the american presidency project - economic report of the ......council of economic advisers during...

ECONOMIC

TRANSMITTEDTO THE CONGRESS

FEBRUARY 197O

Economic Report

of the President

Transmitted to the Congress

February 1970

TOGETHER WITH

THE ANNUAL REPORTOF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE

WASHINGTON : 1970

For sale by the Superintendent of Documents U.S. Government Printing OfficeWashington, T>.C 20402 - Price $1.50

CONTENTS

Page

ECONOMIC REPORT OF THE PRESIDENT 1

THE USES OF OUR NATIONAL OUTPUT 4

THE PRESENT INFLATION 6

THE OUTLOOK FOR 1970 7

STRENGTHENING THE WORLD ECONOMY 9

SEVEN BASIC PRINCIPLES 10

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC

ADVISERS * , 13

CHAPTER 1. ECONOMIC PERFORMANCE AND POLICY IN 1969 21

CHAPTER 2. STABILIZATION POLICY FOR 1970 AND BEYOND 57

CHAPTER 3. USES OF THE NATIONAL OUTPUT 72

CHAPTER 4. GOVERNMENT AND THE MARKET 90

CHAPTER 5. FREEDOM AND STABILITY IN THE WORLD ECONOMY. . . . 118

APPENDIX A. UNEMPLOYMENT AND THE ECONOMY 143

APPENDIX B. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE

COUNCIL OF ECONOMIC ADVISERS DURING 1969 157

APPENDIX C. STATISTICAL TABLES RELATING TO INCOME, EMPLOY-

MENT, AND PRODUCTION 171

*For a detailed table of contents of the Council's Report, see page 17.

I l l

ECONOMIC REPORT

OP THE PRESIDENT

ECONOMIC REPORT OF THE PRESIDENT

To the Congress of the United States:

For many years the American people have been seeking, throughtheir Government, the road to full employment with stable prices.

In the first half of the 1960's, we did have price stability—but unem-ployment averaged 5l/2 percent of the civilian labor force.

In the second half of that decade, we did have relatively full employ-ment—but with sharply rising prices.

After 5 years of sustained unemployment followed by 5 years of sus-tained inflation, some have concluded that the price of finding work forthe unemployed must be the hardship of inflation for all.

I do not agree.It is true that we have just passed through a decade when the economy

spent most of the time far off the course of reasonably full employmentand price stability. But if we apply the hard lessons learned from thesixties to the decade ahead, and add a new realism to the managementof our economic policies, I believe we can attain the goal of plentifuljobs earning dollars of stable purchasing power.

Those lessons sire plain:1. We have learned that Government itself is often the cause of wide

swings in the economy.2. We have learned that there is a human element in economic

affairs—habit, confidence, fear—and that the economy cannot be man-aged mechanistically and will not suspend its laws to accommodatepolitical wishes.

3. We have learned that 1-year planning leads to almost as muchconfusion as no planning at all, and that there is a need to increase publicawareness of long-range trends and the consequences for future years ofdecisions taken now.

My 1970 Economic Report reflects these lessons. The current actionswe are taking are designed to help the American economy regain itsbalance; the plans we are making are designed to build on that balanceas our free economy grows and responds to the needs of its citizens.

"Stability of economic policy/' Theodore Roosevelt pointed out, "mustalways be the prime economic need of this country. This stability shouldnot be fossilization." Stability is a means to an end. The end we seek issteady growth, predictable Government action in maintaining a soundeconomic climate, and constant involvement of the people in setting theirown priorities.

Accordingly, this Economic Report "opens up the books" as neverbefore.

We are making available the facts and figures that will enable thepeople to make more intelligent judgments about the future. If we areto improve the quality of life in this Nation, we must first improve thequality of debate about our national priorities. In this Report, and inthe Budget Message, long-range projections are made that will enablethe people to discuss their choices more effectively in the light of whatis possible.

In the read world of economics, there is a place for dreams—dreamsthat are realizable if we make the hard choices necessary to make themcome true.

THE USES OF OUR NATIONAL OUTPUT

We have placed the Nation's larger decisions in the context of apicture of the total resources available and the competing claims uponthem. A summary of this analysis is contained in Chapter 3 of theAnnual Report of the Council of Economic Advisers; I hope it willbe studied carefully and its precedent carried forward in future years.

That analysis is neutral about which options and claims should bechosen. The purpose of the analysis is to help everyone observe the disci-pline of keeping claims and plans within the limits of our capacity, andto make sure that excessive claims do not prevent us from achieving ourmost important goals.

Even in our own highly productive and growing economy, resourcesare limited. There will be competition between private and governmentuses for our national income, competition among programs within gov-ernment budgets, and competition among borrowers for the limited na-tional savings.

Our problem, in short, will be to choose wisely what to do with our out-put and incomes. Large as they are, the claims upon them, what peopleexpect of them, are even larger. If we add the expenditures that con-sumers will want to make with larger incomes; the investment that busi-nesses must make to assure rising productivity; the housing constructionneeded to meet the current shortage and the demands of a growing pop-

illation with rising incomes; the likely expenditures of State and localgovernments; the costs of present Federal programs plus the proposalsalready recommended by this Administration—we find that the totalwould nearly exhaust the national output until 1975. And that totalwould not include tens of billions of dollars of new programs that arecommonly urged upon the Government.

We shall have to think carefully about how to choose the claims uponthe national output that will be met, since we cannot meet them all. Thischoice is not made exclusively or even mainly by the Federal Government.It is mostly made by the individuals who produce the output, earn theincome, and decide how it should be spent. Nevertheless, a Federal Gov-ernment with a budget of $200 billion has a great influence on how thenational output is used. This influence is not confined to the output theFederal Government uses itself. The taxes the Federal Government col-lects, the grants it makes to State and local governments, its borrowing orrepayment of debt, influence the purchases of private citizens and of Stateand local governments.

Personal freedom will be increased when there is more economy ingovernment and less government in the economy. Economic domination,like any other government domination, is dangerous to a free society, nomatter how benevolent its aims. Freedom depends on our recognizing theline between domination and influence, between control and guidance.The quality of life in America depends on how wisely we use the greatinfluence that Government has.

We know that existing programs of Government and probable de-mands of the private sector could use up all the output we can producefor several years to come. This does not mean that we cannot do anythingnew. It does mean that we have to choose. If we decide to do some-thing new, or something more, in one direction we will have to giveup something elsewhere. There is no unclaimed pool of real resources fromwhich we shall be able to satisfy new demands without sacrificing or modi-fying some existing claims.

If we fail to tailor our demands consciously to resources available, thelikely consequences would be both misdirection of resources and infla-tion. We have seen this in the past 5 years. Beginning in mid-1965 theGovernment imposed on the economy a large increase in nondefensespending and the demands of the Vietnam War effort. It did not, how-ever, face up soon enough to the need to cut back other demands byraising taxes or by following an adequately restrictive monetary policy.Of course, failing to take these steps did not relieve us of the necessity ofcutting back. It only meant that the cutback was imposed unfairly byinflation, rather than in a more deliberate and equitable way.

THE PRESENT INFLATION

The inflation unleashed after mid-1965 had gathered powerful mo-mentum by the time this Administration took office a year ago. Theexpectaton of more inflation was widespread, as was skepticism of thedetermination of Government to control it. Businesses, anticipating ris-ing prices and costs, were eager to invest as early as possible and werewilling to incur high interest charges that they would pay later in pre-sumably cheaper dollars. Workers demanded large wage increases tocatch up with past increases in the cost of living and to keep up withexpected future increases. Prices were being boosted to catch up withpast cost increases and to keep up with the future.

Inflation was in full tide.The inflationary tide could not quickly be turned. At least it could not

be turned quickly without a serious recession. Such a recession would itselfhave brought hardship to millions of people. Moreover, it would havebeen another episode in the history of stop-go economic policy, when theneed was to introduce an era of steadiness in policy that could yield sta-bility in the economy.

Our purpose has been to slow down the rapid expansion of demandfirmly and persistently, but not to choke off demand so abruptly as toinjure the economy. The greater price stability that all desired couldnot, given a concern about unemployment, come quickly. This transi-tion would take place in several steps, each of which would requiretime, and only at the end would increases in the price level slow down.

1969 was a year of progress in the fight against inflation. For thefirst time since the price spiral began, there was a sustained period ofcombined fiscal and monetary restraint. During 1969 the rise of Federalexpenditures was slowed to an increase of $9 billion, compared withan annual average of $20 billion in the 3 preceding years. Instead ofthe rising budget deficits of earlier years there was a surplus in 1969.Instead of the money supply expanding by 7 percent, as in 1968, itgrew at a 4.4-percent annual rate in the first half of 1969 and at a 0.7-percent rate in the second half.

The growth of total spending, public and private, which was the driv-ing force of the inflation, slowed markedly, from 9.4 percent during 1968to 6.8 percent during 1969 and an annual rate of 4.4 percent in the fourthquarter of 1969. This decline in the growth of spending was inevitably ac-companied by what in October I called "slowing pains." Gains in realproduction slowed down. Industrial production declined. Profits driftedlower as margins were squeezed. All of these slowing pains were increased,and the inflation prolonged, by the failure of productivity to rise, for thefirst time in many years.

6

And in the latter part of the year there were the first faint signs of gainon the price front. Instead of continuing to accelerate, the rate of inflationitself began to level out.

THE OUTLOOK FOR 1970

As we enter 1970 continuation of a low rate of growth of sales, pro-duction, and employment for several months seems probable. Thereafter,the performance of the economy will depend on both the continuedresolve of the Government and the difficult-to-predict behavior of theprivate sector.

Government policy must now avoid three possible dangers. One is thatafter a brief lull the demand for output would begin to rise too rapidlyand rekindle the inflationary process, as happened in 1967. This possi-bility cannot be ignored. The tax bill passed in December reducedrevenues for the next fiscal year by close to $3 billion, compared tomy original proposals, requiring the Administration to reduce spendingplans further in order to retain a surplus. Pressures for increased spendingthreaten to shift the budget from the surplus position to a deficit bythe latter part of calendar 1970 unless the responsible fiscal course urgedby the Administration is accepted by the Congress.

A second danger we must consider is that the moderate and neces-sary slowdown may become more severe. The highly restrictive stanceof monetary policy is one reason for considering this possibility. More-over, there is a question whether the rate of real output can long remainessentially flat without more adverse consequences than we have sofar experienced. Until now the unemployment rate has remained low,partly because employers have retained workers despite growing signsof sluggishness in sales. However, they may be unwilling to do this forlong with profits shrinking.

A third danger is that although the economy remains on the pathof slow rise, and avoids either serious recession or revived inflation, thisis achieved with such tight credit conditions as to paralyze the housingindustry, preventing needed additions to the supply of homes and apart-ments. A Federal budget deficit, which would require the Treasuryto become again a net borrower in the capital markets, taking fundsthat would otherwise go to other users, might bring this about. This isone reason why I continue to stress the importance of a strong budgetposition.

Our objective is to avoid these dangers as we achieve stability. Anecessary condition for doing this is to keep the Federal budget inbalance in the coming fiscal year.

A prudent fiscal policy, avoiding the risks of returning to budgetdeficits, and a prudent monetary policy, avoiding the risks of overlylong and overly severe restraint, offer the best promise of relievingstrains and distortions in financial markets, bringing interest rates down,and encouraging a sustainable and orderly forward movement of theeconomy.

After some months of slow expansion of sales, output, and employment,which seems likely, a moderately quicker pace later in the year would beconsistent with continued progress in reducing the rate of inflation.

The goal of policy should therefore be moderately more rapid economicexpansion in the latter part of 1970 than we have recently been experi-encing or expect for several months ahead. Keeping the Federal budgetin balance, as I have recommended, and a moderate degree of monetaryrestraint will help achieve this result. This combination of policies wouldalso permit residential construction to revive and begin a rise towardthe path of housebuilding required by our growing number of familiesneeding homes and apartments.

As far as can now be foreseen, this pattern of developments through theyear could be achieved with a gross national product for 1970 of about$985 billion. This would be 5/2 percent above that for 1969. A slow-down in the rate of increase of consumer prices is a reasonable expecta-tion in this economic outlook.

An unfortunate cost of having allowed the inflation to run for so longis that it courts the risk of some rise in unemployment. The policy of firmand persistent disinflation on which we have embarked, however, holdsout the best hope of keeping that risk low.

This risk emphasizes the importance of promptly enacting the legisla-tion this Administration has recommended for manpower training,unemployment compensation, and welfare systems:

—The proposed Manpower Training Act would not only bringabout better planning and management of training programs; itwould also trigger an automatic increase in appropriations forthese programs if the national unemployment rate reaches 4.5percent for 3 consecutive months.

—The unemployment compensation legislation would increase cov-erage, encourage States to improve benefits, and provide forFederal financing of extended benefits if unemployment of in-sured workers exceeds 4.5 percent for 3 consecutive months.

—The proposed Family Assistance Program would provide incomesupport for poor families with children, whether headed by a maleor a female, while providing strong incentives and assistance forthose who can do so to find and accept employment.

8

Because our expanding and dynamic economy must have strongand innovative financial institutions if our national savings are to beutilized effectively, I shall appoint a commission to study our financialstructure and make recommendations to me for needed changes.

In 1970, we are feeling the postponed pinch of the late sixties. If re-sponsible policies had been followed then, the problems of 1970 would bemuch easier. But we cannot undo the errors of the past. We have nochoice now but to correct them, and to avoid repeating them.

STRENGTHENING THE WORLD ECONOMY

The achievement of greater balance and stability in our own economyis also important for international finance and trade. The dollar is notonly our currency; it provides the principal vehicle for world trade andpayments. We are the world's largest exporter and importer, and in-stability in the United States—whether it involves inflation or recession—has unsettling effects on the world economy. Inflationary pressures aris-ing in the United States have added to inflationary problems in othercountries in recent years. The long inflation has also weakened ourtrading position. However, with the restraining of excessive demand in1969, the deterioration in our trade balance has been arrested.

I am particularly gratified to note improvements in the internationalmonetary scene during the past year with the introduction of SpecialDrawing Rights and with the realignment of several important curren-cies. In cooperation with other countries, we are actively investigatingother ways to make the international monetary system more stable andorderly, and to give more attention to international coordination andsynchronization in the management of domestic economic policies.

Although a high and rising level of international trade can add to theprosperity of the United States and other countries, imports from time totime may cause domestic dislocations. Since the gains from internationaltrade are enjoyed by the country as a whole, it is appropriate that thecosts of trade-associated dislocations be spread more evenly. The tradebill presented to the Congress in November contains practical adjustmentassistance and escape-clause provisions that would soften the impactof import competition in cases where it harms our own workingmen.It also includes the repeal of the American selling price method of tariffevaluation, a step which is important in reducing the nontariff barriersto U.S. exports.

Trade is vital to the progress of the less developed countries of theworld. With other industrialized nations, the United States is exploring

ways of enabling less developed nations to participate more in the grow-ing volume of international trade.

SEVEN BASIC PRINCIPLES

Since this is my first Economic Report, it is in order for me to set out thebasic principles that will continue to guide the management of economicpolicy in my Administration:

First, the integrity and purchasing power of the dollar must be assured.To re-create confidence in a secure future, we must achieve that reason-able stability of the price level which has been so severely eroded sincemid-1965. The unfairness of a steeply rising cost of living must not againbe inflicted on this Nation.

Second, our economic policy must continue to emphasize a high utili-zation of the Nation's productive resources. We must maintain a vigorousand expanding economy to provide jobs for our growing labor force.

Third, we must achieve a steadier and more evenhanded manage-ment of our economic policies. Business and labor cannot plan, and con-sumers and homebuyers cannot effectively manage their affairs, whenGovernment alternates between keeping first the accelerator and then thebrake pedal to the floor.

Fourth, Government must say what it means and mean what it says.Economic credibility is the basis for confidence, and confidence in turnis the basis for an ongoing prosperity.

Fifth, we must preserve and sustain the free market economy in orderto raise the standard of living of every American. The most basic improve-ment in our national life during the last three decades has come throughthe doubling of real purchasing power that our free competitive econ-omy has delivered to the average American family. No Governmentprograms during that period begin to approach this doubling of realincome per family as a source of our improving economic well-being.Government now has both the ability and the duty to sustain a generalclimate for stability and growth, but it must do so in the firm convictionthat only a free economy provides maximum scope for the knowledge,innovativeness, and creative powers of each individual.

Sixth, we must involve the American people in setting goals and priori-ties by providing accurate, credible data on the long-range choices opento them, making possible much better informed public discussion aboutusing the resources we will have in meeting the needs of the future. The1970 Annual Report of the Council of Economic Advisers is a long firststep in that direction.

10

Finally, the free economy of the future will rest squarely on the founda-tion of genuinely equal opportunity for all. Some, because of race ornational origin, find themselves situated far back of the starting line inour economy. Others by the happenstance of health, accidental injury,education, or economic background are unable to participate fully in oureconomic life; still others become casualties of obsolete skills. We aredeeply committed to make a reality of the promise of an equal oppor-tunity in life, so that the fruits of our economic progress and abundancewill become available to all. The national conscience demands it, humandignity requires it, and our free and open economic system cannot befully effective without it.

February 2,1970.

I I

THE ANNUAL REPORT

OF THE

COUNCIL OF ECONOMIC ADVISERS

372-111 O—70 2 13

LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., January 29, 1970.THE PRESIDENT:

SIR: The Council of Economic Advisers herewith submits its AnnualReport, February 1970, in accordance with Section 4(c) (2) of the Employ-ment Act of 1946.

Respectfully,

PAUL W. MCCRACKEN,

Chairman.

S^^a^JUu^HENDRIK S. HOUTHAKKER.

HERBERT STEIN.

CONTENTS

Page

CHAPTER 1. ECONOMIC PERFORMANCE AND POLICY IN 1969 21

The Goals of Stabilization Policy 21The Strategy of Policy in 1969 22

Direct Influence on Wages and Prices 23The Expected Chain From Policy to Results 25

The Record in 1969 27Fiscal Developments 30Monetary Restraint 33The Flow of Credit 34The Demand for Output 39Shares in the National Income. 45The Labor Market 46Price Movements 51

CHAPTER 2. STABILIZATION POLICY FOR 1970 AND BEYOND 57

Policy and Outlook for 1970 57The Policy Objectives for 1970 57Policy for 1970 59Outlook for GNP and its Components 60

Unemployment and Manpower Policy for 1970 62Manpower Training Act 63Employment Security Amendments 63Family Assistance Plan 64Other Manpower Programs 64

The Transition to Full Employment Growth 65The Stabilization Problem in the Longer Run 66

Stabilizing the Growth of GNP 66Improving Our Economic Data 69Living With Instability 70The Continuing Problems of Inflation and Unemployment. 70

CHAPTER 3. USES OF THE NATIONAL OUTPUT 72

Introduction 72The Decisionmaking Process 74

The Level of Decisionmaking 74Budgetary Balance as Discipline 75Toward Improving Federal Decisions 76

Future National Output and the Claims Upon It 78Potential and Projected GNP 79Claims on the National Output 79Balancing Claims and Resources 81Conclusions 83

Appendix: Basis for Estimates of Output and Claims 84

17

Page

CHAPTER 4. GOVERNMENT AND THE MARKET 90

Role of the Government 90Costs of Government Intervention 92

Improving the Efficiency of Markets 93Promotion of Competition 93Adequate Information for Consumers 97Protection of the Environment 99

Regulation 100Government and the Financial System 101Government Regulation of Agriculture 104Regulation of Noncompetitive Markets 107

Government Participation in the Market 110Postal Service I l lUranium Enrichment Facilities 112

The Government and Housing 113CHAPTER 5. FREEDOM AND STABILITY IN THE WORLD ECONOMY. . . . 118

The Expansion of Trade 118Nontariff Barriers 119The Trade Bill of 1969 120The Developing Countries in the World Economy 122The U.S. Trade Balance 124

International Capital Mobility and the Balance of Payments.. 126The Problem of International Equilibrium 131

International Adjustment 133The Dollar and International Equilibrium 140

APPENDIXES:

A. Unemployment and the Economy 143B. Report to the President on the Activities of the Council of

Economic Advisers During 1969 157C. Statistical Tables Relating to Income, Employment, and

Production 171

List of Tables and Charts

Tables1. Funds Raised in Credit Markets, Nonfinancial Sectors, 1968-69. 342. Changes in Deposits and Selected Nondeposit Sources of Bank

Funds, 1968-69 373. Sources and Uses of Funds, Nonfarm Nonfinancial Corporate

Business, 1968-69 384. Changes in Gross National Product and Components, 1968-69. . 405. Changes in Personal Income, Taxes, and Saving, 1967-69 436. Changes in Civilian Employment and Distribution of Change,

1965-69 477. Selected Unemployment Rates, 1961 and 1965-69 48

18

Tables Page8. Increases in Average Gross Hourly Earnings of Private Non-

agricultural Production or Nonsupervisory Workers Since1960 . . 50

9. Wage and Benefit Decisions, 1965-69 5010. Changes in Implicit Price Deflators for GNP, by Sector, 1965-

69 5111. Changes in Current Dollar Costs and Profits Per Unit of Real

Output of Nonfinancial Corporations Since 1960 5312. Changes in Wholesale and Consumer Prices, 1966-69 5413. Gross National Product, 1969 and Projections for 1970-75 7914. Projections of Federal Expenditures, National Income Accounts

Basis, 1970-75 8015. U.S. Balance of Payments, 1960-69 12716. International Investment Position of the United States, 1955,

1965, and 1968 131Charts

1. Changes in the Money Supply and Federal Expenditures . . . . . 282. Changes in GNP, Real GNP, and GNP Deflator 303. Changes in Federal Surplus (National Income Accounts Basis). . 324. Interest Rates 365. Unemployment Rate 496. Changes in Compensation, Productivity, Labor Costs, and

Prices (Private Nonfarm Sector) 527. Price Changes 558. Gross National Product, Actual and Potential 859. Net Family Formation 88

10. Housing Starts 8911. Mortgage Yields and Dividend Rate of Federal Savings and

Loan Associations 10312. Per Capita Personal Income of Farm and Nonfarm Population. . 10513. U.S. Balance of International Payments 129

CHAPTER 1

Economic Performance and Policy in 1969THE GOALS OF STABILIZATION POLICY

T ^ H E AMERICAN ECONOMY began 1969 with production, incomes,-*- and prices increasing rapidly from the momentum of earlier infla-

tionary fiscal and monetary policies. As the year moved along, however,the economy began to respond to the constraints of policies which hadbeen changed to combat inflation. The huge budget deficit had been closedwith the aid of a tax increase in mid-1968, and the new Administrationfurther tightened fiscal policy in 1969 by a sharp pruning of projected Fed-eral outlays. Monetary policy also shifted its direction, becoming increas-ingly restrictive during the year.

This was not the ordinary problem of an economy that had veered mo-mentarily toward excessive rates of expansion. It was the problem ofan economy already in its fourth year of severe inflationary pressure. Themomentum generated by 4 years of inflation was evident in widespreadpressures for wage and price increases and in continuing expectations ofmore inflation. This momentum could not be stopped dead in its trackswithout serious consequences. The policies of fiscal and monetary restraintfollowed in 1969 have reduced it, while at the same time they have laidthe ground for a return to price stability and sound economic growth.

Continuation of fiscal and monetary restraint should bring a decelerationof inflation during 1970 and 1971. This will be an important step towardprice stability, but it will not mean that the goal has been reached. Historycontains other instances in which inflation was slowed down or stoppedonly to break out again as policies shifted too sharply toward expansion.The Nation's goal should be more than just a year or two of declining ratesof inflation. This time we should try to reach and maintain price stability.

The longer run goal of continuing price stability would not be served bya sharp or prolonged rise of unemployment. Such a development would bean evil in itself. In addition, by forcing a sharp shift toward expansionarypolicies, it would intensify the already difficult task of maintaining therestraint necessary for a lasting victory over inflation.

But inflations have seldom ended without a temporary rise in unemploy-ment. While we must direct our efforts to altering the historical pattern,we cannot ignore the possibility that joblessness will rise in the period imme-

21

diately ahead. But we cannot avoid this problem by allowing the currentinflation to continue, for that would harden the expectations of inflationand make subsequent policies to curb it more difficult and harsh. Thebest hope of curbing inflation and restricting the rise in unemploymentto a relatively small and temporary increase rests with a policy of firm andpersistent restraint on the expansion in the demand for goods, services, andlabor.

Such a policy should ultimately produce high employment with muchless inflation than we have recently experienced. During the transition,we may find both unemployment and inflation to be higher than would havebeen desirable if the inflation had not been allowed to persist so long. This isthe price we must pay for having long pursued inflationary policies. Onceinflation has been set in motion, there is no way of correcting it withoutsome costs. The aim of policy is to keep the costs as low as possible.

Over the longer run, further progress in reducing unemployment andgetting as close to a stable price level as possible is dependent upon holdingaggregate demand to moderate and sustainable rates of growth. It willrequire other measures as well. Public policies can help improve theefficiency of labor markets by providing information, opportunities fortraining, and assistance in relocation. Persistent effort in these and otherways to make the economy more flexible and adaptable will contributeto lower unemployment rates and to a more stable price level.

THE STRATEGY OF POLICY IN 1969

The current inflation was generated by the mounting budget deficits andrapid monetary expansion that began in 1965 with the escalation of theVietnam War and the massive increases in Federal spending for domesticprograms. These developments stimulated demand for output and laborat a pace which could not be met by growth in the labor force and otherproductive resources. The resulting pressures caused prices to rise rapidly.Any plan for arresting the inflation called fundamentally for arrestingthe forces which were causing it. In addition, it was clear that slowingdown the inflation after it had gathered momentum would be more difficultthan taking the steps necessary to avoid the inflation initially.

Steps to end rising budget deficits and to slow down monetary expansionhad been taken in 1968. The Revenue and Expenditure Control Act ofJune 1968 had helped to shift the budget from a deficit of $25 billion inthe fiscal year ended June 30, 1968, to a surplus estimated in January 1969at $2.4 billion for the fiscal year 1969. Near the end of 1968, the FederalReserve had turned to a policy of more restrained monetary expansion.Each of these moves, however, was only a beginning. Once they had finallybeen taken, it was important that they remain in force long enough todo the job. Yet the shift in the budget position to surplus had been achievedwith the help of a temporary tax surcharge which was scheduled to expire

22

on June 30, 1969. With continuing strong pressure for increased expendi-tures in fiscal year 1970, the danger of sliding back into a budget deficitcould not be ignored. Nor could it necessarily be assumed that the new andmore restrained monetary policy would continue as long as needed. In 1966monetary tightness had contributed to a dampening of the economy andof the inflation, but the economic slowdown led in turn to a shift back tohighly expansive policies in 1967 and to a resurgence of inflation. It wascommonly thought that this pattern might be repeated.

At the beginning of 1969, as earlier, there were disagreements amongeconomists about the relative roles of rising budget deficits and rapid mone-tary expansion in causing the inflation of 1965-68. On one view the risingdeficits were the driving force and they would have been enough to causesubstantially the inflation that was experienced, even if there had been muchless monetary expansion. On the other view the rapid monetary expansionwas the primary factor; with it there would have been substantial inflationeven with a stable budget policy, and without it there would have beenlittle inflation even with rising deficits. These different views led to differentemphases in policy prescriptions for 1969. Following the one theory thecritical matter was at least to stabilize the budget in its current positionof moderate surplus. According to the other theory a reduction of the rateof monetary growth was the decisive way to slow down the inflation.

The Government could not prudently let the control of inflation dependon the choice of one of these strategies to the neglect of the other. Manyuncertainties exist about the relative power of fiscal and monetary actionstaken separately. There is much less doubt about the power of fiscal andmonetary actions taken together. A reliable policy had to turn away fromboth the rising deficits and the rapid monetary expansion.

DIRECT INFLUENCE ON WAGES AND PRICES

The Administration's plan of policy for 1969 did not include an attemptto revive wage-price guideposts, such as those existing in 1962-66. Theresults of our own experience and numerous trials of such policies in othercountries over the preceding 20 years did not justify confidence that suchefforts would help solve the inflation problem in 1969.

In their usual form these policies enunciate general standards of non-inflationary price and wage behavior, coupled with appeals to labor andbusiness for compliance. The degree to which representatives of labor andbusiness have participated with government in defining standards and seek-ing compliance has varied from country to country. The sanctions invokedin support of the standards are usually informal and have varied in theirseverity and nature.

Experience with such policies in other countries has been remarkablyconsistent. In some cases success in holding down wage settlements or priceincreases has been achieved in particular industries. There is usually a periodin which these programs may have some overall deterrent efTect, though

23

evidence here is less certain. After an interval, however, there is a point atwhich accumulating pressures make the programs ineffective.

American experience conformed to this pattern. In January 1962, theCouncil of Economic Advisers promulgated a set of guideposts intended todescribe the course of wages and prices that would be consistent with gen-eral price stability and certain other objectives. The main element in thestatement of these guideposts was that hourly wages should rise in line withthe average long-term gain in output per man-hour. Prices should ordinarilybe stable; but in a particular industry they could rise if productivity roseless than the average, and they should fall if productivity rose more thanthe average. A number of exceptions were specified—and indeed these werenecessary—to meet requirements of equity and efficiency.

As originally put forth the guideposts were to serve a general educationalfunction of encouraging voluntary patterns of behavior that would be non-inflationary. There was no suggestion that the Government would applythem in particular cases or try to enforce them. But it was natural to ques-tion whether actions in particular cases conformed to the guideposts, and theGovernment felt it necessary to comment on the justification for these actions.Once this threshold had been crossed, the Government also became involvedin attempting to insure compliance in particular cases where it was con-sidered necessary. Usually the attempt consisted of discussions with the per-sons involved. Sometimes there were public exchanges of charges andcountercharges. In some cases the Government relied upon its power aspurchaser, regulator, and law-enforcer to encourage compliance.

With the upsurge of inflation and inflationary pressure after mid-1965,the difficulty of reconciling the guideposts with market forces became moreintense. Labor and business were being asked to act as if prices were notrising, when in fact they were- As it became evident that steps necessary tokeep prices from rising were not being taken, it also became more obviouslyunrealistic and inequitable to make these requests in specific cases. By the fallof 1966 the policy was widely recognized to be unworkable, and it was al-lowed to fade away. In subsequent years, there were only episodic actionswith specific companies regarding prices.

Whether the policy changed the overall behavior of the price level beforeit ran into intense inflation is uncertain. These were years of relative pricestability. But they were also years of considerable slack in the economy, rela-tively high unemployment, and stable or declining farm prices. That is, theywere years in which market conditions favored price stability. Econo-metric studies attempting to isolate a further contribution that guidepostsmight have made to price stability have produced uncertain results. Thefindings of some studies are consistent with the view that the guideposts mayhave had some effect in reducing the increase of the price level; other studiesdo not support this conclusion.

Whatever the uncertainties about this earlier period, the guidepost policyclearly did not work once the economy ran into strong and serious pressures

24

of inflationary demand. By that time the question was not whether guide-posts would have a measurable influence on the rate of inflation. It waswhether they had any credibility and viability at all. The evidence is thatthey did not. The conspicuous cases in which guidepost policy could exercisesome influence were too few and were overrun by the general tide of inflationin the economy as a whole.

The Administration in 1969 recognized that the speed of the disinfla-tionary process would depend in part upon how quickly business and laborbecame convinced that the economic climate was changing. If business andlabor continued to expect demand and prices to rise rapidly, and if theypushed up wages and prices in anticipation, disinflation would come slowlyand more painfully. This meant that the public's understanding of the de-termination to check inflation, of the policies being pursued and of the prog-ress being made would be important to success. There would be room andneed for efforts to inform the public. But first there would have to be evi-dence that the new policies were actually working.

In the exercise of its ordinary functions the Government has a con-siderable influence on conditions of demand and supply and consequentlyon prices in particular markets. It would be important for the Governmentto make sure that its influence did not unnecessarily contribute to inflation inthose markets, and beyond that to try to correct malfunctions in particularmarkets which might aggravate the consequences of the general inflation.

THE EXPECTED CHAIN FROM POLICY TO RESULTSAs the process was viewed at the beginning of 1969, the fiscal and mone-

tary restraint that was the core of anti-inflation policy would slow the rateof inflation through a series of steps which can ,be summarized as follows:

A Slowdown in the Growth of Total Spending

The growth in aggregate spending for goods and services as measuredby gross national product, which was 9 percent from 1967 to 1968, wouldbe reduced. The Federal Government's own purchases would not rise sofast, nor would its payments to State and local governments and to individ-uals—payments which these sectors ordinarily use to make their own pur-chases. By avoiding the tax reduction scheduled for midyear, the Govern-ment would refrain from boosting private after-tax income and consequentlyfrom stimulating private spending.

Monetary restraint and the resulting scarcity and high cost of credit wouldslow down spending in various ways. Expenditures financed by borrowing—for new houses, for State and local construction projects, for business invest-ment, and for consumers' durables—would be most directly affected. Inaddition, money balances would decline in relation to rising incomes andtransactions, and the market value of other assets would be depressed be-cause of higher interest rates. This would dampen the inclination of busi-nesses and consumers to spend. These effects of monetary restraint onspending would not be immediate or follow a precise formula based on theamount of the restraint, but they would come if the restraint continued.

25

A Decline in the Rate of Growth of Production

The slowdown in the growth of purchases would mean a slowdown inthe growth of sales; businesses cannot sell what others do not buy. Somebusinesses might respond to a decline in the growth of sales by allowinginventories to accumulate rather than by cutting their planned output, butthis could only be a temporary reaction. Others might respond to a slow-down in the growth of sales by cutting prices in an attempt to keep volumeup. But this was not likely to be the first response in 1969. Having alreadyexperienced several years of rapidly rising demand, costs, and prices, busi-nesses would expect more of the same, and for the most part they wouldkeep their own prices up and rising.

The most general and important response of business to a slowdown ofsales would be a slowdown in the rate at which production was increasing.Initially this would involve a decline in the rate of growth and possiblysome temporary decline in production itself. An absolute decline in output,however, would not be a necessary aspect of the disinflationary process. Ina growing economy the labor force is increasing, new productive equipmentis being added, new technology is being introduced, and the basic trend oflabor productivity is rising; this means that the potential output of theeconomy also grows. Therefore, even though output is still rising absolutely,a slowdown in the rate of growth of output reduces actual productionrelative to its potential and is an anti-inflationary force. This is a part of theprocess that eventually builds up those back pressures which are essentialto the development of a new stability in the level of costs and prices.

A Decline in Profits Per Unit

A deceleration in the rate of growth in real output would adversely affectproductivity in the short run. The movement of fixed costs per unit of out-put would thus be less favorable for a time. After a sustained period of ex-pansion and labor shortages, employers would tend to maintain work forces,and payrolls would tend to be fixed. The deterioration in productivity andincreased costs per unit of output would reduce profits per unit. While evenhigher prices might consequently seem necessary, and while in many casesthey might be posted, market conditions would make it difficult for suchprices to hold, and the major effect would be heavier pressure on businessesto begin actions to reduce costs. The need to improve productivity andthereby pare unit labor costs would make labor "hoarding" more costly.Employment at overtime would diminish and layoffs would become morecommon.

A Slowdown in Wage Increases

As profits per unit weakened, employers would become more resistant togranting wage increases. At the same time, a softening labor market wouldlessen workers' insistence on large wage increases as a condition for employ-ment, since they could not be so sure of finding another job quickly if they

26

left a current one or rejected a new offer. Moreover, if business profits wereless favorable, a major rationale for heavy wage demands would be removed.As a consequence, the average rate of wage increase would ultimately beginto diminish. However, in view of the momentum of past increases in wagesand the cost of living, this could not be expected to happen quickly. Norcould it be expected to happen evenly in all sectors.

A Slowdown in Price Increases

While, as already indicated, the unfavorable development in profits wouldcreate some incentive to mark up prices, more sluggish market conditionswould encourage businesses to pursue temperate pricing policies, especiallyas this influence began to be reinforced by a slowdown in the rise of wagerates and unit labor costs. The reductions in wage and price increases wouldtend to reinforce each other. The longer price increases moderated, theweaker would become the expectation of further inflation. In turn, businessand labor would be increasingly inclined to respond to the waning inflationby making appropriate price and wage adjustments, in preference to accept-ing a lower volume of production and less employment. With this changethe economy would be on the road to regaining full employment withoutsetting off another round of inflation.

At the beginning of 1969 no one knew how much of this process mightoccur during the year. As this Council indicated in its testimony before theJoint Economic Committee in February 1969, the growth of demandwould be slowed only a little in the first half of the year, because demandwas strong at the outset and the turn to monetary restraint just before theyear opened would not have had much time to work. A more marked slow-down of demand was likely for the second half. At first almost all of theslack in demand would probably be taken up by a slowdown of production.Price and cost trends at the beginning of the year were too strong to bedeflected by the moderate deceleration expected in the first half. But itcould be expected that after midyear the slower growth of real output andof employment would create sufficient excess in the supply of productsand labor to begin to have visible effects on price and wage increases. Bythe end of the year the rate of inflation would be lower than at the beginning.The effects to that point might not be great. Still, the economy wouldhave crossed the threshold from a state of accelerating inflation to one ofdecelerating inflation, and we could count on making further progress.

THE RECORD IN 1969

Fiscal and monetary policies in 1969 followed the general course thatseemed desirable at the beginning of the year. In general the economyresponded to those policies by moving through some of the stages just out-lined—more slowly than was expected at the beginning of 1969 but in a

27

manner that confirmed the initial view of the necessary stages in the process.The policy and economic developments of the year are summarized in thenext few pages after which the main elements in the story are told in greaterdetail.

The contribution of fiscal policy to disinflation was a slowdown in thegrowth of Federal spending and the maintenance of a moderate budget sur-plus. During calendar 1969 Federal expenditures (as measured in the na-tional income accounts) increased by about $9 billion as compared withabout $20 billion a year in the 3 preceding years; and the budget surplusamounted to almost $10 billion for the year as compared with a deficit of$5 billion in 1968. Monetary policy reduced the rate of growth of the moneysupply (demand deposits and currency) from 7.2 percent in 1968 to 2.5percent in 1969. The reduction occurred in successive steps that broughtthe rate of growth close to zero in the fourth quarter (Chart 1).

Chart 1

Changes in the Money Supplyand Federal Expenditures

PERCENTAGE CHANGE, ANNUAL RATEJ/

15

10 -

MONEY SUPPLY(Currency and Demand Deposits)

1iI11I1t i l

-51965 1966 1967

CHANGE, BILLIONS OF DOLLARS, ANNUAL RATEi/

15

1968 1969

10

5

FEDERAL EXPENDITURES(National Income Accounts Basis)

VA \Y7i [73

1965 1966 1967 1968 1969

-I/BASED ON SEASONALLY ADJUSTED QUARTERLY AVERAGES OF DAILY FIGURES.

i/sEASONALLY ADJUSTED.SOURCES: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AND DEPARTMENT OF COMMERCE.

28

Chart 2

Changes in GNP, Real GNP,and GNP Deflator

PERCENTAGE CHANGE (ANNUAL RATE)

1967

NOTE: BASED ON SEASONALLY ADJUSTED DATA.

SOURCE: DEPARTMENT OF COMMERCE.

1968 1969

As the year progressed, it became more and more likely that these develop-ments which led to accelerating inflation were transitory. Profits reportedby corporations declined after the middle of the year. Also, the slower growthof total output—including an actual decline of industrial production—beganto be translated into slower growth of employment and reduction of workinghours. This combination of conditions marked a necessary step toward asubsequent decline in the rate of inflation.

FISCAL DEVELOPMENTS

The operating objective of fiscal policy in 1969, initially and throughoutthe year, was to keep a budget surplus at least as large as had been achieved

30

by the Revenue and Expenditure Control Act of 1968—in the neighborhoodof $3 billion to $5 billion. The first step in the process of fiscal control was areview of the budget for fiscal 1970 that the outgoing Administration hadsubmitted. A program-by-program examination indicated that $4.0 billioncould be cut from the 1970 totals. Of this amount, $1.1 billion would comefrom reducing defense outlays, $1.0 billion from deferring increases in SocialSecurity benefits, and $1.9 billion from cuts in a wide range of other Federalprograms. As a result, the Administration announced in April its intentionto hold fiscal 1970 expenditures to $192.9 billion.

During 1969 the necessary costs of certain "uncontrollable" items, suchas interest on the debt, Medicare, public assistance, civil service retirement,and veterans benefits increased beyond the earlier estimates. At several pointsCongressional action also increased expenditures. In order to hold to the$192.9 billion total for fiscal year 1970, the Administration thereforeannounced further cuts in mid-September amounting to $3.5 billion, ofwhich $3.0 billion was in the defense program.

Adherence to the $192.9 billion ceiling required not only making thesegross reductions of $7.5 billion in existing programs but also firmly resistingproposals, originating in Congress, that would have required spendingmany billions of dollars for new programs or program expansions. By thebeginning of 1970 it was clear that the ceiling could not be maintained forthe entire fiscal year. For calendar year 1969, however, the tight restrainton expenditures allowed fiscal policy to contribute to the fight againstinflation.

The initial review of the budget also revealed that, in order to avoid anabrupt shift from surplus to deficit, it would be necessary to extend the 10-percent income tax surcharge, scheduled to expire on June 30, 1969, and todefer the scheduled reduction of the excise taxes on automobiles and tele-phone services. Accordingly, in March the President recommended their re-tention, with the 10-percent surcharge to continue until June 30, 1970.

Subsequent consideration of the longer-range issues led the Administrationto conclude that the 7-percent tax credit enacted in 1962 to stimulate busi-ness investment should be repealed. The national priorities of the 1970'sdid not require or justify this special incentive.

Once the decision was made to ask for repeal of the investment credit, therepeal had to be effective immediately, in order to minimize disruptions fromheavy advance order placements. Thus, although the repeal served a long-run objective, there would be some revenue increase in the short run,and therefore a gradual phasing out of the tax surcharge was possible.Consequently, on April 21, when the Administration asked for repeal of theinvestment credit, it also recommended that the surcharge rate be reducedto 5 percent on January 1, 1970, and then allowed to expire on June 30.

The extension of the surcharge was the subject of prolonged debate inCongress. Extension for the last 6 months of 1969 was not signed into law

until August 7, and extension for the first 6 months of 1970, at the 5-percentrate, did not become law until December 30. Continued uncertainty abouttax prospects, which raised doubts about how determined the fight againstinflation was going to be, contributed to the persistence of an inflationarypsychology during the year.

As already indicated, the growth in Federal expenditures slowed down sub-stantially in 1969. The Federal pay raise that went into effect on July 1,1969, accounted for about one-third of the year's increase. Federal purchasesof goods and services, including the pay raise, increased by approximately$1 billion from the end of 1968 to the end of 1969. All other Federal expendi-tures combined, however—Social Security and other transfers, grants toStates and localities, net interest paid, and subsidies—continued their up-ward trend, though at a somewhat more moderate pace. Among these, netinterest paid rose because of sharply higher interest rates.

On the revenue side, the increase in Social Security tax rates on January 1,1969, from 8.8 to 9.6 percent, added about $3 billion to collections in 1969.During the year other tax rates were stable, except that the elimination of

Chart 3

Changes in Federal SurplusNational Income Accounts Basis

CHANGE, BILLIONS OF DOLLARS

20

15 -

10

5

0

-5

-10

-151965 1966

SOURCE: DEPARTMENT OF COMMERCE.

1967 1968 1969

the investment tax credit effective April 21, 1969, increased total tax lia-bilities for calendar 1969 by $0.9 billion; only the corporation share of this,$0.5 billion, is counted as Federal receipts within calendar 1969 in thenational income accounts. Only a small part of eligible investment made in1969 lost the advantage of the tax credit because of the rather long leadtimebetween order placement and expenditures. Total Federal receipts (asmeasured in the national income accounts) rose by more than $15 billionfrom the fourth quarter of 1968 to the fourth quarter of 1969.

The reported figures distort the pattern of receipts and consequently ofthe budget surplus during the year, because the insufficient withholding ofpersonal income tax payments in 1968 increased final settlements in thefirst half of 1969. A correction for the bunching of these payments wouldshow that the surplus stayed within a fairly narrow range during the year.(Year-to-year changes in the surplus are shown in Chart 3.)

MONETARY RESTRAINT

Last February, Chairman Martin described the goal of Federal Reservepolicy as being "to disinflate without deflating." It was difficult to tell then,or later in the year, however, what rate of growth in the money supply wouldin fact achieve this general goal. Certainly it was necessary that the moneysupply grow more slowly than the 7.2-percent increase of 1968. In the cir-cumstances of 1969, with interest rates high and rising and with strong andspreading expectations of inflation, businesses and families would be likelyto hold declining money balances in relation to their income. Therefore, tobring about even a moderate slowdown in demand for goods and servicesmight require a very low rate of monetary growth—lower than would beconsistent with prosperity in a more stable economy. Past experience, how-ever, threw little light on the requirements of this transitional period, andpolicy had to be tentative and watchful.

During the first half of 1969 the growth of the money supply fell to aseasonally adjusted annual rate of 4.4 percent. (Before revisions in the datawere made in late summer, the first half growth had appeared to belower.) For the second half the policy became even more restrictive, andgrowth in the money supply was only 0.7 percent at an annual rate(Chart 1). For the year as a whole, time and savings deposits at commer-cial banks declined by 5.2 percent, as market interest rates rose well abovethe ceiling rates that banks could pay on these deposits and thus divertedfunds to market securities.

The Federal Reserve restricted monetary growth primarily by reducingthe expansion of its monetary liabilities. Although currency outside banksexpanded during 1969 by 6.0 percent, almost as much as the 7.4 percentexpansion in 1968, total reserves of commercial banks (adjusted for changesin reserve requirements) were practically constant for 1969, whereas theyhad increased 7.8 percent for 1968. Other restrictive steps were also taken

33

in April. The discount rate on loans to member banks secured by U.S.obligations or other eligible paper was raised from 5 / 2 to 6 percent, andreserve requirements on demand deposits at all member banks were raisedone-half of a percentage point.

THE FLOW OF CREDIT

One way in which the monetary restraint was transmitted to the economywas through its effect on the supply of credit. Banks were less able to expandcredit through increases in the money supply. Also, as the year went on, thecombination of continued slow growth of money and rising transactionsand income lessened the inclination of individuals and businesses to reduce

TABLE 1.—Funds raised in credit markets, nonfinancial sectors, 1968—69

[Billions of dollars; seasonally adjusted annual rates]

Borrowing sector1968

1

94.2

- 5 . 3

99.5

25.5

74.0

8.232.029.4

15.5

4.4

II

81.5

-16.2

97.7

25.5

72.2

5.535.629.1

14.2

2.0

III

117.7

26.4

91.2

2.9

88.3

12.839.933.0

14.2

2.6

IV

95.2

-9 .6

104.8

4.1

100.7

14.348.734.7

15.6

2.9

1969

1

96.3

-5 .7

101.9

5.2

96.7

12.147.930.9

15.6

5.7

II

88.8

- 9 . 2

97.9

- 9 . 6

107.5

11.854.433.1

17.1

8.2

III

Total funds raised.

Change in U.S. Government cash balance out-side Federal Reserve

Net funds raised

U.S. Government net of cash balance

Other sectors

State and local governments-BusinessHouseholds

Home mortgages.

Foreign

100.9

14.8

86.1

.3

85.8

7.445.128.1

15.6

5.2

Note.—Detail will not necessarily add to totals because of rounding.

Source: Board of Governors of the Federal Reserve System.

their money balances further in order to acquire other financial assets.Whereas earlier the restraint on bank lending could be made up by moreborrowing from other lenders who started the year with ample liquidity,this solution became more difficult as the year progressed. The tighteningof credit supplies affected borrowing on the open market as well as throughfinancial intermediaries. As a result, by the third quarter of 1969 totalfunds raised in credit markets, net of changes in Treasury cash at commercialbanks, were nearly 20 percent less, seasonally adjusted, than in the fourthquarter of 1968 (Table 1). Most of this decline came in the third quarter.

A dramatic turnabout was made, of course, by the Federal Government.On a seasonally adjusted net basis, it changed from a heavy borrower in thefirst half of 1968 to a moderate borrower through the first quarter of 1969,then to a substantial lender in the second quarter; in the third quarter itborrowed only a small amount on a net basis. As a result, even though thenet funds raised by all sectors declined in the second quarter of 1969, thenet funds raised by borrowers other than the Federal Government actually

34

increased. In the third quarter, however, when the Federal Governmentwas not active in the market on a net basis, borrowing of all other sectorsdeclined and, consequently, total net funds obtained fell sharply.

This restraint in the amount of credit being supplied occurred inthe face of an unusually strong private demand for credit. In addition tothe strong demand which ordinarily accompanies a high level of economicactivity, the expectation of more inflation acted as a further stimulusto borrowing. The fact that inflation had been accelerating since1965 intensified expectations of future price increases. Individuals andbusinesses, seeing an opportunity to invest in real assets that would be ex-pected to increase in money value with inflation, were eager to borrow inthe expectation of repaying with dollars of reduced purchasing power. Theywere willing to pay high interest rates because they believed that inflationwould substantially reduce the real cost of those rates. On a loan madeat the beginning of a year at an 8-percent interest rate and repaid at theend of a year in which prices have risen by 4 percent, the return on the loanin real purchasing power is, of course, about 4 percent.

In these circumstances interest rates would have risen even if the moneysupply had continued to rise rapidly, as happened in 1968. But the curtail-ment of monetary expansion in 1969, and the curtailment of the supply ofcredit that accompanied it, temporarily raised interest rates even more.Until the slowdown of monetary expansion could reduce economic expan-sion and lessen the expectation of inflation, an extraordinary demand forcredit would collide with a more restricted supply, and interest rates wouldsoar.

In fact interest rates did soar in 1969 (Chart 4). By the end of 1969, mostinterest rates had climbed around 4 percentage points above their 1965 level.One must consult records for the Civil War and earlier to find comparableinterest rates. And the steepness of the advance, on long-term as well asshort-term securities, may well have been unprecedented.

The high interest rates of 1969 substantially altered financial flows, inlarge part because legal ceilings put some borrowers at a disadvantage andshunted funds to unrestricted parts of the market. Ceilings on deposit in-terest rates were particularly important. The maximum interest rates thatbanks could pay on time and savings accounts and on certificates of deposithad not been changed since April 1968, while market interest rates increasedsharply. As a result, commercial banks could not compete, and largecertificates of deposit outstanding fell from $22.8 billion at the end of 1968to $14.7 billion at the end of June, and to $10.8 billion at year-end 1969.(The ceiling rates were adjusted upward in January 1970.)

The two other financial institutions subject to deposit-rate ceilings,mutual savings banks and savings and loan associations, also felt the compe-tition for funds. They experienced heavy withdrawals, and their net growthdeclined substantially. Time and savings deposits which the public held with

35

Chart 4

Interest Rates

PERCENT PER ANNUM12

10

SHORT-TERM

PRIME COMMERCIALPAPER

FEDERAL RESERVEDISCOUNT RATE

3-MONTH TREASURY BILLS(New Issues)

I I I , ' , , , , I I , l l l , | l l l l . l | , ., ,, I

1964 1965 1966 1967 1968 1969

12

10

LONG-TERM

FHA NEW HOMEMORTGAGES

CORPORATE Aaa BONDS(New Issues)

HIGH-GRADE MUNICIPAL BONDS(New Issues)

U.S. GOVERNMENT BONDS

0 ^ , I 1 | , ,, , 1 | , , n , 1 , ,, » , | , ,

1964 1965 1966 1967 1968 1969

SOURCES: TREASURY DEPARTMENT, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, FEDERALHOUSING ADMINISTRATION, MOODY'S INVESTORS SERVICE, AND STANDARD & POOR'S CORPORATION.

all deposit-type financial institutions grew by $33.1 billion in 1968 but de-clined by $20.5 billion at an annual rate during the third quarter of 1969.Life insurance companies also faced heavy demands for automatic policyloans, since the standard 5-percent rate on such loans became a bargain asother interest rates rose.

TABLE 2.—Changes in deposits and selected nondeposit sources of bank funds, 1968-69

[Billions of dollars]

Selected source of bank funds

Commercial bank time and savings deposits

Negotiable certificates of deposit _Other time and savings deposits _

Selected nondeposit sources of bank funds

Euro-dollar borrowing3

Direct foreign borrowing4

Commercial paper5 _ . . . .L o a n R P V

\

Change from preceding period

1968

22.2

2.819.4

0)1.8

0)

8

1969

-10 .8

-12 .01.2

13.0

7.01.74.2

.2

1969, not seasonally adjusted

1

- 0 . 4

- 4 . 03.6

II

- 2 . 6

- 3 . 5.9

210.2

3.6 3.62 1.021.2

2 . 8

III

- 6 . 3

- 3 . 6- 2 . 7

2.2

1.1.1

1.4- . 3

IV

- 1 . 5

- . 9- . 6

.6

- 1 . 3.5

1.6

1 Not available.2 Change during first half of 1969.s Bank liabilities to foreign branches.* Euro-dollars borrowed directly or through brokers and dealers, and liabilities to banks' own branches in U.S. terri-

tories and possessions.5 Paper issued by a bank holding company, affiliate, or subsidiary.« Loans or participations in pools of loans sold under repurchase agreements to other than banks and other than

affiliates or subsidiaries.


Commercial banks were able to offset deposit withdrawals at first bytapping other sources of funds. They borrowed more heavily in the Euro-dollar market, negotiated repurchase agreements of their loans with corpo-rations, and expanded commercial paper issued by subsidiaries and affiliates.In total, as shown in Table 2, banks raised about $10.2 billion by thesedevices during the first half of 1969.

Later in the year the Federal Reserve took steps to make the use of thesesources more expensive to banks. Most repurchase agreements had to betreated like deposits after August 27 and were thus subjected to reserverequirements and interest-rate ceilings. In effect, this prohibited their furtheruse. Euro-dollar borrowings above May levels were also subjected to reserverequirements beginning in September. Banks did not raise additionalfunds from these sources after midyear. Commercial paper sales continuedto grow, however, and provided $3.0 billion more in the second half.(Recent proposals, not yet effective, would bring these sales under eitherreserve requirements or interest rate ceilings, or both.) To meet heavydemands for loans, commercial banks also sold U.S. and municipal securities,depressing the bond market, and they traded actively in the Federalfunds market. With time deposits declining and nondeposit sources offunds quite costly, large commercial banks made the terms of their lend-

37

ing more restrictive, and the expansion of business loans slowed significantlyafter midyear.

The funds withdrawn from or not placed in banks or other financialinstitutions were not lost to the supply of credit. Funds returned by wayof the open market. This can be seen in the shift in the compo-sition of assets acquired by households and nonfinancial businesses. House-holds accumulated only $2.1 billion in money and savings deposits at aseasonally adjusted annual rate during the third quarter of 1969, far belowusual amounts, and diverted their savings increasingly into market instru-ments because of the much higher yields. They invested at an annual rate of$29.1 billion in all credit market instruments in the third quarter of 1969,well above any quarterly rate in recent years. Most of this was accountedfor by the purchase of $27.4 billion of U.S. Government and agency securi-ties. Nonfinancial corporations withdrew funds from time deposits at anannual rate of $12.3 billion in the third quarter of 1969 and purchased $13.3billion (annual rate) of commercial paper.

TABLE 3.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1968—69[Billions of dollars; seasonally adjusted annual rates]

Source or use of funds

Sources, total

Internal fundsCredit market instruments _ .

StocksBonds and mortgagesBank loans ___Other loans .

Trade debt and tax liability .Other liabilities

Uses, total

Acquisition of financial assets:Liquid assetsConsumer and trade creditOther assets . _ _

Capital expenditures-

Discrepancy (sources less uses) __ ___ . _

1968

1

109.9

59.125.7

1.316.43.74.4

18.96.2

102.7

13.716.91.4

70.7

7.2

II

101.3

63.926.6

- 618.36.72.2

2.97.9

93 4

8.410.4

- 2 . 3

76.9

8.1

III

110.5

65.331.1

- 1 . 918.09.85.1

6.08.1

104.7

13.518.5

- 3 . 5

76.2

5.7

IV

118.9

64.140.7

- 2 . 222.218.22.6

8.35.8

112.4

4.519.64.6

83.7

6.5

1969

1

118.0

62.938.7

.120.112.75.9

8.48.0

111.6

8.015.73.2

84.7

6.4

II

114.0

62.743.6

2.416.112.612.5

4.63.1

107.3

1.815.64.1

85.8

6.7

III

108.6

62.936.2

1.615.77.8

11.1

7.81.7

103.6

- 6 . 117.12.9

89.7

5.0



Businesses which could borrow on the open market were able to meettheir credit needs despite this shift in fund flows from financial intermediariesto credit market instruments. Although the third quarter of 1969 saw adecline in the funds raised by businesses in credit markets compared withthe second quarter, the total of funds raised represented an annual ratehigher than during most of 1968. Businesses expanded capital expendituressteadily during the first 3 quarters of 1969 despite little increase in thegeneration of funds internally and a decline in their borrowing from banks

38

(Table 3). They made up the difference in large part by selling liquidassets. In the third quarter, nonfinancial corporations sold liquid assets atan annual rate of $6.1 billion, whereas these corporations are typically netpurchasers of liquid assets, often by substantial amounts.

For the housing sector the job of tapping the open market to find thefunds no longer available through private financial intermediaries fell uponfederally sponsored agencies, chiefly the Federal National Mortgage As-sociation and Federal Home Loan Banks. These agencies stepped up theirsupport of the mortgage market substantially. Their annual rate of supportfor residential and farm mortgages, furnished either directly by purchasesof mortgages or indirectly through loans to savings and loan associations,increased from $3.0 billion in all of 1968 to a $10.3 billion annual rate in thethird quarter of 1969. This represented 47 percent of the total supply ofnoncommercial mortgages, as compared with 14 percent in 1968. Despitethis increased assistance, the growth of total mortgage credit declined inthe fourth quarter.

The support of mortgages by federally sponsored agencies was financedby issuing securities, which competed with other financial assets and to someextent depleted private sources supplying the mortgage market. Total issuesof sponsored Federal credit agencies, made mainly for mortgages, rose from$3.2 billion in 1968 to a $12.3 billion annual rate in the third quarter of 1969.

The largest and earliest decline in net funds raised outside of the FederalGovernment was experienced by State and local governments. By the thirdquarter their acquisition of credit was one-fourth below the 1968 rate. ManyStates and localities were prevented from borrowing in 1969 by legalceilings on the interest rates they could pay. Also, during parts of the yearthe market was disturbed by uncertainty about possible changes in thetax status of State and local securities in addition to heavy selling of thesesecurities by commercial banks.

THE DEMAND FOR OUTPUT

The policies of fiscal and monetary restraint and the associated creditstringency, described earlier, affected the behavior of the economy byslowing down the total demand for output.

Total expenditure for goods and services (gross national product orGNP) rose $67 billion from 1968 to 1969, when it reached $932 billion.This was an increase of 7.7 percent as compared with the 9.1 percent risefrom 1967 to 1968 (Table 4).

A major factor in the slower growth of spending was the slower increaseof Federal purchases, mainly for defense. In fact, GNP other than Federalpurchases rose as much in 1969 as in the preceding year. The mostmarked shift within the non-Federal total was the much larger increase inbusiness fixed investment and the much smaller increase in residentialconstruction than had occurred in the preceding year. These movementswere at least partly related. The large absorption of funds to finance business

39

TABLE 4.—Changes in gross national product and components, 1968—69


Component

Change from preceding period

1968

72.2

8.8

63.4

11.4

10.4

5.15.2

44.3

- 2 . 7

- . 1

19691

66.6

2.5

64.1

12.0

12.5

10.52.0

39.4

- . 4

.7

1969,<

1

16.2

- . 3

16.5

3.7

5.2

3.81.4

11.3

.3

- 3 . 9

easonally adjusted annualrates

II

16.1

- 1 . 0

17.1

3.8

1.9

2.5- . 6

10.8

.1

.3

III

18.0

2.6

15.4

1.5

2.0

3.3- 1 . 3

7.0

1.1

3.8

IV i

10.3

- . 5

10.8

2.4

2.0

1.9.2

9.4

- . 1

- 2 . 9

Gross national product

Federal Government purchases

Non-Federal purchases

State and local government purchases.

Fixed investment

NonresidentialResidential structures..

Personal consumption expenditures.

Net exports of goods and services._.

Change in business inventories

1 Preliminary.


Source: Department of Commerce.

investment, together with tightening monetary conditions, meant that lessfunds were available to finance residential construction. Monetary restraintalso had some effect on State and local government purchases, which none-theless continued to rise at a much higher rate than GNP.

The main categories of GNP other than Federal purchases and netexports are reviewed below. Exports and imports are discussed in Chapter 5.

Fixed Investment by Business

Business demand for plant and equipment was strong throughout 1969and offered stubborn resistance to restraint even though the rate ofexpansion moderated within the year. The 12-percent increase in invest-ment over that of 1968 was the eighth annual advance in a row, markingthe longest sustained increase since before World War I. However, business-men spent less than they had anticipated in the February 1969 Commerce-SEC annual survey of investment plans.

The rise in investment during 1969 was an extension of a recovery thatstarted haltingly in late 1967 and early 1968 but gathered momentum fromthe upsurge in sales and profits in the first half of 1968. The surtax on cor-porations resulting from the passage of the tax increase in mid-1968 did notseem to have much impact on the developing investment expansion, per-haps in part because the tax rise was small and was expected to be tem-porary. During the second half of 1968, the financing of these programs wasfacilitated when the monetary authorities shifted to an easier policy and theFederal deficit declined sharply, making additional funds available for the

40

private sector. At the end of 1968 businessmen projected for the first half of1969 one of the largest half-year increases ever recorded in the Commerce-SEC survey.

Several influences that should have inhibited business investment emergedin 1969, although at best they served only to slow down the increase in thesecond half. They included the shift to monetary restraint and the rapid risein interest costs; the tapering in the expansion of demand and output,and the emergence of excess plant capacity in a number of industries; thedecline in book profits after the second quarter; and the proposed repealof the investment tax credit announced on April 21, 1969, although thismove could not have greatly affected spending until late in the year becauseof the sizable backlog of equipment orders that existed in mid-April. In anyevent, speculation that the termination of the investment tax credit might bein the Administration's proposals led to an upsurge in order placementsimmediately prior to April 21, as businessmen acted to take advantage of thecredit while it was still allowed.

Although their spending fell somewhat short of expectations in the firsthalf of the year, businessmen forged ahead with their investment programsas 1969 progressed. New appropriations by manufacturers and new projectsstarted by manufacturers and public utilities rose through the third quarter.And at the end of 1969, businessmen reporting in the Commerce-SEC surveywere once again projecting a substantial increase in expenditures in thecoming year.

The industrial composition of investment provides a clue to the strength ofbusiness investment. Over the past few years the demand for capital goods byelectric and gas utilities and telephone companies has been exceptionallystrong. In contrast to other groups, investment in these industries has in-creased steadily and substantially each year. Several successive years ofsharply rising demand have strained facilities, and the service failures thathave appeared in particular areas have accentuated the need for additionalcapacity. High interest rates have not seriously deterred these industriesfrom investment because they must meet demands for service and becausethe regulatory authorities permit such cost increases to be reflected in higherrates. Actual spending by these firms rose sharply in 1969, and their plannedspending is a major source of strength in the near-term investment outlook.

Housing

Housing in 1969 showed the effects of disrupted capital markets andhigh interest rates. Private nonfarm housing starts, at about 1.45 millionunits for the year as a whole, were unchanged from 1968, but they declinedirregularly from an early 1969 peak. Expenditures for the full year were 6^4percent greater than in 1968, but the increase was due almost entirely tohigher prices. During the year, private housing outlays declined 6.7 percent(annual rate) from the first to the fourth quarter, and this decline was amajor reason for the dampening in the rise of aggregate demand.

41

Homebuilding never did recover fully from the effects of the creditstringency of 1966. The housing upturn in 1967 came to a temporary haltin the first half of 1968 because of rising interest rates. Since housing startsfrom 1966 to 1968 fell considerably below the number needed to satisfy therequirements created by new households and the replacement of obsoleteunits, a substantial backlog in demand built up. Vacancy rates continued tobe low, prices for new and existing homes recorded sharp increases, and rentsrose at an accelerated rate.

In the second half of 1968, the somewhat easier credit market conditionsthat followed enactment of the surtax led to a pronounced pickup in privatenonfarm starts. From a seasonally adjusted annual rate of 1.4 million units inthe second quarter of 1968 they rose to 1.7 million in the first quarter of1969. However, this upsurge in starts was also short lived. The slower mone-tary growth near the beginning of 1969 was followed by a further rise inwhat were already high interest rates. Some lending institutions shifted frommortgages to more lucrative investments, and most experienced much lessfavorable savings flows. The further sharp tightening by the monetaryauthorities after mid-1969 hampered housing. As was indicated earlier, thethrift institutions, which are important in mortgage financing, were handi-capped in their attempt to compete for savings. These institutions experi-enced large outflows of savings because depositors sought the higher yieldsavailable on market securities. After starts had fallen to a 1.5 million unitrate in the second quarter, they declined to 1.4 million units in the third and1.3 million in the fourth.

Partly in an effort to support homebuilding, the Administration tookseveral steps to alter supply and demand conditions in ways that would curbinflationary trends in construction (including the homebuilding industry).Early in the year, lumber and plywood prices rose sharply as a result of tightsupply conditions and the expectation of further tightness. The Governmentcurtailed its own purchases and initiated measures to increase the supply oftimber from the national forests. These actions played a part in the sharpretreat of lumber and plywood prices from their speculative peaks.

Increases in construction wage rates were very pronounced in 1969, withcollective bargaining agreements commonly calling for rises in excess of 12percent per year for 2 or 3 years. These increases and the consequent ad-vances in costs made it even more difficult to sustain an already weak resi-dential construction industry. Moreover, building such large wage increasesinto costs for future years raised the danger that the entire construction in-dustry would be left stranded by excessive costs when inflation abated. Therewas also concern that the exceptional wage increases in this industry wouldset an example that might be followed in other industries.

On September 4, the President announced a program to attack the in-flationary aspects of construction wage settlements.

1. The Federal Government would cut new contracts for direct Federalconstruction by 75 percent, with the cut to continue until conditions eased

42

in the economy or in the construction industry. If that limitation were toremain in effect through fiscal 1970, it would reduce contract awards by $1.8billion.

2. State and local governments were requested to cut their new construc-tion contracts voluntarily. If not enough voluntary restraint was forthcoming,the Administration would consider a reduction in Federal grants for con-struction.

3. Private business was requested to cooperate in restricting nonresiden-tial construction.

4. The Departments of Labor and of Health, Education, and Welfare weredirected to apply more of their manpower training programs to increasingthe number of skilled construction workers.

5. A Cabinet Committee on Construction, headed by the Chairman of theCouncil of Economic Advisers, was established to develop long- and short-range programs for analyzing problems in the construction industry.

On September 22, the President established a tripartite Construction In-dustry Collective Bargaining Commission to consider solutions to a numberof labor-management and manpower problems in the industry, includingproductivity, seasonally, settlement of disputes, and the training of labor.

Consumer Income and Spending

Personal income rose $59 billion, or 8.6 percent, from 1968 to 1969 (Table5). There were large increases in payrolls and incomes from property, andstill larger percentage rises in transfer payments (such as payments for SocialSecurity, Medicare, and veterans benefits).

Personal taxes rose last year by $20 billion, or 20 percent, an even greaterincrease than from 1967 to 1968, when the surtax went into effect. Last year

TABLE 5.—Changes in personal income, taxes, and saving, 1967—69

Period

196719681969 2

1967: Second half

1968: First halfSecond half

1969: First half...Second half2

Change from preceding period (billions of dollars)

Personalincome

42.258.559.2

Personaltax andnontax

payments

7.515.019.6

Disposablepersonalincome

34.643.539.6

Personalconsump-tion ex-

penditures

26.044.339.4

Personalsaving l

7.9- 2 . 0- . 8

Seasonally adjusted annual rates

21.5

32.031.4

28.829.3

4.4

5.913.8

11.62.2

17.0

26.217.6

17.326.9

13.8

26.222.4

19.617.1

3.1

—.8- 5 . 5

—2.79.5

Saving ratefor period(percent)

7.46.56.0

7.5

7.15.9

5.36.6

andDisposable personal income less personal outlays (personal consumption expenditures, interest paid by consumers,I personal transfer payments to foreigners).

Preliminary.



43

was the first full year of the surtax; for this reason surtax liabilites werehigher, rising from 7/2 to 10 percent. In addition, 1969 tax payments wereunusually high because of the underwithholding of taxes in 1968. Becauseof the substantial increase in taxes, personal disposable (after-tax) incomerose only 6.7 percent, the smallest percentage advance in 6 years.

Consumer spending rose more rapidly than disposable income from 1968to 1969. The pattern of consumer expenditures within the year was par-ticularly interesting for the light it threw on the impact of the surtax. Whenthe surtax was imposed in mid-1968, it was recognized that some of itseffects might be offset if consumers decided to reduce their rate of saving.For reasons that are still not entirely clear, the rate of saving had beenrather high for almost 2 years before the tax increase was enacted.Furthermore, there was always the possibility that consumers mightbe slow in adjusting their expenditures to an anticipated change in dis-posable income, especially if they regarded the surtax as temporary. Asit turned out, consumers did reduce their rate of saving—but to an extentthat was much greater than anticipated.

The imposition of the tax had little immediate impact on consumerspending. In the third quarter of 1968, spending rose sharply, and the savingrate fell; not until the fourth quarter did spending show signs of slowingdown. At the start of 1969, many analysts counted on the slowdown in con-sumer spending that had finally emerged in the fourth quarter of 1968 tocontinue in the first half of 1969, particularly since consumers had heavy taxpayments to make on their 1968 liabilities and since Social Security taxeswere increased at the start of the year. In fact, however, consumer spendingrose sharply in both the first and second quarters, despite the slow expansionin disposable income. The personal saving rate fell to exceptionally lowlevels. Helping to explain the high rate of spending relative to disposableincome in 1968 and 1969 was the rapid monetary expansion and the sub-stantial accumulation of liquid assets that preceded these 2 years.The liquidity of households increased at very rapid rates throughout 1967and 1968. The process of attempting to adjust these liquid asset holdings tonormal levels may have contributed to the heavy consumer spending in 1968and the first half of 1969, as it did in the case of business investment.

During the second half of 1969, increasing concern over the economicoutlook, which showed up in a number of surveys of consumer sentiment,was reflected in a more subdued pace of consumer spending and a risein the saving rate. Spending for durable goods edged down, bringing to ahalt a rise that had started in the summer of 1967. Auto purchases showedconsiderable weakness late in the year, as a result of which auto producersmade substantial cuts in production.

State and Local Purchases

State and local government purchases, with a 12-percent increase, showedthe largest percentage advance of any of the major demand components in

44

1969. The somewhat slower rise as compared with the increases from 1966to 1968 was the result of credit tightness. Several State and local jurisdic-tions either found it impossible to sell securities because of statutory ceilingson interest rates or decided to postpone new bond issues because of high rates.Hardest hit was construction, which accounts for about one-fourth of Stateand local government purchases, and which rose very little after annual in-creases of about 10 percent in the 3 preceding years. The Administration'srequest to State and local governments in September to curb constructioncame too late in the year to influence 1969 outlays significantly.

Inventory Investment

Investment in business inventories totaled $8 billion last year—aboutas much as the year before. Businessmen tended to be cautious intheir inventory policies, possibly because of the high cost of borrowed moneyand uncertainties over the sales outlook. Accumulation was moderate inthe first half, but during the third quarter there was some evidence thatunwanted stocks were piling up. However, the actual rate of accumulationapparently fell in the final quarter as steps were taken to adjust production.A good part of the swing in inventory accumulation centered in the auto-mobile industry.

SHARES IN THE NATIONAL INCOME

The value of the Nation's production can also be measured by the na-tional income, which is obtained by adding up all of the incomes earned incurrent production—wages and salaries, corporate profits, proprietors' in-comes, net interest, and rental incomes of persons. Since incomes are the fac-tor costs of production, an analysis of them is particularly instructive in atime of inflation. It provides a useful backdrop for the discussion of the labormarket, profits, and prices that follows.

The 1969 rise in employee compensation, approximately 10 percent,matched the large increase from 1967 to 1968. The combination of higheremployment and substantial increases in rates of pay resulted in the largestpercentage increase in private payrolls since 1951. Government payrollsgrew less rapidly than in the preceding year, mainly because the growth inemployment slowed. The slowdown in military payrolls was especiallypronounced because for the first time since 1965 the size of the ArmedForces showed no increase. The rise in Federal civilian employment wasdeliberately held down as a measure of restraint. Growth in State and localgovernment employment remained substantial, but its rate of increase fellfor the third year in a row.

In 1969, the national income accounts measure of corporate profits (thatis, adjusted to exclude inventory profits) was slightly above the 1968 total.However, according to preliminary data, profits declined in each quarterof 1969, continuing a movement that started in late 1968. Book profits (in-cluding inventory profits) made a better showing in 1969 than the national

45372-111 O—70 4

income version; the rise from 1968 came to $3 billion, bringing the total tomore than $94 billion. After-tax profits rose $1 billion to a new peak, therepeal of the investment tax credit adding $% billion to 1969 tax liabilities.Corporations increased dividends more than after-tax profits rose so thatundistributed profits edged down.

Both farm and nonfarm proprietors experienced increased incomes in1969. Large increases in farm prices helped raise the total net income of farmproprietors by $1.5 billion. Last year's income of about $1-6 billion wasthe same as the 1966 total, which in turn was the highest since 1948.Cash receipts from marketings of livestock and livestock products werebolstered by a 12-percent price rise that reflected a continued increase inconsumer demand for meat coupled with only moderate increases in marketsupplies and in imports, which are limited by voluntary restraints. In thecase of crops, however, another record harvest, combined with big carryoversof grains and soybeans, resulted in a 3-percent decline in prices. DirectGovernment payments totaled about $3% billion last year, up $5/3 billionfrom 1968. They accounted, as in 1968, for 6 percent of the cash receiptsfrom farm marketings.

Inflation had an important effect on farm expenses as well as on receiptslast year. Prices were higher for all major inputs except fertilizers. Sharpincreases were recorded for farm wage rates, which were up 10 percent from1968. Because the number of hired farmworkers dropped, however, total cashwages showed an increase of 6 percent over the 1968 figure.

THE LABOR MARKET

The pressures of excess demand that the economy has experienced mostof the time since 1966 have been nowhere more evident than in the labormarket. The tight market that prevailed during most of 1969 showedup in many different ways. For the year as a whole, the unemployment ratewas the lowest since 1953. In response to the heavy demand for workers,there was an abnormally large increase in the civilian labor force; the num-ber of persons employed rose by 2 million to a record 77.9 million. Theworkweek remained long. Wage rates continued their rapid advance, andthe rise in productivity came to a halt. Within the year, labor demand wasless intense in the second half than in the first.

Employment

The increase of 2 million persons in the civilian labor force was not onlysome 600,000 greater than the average rise of the 5 preceding years, but itwas the largest since 1946-47, after the demobilization of the Armed Forces.With their unemployment rates extremely low and labor force participationrates already high, adult men accounted for a significantly smaller propor-tion of the increase in total employment than in the 2 preceding years. Adultwomen and teenagers, apparently attracted by the ease of finding jobs, ac-

counted for about three-fourths of the employment rise, a much larger pro-portion than in 1967 and 1968, when employment increases were not sogreat (Table 6). A large proportion of the jobs that women and youngpersons found last year were part-time jobs, which have been growing inimportance over the past several years.

TABLE 6.—Changes in civilian employment and distribution of change, 1965—69

Year

Change from preceding year

Totalemployment

Both sexes16-19 years

Females20 yearsand over

Males20 yearsand over

Thousands of persons

1965.1966.1967.1968.1969.

1,7831,8071,4771,5481,982

520685

-3998

337

727877890884

1,116

536245626566529

Percentage distribution of change

1965..1966.1967.1968.1969.

100.0100.0100.0100.0100.0

29.237.9

-2 .66.3

17.0

40.848.560.357.156.3

30.113.642.436.626.7

Note.—Detail will not necessarily add to totals because of rounding.Source: Department of Labor.

The long-term downward trend in agricultural employment, which hadslowed markedly in 1967 and 1968, accelerated in 1969. All of the major in-dustry divisions in the nonagricultural sector recorded employment in-creases, but most of the gains were outside manufacturing, increases in con-struction and retail trade being especially noteworthy. The rise in manufac-turing employment was moderate, far below the advances in 1965 and 1966when the buildup for the Vietnam War was underway.

Unemployment

The average number of persons out of work in 1969 was almost the sameas in 1968, and the unemployment rate edged down from 3.6 percent to3.5 percent of the labor force. Most groups experienced decreased rates. Theshortage of adult male workers, who account for nearly 60 percent of totalemployment and constitute the mainstay of the labor force, was especiallyevident last year. Their unemployment rate fell from 2.2 to 2.1 percent—the lowest for any year in the postwar period. Last year's 12.2 percent ratefor teenagers was the lowest since 1957, and the 6.4 percent rate for Negroesand other nonwhite races combined showed a decline. Decreases occurred inthe relatively unskilled occupations, but they were also significant amongcraftsmen and foremen (Table 7).

47

TABLE 7.—Selected unemployment rates, 1961 and 1965-69

[Percent]

Group of workers

All workers.

Sex and age:Both sexes 16-19 years....Men 20 years and over

Women 20 years and over-

Race:WhiteNegro and other racesSelected groups:White collar workers.Blue collar workers. _

Craftsmen and foremen.OperativesNonfarm laborers

Private wage and salary workers in nonagriculturalindustries..

Construction...Manufacturing.

1961

6.7

16.85.76.3

6.012.4

3.39.2

6.39.614.7

7.5

15.77.7

1965

4.5

14.83.24.5

4.18.1

2.35.3

3.65.58.6

4.6

10.14.0

1966

3.8

12.82.53.8

3.47.3

2.04.2

2.84.37.4

3.8

8.13.2

1967

3.8

12.82.34.2

3.47.4

2.24.4

2.55.07.6

3.9

7.43.7

1968

3.6

12.72.23.8

3.26.7

2.04.1

2.44.57.2

3.6

6.93.3

1969

3.5

12.22.13.7

3.16.4

2.13.9

2.24.46.7

3.5

6.03.3

Source: Department of Labor.

Although the demand for labor was strong through the year, it showedsome easing as the year .progressed, notably after midyear. In nonfarmestablishments, employment increases, which had averaged 700,000 perquarter in the first half, fell to 300,000 per quarter in the second half. Thelength of the workweek in private nonfarm industries fell noticeably in thefinal quarter after remaining high and remarkably steady through Septem-ber. The unemployment rate rose from 3.3 percent in the first quarter to 3.5percent in the second and edged up further in the second half, showing littlechange, on average, from the third to the fourth quarter (Chart 5).

Productivity Changes

Output per man-hour for all employees in the private nonfarm sectorrecorded no change from 1968 to 1969. This was the poorest performancefor productivity growth since the mid-1950's. The absence of comprehensiveand detailed data makes it difficult to specify the reasons for this poorshowing. The explanation probably involves two factors which differed inimportance from industry to industry and time to time. One is that theslower rate of increase of demand and output itself limited the gains of pro-ductivity. Employers not only retained staff, technical, and other "overhead"workers as they usually do; they also expanded their work forces despitethe slower sales rise in order to be prepared for a future higher level ofdemand. The consequence of combining this with slow growth of currentoutput was a poor performance of output per man-hour. The otherexplanation is that productivity was limited by the shortage of labor, as evi-denced by the low unemployment rates, especially for experienced workers.Employers were forced to turn to marginal workers such as teenagers andhousewives, most of whom have relatively little work experience and a lower

Chart 5

PERCENT*

10

Unemployment Rate

SEASONALLY ADJUSTED

0 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I

1953 55 57 59 61 63 65 67 69

•UNEMPLOYMENT AS PERCENT OF CIVILIAN LABOR FORCE.SOURCE: DEPARTMENT OF LABOR.

than average rate of productivity. Probably also as a result of labor shortage,absenteeism and turnover were both unusually high, which depressed pro-ductivity. Finally, under the conditions that prevailed in 1969, delays inthe delivery of materials and equipment were common, especially in thecapital goods sector, and production schedules were hard to maintain, atleast through the summer.

Wage Changes

Since the demand for labor in recent years has been strong in relationto supply at existing wage rates, labor has been in a position to winlarge gains in hourly compensation. During this period, the rapid risein living costs and expectations of further increases in the cost of living haveadded to labor's wage demands. Employers have bid up wages because oftheir own expectations that higher costs could readily be passed on in theform of higher prices.

Increases in average hourly earnings, excluding fringe benefits, were againvery large in 1969 (Table 8). In construction and mining, where the de-mand for labor was extremely strong, hourly earnings showed their sharpestgains since 1951. In manufacturing, where the increase in labor demandwas more moderate, the rise in earnings fell a little short of the increases in1968.

49

TABLE 8.—Increases in average gross hourly earnings of private nonagricultural production ornonsupervisory workers since 1960

Industry

Percentage change per year

1960to

1964

1964to

1965

1965to

1966

1966to

1967

1967to

1968

1968to

19691

Total private 2..

MiningContract construction.Manufacturing

Durable goodsNondurable goods..

Wholesale and retail trade..

Wholesale trade.Retail trade

Finance, insurance, and real estate.

3.1

1.93.62.9

2.82.8

3.5

3.03.6

3.3

3.8

3.94.23.2

3.03.1

3.6

3.64.0

3.9

4.5

4.55.14.2

3.93.8

4.9

4.64.9

3.3

4.7

4.65.74.0

3.44.9

5.2

5.55.2

4.5

6.3

5.07.16.4

6.36.6

7.1

5.97.5

6.6

6.7

7.28.46.0

6.06.2

6.7

5.96.5

6.2

* Preliminary.2 Includes transportation and public utilities and services, not shown separately in this table.Note.—Data relate to production workers in mining and manufacturing, to construction workers in contract construe-

tion, and, generally, to nonsupervisory workers in all other industries.


TABLE 9.—Wage and benefit decisions, 1965-69

Measure

Major collective bargaining situations: 2

Wage and benefit changes (packages):Equal t imings.. .Time weighted (actual timing)^

Negotiated wage-rate increases averaged over life ofcontract:

All industries

ManufacturingNonmanufacturing.

Negotiated first-year wage-rate increases:All industries

ManufacturingNonmanufacturing.

Wage increases in manufacturing:

All establishments _

Union establishmentsNonunion establishments-

Median annual rate of increase in decisions reached in—

1965

3.3(5)

<»3.3

83.9

4.13.7

3.7

3.64.0

1966

4.04.7

3.9

3.83.9

4.8

4.25.0

4.2

4.14.4

1967

5.25.5

5.0

5.15.0

5.7

6.45.0

5.3

5.55.0

1968

6.06.6

5.2

4.95.9

7.2

6.97.5

6.0

6.55.0

19691

7.48.2

7.1

5.98.8

8.3

7.110.5

76.2

76.975.8

1 Preliminary.2 Except for packages, data are for contracts affecting 1,000 workers or more. Package cost estimates are limited to settle-

ments affecting 5,000 workers or more (10,000 in 1965). The package cost of a few settlements affecting relatively fewworkers has not been determined.

3 Based on estimated increases in hourly costs at end of contract period and assumes equal spacing of wage and benefitchanges over life of contract.

* Takes account of actual effective dates of wage and benefit changes.* Not available.6 Based on settlements affecting 10,000 workers or more.7 Data not available for year 1969; data apply to first 9 months of 1969.Note.—Possible increases in wages resulting from cost-of-living escalator adjustments (except those guaranteed in the

contracts) were omitted.


Although 1969 was not a year of collective bargaining agreements on anextensive or major scale, the increase in wage rates and benefits won byunions was considerably above their gains in 1968. Pay raises were not onlymuch larger in nonmanuf acturing industries than in manufacturing—as wastrue in 1968—but the acceleration in comparison with that in the preced-ing year was also much greater in nonmanuf acturing (Table 9). As inearlier years, "front-end loading" was common last year. This is the prac-tice of concentrating a pay raise in the first year of a contract covering morethan 1 year. It reflects attempts by unions to make up quickly for the erosionof prior wage gains because of rising living costs.

The combination of higher hourly compensation and no rise in pro-ductivity resulted in a 7-percent rise in labor costs per unit of output—the sharpest annual advance for employees in the private nonfarm sectorsince 1951. It was far above the preceding year's rise of 4 percent because ofthe pronounced difference in productivity performance (Chart 6). The risein unit labor costs continued throughout the year.

PRICE MOVEMENTS

As a result of last year's pressures in the economy, all major price indi-cators—the comprehensive GNP price deflator, the consumer price index(CPI) and the wholesale price index (WPI)—rose more rapidly than inany year since 1951. Changes in GNP deflators by sector are shown in Table10 while changes in the CPI and WPI are shown in Table 12.

The rise in the GNP deflator was intensified by the sharp advance in farmprices and by continued large increases in pay scales for Government workersand members of the Armed Forces. Although the price rise for the privatenonfarm business sector (which produces about five-sixths of the GNP) wassmaller than for the GNP as a whole, it represented a significant stepup overthe preceding year's change.

TABLE 10.—Changes in implicit price deflators for GNP, by sector, 1965-69

Producing sector

Gross national product . .

Private

Business _.

Nonfarm . . . .Farm

Households and institutions

General government

1965to

1966

2.7

2.6

2.4

2.011.5

4.9

5.1

Percentage change

1966to

1967

3.2

2.9

2.8

3.2- 7 . 5

6.6

5.6

1967to

1968

4.0

3 6

3.5

3 53 8

7 7

7.6

1968to

19691

4 7

4 S

4.5

4.37.4

4 ?

7.0

1 Preliminary.


Chart 6

Changes in Compensation, Productivity,Labor Costs, and Prices

Private Nonfarm Sector

PERCENTAGE CHANGE PER YEAR10

I960 TO 1965

10

5

0

10

1965 TO 1966

1966 TO 1967

10

5 -

10

5 -

-5COMPENSATIONPER MAN-HOUR

OUTPUT PERMAN-HOUR

UNIT LABORCOST

NOTE.-DATA RELATE TO ALL EMPLOYEES.SOURCES: DEPARTMENT OF LABOR AND DEPARTMENT OF COMMERCE.

1967 TO

-

i1968

1mmmm •1

1968 TO 1969

-

HH • •PRICES

Some insight into price movements in the nonfarm business sector is pro-vided by Table 11, which shows for nonflnancial corporations the composi-tion of price change in terms of changes in its components—costs and profitsper unit of output. These data link the various income flows such as wagesand profits with real output. Costs and profits per unit of output are derivedby dividing each cost aggregate and aggregate profits measured in currentdollars by real output measured in 1958 prices throughout the period. Thesum of the costs and profits per unit equals price per unit, which is the de-flator for nonflnancial corporations. (As indicated in the table, for example,the price of a unit of output thus measured rose 4.1 cents from 1968 to 1969.)

Labor cost is the single most important component of price; in the periodfrom 1965 through 1969, its relative importance varied from 621/2 to 65 per-cent of price. All other costs combined—depreciation, indirect business taxes,and net interest—accounted for about 20 to 21 percent of price while profits(including the inventory valuation adjustment) accounted for the remainder.

Last year, as in 1966 and 1967, increased labor costs per unit of outputwere almost equal to the rise in prices. Depreciation, indirect business taxes,and net interest also added small amounts>to the price rise. However, busi-nessmen were only partly successful in translating unit cost increases intohigher prices, and consequently profits per unit of output edged lower. Thisdiffered from the experience from 1967 to 1968, a period of very rapidincrease in demand, when the price advance was accompanied by largerunit profit margins.

T A B L E 11.—Changes in current dollar costs and profits per unit of real output of nonfinancialcorporations since ,1960

[Dollars per unit of real output]

Item 1960-65average

.007

-.002.003.006

1965to1966

—

018

018001001

1966to1967

.030

.028

.014-.013

1967to1968

030

017007007

1968to

19691

Total price-

Labor costs..Other costs2.Profits 3

.041

.038

.011- . 0 0 8

1 Preliminary.2 Capital consumption allowances, indirect business taxes plus transfer payments less subsidies, and net interest.3 Before tax and including inventory valuation adjustment.Note.—Detail will not necessarily add to totals because of rounding.Source: Department of Commerce.

Although the price rise was substantial throughout 1969, the characterof the rise appeared to be undergoing a transition some time late in the year.Unit costs continued to increase rapidly. With real output growing moreslowly, aggregate overhead costs became increasingly burdensome. Butdemand pressures, which had been the dominant element in the price riseearlier in the year, diminished, making it more difficult for business fullyto recoup cost increases through higher prices. However, the further narrow-ing of unit profit margins did not prevent prices from rising sharply at theend of the year.

53

Wholesale and Retail Prices

Large increases in wholesale prices of farm products and foods and wide-spread advances in industrial prices brought about a 4.0-percent rise inwholesale prices from 1968 to 1969, considerably more than the 2.5-percentrise from 1967 to 1968 (Chart 7). All of the main parts of the industrialcomponent increased, and for most the rises were greater than they had beenfrom 1967 to 1968. Increases were considerably above average for metals andmetal products, amounting to almost 6 percent, as a result of large increasesin steel and nonferrous metals prices. Prices of lumber and wood productsrecorded a rise of 11 percent from 1968 to 1969 after a 13-percent advancefrom 1967 to 1968.

TABLE 12.—Changes in wholesale and consumer prices, J966—69

Commodity or item group

Wholesale prices: All commodities.

Farm productsProcessed foods and feeds . .Industrial commodities

Consumer prices: All items

FoodNonfood commoditiesServices

Consumer prices: All items.

Food...Nonfood commodities _Services. _

1966

3.3

7.35.92.1

2.9

5.01.33.8

Percentage change (annual rate) over preceding period

1967

0.2

- 5 . 6- 1 . 2

1.5

2.8

.92.54.4

1968

2.5

2.52.12.5

4.2

3.63.75.2

1969

4.0

6.25.03.4

5.4

5.24.27.0

1

1969

II III

Unadjusted

6.4

12.25.75.6

5.0

4.02.57.5

5.3

4.04.67.5

5.1

14.411.52.9

6.9

6.76.48.2

2.9

.77.62.2

5.8

10.42.46.6

Seasonally adjusted

6.9

7.05.68.3

5.5

6.63.16.6

4.3

3.31.35.1

5.7

3.86.26.5

5.7

7.54.16.8


Industrial prices rose at a very rapid rate early in the year, showed adeclining rate of increase in the second and third quarters, and then acceler-ated again in the final quarter, when prices advanced at an annual rate of 5.1percent. This movement through the year was distorted to some extent bythe behavior of lumber and wood products prices, which rose very rapidlythrough March and thereafter declined 18 percent, falling back almost tothe level of the preceding year. That decline followed from a weaken-ing in demand as a result of the downturn in housing starts and from specialefforts undertaken by the Administration to improve supplies. The exclu-sion of the lumber and wood products component from the industrial aver-age would reduce the first quarter increase and raise the second and third.On this basis, the increases in the first three quarters would be about thesame while the fourth quarter would represent a peak for the year.

54

Chart 7

PERCENTAGE CHANGE

Price Changes

63 65 67 69

1955 57 59 61 63 65 67 69

WHOLESALE PRICE INDEX, TOTAL

1955 57 59 61 63 65 67 69

4

2

0

-2

WHOLESALE PRICE INDEX, INDUSTRIALS

m mV77A

1955 57 59 61 63 65 67 69

SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.

55

The consumer price index rose 5.4 percent in 1969 following a 1968 ad-vance of 4.2 percent and increases of just under 3 percent in 1966 and 1967.All of the broad components registered sizable advances, the largest—7 per-cent—being in services. However, the acceleration in relation to the 1968record was attributable almost wholly to food (5.2 percent in 1969 as com-pared with 3.6 percent in 1968) and housing (6.4 percent in 1969 ascompared with 4.2 percent in 1968).

Consumer prices rose rapidly throughout the year. The increase waslargest from the first to the second quarter, when it came to an annualrate of almost 7 percent. However, the rise subsided a little in the thirdand fourth quarters.

# # #

By the end of 1969, the first signs that the inflationary tide was nolonger rising had begun to appear. They had been slow in coming. Strongexpectations of inflation, an abundant supply of liquidity when the yearopened, and poor productivity performance all contributed to the delay inthe response to anti-inflationary policy. But there was enough responseto indicate that if the policy was continued the desired results would beachieved. The steadfastness of policy would be tested in 1970.

CHAPTER 2

Stabilization Policy for 1970 and Beyond

POLICY AND OUTLOOK FOR 1970

E YEAR 1970 OPENS with total demand slowed down substantially-*- and real output approximately stable, but with prices still rising rapidly.

The objectives of policy for 1970 are to reduce the rise of prices and to revivethe growth of output. These objectives are difficult to reconcile. Measuresthat would most quickly revive the growth of real output would almostcertainly accelerate the rise of prices. Measures that would assure the mostrapid stabilization of the price level would almost certainly force a sharpcontraction of production and employment. But there is a path of moderateexpansion of demand which will yield both a decline of the rate of inflationand a resumption of growth of output. The task of economic policy in 1970is to achieve that path.

The path of the economy in the early part of 1970 is already largelydetermined. Policy actions taken in the first few months of the year willprobably not have much immediate effect. However, the course of the econ-omy later in the year will depend heavily on policy actions still to be taken.The policy problem for 1970 is to take actions in the first half of the yearwhich will place the economy on the sustainable path of moderately risingoutput and significantly declining inflation in the second half. This desirablepath will also be the probable path if the policy needed is correctly identifiedand carried through.

THE POLICY OBJECTIVES FOR 1970

Although the course of the economy in the early part of 1970 is alreadylargely determined, this is not to say that it is already known. In fact, even forthe next few months there are considerable uncertainties. A continued slowrise of money gross national product (GNP) at about the annual rateof the fourth quarter of 1969 seems likely. The very small monetary expan-sion of the second half of 1969 may portend an even slower rise of GNP.If this were about to occur in the months immediately ahead, however,clearer evidence might already have been expected in developments such asnew orders for durable goods, which reflect the intermediate processes be-tween changes in the money supply and changes in GNP.

With continued slow increase of GNP in the early months of 1970 thegrowth of real output would remain close to zero, and there should be some

57

decline in the rate of inflation. The sharp rise of wholesale prices at the endof 1969, however, holds out the possibility that the rise of over-all prices(as measured by the GNP deflator) in early 1970 may differ little from thatin late 1969. However, if the slowing of final demand leads to an increasedrate of inventory accumulation early in the year, subsequent reductions inproduction schedules might mean losses in output and some softening ofprices as inventories were being worked back down.

Despite these uncertainties of degree, it does seem likely that by mid-1970the economy, after three quarters of very little increase of real output, wouldbe producing significantly below its potential. Such a GNP gap places a down-ward pressure on the rate of inflation. Businesses find themselves selling inmarkets less receptive to price increases. This forces greater resistance tocost increases, including wage increases. These pressures against inflation willcontinue if demand remains below potential output, even though demandbegins to rise more rapidly.

Thus, in the second half of 1970 a moderately more rapid rise of moneydemand, bringing about an increase of real output, would be consistentwith a further reduction of the rate of inflation. The demand for outputwould be short of the potential so that a moderately larger increase in demandwould call forth mainly an increase in real output, not in the price level.

On the other hand, if demand continues to rise so slowly that real outputdoes not rise, this could be expected to result in rising unemployment. It iswell to remember, however, that the unemployment rate does not move inany fixed, precise relationship to other measures of business activity. We werereminded of that again in 1969. There was a considerable slowdown of realoutput gains, and in the fourth quarter a cessation, but this did not cause asignificant rise in the unemployment rate. Still, this slippage between realoutput and employment cannot be expected to go on indefinitely. The pros-pect of a rise in unemployment increases the importance of bringing about arise in real output when that is consistent with continued progress in reducinginflation.

The exact timing and degree of expansion that would be consistent witha significant reduction in inflation in 1970 are uncertain. However, it seems areasonable estimate that the slow increases of GNP foreseeable in the firsthalf plus the moderately larger but still noninflationary increases desirablein the second half would add up to a GNP for the year between $980 and $990billion—a range which for convenience may be described by the figure of$985 billion. This would be an increase of about 5J/2 percent over 1969, ascompared with the increase of 7.7 percent from 1968 to 1969. Part of thissmaller GNP rise would be reflected in a smaller increase of real output. Partof it would be reflected in less inflation. Whereas the GNP price deflatorwent up 5.1 percent from the fourth quarter of 1968 to the fourth quarterof 1969, and was still rising at a 4.7-percent annual rate at the end of 1969, itis reasonable to expect these figures to be substantially lower in 1970.

58

It is not necessary at this point in history to emphasize the fallibility ofsuch estimates of a desirable pattern of the GNP and of the consequencesof that pattern for the behavior of prices. However, precision in such esti-mates is not required for the success of policy. The estimates indicate thedesirable general direction of policy. The basic point is that if the rate ofgrowth of GNP is slowed, the rate of inflation will in time also decline, al-though the timing and magnitude of the effect is inevitably somewhat un-certain. The growth of GNP has already been slowed to a rate which al-though temporarily necessary is lower than needs to be sustained for longin order to achieve significant disinflation. Therefore we can tolerate amoderate rise in the rates of increase of GNP and of real output without re-viving inflation and should have such a rise in order to avoid mountingunemployment.

POLICY FOR 1970

There is substantial room for judgment about the combination of poli-cies that would get the economy on the desired path. There are twodangers to be avoided. One is that after the slowdown of activity which isnow in progress total demand will rise too soon and too sharply, touchingoff another round of inflation, as in 1967. Some have expressed concernabout the expansiveness of fiscal policy—with the two-step elimination of theincome tax surcharge, the institution of the low-income allowance and theincrease of the personal exemption in the income tax, and the large rise inSocial Security benefits. This, some fear, could add up to excessive stimulus;the tight expenditure control recommended in the budget for fiscal year 1971submitted by the Administration is intended to prevent that.

Others are concerned that the highly restrictive stance of monetary policyafter mid-1969 and the slow growth of real output experienced in late 1969and expected to continue into early 1970 will make the slowdown too severe.The combination of tight credit conditions, slow sales growth, and decliningprofits could bring unexpected weakness in business investment (in-cluding inventories) at the same time that Federal purchases are falling andcredit tightness is restraining construction and purchases by State and localgovernments.

It would not be prudent to count on these two possibilities—an expansiveswing in the budget position and cumulating severity of monetary restraint—to offset each other, although it is possible that they might. Not enough isknown about the relative influences of the fiscal and monetary factors to pre-clude the possibility that one or the other might be heavily dominant, re-sulting in either excessive expansion or excessive contraction. The safercourse would be a more moderate posture for both fiscal and monetarypolicies.

There are other important reasons for not relying on a combination of anexpansive fiscal policy, with a budget deficit, and an extremely restrictive

59

monetary policy. Even if this combination should result in the desired mod-erate disinflation, it would do so only with high interest rates and scarcityof funds that would limit the rate of residential construction to a level inade-quate for the needs of the growing population. Moreover, excessive pres-sures in U.S. money and capital markets are reflected in internationalfinancial markets, tending to lead toward a disturbing escalation of interestrates in those markets.

Fiscal policy in 1970 should therefore aim at continuing a modest surplusin the unified budget. Combined with moderate monetary restraint thismight be expected to yield the GNP path indicated above as desirable withoutoverly severe pressures in credit markets. This does not mean a return tothe rates of monetary expansion of 1967 and 1968. The appropriate rateof expansion is between that of 1967-68 and the severe restraint of thelatter part of 1969. But just what this rate should be is particularly difficultto tell, because of uncertainty about the adjustment of the economy to thelower demand for money resulting from high interest rates, inflationaryexpectations, and the development of new money substitutes. In these cir-cumstances policy must be cautious and tentative and feel its way along.

OUTLOOK FOR GNP AND ITS COMPONENTS

The fiscal and monetary policy described is intended to bring a moderaterevival along a sustainable path, after slow expansion of the GNP in the firsthalf of the year. This target has been indicated above by a path whichwould yield a total GNP of about $985 billion for 1970. The behavior of thecomponents of GNP that might be expected to accompany this policy, andrealization of the GNP total, is subject to a number of uncertainties, but thefollowing is a reasonable expectation for the major sectors of the economythat is consistent with this picture for the whole.

Business Fixed Investment. Private investment surveys suggest a 7- to 10-percent increase in plant and equipment spending in 1970, and the Com-merce Department-SEC survey suggests a 9-percent increase from 1969 tothe second quarter of 1970, with a further small increase in the second halfof 1970. Since a large fraction of the anticipated increase in plant and equip-ment spending is in nonmanufacturing industries such as public utilities,which have somewhat independent investment demands, a strong furthergain for investment in 1970 seems likely. On the other hand, there are con-straints on a further substantial expansion of capital outlays. Credit is ex-pensive and for some firms difficult to obtain. The liquidity of many com-panies has been reduced sharply. And profits are going to be under adversepressures. These suggest tha.t investment demand in other sectors might besluggish. Thus, with the economy slowing, realized investment spending maycome in somewhat less than anticipated. On balance, an increase of about8 percent—on the low side of the anticipations surveys—seems to be areasonable expectation for 1970.

6o

Inventories. Although auto inventories were a bit high at the end of 1969,inventories in general did not seem out of line with their relationship tosales in recent years. Businesses seem for the most part to be successful inpursuing a cautious inventory policy. Thus only a slight decline in inventoryinvestment is expected in 1970.

Both inventories and business fixed investment present a major uncertaintyon the down side of the forecast. A major downturn in sales expectationscould bring a large downward revision in both kinds of business investment.But no such swing seems to be in the making now. Such factors as the needto reduce costs with modern equipment, the expectations of the businesscommunity concerning the price level, and for many companies the still thinmargin of spare capacity, are all acting to keep capital expenditures strong.

Residential Construction. Housebuilding is the sector most exposed toincreasing tightness in the capital markets, and it has also been hard hit bydistortion in the flow of funds in response to interest rate ceilings. The rateof housing starts (private nonfarm) fell from an average 1.7 million (sea-sonally adjusted) in the first quarter of 1969 to 1.3 million in the last quarteras credit conditions tightened.

Housing starts are expected to remain low in the first half of 1970. If, asexpected, conditions become easier in the money and capital markets, hous-ing starts should respond favorably in the second half of the year. Neverthe-less in 1970 housing will be below the longer-run demand indicated by presentand prospective rates of new family formation and real income and normalreplacement needs.

Despite housing costs rising, residential construction expenditures are ex-pected to fall to about $30 billion in 1970, from $32.2 billion in 1969.

State and Local Government. The strong upward trend of State andlocal government purchases of goods and services is expected to continue in1970, rising about $11 to $12 billion over those in 1969. Much depends oncredit conditions. The increase is expected to be less in the first half of1970, reflecting credit conditions in 1969. As capital market conditionsgradually ease during the first half of 1970, outlays may accelerate in thesecond half.

Federal Purchases. The tight expenditure control projected in the budgetfor fiscal 1971 is reflected in the estimates of Federal purchases of goods andservices in 1970. Total Federal purchases, which came to $102.0 billion in1969, are expected to fall by about $4/2 billion in 1970. This declining Fed-eral Government demand for output is a major factor in the projected re-duction of the rate in inflation. All of the decrease in Federal purchases isprojected to come in the defense area, which is expected to reduce its pur-chases from $79.3 billion in 1969 to about $74 billion in 1970. NondefenseFederal purchases are expected to remain about at the 1969 level of $22.8billion.

372-111 O—70 5 6i

Consumption. Consumer spending in 1970 is another major source ofuncertainty. Surveys indicate that consumer sentiment has been fallingsharply since the first quarter of 1969, and experience suggests that thesechanges in consumer attitudes are associated with slower buying. Indeed,automobile sales began to show some weakness toward the end of 1969,and into this year. On the other hand, reduction of the income tax surchargeto 5 percent on January 1, and to zero on July 1, in addition to an increasein Social Security benefits of about $4.4 billion (annual rate) in April 1970with an additional $2.8 billion one-time payment for benefits retroactive toJanuary 1970, should tend to stimulate consumer spending.

On balance, it is expected that consumer expenditures will rise by about$40 billion from 1969 to 1970. With some of the addition to disposable in-come from the surcharge elimination going into saving, the saving rate isexpected to rise from 6 percent in 1969 to about 6^4-7 percent in 1970.

Net Exports. Net exports of goods and services are expected to rise fromabout $2.1 billion in 1969 to about $3 billion in 1970. While the slowdownexpected in the growth of U.S. demand should reduce the growth of mer-chandise imports, the combined effect of less buoyant demand conditions insome markets abroad and the lagged impact of rising prices in the UnitedStates on our exports and imports may limit the improvement in 1970.

Summary. The general trends in the composition of the GNP describedabove are consistent with a GNP for 1970 of about $985 billion or, morerealistically, between $980 and $990 billion. While specific figures in billionsof dollars have been put down for each major component of GNP, it would,of course, be possible to achieve the total with a different mixture. If thistotal is achieved, the year should see progress toward establishing the basisfor sustained gains against inflation, and for more sustainable rates of expan-sion. Policy will have to be open for reconsideration if the economy seemsto be on a markedly different path or if the path is not leading to the desiredresults.

UNEMPLOYMENT AND MANPOWER POLICY FOR 1970

With little growth of real output likely in the first half of 1970, and withthe restraint that will have to be maintained in the second half, some increasein the rate of unemployment is possible. This depends in large part on thechange in output per worker and in the proportion of the population thatseeks employment, variables that are particularly difficult to predict. Muchof the increase would be the result of a small lengthening in the averageinterval of unemployment experienced by people between jobs or newlyentering the labor force. (For a discussion of the character and significanceof unemployment see Appendix A.)

The reduction in Department of Defense procurement, reflected in thebudget and in the projections of defense purchases, will directly cause adecline in defense production and employment. This has been taken into

62

account in the earlier discussion of monetary and fiscal policy and of thepossibility of changes in overall unemployment. The Federal Government,in action coordinated by the President's office, will assist the workers andcommunities directly affected to make the smoothest possible transition toother activities. This action will include, in addition to the programs dis-cussed in the next few paragraphs, planning assistance, loans and grants forseverely affected communities, and, in some cases, transfer of federally ownedfacilities to nondefense use.

The risk of a rise in unemployment, even if small and temporary, adds tothe urgency of steps to spread its burden more equitably and to minimize itsadverse effects on those who become temporarily unemployed. The Adminis-tration's programs in manpower training and welfare reform, while pri-marily aimed at longer-run structural improvement, will also help to cushionthe impact of a temporary increase in unemployment.

MANPOWER TRAINING ACT

The Administration has proposed many improvements in manpowertraining efforts in the Manpower Training Act of 1969, which coordinatesseparate manpower programs and creates a comprehensive manpowerservices system. The bill would decentralize the administration of manpowerprograms to State and local governments because they can more accuratelyidentify specific local problems and priorities. The decentralization wouldtake place in three steps as States and municipalities demonstrate interestand establish administrative capability in the manpower area. The bill wouldunify the administration of manpower services, providing for the establish-ment of State and area single prime sponsors who will be responsible forplanning and providing services. It would provide flexible funding formanpower programs so that they may be better utilized in the community tomeet local needs.

In addition, it would facilitate the use of manpower programs as aneconomic stabilizer by authorizing a 10-percent increase in the manpowerappropriation when the national unemployment rate reaches 4.5 percent(seasonally adjusted) for 3 consecutive months.

EMPLOYMENT SECURITY AMENDMENTS

The Administration has also proposed legislation to strengthen our un-employment insurance system. The legislation would extend unemploymentinsurance to 5.1 million workers not now covered and automatically extendthe duration of benefits in periods of high unemployment. Eligible workerswould receive benefits for up to an additional 13 weeks beyond the presentlimit (usually 26 weeks) if insured unemployment were to go as high as 4.5percent (seasonally adjusted) for 3 consecutive months. The legislationwould also require States to permit workers to continue to receive unemploy-ment insurance benefits while enrolled in job training programs. Thesechanges will make the unemployment insurance system more effective thanever before in maintaining the purchasing power of the unemployed.

63

FAMILY ASSISTANCE PLAN

The proposed Family Assistance Plan (FAP) ties in closely with the man-power training programs. It greatly reduces the danger that poor people whohad not been covered by unemployment compensation would be seriouslyinjured by an increase in unemployment, or that workers with large familieswould find themselves in difficult straits in periods of temporary unemploy-ment. The Plan would supplement the incomes of the poor whose wagesare too low to meet the needs of their families, and of those who have diffi-culty working, or probably ought not to be working, such as women with lowincomes who head families with young children.

The Plan, in conjunction with the Administration's food stamp program,would have its greatest impact on the working poor, while maintaining theincentive to work. A family of four with no income would receive $1,600,plus about $850 in food stamps, for a potential income of $2,450. An in-centive is provided for recipients to obtain jobs by permitting a family of fourto receive some FAP payment until its income reaches $3,920. Able-bodiedmen who are not employed, and mothers of families with no such man athome and no children under 6, must register at the State employment officefor training or employment as a condition of receiving their benefit (althoughpayments to their dependents are in any event automatic). Day care wouldbe provided for children whose mothers are at work, or in training.

The Family Assistance Plan would eliminate the existing system of welfare-conditioned-on-dependency. By providing aid to families headed by workingmen, and by providing incentives to work, it would presumably contributeto family stability in low income groups. The FAP payment (with foodstamps) at any income level would be well above the present welfare pay-ment at that income level in many States, thereby reducing State-to-Statedifferences in benefit levels. The Federal Government would finance thePlan, relieving the States of some of the burden of high welfare costs. Pay-ments would be made on the basis of declaration of income. There will be apresumptive need test, but it would be simple and straightforward, and thecitizen's word would have approximately the same weight as it does in self-reporting for personal income tax deductions. With this method the socialworker no longer has to judge eligibility for benefits and supervise the useof the family income.

OTHER MANPOWER PROGRAMS

The Computerized Job Bank is a promising innovation in job placement.It currently is operating in seven U.S. cities, and by next June, the targetis to have such facilities established in a total of 56 cities. The Job Bank planproduces a daily, up-to-date computerized list of available jobs to helpplace the unemployed. In addition, the establishment of a national system ofjob vacancy statistics, presently under development, will provide currentinformation on the numbers and locations of jobs available in differentindustries and occupations.

Changes have been made in the Job Corps to improve its operation andto integrate it better with other manpower programs, as well as with locallabor markets. Fifty-nine centers were closed and 30 new inner-city andnear-city training centers will be established in order to shift the emphasisfrom conservation work to training and job placement.

The Administration has emphasized well conceived and carefully plannedmanpower training programs. Pilot projects to test manpower programs arean important means to accomplish this objective. A pilot project presentlyis being conducted in several States to test various methods of using com-puters to match specific jobs to the needs, interest, and ability of a particularapplicant. All of these programs will help to ease the slowing pains of thedisinflationary policy that must be followed in 1970, while improving labormobility and skills to provide the base for a noninflationary expansion backto full employment beginning in late 1970.

THE TRANSITION TO FULL EMPLOYMENT GROWTH

At the end of 1970 total output should be rising, and the price levelshould be rising significantly less rapidly than at the beginning of theyear. Nevertheless, total output will be below its potential and the rateof inflation, while declining, will probably still be too high. The transitionto an economy growing along the path of potential output at full employ-ment with reasonable price stability will not have been completed.

The problem then will be to raise the rate of increase of real outputwhile continuing to reduce the rate of inflation. This will be essentiallya continuation of the 1970 problem. There will, however, be two dif-ferences.

Whereas in 1970 it is necessary that real output should rise by lessthan its potential, at some point it will be necessary that output shouldrise somewhat more rapidly than potential for an interval. This would bethe only way for actual output, starting below potential, to regain thepotential.

This temporary period of regaining potential output will have to benegotiated cautiously to avoid reviving inflation. The possibility of doingthis should be strengthened by another development. As persistence ofpolicy brings the actual inflation rate down, the expected rate of inflationwill also fall, and this will influence both buyers and sellers of goods andservices (including labor). Workers will accept smaller increases in moneywages if expected price increases are smaller. Interest rates will be lowerbecause lenders will no longer want as much compensation for the expectedfall in the value of money and borrowers will be less ready to give suchcompensation. In other words, the inflationary momentum that resisted anti-inflationary policy strongly in its early phases will subside.

With the economy starting from a position below potential, and inflation-ary expectations reduced, an increase of demand sufficient to restore output

to its potential rate need not revive inflation if it does not occur too rapidly.Just how fast it will be safe to proceed can be much better judged after thebehavior of the economy in 1970 is tested.

It is impossible to state a target for reduction of unemployment and therate of inflation in the years just ahead. As both are reduced, the costs andbenefits of further reduction must be weighed. It would be foolish to predictnow where the margin of improvement in unemployment and inflation lies.

But after 1970 we will have a clear guide for the direction of policy:lower inflation, and lower unemployment.

THE STABILIZATION PROBLEM IN THE LONGER RUN

The main lesson of stabilization policy in 1969 was the importance ofavoiding in the future the kind of inflationary situation and pervasiveinflation-mindedness that had built up by the end of 1968. Starting fromthat situation a major change in the behavior of the economy and in expecta-tions was required, a change that would run against the current of strongongoing forces. No one could tell how fast that change could be successfullyaccomplished or the degree of monetary and fiscal restraint required toaccomplish it.

The objective of stabilization policy in 1970 will be to move us toward aposition where the main goal can be continuity. That position will have beenreached when inflation has been brought down to a significantly slowerrate, and real output is growing at about its potential rate. At that pointgrowth of the GNP in current dollars at a steady and moderate rate, such as6 percent per year, would serve to support steady growth of output at itspotential rate with a far better performance of the price level than has beenexperienced in recent years.

The problem then will be threefold:1. To stablize the rate of growth of money GNP as far as feasible at

a pace that will permit the economy to produce at its potential;2. To adapt the economy so that it lives better with whatever remaining

instability may develop; and3. To press on with measures to reduce both inflation and unemploy-

ment further.

STABILIZING THE GROWTH OF GNP

To stabilize the growth of GNP will require avoiding destabilizing movesin fiscal and monetary policies and instead using these policies to offset, or atleast constrain, destabilizing forces arising in the private economy. One diffi-culty is that the attempt to use fiscal and monetary policies to counter fluc-tuations arising in the private economy may itself be destabilizing, if movesare not made in the right amounts and at the right times.

66

Stabilization by Fiscal Policy

Fiscal policy should avoid large destabilizing swings occurring at randomor contrary to the clear requirements of the economy. The big upsurge ofFederal spending (nondefense as well as defense spending) after mid-1965,which was unmatched by any general tax increase for 3 years, is a majorexample of such a destabilizing movement.

The likelihood of achieving economic stability would not be greatly af-fected by the size of the surplus or deficit, within a reasonable range, if thatsize were itself stable or changing only slowly, and if the effects on liquidityresulting from secular increases or decreases in the Federal debt were offsetby monetary policy. Therefore, it should be possible to decide on the desiredfull-employment surplus or deficit on grounds other than stability, and with-out sacrificing stability if the target itself is kept reasonably stable. If thebudget position changes sharply in the short run in the absence of markedshifts in private demand, the adaptation of the private economy and thecompensatory force of monetary policy may not come into play quicklyenough to prevent large swings in overall economic activity. This is a majorlesson for the 1970's.

The considerations which should govern the decision about the averagesize of the surplus or deficit are discussed in Chapter 3. Except as a result ofa national emergency, there is probably no reason for this decision to changein a way that would radically alter, from year to year, the size of the surplusor deficit that would be the objective under conditions of high employment.

If the surplus or deficit position of the budget that would be yielded by asteadily growing, full-employment GNP were kept stable, the actual figurewould, of course, automatically respond to changes in the pace of the econ-omy. If the economy were to grow unusually slowly in any year, receipts wouldrise slowly also, and the surplus would be below normal (or the deficit wouldbe enlarged further). These variations in the size of the surplus or deficitwould tend to stabilize the growth rate of the GNP. The question is in whatcircumstances and how to go beyond this and vary expenditure programsand tax rates to offset fluctuations in the private economy. There is now abun-dant experience with the obstacles to effective and flexible use of tax changesfor this purpose. Moreover, recent experience and analysis suggest that thestabilizing power of temporary income tax changes may not be as great as hadbeen hoped, and it might become less if they were used frequently, becausepeople would tend to adjust their behavior to what they regard as the normalrate of taxation. Nevertheless, there will be situations in which tax ratesmust be changed in order to maintain the desired longrun deficit or surplusposition and there may also be circumstances in which the effort should bemade to use a temporary tax change to offset destabilizing shifts in privatedemand.

The possibility of varying the rate of increase of Federal spending inthe interest of stability is somewhat greater though still limited. Although

tax and expenditure decisions are both politically sensitive, the fact that thePresident has some discretion to adjust the timing of expenditures within thelimits of legislation avoids some of the complications that beset tax changes.Moreover, the effect of expenditure changes on economic activity canprobably be more reliably foreseen than the effect of temporary tax changes.It is true that the part of the total expenditures that is open to deliberatevariation is small, because of legal and implied commitments. Neverthe-less, some variations can, in fact, be made, as they were in 1969, and itwould be unwise to rule out the attempt to do more of this when theeconomic necessity is clear. Furthermore, it is possible to broaden the "auto-matic stabilizers" in Federal expenditure, as the Administration has proposedin the Manpower Training Act and Employment Security Amendmentsmentioned earlier.

The possibility of using debt management as an instrument of stabilizationpolicy has been severely inhibited by the 4*4 -percent interest rate ceiling onGovernment bonds. This ceiling has forced the Federal Government to sellonly short or intermediate securities since 1965. Raising or eliminating theceiling to realistic levels, or eliminating it, would provide the Federal Gov-ernment with a desirable degree of latitude in conducting its financingoperations.

Stabilization by Monetary Policy

Monetary policy can be devoted somewhat more singlemindedly to main-taining stability than can fiscal policy. Nevertheless, there are a number ofdifficulties in its use. Apparently the effects of changes in monetary policyare felt in the economy with widely varying and often long lags. Therefore,if policy that is intended to have a restrictive effect is continued until theeffect is visible, the lagged consequences of what has been done may showup in excessive contraction. The attempt to counter this by a sharp reversal inpolicy to an expansive posture may, after a while, generate inflationary ratesof expansion. In the present state of knowledge there is no ideal solution forthis problem. Prudence, therefore, suggests the desirability of not allowingmonetary policy to stray widely from the steady posture that is likely on theaverage to be consistent with long-term economic growth, even thoughforecasts at particular times may seem to call for a sharp variation in onedirection or another.

The suggestion that monetary policy might well be steady, or at least stead-ier than it has been, raises the question of the terms in which this stability isto be measured. There is abundant evidence that the steadiness of monetarypolicy cannot be measured by the steadiness of interest rates. Interest rateswill tend to rise when business is booming and inflation is present or expected;they will tend to decline in the opposite circumstances. Better results mightbe obtained by concentrating more on the steadiness of the main monetaryaggregates, such as the supply of money, of money plus time deposits, andof total bank credit. This still leaves questions of policy to be resolved when

68

these aggregates are tending to move in different directions, or at differentrates of change, as they often do. There is no substitute for trying to under-stand in particular cases what the significance of the divergences is andwhat they indicate about the underlying behavior of the supply of liquidity.

IMPROVING OUR ECONOMIC DATA

Since the Federal Government has the responsibility for keeping theeconomy on a noninflationary growth path with high employment, it musthave at its disposal the tools for accurately measuring on a timely basisthe performance of the economy at the national level. The Governmentnow publishes a broad array of economic statistics that serve this purpose.These statistics, particularly those relating to economic activity in theshort run, have grown over the years in volume and quality and haveserved the Nation well. But our demands for economic data of high qualitykeep outrunning the supply. The Federal Government is not alone inrequiring better statistics, since to an increasing extent businesses havebeen making use of economic data for planning their own operations. Indeed,never before have so many businesses watched so closely the economic indi-cators that appear each month or quarter.

More accurate measurement of economic performance would improve themanagement of policy in a number of ways. It would tell us more certainlywhere we have been. Elementary as this may sound, it is of crucial impor-tance. Too often this is a fundamental problem for the policymaker. Theeconomy, or some important part of it, may be on a somewhat differentcourse from that indicated by the data. Or economic series that purportto measure the same thing, or almost the same thing, may move in contra-dictory directions. Sometimes a series that moves in one direction one monthmoves in the opposite direction when revised the following month. The firstrequirement for making judgments about where the economy is going orwhat policies are needed is an accurate picture of where we have been.

Accurate data are also needed in order to help analyze the past and findrelationships that have some degree of stability. Accomplishing this aimis obviously only partly a question of statistics; the economy is, of course,more than a mechanism. For example, swings in sentiment and attitudes inour affluent economy have a powerful effect on the inclinations of consumersand businesses to spend. Consumer behavior has been especially difficult topredict in recent years, and may be more complex than had been thoughtpreviously. Business decisionmaking is equally complex. Yet economic analy-sis is a continuing search for patterns of regularity that can be helpful informing judgments about the economy. And the first requirement for thissearch is reliable basic data. The Administration has proposed substantialimprovements in many of the key economic statistics, including, for example,those relating to retail sales, construction, the service industries, interna-tional prices, and job vacancies.

69

Having data on a timely basis is also important for the policymaker. Thisis particularly important if there is reason to think that the economy may beshifting its course. This Nation probably has more timely statistics than anyother economy, but clearly much improvement is in order here. Early in1969 the President directed the Director of the Bureau of the Budget totake action that would secure prompter issuance of monthly and quarterlystatistical series by Federal agencies. The Bureau of the Budget issued a setof guidelines governing release of major economic indicators, and the statis-tical agencies have already achieved a considerable speedup. Further pro-gress depends heavily on obtaining prompter reporting from the businesscommunity.

LIVING WITH INSTABILITY

If the American people assign sufficient priority to doing so, they shouldbe able to enjoy a higher degree of economic stability than in the past. Still,some instability will remain, and this emphasizes the importance of im-proving the operation of the economy so that the remaining instability willcause less pain and inefficiency. The most obvious and probably mostimportant step in this direction is improvement of the unemploymentcompensation system. Proposals of the Administration to accomplish thishave been discussed earlier in this chapter. Improvement of labor markets—through better provision for retraining and movement of workers—wouldalso help to prevent the concentration of unemployment on a small group ofworkers who are substantially injured by it.

On the inflation side, also, some useful steps can be taken. The distortionsintroduced into the economy by the presence of interest rate ceilings ofvarious kinds—on savings deposits and shares, on guaranteed and insuredmortgages, on loans generally under State usury laws—have become evidentin this inflationary period. When market interest rates rise certain uses ofcredit are shrunk disproportionately because of these ceilings. The need tofree the economy of these rigidities is discussed in Chapter 4.

The construction industry has experienced much greater fluctuations inconjunction with general economic instability than most other industries.This has been painful to the workers and contractors in the industry andharmful to the growth of its productivity. Steps to reduce this extreme in-stability are also discussed in Chapter 4.

THE CONTINUING PROBLEMS OF INFLATION AND UNEMPLOYMENT

The present anti-inflation effort should reduce the rate of inflationsubstantially and demote inflation from its position as the Nation's most im-portant economic problem. Still the problem of getting the inflation rate downfurther, while at the same time maintaining high employment, will probablyremain. This will require persistent efforts to reduce the inflation that occurswhen demand is growing sufficiently to keep employment high. One of themost hopeful lines of attack will be to improve the adaptation of the labor

70

force—in skills and location—to the pattern of demand for labor. This willshorten the interval of job-search for persons losing or leaving old jobs orentering the labor force, in given conditions of the labor market. It willpermit an increasingly high rate of employment to be attained without sostrong a pressure of demand as to cause inflation. Manpower programs tomove in this direction by better training programs, application of computertechnology to job placement and general overhaul of the Nation's jobexchange system, have already been discussed. Evaluation of experience withthem should permit further development of improved methods. Measures toimprove the competitiveness of product markets to assure that businesspolicies will freely and flexibly adapt to changes in market demand will alsocontribute to reducing the average rate of inflation that accompanies highemployment. Some of these measures are considered in Chapter 4.

There is no inherent reason why a high employment economy must bean inflationary economy—even a mildly inflationary economy. After theseries of inflationary episodes since World War II, the transition to a stablecondition of high employment without inflation will come slowly. Butwith persistent attention and effort it is attainable.

CHAPTER 3

Uses of the National OutputINTRODUCTION

BY ANY USUAL MEASURE, AMERICA ENTERS THE 1970's awealthy nation which is growing wealthier at a rapid rate. Per capita

national income in 1969 was about $3,400 and had increased in real termsabout 40 percent since 1959. It is expected to increase 20 percent moreby 1975.

Despite this, or perhaps because of it, Americans are becoming acutelyaware that being rich and growing richer does not solve all of our problems.The realization that we expect more than the economy can produce, produc-tive as it is, points the way to the real problem, which is to make surethat the output is used efficiently to meet our most important needs. Thereis a growing sense that the limited national output is not being used in thisway.

The focusing of increased attention on how the national output is dividedcomes after a generation in which it had seemed that the country couldmake a quantum jump in available output that would dramatically im-prove the quality of life. In fact, for a time this was true. During the1930's, when the Nation was producing far below its economic capacity,we expected that our needs could be satisfied by the return of productionto reasonably full employment. During World War II, when the economyactually operated at capacity, private citizens could foresee a large increasein the output available to them after the war.

Later, in the 1950's and early 1960's, many people were impressed withthe possible contribution that a "small" increase in the annual rate ofeconomic growth—from 3 or 4 percent to 5 or 6 percent—would make toproviding the output available for every kind of purpose. "Faster growth"became the source from which all new claims on the national output wouldbe met. But in time this was seen to be largely an illusion. The basic full-employment growth path of an economy is not readily raised by any of thepolicy instruments that we now know about. The country could count onsustained growth to increase its capacity for doing many things. It could notcount on being able to boost the growth rate at will to support every newclaim.

72

Although the necessity to confine total uses of output to a growing butlimited productive capacity is becoming more recognized in principle, it tendsto be ignored in practice. This is obvious in Federal Government policyinvolving claims on resources. Even when the economy is operating atfairly full employment it is possible to increase Government expenditures,to reduce taxes, and to finance Government borrowing by monetaryexpansion. This may seem to provide an escape from the limitation onresources and the necessity for hard choices that all individuals and Stateand local governments face. But in fact it does not. All it does islet inflation choose which demands are satisfied and which are not. A ma-ture people can find a better way to make these choices. The basic problemis to make better decisions about the uses of the national output. Thischapter discusses the role of the Federal Government in this process.

The attention given here to the Federal Government's role in allocatingthe national output may seem excessive for a nation committed to a free-market, decentralized economic system. The idea that the Federal Govern-ment must make hard decisions to allocate the limited resources withinits own budget is commonplace. The idea that it does or should influencethe allocation of the output of the entire economy is not. However, the Fed-eral Government does have an important influence on decisions aboutthe use of resources in the private, as well as the Government sector. Perhapsthat influence should not be as big or as detailed as it is. Nevertheless alarge influence exists, and much of it is inevitable or desirable or both. Thisinfluence should be recognized, its effects appraised, and decisions con-sciously made to achieve the effects that are preferred.

In 1969 the Federal Government purchased and used, mainly for de-fense, 11 percent of the gross national product. The remainder, except fora small amount of net exports, was used for personal consumption, forprivate investment, and for State and local government purposes. The Fed-eral Government was a major influence in the division of the remainderamong these three categories and within them. While it purchased only about11 percent of the national output for its own use, it collected about 20 percentof the national output in taxes and social insurance contributions. It re-turned the difference to State and local governments in grants, to householdsin transfer and interest payments, and, since there was a budget surplus, toprivate capital markets for investment through repayment of Governmentdebt. Grants to State and local governments to finance purchases (asopposed to transfer payments) were about 13 percent of their purchases.Federally financed transfer and interest payments to persons were equal toabout 11 percent of consumer expenditures. The funds supplied by theFederal surplus to capital markets and available for private investment were6 percent of gross private domestic investment. The relative amounts ofthese flows, and the taxes used to raise the revenues, substantially affectedthe division of the available output among these three broad categories.

Federal decisions also influence the division of the output within thesecategories. The Federal Government not only provides the States and

73

localities with billions of dollars in grants, but it provides these grantsthrough hundreds of separate programs for specific purposes. The taxesit collects from households and the transfers it pays to them come from andgo to particular classes of persons, and thus affect the distribution of incomeand the composition of consumer spending. Taxes levied on specific items,such as automobiles or alcoholic beverages, also affect what is consumed.Facilities and services provided by the Federal Government stimulateprivate consumption or investment expenditures that are complementarywith them or curtail private expenditures that are competitive with them.For example, Federal expenditures on highways encourage private expen-ditures for automobiles and trucks.

THE DEGISIONMAKING PROCESS

The Federal Government has a large and pervasive influence on theallocation of the national output. Its decisions in this role fundamentallyaffect the national welfare. There can be no single, scientifically determined"best" allocation of the national output. Differences of interest, value, andopinion among people are inevitable, and they are not of a character thatcan be resolved objectively. They must, however, be reconciled, and it isthe function of the political democratic process to do this.

Given the distribution of interests and the location of powers to makedecisions, there is still much that needs to be done to reach better decisions—to make sure that as far as possible the consequences of decisions are knownand are taken into account as they are made. Decisionmakers need toknow the longrun as well as the immediate results of what they do, andthe indirect as well as the direct results. They need to see the options thatare open to them, and there must be an opportunity for differing view-points to confront each other. The effort to improve decisionmaking has along history, in which the establishment of the modern budget, the consolida-tion of the Appropriations Committees in Congress, the development of theExecutive Office of the President, and the creation of the Council of Eco-nomic Advisers were milestones.

THE LEVEL OF DEGISIONMAKING

One basic requirement for good choices about the use of the nationaloutput is, of course, that they should be made at the right level andby the right people. The mere size of the Federal Government will in-fluence the division of decisionmaking between it and the non-Federal—private, State, and local—parts of the community. There is a strong casefor holding down that size in order not to load responsibilities on theFederal Government beyond its capacity to discharge them, as well as forother reasons. The character of the Federal activities is probably as impor-tant as their volume in determining the location of decisionmaking. Forexample, Federal tax policy inescapably influences the total amount of

74

consumption expenditures by private households, but some kinds of taxesgo further and influence the composition of consumption. Similarly, the Fed-eral Government probably cannot avoid influencing the total rate of privateinvestment, but different Federal policies can involve more or less Federalinfluence over the character of the investment.

The problem of the appropriate level of decisionmaking has becomecritically important in the relations between the Federal Government andthe States and localities. The amount of Federal financial assistance tothe lower levels of government has grown markedly in the postwar period.This growth has raised the question whether the Federal Government shouldbe a neutral supplier of funds or should attempt to determine how Statesand localities use these funds, and their own. Undoubtedly there is roomfor some Federal intervention in the decisionmaking process. However,grants for highly specified purposes have reached a degree of detail whichis neither necessary nor efficient.

The Administration has proposed to alter the Federal-State-local rela-tionship by instituting a system of revenue sharing, through which theFederal Government would supply funds without dictating their use. Inaddition the Administration has asked for authority to consolidate someof the innumerable specific grant programs when they relate to similarfunctions. In these ways it is hoped to improve the overall decisionmakingprocess.

BUDGETARY BALANCE AS DISCIPLINE

Balancing the Federal budget has long been a symbol and instrumentof discipline in Government decisionmaking. The requirement that if someexpenditures are raised others must be cut or taxes must be increased hasforced Government officials to count the costs of expenditures. In recentyears the Nation has become more sophisticated about budget deficits andsurpluses. It has learned that the size of the surplus or deficit will andshould vary with economic conditions. It is now learning that the longrunaverage size of the surplus or deficit should be determined by the amountof savings it is desired to make available for private business and housinginvestment in total. But this does not reduce the relevance or value of thebudget-balancing discipline.

Once the appropriate longrun average size of the surplus or deficit hasbeen determined, that goal should not be changed except upon reconsider-ation of the longrun objectives. Shortrun fluctuations in private demandwill sometimes require offsetting temporary changes in tax rates or Federalexpenditures. And the size of any specific year's surplus or deficit will inevi-tably depart from the target level as a result of economic fluctuations, evenwith tax rates unchanged and expenditures at longrun levels. But achievingthe desired average budget position over a period of years means that on theaverage expenditures can grow only as fast as full-employment revenues.

75

Beyond that, expenditure increases in one area must be matched by expendi-ture cuts in another, or by increased taxes. In principle, every decision onGovernment expenditures should reopen the question of the desirable size ofthe surplus or deficit. In fact, Government cannot operate that way. Theobjectives served by the surplus or deficit, although important, are remoteand indirect. These objectives will suffer if they are implicitly reevaluatedevery time an expenditure decision is made. In their day-to-day decisionsabout spending, Government officials need to be confronted with costs thatare obviously and directly within their purview and responsibility. This meansthat they must at least count costs that appear in the form of tax and ex-penditure requirements to meet a given surplus or deficit target.

The budgetary discipline in the Federal Government can only be self-discipline. If the old symbolism of the balanced budget is losing its force, anew understanding of its value must replace it.

TOWARD IMPROVING FEDERAL DECISIONS

Although a budgetary rule that requires the balancing of additionalexpenditures against additional revenues has an essential role in Federaldecisionmaking, it is by itself far from a sufficient guide to the discharge ofthe Federal Government's fiscal responsibility. This rule tends to focusattention on the shortrun aspects of what are also longrun commitments.It forces the counting of costs, but it does not provide realistic informationon what the costs are. It concentrates on choices among uses of the relativelysmall part of the national output that is within the budget without ade-quately revealing the effects that the choices will have on the larger partthat is outside the budget.

This Administration has taken several important steps to improve deci-sions about the allocation of resources. The President established in July1969 the National Goals Research Staff to identify alternative goals im-portant to Americans and to study long-range social trends of significance fornational policy. The Cabinet level Urban Affairs and Rural Affairs Councilsand the Cabinet Committee on Economic Policy are interagency groups thePresident has formed to coordinate the development of policy. The DefenseProgram Review Committee, on which the Chairman of the Council of Eco-nomic Advisers and the Director of the Bureau of the Budget serve, helps toassure that the broad picture of total national resources and claims entersinto the process of decisionmaking for defense.

As a further step toward improving the organization of the ExecutiveBranch for making its major policy decisions, including those which im-portantly affect the allocation of the national output, the President estab-lished the President's Council on Executive Organization—the Ash Council.

In 1965, a new effort was inaugurated throughout the Government, inthe planning-programing-budgeting system, to evaluate more objectively

the costs and benefits of existing and proposed programs. Building on thisbeginning, the Administration is now focusing economic analysis primarilyupon major policy issues. By examining especially carefully the most im-portant programs, scarce analytical resources are economized; thus analysiscan penetrate further into the decisionmaking process. Potential savingsfrom improved decisions can be large.

Analysis of the possible implications of proposed decisions before theyare taken is, although speculative, obviously necessary. Equally necessary,and somewhat less speculative, is evaluation of the results of decisions afterthey have been taken. Persistent efforts to evaluate existing programs arenecessary if the Nation is going to be able to do the new things it wants to do.One of the steps in this direction was the President's instruction to the Officeof Economic Opportunity to establish a research and evaluation officecapable of independent appraisal of Federal social programs affecting thedisadvantaged. Evaluation of the results of Government programs remainsone of the most urgent needs of Government as it seeks to make effectivedecisions about the use of resources.

Besides assessing the full costs and benefits of Federal programs,agencies must take into account the time pattern in which benefits and costsof programs occur. The Government, like private firms and individuals,must recognize that benefits are worth more if they occur today rather thantomorrow. Accordingly, agencies have been directed to apply a discountfactor to all programs which have costs or benefits that occur 3 or moreyears in the future. Studies have been undertaken to determine the appro-priate factors to use in this kind of calculation. In addition, explicit accountis being taken of risks involved in public projects.

The Administration is seeking to formulate the larger choices it facesin the allocation of national output in the light of the competing options.Among the most important steps in this direction have been the inter-related studies conducted through the National Security Council and theCabinet Committee on Economic Policy. These studies examined alternativedefense strategies with their associated costs and alternative nondefenseFederal programs. Various defense strategies were translated with roughaccuracy into a large number of possible forces and budgets. Similarly, alter-native nondefense Federal programs were developed. The studies revealedthe probable effects of different combinations of defense and nondefenseprograms on private consumption, housing, other investment, and Stateand local expenditures, given the limit set by potential national output.These studies in the Cabinet Committee have also explored trade-offs amongvarious nondefense programs within resources that will be available fromcontinued economic growth and assumed reductions in defense expendi-tures. All of these studies have served as background for consideration oflong-range revenue and expenditure decisions.

372-111 O—70 6 77

FUTURE NATIONAL OUTPUT AND THE CLAIMS UPON IT

The last few pages have discussed mainly the budgetary rules and decision-making procedures that might improve Federal Government decisions.These decisions affect the use of the entire national output, as was pointedout in this chapter's introduction. The substance of the priorities prob-lem is to allocate the future national output among alternative uses in arational way that reflects decisions about national priorities. This tailoringof Federal decisions concerning allocation to a view of national prioritiesrequires—

1. An estimate of what the future national output can be.2. A view of the claims upon the national output—the things we would

like to do with it—that are eligible for serious consideration.3. A view of the policy measures that would be necessary to bring about

satisfaction of some claims rather than others.4. A decision about the claims to be satisfied and the policies to carry out

the decision.Step 4 in this process must, of course, ultimately reflect Government

decisionmaking at the highest level. This section undertakes a tentativeapproach to the first three steps. No one can now confidently draw com-prehensive and detailed conclusions on these first three steps. But eventhe rough and preliminary estimates presented here reveal much about thepriorities problem confronting the Nation and establish the need for furtherefforts to analyze it.

Projections of available future output and the potential claims on itcan move discussion of the priorities problem from vague and sometimeseasily ignored knowledge to the concrete realization of just how limitedthe available output will be. First, a projection will be made of availableoutput—GNP in real terms for the years 1970-75. Then visible claims onthis output by consumers, governments, and business will be projected.Adding up these claims and comparing the total to available GNP willindicate the magnitude of the priorities problem. The projections will alsoprovide a framework for discussing various policy alternatives that wouldmeet various sets of claims on the output.

The principal objective of this section, therefore, is to estimate the claimsagainst GNP and to show how different patterns of allocation of the GNPcan be achieved. Since it is assumed throughout that the projected real GNPis in fact achieved, the only problem discussed here is how the GNP is tobe allocated. The projected GNP can be achieved by any one of a numberof different combinations or "mixes" of fiscal and monetary policy, whichwill differ in the allocation of the total GNP that results from them. Inthese terms this section is concerned with which mix will give a desiredallocation of the total GNP. In the short run, this is probably an exaggera-tion of the choices available; the number of mixes consistent with economicstability may be more limited. But for the long run, which is the appropriate

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context of this analysis, the assumption of a given GNP achievable withany of a large variety of policy mixes and resource allocations is reasonable.

Since the problem here is allocation of a projected real GNP as it movesalong its growth path, the projections are made in constant 1969 prices.This does not imply any forecast about the price level; rather the assumptionkeeps the focus on the allocation problem.

POTENTIAL AND PROJECTED GNP

The output the economy would be capable of producing when operatingat an unemployment rate of about 3.8 percent—called here potential out-put—is estimated to rise by about 4.3 percent per year in real terms.This results from projected growth of the labor force at 1% percent peryear, a decline in annual average hours of work per person of one-quarter of 1 percent per year, and an increase of output per man-hourin the total economy of 2.8 percent per year. Projected available outputis assumed to be below potential from 1970 until 1972, as a result of policiesto slow inflation, but to equal potential output thereafter.

The resulting illustrative projections of available GNP at 1969 pricesare shown at the top of Table 13.

CLAIMS ON THE NATIONAL OUTPUT

To list uses of the national output which though desirable would ex-ceed potential output is. not difficult. But that is not the purpose here.The purpose is to present the claims that already exist. The largest part ofthe claims is found in the usual consumption behavior of households, giventhe incomes they would be earning and the taxes they would be paying, andin the investment behavior of businesses, given the total output and demandprojected. Other claims exist in the form of ongoing Government programs,goals stated in legislation, and proposals made by the Administration.

TABLE 13.—Gross national product, 1969 and projections for 1970-75

[Billions of dollars, 1969 prices; calendar years]

Claim

Gross national product available

Claims on available GNP .

Federal Government purchases.State and local government

purchases . . .Personal consumption expend-

ituresGross private investment

Business fixed investment-Residential structuresOther investment

Excess of claims

1969,actual

932.3

932.3

102.0

112.7

576.0141.7

99.332.210.1

.0

Projections

1970

944

944

93

116

594141

1032910

0

1971

980

980

89

120

620152

1053414

0

1972

1,042

1,042

88

125

664166

1114015

0

1973

1,103

1,100

87

131

704178

1164616

- 3

1974

1,150

1,144

87

137

735186

1204917

- 6

1975

1,200

1,188

86

142

769192

1254918

- 1 2

Note.—Projections are based on projected Federal expenditures (see Table 14) and their influence on various compo-nents of GNP.

Detail will not necessarily add to totals because of rounding.

Source: Council of Economic Advisers.

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Large claims not recognized in these estimates exist and new ones willemerge. However, it is sufficient here to show that the existing, visible, andstrongly supported claims already exhaust the national output for someyears ahead. This is not to say that no other claims will be satisfied, or thatclaims included in these calculations should have preference over claimsnot recognized here. The basic point is that if other claims are to be satisfiedsome of those recognized here will have to be sacrificed.

The projection of claims on the national output shown here correspondsto a projection of Federal spending. Federal spending affects not only theFederal Government's own purchases of goods and services but also thepurchases of State and local governments, through Federal grants to them,and the purchases of consumers, through Government transfer payments.The method of estimating the claims is described briefly here and in moredetail in the Appendix to this chapter.

1. The estimate of Federal spending includes a baseline projection of thecosts of the Federal Government's 1970 program, in 1969 prices, and thecosts of new programs already proposed by the Administration. The baselineadjusts the 1970 program for changes related to population, workload,and pay increases in 1969 dollars. The new initiatives, shown separatelyin Table 14, project the 1969 dollar costs of proposed new programs,such as the Family Assistance Program and Revenue Sharing, and proposedexpansion of existing programs.

2. State and local spending is the estimated consequence of projectedgrowth of GNP (in 1969 prices) and population to 1975 plus the grantsincluded in the Federal expenditure projections of Table 14.

3. Personal consumption is the expenditure that would result from theamount of income that households would have available if the projectedGNP at 1969 prices were produced, present tax laws remained in force (withthe income tax surcharge expiring June 30, 1970), and governments madethe transfer payments included in the government expenditure projections.

TABLE 14.—Projections of Federal expenditures, national income accounts basis, 1970-75

[Billions of dollars, 1969 prices; calendar years]

Priority category 1970

189

188

92562219

1

1000

1971

192

186

88592216

6

1320

1972

196

186

87622215

10

1630

1973

200

188

86652314

12

1650

1974

204

190

85682314

14

2560

1975

Federal expenditures.

Baseline

Purchases of goods and services.Transfer payments to persons i__Grants-in-aidOther

New initiatives.

Purchases of goods and services.Transfer payments to persons i__Grants-in-aidOther

206

191

84702414

15

2570

1 Excludes transfer payments to foreigners, which are included under "Other."


Source: Bureau of the Budget.

8o

It is assumed that personal saving is 6.5 percent of personal disposableincome.

4. Residential construction expenditures are the amounts consistent withreaching the goal specified in the Housing and Urban Development Act of1968 along the path of housing construction shown in the Second AnnualReport on National Housing Goals.

5. Business fixed investment in real terms is estimated to decline as afraction of privately produced real GNP from 12 percent, which it hasaveraged since 1966, to 11.5 percent by 1975. This would continue thedownward trend of the ratio of capital stock to real output experiencedsince World War II.

6. The two other components of real GNP—inventory investment andnet exports—are both projected to rise slowly with their total growing from$10.1 billion in 1969 to $18 billion in 1975 (in 1969 prices).

BALANCING CLAIMS AND RESOURCES

The results of these calculations are summarized at the bottom of Table13 in the figures on the excess of claims over resources. The projected claims,which assume no addition to present Federal nondefense programs beyondthose already proposed by the Administration, would approximately absorball available resources through 1973 and leave room for significant addi-tions only by 1975.

The basic lesson of the estimates is that the country is already at a pointwhere, despite prospective rapid growth of output, a decision to satisfyan existing claim on a larger scale or to satisfy a new claim will requiregiving up something on which people are already counting.

These estimates are based on a number of assumptions which may turnout to be wide of the mark. Even a generous allowance for errors in theassumptions, however, is unlikely to change the fundamental picture. Andsome of the assumptions may themselves be optimistic. If potential outputgrew by only 4.0 percent rather than 4.3 percent, the excess of claimswould increase, but only slightly, because consumption expenditures andbusiness investment, which amount to about 80 percent of total claims,would also be smaller. On the other hand, the excess of available outputover claims would be a little larger, about $4 billion more in 1975 (in1969 prices), if personal savings were 7 percent of disposable income in-stead of the 6.5 percent assumed here. This is possible, but it is no morelikely than that the personal savings rate should turn out to be 6 percent,which would increase claims on available output. Other departures fromthe assumptions are possible—certainly there will be some—but none seemssufficiently large or probable to change the conclusion. Moreover, thereis little reason to expect that these departures will all be in the samedirection.

Inability to meet all the visible claims would not deny that the countryis rich and growing richer. The most comprehensive index of the economic

8i

condition of the population—real per capita personal consumption—wouldrise about 3^4 percent per year under the Table 13 projections, comparedto 2J/2 percent per year in the period 1957 to 1967. The conclusion is simplythat choices must be made.

In fact, of course, choices will be made. The total of satisfied claimscannot exceed the available output. Policies, whether of omission or com-mission, will determine which claims get satisfied and which do not. Thefollowing discussion of ways in which claims and resources can be broughtinto balance is not intended to support any particular claims or any par-ticular ways of meeting them. It is only intended to illustrate the optionsthat are permitted and not permitted by the arithmetic of the economicsystem.

If the projections of output prove reasonably accurate, and Federalexpenditures run at the projected level, or higher, with taxes unchanged,trimming of claims on output would fall mainly on investment. Privatesaving, together with the Federal surplus, would be inadequate to financeall the private investment claims shown here through 1973. Interest rateswould rise, and, while this might stimulate saving, the main effect wouldbe to make funds scarce and expensive and keep some investment demandsfrom being met. Since housing is more sensitive to the supply of funds thanother investment, the shortfall would probably be relatively larger inhousing. If, however, the shortfall occurred in capital outlays of businesses,productivity would tend to be adversely affected, and the economy's rateof growth would lag.

Government policy could bring about a different pattern of resourceallocation. If it were desired to do so, the combined investment claims shownhere could be satisfied by either of two approaches, or some combinationof them. One would be to hold Federal expenditures down, below the levelprojected here through 1973 and not too much higher thereafter. Federalpurchases of goods and services would be lower, and State and local pur-chases and consumers' purchases would also be lower as a result of smallergrants and transfer payments. With purchases in these categories lower, moreof the national output would be available for investment. As a corollary tothis, there would be a larger budget surplus, which would make more fundsavailable to finance private investment. To obtain the same level ofinvestment with higher Federal expenditures, the second alternative wouldbe to raise taxes to restrict private consumption, thus releasing resourcesfor investment and sustaining the budget surplus needed to finance invest-ment. These methods of generating a surplus to finance a desired total ofprivate investment would not in themselves assure any particular division ofthe total between business investment and housing.

What has been said about the combination of taxes and expenditureprograms that would be required to permit satisfaction of the private invest-ment claims implies a certain relationship between the Federal surplus andprivate investment. The surplus must be large enough, when added to pri-

82

vate saving, to finance the private investment. The higher the privateinvestment desired, the larger, in general, will be the budget surplus re-quired. This is the main longrun implication of a budget surplus.

The additional surplus that would be required to support an additionalamount of private investment, say $1 billion, would probably be larger than$1 billion if the additional surplus is created by raising taxes to reduceconsumer spending. This is because the higher taxes will probably reduceprivate saving somewhat, and the surplus must be large enough to coverthe additional investment desired plus the loss of private saving. Thus, onthe assumption used in this section that personal saving is 6.5 percent ofpersonal income after tax, additional personal taxes and a further surplusof $1.07 billion would be required to increase the total of private savingand the surplus by $1 billion.

These are propositions about the national income accounts budget, which,unlike the unified budget, does not include as an outlay the net lending ofthe Federal Government. To the extent that net lending of the FederalGovernment to finance private investment is already included in the unifiedbudget as outlays, the surplus that would be required in the unifiedbudget would be smaller. The required surplus would be the excess (if any)of desired private investment over private saving plus Government netlending. That would not, however, affect the amount of taxes that would berequired to bring about a given amount of private investment. It would onlymean that part of the taxes would be used to finance the Government lend-ing, rather than the repayment of Federal debt which would permit privatelenders to supply more funds to private investment.

CONCLUSIONS

The estimates of this section are, of course, hypothetical calculations basedon inevitably somewhat arbitrary assumptions. The costs of programs now onthe books may turn out to be different from projections used here. More-over, programs now in being can be modified or eliminated if peopledecide that costs are excessive or that other things are more important.The capability of the economy to grow may be different from what hasbeen assumed. Nevertheless, for all of their necessarily hypothetical char-acter, these estimates do highlight three important points that havemajor implications for fiscal policy. First, existing claims upon the growingavailable national output already exhaust the probable output and realnational income that the economy can generate for several years to come.The satisfaction of a new claim, therefore, necessarily will require therejection of another claim which now exists. Second, the Federal Govern-ment's fiscal policies will directly affect which claims on our national incomeare satisfied—not only the direct Federal claims but also State, local, andprivate claims. Federal actions that increase State, local, or privateexpenditures—even if those actions are not reflected in the Federal budget—

83

generate claims against the national output. Therefore, the Federal Govern-ment should be concerned that its extrabudgetary as well as its budgetaryactions do not generate excessive claims or do not cause more importantuses of the national output to be displaced by less important ones. Third,the level of private investment in business plant and equipment, and par-ticularly in housing, is necessarily directly affected by decisions that de-termine the character of the budget and the target for a longrun averagesurplus or deficit. The budget and the budget surplus should not be regardedmerely as conventional symbols of sound finance; they have a profoundlyimportant functional role in achieving national goals.

APPENDIX

Basis for Estimates of Output and ClaimsPOTENTIAL AND PROJECTED GNP

The available total output by years from 1970 to 1975 is estimated in twostages, one yielding potential output and the second yielding projected avail-able output.

Potential output is considered to be the output the economy would pro-duce when operating at a 3.8 percent unemployment rate. This is slightlyabove the rate in the last half of 1969 when actual output was con-sidered to be close to the potential. The annual growth of real potential out-put is determined by the growth of the labor force, estimated at 1% per-cent per year, the decline in annual average hours of work per person,estimated at one-quarter of 1 percent per year, and the growth of outputper man-hour. In the private sector of the economy, output per man-hour isestimated to grow by about 3.1 percent per year—less than in the early1960's when resource utilization rose, but more than in 1965-69 when theeconomy operated under excessive demand pressure. Allowance for the factthat productivity growth in the Government sector, which produces about9 percent of national output, is zero by definition (because Governmentoutput is measured by labor input) reduces the overall productivity growthrate to about 2.8 percent per year. Combined with the estimates of laborinput, this yields about a 4.3 percent rate of growth of potential real GNP.

Projected available real output lies below potential output from 1970 to1972 because some gap between actual and potential output is necessary toslow down inflation. A gradual closing of the gap is projected to permit thepotential to be regained without reviving inflation. Potential and projectedreal GNP, in 1958 dollars, are shown in Chart 8. Projected available GNPin 1969 dollars is shown at the top of Table 13.

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Chart 8

Gross National Product, Actual and Potential

BILLIONS OF DOLLARS (ratio scale)*

1,000GNP IN 1958 PRICES

900

POTENTIAL-1/

800

700

500

400 i i i 1 i i i I i i i 1 i i i i i i i i i i i 1 i i i I i i i 1 i i i 1 i i i I i i i 1 i i i 1 i i i h i i 1 i i i I i i i

1961 63 65 67 69 71 73 75

•SEASONALLY ADJUSTED ANNUAL RATES.

J / T R E N D LINE OF 3.5 PERCENT FROM MIDDLE OF 1955 TO 1962 IV, 3.75 PERCENT FROM 1962 IV TO 1965 IV,4 PERCENT FROM 1965 IV TO 1969 IV, 4.3 PERCENT FROM 1969 IV TO 1970 IV, 4.4 PERCENT FROM 1970 IVTO 1971 IV, AND 4.3 PERCENT FROM 1971 IV TO 1975 IV.

SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

CLAIMS ON THE NATIONAL OUTPUT

Federal Expenditure Projections

Federal expenditure projections are presented before those for the privateand State and local government sectors, because the level and nature ofFederal expenditures affect the other expenditure components. The amountof Federal transfer payments to individuals affects consumer expendi-ture, and the level of grants affects State and local purchases. Becauseof these effects it is convenient to have an initial projection of Federal spend-ing preparatory to making projections of expenditures in the rest of theeconomy.

Baseline Expenditures. The cost of the 1970 Federal program, adjustedfor increases in workload and pay increases at 1969 prices, gives the pro-jection of baseline expenditures in Table 14, broken down into purchasesof goods and services, transfer payments, grants, and other expenditures.

The major increases in the baseline are projected for transfer payments,which rise by $14 billion (in 1969 prices) from 1970 to 1975, and grants to

85

State and local governments, which rise by $2 billion in that period. Muchof the increase in transfers will be due to increased coverage and populationgrowth, as more people receive checks for social security, disability insur-ance, and so forth. But part will also be due to higher real benefits. Much ofthe increase in grants will come in essentially open-ended programs, such asMedicaid, in which the Federal Government must provide matching fundsif the States choose to provide funds for the program.

New Initiatives. The costs at 1969 prices of new programs proposedby the Administration in the Fiscal 1971 Budget are added to thebaseline expenditures to give the projections of Federal expenditures usedhere. These in turn are broken down into purchases, transfer payments,grants, and other expenditures.

The costs of Federal programs at 1969 prices are projected to rise from$189 billion in 1970 to $206 billion in 1975. Two aspects of these expenditureprojections are especially noteworthy. First, the projections include expan-sions of transfer and grant programs and a reduction of purchases. ExpandedFederal programs would focus upon providing money to people in trans-fers, and to States in grants, rather than upon purchasing output directly.Second, projected Federal expenditures build up rapidly through 1974and rise less rapidly thereafter. If this path were in fact to materialize, theclaims-resources position would be tighter in the early 1970's, and a biteasier in the middle 1970's. But this flattening out of the expenditure pathmay instead reflect simply the difficulty of seeing more than 3 or 4 yearsahead. As these years arrive, further proposals for new programs or ex-tensions of existing programs can be expected to come forward. Thus itshould probably be assumed that the position will be just as tight in themiddle 197O's as in the next year or so.

State and Local Government Purchases

State and local government purchases of goods and services at 1969 pricesare projected to grow with real GNP, population, and projected levels ofFederal grants-in-aid from 1970 to 1975. Projected growth of these itemsyields the estimates of State and local purchases shown in Table 13. In 1969dollars, State and local purchases are projected to increase from $116billion in 1970 to $142 billion in 1975, or at an average annual rate of 4percent. Of the $26 billion increase in State and local purchases from1970 to 1975, $8 billion is projected to be due to population increases. Thisleaves a projected increase of $18 billion over and above the cost of pro-viding State and local services at the present per capita level. This $18billion represents an increase of 2.8 percent per year in the real per capitaquantity of the services provided by State and local purchases, comparedto the 1962 to 1968 average increase of 3.8 percent.

Personal Consumption Expenditures

Consumer spending is a fairly stable fraction of personal income aftertaxes, aside from shortrun variations. Personal income other than transfer

86

payments is assumed to be 73 percent of GNP. Adding to this transfers byFederal, State, and local governments gives total personal income. ProjectedFederal, State, and local personal taxes are subtracted to arrive at disposablepersonal income, which is allocated between consumption expenditures,personal interest and transfer payments, and personal saving.

The projections assume a saving rate of 6.5 percent, and 2.5. percent forpersonal interest and transfers, leaving 91 percent for consumer spending.The projections of consumer expenditures in 1969 prices, based on the pro-jected Federal expenditures, are shown in Table 13.

Two important assumptions in the consumer spending projections shouldbe noted. First, the 6.5 percent saving rate is near the middle of the 4.9-7.4 percent range experienced since 1960. Second, the projections in thetable assume present tax law.

Private Investment Demand

The remaining four elements of private demand are estimated independ-ently of the Federal expenditure projections. These are business fixed in-vestment, residential construction, inventory investment, and net exports.

Business Fixed Investment. Since cumulative net business investmentequals capital stock, the projection of investment should yield an accumu-lated capital stock consistent with the projected GNP path and a reasonablecapital-output ratio.

Since 1966, real business fixed investment has averaged 12 percent of realprivate output. It is estimated that if this fraction gradually falls to l l / 2

percent by 1975, the ratio of capital stock to real output would continuethe slow downward trend experienced since World War II. The projectionsof business fixed investment in 1969 dollars are shown in Table 13.

Residential Construction. A key area of the projections is residentialconstruction. Twice in the last half decade homebuilding has been severelysqueezed by the competition of the Federal deficit and high business invest-ment for the supply of private saving. Moreover as Chart 9 shows therewill be a substantial increase in the rate of family formation in the next5 years. Both because of the backlog of need created by the housing declinesin 1966 and 1969-70 and because of the increased demand for housinggenerated by family formation, the number of housing starts is likely torise considerably in the early 1970's.

In the Housing and Urban Development Act of 1968, Congress stated agoal of 26 million new housing units to be constructed from fiscal year1969 to fiscal year 1978. The Second Annual Report on National HousingGoals to be submitted by the President this month projects a path ofhousing construction, including both conventional and mobile homes, to1978 which will meet the goal and is considered feasible. The conventional

87

Chart 9

Net Family Formation

INCREASE, MILLIONS OF FAMILIES

1.2

1.0

.8

.6

.4

.2

0

-.2

NET INCREASE IN NUMBEROF FAMILIES WITH HEAD25-44 YEARS OF AGE

1961 63 65 67 69 71 73 75

SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

housing starts portion of this path, on which the residential constructionprojection is based, is shown in Chart 10.

This path of starts gives the residential construction projection in 1969dollars shown in Table 13. The projection assumes residential constructionexpenditures per start (in 1969 dollars) of $21,800— the 1959-68 average—from 1970 to 1975. This cost figure will turn out to be high if the cost-reducing potential of Operation Breakthrough, the industrial housing pro-gram of the Department of Housing and Urban Development, is fulfilled.

The two small remaining components of GNP—inventory investmentand net exports—are both projected to grow roughly in line with GNPfrom 1970 to 1975. Inventory investment along trend is expected to beroughly a constant fraction of GNP, perhaps 1 percent. This would main-tain an approximately constant ratio of stocks to final sales. Net exportsare projected to expand from the 1969 low as the U.S. trade positionimproves.

Total Expenditure Projections

The second line of Table 13* "Claims on available GNP,35 which addsup the expenditure projections assuming projected Federal expenditures,shows total visible claims oil potential GNP.

88

Chart 10

MILLIONS OF UNITS*

Housing Starts

-PROJECTIONS-

1961 63 65 67 69 71 73 75 77

T O T A L PRIVATE AND PUBLIC. DATA EXCLUDE MOBILE HOME SHIPMENTS.

SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.

To avoid confusion, it should be noted here that the "Claims on availableGNP" of Table 13 is not the equilibrium GNP in 1969 dollars that wouldresult if the "exogenous" investment and government expenditures wererealized. This is because consumer spending is projected on the basis ofpresent tax law, transfer payments in the Federal spending projections, andavailable GNP. Thus the difference between available GNP and "Claims onavailable GNP" is the reduction in exogenous expenditure needed to bringthe demand for output down to the level of available GNP.

CHAPTER 4

Government and the MarketHIT SHALL BE THE DUTY AND FUNCTION OF THE COUN-

1 CIL . . . to appraise the various programs and activities of theFederal Government . . . [and] to develop and recommend to the Presi-dent national economic policies to foster and promote free competitiveenterprise. . . . " With these words in Section 4, the Employment Act of1946 makes clear the responsibilities of Government for the vast range ofpolicies and programs that are concerned with strengthening the vitalityand efficiency of our market economy. This chapter, therefore, focuses onthe essential role of the Government in maintaining a competitive freemarket economy and in supplementing the market where necessary toachieve efficiency and progress.

This role of the Government is especially important today when manypeople have become disenchanted with the effects of the Government'sparticipation in economic life. We rely upon the Government to do morethan ever before, but we grow less and less confident that its ways of dis-charging the responsibilities placed upon it are the most effective. Onoccasion the Government's action has run counter to its responsibility,restricting rather than promoting competition and failing to observe theprinciples of the market economy in the management of its own affairs.

In the main, we depend for the satisfaction of our economic goals on thevoluntary activity of individuals. Traditionally this Nation has accepted thepremise that the individual should be as free as possible to decide for him-self what goods and services will be best for him and where and how he willexercise his own talents and energies in the common productive efforts. Byand large the resultant system serves us well. It has made possible a largeand growing measure of personal liberty, wider job opportunities, andrising levels of living. Because each of us has considerable freedom inapplying his knowledge and talents, our system is more flexible, innovative,and progressive than if it were guided in detail by Government edicts.

ROLE OF THE GOVERNMENT

An economic system cannot, however, operate in a vacuum. Besidescontrolling general monetary and fiscal policies, Government must establishthe necessary framework for economic activity if our free and open economyis to keep its responsive and effective character.

90

The need for rules of the game concerning contracts, property rights,fraud, and fair methods of competition is obvious. In the course of timeadditional rules have become necessary as our economy and our societyhave become increasingly complex. It is necessary to prohibit the sale ofharmful foods and drugs and to proscribe child labor, unsanitary workingconditions, and discrimination in employment. But just as new rules havebecome necessary, old rules can become obsolete and hamper our effortsto realize the capability of the economy.

Since we depend on the private sector to produce the overwhelming pro-portion of our goods and services, the Government must insure that com-petition is vigorous and that markets are efficient. Vigorous competition isthe main protection of consumer interests; in most areas of the economy ithelps create efficient markets that respond quickly to the desires of consumers,and in which costs of production and distribution are kept low. A wellworking financial system and well-informed consumers are also necessaryfor efficient markets; the Government can and does play a vital role inthese areas.

In a relatively few instances, competition alone may not be sufficient toprotect consumers' interest, or it may not be a possibility. Economies of large-scale production may be so great as to leave room for only a few firms—toofew for competition to be effective. Where property rights are poorly de-fined, competition may lead to the waste of valuable resources or to deg-radation of the environment. As a result, in these areas elaborate regulationsconcerning prices, outputs, and standards of service have been prescribed.In a few sectors of the economy—agriculture is one example—the ability ofbuyers and sellers to respond promptly to shifts in demand or supply maybe so limited that prices fluctuate more widely than is good for eitherconsumers or producers. In such situations, Government intervention in themarkets may be desirable.

The Government also has a role as a participant in market activity. Someenterprises, essential to the national well-being or the national defense,have been confined to governmental operation. Traditionally, the Post Officehas been a Government operation, even though it exists chiefly to providea service for which a price is charged and attempts to cover its costs withits receipts. In other cases, such as the Tennessee Valley Authority, thecommercial activity has been mainly incidental to the principal objectiveof the project, which was, in that case, unified resource development in aregion especially hard hit during the Great Depression.

Whatever reason the Government has for engaging in market activity,it should follow certain.rules to insure that the operation is efficient and itseffects are equitable. Certain operations are, of course, deliberately sub-sidized to serve essential public objectives; in such cases, it is always goodpractice to identify the subsidy explicitly in the budget. Except in thesecases, however, prices should reflect costs if resources are not to be wastedand users unintentionally subsidized at the expense of others. Rules are also

needed to guide the managers of Government enterprises so that they takeall costs into account, not simply those in their budgets.

The Government is involved, therefore, in economic activity for manydifferent reasons. It must establish the "rules of the game" for privateparticipants; it must facilitate competition and improve the efficiency ofmarkets; it must impose detailed regulations where the market does not offersufficient safeguards to consumers' interests because of inevitable monop-olistic conditions; and it must establish rules for its own participation inmarket activity.

COSTS OF GOVERNMENT INTERVENTION

Generally, this Nation has preferred to limit the rules and regulationsit imposes on individuals and on market operations, in order to encourageprivate initiative; and it leaves the burden of proof on any who assert aneed for more governmental involvement. A business in the private sector,operating under normal competition, has a direct test of how well thebusiness is doing its job—profits. All companies that are inefficient or putout products not desired by the public must face the consequences. AGovernment agency, a Government operation—or even Government rules—need not submit to such a direct test. Inefficient operations can limpalong for years without being called to account. Some regulatory rulesthat persist protect obsolete or inefficient production. Import quotas, agri-cultural marketing agreements, and outdated regulations can encourageor preserve high-cost, badly located, or obsolete facilities with little inter-ference and no direct test of their net value. Indeed, a major problem inGovernment's participation in our economic life is that we have developedno systematic procedure for eliminating obsolete rules, activities, and pro-grams. In principle, and generally in practice, the competitive marketplacehas an answer, and this is one of its crucial advantages. In a competitivemarket, if a private company uses productive resources inefficiently, marketpressures force it to relinquish them. This is one of the reasons why weshould rely as much as possible on the discipline of the market place toprotect the public interest.

Government involvement is not always the best answer—even when pri-vate activities are producing undesirable side effects or markets are notcompletely efficient. Government regulations are themselves not costless.Certain provisions in building codes, for instance, were originally intendedto protect consumers by specifying the materials that can be used. Nowthat some of the prohibited materials have been improved, these regulationscan result in needlessly higher costs of construction.

The sections below discuss the role of the Government in providing theframework for efficient markets, the role of the Government when regula-tion is necessary, and the rules under which the Government should partici-pate in the market.

92

IMPROVING THE EFFICIENCY OF MARKETS

Government has a major role in promoting the efficiency of markets.Where markets are efficient, prices and output respond swiftly to shifts inconsumer demand. Efficient markets result in reasonable uniformity in theprices charged by sellers or offered by buyers. Markets that work well alsohave low transaction costs; that is, buyers and sellers can conduct transac-tions swiftly and cheaply.

For efficient markets, it is necessary to have clearly defined and appro-priately specified property rights, enforceable contracts, competition,informed consumers, and a well working monetary system. Where no oneowns scarce resources such as fish in the ocean, oil under the ground, orradio frequencies, Government regulations are necessary to prevent waste-ful exploitation. Some of the problems that result from such commonproperty resources are treated below in the discussion of regulation.

A similar problem, on which attention is now focusing, is the inadequatedemarcation of public and private property rights in the atmosphere and inbodies of water. At present most private citizens have little or no legalrecourse against others who cause pollution. Since private property rightsare rarely established for air or water, the Government must find alternativeways of protecting the environment. These are discussed later in this chapter.

PROMOTION OF COMPETITION

A major role of the Government in providing for efficient markets is topromote competition. The nature and extent of competition have beencontinually changing as our economy has grown. Some changes have mademarkets more competitive, others have made them less so. The most notablechange has been the increase in size of markets because of advances intransportation and communications, the growth of the population, and itsconcentration in metropolitan areas. Most firms now compete over a muchwider area and for a much larger sales volume. Consumers find that manymore sellers are seeking their favor. This growth in size of the market leadstoward larger (but not necessarily fewer) firms that are better able totake advantage of a large market.

As educational levels have risen, buyers have also become better informedand more sophisticated. On the other hand, products have become morecomplex and more difficult to evaluate. Incomes of most consumers haverisen and these increases have made them better able to choose different com-binations of products. In every market segment new products and servicesare competing vigorously for the consumer's dollar.

The vigor of competition often depends on the number and size of rivalcompanies offering similar products or services. Although no data existfor the economy as a whole, data on manufacturing do not support claimsthat competition in general is diminishing. Concentration within manufac-turing industries has changed little since World War II and may have

372-111 O—70 7 93

declined since 1900. The average share of the market for the largest fourfirms among the same 213 manufacturing industries was between 41 and42 percent in both 1947 and 1966. On average, rough estimates indicatethat the concentrated portion of manufacturing has probably not increasedand may even have decreased since the turn of the century.

Partly as a result of merger and partly as a result of internal growth, how-ever, there has been a steady increase in the proportion of total manufac-turing assets controlled by the largest firms in manufacturing. In 1929,46 percent of the total assets of all manufacturing firms belonged to the200 largest corporations; in 1968, the comparable figure was 60 percent.Thus in manufacturing the concentration of ownership of assets by cor-porations has increased dramatically, while concentration in the share ofmarkets has not gone up. These conflicting trends apparently result froman increase in conglomerate activity.

Antitrust

Competition is not always self-sustaining. Collusion on prices, output,or market share can usually increase profits. Mergers between major com-petitors will eliminate their rivalry and may reduce competition. Conse-quently, the antitrust laws have long been accepted as necessary to marketefficiency. This Administration has continued vigorous enforcement. During1969, 44 cases were brought, of which 20 involved alleged violations ofSection 1 of the Sherman Act (conspiring to restrain trade). There havebeen five conglomerate merger cases, some of which involve vertical rela-tionships between buyers and sellers in some product lines. There were 15cases involving mergers between firms in the same line of business.

The Justice Department is actively pursuing a course designed to apply theantitrust laws to the changing and expanding economy. For example, inboth the legislative and judicial branches, a broader concept of interstatecommerce has been recognized. In consequence, the Justice Department isconsidering whether the antitrust laws apply to transactions, includingthose in the service industries, heretofore regarded as intrastate. Indeed,the Department has recently brought suit to enjoin a county association ofreal estate brokers from conspiring to fix minimum commission rates.

Remedies and Sanctions. Enforcement in itself may not be enough, how-ever, if the remedies or sanctions are inadequate. Generally, the remedies nowavailable to the Department of Justice in civil cases are felt to be adequate.But some have criticized the Expediting Act, governing appeals in Gov-ernment civil antitrust cases, because it provides no right of appeal fromthe grant or denial of a preliminary injunction. This shortcoming in the lawwould be corrected under an Administration bill to revise this Act.

Inflation and the growth in size of companies have lessened the force ofmaximum fines for criminal violations of the antitrust laws. Because a cor-poration can be fined no more than $50,000 for each criminal violation,regardless of the seriousness of the crime or its cost to the economy, the cor-

94

porate fine is often ineffectual. Accordingly, the major deterrent to pricefixing and other criminal antitrust action has been the threat of treble dam-age suits and the possibility of jail sentences for company executives. TheAdministration has accordingly requested Congress to raise the maximumfines for corporations to $500,000.

Mergers. A horizontal merger between major firms in an industry canbe at least as effective in eliminating price competition as any agreement be-tween the firms. Mergers, even between competitors, are not per se viola-tions of the law, however, and they may even favor healthy competition.The ready marketability of a firm may encourage others to become entrepre-neurs and establish new enterprises. Mergers may also be an efficient wayof replacing incompetent managements. They may lead to greater econ-omies of scale in production and marketing. And they may make it easierto transfer resources to the industries or enterprises that can most effectivelyemploy them. In addition, access to capital markets may be facilitated.Nonetheless, the law prohibits mergers whose effect ". . . may be substan-tially to lessen competition, or to tend to create a monopoly." An accom-plished effect deleterious to competition need not be proved; it is sufficientif there is a reasonable likelihood that such an effect will follow.

Problems may arise when a merger involves two firms in the same lineof business that until then had not competed in the same market. Arecent case of this kind involved the merger between Standard Oil of Ohio(Sohio) and a subsidiary of the British Petroleum Company, Ltd. (BP), oper-ating in the States along the Atlantic seaboard. The Justice Department hasestablished guidelines for such market extension mergers: A proceedingwill be brought when a company that is one of a few most likely entrantsinto a concentrated market joins in a merger with a leading firm in thatmarket. In this case, because BP was a likely entrant and Sohio, had by far thelargest market share in Ohio, the Department of Justice brought suit. A con-sent decree has been entered requiring that some of Sohio's stations be di-vested (sold or exchanged) to other firms, so that they will supply additionalcompetition. Sohio-BP will now not only operate in the Ohio market butextend its operations elsewhere. The general effect on competition in thegasoline retailing market should be beneficial.

Conglomerate mergers are growing in importance. Over two-thirds ofthe mergers between 1926 and 1930 were between competitors (hori-zontal), 8 percent represented market extensions, 5 percent were betweena buyer and the seller (vertical), and only 19 percent were between unre-lated firms (conglomerate). In the 1966-68 period the proportion of hori-zontal mergers fell to 8 percent, the drop being at least partly due to anti-trust action, while conglomerate mergers rose to 82 percent of all combina-tions. These mergers are more difficult to evaluate. They do not increase themarket share of either part of the joint firm. Their effect may be to stim-ulate competition, but because of its very size, diversity, and financialstrength, the combination may operate to lessen competition.

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Conglomerate firms can use the profits in one market to subsidize pricewars or promotional expenditures in other markets and so eventually re-duce competition. Conglomerates may also be in a position to require sup-pliers to purchase some goods from other divisions of the conglomerate.This practice of reciprocity may exclude competitors from a part of themarket.

The Department of Justice has announced that it intends generally toadhere to its 1968 guidelines, but that it probably will oppose any mergeramong the top 200 manufacturing firms or firms of comparable size in otherindustries, or any merger by one of the top 200 manufacturing firms withany leading producer in any concentrated industry. This program is basedupon recent decisions of the Supreme Court condemning mergers thateliminate significant potential competition, entrench leading firms in con-centrated markets, substantially increase the power of large firms to engagein reciprocity, or further a trend of mergers that would lessen competition.The staff of the Federal Trade Commission has recently issued a report onconglomerate mergers. The Commission is planning to continue its studyand to coordinate it with a projected Administration study of economicconcentration, including conglomerate mergers.

Resale Price Maintenance

The Miller-Tydings Act and the McGuire Act, under which resale pricemaintenance arrangements established under State law are exempted fromthe Sherman Act, reflect a major exception to the antitrust laws and tothe policy of promoting competition. The State laws in question permit amanufacturer to contract with a retailer not to sell his product or productsfor less than a specified amount. In a State with a "nonsigner" clause in itsstatute, no retailer is permitted to undercut this price. While the "nonsigner"clause has been found to violate State constitutions in 18 States, 20 Stateswith over half the population still have effective resale price maintenancestatutes.

A major objective of permitting resale price maintenance is to protect andencourage small business by eliminating price competition between retailersof the same branded product. Resale price maintenance reflects the dilemmaof whether to protect competitors or competition. Generally under resaleprice maintenance, manufacturers establish generous margins for retailers asan inducement to promote their product. But other manufacturers canquickly counter with similar margins, and they do. Retailers often profit tem-porarily from these higher gross margins, but competition usually eliminatesthe gain by encouraging additional outlets to carry the product, with theresult that sales per store decline. For example, a Justice Department studyfound that for eight lines of retailing in States with strong provisions for resaleprice maintenance, the sales per store in metropolitan areas were 12 to 34percent less than in States without any such law. Thus manufacturers receiveat best only a temporary edge from resale price maintenance. Retailers' gains

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are also eroded over time, but consumers normally will continue to payhigher prices.

ADEQUATE INFORMATION FOR CONSUMERS

For retail markets to be efficient in providing buyers with the goodswanted, consumers must have adequate information. Ill-informed consumerscan be defrauded, or they can be misled even when there is no intent todefraud in the legal sense. Unless he has a technical background and enoughtime to evaluate a product fully, the most careful buyer often finds it difficultto decide what he should purchase. He can perhaps reduce his risk bykeeping strictly to well-known brands and reputable retailers, but this maycost him the chance to profit by satisfactory low-cost alternatives. Moreover,on a wide scale this practice could entrench existing manufacturers andcreate new barriers against entry into the market.

Often the most effective way to help buyers become well informed is torequire proper labeling. The Truth in Lending Act and the Fair Packagingand Labeling Act are intended to help the consumer make "value com-parisons." In certain instances, however, labeling is impractical, and the Gov-ernment may need to prescribe standards for certain products. Moreover,with automobiles and some other products, an unsafe feature poses a dangernot only to the owner but also to others. The Government has thereforeestablished Federal safety standards for new vehicles, and many States requireperiodic safety inspections. Since January 1st, a prospective new car buyermust be told the stopping distance, acceleration, and the tire reserve load ofa vehicle.

Considerations of safety may require the Government to ban the sale ofcertain products altogether rather than rely on the consumer's ability toprotect himself even when provided with adequate information. For ex-ample, where complex products like drugs are involved the necessary in-formation may be unintelligible to the layman, and it is simplest and safestto prohibit their sale unless they are prescribed by physicians.

Increasing public concern about standards for the safety and quality ofproducts has led to proposals that the Government widen its influence in themarketplace. Particularly where products represent a potential hazard, thereis obviously a strong case for having the Government set and enforce stand-ards for producers. Nevertheless, we need to evaluate carefully the advan-tages and disadvantages to the consumer when considering such proposals.Despite their beneficial intent, their adoption could in some cases have theundesirable effect of lessening competition among producers—and thusbreaching one of the consumer's most effective defenses. The consumer'sinterest may not be served if so much reliability is required that it addsheavily to the cost. Another possible disadvantage in these restrictions is theireffect on the development of new products. Producers may be uncertainabout how well potential new products or services can meet published stand-ards requiring reliable performance and freedom from other defects. Such

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uncertainty, together with the threat of costly damage suits, confiscation ofgoods, or time-consuming delays in satisfying a multitude of Federal require-ments, may inhibit the development of new products and the entry of newfirms into the market to compete with established companies. We must alsoconsider whether safety is better served by educating consumers in the properuse of a product rather than making the product completely safe against evenremote contingencies.

The Consumer and the Market

To defend the public from misinformation offered by sellers, the Admin-istration has proposed a Consumer Protection Act. This act would specifyand prohibit many unfair and deceptive practices, such as "bait and switch"advertising (where the victim is attracted by a low-cost line and thenswitched to a more expensive product), passing off used goods as new, andmisrepresenting price reductions. Responsibility for enforcing these prohi-bitions would lie in a new Consumer Protection Division to be established inthe Department of Justice. The Federal Trade Commission would also havepowers to enforce these prohibitions. As soon as a violation was determinedin a proceeding by either agency, consumers could bring suits individually oron behalf of a group of consumers for damages in the Federal courts. Thisprocedure would give consumers effective relief in proven cases of deceptionor fraud; at the same time it would protect firms against nuisance suits.

Because information provided by the private market must be reliable, aConsumer Product Testing Bill has been recommended to Congress. Underthe provisions of this bill, the Office of Consumer Affairs, to be establishedin the Executive Office of the President, would review the adequacy ofcurrent methods now used to test consumer products. One purpose of the billis to upgrade the tests used by private laboratories when necessary. If teststandards were lacking or deficient, the Government could ask industry toestablish proper ones. If industry were unable to establish acceptable stand-ards by itself, the Government could then identify the standards it believesshould be followed. Firms meeting approved standards would be entitledto say so in their product promotion activities.

The Consumer and the Government

In the past, the interests of labor, capital, and management have beenwell considered in Government deliberations. Consumers are less organized,however, and they have not always been adequately represented. To helpremedy this defect, the Administration has proposed, as noted above, anOffice of Consumer Affairs and a Consumer Protection Division in theDepartment of Justice.

The Office of Consumer Affairs would have broad powers to coordinateand improve present programs relating to consumers. It would see that theinterests of consumers receive consideration at appropriate levels of theFederal Government. Among other powers it could conduct research, hold

conferences on consumer problems, and develop a program for the releaseand publication on a generic basis of product information derived from theFederal Government's purchasing expertise. This office may also publish aConsumer Register which would translate the legal terminology of theFederal Register into layman's language so that interested consumers wouldbe properly informed of Federal regulatory proposals and rules.

The Consumer Protection Division would have broad powers of advocacyand enforcement. It would be authorized to intervene in any proceedingsby Federal agencies which affect consumer interests, as the Antitrust Divi-sion now does in proceedings which affect competition. It would thus offera counterweight in formal hearings to the briefs filed on behalf of producers.

PROTECTION OF THE ENVIRONMENT

The existing rules of the game governing the economic system were notprimarily designed to deal with our common responsibility for the environ-ment in which we live. As public concern for the environment increases, thedemand for appropriate rules, and for Government action if these rules fail,becomes more pressing. The environment is threatened when the wastesoriginating in a factory, home, or automobile find their way to the outsideworld, or when outsiders are bothered by noise, odors, or unsightliness. Thefollowing discussion will be confined to pollution caused by wastes, thoughsome of the remarks also apply to other forms.

The problems created by wastes can be handled by five general approaches.They can be left to nature; the public sector can dispose of wastes at generalexpense; standards can be imposed to prevent or reduce pollution; the costsof reducing pollution can be shared by the Government and the polluter; orincentives to control pollution can be developed by levying special charges onemissions. Each of these approaches, which can be used in combination, hasits advantages and disadvantages.

As long as pollution is insignificant it is possible to ignore wastes and theirconsequences. This traditional approach depends primarily on the abilityof the environment to clean itself or to absorb wastes without unduly harm-ful effects. But the quantity of wastes has now become so great that pollutionis affecting peoples' lives noticeably. Air pollution, for example, is not onlyunpleasant but has a measurable impact on death and morbidity rates. Waterpollution has prevented millions from utilizing rivers, lakes, and ocean frontsfor recreational activity and has interfered with farming and commercialfishing. In addition, water pollution and the residues of fertilizers and pesti-cides are held responsible for undesirable changes in the ecology.

Consequently, the Government has found it necessary to develop programsto deal with pollution. Water pollution has normally been handled by treat-ing wastes before releasing them to the environment. The public costs oftreatment have traditionally been borne most heavily by local authorities,although recently the Federal and State shares have increased. Most treat-ment of industrial wastes is performed by industrial firms through their own

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treatment plants, but some firms release their effluents untreated or rely onmunicipal systems. In the latter case it is important to charge for treatment;if the direct costs of dealing with pollution are charged to the general tax-payer rather than to the polluter, there is no incentive to reduce pollution.

The backbone of pollution abatement programs for both water and airpollution utilizes the resrulatorv approach. Under the Air Quality Act of1967, air quality standards for stationary sources of emissions are being estab-lished for control regions throughout the Nation. Subject to the approval ofthe Department of Health, Education, and Welfare, standards are estab-lished by the States and an implementation program is drawn up. Aspecial regulatory scheme, enacted to cover motor vehicles, requires that newcars can be sold in the United States onlv if emissions complv with standardsspecified by HEW. Under the Water Quality Act of 1965, water qualitystandards are being set for all parts of interstate and coastal waters, undera similar Federal-State partnership. For example, each section of a river isdesignated for a particular use, such as water supply, swimming, fish produc-tion, etc., and the standards are set to achieve that quality. All States havedeveloped water quality standards and enforcement procedures which havebeen approved, at least in part, by the Secretary of the Interior. The cost ofcomplying with these standards normally falls on the polluter and in somecases on municipalities aided by Federal and State grants.

A related and supplemental method of pollution abatement would be toprovide some form of cost sharing payment for individuals or firms to reducethe pollution they cause. Such payments might conceivably take the form oftax concessions on the costs of pollution abatement methods. A stronger in-centive is provided by taxes on effluents or treatment fees, which can leadfirms to change their processes or install new equipment to reduce their efflu-ents. The cost of pollution would then be charged to those who cause it, andas a result they may decide to reduce or eliminate their discharge of wastes.

In some water pollution cases, however, economies of scale may make itmore economical for a public agency to deal with the wastes than it wouldbe for the individual polluters. Who should provide abatement equipment,and how, depends both on the cost of treatment and on the costs to theenvironment of the pollution. In some cases regulation combined with taxincentives may be most efficient and equitable. In other cases effluent chargesmay be appropriate.

REGULATION

Regulation has been imposed for two purposes: to make the market per-form more satisfactorily and as a substitute for competition. In the financialarea it is particularly important that markets work well, not only forstabilization purposes but also to insure that product and labor markets areefficient.

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GOVERNMENT AND THE FINANCIAL SYSTEM

Throughout our history the Government has been involved in regulationof the financial markets. Such regulation serves three broad purposes: (1) Itprovides for an appropriate money supply and efficient operation of the pay-ments system; (2) it protects the public from loss due to financial failures, aswell as from misrepresentation and fraud; and (3) it encourages and sub-sidizes the allocation of credit to particular sectors. Achievement of the firsttwo objectives increases the efficiency of markets. The third is aimed at usingregulation to accomplish other policy objectives.

A well-functioning payments system is vital to the economy, as the bank-ing panics of 1933 and earlier periods forcefully remind us. The Constitutionauthorizes Congress "to coin Money [and] regulate the Value thereof,"an authority that has been broadly construed. The United States has estab-lished a variety of regulations and agencies for controlling the creation ofmoney and the operation of commercial banks and other depository institu-tions. For example, the Federal Government issues currency, charters banks,imposes reserve requirements, oversees foreign exchange operations, insuresdeposits, prohibits interest on checking accounts, and sets ceilings on therates to be paid on time and savings deposits.

The stock market crash of 1929 and some financial malpractices thatsubseouently came to light created doubts about relying solely on the generallaws of contract in financial markets. Since 1933, Congress has aidedthe investing public by enacting laws curbing unethical financial practicesand by making pertinent information more accessible. The Securities andExchange Commission was established to formulate and enforce require-ments relating to operations of securities exchanges and the disclosure ofinformation about publicly issued and traded stock (later extended tobonds). To protect public shareholders, Federal legislation also restrictsand requires publication of the trading of stock by corporate "insiders."The Investment Advisers Act of 1940 and the Truth in Lending Act areexamples of laws designed to improve the information upon which the publicbases financial decisions.

Problems of Financial Regulation

While the ultimate objectives of Federal involvement in the financialsector are clear, the problems and costs do not always receive sufficientattention. The direct costs to the Government and the public of imposingrestrictions on financial institutions may not seem large, but an importantcost easily overlooked, because it is difficult to quantify, stems from theinflexibility of regulations once they are issued. Regulations devised foran earlier economic environment can stifle innovations and new develop-ments in today's market. Examples are the restrictions on branch bankingimposed by many States, which Federal law makes applicable also tonational banks; the geographical and portfolio restrictions on savings andloan associations, which are particularly onerous when their potential market

IOI

has been shifting to new areas; and restrictions on commercial banks thathamper them in meeting emerging demands for new services.

Sometimes regulations created to protect the public against malpracticesare extended and used to restrict new entry into a market. Regulationsalso often prescribe or support minimum or maximum prices. The Invest-ment Company Act of 1940 in effect establishes a resale price maintenancelaw for mutual funds that prevents retail dealers of mutual funds fromcharging lower commissions. Minimum brokerage fees set by major stockexchanges are currently under review. Many financial regulations distortcredit flows by imposing interest-rate ceilings on mortgages and deposits.The problem is to make certain that "fairness" in setting rates does notput an umbrella over inefficiency, and that "soundness" in financial institu-tions does not become a pretext for impeding competition and innovation.

Deposit-Rate Ceilings as a Case History. An example of the problemscreated by the inflexibility of regulation can be found in recent developmentsarising from interest-rate ceilings on time and savings deposits at commercialbanks and other financial institutions. Authorized by the Banking Acts of 1933and 1935, these ceilings were intended to prevent banks from paying moreinterest on deposits than "sound" banking would warrant. The fear was thatbanks might otherwise make high-rate but risky loans (to cover excessiveinterest rates on their deposits) and would thus become vulnerable to defaultwhenever business activity weakened. There was also concern that, in asystem composed of thousands of banks, competition for funds on a ratebasis might draw funds away from many individual institutions and seriouslyweaken them. In reality, the ceilings made very little difference until themid-1950's, because interest rates on all assets remained very low and thedeposit rates actuallv paid remained below the ceilings.

In later years, these ceilings on deposit rates at commercial banks havecome to serve quite different purposes than those originally contemplated.In particular, thev are viewed as a device to ensure a larger flow of fundsinto home building, because they help protect savings and loan associations,a mainstay of home financing. These associations, specializing in mortgages,have attracted deposits by paving a slightly higher return than commercialbanks, which are prevented by the ceilings from offering competitive rates.Because of the slow turnover of the long-term mortgage holdings of savingsand loan associations, however, these institutions were not in a position, asinterest rates rose rapidly in the past several years, to increase the ratespaid to depositors sufficiently to prevent large withdrawals. Chart 11illustrates how the yield on new mortgages, which reflects what homebuyersare willing to pay, climbed in recent years above the average return onassociation portfolios, a figure which, after allowing for costs, representswhat these institutions could afford to pay to attract deposits and stillshow a positive net income. Because of these competitive pressures, rateceilings were extended in 1966 to cover savings and loan associations.

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Chart 11

Mortgage Yields and Dividend Rate of FederalSavings and Loan Associations

PERCENT PER ANNUM

10

8 -

6 -

4 -

2 -

MORTGAGE YIELDS:

_ S & L PORTFOLIOAVERAGEJ/

\ ^

^gfltumnnun*****

„„„.».•••••••»**

1 1 I 1 1 1 1

FHA NEW HOMEMORTGAGES

\

S& L DIVIDEND RATEi /

1 1 1 1 1 1 I

yzf— "

+*—

1 1 1 1 1

J / T O T A L INTEREST RECEIVED AS PERCENT OF AVERAGE MORTGAGE LOANS HELD.

-2/TOTAL DIVIDENDS PAID AS PERCENT OF AVERAGE SAVINGS CAPITAL,

SOURCES: FEDERAL HOUSING ADMINISTRATION AND FEDERAL HOME LOAN BANK BOARD.

During 1969, a consequence of rate ceilings has been a net reductionin the inflow of savings to depository institutions as a group. Many oftheir depositors have withdrawn funds in order to invest directly in marketsecurities, which have recently paid much higher interest rates. Rate ceil-ings have also discriminated against small savers who cannot so easilyswitch to securities and must be content with lower rates.

Since mid-1969, deposits of savings and loan associations have practicallystopped growing, despite the lack of competition from commercial banks,and the consequence has been a decline in mortgage financing. The savingsand loan associations must now depend heavily on loans from the FederalHome Loan Bank System. Indeed, only a massive dose of support by

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federally sponsored agencies has been able to prevent an even larger declinein mortgage financing and housing starts.

Direct regulation of interest rate ceilings on deposits, together with port-folio restrictions, has contributed to these problems, because it has encouragedsome developments and delayed others in such a way that an important partof the financial system is now ill-adapted to a world of changing interestrates. These ceilings have not provided a satisfactory answer to the financialneeds of housing, while they have prevented the free and efficient move-ment of funds through financial markets. Mortgage financing and the roleof interest ceilings need reexamination. Savings and loan associations needgreater flexibility to adapt to market developments, and new sources offunds for the mortgage market need to be devised. Given the consequencesof four decades of deposit-rate ceilings, they cannot be suddenly removedwithout serious financial disruptions. Some basic reforms in financial regu-lations are, however, needed.

Presidential Commission on Financial Structure and Regulation

Our expanding and increasingly complex economy must have financialinstitutions reflecting the vitality that comes from vigorous innovation andcompetition. Financial services required by tomorrow's economy will differin as yet undefinable ways from those appropriate today. The demands onour flow of national savings, as indicated in Chapter 3, will be heavy inthe years ahead, and our financial institutions and financial structuremust have the flexibility that will permit a sensitive response to changingdemands. Thus the time has come for a thorough examination of neededchanges in our financial institutions and our regulatory structure. Thisstudy will be carried out by a commission to be appointed by the Presidentearly this year.

GOVERNMENT REGULATION OF AGRICULTURE

Agriculture is another important sector of the economy where regula-tion has been used in an attempt to make market performance moresatisfactory.

Many of the problems of agriculture are the result of a steady increasein agricultural output per farmer, which has made farmers a continuallydwindling minority, and of insufficient mobility, which has kept theiraverage income below that of most other occupational groups. As earlyas 1870, the number of farmers had dropped below the number of personsin other occupations. This trend has continued, and the proportion of thepopulation gainfully employed in agriculture at the present time is only5 percent. This is the usual transition in an advancing economy. Fewerand fewer people are required to produce the food and fiber for the restof the population; or, stated another way, as the real income of consumersrises, an increasing proportion of income becomes available for other thingsthan the basic necessities of life. Currently, about 16 percent of consumerincome is spent on food.

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Thus we get the familiar adjustment problem in the agricultural sector.Stimulated by the yield from public and private programs to develop andfacilitate adoption of technological innovations, output grows more rapidlythan consumer demand. Since the demand for farm products is relativelyinelastic, increased supplies generally lead to markedly lower farm prices.As a result, farm incomes are depressed, and farmworkers and proprietorsmove to other occupations. But because there are impediments to this move-ment, per capita personal farm income does not catch up with the level inother sectors.

At the depth of the depression, per capita personal income of farm peoplewas less than one-third that of the nonfarm population. In the middle fiftiesit was about 46 percent. Currently, the per capita personal income of farmpeople is about 70 percent of that of the rest of the population, but the nar-rowing of the income gap is due in large part to increasing Governmentpayments to farmers, steady gains by farmers in adding to their income fromnonfarm sources, and substantial declines in farm population (Chart 12).

Chart 12

Per Capita Personal Income ofFarm and Nonfarm Population

DOLLARS

4,000

3,000

2,000

1,000

INCOME OF NONFARM POPULATION

INCOME OF FARM POPULATION:

FROM ALL SOURCES

FROM FARM SOURCESINCLUDING GOVERNMENT

PAYMENTS

FROM FARM SOURCESEXCLUDING GOVERNMENT PAYMENTS

1955 57 59 61 63 65 67 69

SOURCES: DEPARTMENT OF AGRICULTURE, DEPARTMENT OF COMMERCE, AND COUNCIL OF ECONOMICADVISERS.

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Government Intervention in Agricultural Markets

The depression of the 1930's led the Federal Government to intervenedirectly to support falling prices in agricultural markets with the objective ofstabilizing farm income. Since that time, commodity programs that wereoriginally adopted largely as emergency measures have varied only in em-phasis from one decade to another. They have generally involved direct pay-ments to farmers, production controls on output, price supports, and storageand marketing activities. All these programs have entailed substantial budg-etary costs. Direct payments alone were about $3.75 billion in 1969, account-ing for about 23 percent of realized net farm income.

Because most commodity programs have been related to output, theirmain benefits go to the larger commercial farms; for example, in 1968 thetop 6 percent of the farms (those with sales of $40,000 or more) receivednearly one-fifth of the Government payments and accounted for about one-third of the realized net farm income.

As another indirect form of regulation, Federal and State marketingorders and agreements are in effect for many perishable commodities such asmilk, fresh fruit, and fresh vegetables. Milk marketing orders illustrate onemethod of market control. For each milk marketing order, minimum pricesare established for the milk sold by dairy farmers. Using criteria providedby statute, the Secretary of Agriculture sets these prices; prices may be dif-ferent for the same milk depending on its final use. Drinking or Class I milkcarries a higher price than manufacturing or Glass II milk. The average or"blend" price is paid to all farmers.

In an attempt to reinforce price discrimination between the two classesof milk, the Food and Agriculture Act of 1965 provided for so-called Class IBase Plans in Federal milk markets. These plans, which are instituted at therequest of dairy farmers, can be used to restrict production to the level ofClass I requirements in an individual market. Under this plan, each producerreceives a high price on his "base" (his share in the Class I market), ratherthan a "blend" price on all production. Milk produced in excess of the estab-lished base is then priced at the lower Class II level, thus discouraging theproduction of milk for manufacturing. When access to the Class I marketwith its higher prices is sharply restricted, title to a base may be very advan-tageous. The value of these bases subsequently becomes capitalized into pro-duction costs for new producers, who purchase them. And consumers ofClass I milk must continue to pay substantially higher prices.

A Market-Oriented Agriculture Policy

Farm policies on field crops should give greater emphasis to marketforces and thus reduce direct governmental participation in the marketplace.Specifically, three goals should be sought. First, prices should become moreflexible so that they approximate equilibrium between supply and demandwhen averaged over a period of years. With this flexibility farmers should be

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able to hold and even expand both domestic and foreign markets. Price sup-ports should not interfere with normal commercial transactions, but shouldserve only as a price floor to prevent excessive fluctuations and to provide abasis for credit.

Second, production should not be controlled by limiting individual cropacreages; rather it should be guided by market prices. Because the Govern-ment cannot immediately withdraw the influence on production that it hasexercised during its four decades of direct intervention, a gradual approachis needed by which greater freedom will be gained through restrictionson total land use only. Such a program would restore considerable freedomof choice to participating farmers, permitting each one to produce as much ofany crop as he thinks will be most profitable up to the limits of his authorizedcropland. Eventually, we may be able to discard even this control measure.

Third, direct income payments, properly applied, offer a more efficientway to support farm income than high price supports. The potential benefitsof high prices are largely dissipated because they make additional purchasesof inputs profitable. Direct income payments will be necessary for some timeto compensate for inequities and to smooth the adjustment process. Reason-able limits on payments to individuals, however, would help prevent theundue enrichment of large operators at public expense.

REGULATION OF NONGOMPETITIVE MARKETS

In a few markets, competition does not flourish. In fact, in some instancesone large firm can supply an entire market at lower cost than several smallerfirms. When this is true, there tends to be a natural monopoly.

The American answer to these problems has generally been to substituteregulation by Government agencies for reliance on the market. Nationaliza-tion and Government operation have only been experimented with in anumber of instances. This preference for regulation instead of nationaliza-tion has given rise to a variety of Federal and State agencies that set upand enforce restrictions on many economic activities. There are agencies cov-ering transportation, communications, electric power, pipelines, and petro-leum, to cite most of the important ones.

The American experience with regulation, despite notable achievements,has had its disappointing aspects. Regulation has too often resulted in pro-tection of the status quo. Entry is often blocked, prices are kept from falling,and the industry becomes inflexible and insensitive to new techniquesand opportunities for progress. Competition can sometimes develop outsidethe jurisdiction of a regulatory agency and make inroads on the regulatedcompanies, threatening their profitability or even survival. In such cases,pressure is usually exerted to extend the regulatory umbrella to guard againstthis outside competition, so that the problems of regulation multiply anddetract from the original purpose of preventing overpricing and unwantedside effects.

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The fundamental problem lies in the complex and conflicting objectivesthat sometimes characterize economic regulation itself. Agencies are sup-posed to protect the present and future interests of consumers, employees,investors, and the Government. No one can begin to see the full conse-quences of current decisions on all these groups. As quasi-judicial bodies,the regulatory commissions tend to give much weight to precedent. As aresult, change of any kind becomes hard to justify and even harder to allowwhen some affected group can claim immediate harm, whereas the po-tential beneficiaries are widely diffused and usually not represented. Yetinnovation and adaptation are the dynamics of economic progress.

There is no clear safeguard against these dangers, but more reliance oneconomic incentives and market mechanisms in regulated industries wouldbe a step forward. The record in transportation and communications, andother examples in this chapter, point to that lesson. Industries have beenmore progressive when the agencies have endeavored to confine regulationto a necessary minimum and have otherwise fostered competition. Whenregulation has stifled competition, performance has deteriorated. Theclearest lesson of all, however, is that regulation should be narrowed orhalted when it has outlived its original purpose.

Transportation

The Interstate Commerce Commission's efforts to eliminate price cuttingamong truckers, railroads, and bargelines is a classic example of the at-tempts to curb competition through regulation. The original justificationfor regulation—that railroads were monopolistic—has lost much of its va-lidity since there is now considerable competition from other modes oftransportation, although the shippers of some bulk commodities are stillheavily dependent on rail transportation. Yet the ICC must continue tooperate under the mandate of past transportation acts. Greater reliance onthe market would be beneficial to transportation, but, in view of longestablished practices, this would have to be approached gradually. Exceptfor predatory pricing to drive competitors from a market, which is pro-hibited under antitrust law, many transportation rates could safely be allowedto find their own level through competition. A policy of permitting andencouraging competition of all kinds would, if general economic experienceis any guide, make the industry more efficient as well as benefit the public.

ICC regulations also have the effect of restricting entry into markets,particularly in the trucking industry, where economies of scale are limitedand costs of entry low. Lack of free entry protects the profits of existingcarriers, but it hardly benefits the public. Here the regulatory process isarrayed against new entrants. Those who could suffer from competitionmake themselves known and actively plead their cause. Those who mightenter if restrictions were relaxed are less clearly identifiable, and theyhave less interest in advocating the case for free entry.

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The origin of regulation was somewhat different in the air transportationindustry. The Civil Aeronautics Board (CAB) was given a mandate tofoster competition consistent with orderly growth and the convenience andneeds of the public. Public safety was to be an important dimension of con-venience. As a result, the air transportation industry blends competitionwith a high degree of safety and convenience. Regulation has inevitablyreduced price competition, however, and has tended to reduce new entryin air transportation. With the exception of two carriers serving Alaska,no new trunkline carriers have been certified since the CAB was established.The CAB has, however, encouraged limited competition by certifying com-peting carriers on some routes, and this limited competition has resultedin increased service to the public.

Communications

Common-carrier communications service, such as the telephone service,is a natural monopoly. In many parts of the world, the practice has been tonationalize this industry. Here we have chosen to provide detailed regulationof privately owned service. The results have been generally satisfactory, interms of convenience to customers. Regulation should be carried out insuch a manner that it does not prevent or limit competition in sectorsthat are not natural monopolies. Recently, after a series of Federal Com-munications Commission (FCC) and court decisions, new carriers of privatewire and microwave systems have been permitted, with beneficial effects onrates and services.

Long-distance communications may be entering a new and more com-petitive era with the development of satellite communications systems.Economies of scale in the operation of satellites do not appear to be sufficientto bar competitive operations. Hence the Administration has recommendedto the FCC that multiple domestic satellite systems be authorized and thatrestrictions on entry be applied only where they are necessary to preventundue interference. It is the Administration's hope that increased competi-tion will eventually make it possible to let market forces assume more of therole of detailed regulation.

Radio Spectrum

Property rights in radio frequencies do not exist, nor are markets allowedto determine the allocation of frequencies. The FCC currently allocates spec-trum among the competing users and thus creates quasi-rights. Unfortu-nately, it is difficult for any regulatory body to determine the most bene-ficial uses of a scarce resource. While the FCC attempts to make sound allo-cative judgments, it is faced with continual requests for spectrum for manydifferent uses. Without a market test it has no way of being sure that its allo-cative decisions are appropriate.

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The absence of property rights to the radio frequencies also helps createcongestion in the spectrum. No single user feels impelled to develop methodsthat will require less spectrum. Nor does he have an incentive to share hisspectrum with others who may make more efficient use of the frequency.

Here too the market should probably have a stronger influence on theallocative process. As an illustration, it might be possible to experiment witha mechanism reflecting the economic value of the entire spectrum. Such anexperiment might involve a system of fees varying with the estimated valueof particular frequencies and subject to repeated adjustments.

GOVERNMENT PARTICIPATION IN THE MARKET

The Government participates in the market primarily as a buyer of goodsand services. It also participates as a seller or provider of goods and services.Some of these are collective goods, such as national defense, that can only beprovided by the Government. Others, such as education, can and are furn-ished by the private sector as well. A full treatment of the Government'sparticipation in the marketplace is beyond the scope of this Report, but cer-tain aspects are worth emphasizing.

When the Government is the only supplier, the public is not always ade-quately serviced. The Government makes many items available free or belowcost, so that it becomes a monopoly supplier. Sometimes the Governmenthas established a legal monopoly and prohibited competition. Unless thereis a compelling reason to justify a Government monopoly, it should not beestablished; rather competition should be encouraged wherever possible.

In some instances goods or services are supplied below cost, when theGovernment could accomplish the same aim, yet encourage competition, bysupplying buyers with funds earmarked for the purchase of the desired itemin the market. The food stamp program is an example of this approach.In general the recipients will derive less benefit from such earmarked fundsthan from unrestricted grants in the same amount. The Administration'sFamily Assistance Program therefore envisages replacing food stamps bycash grants as rapidly as possible.

In the Government's role as a supplier of goods and services its chargesshould clearly reflect the incremental costs of its operations, includingcapital charges except where subsidization is a conscious objective. Whencharges are brio™ such costs, a wasteful use of resources may result, sinceconsumers are encouraged to use more of the product or service than theywould if charges reflected costs more accurately. Subsidization is, of course,appropriate wherever such greater use is the explicit objective (and in thiscase there should be an explicit accounting for the subsidy).

Costs of Government enterprises are especially difficult to measure. Inprinciple, the appropriate measure of cost to the Government is what theresources it consumes could have earned in the private sector. As the previ-ous chapter pointed out, when any resources are used by the Government,

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it lessens by that much the resources available to the private sector. Onealternative to Government use of resources would be to make more fundsavailable for private investment. As a first approximation, the appropriatecost of a Government investment would be the expected earnings—pretax—on a similar private investment, and not the cost to the Government of bor-rowing funds.

If a Government enterprise is operated in a market framework, the dis-cipline of the marketplace is likely to improve the results. When an enter-prise faces active competition, it cannot afford to offer poor service. If itmust raise capital in the private sector, it will naturally take account of thefull cost to the economy of such investment. And when it operates withoutGovernment aid, it must cover its costs.

Thus, a practical way to improve the workings of Government enter-prises, unless subsidizing is a major objective, is to move the operation asclose to the private sector as possible. This Administration has initiatedtwo important moves in this direction. It has recommended the establish-ment of a Government-owned postal corporation which would ultimatelyhave to cover nearly all its costs. It has also recommended that the AtomicEnergy Commission's uranium enriching plants be sold to private industryat an appropriate time and that in the interim the operation of the plantsresemble private operation as nearly as is practical.

POSTAL SERVICE

The Post Office is essentially a commercial operation run as a Govern-ment agency, but modern management practices are difficult to introduce.Personnel costs, which account for about 80 percent of Post Office costs,are fixed by Congress. Net fixed assets per postal employee were only$1,145 in 1967, while they were $2,836 per employee in merchandising,$7,170 in manufacturing, and $25,053 in transportation. Partly as a con-sequence of these conditions postal productivity has been increasing since1956 at a rate of about 0.2 percent per year compared with 3.4 percentfor the private sector of the economy.

According to the Kappel Commission's review of the Post Office, workingconditions in many post offices leave much to be desired. More than 60 per-cent of the regular postal employees finish their careers at the same level atwhich they started. Patronage and residence requirements for postmasters'appointments have held down career opportunities. Efforts to improveproductivity are often frustrated. The system has been "run by the book,"a 2,000-page Postal Manual intended to cover all contingencies.

Most postal rates are currently set by Congress. Under the current account-ing system, it is impossible to ascertain the incremental cost of any service.For this reason little basis exists for confirming or denying the popular beliefthat first-class mail more than pays for itself while other mail is deliveredat a loss.

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The Kappel Commission pointed to the political nature of Post Officeappointments as one of the most serious problems in the postal system.The President has asked that Congress no longer require Senate confirma-tion of appointments to postmasterships at first-, second-, and third-classoffices. He has also requested legislation to bar political tests in the selection,appointment, and promotion of Department employees. Departing from aformer practice, the President does not seek local political endorsement ofprospective postmasters. All these steps are designed to strengthen the meritsystem and permit candidates to be chosen for their competence rather thantheir political activity.

An even more fundamental departure is the Administration's proposal forreform of the postal service through the creation of a Government-owned,self-supporting corporation to operate the postal system under a directivethat costs must be covered with revenues after a transitional period, exceptfor public service costs for which appropriations would be made. The corpo-ration would have the power to borrow fimds for capital investment, tonegotiate wage rates with postal unions, and, subject to veto by Congress,to set postal rates. The Government-owned postal corporation would beallowed great flexibility in operating the postal system, especially in itspersonnel and capital expenditure programs.

The postal reform proposal would obligate the board of directors of thepostal corporation to report to Congress within 2 years concerning modern-ization of the postal monopoly laws, which effectively prohibit a privatefirm from delivering first-class mail. A careful review of these laws might showthat additional competition could prove beneficial to the using public.

URANIUM ENRICHMENT FACILITIES

In the current state of technology the most efficient method of providingnuclear power is the use of light water reactors which operate on enricheduranium. Three plants owned by the Atomic Energy Commission andoperated under contract by private enterprise supply this uranium. Con-structed at a cost of $2.4 billion, these plants are located in Oak Ridge,Tenn., Paducah, Ky., and Portsmouth, Ohio.

Originally the plants were built for the nuclear weapons program. Militaryneeds for enriched uranium are expected to be small in future years, muchbelow the capacity of these plants, but the growth of the nuclear powerindustry is expected to lead to capacity operations by the late 19705s.

In the chain of operations involving this form of energy—from mininguranium to generating nuclear power—the enriching plants are the last linkto remain exclusively in Government hands. Since demand for enricheduranium is likely to come almost entirely from the commercial sector, thePresident has indicated that these plants should also be sold to privateindustry when conditions for disposal are advantageous.

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Conditions for such sale are not advantageous at present. The plants arecurrently being operated at only about 40 percent of their existing capacity.Moreover, because of existing long-term contracts for power supplies, theplants will produce considerably more enriched uranium than can be soldat present, though it may be needed to meet future demands.

So long as the Government keeps the plants, it should encourage theirefficient use in order to strengthen competition in the power field. ThePresident has asked the AEC to establish a Directorate to run these plantsin a manner that approaches more closely commercial enterprises, implying1

that they should earn commercial rates of return on the investment. TheDirectorate will use commercial accounting procedures and prepare annualfinancial statements equivalent to those of private corporations.

An important feature of this change is that nuclear generating plantswill not enjoy a subsidy giving them an advantage in their competition withfossil fuels as sources of electric power. The proposed Directorate's opera-tions, modeled after commercial operations, should provide a record ofearnings that will facilitate subsequent sale to private industry and helpto assure that the Government receives a fair price for the plants when theyare sold.

THE GOVERNMENT AND HOUSING

All levels of government have been involved to an exceptionally highdegree in the housing industry—in its financing, its technology, its laborsupply and labor relations, and even in its supply of some basic materials.In addition, housing is the only major private industry for whose outputa fairly specific goal has been stated by legislation. The Housing Act of 1949declared a goal of "a decent home . . . for every American family," and theAct of 1968 said that this goal could be met by constructing or rehabilitating26 million houses in the next decade, of which 6 million would be for low-and moderate-income families.

The enactment of this goal was not based on a calculation of the costs ofachieving it and a decision to pay those costs whatever they might be. Untilthe costs and possible methods of achieving this goal are assessed moreaccurately it cannot be regarded as a firm basis for planning. Moreover, anygoal set now would certainly have to be regarded as open to review andrevision as time passes. Nevertheless, the kind of concern expressed by the26 million housing goal, together with the prospect that rising family forma-tion will greatly increase the demand for houses in the next decade, calls fora reexamination of the Federal role with respect to housing.

A distinction should be made between policy about housing for low-income people and housing for the rest of the population. An intention tosubsidize housing for low-income people is clear. This may be explained onthe same grounds as other contributions from the more affluent to the poor,although there are questions about whether in the long run subsidizinghousing is an efficient way to make this transfer.

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Federal policy toward the nonsubsidized part of housing is probably bestunderstood as an effort to improve the operation of private markets. Thisis clearest with respect to finance. The cost of capital to finance housing hasbeen affected by the real or apparent riskiness and illiquidity of mortgageinstruments. Policies to reduce these costs, without subsidies from theFederal Government, include FHA insurance, the provision of insuranceand a reserve lending source for savings and loan associations, and theestablishment of the Federal National Mortgage Association (FNMA)to create a secondary market for mortgages. Further action along this linemay be useful, especially to reduce the great instability of the residentialconstruction industry, which in turn would contribute much to increasingproductivity in the industry.

It is probably inevitable that housing construction should be particularlysensitive to variations in interest rates, given the heavy weight of interestcharges in housing costs and the fact that much of the demand for housingcan be postponed, at least for a time. However, this sensitivity has beengreatly increased by a number of institutional arrangements of which interestrate ceilings have been among the most important. In the past, legal ceilingson the interest rates payable on FHA and VA mortgages have caused thesupply of funds available through those programs to dry up whenevermarket interest rates rose much above the ceilings. The Secretary of Hous-ing and Urban Development is authorized to vary the ceiling rate, and thisflexibility can somewhat ease that particular problem. Usury ceilings insome States prevent the flow of funds into mortgages when market rates arehigh. In 1969, the supply of mortgage money in States with low usuryceilings appeared to be more limited than in other States. Stability in con-struction would be improved if these usury ceilings were eliminated. Thefact is that these ceilings, instead of protecting people from having to payexorbitant rates, often prevent their obtaining mortgage credit at all.

The housing industry is also less able to compete for funds when interestrates are rising because by custom it has depended heavily on specializedfinancial intermediaries, as noted elsewhere. The possibility of raisingfunds in the face of high interest rates might be improved if housing hadrecourse to more varied sources. Several steps have recently been taken toremedy this lack. The Federal National Mortgage Association and theFederal Home Loan Bank Board (FHLBB) have greatly expandedtheir borrowing on their own securities in the open capital market in orderto supply funds to mortgage markets directly or through savings and loanassociations. In 1969, regulations were promulgated for the issue of mort-gage-backed securities of various kinds, guaranteed by the GovernmentNational Mortgage Association (GNMA). This action was intended toauthorize a mortgage investment instrument that would be marketable andattractive to a wide range of investors not now interested in mortgages di-rectly. Establishment of a facility providing a secondary market for conven-

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tional mortgages somewhat along the lines that FNMA now provides forFHA-VA mortgages is currently being considered.

The housing industry is unable to raise sufficient funds during a period ofrising interest rates and inflation because of the nearly universal use of a long-term credit instrument with a fixed interest rate and amortization schedule.When future interest rates and rates of inflation are uncertain, both lendersand borrowers may be better satisfied with an instrument that provides somehedge against these uncertainties. One possibility would be a mortgage inwhich the interest rate varied with some prevailing market rate, adjustmentto be made by lengthening or shortening the repayment schedule. Lendinginstitutions may need greater flexibility to work out terms of mortgages thatare accepable both to them and to their customers.

The Government's efforts to improve the flow of finance into housinghas only recently begun to be matched by efforts to increase the supply andimprove the utilization of real resources—notably labor. But the imper-fections on this side of the industry have probably been as great as on thefinancial side. Entry into the construction workforce has been limited byprevailing practices. The large turnover of firms, the seasonality of thework, and the traditionally long apprenticeships contribute to the difficultyin securing an adequate supply of skilled workers. The fragmented structureof the industry and the instability of its operations have impeded the researchand development that might lead to greater efficiency and lower cost.

In order to improve the utilization of construction manpower, the Presi-dent issued an Executive Order on September 22, 1969, establishing aConstruction Industry Collective Bargaining Commission. The Commissionwas established to assist in the settlement of labor disputes through voluntaryprocedures and to seek solutions to a wide range of manpower problems, in-cluding training and development of construction manpower, instability andseasonality of employment, and productivity and mobility of the construc-tion labor force.

Significant expansion of training programs will be necessary to meet thelarge projected demand for skilled construction workers. Expansion ofvocational education programs emphasizing construction skills can play animportant supplementary role in increasing the supply of craftsmen withskills appropriate for entering construction work or for further training toattain full journeyman status. Federal officials will work with State andlocal authorities to encourage programs in construction skill training, andsome Federal funds will be used to obtain direct expansion of these pro-grams. Cooperative programs between the schools, unions, and contractors,in which credit toward apprenticeship requirements is granted for vocationaleducation programs, is also a promising new direction which HEW iscurrently emphasizing.

The Administration has also made a major effort to expand participa-tion of minority workers in training and employment in construction work,especially on Federal and federally assisted construction projects. The

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widespread shortage of skilled construction workers in the industry isindicated by the ability of unions to obtain very large wage settlements.To open a greater flow of minority workers into the industry in order tohelp relieve these skill shortages is a major objective of the PhiladelphiaPlan. The Plan requires contractors bidding on Federal construction proj-ects to make good faith efforts through affirmative action to meet estab-lished hiring goals for minority employment. The Department of Housingand Urban Development has also been working to develop local coalitionsthat will help increase opportunities for members of minority groups tojoin craft unions and apprenticeship and other training programs.

Through its "Operation Breakthrough" program, the Department ofHousing and Urban Development has solicited proposals for experimentalprojects to demonstrate the use of new production techniques, includingimproved building management and financial arrangements, as a basis forsignificant improvements in productivity and efficiency. Simultaneously, theDepartment has solicited prototype site proposals from State and localgovernments willing to cooperate in eliminating building code and zoningconstraints and in combining markets for volume production. The goalis to develop techniques to meet opportunities for mass marketing throughthe use of volume production methods and the capital resources of largecompanies. The Department of Housing and Urban Development hasreceived 236 proposals for the use of new systems in residential constructionprojects. About 20 of these will be underwritten, in part, by the Department.

An essential part of the "Breakthrough" program is to change zoningand building regulations that presently impede building of low- andmoderate-cost residential units in and around many major cities. Whilesome States are now enacting statutes capable of overruling local ordinances,the remaining political and social obstacles are great. There is also needfor a breakthrough to reduce the administrative delays and unnecessary red-tape that are characteristic of many Federal housing programs and of manylocal housing authorities.

The Department has also taken the lead in the negotiation of a pilotlabor-management agreement which will reduce obstacles hampering theintroduction of new techniques. This nationwide agreement permits thefactory production of modular homes, provides for locally negotiated wagesand fringe benefits uniform for three building trades, allows for thecrossing of craft jurisdictions, and incorporates effective dispute settlementmachinery. In addition, provision is also made for training and employ-ment opportunities for minority group members. It is felt by many observersthat the agreement will provide a viable model to others similarly engagedin construction of housing units in an industrial context.

Improving the financing arrangements for housing, removing obstaclesto the supply of labor, increasing investment in the training of constructionlabor where the payoffs justify the costs, and improving technologyshould all raise the rate of housing construction in the years ahead. Whether

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they will suffice to achieve a predetermined goal for the number of housesto be built in the decade remains to be seen. Much will depend upon con-current developments in the economy, including the strength of businessdemands for capital, the degree to which the Federal Government isadding to or subtracting from the supply of capital by its surplus ordeficit, and the success of the home building industry itself in offeringinnovative products at a reasonable cost.

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CHAPTER 5

Freedom and Stability in the World Economy

I NTERNATIONAL SPECIALIZATION AND EXCHANGE havemade an important contribution to rising standards of living in the United

States and abroad. By offering its own products in payment, a nation canacquire imports with less sacrifice of domestic resources than would berequired to produce the same goods at home. Imports are the fruits ofinternational trade, and exports are what must be given up to obtain them.The ability of a country to import depends primarily on how much of itsproduction it can sell abroad. And this depends in turn on its domestic pro-duction costs, compared to those abroad, its access to foreign markets, andthe exchange rates which translate the exporters' selling prices into the im-porters' currencies.

Of these determinants, domestic production costs are the result in part ofgeneral monetary and fiscal policy, discussed in Chapter 1, and in part ofmarket performance, discussed in Chapter 4. Access to foreign markets isone of the subjects taken up in the first part of the present chapter, andexchange rates are considered in the last part. This chapter also deals withinternational capital movements and the Euro-dollar market, and withother recent developments in international finance.

THE EXPANSION OF TRADE

The case for free markets in international trade is much the same as it isin the domestic economy. Artificial barriers to trade, such as tariff's andquotas, usually act to reduce or eliminate exchange that would have bene-fited the trading parties. Similarly, by insulating domestic producers fromforeign competition, trade restrictions reduce the incentives to increase in-novation, efficiency, and specialization—dynamic forces that have made amajor contribution to the economic growth of industrial nations. Restrictionson trade also limit the extent to which imports can compete with domesticproducts, and thus weaken an important restraint on domestic price increases.

In a dynamic world economy, changing conditions require continuousadjustments. These may inflict hardship on some and evoke resistance. ButAmerican industry is used to adapting to changing competitive pressuresfrom both at home and abroad, and American labor has always been mobile,both among regions and among industries. Most of the necessary adjust-ments can be taken in stride, but some may prove more difficult. By

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providing temporary adjustment assistance, the Government can help thosewho must adapt to changing patterns of world trade, and improve thecapability of our market economy to take full advantage of the benefits ofinternational trade and investment.

NONTARIFF BARRIERS

The rapid growth of international trade in the past decade attests to theprogress made in reducing trade barriers. In 1969 total world trade ap-proached a quarter of a trillion dollars, an increase of about 14 percent overthat for 1968. During the decade of the 1960's the international trade ofindustrial nations increased at an average rate of almost 10 percent per year.As incomes rise and wants become more diverse, it is to be expected thatopportunities for trade among these nations will grow rapidly, and thisclearly has been happening. Progress towards freer trade, however, has beenuneven. A serious problem is that the lowering of tariff walls has not beenaccompanied by similar progress in the lowering of nontariff barriers, whichhave increased in relative importance—and in some cases absolutely—astariffs have declined. Recognizing the importance of attacking nontariffbarriers in a systematic and coordinated manner, the countries adhering tothe General Agreement on Tariffs and Trade (GATT) assigned highpriority to this problem in the work program planned to follow the KennedyRound. On industrial products, an analysis of existing nontariff barriers wascompleted during 1969, and it was agreed to begin early in 1970 to formulatemeans of dealing with various types of these restrictions. A similar projecthas been initiated in relation to agricultural trade.

Nontariff barriers range from formal and explicit quotas to unpublicizedadministrative procedures that have the effect of impeding or excludingimports. One clear-cut example is quota restrictions that are imposed dur-ing periods of an unfavorable balance of payments, but often continue afterthe difficulties have disappeared. (The GATT allows the use of quantitativerestrictions to correct deficits in the balance of payments under certain cir-cumstances, provided that such restrictions are progressively relaxed as thebalance of payments improves.)

More commonly, however, nontariff import barriers have been imposedfor a variety of other reasons. In some cases their explicit purpose is to pro-tect domestic industry. In other cases, legitimate domestic measures may havea protective side effect; health and sanitary regulations primarily designedto protect the consumer, for example, may also make it more difficult forforeign competitors to gain access to the domestic market.

Government procurement policies are frequently designed to provideprotection for domestic industries. Domestic procurement may be explicitlyrequired, or a price preference may be allowed on bids by domestic concerns.In a number of countries the responsible administrative agencies are givenwide latitude in accepting or rejecting bids by foreign producers. As a result,American corporations may run into a combination of high barriers andfrustrating uncertainties about how the barriers are administered.

On the U.S. side, preferences are also granted to domestic suppliers butthese are generally explicit and easily understood. Thus regulations issuedunder the Buy American Act grant a 6-percent preference, plus another6 percent if the materials are produced by a small business or in an areawith substantial labor surplus. A 50-percent preference in overseas procure-ment is applied for balance-of-payments reasons by the Department ofDefense and most other Government agencies. The case for the 50-percentpreference involves weighing balance-of-payments gains against budgetarycosts.

Restrictions abroad on trade in agricultural products are arousing par-ticular concern in the United States because we have a comparative advan-tage in many of these products. The farm programs of most developedcountries include special measures to support the prices farmers receiveand to give them protection beyond that provided by customs duties. Meas-ures taken pursuant to the Common Agricultural Policy of the EuropeanEconomic Community have an especially distorting effect on world agri-cultural trade because they insulate domestic producers from foreign com-petition in order to keep internal farm prices far above world prices. Thesurpluses in some commodities resulting from these high prices are soldabroad with the aid of large export subsidies. While the United States alsosupports the prices of most basic crops, these prices (with a few exceptions)do not greatly exceed the world market level. We also maintain importquotas, notably on sugar and dairy products, and have arranged for export-ing countries to limit exports of beef to the United States.

THE TRADE BILL OF 1969

The trade bill submitted by the President to Congress in November con-tinues the movement toward freer world trade, and it also explicitly rec-ognizes the importance of insuring that U.S. producers have fair access toforeign markets. Specifically, the bill would restore Presidential power tomake limited tariff reductions. It envisions the elimination of the Americanselling price (ASP) system (in which certain import duties are based on thedomestic selling price of competing American products rather than on thenormal basis of actual export price). It would broaden the present authorityto act against countries that treat U.S. products unfairly and would providenew authority to act against those countries that grant export subsidies whichresult in unfair competition against U.S. exports in third markets. At thesame time, it would significantly improve the procedure by which businessand workers injured by imports can receive Government assistance.

The tariff authority requested in the bill would make it possible for thePresident to approve occasional minor adjustments in tariffs that may be re-quired—to compensate foreign countries, for example, if the United Statesapplies an escape clause, or if a statutory change is made in tariff classifica-tion. It is not designed to be used for major tariff negotiations.

The American selling price system of customs valuation which appliesto a few American products (primarily benzenoid chemicals) has taken

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on symbolic importance for our trading partners. In conjunction withthe Kennedy Round of tariff reductions, an agreement was reached pro-viding that if the United States removed ASP, others would make specifiedfurther reductions in foreign tariffs on chemicals as well as reductions inseveral important nontariff barriers, such as European road taxes which dis-criminate against larger automobiles. Legislation to eliminate ASP wouldachieve these already negotiated trade benefits, and would also be an impor-tant positive step toward multilateral reduction of nontariff barriers, a lib-eralization which would benefit the United States both as an exporter andas an importer.

Although the relaxation of tariffs and other barriers in international tradepromises clear benefits to the national economy as a whole, it must be recog-nized that the effects on some industries and individuals may be adverse, atleast in the short run. Because the gains from trade are widely distributedto the consuming public, the costs of major resulting adjustments should beborne in part by the economy as a whole, not just by those who must sufferthe direct effect of liberalization. For the economy as a whole, increased im-ports need not create unemployment. This was demonstrated, for instance,during the inflationary expansion of 1968, when unemployment fell from3.8 to 3.6 percent, in spite of the record increase of 23 percent in imports.Nevertheless, specific imports may cause disruption in directly competing in-dustries. The Trade Expansion Act of 1962 provided for assistance to helpthose injured by tariff reductions adjust to the change, but in practicethe criteria for assistance have been excessively stringent. The new bill wouldrelax these criteria and make aid more readily available to those whorequire it.

In his trade message of November 18, the President stated that provisionsconcerning both the escape clause and adjustment assistance in the 1962 actwere too tightly drawn and too technical to insure prompt and effective relieffor those actually injured by imports. The President therefore recommendedthat the escape clause be made more flexible by providing a simple and clearstatement of what should constitute injury under the law: Relief should beavailable whenever increased imports are the primary cause of actual orpotential serious injury.

Under the present law, the injury must be related to a prior tariff reduc-tion. In many cases, the tariff rates originally set in the Tariff Act of 1930have been reduced in a series of trade agreements from 1934 to 1967, andit has become increasingly difficult to determine whether past tariff reduc-tions are the cause of increased imports. Since the same problem arises ininvestigations of adjustment assistance, the President recommended a similarchange in the criteria applicable to petitions for adjustment assistance filedby firms or groups of workers. The President observed that improving theprovisions for relief from import injury should lessen the pressure for legis-lation to restrict imports and should thus aid in the continuing U.S. attack

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on trade restrictions of other countries, which currently impede the accessof U.S. exports to foreign markets.

THE DEVELOPING COUNTRIES IN THE WORLD ECONOMY

Greater access to markets is especially important to the developing coun-tries. Although aid from abroad is vital to most of their plans for achievinggreater prosperity, the most important condition for success is their ability tomake better use of their own resources, both internally and externally. Aneffective strategy must be designed to further their participation in foreigntrade and attract private investment from abroad.

The Flow of Resources

For more than two decades the United States has provided large amountsof financial aid to the less developed countries (LDC's). In recent yearsother industrialized countries have also begun to provide substantialamounts. In 1968, industrial countries contributed $6.4 billion in officialdevelopment assistance (which excludes private investment and loans oncommercial terms). Although the flow of resources from the United Statesrose steadily up to the mid-1960's, it has leveled off in recent years. Privateinvestment, on the other hand, has grown rapidly during the last 5 years. In1968, U.S. private investment in less developed countries increased to $2 bil-lion, more than double the 1963 rate. Total private investment in the LDC'sby developed countries as a whole rose to $5.9 billion in 1968, also more thandoubling the 1963 figure. To encourage a continuation of this trend the Pres-ident signed the Foreign Assistance Act of 1969 providing for the establish-ment of the Overseas Private Investment Corporation, which would sell in-surance and guarantees to U.S. private investors. The President has alsoendorsed the multilateral institutions—the World Bank and its affiliates andthe regional banks—as channels through which development assistance canbe provided on an equitable basis.

The Efficiency of Aid

Greater reliance on the market mechanism can contribute significantly toeconomic growth in the LDC's as well as in developed countries. It is espe-cially appropriate that the United States, whose strong economy owes somuch to the freedom of our market system, set an example by showing awillingness to let market forces operate. When this Administration came tooffice, foreign aid was subject to "additionally" and "tying" conditions whichhampered its effectiveness. Tying requires that aid funds be used only to pur-chase U.S. goods and services; additionality further requires that aid fundsnot otherwise restricted be spent on U.S. products or services that do notsubstitute for commercial exports from the United States.

In June 1969 the Administration acted to end additionality require-ments for aid. Later, the tying requirement in aid to Latin American nationswas relaxed; they may now spend aid funds anywhere in Latin America aswell as in the United States. The speed with which the United States can

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make further improvements in the efficiency of its aid is governed to a majorextent by its balance of payments and by the aid policies of other countries.

Tariff Preferences

In the long run, the LDC's must look to a continued and vigorous expan-sion of export earnings as an important part of their economic progress. Aidcan help them overcome their initial handicaps, but by itself it cannot con-stitute a lasting solution. Greater internal efforts are also required.

From 1960 to 1967, export earnings of the developed nations grew at arate of 8.4 percent per year. Although rates for different countries differwidely, export earnings of LDC's as a whole rose at the rate of only 6.1 per-cent. At present, primary products account for almost 80 percent of theexports of LDC's and the rate at which exports of these products are grow-ing is substantially below the rate of growth of world trade generally. Becauseof the limited potential for future expansion of trade in traditional exports,the ability of the LDC's to develop new exports, especially of manufacturedproducts, will be increasingly important. This development is inhibited bytariffs and quotas imposed by developed countries, and by internal economicdifficulties within the LDC's.

To assist in meeting the goals of the LDC's the 1968 United Nations Con-ference on Trade and Development (UNCTAD) recommended that themore prosperous nations offer preferential tariff rates on the exports of theLDC's. The Organization for Economic Cooperationxand Development(OECD) has appointed a working group, consisting of representatives of theOECD members plus Australia and New Zealand, to formulate a plan fora system of generalized tariff preferences. The United States has submitteda proposal to this body. Some of the key provisions are:

(1) All duties on manufactured and semimanufactured products im-ported from less developed countries, except textiles, footwear, and petroleumand petroleum products, would be eliminated. A selected list of agriculturaland fishery products that would also benefit from the preferences is provided.

(2) There would be no quantitative limits on the additional importseligible for preferential treatment. Injury to domestic producers would behandled by standard escape clauses and adjustment assistance.

(3) The preferences would be temporary, scheduled to last no more than10 years, and should not obstruct further general tariff reductions.

(4) All major developed countries would adopt a common plan.(5) The United States would not grant preferences to any country

that received an exclusive trade preference from any developed country fora product covered by the plan, nor would we grant preferences to LDC'sthat gave exclusive trade preferences to any developed country (reversepreferences).

Other participants in the OECD working group have also submittedproposals, some of which vary in important respects from the U.S. approach.The European Community's proposal, for example, calls for limits on thequantities of imports granted preferential treatment.

123

In November 1969, the OECD transmitted to the UNCTAD a reportsetting forth the positions taken by the prospective preference-granting coun-tries. The United States will be engaged during the coming months in dis-cussions in OECD and UNCTAD with the other developed countries andwith the potential LDC beneficiaries with a view to reaching agreement ona mutually satisfactory arrangement.

Tariff preferences for the LDC's will mark a significant departure fromthe most-favored-nation principle on which the General Agreement onTariffs and Trade has been built. This principle, which requires nondis-criminatory treatment of all imports regardless of origin, lies at the heart offree international trade, and departures should be avoided except for com-pelling reasons.

When one country gives another preferential access to its markets, anincrease in trade between the two countries will normally result. This mayrepresent new international trade, or it may come from substituting theexports of one country for those of others. In the first case, there willnormally be an increase in efficiency. In the second case, where trade isdiverted from the lower cost third countries, the result will generally be lowereconomic efficiency. Countries negotiating trade matters find it least pain-ful to give one another the markets that were previously the province ofthird parties. The general GATT proscription of preferential arrangementswas aimed to counteract the natural bias toward trade diversion whencountries exchange selective preferences.

The departure from the most-favored-nation principle is justified by twoconsiderations. The development of manufacturing industries is essential tothe progress of the LDC's, and these industries will be stimulated by prefer-ences. Second, a liberal system of general preferences replacing specializedregional preferences will create additional world trade and may reduceexisting distortions in trade patterns.

THE U.S. TRADE BALANCE

The U.S. economy and developments in our own external payments havea profound influence on the stability and growth of the world trading andfinancial system. Our exports now account for 17 percent of total worldtrade, and the dollar has achieved high standing as an international cur-rency. Growing economies abroad have provided expanding markets forour output. In turn the level of our material welfare has been raised by anincreasingly diverse array of products from abroad.

During the 1960's, U.S. exports grew rapidly, at an average annual rateof over 7 percent. Imports grew even more rapidly, however, with the resultthat the trade surplus in merchandise shrank from a peak of $6.8 billion in1964 to less than $1 billion during 1968.

The growth of U.S. exports has been fostered by high technology, exem-plified in such manufactured items as computers, jet aircraft, and control

124

instruments. Even the rapidly growing international demand for these prod-ucts, however, has not been sufficient to prevent a decline in the U.S. shareof total world exports. One reason is that growth in the traditional U.S.export markets has been below the average. And even within these markets,U.S. competitive shares of manufactured exports have declined.

During recent years export prices of some of our major competitors—such as Germany, Italy, and Japan—have performed better than thoseof the United States. It is not surprising, therefore, that from 1961 through1968 U.S. bilateral trade balances with these three countries declined by morethan $3.8 billion. In the same interval, the overall trade balances of thesethree countries improved by roughly $7.6 billion.

The U.S. trade balance with Canada has also shown a large decline inrecent years, but the reason appears to lie in special conditions affectingU.S.-Canadian trade. Canada's trade balance with other countries deterio-rated slightly during the 1960's.

There have been other important changes in the composition of U.S.trade during the decade. From 1960 through 1966, U.S. agricultural ex-ports increased rapidly, but they have been at a standstill since 1967. Thesharp rise in U.S. imports of finished manufactured goods other than foods,from $5.3 billion in 1960 to almost $17 billion in 1968, was also significant.The share of these products in total U.S. imports increased from 35 to over50 percent in the period from 1960 through 1968. The increase was par-ticularly strong in imports of consumer goods, especially luxury products.

A part of the recent surge in U.S. imports can be attributed to inflationin the domestic economy. During the years of relatively stable prices be-tween 1955 and 1965, the value of merchandise imports as a percentage ofGNP varied little, hovering around 3 percent, but by 1968 it had increasedto almost 4 percent. In 1969 it edged slightly higher but remained justunder 4 percent.

Because of the prolonged dock strike in the first quarter of 1969, it isdifficult to interpret the currently available trade figures for last year. Thereare signs of improvement in the merchandise trade balance after mid-year, and the deterioration of the trade balance typical of the past severalyears appears at least to have been arrested. As inflation is slowed in theUnited States, the trade balance should improve. It is not likely, however,that regaining internal stability will be enough by itself to restore promptlythe large surplus in the trade balance of the early and middle 1960's. For onething, the excessive domestic demand emerging toward the end of 1965 hasbecome incorporated into higher costs and prices, and these tend to be in-flexible downwards. Thus, the inflation of recent years will continue to havean adverse effect on our competitive position in the world economy. At thesame time our technological superiority in many fields has been narrowed bythe notable advances of countries like Japan and Germany.

372-111 O—70 9 125

INTERNATIONAL CAPITAL MOBILITY AND THE BALANCE OFPAYMENTS

While the gradual narrowing of our trade balance has dominated thegeneral trend of the U.S. balance of payments, short-term fluctuations havebecome increasingly dominated by capital movements. Capital flows aretreated differently in the two most widely publicized measures of the balanceof payments: the official settlements balance and the liquidity balance.Because short-term capital movements have been large, these two measureshave recently yielded very different results. During the first half of 1969, theUnited States registered a record surplus measured on the official settle-ments basis, while the same period showed a record deficit in terms of theliquidity definition. For the full year, preliminary estimates indicate an of-ficial settlements surplus significantly larger than the $1.6 billion surplus of1968. The liquidity balance was in surplus during the fourth quarter, al-though the deficit for the year was far larger in 1969 than in any previousyear (Chart 13).

Two Measures of the Balance of Payments

The differences in the coverage and concept provided by these two meas-ures must be kept in mind. The official settlements balance measures thechange in our holdings of international reserve assets, less the change inliquid and certain nonliquid claims on the United States by foreign officialinstitutions such as central banks or finance ministries. The liquidity balancemeasures the change in our holdings of international reserve assets, less thechange in liquid liabilities to all foreigners, whether official or private.

Thus, sales to foreign official institutions of securities that exceed 1 yearin original maturity (and are hence technically nonliquid) in replacementof short-term instruments do not affect the results according to the officialsettlements basis, but they do improve the liquidity measure. For 1968, forexample, Table 15 shows that such special financial transactions shiftedwhat would have been a liquidity deficit of $2.1 billion to a liquidity sur-plus of $0.2 billion. As these instruments are paid off with liquid claims onthe United States, they correspondingly augment the liquidity deficit, leav-ing the official settlements basis unchanged. In the second and third quartersof 1969, for example, the reversal of previous special transactions addedapproximately $1 billion to the liquidity deficit.

Perhaps an even more fundamental difference between the two measuresconcerns the treatment of flows of foreign private short-term funds into theUnited States. To the extent that private foreigners obtain or withhold dol-lars from their central banks, these flows reduce the official settlementsmeasure of the deficit (or increase the surplus). Under the liquidity defini-tion, however, a net increase in liquid liabilities to foreigners (whetherofficial or private) indicates an enlarged deficit. Thus if private foreigners

126

TABLE 15.—U.S. balance of payments, 1960-69


Type of transaction

Merchandise trade balance.ExportsImports

Balance on investment income..U.S. investments abroadForeign investments in the

United States _.

Balance on other services.Exports2

Imports

BALANCE ON GOODS ANDSERVICES2

Unilateral transfers, net; trans-fers to foreigners (—)3

BALANCE ON CURRENTACCOUNT

Balance on direct private in-vestments..

U.S. direct investmentsabroad.... _.

Foreign direct investmentsin the United States

BALANCE ON CURRENT ANDDIRECT INVESTMENT AC-COUNTS

Transactions in U.S. private non-direct assets, net

Transactions in U.S. Governmentassets, excluding oficia reserveassets, net

Transactions in foreign nondirectnonliquid assets, net

Errors and omissions

BALANCEON LIQUIDITY BASIS..

Less: Certain nonliquid liabilitiesto foreign official agencies

Plus: Foreign private liquid capital,tnet

BALANCE ON OFFICIAL RE-SERVE TRANSACTIONS BASIS.

Addendum:Special financial transactions..

BALANCEON LIQUIDITY BASISEXCLUDING SPECIAL FI-NANCIAL TRANSACTIONS....

1960-64average

5.421.7

-16.2

3.24.3

- 1 . 2

-2.75.3

-8 .0

5.9

-2.6

3.3

- 1 . 8

- 1 . 8

.1

1.6

- 2 . 7

- 1 . 3

.6

- 1 . 0

- 2 . 8

.2

.8

-2.2

<*)

1965

5.026.4

-21.5

4.25.9

- 1 . 7

- 2 . 07.1

- 9 . 1

7.1

- 2 . 8

4.4

- 3 . 4

- 3 . 5

.1

1.0

- . 3

- 1 . 6

.2

- . 6

- 1 . 3

.1

.1

- 1 . 3

- . 1

- 1 . 2

1966

3.929.4

-25.5

4.16.3

- 2 . 1

- 2 . 87.7

-10.5

5.3

-2 .8

2.4

- 3 . 6

- 3 . 6

.1

- 1 . 1

- . 7

- 1 . 5

2.4

- . 5

- 1 . 4

.8

2.4

.3

1.6

-2.9

1967

3.930.7

-26.8

4.56.9

-2.4

- 3 . 28.6

-11 .8

5.2

-3 .0

2.2

-2 .9

-3.2

.3

- . 7

-2.5

- 2 . 4

3.1

- 1 . 0

- 3 . 5

1.3

1.5

- 3 . 4

1.0

-4.6

1968

0.633.6

-33 .0

4.87.7

-2 .9

-2.99.3

-12 .2

2.5

-2.9

- . 3

-2.7

-3 .0

.3

- 3 . 1

- 2 . 1

-2.2

8.2

- . 6

.2

2.3

3.8

1.6

2.3

- 2 . 1

1969 first 3quarters i

0.335.5

-35.2

4.58.8

-4 .3

- 3 . 09.9

-12 .9

1.9

- 2 . 8

- . 9

- 3 . 4

- 4 . 1

.7

- 4 . 4

- 2 . 1

- 2 . 3

2.3

- 4 . 3

-10.8

- 1 . 1

11.6

1.9

- 1 . 2

- 9 . 6

* Average of the first 3 quarters at seasonally adjusted annual rates.2 Excludes transfers under military grants.3 Excludes military grants of goods and services.

* Not available.



gain more short-term claims on the United States than are lost by officialforeign holders of dollars, the difference adds to our liquidity deficit. During1969, the large short-term capital flow into the United States caused by theEuro-dollar borrowings of U.S. commercial banks has made the differencein treatment unusually important.

127

The Euro-Dollar Market and Short-Term Capital Movements

Euro-dollar deposits are liabilities of banks outside the United States (in-cluding foreign branches of U.S. banks) which are denominated in dollarsrather.than local currency. London is the center of the Euro-dollar marketin which such funds are placed and borrowed. Large amounts of U.S. dollarsare also on deposit in continental Europe, Canada, and Japan. The Euro-dollar market consists almost entirely of short-term funds, with few depositmaturities exceeding 180 days. (There is a counterpart long-term marketfor Euro-bonds, including substantial amounts of securities of U.S. corpora-tions, offered in Europe but denominated in dollars.)

While exact measurement of the size of the Euro-dollar market is not pos-sible, estimates published by the Bank for International Settlements indicatethat the market may have been roughly three times as large in 1968 as it wasin 1964, growing from $9 billion to $25 billion, with further growth during1969. One can gain some idea of the increasing importance of this marketas a source of foreign borrowing for U.S. banks by looking at the liabilitiesof U.S. banks to their foreign branches. These grew from approximately$1 billion in 1964 to more than $14 billion by the summer of 1969, afterwhich they remained relatively constant. The branches themselves had Euro-dollar liabilities amounting to $23.2 billion on September 30, 1969. Euro-dollar deposits are also held in foreign-owned banks abroad.

The Euro-dollar market has become a major link among national short-term money markets. Its growth owes much to the impetus generated byvarious restrictions on competitive practices in national money markets. Thepart that domestic banking regulations play in stimulating the growth of theEuro-dollar market is well illustrated by the effects of the Federal Reserve'sRegulation Q, fixing the maximum interest rates which member bankscan pay on most types of time deposits. During 1969, short-term interestrates moved well above the Regulation Q ceiling, impeding the access ofAmerican banks to domestic money markets. In their search for funds, U.S.banks turned to Euro-dollar borrowing through their foreign branches. Thisdemand helped push Euro-dollar interest rates upward to more than 11percent in June, and they stayed close to that level for the remainder of 1969(Chart4,page36).

These high interest rates attracted funds from Europe's domestic moneyand capital markets. Participation in the Euro-dollar market required U.S.dollars, and the major part of these dollars ultimately came from Europeancentral banks, with the result that European countries did not gain officialreserves on the scale they might otherwise have done, or even lost part ofthese reserves. Thus, such flows from European domestic money and capitalmarkets into Euro-dollars contributed to the U.S. official settlements surplus.As private European funds were attracted to the Euro-dollar markets, in-terest rates in European money markets rose. In response to the pull exertedby the Euro-dollar market, several European countries have taken actions

128

Chart 13

U.S. Balance of International Payments

BILLIONS OF DOLLARS

60

50 ~

40 -

30 -

- EXPORTSGOODS

-

ANDAND

IMPORTSSERVICES

OF

EXPORTS

\ *

IMPORTS

_

-

10

1 9 6 0 " 6 4 1965AVERAGE i y O D 1966

BALANCE ONCURRENT ACCOUNT

— AND DIRECT PRIVATE INVESTMENT

,.. / _ _

~ BALANCE ON LIQUIDITY BASIS

1 1 11960-64 1 Q A .

AVERAGE I y o ° 1966

1967 1968

BALANCE ONOFFICIAL RESERVE

TRANSACTIONS BASIS

i i

1967 1968

1969-1/

^ _

1969 J/-10

J/BALANCES ON LIQUIDITY BASIS AND ON OFFICIAL RESERVE TRANSACTIONS BASIS ARE ESTIMATES FORFULL YEAR. ALL OTHER DATA ARE FOR FIRST 3 QUARTERS AT SEASONALLY ADJUSTED ANNUAL RATES,SOURCE: DEPARTMENT OF COMMERCE.

to restrict the outflow of funds from their domestic money and capitalmarkets.

The surge in Euro-dollar interest rates, together with the Regulation Qceiling on domestic deposit rates, also provided a strong incentive for U.S.depositors to place funds in the Euro-dollar market rather than directly withU.S. banks. As a result a circular flow of U.S. funds developed, in whichdollars moved from the United States to the Euro-dollar market and backagain through the foreign branches of U.S. banks. This flow involved bothan increase in U.S. residents' claims on foreign institutions (which largelywent unrecorded and therefore showed up as "errors and omissions" in the

129

balance of payments) and an increase in liquid liabilities to foreign branchesof U.S. banks. The result of the circular flow was an increase in the liquiditydeficit.

On both counts, then, Euro-dollars contributed to a divergence betweenthe official settlements and liquidity balances. When dollars were drawn outof foreign official reserves, they influenced the official settlements balancewithout affecting the liquidity balance. When dollars originating in theUnited States were routed through the Euro-dollar market, they increasedthe liquidity deficit without affecting the official settlements balance.

Long-Term Capital Movements and Investment Income

Long-term capital movements have also strongly influenced the U.S.balance of payments in recent years. In response to the limits imposed by theDirect Investment Program on net direct investment abroad with U.S. fundsand to the high cost and reduced availability of domestic funds, U.S. corpo-rations have been increasing their efforts to raise long-term funds abroad. Atthe same time, a substantial number of foreign investors have broadenedtheir portfolios to include American common stocks. During the first threequarters of 1969, foreign purchases of U.S. corporate securities are estimatedto have been $1.8 billion, or $0.5 billion more than net sales of foreign stocksand bonds to U.S. investors over the same period. Direct U.S. investmentabroad also continued to be large during the first three quarters of 1969.

The heavy U.S. borrowing abroad in recent years brought to a halt therapid growth of the U.S. net international investment position. Between theend of 1966 and the end of 1968 net assets remained virtually unchanged at$65 billion. The composition and growth of the U.S. international invest-ment position are given in Table 16.

Earnings on U.S. investments abroad have continued to contributeto the U.S. balance of payments. During 1968, our rate of return on directinvestments abroad reversed its previous decline and rose almost a fullpercentage point above the 11 percent of 1967. During the first three quar-ters of 1969, income from direct and other private U.S. investment abroadis estimated to have reached an annual rate of almost $8.0 billion, upabout $1.0 billion from 1968.

On the other hand, interest payments on foreign investments in theUnited States have increased even more rapidly, reflecting heavy U.S.short-term borrowing from abroad during the first half of 1969. High interestrates also increased the cost of refinancing previous borrowings. In the thirdquarter, interest payments by U.S. commercial banks on their liabilities toforeign branches were running at an annual rate of approximately $1.5billion, rising from less than a quarter of a billion dollars in late 1967. Forthe first three quarters of 1969, income on private foreign investments in theUnited States is estimated at roughly $2.6 billion, $0.4 billion more than thetotal for the whole of 1968.

130

TABLE 16.—International investment position of the United States, 1955, 1965, and 1968

[Millions of dollars; end of year]

Type of investmentTotal

1955

37,237

65,076

29,136

26,75019,3957,3552,386

13,143

22,797

27, 839

13,408

5,0766,5751,757

900

13,531

7,6865,845

1965

61,387

120,126

81,197

71,04449,47421,57010,153

23,479

15,450

58,739

26,374

8,79714, 5992,978

3,250

29,115

17,19511,920

19681

65, 013

146,134

101,900

88,93064,75624,17412,970

28,524

15,710

81,121

40,267

10, 81519, 5289,924

7,237

33,617

24,4609,157

WesternEurope,19681

-8,278

39,658

28,124

24,68719,3865,3013,437

8,011

3,523

47,936

26,037

7,75012,9895,298

4,591

17,308

12, 5804,728

Canada,19681

20,704

31,694

31,679

30,47619,48810,9881,203

11

4

10,990

6,172

2,6593,271242

1,638

3,180

2,615565

LatinAmericanRepublics,

19681

Net international investment position of theUnited States

U.S. assets and investments abroad 2_

Private investments

Long-termDirectOther

Short-term assets and claims.

U.S. Government nonliquid credits andclaims.

Monetary reserve assets

15,060

22,281

17,077

13,79111,0102,7813,286

5,204

Foreign assets and investments in the UnitedStates

Long-term

DirectCorporate stocks.Other . . .

Nonliquid short-term assets and U.S. Gov-ernment obligations

Liquid assets

Private liabilities reported by banks.. .Other

7,221

2,749

1641,4111,174

164

4,308

4,190118

1 Preliminary. Total includes other foreign countries and international organizations and unallocated, not shown separatelyin this table.

2 Includes U.S. gold stock.


THE PROBLEM OF INTERNATIONAL EQUILIBRIUM

The rapid growth of international trade and capital flows has broughtinto sharper focus two essential requirements for an adequate world mone-tary system. In the first place, there must be sufficient official liquidityto finance temporary imbalances. Second, the terms of exchange betweennational currencies should be sufficiently stable to foster confidence ininternational dealings, but not so rigid that they preclude the adjustmentsthat may be needed from time to time as trading patterns and terms of tradeundergo inevitable change. The urgency of progress in both these directionshas been underlined in recent years by the increasing frequency of interna-tional financial disturbances. The ad hoc solutions for these have often beento impose various restraints that now threaten to obstruct further advancesin the efficiency of the international economy.

The past year has seen important improvements, especially in the direc-tion of greater liquidity. Years of discussion and negotiations culminatedin final agreement to create Special Drawing Rights, a new internationalreserve asset. Now, for the first time in history, there is an internationalarrangement for systematically creating reserves. Also, the official paritiesof two important currencies were adjusted during 1969. France reduced

the exchange value of the French franc in August. Following repeatedinflows of speculative capital—most notably, the flood of between $4billion and $5 billion in May and over $1.5 billion in September—theGermans allowed the mark to float upward at the end of September,and a new, higher parity was chosen in October. These two parity adjust-ments, together with the devaluation of the British pound in November 1967,have resulted in a pattern of exchange rates that is more closely in line withinternational competitive positions. A lessening of strains and instability inthe international financial situation has followed, and the effects are apparentin the exchange markets. Most notable, perhaps, has been the narrowing ofthe discounts and premiums on forward exchange, which had become ab-normally large before these adjustments in parities were made.

The agreement to create Special Drawing Rights provides a fundamentaland lasting method for dealing with the liquidity question, but the changesin exchange rates during the past year do not assure an equally permanentsolution to the adjustment problem. Some of the major maladjustmentshave been relieved for the time being, but basic forces that could producenew disequilibria continue to operate. Nations attach different degrees ofimportance to different objectives for economic policy. Changes in tech-nology and demands have varying effects among countries. We should usethe period of reduced tensions, which recent currency realignments and ad-vances in providing for needed liquidity have granted us, to consider how theinternational financial system might be made more capable of adjusting topossible future shifts in the world economy.

International Liquidity: Special Drawing Rights

Consideration of how the international economic system might becomebetter able to cope with changes in the relative positions of individual econ-omies must begin with the landmark decision to establish Special DrawingRights (SDR's). As trade and investment grow, countries tend to needhigher reserves. If the reserves coming into the system are insufficient, gen-eral success in meeting goals for national reserves becomes impossible, andthe outcome is destructive competition for reserves. Domestic and interna-tional policies are warped by a preoccupation with the balance of payments.Reductions in barriers to trade and investment become ever more difficult;indeed, international barriers may be increased as a result of the desire toprotect national reserves.

To avoid these undesirable consequences international studies were startedin 1964, focusing on the possibilities of creating a new reserve asset. The es-tablishment of Special Drawing Rights resulted from these studies and fromprotracted negotiations later on involving the Group of Ten and the Inter-national Monetary Fund. SDR's are created by the IMF and allocatedamong the member countries in proportion to their Fund quotas. Becausethey are counted as an increase in reserves of the member countries, incen-tives to compete for reserves should be correspondingly lessened.

132

The preliminary steps to create the SDR's were discussed in the Coun-cil's Annual Reports for 1968 and 1969. During the past year, two final stepswere taken in preparation for activation in January 1970. The amendmentto the Articles of Agreement of the International Monetary Fund creatingSpecial Drawing Rights was ratified during August by the recmired 67member countries having 80 percent of the voting power of the IMF. Thenext step resolved the important question of the appropriate amounts ofSDR's. The deficient growth of international reserves made it desirable thatinitial allocations of Special Drawing Rights should be substantial. Thedecision by the International Monetary Fund to create $9.5 billion inSpecial Drawing Rights between 1970 and 1972 should permit an adequatebut not excessive growth of official reserves.

In using SDR's, countries are expected to fulfill the "requirement of need."SDR's are to be transferred to meet balance-of-payments needs and coverreserve losses, but not solely to change the composition of reserves. A countrymay use SDR's to purchase balances of its own currency from another par-ticipant, if the other participant agrees. Another set of provisions enables theFund to guide SDR transactions from using countries to countries designatedas eligible recipients on the basis of a number of criteria, including theirbalance-of-pavments and reserve position. No country is bound to acceptadditional SDR's if its holdings already amount to three times its cumulativeallocations.

During 1969 the Executive Board of the International Monetary Fundalso agreed to recommend an increase in quotas in the Fund by a total of $7.6billion, or 35.5 percent. While an increase in IMF quotas does not, in itself,result in an increase in "owned" international reserves, it does create a largerpool of international credit, which acts as a partial substitute for reserves.(When countries can borrow to finance temporary balance-of-paymentsdeficits, they are under less pressure to acquire and hold reserves.) As part ofthe general increase in quotas, the U.S. quota will, if Congress approves, risefrom $5,160 million to $6,700 million, an increase of 29.8 percent. Specialarrangements were made in order that the proportion of the quotas held byless developed countries should not fall as much as they would with a me-chanical application of the usual criteria based on trade and GNP. Thesecountries' share of the total quotas will decrease only from 28.3 percent to27.7 percent, and in absolute terms they will rise from $6,032 million to$8,014 million.

INTERNATIONAL ADJUSTMENT

Creating the Special Drawing Rights and increasing the IMF quotaswill give nations more time to redress their balance-of-payments disequilibriain an orderly fashion, but the question of the most effective way to correctimbalances is still open. In principle, they can be corrected by threebasic measures applied singly or in combination. First, domestic policy canbe altered. Countries with a surplus can adopt more expansive policies andthereby increase their imports and reduce their exports. Countries with defi-

133

cits can restrict domestic demand, thereby reducing their imports andincreasing their exports. Second, governments can take direct action byadopting certain selective measures. To correct deficits, countries canincrease tariff rates, or institute import quotas or controls on capital move-ments and tourist expenditures. In countries where a surplus exists, govern-ments can reduce tariffs, remove other obstructions to imports, or encouragethe outflow of capital. Third, exchange rates can be altered (although, as apractical matter, the United States cannot adjust its exchange rate). Coun-tries may aim to correct deficits by adjusting the exchange rate of theircurrencies downward, a move that will discourage imports and encourageexports. Surplus countries can appreciate the exchange rate of their curren-cies, thereby encouraging imports and discouraging exports. The measures acountry selects and its quickness in applying them will depend on its willing-ness and ability to finance deficits out of reserves and borrowings, or to per-mit surpluses to build up reserves.

Each of the three general methods for redressing balance-of-paymentsdisequilibria has its advantages and disadvantages. How much internationalsynchronization of domestic policies is desirable depends partly on whetherpolicies to achieve internal stabilization will also restore a balance-of-pay-ments equilibrium. It has been argued, for instance, that maintaining fixedexchange rates encourages countries to keep inflationary pressures under con-trol, thus reinforcing "discipline." There is no automatic assurance, how-ever, that the internal adjustment required to correct a country's balanceof payments will also contribute to domestic stability. A balance-of-paymentssurplus might coincide with a domestic boom, in which case the restric-tive policies needed by the domestic economy would further enlarge thesurplus in the country's external payments. Another country might face thereverse of that situation, with underemployment at home and a deficit inits external payments. In such instances, there will be strong pressure toadopt direct action affecting international transactions, and, in some cases,to alter the exchange rate.

Direct Actions

International adjustment may be attempted through direct actions aimedat any of the components of the balance of payments, but the nature andlimitations of such controls must be fully recognized. Although at times theymay relieve an urgent situation, their function is essentially palliative. Onceestablished, moreover, it often proves difficult either to deactivate them orto integrate them effectively into longer range solutions.

At the time the International Monetary Fund was established, capitaltransactions were believed to be a possible source of international disequi-librium, and capital controls were therefore considered preferable to currentaccount controls as a means of correcting the balance of payments. Capitalcontrols, however, also have their costs. The case for free international in-vestment is similar to that for free international trade. Broader and freer

134

markets for both capital and goods contribute to economic efficiency, thegrowth of the world economy, and a more rapid improvement of livingstandards generally. Capital controls create serious administrative difficul-ties and are likely to inspire a search for loopholes in their provisions.Once set up, they have a tendency to enmesh the economy in an ever-widening circle of restrictions rather than to develop conditions that wouldobviate the need for curbs. Furthermore, they are inconsistent with a lib-eral approach to economic policy and are irksome to business.

In his message of April 4, 1969, the President affirmed the Administration'sintention to move away from controls on capital movements. The programto restrict direct investment abroad was relaxed; the minimum amount ofinvestment, that is, the leeway before restraints are applicable, was raisedfrom $200,000 to $1 million. This measure reduced the number of firmsrequired to furnish quarterly reports under the program from 3,400 to 650.Furthermore, an optional earnings quota was established which allows com-panies to reinvest up to 30 percent of their foreign earnings. The FederalReserve guidelines for banks were revised to give them more flexibility infinancing U.S. exports and to resolve some equity problems. For 1970, fur-ther changes were made in the Federal Reserve program to encourage thefinancing of exports. The former minimum of $1 million under the ForeignDirect Investment Program was raised to $5 million, so long as investmentover $1 million is used in the less developed countries.

On the trade side, temporary quantitative restrictions on imports aresanctioned under the GATT as a method for protecting the balance ofpayments. Since quantitative restrictions are particularly likely to disrupttrade, however, there has been some tendency to use import surcharges or acombination of import surcharges and export subsidies in their place. Intheory, the imposition of a uniform import surcharge combined with anequivalent export subsidy is close to a change in the exchange rate in itseffects on the trade balance, and therefore almost as neutral as an exchangerate adjustment with respect to the allocation of resources. In one importantrespect, however, these measures are not equivalent to an adjustment in theexchange rate. The latter applies to all international transactions, includingtourist expenditures and other invisibles, as well as capital items. In con-trast, the combination of import surcharges and export grants applies onlyto merchandise trade. Furthermore, almost inevitably there are pressures toexclude certain items from the surcharge-grant system, with the consequencethat specified industries enjoy a degree of protection not granted to others.

It is appropriate for countries having a surplus to reduce their restrictionson imports and on capital flows, and a number of countries have takensuch steps. (Countries may also undertake unilateral reductions in importbarriers, or a speedup of reductions already agreed upon, to reduce domes-tic inflationary pressures, as Austria and Canada did during 1969, and asSwitzerland plans to do in early 1970.) Although direct restrictions on im-ports or capital flows to correct deficits will normally have the undesirable

135

side effect of inhibiting mutually advantageous international exchange,direct action to deal with a country's surplus by reducing barriers to tradeor capital flows will have favorable side effects and will also lessen the likeli-hood of restrictive measures by deficit nations. Where possible, therefore,direct actions should take the form of a relaxation of controls and restraintsby countries with a surplus rather than the introduction or tightening of suchmeasures by deficit countries.

Exchange Rate Adjustments

Proper management of domestic economic policy, as indicated above,will not always be sufficient to avoid balance-of-payments difficulties. Otherfactors besides improper demand management may create imbalances.Where the economic policies required for external equilibrium differ greatlyfrom those that promote price stability and high employment at home, theBretton Woods system provides for discrete adjustments in exchange parities.In practice, however, countries have been reluctant to make such adjust-ments promptly, and their delays have often generated speculative move-ments of funds and use of restrictionist measures. The frequency of inter-national financial crises in recent years has focused attention on the pos-sibility of adjusting exchange rates in a calmer and more orderly manner.

At the Annual Meeting of the Governors of the International MonetaryFund in September, the Managing Director announced that the Fund willcontinue its study and appraisal of proposals for "limited flexibility" inexchange rates. The Secretary of the Treasury made it clear that the UnitedStates will actively participate in and contribute to this study. Althoughthe results of such studies cannot be foreseen, it is possible to point out someof the technical and policy problems that will need clarification.

Within the general framework of the Bretton Woods system there is scopefor greater flexibility of exchange rates than has been evident in practice. Ithas been suggested that parity adjustments could be made more frequentlyand hence in smaller amounts. Some official interest has also focused on pro-posals to widen the band within which exchange rates would be permittedto fluctuate around parities, and to provide mechanisms, like the so-calledcrawling peg or sliding parity, that would make movements in parity moregradual than they have been in the past.

Wider Bands

Interest in proposals for wider bands has concentrated on the possibleeffects of a modest widening—perhaps changing the present maximumrange of 1 percent on each side of parity to permit a range of 2 percent. Initself this would do little to improve the adjustment mechanism. What itmight do is to help insulate domestic money markets from movements ofinterest-sensitive short-term funds and reduce the largely one-sided specula-tive options that occur under the present system. However, a modest widen-ing of the band can have no substantial effect in reducing troublesome flows

136

of short-term money unless abrupt changes in parities are considered unlikely.If people commonly believe that the equilibrium exchange rate falls welloutside the band, the broader band in itself can do little to discourage move-ments of short-term funds.

For a number of reasons, widening of the present bands cannot whollyguard against international imbalances sufficiently severe to throw estab-lished parities into question. As already pointed out, countries do not attachequal weight to the different objectives of economic policy. Some nations aremore tolerant of inflation—or of increases in unemployment—than others.Governments also differ in their ability to influence the trend of costs andprices effectively. And, even if general price trends were identical in allcountries, balance could be disturbed by changes in demand and supplypatterns for internationally traded goods, or differing trends in governmentpurchases and receipts. This situation has encouraged some to ask whetherstability of the international monetary system would be improved if smallerand more frequent changes in parity were made in the hope of avoidinglarge discrete jumps.

Smoothly Moving Parities

A number of proposals have been made for smooth and gradual adjust-ments in parity of up to 2 or 3 percent per year. While these proposals for"crawling pegs" differ in technical detail, they present in common a numberof the fundamental questions that figure in debates on this subject. Oneimportant issue turns on the degree of national discretion to be encouragedor permitted in altering exchange rates. Another question is whethersmoothly moving parities would tie interest rates more closely to inter-national developments and thus reduce the independence of domestic mone-tary policies. It is also feared that parity movements would weaken theexternal discipline on domestic policies. And there has been concern aboutwhether these movements might complicate the conditions under whichinternational business transactions take place.

The Degree of Discretion. The various proposals for slowly movingparities range from a completely permissive, discretionary authority to acompletely automatic, mandatory system. A purely discretionary systemmight be no more successful than present arrangements in preventing funda-mental imbalances that require abrupt changes in parity. Experience sug-gests that, left to their own discretion, individual countries might postponeparity changes until political or financial developments made them im-perative. On the other hand, a fully automatic system might be unacceptableto nations that regard control over their exchange rate as an established pre-rogative of national sovereignty.

A possible compromise may lie between complete discretion and bindingrules. One solution might be to develop presumptive rules that, with a degreeof multilateral surveillance, would guide countries in making appropriateadjustments in parities.

137

The objective criteria most frequently recommended for incorporation intosuch presumptive rules are based on the behavior of spot and forward ex-change rates, and on the changes in reserve levels, defined in various ways—for example, to include or not include short-term funds held by commercialbanks. Typical proposals have urged that desirable parity changes be in-dicated by a moving average of past spot rates or by reserve movements. Anadvantage of including some measure of reserve movements in the criteriais that rules on direct official intervention in the spot or forward market mightthen be unnecessary. (If exchange rates were the only criterion, such rulesmight be deemed necessary, since exchange rates can be influenced by officialintervention.) Much technical work remains to be done, however, beforesatisfactory criteria for parity changes can be established.

A number of other questions about the most desirable form of a movingparity system also require further study. For instance, how general wouldparticipation in the system need to be? As an initial step, should one or afew countries be encouraged to experiment with greater flexibility? Wouldslowly moving parities work best if they were accompanied by a wideningof the band around parity? What special problems might arise for regionaleconomic groupings?

In addition to these technical points, questions have been asked aboutthe fundamental value of any form of slowly moving parities or wideningof the band in improving the operation of the international monetary sys-tem. A full discussion of all of these issues would go beyond the scope of thischapter, but five of the most commonly raised questions about the desir-ability of greater exchange rate flexibility will be considered briefly. Theseask what effects a greater flexibility in exchange rates would have on mone-tary independence; whether internal discipline would suffer; what provi-sion would be made for forward cover on exchange transactions; whethersmall but frequent exchange rate adjustments would actually be effective;and what the implications of greater exchaijige-rate flexibility would be forthe U.S. dollar.

Monetary Independence. One criticism of smoothly moving parities hasbeen that they would bind monetary policy too closely to international con-ditions. If, for example, it was generally believed that a country's parity wouldmove downward at the maximum permitted annual rate—say, 2 percent—for an extended time and that its spot rate would move down accordingly,there would be an incentive for capital to move out of the country unlessdomestic interest rates were 2-percent higher than foreign rates.

This criticism assumes that movements in the spot rate are predictable.Under certain conditions they might be. If sliding parities were used in anattempt to overcome an already existing and sizable disequilibrium, thedirection of future movements in the exchange rate would be clear. This,however, is a purpose for which sliding parities are not particularly wellsuited. Alternatively, movement of the spot rate might be predictable if theequilibrium rate were gradually rising or falling over time. If a downward

138

crawl in the exchange rate resulted from a more rapid rate of inflation in onecountry than in others, that country's domestic capital markets would tendto reflect these inflationary pressures, and the higher interest rates couldexist for domestic reasons. The need to have higher interest rates because ofthe crawling peg might not, therefore, represent a restraint on domesticpolicy. Similarly, in countries with less inflation, there would be a tendencyfor interest rates to be lower whether there was a crawling peg or not.

Different rates of inflation are not, of course, the only forces that wouldcause a crawling peg to move. If the par value of a country's currency weretoo high for other reasons, a predictable one-way downward crawl mightraise complications, with international capital flows impelling the monetaryauthorities to keep interest rates above the level that they consider desirablefor domestic reasons, perhaps over fairly long periods. In any event, theimportant comparison lies between the policy restraint that might resultfrom the crawl and the policy restraint that now occurs when an exchangerate is generally considered out of line, and when capital flows may conse-quently be stimulated by the expectation of a large discrete adjustmentin the exchange rate. Because such adjustments offer the prospect ofimmediate sizable gains, the expectation that they will occur has oftenbeen an important motive behind short-term capital flows.

Furthermore, the initial capital flows in response to expected movementsin the exchange rate will greatly overstate the magnitude of continuingflows. Once financial positions adjust to these changed incentives, capitalmovements would probably become much smaller, and the cessation of thecrawl in due course would eliminate the incentives. Finally, the reversiblenature of most liquid capital movements means that problems arising fromshort-term capital flows under a sliding parity could to some extent be dealtwith by official financing instead of adjustments in interest rates.

Domestic Discipline. Another concern about slowly moving paritiescenters on whether they would reduce the disciplinary effects that reservelosses may have on nations needing to deal with domestic inflation. Sinceupward movements in the par value would have no such effects, it has beensuggested that greater flexibility be allowed only in moving exchange ratesupward. Indeed, an upward movement of the exchange rate would reduceinflationary pressures and facilitate the maintenance of domestic pricestability in countries having a surplus. For countries with deficits, the validityof the discipline argument is difficult to assess in general terms. The responseof countries to reserve losses varies considerably. Most countries have beenreluctant to devalue. Some have adopted more restrained domestic policiesas well as imposing restrictions on international transactions. The prob-lems that might be caused by permitting a downward crawl therefore donot lend themselves to easy generalization.

The Provision of Forward Cover. A third question has to do with theoperation of the forward market when there is greater flexibility in exchangerates. A change in the international financial system that, whatever its

139

merits, aroused even more uncertainty about exchange rates, might have anadverse effect on trade and investment. On the other hand, to the extentthat greater flexibility in the exchange rate promoted better adjustment andthat speculative expectations became more stabilized, demands by interna-tional traders to cover their exchange risk in the forward market mightactually fluctuate less than they do at present. Moreover, as the chancesof an abrupt and large adjustment in the exchange rate are reduced, theconsequences of being caught without forward cover become correspond-ingly less serious.

The Effectiveness of Small Changes in Parity. Another question iswhether small but frequent changes in parity would be an effective meansof promoting adjustments, since the evidence suggests that it takes time fortrade to respond fully to a change in exchange rates; that is, elasticities ininternational trade are generally higher in the long run than in the short run.This lag is, of course, more relevant in situations where small changes in theexchange rate are used to correct already existing imbalances than wheresuch changes are used to prevent a disequilibrium from developing. Thatbeing so, small but frequent adjustments of parity would probably be moreuseful in maintaining approximate equilibrium than in restoring a balanceafter a substantial disequilibrium has been allowed to develop.

The U.S. Position. Because of the central role of the U.S. dollar in theinternational monetary system, the United States cannot move its own paritywith respect to other currencies. This implies that the United States wouldbe particularly concerned with the direction in which other countries weremoving their parities. A bias in one direction or the other could lead to anovervaluation or undervaluation of the dollar. Historically, devaluations ofcurrencies with respect to the dollar have been more frequent and on aver-age larger than revaluations. While to some extent this may reflect greaterprice stability in the United States than in many foreign countries, the dan-ger of systematic overvaluation as a result of greater flexibility should beguarded against. This could be done by appropriate specification of the pre-sumptive rules mentioned earlier.

THE DOLLAR AND INTERNATIONAL EQUILIBRIUM

The United States has the world's largest economy, and its exports andimports are larger than those of any other nation. These facts alone wouldmake economic developments and policy here a matter of great concern tothe world economy. A further point, however, is that the dollar has becomethe principal international currency. Much of the world's trade is de-nominated in dollars, and throughout the world dollars are widely held asreserves and as working balances to accommodate trade and investment.

Because the dollar plays a central role in the international monetarysystem, the United States is more constrained in its adjustment policies thanother countries. Since the United States does not have primary control overany market exchange rate, other nations in effect determine the exchange

140

value of the dollar. It is generally recognized that exchange rates are a matterof international concern, and the United States is consulted through the IMFand other organizations regarding the appropriateness of exchange rateadjustments. Yet the United States clearly exercises only indirect influenceover the exchange value of its currency, in contrast to the more directcontrol exercised by other countries.

The central position of the dollar in the international system was not theresult of any conscious decision or strategy on the part of the U.S. Govern-ment. It was the natural consequence of the size, strength, and stability ofthe U.S. economy, traits which were especially evident during the earlyyears after the Second World War. This central role provides benefits forthe United States, but it also entails problems and responsibilities.

For some years now, concern over the state of the U.S. balance of pay-ments has been evident. The discussions of a dollar shortage in the 1950'shave given way to discussions of the U.S. payments deficits. Nevertheless, inthis same interval the predominant change in the exchange parities of othercurrencies has been downward (not upward) in relation to the dollar. Therehave been only three upward changes in the past decade—the revaluationsof the German mark by 5 percent in 1961 and 9.3 percent in 1969, and therevaluation of the Dutch guilder by 5 percent in 1961.

In part—perhaps in large part-^this paradox can be attributed to thefact that international liquidity needed to grow, and a large part of thisgrowth has been through official accumulation of dollars. To be sure, notevery payments imbalance is an indication of a low overall level of liquidity.But when many countries simultaneously begin to feel that their balance-of-payments positions are too weak, it is evident that there is a general shortageof liquidity. It was precisely to eliminate this shortage and the resultantdanger of a destructive competition for reserves that the Special DrawingRights were instituted. The introduction of SDR's should moderate thegeneral tendency to consider that official reserves are too low.

It is also important to the United States and to the international com-munity that the international adjustment mechanism be strengthened. Fail-ure to achieve this could have serious consequences. New strains on theworld monetary system could develop unless our payments position assuresforeign monetary authorities and private traders that the dollar will remainstrong. The present situation, in which we maintain an official settlementssurplus only because of large-scale foreign borrowing by U.S. corporationsand banks at high interest rates, creates a feeling of some uneasiness hereand abroad, and observers generally regard the present structure of theU.S. international accounts as abnormal and temporary.

Whatever the United States does is felt in other countries. We, therefore,have every reason to consider the effects that our economic policies willhave on them. Continuing prosperity and economic stability abroad dependsin part on stable growth in the United States. Because of our size, othercountries feel the influence of inflationary or deflationary pressures originat-

141372-111 O—70 10

ing in this country. If U.S. inflation were to continue at its recent levels,some countries might face the painful necessity of choosing between theinflationary consequences of a large export surplus or an upward adjust-ment of their exchange rates. For international as well as domestic rea-sons, it is most important that the United States restore internal balance andachieve sustainable, noninflationary growth. This responsibility, along withreasonably free access to U.S. markets, constitutes our predominant obliga-tion toward international economic well-being.

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Appendix A

UNEMPLOYMENT AND THE ECONOMY

CONTENTSPage

UNEMPLOYMENT AND THE ECONOMY 147UNEMPLOYMENT STATISTICS AND THEIR INTERPRETATION 147

UNEMPLOYMENT AND LABOR MOBILITY 148

THE DURATION OF UNEMPLOYMENT 151

UNEMPLOYMENT AMONG DIFFERENT GROUPS 152

List of Tables and ChartsTablesA-l . Unemployed Persons by Reason for Unemployment, 1969 149A-2. Unemployment by Age, Sex, and Race, 1969 152A—3. Selected Measures of Unemployment, 1969 153A-4. Distribution of Activities of Persons 16-21 Years of Age, 1968-69 154A-5. Distribution of Activities of Persons 16-21 Years of Age by Sex and Race,

1968-69 155ChartA-l . Unemployment Rate and Duration 150

145

Unemployment and the Economy

The unemployment rate occupies a prominent place in the array of eco-nomic statistics that indicate the overall state of the economy. This centralposition is to a large extent attributable to the fact that it serves as a broadbut direct index of the extent to which the mandate of the Federal Govern-ment embodied in the Employment Act of 1946 is being fulfilled.

Much of the attention the unemployment rate receives, however, is aresult of its role as an indicator of economic waste and public welfare.As a Nation we are highly and properly sensitive to the problem, of theperson seeking employment and unable to find a job. We need to know asmuch as possible about the numbers and characteristics of the unemployed,and the reasons they are not working, so that the most effective remediescan be devised. In the management of economic policy it is essential tosee this complex picture clearly in order to formulate a judgment about therelative emphasis to be placed on general measures to enlarge employmentopportunities and on other special-purpose programs to deal with morespecific manpower problems. This appendix examines information bearingon the character and composition of unemployment in our recent experience.

UNEMPLOYMENT STATISTICS AND THEIR INTERPRETATIONUnemployment is usually accompanied by an interruption or decline

in the income flow that often represents the principal source of livelihoodfor a family or individual. Unemployment can, therefore, cause substantialhardship, particularly if it occurs for the family breadwinner and if itpersists for a considerable period of time. The implications of unemploy-ment and loss of income for economic well-being and morale provide amplejustification for public concern about unemployment and for governmentpolicies to reduce its incidence and to cushion its impact when it occurs.

While these social implications of unemployment are widely recognized,and appropriately given great emphasis, some other facets of unemploy-ment in the economy and the interpretation of the unemployment ratehave received much less recognition and discussion.

The unemployment rate is sometimes viewed as an indicator of wastedresources in the economy. In its simplest formulation this view often restson the notion that labor services lost through involuntary unemploymentare irretrievably lost, and that the loss serves no economic purpose. It canlegitimately be argued that the loss in labor services is not restricted to theperiod of idleness if unemployment is accompanied by loss of income

147

that results in a decline in the health and well-being of workers. Inaddition, loss of proficiency in skills and loss of motivation and morale ac-companying idleness may further increase the waste of human resourcesthat involuntary unemployment entails. Nevertheless this view of unemploy-ment as an important source of waste is applicable to only a part of actualunemployment and that portion declines as lower unemployment rates areachieved.

The level of the unemployment rate and the numbers of unemployedpersons in various subcategories are often taken to indicate the narrow seg-ment on which the incidence of slack in the economy falls—the unemployed.The cost to society of unemployment is then viewed as the earnings loss im-plied for those experiencing unemployment. Viewed in the context of aggre-gate economic policy, the cost of economic conditions or policies that resultin increased unemployment thus appears to be concentrated on those in thefraction of the labor force reported as unemployed. While these costs areborne disproportionately by some groups, the portion of the work force ex-periencing unemployment over a period of time is much larger than the un-employment rate suggests. Moreover, involuntary part-time employment,other forms of underemployment, and nonparticipation in the labor force asa result of poor prospects for obtaining employment are not reflected in theunemployment rate. Some unemployment is a byproduct of labor market ad-justments such as entry into the labor force, seasonal variation in manpowerrequirements, and changes in the composition of demand. Although its originsmay be inherent in the operation of a free labor market, even under condi-tions of high demand, such unemployment may cause serious problems forsome workers.

Recent unemployment rates have been low compared to our historicalexperience since World War II. The interim goal of a 4-percent averageannual unemployment rate, set out in the early sixties, has been surpassedfor 4 years (1966-69), and in this period the unemployment rate was at itslowest level since the Korean conflict in the early fifties. The primarypolicy emphasis has now shifted from one of reducing slack in the economyand further decreasing unemployment to one of monetary and fiscal restraintto contain the forces of inflation. Thus an examination of the character andcomposition of unemployment in our recent experience will indicate thedimensions of the labor market adjustment process under high employmentconditions.

UNEMPLOYMENT AND LABOR MOBILITYThe American economy has been characterized by growth and tech-

nological change. This has been accompanied by a shifting pattern of out-put and resource use. A highly mobile labor force has facilitated the ad-justment processes necessary to accommodate rapid and continued change.New employment opportunities constantly open up providing more pro-ductive and higher paying jobs than in other sectors of the economy. In-creasing productivity and rising wages have resulted from this continuing

148

reallocation of labor to more productive employment as well as from im-provement in workers' skill levels and an increasing supply of more produc-tive capital inputs.

Many workers are able to change jobs without an intervening periodof unemployment, and many of those leaving school or reentering thelabor force have jobs lined up in advance. But obtaining new employmentoften involves time and effort in search of the most suitable and productiveopportunities consistent with workers' skills and preferences. Time spentin search of the most suitable employment in a generally active labor marketcan be regarded as a constructive activity on the part of some workers. Inthose cases it should not be regarded as a waste of resources, just as timespent in schooling, skill training, or other activities to upgrade earningpower are not regarded as economic waste. There is a cost to the workerand to the economy of such "frictional" unemployment, but improvementsin job status, earnings, working conditions, and job satisfaction are off-setting benefits.

Ways should be sought to reduce this cost, without losing the attendantbenefits. For example, information plays a crucial role in the process ofsatisfactorily matching workers with jobs. Providing job information maybe a worthwhile social investment, decreasing the time and effort workersmust typically spend in search of suitable employment and improving laborutilization. The Department of Labor has long played a leading role ingathering and disseminating job market information, and tr̂ is Administra-tion is accelerating the development and introduction of systems such as theJob Bank and experiments in computerized matching of workers with jobs.

Many job changes with accompanying periods of unemployment are aresult of voluntary turnover, workers leaving their previous employment insearch of more favorable alternatives. In 1969, 15 percent of the unem-ployed voluntarily left their last job (Table A - l ) . In addition, many ofthose unemployed were entering or reentering the labor force—49 percentin 1969. These workers who entered or reentered the labor force are activelyusing this time in an effort to find suitable jobs. Unemployment for workersin these categories often is not strictly involuntary. For many of them it canbe described more properly as time voluntarily devoted to obtaining pro-ductive employment, improved job status, or more suitable and perhapshigher paid employment.

T A B L E

Total unemployment

Lost last jobLeft last jobReentered labor forceNever worked before

A—1.— Unemployed persons

Reason

by reason for unemployment, 1969

Number(thousands)

2,831

1,017436965413

Percentagedistribution

100

36153415

Note.—Detail will not necessarily add to totals because of rounding.Source: Department of Labor, Bureau of Labor Statistics.

149

The rapid pace of technological change contributing to rising livingstandards leads to changes in the pattern of labor use that often require someinvoluntary job changes. In addition, the seasonal nature of some work,secondary effects of work stoppages, and temporary adjustments in pro-duction and inventories result in involuntary loss of employment. In 1969,36 percent of those unemployed left their last job involuntarily. Most wereunemployed for only a short time. One out of two were unemployed lessthan 5 weeks as compared to slightly over 4 weeks for those who became un-employed for reasons other than job loss.

The nature of the job search required to obtain suitable employmentfor those workers experiencing unemployment is indicated by the amountof time the typical unemployed worker spends in search of employment. In1969, the median duration of unemployment was less than 4.5 weeks (ChartA - l ) . The search period required for the typical unemployed worker toobtain employment varies with the level of the unemployment rate. Since1965, it has been less than 5 weeks. Thus the predominant share of those un-employed spend a relatively short time in search of suitable jobs. Someworkers experiencing frequent short periods of unemployment are, neverthe-less, seriously affected by unemployment that is typically of short duration.

Chart A - l

PERCENT

Unemployment Rate and Duration

WEEKS

12SEASONALLY ADJUSTED

UNEMPLOYMENT RATE- ! /(Left scale)

MEDIAN DURATION OFUNEMPLOYMENT

(Right scale)

I I I I I I I I 1 I I I 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 1 I I I I I I I I

10

1955 57 59 61 63 65 67 69

-^UNEMPLOYMENT AS PERCENT OF CIVILIAN LABOR FORCE.

SOURCES: DEPARTMENT OF LABOR AND COUNCIL OF ECONOMIC ADVISERS.

I 5 O

Many workers, of course, enter or leave the labor force without sufferingany unemployment. In 1968, for example, over 90 million persons workedat some time during the year. (Data for 1969 are not yet available.) Slightlyover 10 million of those who worked were unemployed at some time duringthe year. Hence over 80 million persons worked in 1968 and experienced nounemployment even though the average number employed was less than76 million. Viewed in a slightly different manner, over 32 million personsworked less than 50 weeks in 1968. But less than 9 million (27 percent) ofthese part-year workers experienced some unemployment. The rest of thosewho worked less than a full year entered or voluntarily left the labor forceduring the year. In addition, many workers who worked a full year changedjobs without experiencing any intervening unemployment. In manufactur-ing alone, a sector accounting for over 25 percent of average employmentin 1968, Bureau of Labor Statistics data indicate that almost 11 million jobchanges and new hires occurred—a number almost equal to the total num-ber of persons experiencing unemployment throughout the entire economyin that year. These data illustrate the amount of flux in the labor force. Theyalso indicate that changing jobs and obtaining employment typically requirefar less search time than is indicated by the median duration of unemploy-ment, since those statistics refer only to workers experiencing unemployment.

THE DURATION OF UNEMPLOYMENTAn increase in the unemployment rate obviously results in additional

persons experiencing unemployment. It is less generally recognized thatpart of the increase in the unemployment rate is attributable to a lengthen-ing in the time that workers must typically spend in search of suitableemployment. More people are unemployed because of layoffs and aninability to find other employment immediately. Others who enter thelabor force or who left previous employment are more likely than beforeto go through a period of job search instead of finding suitable employmentimmediately. Since the increase in the period of time typically required tofind work is reflected in the reported unemployment rate, the number ofadditional people experiencing unemployment over a period of time isproportionately less than the increase in the number reported as unemployedat any given time.

An increase of 1 percentage point in the unemployment rate would, onthe basis of past experience, be expected to result in an increase of about1.4 weeks in the median time required for those becoming unemployed toobtain jobs. Thus, from the point of view of both the larger number of workersexperiencing unemployment and the longer average duration of unem-ployment, higher unemployment rates increase the costs that must be in-curred to find suitable jobs by those entering the labor force or changingemployment.

Workers most seriously affected by unemployment and increases in theunemployment rate are the long-term unemployed. In 1968, for example,over 900,000 workers experienced more than 6 months of unemployment

during the year, more than half of them having more than one intervalof unemployment. Yet the number unemployed more than 6 months atany given time averaged about 156,000. Thus even this group of long-termunemployed is subject to substantial turnover.

For the long-term unemployed, searching for suitable employment isextremely costly, and the consequences for family income when the principalearner is unemployed for a long period are likely to be severe. Many ofthese workers undoubtedly have handicaps impairing their ability to getand hold jobs. Manpower training programs to improve their employabilityor special programs to give them access to job opportunities are required.Fortunately, their numbers are relatively small. There were 133,000 reportedas unemployed for 6 months or more in 1969 monthly statistics; 42,000 ofthese were married males with wives present. Although they represent a smallgroup in a labor force of over 80 million, the costs unemployment imposeson them justify strong manpower policies to improve their employmentprospects and further reduce the number in this group.

UNEMPLOYMENT AMONG DIFFERENT GROUPS

Unemployment rates differ markedly among classes of workers andpopulation groups. They are particularly high for teenagers, and relativelyhigh for women and for Negro and other races (Tables A-2 and A-3).

TABLE A—2.— Unemployment by age, sex, and race, 1969

Age, sex, and race Number(thousands)

2,831

853

441343

97

412317

95

1,370

630509122

740571168

608

332285

47

276235

41

Percentagedistribution

100

30

1612

3

1511

3

48

2218

4

2620

6

21

1210

2

1081

Rate(percent) i

Total unemployment

Teenagers 16-19 years of age. _

MalesWhiteNegro and other races.

FemalesWhiteNegro and other races.

Adults 20-44 years of age-

MalesWhiteNegro and other races..

FemalesWhiteNegro and other races..

Adults 45 years of age and over..

MalesWhite....Negro and other races..

FemalesWhiteNegro and other races..

3.5

12.2

11.410.121.3

13.311.527.7

3.2

2.42.14.2

4.74.27.2

2.0

1.71.62.8

2.42.33.3

i Number of unemployed in each group as percent of labor force in that group.


Source: Department of Labor, Bureau of Labor Statistics.

TABLE A-3.—Selected measures of unemployment, 1969

Total unemployment

Race:WhiteNegro and other races

Selected type of worker:Blue collarWhite collar

Sex:MaleFemale

Marital status:Male:

Married __ _Other.

Female:MarriedOther

Measure Number(thousands)

2,831

2,261570

1,154780

1,4031,428

582821

689739

Rate(percent)

3.5

3.16.4

3.92.1

2.84.7

1.57.1

3.95.8



Teenagers and Young People

Almost 40 percent of the unemployed in 1969 were persons 16-21, al-though this age group comprised only 13 percent of the labor force. Theunemployment rate for persons 16-21 years of age was 10.4 percent in1969, while that for persons 22 years of age and over was 2.4 percent. Sincethe overall unemployment rate was 3.5 percent, the high rates for persons16-21 years of age contributed 1.1 percentage points to the overall rate.But the high unemployment rates of young workers give a misleading im-pression of the incidence of unemployment among teenagers as a group aswell as of their welfare implications.

The pattern of activities of persons in the 16-21 age class differs markedlyfrom that for older persons. The primary activity of nearly half (45.5 per-cent in 1969) of the persons in the civilian population age 16-21 years oldis schooling. Although their unemployment rate was 10.4 percent, only 3.9percent of all the persons in this age class were both unemployed and notattending school.

Examining only annual averages obscures the large seasonal variationin the labor force and employment that occurs in this age class. During theschool year (October 1968-May 1969) 58.9 percent were attending school(Table A-4). The percentage in school dropped to 6.5 percent in thesummer months (July and August 1969) and the unemployment rate ofthe 16-21 year age group increased from 9.8 to 10.1 percent. The per-cent of those in this age class who were unemployed and not in school in-creased from 2.7 to 6.5 percent. The number in the labor force, however,increased by more than one-third. This short-term increase for the summermonths occurs for a period averaging about 3 months or less.

*53

T A B L E A—4.—Distribution of activities of persons 16-21 years of age, 1968-69

Activity

Percentage distribution of civilian noninstitutional population 16-21years of age, total

Major activity, going to school:In civilian labor force:

EmployedUnemployed..

Not in labor force.

Major activity, other:In civilian labor force:

EmployedUnemployed..

Not in labor force.

Unemployment rate, persons 16-21 years of age (percent):In schoolNot in school

1969 annualaverage

100.0

13.01.7

30.8

35.53.9

15.1

11.79.9

School year,October 1968-

May 1969

100.0

17.32.1

39.6

27.22.7

11.1

10.79.2

Summermonths,

July andAugust 1969

100.0

1.2.2

5.0

58.26.5

28.9

15.310.0


During the school year 2.1 percent of those in the 16-21 year age classwere in school and unemployed. During most of the school year over 90percent of those unemployed and in school were interested in only part-time work. In the summer months about 25 percent were looking forpart-time work. Even in the large short-term bulge in the labor forceoccurring in the summer months only 4.8 percent of the population inthis age class was unemployed, not in school, and looking for full-timework.

Unemployment rates, particularly in the summer months and for Negroand other nonwhite races, are comparatively high for persons in the 16-21year age class (Table A-5). This is in part a result of the large seasonalchange in the labor force that occurs in the summer months. For this ageclass entry and reentry into the labor force are also much more prevalentthan for older workers. This is a period in which a large share of the transi-tion between schooling and attachment to the work force is accomplished.

Persons in this age class are particularly vulnerable to unemploymentbecause many are seeking their first job. Moreover, many of the earlyschool-leavers enter the labor force without skills or qualifications that areeasily recognizable by employers. Many are inexperienced at searching forwork and often change jobs frequently to explore different types of employ-ment. The large share of those in this age class that are usually searchingfor employment, their inexperience in job search, and the relative lack ofinformation both on the part of employers and job seekers are all factorscontributing to the high unemployment rates they experience. Lack offamily and other commitments also often makes their attachment to workand to any given job more casual than that for older workers.

X54

TABLE A-5.—Distribution of activities of persons 16-21

Period, sex, and race

School year, October 1968-May 1969:

Males:White. .Negro and other races

Females:WhiteNegro and other races

Summer months, July and August 1969:

Males:WhiteNegro and other races

Females:W h i t e . . . . . . . . . . .Negro and other races

years of age by sex

Percent of noninstitutionalpopulation 16-21 years of age

Inschool

67.859.2

52.947.5

6.26.6

6.38.6

Unemployed

Inschool

2.53.5

1.42.2

.2

.1

.2

.4

Not inschool

2.25.0

2.46.0

5.912.7

5.510.4

and race, 1968-69

Unemployment rate(percent),

persons 16-21years of age

Inschool

9.722.2

9.425.2

11.69.1

19.327.3

Not inschool

7.714.4

8.019.7

7.917.6

9.6. 21.1


The earning capability of many workers in this age class is low relativeto that for older, more experienced workers. A large fraction is also inter-ested in only part-time work, and part-time jobs typically pay lower wagesthan full-time, long-term job commitments. Higher minimum wage levelsand expanding coverage requirements may, therefore, be significant factorsinfluencing recent high unemployment rates for persons in this age class.

The welfare and income implications of unemployment among youngpersons are somewhat less serious than for other groups such as adultmarried men. Many of these young persons are part of larger familyunits. The contribution of working teenagers to average family income in1966 was about 10 percent. More than three-quarters of those who workedearned less than $1,000. Moreover, many unemployed teenagers are fromfamilies that are relatively well-to-do. Over 30 percent of unemployedteenagers were in families with annual incomes of more than $10,000;about the same fraction were in families with incomes of less than $5,000.

WomenUnemployment rates for women are also relatively high. In 1969, the

unemployment rate for females was 4.7 percent compared to 2.8 percentfor males. Nearly half of unemployed women were married with husbandspresent. In a large fraction of these families the husband was undoubtedlyemployed, and employment for the wife would represent a secondarysource of income. Among the 739,000 unemployed females not marriedor whose husbands are not present, many are young persons withthe special reasons for high unemployment already discussed. Since therewere 412,000 unemployed female teenagers in 1969, they account for a

J55

large fraction of the unemployed females who were not married or whosehusbands were not present.

Negro and Other Races

Unemployment rates for Negroes and other minority races are roughlydouble those for whites, a pattern that has prevailed since the late fifties.The higher unemployment rate for Negro and other races reflects in parttheir different labor force composition. Standardizing for age and sex dif-ferences in the labor force decreases the unemployment rates for Negro andother races from 6.4 to 6.0 percent, but the adjusted rate is still almostdouble that for whites (3.1 percent). Standardizing for years of schooling,industry, occupation, and the like would further decrease the relative un-employment rate of Negro and other races. But the need for adjustmentsof this sort simply reflects an historical pattern of discrimination and disad-vantage that more recent policies to improve employment qualificationsand opportunities have only begun to ameliorate.

An additional 290,000 jobs for unemployed Negroes and members ofother races in 1969 would have made their unemployment rate equal to thatof whites. This is about 20 percent of the annual increase in average employ-ment in each of the last 5 years. Focusing on the additional jobs requiredfor members of Negro and other races to bring their unemployment ratedown to the level for whites, however, gives a misleading impression of thenature of the problem. The problem is not that 290,000 additional membersof Negro and other races are totally unable to obtain employment. In 1969,for example, 29,000 persons of Negro and other races were reported as un-employed for 6 months or more in a typical month. The fraction of thoseunemployed who were unemployed for 6 months or more was slightly higherfor Negro and other races than for whites—5.1 compared to 4.6 percent.Bringing the unemployment rate for Negro and other races down to the levelprevailing for whites requires long-term policies designed to improve the dis-tribution of education, skill levels, occupational and industrial affiliation,and job opportunities.

156

Appendix B

REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THECOUNCIL OF ECONOMIC ADVISERS DURING 1969

372-111 0—70 11 157

LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,,

Washington, D.C., December 31,1969.T H E PRESIDENT:

SIR: The Council of Economic Advisers submits this report on its ac-tivities during the calendar year 1969 in accordance with the requirements ofthe Congress, as set forth in Section 4 (d) of the Employment Act of 1946.

Respectfully,PAUL W. MCCRACKEN,

Chairman.HENDRIK S. HOUTHAKKER.

HERBERT STEIN.

Report to the President on the Activities of theCouncil of Economic Advisers During 1969

In 1969, for the third time in its history, the Council of Economic Ad-visers was entirely reconstituted as the result of a change of Administration.Paul W. McCracken took office as Chairman of the Council on February 4,1969, replacing Arthur M. Okun, who became a Senior Research Fellow atthe Brookings Institution, Washington, D.C. Mr. McCracken, who had pre-viously served as a Council Member for 2 years during 1957 and 1958, is onleave of absence from the University of Michigan where he is Edmund EzraDay University Professor of Business Administration.

Herbert Stein and Hendrik S. Houthakker also became Members onFebruary 4, 1969. They succeeded Merton J. Peck, of Yale University, andWarren L. Smith, of the University of Michigan. Mr. Houthakker is onleave of absence from Harvard University where he is Professor of Eco-nomics. Mr. Stein is on leave from his post as Senior Research Fellow at theBrookings Institution.

Below is a list of all past Council Members and their dates of service:

Name Position Oath of office date Separation date

Edwin G. NourseLeon H. Keyssrling.

John D. Clark.

Roy BloughRobert C. TurnerArthur F. BurnsNeil H.JacobyWalter W.Stewart—.Raymond J.Saulnier..

Josephs. DavisPaul W. McCracken..Karl BrandtHenry C. WallichJames TobinKermit GordonWalter W. Heller... .Gardner Ackley

John P. Lewis...Otto Eckstein....Arthur M. Okun.

James S. Duesenberry.Merton J. PeckWarren L Smith

ChairmanVice Chairman. __Acting Chairman.ChairmanMembarVice Chairman...MemberMemberChairmanMemberMemberMember _._Chairman.MemberMemberMemberMember

August 9,1946August 9,1946November 2, 1949...May 10, 1950August 9, 1946May 10,1950June 29,1950September8,1952...March 19, 1953September 15,1953.December 2,1953.UCWCIIIUVI t-f l&sJ'J-. -.

April 4,1955December 3,1956..May 2,1955December 3,1956..

Member..MemberChairmanMemberChairmanMember _MemberMemberChairmanMemberMemberMember

November 1,1958..May 7, 1959January 29,1961. . .January 29,1961. . .January 29,1961. . .August 3,1962November 16,1964.May 17,1963September 2 1964..November 16,1964.Feburary 15,1968..February 2,1966.. .Februarys, 1968. _July 1,1968

November 1,1949.

January 20,1953.

February 11,1953.August 20,1952.January 20,1953.December 1,1956.February 9,1955.April 29,1955.

January 20,1961.October 31,1958.January 31,1959.January 20,1961.January 20,1961.July 31,1962.December 27,1962.November 15,1964.

February 15,1968.August 31, 1964.February 1,1966.

January 20 1969.June 30,1968.January 20 1969.January 20; 1969.

161

ECONOMIC POLICYMAKING AND THE COUNCIL OFECONOMIC ADVISERS

RESPONSIBILITIES OF THE COUNCIL

The Employment Act of 1946 describes explicitly the objectives ofeconomic policy as "creating and maintaining, in a manner calculated tofoster and promote free competitive enterprise and the general welfare,conditions under which there will be afforded useful employment opportu-nities, including self-employment, for those able, willing, and seeking towork, and to promote maximum employment, production, and purchasingpower." The foremost duty of the Council of Economic Advisers (CEA) is togive the President advice, based on economic analysis, which will assist himin assuring that this responsibility of the Federal Government is met.

A variety of analytical techniques is used, ranging from economic modelsincorporating complex equation systems to the careful judgment and ap-praisal that must finally temper the answers from formal systems. Statisticalanalyses of many aspects of economic conditions and stabilization policiesare a continuing part of Council work. Final output of this analysis isreflected in personal consultations with the President and in memorandafrom the Chairman of the Council to the President and others in theAdministration.

Although the Employment Act of 1946 specifically directs the Council"to appraise the various programs and activities of the Federal Government,"this function of the Agency is less familiar to the general public because itis largely internal. The Council works with other agencies to assist theAdministration in formulating proposals for new programs and policies andin reappraising existing ones. It also recommends positions on bills proposedin Congress. Since January 20 the Council has made formal recommendationson 190 bills that have been either in the early stages of consideration by theAdministration or the Congress or have come to the President's desk to besigned or vetoed. The Council brings to its appraisal the analytical methodsof economics, and it seeks to take the viewpoint of the public at large, or theeconomy as a whole.

During 1969, the Council participated in formulating a number of newAdministration programs, including programs for manpower training,transportation, social security, unemployment compensation, welfare, andagriculture. In each case, following background analysis by the staff, theCouncil's position was defined in memoranda to the President. The CEAalso played a role in drafting some proposed legislation.

Analysis by the Council and its staff also helped reexamine a number ofexisting Federal Government programs, policies, and procedures. Amongthese was the CEA's participation in inter agency efforts directed at suchmatters as interest rate ceilings on bank deposits, minority business enter-

162

prise, international monetary reform and trade policy, meat and oil imports,wheat exports, and a wide range of other programs and policies.

Much attention was devoted to the pressing problems in the constructionand housing sectors of the economy during 1969. The Council played anactive role in interagency groups dealing with lumber prices, housingprospects in the seventies, and the cutback in new contracts for direct Fed-eral construction. The Council also participated in the Cabinet Committeeon Construction appointed by the President, and the Chairman of the Cjoun-cil was directed by the President to serve as Chairman of this Committee.The Chairman of the Council also chaired a committee to study policiesfor handling the Government's uranium enrichment plants.

The CEA assists the President in the preparation of his Economic Reportand also prepares its own Annual Report.

POLICY COORDINATION

The Council and its staff are in daily contact with other Governmentofficials. There is especially close coordination among the Treasury, theBudget Bureau, and the CEA. At least weekly the Secretary of the Treasury,the Director of the Bureau of the Budget, and the Chairman of the Councilmeet. Known as trie "Troika," this coordinating group has two other "tiers."The second tier consists of one of the other two Council Members, theAssistant Director of the Budget for Economic Policy, and the AssistantSecretary of the Treasury for Economic Policy. A third tier, consisting ofsenior staff economists from the three agencies, meets frequently to appraisethe economic situation and its policy implications. Outlook memorandaare prepared and cleared through the second tier of the Troika for use bythe principals. The Troika meets with the President frequently. From timeto time the Chairman of the Board of Governors of the Federal ReserveSystem participates in these meetings also.

The new Cabinet Committee on Economic Policy, established by Execu-tive Order of the President on January 24, 1969, serves as a major forum forbroader policy discussion and coordination. Members include the President,the Vice President, the Secretaries of the Treasury, Agriculture, Commerce,Labor, and Housing and Urban Development, the Counselors to the Presi-dent (Mr. Burns and Mr. Moynihan), the Director of the Bureau of theBudget, the Deputy Under Secretary of State for Economic Affairs, andthe Chairman of the Council of Economic Advisers (who coordinates thework of the Committee).

This Cabinet Committee considers the broad spectrum of economic pro-gram and policy issues. During 1969, the President appointed subcommit-tees to study such problems as post-Vietnam planning, agricultural trade,economic aspects of antitrust laws, legal ceilings on interest rates, Federallending policies and procedures, establishment of a commission to review

163

Federal statistics, and the availability and prices of softwood lumber andplywood.

The Cabinet Committee on Construction was established by the Presi-dent on September 4, 1969, in response to the growing problems in thisindustry. Its purpose is to study the impact of Federal activities on theindustry and to appraise the Nation's needs for construction and housingand to devise ways to meet these needs. Formerly under the Cabinet Com-mittee on Economic Policy, the interagency Task Force on Requirementsfor the Housing Program became a part of this Cabinet Committee. Mem-bers of the Cabinet Committee on Construction are the Secretaries ofCommerce, Labor, Housing and Urban Development, and Transportation,the Postmaster General, the Administrator of the General Services Ad-ministration, and the Chairman of the Council of Economic Advisers.

The Council participates in a variety of other activities of interagencyconcern. Reflecting this wider role, the Chairman of the Council serves asa member of the Rural Affairs Council, the Urban Affairs Council, and theNational Defense Review Committee; he meets with the National SecurityCouncil and the Environmental Quality Council when agenda items makethis relevant. The other two Council Members as well as senior staff econo-mists also participate in the task forces and study groups designated bythese councils. The Chairman of the Council regularly attends Cabinetmeetings.

There is a particularly close association between the Council and the JointEconomic Committee (JEC) of the Congress, a Committee which was alsocreated by the Employment Act of 1946 "to make a continuing study of mat-ters relating to the Economic Report3' and generally for the purposes offurthering the objectives of the Act. Each year, soon after the President hassubmitted his Economic Report to Congress, the Council testifies before theJEC, which itself is required by the Act to file a report to the Senate andHouse by March 1 of each year, presenting its findings on the recommenda-tions and content of the Economic Report. Testimony may also be presentedto the JEC at other times throughout the year. During 1969, the Counciltestified four times before the JEC. On February 17, the Council testified onthe economic thinking of the new Administration. On April 30, the Chairmantestified before the Subcommittee on Economic Statistics of the JEC in sup-port of the decennial census. On June 12, the Chairman testified before theJEC's Subcommittee on Economy in Government on defense spending andnational priorities in the years ahead. And on October 23, the Council re-viewed economic conditions and the outlook with the Subcommittee onFiscal Policy of the JEC.

Although Council testimony in the past has largely been limited to theJoint Economic Commitee, three exceptions arose in 1969. On March 253

the Chairman testified before the Senate Committee on Banking and Cur-

164

rency with regard to interest rates and monetary policy. On May 20, theChairman appeared with the Secretary of the Treasury and the Director ofthe Bureau of the Budget before the Committee on Ways and Means of theHouse on behalf of the Administration recommendations for extending theincome tax surcharge. And on September 23, the Council testified beforethe Committee on Government Operations of the House of Representativeson a bill that sought to formalize the apparatus of wage-price guideposts.

At the international level, the Council Members and staff are active partic-ipants in meetings of the Economic Policy Commitee (EPC) of the Orga-nization for Economic Cooperation and Development (OECD). The Chair-man of the Council heads the U.S. delegation to the EPC. This Committeeis part of the international machinery by which nations strive for better mu-tual understanding and coordination of their domestic economic policies. AMember and senior staff economists also participated in the subcommitteesof the EPC on balance of payments and international financial problems(Working Party I I I ) , and Council staff have been active in OECD studiesof the short-term outlook (Working Group on Short-Term EconomicProspects), of long-term economic growth (Working Party I I ) , and of man-power policies pursued in the member countries (Manpower and Social Af-fairs Committee). In 1969, Council personnel attended seven of these in-ternational meetings.

PUBLICATIONSThe Council's Annual Report remains a major communication between

the Council and citizens generally. About 54,000 copies of the January1969 Economic Report have been distributed. The Council also preparesEconomic Indicators, a monthly publication of the Joint Economic Com-mittee. The current circulation of Economic Indicators is approximately10,000.

PUBLIC CONTACTSThe Council arranged periodic meetings during the year with groups

of leading academic, business, and labor union economists, in order to keepinformed about their views on the major economic questions of the day.There is a constant stream of visitors to the Council from outside of Govern-ment, among them business and labor leaders, students, educators, foreignvisitors, the press, and interested citizens generally. Informal interviews anddiscussions are also held on a wide range of economic policy problems andissues. Finally, to explain economic conditions and policies during the year,Council Members made a number of public speeches and granted interviewsto newspapers and magazines.

165

ORGANIZATION AND STAFF OF THE COUNCIL

OFFICE OF THE CHAIRMAN

Under authority of the Employment Act, as amended by ReorganizationPlan No. 9 in 1953, the Chairman of the Council bears full responsibilityfor employing the Agency's staff, and he is officially charged with reportingthe Council's views to the President.

OTHER COUNCIL MEMBERS

The day-to-day direction of the professional staff is the general responsi-bility of the other two Council Members. While the Council has no depart-ments, there is an informal division of responsibilities by subject area. Mr.Houthakker's responsibilities include economic analyses by the Council'sstaff in such areas as the balance of payments and international financialmatters, trade policy, foreign aid and economic development, agriculture,transportation, industrial organization and antitrust, labor relations, long-term economic growth, consumer affairs, natural resources, technology, andenvironmental problems.

Mr. Stein's responsibilities include forecasting and analyses of economicconditions, fiscal policy and taxation, monetary policy and financial institu-tions, housing and urban affairs, welfare and social security problems, educa-tion, manpower and human resources, national defense matters, andpost-Vietnam planning generally.

In addition to these responsibilities, Mr. Houthakker and Mr. Steinrepresent the Council in a wide variety of official capacities, including meet-ings of the Cabinet Committee on Economic Policy and the Cabinet Com-mittee on Construction. One of these two Members is always designated asActing Chairman when the Chairman is absent from Washington.

PROFESSIONAL STAFF

At the end of 1969, the Council's senior professional staff included 16economists and one statistician. Assisting the Chairman in carrying out hisnumerous official responsibilities is the Special Assistant to the Chairman,Albert H. Cox, Jr. Mr. Cox also handles press relations for the Council,acts as staff secretary for the Cabinet Committee on Economic Policy,and performs professional duties, including work in his primary fields ofspecialty (financial markets and monetary conditions).

Senior Staff Economists William H. Branson, Murray F. Foss, and FrankC. Ripley work primarily on analyses and forecasting of economic condi-tions. Mr. Branson, who along with Mr. Foss represents the CEA in thethird tier of the Troika (discussed earlier), also did extensive work duringthe year on the Administration's proposed welfare program and on thereview of economic aspects of the defense program. Mr. Ripley's primaryresponsibility has been in the development and refinement of the Troika

166

forecasting models, the analysis of price-making forces, and other econo-metric studies.

Senior Staff Economist Phillip D. Cagan and Staff Economist RobertRene de Cotret cover monetary policy and financial institutions and theinfluence of developments in this area on economic activity. Senior StaffEconomist Charles E. McLure, Jr., has been concerned with matters of fiscalpolicy and public finance, including tax policy, problems of measuring theFederal budget, cost-benefit analyses of expenditure programs, social se-curity, and economic and budgetary aspects of Federal credit programs.

The fields of human resource development and labor market analysisare assigned to Marvin H. Kosters and Michael H. Moskow, both SeniorStaff Economists. Mr. Kosters and Mr. Moskow are primarily concernedwith labor market conditions, manpower programs and problems, indus-trial relations, labor union developments, and wage trends and prospects.

Housing and construction problems, and the problems of small businessand minority business enterprise are the primary focus of Sidney L. Jones,Senior Staff Economist. Mr. Jones also serves as the staff secretary for theCabinet Committee on Construction. Staff Economist Irene Lurie worksin the field of welfare and income maintenance and on other economicaspects of poverty problems.

Three Senior Staff Economists specialize in economic analysis of particularprograms and activities of the Federal Government. During 1969, ThomasG. Moore participated in a wide variety of interagency studies, includingthose concerned with the uranium enrichment facilities of the AtomicEnergy Commission, urban mass transit, the supersonic transport, pollutionproblems, domestic satellite communications, antitrust policy, airports andairways, economics of marine resources, electric power reliability, and inter-national aviation policy. Studies relating to oil import quotas, tariff prefer-ences for less developed countries, and foreign aid were among those towhich Senior Staff Economist Edward J. Mitchell contributed. SeniorStaff Economist Harold O. Carter is concerned with the economics of agri-culture and the many aspects of agricultural and rural development pro-grams and policies.

Saul Nelson has been the Senior Staff Economist concerned with priceand commodity developments, and during the year he participated in variousinteragency studies in these fields. In October, Mr. Nelson was given a leaveof absence to work on a project for the International Bank for Reconstruc-tion and Development.

Analysis of international economic problems is carried forward by G.Paul Wonnacott and Thomas D. Willett, Senior Staff Economists. Mr.Wonnacott has been concerned with such areas as balance of payments andinternational financial developments, foreign trade policy, and problemsconcerning the interrelationships of domestic economies. In addition to par-ticipating in the coverage of these areas, Mr. Willett has been engaged in thestudy of longer range aspects of international financial policy.

167

Frances M. James, Senior Staff Statistician, is in charge of the Council'sStatistical Office. Miss James has major responsibility for managing theCouncil's economic and statistical information system. She also supervisesthe preparation of Economic Indicators for publication, the preparation oftables and charts for a wide variety of meetings throughout the year and forthe Economic Report, and the fact-checking of memoranda, speeches, andtestimony.

Assisting the senior professional staff are four Junior Economists, LeslieJ. Barr, Paul N. Courant, Robert A. Kelly, and Rosemary D. Marcuss.Barry M. Levenson and Timothy B. Sivia are research assistants. AssistingMiss James in the Statistical Office are Teresa D. Bradburn, Catherine H.Furlong, Christine L. Johnson, and V. Madge McMahon.

From time to time, leading members of the economics profession haveacted as consultants to the Council in various capacities. At the end of 1969,the list of active consultants included Edward F. Denison (Brookings Institu-tion), Marten S. Estey (University of Pennsylvania), Ray C. Fair (Prince-ton University), Milton Friedman (University of Chicago), GottfriedHaberler (Harvard University), Arnold Harberger (University of Chicago),David J. Ott (Clark University), George Stigler (University of Chicago),and Lloyd Ulman (University of California).

In 1969 the Council continued its student intern program. Under thisprogram the Council employs a limited number of outstanding students ineconomics, both graduate and undergraduate, for various periods of time,particularly in the summer. Employed under this program in 1969 wereHenry E. Cole, W. Donald Dresser, H. Diana Hicks, Neil J. McMullen,Paul B. Manchester, Richard C. Marston, Mary E. Procter, Daniel L.Rubenfeld, and Earl M. Unger. Mr. Dresser, Mr. McMullen, and MissProcter also returned as consultants during preparation of this AnnualReport.

SUPPORTING STAFF

The Council's Administrative Officer, James H. Ayres, has responsibilityfor office management, including general supervision of the secretaries andmessengers, duplicating, and the Agency's budget. Mr. Ayres, who reportsto the Special Assistant to the Chairman, is assisted by Nancy F. Skidmore,Elizabeth A. Zea, and Bettye T. Siegel.

The secretarial staff includes Daisy S. Babione, Mayme Burnett, Mary C.Fibich, Elizabeth F. Gray, Laura B. Hoffman, Bessie M. Lafakis, PatriciaA. Lee, Betty Lu Lowry, Eleanor A. McStay, Joyce A. Pilkerton, Dorothy L.Reid, Earnestine Reid, and Linda A. Reilly. Margaret L. Snyder serves pri-marily as the Agency's contact for general public information. James W.Gatling, Judson A. Byrd, and A. Keith Miles operate the duplicating andmessenger department.

168

In preparing its Annual Report, the Council relied upon the editorialskills of Rosannah C. Steinhoff.

DEPARTURES

Charles B. Warden, Jr., who had served as Special Assistant to the Chair-man for more than 3 years, resigned to accept a position with Data Resources,Inc., Lexington, Mass.

The Council's professional staff is drawn primarily from universities,largely on a 1-year basis. Many, therefore, who had served the Council dur-ing 1969 were not on the staff at the end of the year. Senior Staff Economistswho resigned during the year were Leonall C. Andersen, F. Gerard Adams,Barry P. Bosworth, Frederick W. Deming, Marten S. Estey, Lawrence B.Krause, James W. Kuhn, Roger G. Noll, David J. Ott, Jack Rosen, Cour-tenay M. Slater, Thomas T. Stout, and Luther T. Wallace. Junior econo-mists who served the Council in 1969, but were not members of the staff atthe end of the year, were Susan R. Ackerman and Roselee N. Roberts. Re-search assistants Elaine R. Goldstein and Joanne C. Turner also served fora part of the year. Secretarial resignations included Frances V. Broderick,Anne G. Donnelly, Gladys R. Durkin, Roberta R. Kirk, Helen H. Knox,Karen J. MacFarland, Lucille F. Saverino, and Joy T. Sindelar.

The Council of Economic Advisers suffered a great loss with the passingof David W. Lusher, June 15, 1969. Mr. Lusher, widely known in thiscountry and abroad as a student of economic developments and policy,joined the staff of the Council in March 1952.

169

Appendix C

STATISTICAL TABLES RELATING TO INCOME,

EMPLOYMENT, AND PRODUCTION

171

CONTENTSNational income or expenditure:

C-l. Gross national product or expenditure, 1929-69 177C-2. Gross national product or expenditure, in 1958 prices, 1929-69 178G-3. Implicit price deflators for gross national product, 1929-69 180C-4. Gross national product by major type of product, 1929-69 182C-5. Gross national product by major type of product, in 1958 prices,

1929-69 183C-6. Gross national product: Receipts and expenditures by major economic

groups, 1929-69 184G-7. Gross national product by sector, 1929-69 186G-8. Gross national product by sector, in 1958 prices, 1929-69 187G-9. Gross national product by industry, in 1958 prices, 1947-68 188G-10. Personal consumption expenditures, 1929-69 189C-l 1. Gross private domestic investment, 1929-69 190C-12. National income by type of income, 1929-69 191C-l 3. Relation of gross national product and national income, 1929-69.. . . 192C-14. Relation of national income and personal income, 1929-69 193C-15. Disposition of personal income, 1929-69 194C-l6. Total and per capita disposable personal income and personal con-

sumption expenditures, in current and 1958 prices, 1929-69 195C-l 7. Sources of personal income, 1929-69 196C-18. Sources and uses of gross saving, 1929-69 198C-19. Saving by individuals, 1946-69 199C-20. Number and money income (in 1968 prices) of families and unrelated

individuals, by race of head, 1947-68 200

Population, employment, wages, and productivity:C-21. Population by age groups: Estimates, 1929-69, and projections,

1970-85 201C-22. Noninstitutional population and the labor force, 1929-69 202C-23. Civilian employment and unemployment, by sex and age, 1947-69. . 204C-24. Selected unemployment rates, 1948-69 205C-25. Unemployment by duration, 1947-69 206C-26. Unemployment insurance programs, selected data, 1940-69 207C-27. Wage and salary workers in nonagricultural establishments, 1929-69. 208C-28. Average weekly hours of work in selected nonagricultural industries,

1929-69 210C-29. Average gross hourly earnings in selected industries, 1929-69 211C-30. Average gross weekly earnings in selected nonagricultural industries,

1929-69 212C-31. Average weekly hours and hourly earnings, gross and excluding over-

time, in manufacturing industries, 1939-69 213C-32. Average weekly earnings, gross and spendable, total private non-

agricultural industries, in current and 1957-59 prices, 1947-69. . . 214C-33. Average weekly earnings, gross and spendable, in manufacturing

industries, in current and 1957-59 prices, 1939-69 215C-34. Indexes of output per man-hour and related data, private economy,

1947-69 216

173372-111 O—70 12

Production and business activity: Page

C-35. Industrial production indexes, major industry divisions, 1929-69. . . . 217C-36. Industrial production indexes, market groupings, 1947-69 218C-37. Industrial production indexes, selected manufactures, 1947-69. . . . . 219C-38. Manufacturing output, capacity, and utilization rate, 1948-69 220C-39. Business expenditures for new plant and equipment, 1947-69 221G-40. New construction activity, 1929^69 222C-41. New housing starts and applications for financing, 1929-69 224C-42. Sales and inventories in manufacturing and trade, 1947—69 226C-43. Manufacturers' shipments and inventories, 1947-69 227G-44. Manufacturers' new and unfilled orders, 1947-69 228

Prices:G-45. Consumer price indexes, by major groups, 1929-69 229C-46. Consumer price indexes, by special groups, 1935-69 230C-47. Consumer price indexes, selected commodities and services, 1935-69. 231C-48. Wholesale price indexes, by major commodity groups, 1929-69 232C-49. Wholesale price indexes, by stage of processing, 1947-69 234

Money supply, credit, and finance:

C-50. Money supply, 1947-69 236C-51. Bank loans and investments, 1930-69 237C-52. Total funds raised in credit markets by nonfinancial sectors,

1961-69 238C-53. Selected liquid assets held by the public, 1946-69 240C-54. Federal Reserve Bank credit and member bank reserves, 1929-69. . . 241C-55. Bond yields and interest rates, 1929-69 242C-56. Short- and intermediate-term consumer credit outstanding, 1929-69. 244C-57. Instalment credit extended and repaid, 1946-69 245C-58. Mortgage debt outstanding, by type of property and of financing,

1939-69 246C-59. Mortgage debt outstanding, by lender, 1939-69. 247C-60. Net public and private debt, 1929-68 248

Government finance:

G-61. Federal budget receipts and outlays, 1929-71 249G-62. Federal budget receipts, outlays, financing, and debt, 1960-71 250C~63. Relation of the Federal Budget to the Federal sector of the national

income and -product accounts, 1968-71 252G-64. Receipts and expenditures of the Federal Government sector of the na-

tional income and product accounts, 1946-71 253C-65. Public debt securities by kind of obligation, 1946-69 254C-66. Estimated ownership of public debt securities, 1939-69 255C-67. Average length and maturity distribution of marketable interest-bear-

ing public debt, 1946-69 256C-68. Receipts and expenditures of the government sector of the national

income and product accounts, 1929-69 257C-69. Receipts and expenditures of the State and local government sector

of the national income and product accounts, 1946-69 258G-70. State and local government revenues and expenditures, selected fiscal

years, 1927-68 259

174

Corporate profits and finance: Page

G-71. Profits before and after taxes, all private corporations, 1929-69 260C-72. Sales, profits, and stockholders' equity, all manufacturing corpora-

tions (except newspapers), 1947-69 261C-73. Relation of profits after taxes to stockholders' equity and to sales, all

manufacturing corporations (except newspapers), by industry group,1948-69 262

C-74. Sources and uses of funds, nonfarm nonfinancial corporate business,1958-68 264

C-75. Current assets and liabilities of United States corporations, 1939-69. 265C-76. State and municipal and corporate securities offered, 1934-69 266C-77. Common stock prices, earnings, and yields, and stock market credit,

1939-69 267C-78. Business formation and business failures, 1929-69 268

Agriculture:

C-79. Income from agriculture, 1929-69 269C-80. Farm production indexes, 1929-69 270C-81. Farm population, employment, and productivity, 1929-69 271C-82. Indexes of prices received and prices paid by farmers, and parity ratio,

1929-69 272C-83. Selected measures of farm resources and inputs, 1929-69 274C-84. Comparative balance sheet of agriculture, 1929-70 275

International statistics:

C-85. United States balance of payments, 1946-69 276C-86. United States merchandise exports and imports, by commodity groups,

1958-69 278C-87. United States merchandise exports and imports, by area, 1963-69. . 279C-88. United States overseas loans and grants, by type and area, fiscal years,

1962-69 280C-89. International reserves, 1949, 1953, and 1964-69 281C-90. United States reserve assets: Gold stock, holdings of convertible foreign

currencies, and reserve position in the International MonetaryFund, 1946-69 282

C-91. Price changes in international trade, 1961-69 283C-92. Consumer price indexes in the United States and other major in-

dustrial countries, 1957-69 284

General Notes

Detail in these tables will not necessarily add to totals because of rounding.Unless otherwise noted, all dollar figures are in current prices.

Symbols used:» Preliminary.__ Not available (also, not applicable).* Amount insignificant in terms of the particular unit (e.g., less than

$50 million where unit is billions of dollars).

175

NATIONAL INCOME OR EXPENDITURETABLE C-l.—Gross national product or expenditure, 1929-69


Year or quarter

1929...

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

1940...1941...1942...1943...1944...1945...1946—1947...1948...1949...

1950..1951-.1952..1953..1954..1955..1956..1957..1958..1959..

I960..1961..1962..1963..1964...1965...1966...1967...1968...1969 v.

1967: L -II.111IV.

1968: I . .II.IIIIV.

1969: LII.IIIIV

Totalgross

nationalproduct

103.1

90.475.858.055.665.172.282.590.484.790.5

99.7124.5157.9191.6210.1211.9208.5231.3257.6256.5

'28478;328.4345.5364.6364.8398.0419.2441.1447.3483.7

503.7520.1560.3590.5632.4684.9749.9793.5865.7932.3

Per-sonalcon-

sump-tion

expend-itures^

77.2

69.960.548.645.851.355.761.966.563.966.8

70.880.688.599.3

108.3119.7143.4160.7173.6176.8

191.0206.3216.7230.0236.5254.4266.7281.4290.1311.2

325.2335.2355.1375.0401.2432.8466.3492.3536.6576.0

Grossprivate

do-mesticinvest-ment2

16.2

10.35.61.01.43.36.48.5

11.86.59.3

13.117.99.85.77.1

10.630.634.046.035.7

54.159.351.952.651.767.470.067.860.975.3

74.871.783.087.194.0

108.1121.4116.0126.3139.6

Netexports

of goodsand

serv-ices 3

1.1

1.0.5.4.4.6.1.1.3

1.31.1

1.71.3

- 2 . 0- 1 . 8- . 67.5

11.56.46.1

1.83.72.2.4

1.82.04.05.72.2.1

4.05.65.15.98.56.95.35.22.52.1

Government purchases of goods and services*

Total

8.5

9.29.28.18.09.8

10.012.011.913.013.3

14.024.859.688.696.582.327.025.131.637.8

37.959.174.781.674.874.278.686.194.297.0

99.6107.6117.1122.5128.7137.0156.8180.1200.3214.7

Total

1.3

1.41.51.52.03.02.94.94.75.45.1

6.016.951.981.189.074.217.212.516.520.1

18.437.751.857.047.444.145.649.553.653.7

53.557.463.464.265.266.977.890.799.5

102.0

Federal

Nationaldefense5 Other

1.3

1.41.51.52.03.02.94.94.75.4

1.2

2.213.849.479.787.473.514.79.1

10.713.3

14.133.645.948.741.238.640.344.245.946.0

44.947.851.650.850.050.160.772.478.079.3

3.9

3.83.12.51.41.6.7

2.53.55.86.8

4.34.15.98.46.25.55.35.37.77.6

8.69.6

11.813.515.216.817.118.421.522.8

Stateandlocal

7.2

7.87.76.66.06.87.17.07.27.68.2

8.07.97.77.47.58.19.8

12.615.017.7

19.521.522.924.627.430.133.036.640.643.3

46.150.253.758.263.570.179.089.3

100.7112.7


774.2783.5800.4816.1

835.3858.7876.4892.5

908.7924.8942.8953.1

480.9489.8495.7502.6

520.6530.3544.9550.7

562.0572.8579.8589.2

113.6109.4117.7123.3

119.4126.6125.2133.9

135.2137.4143.3142.4

5.45.85.63.8

1.93.43.61.2

1.51.62.72.6

174.2178.5181.3186.4

193.4198.4202.5206.7

210.0212.9217.0218.9

87.890.391.393.5

96.399.0

100.9101.9

101.6100.6103.2102.7

69.971.973.074.6

76.177.978.879.3

79.078.580.379.2

17.918.418.418.9

20.121.122.122.5

22.622.122.923.5

86.488.190.092.9

97.199.4

101.7104.8

108.5112.3113.8116.2

1 See Table C-10 for detailed components,a See Table C - l l for detailed components.* See Table C-6 for exports and imports separately.< Net of Government sales.* This category corresponds closely to the national defense classification in the "Budget of the United States Govern-

ment for the Fiscal Year ending June 30,1971."

Source: Department of Commerce, Office of Business Economics.

177

TABLE C-2.—Gross national product or expenditure, in 1958 prices, 1929-69

[Billions of dollars, 1958 prices]

Year orquarter

1929...

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

1940..1941..1942..1943..1944..1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954..1955..1956..1957..1958..1959..

1960196119621963196419651966196719681969 v

1967: !____II . .III..I

1968: L___I I . . .IllIV.. .

1969: I.I I . . .IllIV*.

Totalgrossna-

tionalprod-

uct

203.6

183.5169.3144.2141.5154.3169.5193.0203.2192.9209.4

227.2263.7297.8337.1361.3355.2312.6309.9323.7324.1

355.3383.4395.1412.8407.0438.0446.1452.5447.3475.9

487.7497.2529.8551.0581.1617.8658.1674.6707.6727.7

Personal consumptionexpenditures

Total

139.6

130.4126.1114.8112.8118.1125.5138.4143.1140.2148.2

155.7165.4161.4165.8171.4183.0203.5206.3210.8216.5

230.5232.8239.4250.8255.7274.2281.4288.2290.1307.3

316.1322.5338.4353.3373.7397.7418.1430.3452.6466.0

Dura-ble

goods

16.3

12.911.28.48.39.4

11.714.515.112.214.5

16.719.111.710.29.4

10.620.524.726.328.4

34.731.530.835.335.443.241.041.537.943.7

44.943.949.253.759.066.671.772.880.784.8

Non-dura-

blegoods

69.3

65.965.660.458.662.565.973.476.077.181.2

84.689.991.393.797.3

104.7110.8108.3108.7110.5

114.0116.5120.8124.4125.5131.7136.2138.7140.2146.8

149.6153.0158.2162.2170.3178.6187.0190.3196.9199.5

Serv-ices

54.0

51.549.445.946.046.147.950.552.050.952.5

54.456.358.561.864.767.772.173.475.877.6

81.884.887.891.194.899.3

104.1108.0112.0116.8

121.6125.6131.1137.4144.4152.5159.4167.2175.0181.7

Total

40.4

27.416.84.75.39.4

18.024.029.917.024.7

33.041.621.412.714.019.652.351.560.448.0

69.370.060.561.259.475.474.368.860.973.6

72.469.079.482.587.899.2

109.3100.8105.7111.9

Total

36.9

28.019.210.99.7

12.115.620.924.519.423.5

28.132.017.312.915.922.642.351.755.951.9

61.059.057.260.261.469.069.567.662.468.8

68.967.073.476.781.990.195.493.999.1

104.9

Gross private domestic investment

Fixed investment

Nonresidential

Total

26.5

21.714.18.27.69.2

11.515.818.813.715.3

18.922.212.510.013.419.830.236.238.034.5

37.539.638.340.739.643.947.347.441.644.1

47.145.549.751.957.866.374.173.675.881.5

Cfriif.

oiruc-tures

13.9

11.87.54.43.33.64.05.47.15.65.9

6.88.14.62.93.85.7

12.511.612.311.9

12.714.113.714.915.216.218.518.216.616.2

17.417.417.917.919.122.324.022.622.724.0

Pro-ducers'durableequip-ment

12.6

9.96.63.84.35.67.5

10.311.88.19.4

12.114.27.97.29.6

14.117.724.625.722.6

24.825.524.625.824.527.728.829.125.027.9

29.628.131.734.038.744.050.151.053.257.5

Resi-dentialstruc-tures

10.4

6.35.12.72.12.94.05.15.65.78.2

9.29.84.92.92.52.8

12.115.417.917.4

'ftf18.919.621.725.122.220.220.824.7

21.921.623.824.824.223.821.320.323.323.5

Changein busi-

ness-inven-tories

3.5

— 6-2 A-6 .2- 4 . 3-2 .7

2.43.15.5

-2 .41.2

4.99.64.0

- . 2-1 .9-2 .910.0- . 24.6

-3 .9

8.310.93.3.9

-2 .06.44.81.2

-1 .54.8

3.52.06.05.85.89.0

13.96.96.66.9


666.5670.5678.0683.5

693.3705.8712.8718.5

723.1726.7730.6730.5

424.4430.5431.9434.3

445.6449.0458.2457.6

462.9466.2466.5468.5

70.373.973.073.9

77.779.583.082.7

84.385.984.784.1

190.2190.6190.3190.2

196.0195.8198.7197.2

199.3199.3199.3200.2

163.9166.1168.6170.3

171.8173.7176.5177.7

179.3181.0182.5184.1

100.595.7

101.6105.4

101.2106.6104.1110.9

109.9110.8114.3112.6

92.092.694.396.7

99.897.697.7

101.4

104.0104.8105.0106.0

74.173.573.173.8

77.174.075.077.3

79.481.082.483.2

23.822.122.322.1

23.622.022.222.9

23.923.324.624.2

50.351.450.851.6

53.552.052.754.4

55.557.757.859.0

17.919.021.223.0

22.723.522.724.1

24.623.822.622.8

8.53.17.48.7

1.59.06.49.6

5.96.09.36.7

See footnotes at end of table.

178

TABLE C-2.-—Gross national product or expenditure, in 1958 prices, 1929-69—Continued


Year or quarter

Net exports of goods and services

Netexports Exports Imports

Government purchases of goods andservices l

Total Federal State andlocal

1929..

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

1940..1941..1942..1943..1944..1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954..1955..1956..1957..1958..1959..

I960. . . .1961196219631964...1965. . .1966—1967.. .1968.. .1969 P .

1967: II I . .III.IV..

1968: I .11..III.IV.

1969: I

1.5

1.4.9.6.0

- L 0- 1 . 2- . 71.91.3

2.1.4

- 2 . 1- 5 . 9- 5 . 8- 3 . 8

8.412.36.16.4

2.75.33.01.13.03.25.06.22.2

4.35.14.55.68.36.24.23.6.9.0

IIIIV

4.04.24.12.0

.91.31.7

- . 2

- . 3- . 5

.4

.3

11.8

10.48.97.17.17.37.78.29.89.9

10.0

11.011.27.86.87.6

10.219.622.618.118.1

16.319.318.217.818.820.924.226.223.123.8

27.328.030.032.136.537.440.242.145.648.4

10.3

9.07.96.67.17.18.79.3

10.58.08.7

8.910.89.9

12.613.413.911.210.312.011.7

13.614.115.216.715.817.719.119.920.923.5

23.022.925.526.628.231.236.138.544.748.4

22.0

24.325.424.223.326.627.031.830.833.935.2

36.456.3

117.1164.4181.7156.448.439.946.353.3

52.875.492.199.888.985.285.389.394.294.7

94.9100.5107.5109.6111.2114.7126.5140.0148.4149.8

3.5

4.04.34.66.08.07.9

12.211.513.312.5

15.036.298.9

147.8165.4139.730.119.123.727.6

25.347.463.870.056.850.749.751.753.652.5

51.454.660.059.558.157.965.474.878.976.1


41.841.942.242.5

43.945.248.045.5

41.950.450.251.3

37.837.838.140.5

43.043.946.345.7

42.250.849.850.9

137.6140.1140.4141.7

145.6148.9148.8150.2

150.6150.2149.4149.0

18.5

20.221.119.617.318.619.219.619.420.622.7

21.420.118.316.616.316.718.420.822.725.7

27.527.928.429.732.134.435.637.640.642.2

43.545.947.550.153.256.861.165.269.573.7

72.875.175.575.7

77.379.679.279.4

78.376.375.574.4

64.865.064.966.0

68.369.369.670.8

72.373.973.974.7

i Net of Government sales.Source: Department of Commerce, Office of Business Economics.

179

TABLE G-3.—Implicit price deflators for gross national product, 1929-69

[Index numbers, 1958=100]

Year or quarter

1929

19301931193219331934193519361937 -19381939

1940 -1941194219431944 -.19451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969 v

1967: 1IIIIIIV

1968: 1IIIIIIV

1969: 1II .IllIV p

Totalgross

national

ucH

50.6

49.344.840.239.342.242.642.744.543.943.2

43.947.253.056.858.259.766.774.679.679.1

80.285.687.588.389.690 994.097.5

100.0101.6

103.3104 6105.8107.2108.8110.9113.9117.6122.3128.1

116.2116.9118.1119.4

120.5121.7122.9124.2

125.7127.3129.0130.5

Personal consumption

Total

55.3

53.647.942.340.643.544.444 746.545.645.1

45.548.754 859.963.265.470 577.982 381.7

82 988.690.591 792.592 894 897 7

100.0101.3

102.9103 9104.9106.1107.4108.8111.5114.4118.6123.6

113.3113.8114.8115 7

116.8118.1118.9120.4

121.4122.9124.3125.8

expenditures

Dur-able

goods

56.4

55.349.143.241.944.743.743.645.846.746.0

46.550.459 364.271.575.976 882.786 386.8

87 894.295.494 392.991 994 998 4

100.0101.4

100.9100 6100.8100.4100.499.698.7

100.3103.3105.7

99.699.5

100.5101.7

102.3102.9103.4104.5

104.9105.5106.0106.6

Non-durablegoods

54.5

51.644.137.738.042.744.544 846.444.043.2

43.847.755 662.566.268.774 383.688 585.6

86 093.394.393 994.293 694 997 7

100.099.9

101.2101 9102.8104.0104.9106.9110.7113.0117.1122.2

112.1112.5113.4114.0

115.3116.7117.5118.8

119.8121.5123.0124.6

Serv-ices

56.1

55.752.748.343.644.344.445.046.847.747.7

47.949.852.755.357.558.762.767.972.174.3

76.380.083.687.790.092.094.697.3

100.0103.0

105.8107 6109.0110.9113.1115.1118.3122.1127.3133.5

120.6121.5122.5123.7

125.2126.6127.9129.5

131.0132.7134.2135.9

Gross private domestic investment *

Fixed investment

Total

39.4

37.935?231.630.633.734.334.637.838.237.7

39.042.046.549.351.151'. 558.566.773.974.7

77.583.185.386.686.889 094.098.5

100.0102.6

103.4103.9104.9106.0107.6109.3111.8115.7120.0125.3

113.8114.6116.6117.7

118.0119.6120.8121.7

123.7124.5126.2127.0

Nonresidential

Total

39.9

38.135.832.931.634.935.935.638.839.338.7

40.042.747.849.951.051.056.364.570.772.8

74.480.482.684.084.886.792.497.9

100.0102.2

102.9103.4104.1104.5105.7107.5110.2113.7117.1121.9

112.4112.9114.2115.2

115.7116.7117.6118.4

120.1120.8122.7123.8

Struc-tures

35.7

34.031.127.627.928.930.630.234.433.933.1

33.936.441.346.848.649.254.464.471.571.2

72.979.383.284.986.088.193.498.6

100.0102.7

104.0105.6107.1108.9111.1114.7118.9123.6129.3139.1

121.8122.8124.6125.5

126.5128.7130.6131.4

135.3137.8141.0142.2

Pro-ducers'durableequip-ment

44.6

43.041.139.134.538.838.738.541.443.042.2

43.446.351.551.151.951.757.564.670.373.6

75.280.982.283.584.085.991.897.5

100.0102.0

102.2102.1102.3102.3103.0103.9106.0109.2111.9114.7

107.9108.6109.7110.8

110.9111.6112.1113.0

113.5113.9114.9116.3

Resi-dentialstruc-tures

38.1

37.133.627.327.130.129.831 334.335.535.7

36.940.343 347.051.654.959.771.780 878.5

82 588.690.891 990.492.997.499.8

100.0103.1

104.5105.0106.7108.9112.3114.2117.4123.1129.7137.4

119.7121.4124.8125.6

126.0128.7131.5132.4

135.3137.1138.8138.5


180

TABLE C-3.—Implicit price deflators for gross national product, 1929-69—Continued

[Index numbers, 1958=100]

Year or quarter

1929

19301931193219331934 . . .19351936193719381939

1940194119421943194419451946194719481949

19501951 . .195219531954 . .19551956195719581959

19601961.196219631964.1965196619671 9 6 8 . . .1969 v

1967: 1I I . . . . . . .IllIV.. . . . . .

1968: 1IIIIIIV. .

1969: 1.IIIIIIV p . . . . .

Exports and imports ofgoods and services1

Exports

59.5

52 341.034.733.740 642.343.446.543 844.1

48.653.061.565 269 971.375.487.392 787.0

84.997.098.895 294.394.997 5

101.3100 098.8

99.9101.9100 8100.6101.5104.7107.7109.7110.9114.4

109.7109.6109.7109.8

108.9112.1111.3111.3

113.5113.4115.2115.2

Imports

57.3

49 039.331.528.833.636.036.740.737.938.6

40.843.048.351.253.256.464.979.486.482.2

88.7107.2103.699.1

100.8100.6102.5104.0100.099.3

101.0100.198 599.5

101.5103.4105.6106.5107.6110.0

106.9106.3106.8105.9

106.7107.8107.5108.2

109.2109.2110.8110.8

Government purchases of goodsand services

Total

38.6

37 936.333.434.536 837.037.638.438 337.9

38 544.050.953 953.152.655.862.968 171.0

71.878.581.081.884.187.192.196.4

100.0102.4

105.0107.1109.0111.8115.7119.4124.0128.7135.0143.3

126.6127.4129.2131.5

132.8133.3136.2137.6

139.5141.8145.3146.9

Federal

36.0

34 134.531.933.137.437.040.540.740 540.8

40.246.652.554 953.853.157.365.669.873.0

72.979.481.281.483.586.991.795.8

100.0102.2

104.2105.2105.6108.0112.2115.5118.8121.3126.2134.1

120.5120.3121.0123.5

124.5124.5127.4128.3

129.8131.9136.8138.1

State andlocal

39.1

38 736.633.835.036 637.035.937.136 836.3

37.339.242.344 646.148.653.260.466.468.9

70.876.980.682.885.387.592.797.3

100.0102.6

105.9109.4113.2116.3119.5123.5129.4137.1145.0152.9

133.4135.6138.7140.7

142.3143.4146.2148.1

150.1151.9153.9155.6

Gross national product bysector

Private 2

51.7

50.445.740.939.943.043.543.445.344.643.9

44.748.755.560.962.062.668.276.381.480.6

81.487.489.089.690.891.694.597.9

100.0101.4

102.8103.7104.7105.8107.0108.8111.6114.8118.9124.2

113.5114.1115.2116.3

117.2118.4119.4120.6

122.0123.6125.0126.4

Generalgovernment

34.1

34.134.533.733.534.834.736.536.537.436.8

36.034.737.339.743.348.355.458.560.864.7

67.170.574.476.679.584.088.793.3

100.0104.2

108.6113.6116.6121.5128.4133.5140.3148.1159.4170.6

144.5146.5148.4153.1

155.7156. S161.3163.6

165.6167.5173.7175.3

1 Separate deflators are not available for total gross private domestic investment, change in business inventories, andnet exports of goods and services.

2 Gross national product less compensation of general government employees. See also Tables C-7 and C-8.


TABLE C-4.—Gross national product by major type of product, 1929-69


Year orquarter

1929. . . .

19301 9 3 1 . . . .1932. . . .193319341935. . . .193619371938. . . .1939

1940194119421943194419451946. . . .194719481949

19501951195219531954....1955195619571958....1959

1960196119621963196419651966...19671968....1969 p . .

1967: I . . .III I I . .I V . .

1968: I . . .I I .I I I . .I V . .

1969: II I . .I I I .IV v

Totalgrossna-

tionalprod-

uct

103.1

90.475.858.055.665.172.282.590.484.790.5

99.7124.5157.9191.6210.1211.9208.5231.3257.6256.5

284.8328.4345.5364.6364.8398.0419.2441.1447.3483.7

503.7520.1560.3590.5632.4684.9749.9793.5865.7932.3

Finalsales

101.4

90.777.060.557.265.871.281.287.985.690.1

97.5120.1156.2192.2211.1213.0202.1231.8252.9259.6

278.0318.1342.4364.1366.4392.0414.5439.8448.8478.9

500.2518.1554.3584.6626.6675.3735.1786.2858.4924.3

1.7

- . 4-1 .1-2 .5-1 .6- . 71.11.32.5

- . 9.4

2.24.51.8

- . 6-1 .0-1 .0

6.4- . 54.7

-3 .1

6.810.33.1.4

-1 .56.04.71.3

-1 .54.8

3.62.06.05.95.89.6

14.87.47.38.0

Goods output

Total

Total

56.1

46.937.426.727.034.439.945.851.545.349.0

56.072.593.6

120.4132.3128.9124.9139.7154.2147.5

162.4189.7195.6204.1197.1216.4225.4234.6230.8249.1

259.6262.3284.5298.6319.4347.2383.3398.4431.1459.9

Finalsales

54.3

47.338.629.228.635.138.844.548.946.248.6

53.868.091.9

12K0133.3129.9118.5140.1149.4150.5

155.6179.4192.5203.7198.6210.4220.7233.3232.3244.4

256.0260.2278.5292.7313.6337.6368.5391.0423.7451.8

° =?C CO

fj-5

1.7

- . 4-1 .1- 2 . 5-1 .6- . 71.11.32.5

- . 9.4

2.24.51.8

- . 6-1 .0-1 .0

6.4- . 54.7

-3 .1

6.810.33.1.4

- 1 . 56.04.71.3

- 1 . 54.8

3.62.06.05.95.89.6

14.87.47.38.0

Durable goods

Total

17.5

11.47.73.64.97.49.3

12.213.99.9

12.7

16.626.835.554.257.948.936.946.048.747.8

60.473.774.679.472.185.790.394.483.695.6

99.596.5

109.0116.1127.0139.6156.7160.9176.7192.3

Finalsales

16.1

12.59.05.75.47.38.9

11.213.110.812.4

15.423.834.554.258.550.231.644.348.049.9

56.366.873.578.574.682.787.593.186.493.2

97.496.6

106.2113.3122.8133.0146.2157.0171.4186.1

II|1

1.4

- 1 . 0-1 .2-2 .0- . 5

.1

.3

.9

.8- . 9

.3

1.23.01.0.0

- . 6- 1 . 3

5.31.7.7

-2 .1

4.16.91.1.9

- 2 . 53.02.81.3

- 2 . 82.3

2.1- . 12.82.84.26.7

10.53.95.36.2

Nondurable g

Total

38.5

35.529.723.122.127.030.633.637.635.436.3

39.345.658.166.274.480.088.093.7

105.599.7

102.0116.0121.0124.8125.0130.7135.1140.2147.2153.6

160.1165.8175.5182.5192.4207.6226.6237.5254.4267.5

Finalsales

38.2

34.829.623.623.227.829.933.335.835.436.2

38.444.257.466.874.879.786.995.9

101.5100.6

99.3112.6119.1125.2124.1127.7133.2140.2145.9151.1

158.6163.7172.2179.4190.7204.7222.3234.1252.3265.7

IIC TO

0.3

.7

.1- . 4-1.1- . 9

.7

.31.8.0.1

1.01.4.7

- . 6- . 3

l!l-2.2

4.0-1.0

2.73.42.0

- . 51.02.91.9.0

1.32.4

1.52.13.23.11.63.04.33.52.01.8

Serv-ices

35.6

34.231.727.525.727.128.331.032.333.234.0

35.440.350.362.571.876.568.070.275.780.8

87.0101.2110.8118.8123.5132.6142.3154.2163.4176.2

187.3199.5213.3226.2244.2262.9289.1316.7347. 5377.5

Struc-tures

11.4

9.26.73.82.93.54.05.66.76.27.5

8.311.814.08.76.16.5

15.621.427.728.3

35.437.539.141.744.249.051.552.353.158.3

56.858.362.665.768.874.877.578.487.195.0


Grossautoprod-uct

774.2783.5800.4816.1

835.3858.7876.4892.5

908.7924.8942.8953.1

765.2780.2792.6806.6

833.6848.8869.2882.0

902.1917.9932.0945.3

9.03.47.89.5

1.69.97.2

10.5

6.66.9

10.77.8

391.5395.9401.1405.3

414.5429.2437.0443.5

447.9456.5465.9469.0

382.5392.5393.3395.8

412.8419.3429.9433.0

441.3449.6455.2461.2

9.03.47.89.5

1.69.97.2

10.5

6.66.9

10.77.8

156.1159.9162.2165.5

168.3175.7178.8184.0

186.4190.3195.4197.1

151.9158.3157.7160.0

166.4168.9173.7176.6

181.6185.5187.8189.7

4.21.54.45.6

1.96.85.17.4

4.84.97.67.4

235.4236.0238.9239.8

246.2253.5258.3259.5

261.5266.2270.5271.9

230.7234.2235.5235.9

246.5250.4256.1256.4

259.7264.1267.4271.5

4.71.83.43.9

- . 33.12.13.1

1.82.13.1.4

306.4312.0320.1328.4

335.0343.4353.2358.5

365.8373.4381.6389.0

76.375.679.382.4

85.886.086.190.6

94.994.895.395.1

7.28.8

11.9

15.413.512.016.314.621.216.919.514.519.1

21.417.922.525.125.831.830.028.635.936.5

26.128.828.730.9

34.036.336.037.5

37.534.538.035.9


l 8 2

TABLE G-5.—Gross national product by major type o] product, in 1958 prices, 1929-69


Year orquarter

1929...

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

1940...1941...1942...1943...1944...1945...1946...1947...1948...1949...

1950...1951...1952...1953...1954. .1955...1956...1957...1958...1959...

1960...1961—.1962...1963...1964...1965..1966._1967. .1968. .1969 p.

1967:1 . - . .I I . . .I II . .IV...

1 9 6 8 : 1 . . .I I . . .III. .IV...

1969 :1 . . .I I . .III.IV P.

Totalgrossna-

tionalprod-uct

203.6

183.5169 3144.2141.5154.3169.5193.0203.2192.9209.4

227.2263.7297.8337.1361.3355.2312.6309.9323.7324.1

355.3383.4395.1412.8407.0438.0446.1452.5447.3475.9

487.7497.2529.8551.0581.1617.8658.1674.6707.6727.7

Final

200.1

184.1171.7150.5145.9157.0167.1189.9197.8195.3208.2

222.3254.1293.8337.3363.2358.2302.6310.1319.1328.1

347.0372.5391.8411.8409.0431.6441.2451.2448.8471.1

484.495.2523.8545.2575.2608.8644.667.7701.0720.8

3.5

- . 6-2 .4-6 .2-4 .3-2 .7

2.43.15.5

-2 .41.2

4.99.64.0

- . 2-1 .9-2 .910.0- . 24.6

-3.9

8.310.93.3

-2 i06.44.81.2

- 1 . 54.8

3.52.06.05.85.89.0

13.96.96.66.9

Goods output

Total

Total

103.9

90.583.268.768.877.988.6

102.2110.2100.5110.7

124.0143.4158.1187.4204.8198.0172.1172.2178.4174.2

192.6208.4214.0225.4215.1236.1239.0239.8230.8247.7

256.0257.3277.3289.7308.6330.7356.8362.7381.3392.7

Finalsales

100.4

91.185.774.973.280.586.299.1

104.8102.9109.5

119.0133.8154.1187.6206.7201.0162.1172.4173.8178.1

184.3197.5210.7224.5217.1229.7234.2238.5232.3242.9

252.6255.3271.3283.9302.8321.7342.9355.7374.7385.7

l l> o

3.5

- . 6-2 .4-6 .2- 4 . 3-2 .7

2.43.15.5

-2 .41.2

4.99.64.0

- . 2-1 .9-2 .910.0

24*. 6

-3 .9

8.310.93.3.9

-2 .06.44.81.21 5

3.52.06.05.85.89.0

13.96.96.66.9

Durable goods

Total

33.6

22.416.38.3

11.716.921.528.731.021.127.6

35.650.057.285.695.984.354.760.161.358.0

73.484.184.691.081.996.596.596.283.694.0

97.894.9

107.0114.2124.6136.5151.8152.0162.8172.4

Finalsales

30.9

24.519.213.413.416.720.626.329.123.427.0

32.843.554.485.297.487.446.158.660.061.0

68.376.183.289.984.893.093.595.086.491.6

95.994.9

104.1111.4120.4130.1141.9148.5158.0167.1

F2.7

-2 .1-3 .0-5 .1-1 .7

.2

.92.41.9

-2 .3.6

2.76.62.9.4

-1 .5-3 .1

8.61.51.2

-3 .0

5.28.01.51.2

-3 .03.43.01.2

-2 .82.4

2.0.0

2.82.84.16.59.83.54.75.3

Nondurable g

Total

70.4

68.067.060.457.161.067.173.579.279.483.0

88.493.4

100.9101.7108.8113.7117.4112.2117.1116.2

119.1124.3129.4134.4133.2139.7142.5143.6147.2153.7

158.2162.3170.3175.6184.1194.2205.1210.7218.6220.3

Finalsales

69.5

66.566 561.559.863.865.672.875.779.582.5

86.290.399.7

102.4109.3113.6116.0113.8113.8117.1

116.0121.4127.6134.6132.3136.7140.7143.6145.9151.2

156.7160.3167.2172.5182.3191.6201.0207.3216.7218.6

0.8

1.5.5

-1.1-2.7-2.8

1.5.7

3.6

.'6

2.23.11.2

- . 6- . 4

.21.4

-1.73.3

- . 9

3.12.91.8

- . 2.9

3.01.8.0

1.32.5

1.52.03.3.11.72.64.13.41.91.6

Serv-ices

69.3

67.765.861.963.065.368.173.373.974.876.9

80.089.8

107.7131.8144.0144.3113.3106.5109.3112.4

117.5130.5136.3140.3141.8147.5153.0160.1163.4171.2

176.6184.0193.7200.9210.8221.9236.3249 1259.9267.3

Struc-tures

30.3

25.320.213.79.8

11.112.817.519.117.721.8

23.230.31.917.912.412.927.231.236.37.5

45.244.444.747.050.254.354.052.653.157.0

55.055.858.860.461.665.265.062.966.467.7

Grossautoprod-uct


666.5670.5678.0683.5

693.3705.8712.8718.5

723.1726.7730.6730.5

658.0667.4670.7674.8

691.8696.8706.3709.0

717.2720.7721.3723.8

8.53.17.48.7

1.59.06.49.6

5.96.09.36.7

359.2362.3364.2365.0

370.8380.8385.5388.2

389.1391.6395.9394.1

350.7359.2356.8356.3

369.4371.7379.1378.7

383.2385.7386.6387.5

8.53.17.48.7

1.59.06.49.6

5.96.09.36.7

148.8152.1153.0154.1

156.6162.3164.5167.8

169.0171.4174.7174.6

145.0150.8148.9149.2

154.8156.2159.9161.2

164.8167.3168.1168.3

3.81.34.14.9

1.76.14.56.5

4.24.16.66.3

210.4210.2211.2210.9

214.3218.4221.1220.5

220.2220.2221.2219.5

205.7208.4207.9207.1

214.6215.5219.2217.5

218.4218.4218.5219.2

4.71.83.33.8

- . 32.91.93.0

1.71.92.7.3

244.8246.9251.0253.7

255.4258.9262.4262.7

264.6267.0267.6269.8

62.561.362.964.9

67.166.264.867.5

69.368.067.166.5

10.311.414.8

19.115.913.518.717.124.618.620.214.518.5

21.017.522.024.725.531.830.628.735.134.9

26.629.328.530.4

33.435.635.236.2

36.233.036.434.2


183

TABLE C-6.—Gross national product: Receipts and expenditures by major economic groups,1929-69

(Billions of dollars]

Year orquarter

1929..

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

1940..1941..1942..1943..1944..1945..1946-1947..1948..1949..

1950..1951..1952..1953..1954..1955..1956-1957-1958..1959-

1960..1961..1962..1963..1964..1965..1966..1967..1968..

83.3

74.564.048.745.552.458.566.371.265.570.3

75.792.7

116.9133.5146.3150.2160.0169.8189.1188.6

206.9226.6238.3252.6257.4275.3293.2308.5318.8337.3

350.0364.4385.3404.6438.1473.2511.9546.5590.0

1969* 629.6

Persons

Disposable personalincome

Total i

Less:Inter-

estpaidand

trans-fer

pay-mentsto for-eigners

1 9 6 7 : 1 . . . .I I . . . .I I I . . .I V . . .

1968:1....IL_._I I I . . .IV...

1969:1....IL. . .I I I . . .

1.9

1.2.9.7.7.6.7.8.9.8.9

1.01.1.8

1.01.41.82.22.4

2.93.13.54.34.65.15.96.46.57.1

7.88.18.69.7

10.712.013.013.915.016.0

Equals:Total

exclud-ing in-terestand

trans-fers

81.4

73.363.148.044.951.757.865.570.364.669.4

74.791.6

116.1132.7145.5149.3158.6168.0186.9186.2

204.1223.5234.8248.3252.9270.2287.2302.2312.3330.3

342.3356.3376.6394.9427.4461.3498.9532.6575.0613.6

Per-sonal

con-sump-

tionex-

pendi-tures

77.2

69.960.548.645.851.355.761.966.563.966.8

70.880.688.599.3

108.3119.7143.4160.7173.6176.8

191.0206.3216.7230.0236.5254.4266.7281.4290.1311.2

325.2335.2355.1375.0401.2432.8466.3492.3536.6576.0

Per-sonalsaving

ordis-

saving()

4.2

3.42.6

- . 6- . 9

.42.13.63.8

2.6

3.811.027.633.437.329.615.27.3

13.49.4

13.117.318.118.316.415.820.620.722.319.1

17.021.221.619.926.228.432.540.438.437.6

Government

Net receipts

Taxandnon-taxre-

ceiptsor ac-cruals

11.3

10.89.58.99.3

10.511.412.915.415.015.4

17.725.032.649.251.253.250.956.858.956.0

68.784.889.894.389.7

100.4109.0115.6114.7128.9

139.8144.6157.0168.8174.1189.1213.3228.4264.2302.0

Less:Trans-fers,inter-

est,andsub-

sidies a

1.8

1.93.12.62.73.13.44.13.23.84.2

4.44.04.44.76.5

10.418.517.318.821.3

22.919.919.019.521.923.425.528.733.034.0

36.541.342.844.446.749.955.562.870.678.3

Equals:Netre-

ceipts

9.5

8.96.36.36.77.48.08.8

12.211.211.2

13.321.028.244.444.742.832.439.540.134.7

45.864.970.874.867.876.983.586.881.695.0

103.3103.3114.2124.3127.3139.2157.9165.6193.6223.7

Expenditures

Totalex-

pendi-tures

10.3

11.112.410.610.712.913.416.115.016.817.6

18.428.864.093.3

103.092.745.542.450.359.1

60.879.093.7

101.296.797.6

104.1114.9127.2131.0

136.1149.0159.9166.9175.4186.9212.3242.9270.8293.0

Less:Trans-fers,inter-est,and

sub-sidies 2

1.8

1.93.12.62.73.13.44.13.23.84.2

4.44.04.44.76.5

10.418.517.318.821.3

22.919.919.019.521.923.425.528.733.034.0

36.541.342.844.446.749.955.562.870.678.3

Equals:Pur-

chasesof

goodsand

serv-ices

8.5

9.29.28.18.09.8

10.012.011.913.013.3

14.024.859.688.696.582.327.025.131.637.8

37.959.174.781.674.874.278.686.194.297.0

99.6107.6117.1122.5128.7137.0156.8180.1200.3214.7

Sur-plusor

deficit(-),

na-tional

in-comeand

prod-uct ac-counts

1.0

- . 3- 2 . 9- 1 . 8- 1 . 4- 2 . 4- 2 . 0- 3 . 1

.3- 1 . 8- 2 . 2

- . 7- 3 . 8

-31.4-44.1-51.8-39.5

5.414.48.5

- 3 . 2

7.85.8

- 3 . 8- 6 . 9- 7 . 0

2.74.9.7

-12.5- 2 . 1

3.7- 4 . 3- 2 . 9

1.8- 1 . 4

2.21.1

-14.5- 6 . 7

9.0


534.4541.6550.3559.8

575.0587.4593.4604.3

610.2622.0639.0647.1

13.514.113.914.1

14.514.815.215.5

15.715.916.116.2

520.9527.5536.4545.7

560.5572.6578.2588.8

594.5606.1622.9630.9

480.9489.8495.7502.6

520.6530.3544.9550.7

562.0572.8579.8589.2

40.037.740.743.1

39.942.333.238.0

32.533.343.141.6

222 0224.5230.2236.9

248.5257.3271.0279.7

294.1302.0303.4

61.961.963.464.0

66.669.772.073.9

75.877.678.980 9

160.1162.5166.7173.0

181.9187.6199.1205.8

218.3224.4224.4

236.1240.4244.8250.4

260.0268.1274.5280.6

285.9290.6296.0299.7

61.961.963.464.0

66.669.772.073.9

75.877.678.980.9

174.2178.5181.3186.4

193.4198.4202.5206.7

210.0212.9217.0218.9

-14.1-16 .0-14.6-13.4

-11.5-10.8- 3 . 5- . 9

8.311.47.4

See footnotes at end of table.184

T A B L E G-6.—Gross national product: Receipts and expenditures by major economic groups,1929-69—Continued


Yearor

quarter

192919301931193219331934193519361937193819391940 -194119421943 .1944 . .19451946194719481949195019511952195319541955195619571958 . . . .19591960196119621963__1964196519661967— _ .19681969*

1967: L_IIIII...IV

1968: 1IIIII... _ . . .IV

1969: 1I I . . .IIIIV v

Grossre-

tainedearn-ings 3

11.28.65.33 23.25.26.46 77.78.08.4

10.511 414.516.317.115 114.520.228.029.729.433.135.136.139.246.347.349.849.456.856.858.766.368.876.284.791.393.396.798.6

Business

Grosspri-vate

domes-tic in-vest-

ment*

16.210.35.61.01.43.36.48.5

11.86.59.3

13.117.99.85.77.1

10.630.634.046.035.754.159.351.952.651.767.470.067.860.975.374.871.783.087.194.0

108.1121.4116.0126.3139.6

Excessof in-vest-ment(-)

- 5 . 1- 1 . 6- . 32.21.81.9

*- 1 . 8- 4 . 0

1.6- . 9

- 2 . 7- 6 . 5

4.610.610.04.6

-16 .1- 1 3 . 8- 1 8 . 0- 6 . 0

- 2 4 . 7- 2 6 . 2- 1 6 . 8- 1 6 . 5- 1 2 . 5-21 .1- 2 2 . 8- 1 8 . 1- 1 1 . 5- 1 8 . 5- 1 8 . 0- 1 3 . 0- 1 6 . 8- 1 8 . 4- 1 7 . 8- 2 3 . 4- 3 0 1-22 .7- 2 9 6- 4 1 . 0

International

Trans-fers to

for-eignersby per-

sonsandGov-ern-ment

0.4.3.3.2.2.2.2.2.2.2.2.2.2.2.2.38

2 92.64.55.64.03.52.52.52.32.52.42 32.42.42.42 62.72.82.82.82 83.02.92.6

Net exports of goodsand services

Ex-ports

7.05.43.62.52.43.03.33.54.64.34.45.45.94.84.45.37.2

14.719.716.815.813.818.718.016.917.819.823.626.523.123.527.228.630.332.337.139.243 446.250.655.4

Less:Im-ports

5.94.43.12.12.02.43.13.44.33.03.43.64.64.86.57.17.97.28.2

10.39.6

12.015.115.816.615.917.819.620.820.923.323.223 025.126.428.632.338 141 048.153.3

Equals:Netex-

ports

1.11.0.54

.4

.6

.11

.31.31.11.71 3

*- 2 . 0- 1 . 8— 67 5

11 56.46.11.83.72.2

41 82.04.05 72 2

.14.05 65 15.98.56 95 35.22.52.1

Excessof

trans-fersor

of netex-

ports<-)«

- 0 . 8- . 7- . 2- . 2- . 2- . 4

.111

- 1 . 1- . 9

- 1 . 5- 1 1

22.22.11 4

- 4 6- 8 9- 1 . 9- . 52.2

- . 2.3

2 15

.5- 1 . 5- 3 4

.22.3

- 1 . 7- 3 0- 2 . 5- 3 . 1- 5 . 7- 4 1—2 4- 2 . 2

.3

.6

Totalincomeor re-ceipts

102.491.275.157.755.064.572.581.390.584.189.298.7

124.1159.0193.6207.6208.0208.4230.4259.5256.2283.3325.1343.3361.6362.1395.9420.4441.1445.8484.5504.8520.8559.8590.8633.7688.0750.9794.5868.2938.5

Statis-ticaldis-crep-ancy

0.7- . 8

.7

.3

.6

- . 21 2

*.6

1.31.0.4

- 1 . 1- 2 . 0

2.53 9.1.9

- 2 . 0.3

1.53.32.23.02.72.1

- 1 . 1*

1.6- . 8

- 1 . 0- . 8

.5- . 3

- 1 . 3- 3 . 1

1 0- 1 . 0- 2 . 5- 6 . 2

Grossna-

tionalprod-uct

or ex-pendi-ture

103.190.475.858.055.665.172.282.590.484.790.599.7

124.5157.9191.6210.1211.9208.5231.3257.6256.5284.8328.4345.5364.6364.8398.0419.2441.1447.3483.7503.7520.1560.3590.5632.4684.9749.9793.5865.7932.3


91.691.993.895.9

92.197.299.398.3

97.798.099.7

113.6109.4117.7123.3

119.4126.6125.2133.9

135.2137.4143.3142.4

- 2 1 . 9- 1 7 . 5- 2 3 . 9- 2 7 . 4

- 2 7 . 3- 2 9 . 4- 2 6 . 0-35 .7

- 3 7 . 5- 3 9 . 4- 4 3 . 6

2.83.33.32.6

2.52.83.13.1

2.42.82.62.7

45.845.946.346.7

47.750.753.450.6

47.657.157.859.1

40.440.140.742.8

45.947.349.749.4

46.155.555.256 4

5.45.85.63.8

1.93.43.61.2

1.51.62.72 6

- 2 . 7- 2 . 5- 2 . 3- 1 . 3

.7- . 6- . 61.9

1.01.2.01

775.4785.2800.3817.2

837.1860.2879.6895.9

912.9931.3949.7

- 1 . 2- 1 . 7

.1- 1 . 1

- 1 . 8- 1 . 6- 3 . 3- 3 . 4

- 4 . 2- 6 . 5- 6 . 9

774.2783.5800.4816.1

835.3858.7876.4892.5

908.7924.8942.8953.1

> Personal income less personal tax and nontax payments (fines penalties, etc.).2 Government transfer payments to persons, foreign net transfers by Government, net interest paid by government,

and subsidies less current surplus of government enterprises.3 Undistributed corporate profits, corporate inventory valuation adjustment, capital consumption allowances, and

wage accruals less disbursements.* Private business investment, purchases of capital goods by private nonprofit institutions, and residential housing.

See Table C- l l .5 Net foreign investment with sign changed.Note.—Corporate profits tax and related items for 1969 reflect repeal of investment tax credit.Source: Department of Commerce, Office of Business Economics.

185

TABLE C-7.—Gross national product by sector, J929-69


Year orquarter

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966. . .1967. . .19681969*

1967:1||IIIIV

1968:1IIIIIIV

1969:1IIIIIIV v

Totalgross

nationalproduct

103.1

90.475.858.055.665.172.282.590.484.790.5

99.7124.5157.9191.6210.1211.9208.5231.3257.6256.5

284.8328.4345.5364.6364.8398.0419.2441.1447.3483.7

503.7520.1560.3590.5632.4684.9749.9793.5865.7932.3

774.2783.5800.4816.1

835.3858.7876.4892.5

908.7924.8942.8953.1

Gross private productl

Total

98.8

85.871.253.650.959.566.375.283.577.082.9

91.9115.1142.8166.0177.9176.8187.7214.6240.1237.0

263.9301.0314.3332.7332.4363.8382.6402.0405.2439.4

456.3469.2505.7532.4569.4617.1673.3708.2770.5828.2

692.0699.5714.2727.1

743.9764.9779.2794.0

808.5822.7836.5845.2

Business

Total

95.1

82.468.351.348.957.464.172.981.074.580.3

89.1112.2139.5162.4173.8172.3182.7208.6233.5230.1

256.3292.8305.8323.6322.7352.9370.8389.3391.7425.0

440.7452.3487.4513.0548.2594.4648.9681.0740.6795.4

Nonfarm2

85.4

74.862.046.844.352.757.166.572.767.974.0

82.6103.3126.5147.2158.5156.4163.9188.5210.2211.4

236.3269.9283.7303.3303.1334.1352.2370.9370.9405.3

420.2431.4466.2491.5527.6570.8624.0656.6715.7768.4

Farm

9.7

7.76.34.54.64 77.06.48.36.66.3

6.58.9

13.015.315.315.918.820.223.318.8

20.022.922.220.319.618.818.618.420.819.6

20.520.921.221.520.623.724.924.424.927.0

Seasonally adjusted annual rate

665.9673.0686.4698.6

715.4734.6749.3763.1

776.7790.5803.6810.8

642.1648.6661.7673.9

690.5709.8724.1738.4

751.1763.0775.9783.8

23.824.424.724.7

24.924.825.224.7

25.727.627.726.9

House-holdsand

institutions

2.9

2 72.31.91.71 81.92.02 32 22.3

2 42 52.93.23.74.14.55.15.65.9

6.46.97.27.88.19.19.8

10.511.412.2

13.214.015.016.017.318.520.222.725.228.6

5

22.022.522.923.4

24.325.425.026.0

27.228.328.930.0

Rest ofthe world

0.8

75

.4

.334

.3343

444

.4

.44

.6

.81.01.0

1.21 31.31.31.61.82.12.22.02.2

2.42.93.33.44.04.24.14.54.74.2

4.14.04.95.1

4.34.94.94.9

4.53.94.14.4

Grossgovern-

mentproduct 3

4.3

4 54 74.44.75 65 97.36 97 67 6

7 89 4

15.125.632.235.220.816.717.419.4

?0.927.431.231.932.534.236.639.142.144.3

47.550.954.758.163.067.876.685.395.2

104.1

82.284.086.289.0

91.393.897.198.5

100.2102.1106.2107.9

* Gross national product less compensation of general government employees.2 Includes compensation of employees in government enterprises. Government enterprises are those agencies of gov-

ernment whose operating costs are to a substantial extent covered by the sale of goods and services, in contrast to thegeneral activities of government, which are financed mainly by tax revenues and debt creation. The Post Office and publicpower systems are examples of government enterprises; on the other hand, State universities and public parks are part ofgeneral government activities.

s Compensation of general government employees.


186

TABLE C - 8 — Gross national product by sector, in 1958 prices, 1929-69


Year orquarter

1929..

1930..1931..1932..1933..1934..1935..1936.1937.1938.1939.

1940.1941.1942.1943.1944.1945.1946.1947.1948.1949.

1950.1951.1952.1953.1954.1955.1956.1957.1958.1959.

1960. . .1961 . . .1962 . . .1963 . . .1964 . . .1965 . . .1966. . .1967. . .1968. . .1969 p . .

1967: lI

:I I . .III.IV..

1968: !.

III.IV.

1969:1.I I . .III..IV p

Totalgross

nationalproduct

203.6

183.5169.3144.2141.5154.3169.5193.0203.2192.9209.4

227.2263.7297.8337.1361.3355.2312.6309.9323.7324.1

355.3383.4395.1412.8407.0438.0446.1452.5447.3475.9

487.7497.2529.8551.0581.1617.8658.1674.6707.6727.7

Gross private product i

Tntali oiai

190.9

170.1155.8131.0127.5138.3152.4173.1184.3172.6188.7

205.6236.6257.3272.8286.9282.5275.1281.4295.0294.1

324.2344.6353.2371.1366.2397.2404.8410.5405.2433.4

444.0452.3482.9503.2532.0567.0603.5617.0647.9666.7

Total

182.1

161.4147.7123.8120.6131.1144.9165.4176.4164.6180.7

197.1228.1248.7264.9278.9274.6267.0272.8286.0284.7

314.2334.5343.2360.7355.4385.4392.2397.5391.7419.4

429.5436.9466.7486.6514.4548.9584.9597.3627.5645.3

Business

Nonfarm2

165.1

145.4129.2105.8103.0116.6128.4150.5158.5146.8162.5

179.6209.3228.0245.3259.5256.5248.6255.8267.0266.2

294.9316.2324.2340.7335.0364.4371.4377.2370.9398.3

407.6414.8444.6463.8492.1525.2562.5573.5604.2621.8

Farm

17.0

16.118.518.017.514.616.514.917.917.818.2

17.518.820.619.619.418.118.517.019.018.4

19.418.419.020.020.420.920.820.320.821.1

21.922.222.122.822.323.722.423.723.323.5

House-holdsand

institutions

7.4

7.16.66.05.76.26.46.87.16.87.1

7.67.57.87.27.17.17.17.57.98.2

8.78.88.89.19.2

10.110.610.911.411.7

12.212.412.913.213.714.014.615.415.917.3

Rest ofthe world

1.4

1.61.41.31.21.01.11.0.8

1.1.9

1.0.9.8.8.9.8.9

1.11.2L.2

1.31.21.2L.31.61.82.02.12.02.2

2.32.93.43.43.94.13.94.34.54.0


Grossgovern-

mentproducts

12.7

13.313.513.214.016.017.119.918.920.420.6

21.627.240.564.374.472.837.528.628.730.1

31.138.841.841.740.940.741.341.942.142.5

43.744.846.947.849.150.854.657.659.761.0

666.5670.5678.0683.5

693.3705.8712.8718.5

723.1726.7730.6730.5

609.6613.1619.9625.4

634.6646.1652.6658.3

662.6665.8669.4668.9

590.6593.9599.7604.8

615.0625.3632.1637.5

641.5644.8648.2646.9

567.3570.0575.9581.1

591.0602.3608.8614.6

617.8621.1624.1624.3

23.324.023.923.7

24.023.023.422.9

23.723.724.122.6

15.115.415.515.7

15.516.115.716.2

16.817.217.417.8

3.93.84.74.9

4.14.74.74.6

4.33.73.94.2

56.957.358.158.1

58.759.860.260.2

60.560.961.161.6

1 Gross national product less compensation of general government employees.2 Includes compensation of employees in government enterprises. Government enterprises are those agencies of govern-

ment whose operating costs are to a substantial extent covered by the sale of goods and services, in contrast to the generalactivities of government, which are financed mainly by tax revenues and debt creation. The Post Office and public powersystems are examples of government enterprises; on the other hand, State universities and public parks are part of gen-eral government activities.

3 Compensation of general government employees.


187

TABLE G-9.—Gross national product by industry•, in 1958 prices, 1947-68


Year

194719481949 .

19501951 . . .195219531954 .

19551956195719581959 . .

196019611962 . . . .19631964

1965196619671968

Totalgross

na-tional

product

309.9323.7324.1

355.3383.4395.1412.8407.0

438.0446.1452.5447.3475.9

487.7497.2529.8551.0581.1

617.8658.1674.6707.6

Agri-culture,fores-tsandfish-eries

17.920.019.4

20.419.520.221.221.6

22.122.021.522.022.3

23.123.423.324.023.6

25.023.725.024.6

Con-tractcon-

struc-tion

12.914.114.7

16.218.218.318.919.3

20.821.821.120.722.0

21.721.421.721.923.3

23.524.723.123.8

Manufacturing

Total

91.896.390.9

105.5116.2118.7128.6119.5

133.6134.1134.6123.7138.9

140.9140.4154.6162.4173.7

190.5205.7205.6220.6

Dur-able

goodsindus-tries

52.355.050.5

60.869.071.579.171.2

80.779.479.669.679.9

81.079.790.095.6

102.4

114.8125.1124.4133.3

Non-durablegoodsindus-tries

39.441.340.4

44.747.247.349.548.3

52.954.654.954.059.0

59.960.764.766.871.3

75.780.781.̂ 387.2

Trans-porta-tion,com-muni-cation,

andutili-ties

29.630.428.7

30.834.334.635.736.4

38.640.541.340.643.3

44.946.048.951.954.7

59.264.066.570.4

VA/hnlo

saleandretailtrade

52.754.255.2

60.461.462.964.965.5

71.673.875.175.180.8

82.383.588.992.898.9

104.8111.6113.9119.9

Finance,insur-ance,andreal

estate

35.636.537.8

41.042.944.746.849.8

52.754.857.059.261.4

64.167.171.274.478.3

83.186.891.395.8

Serv-ices

30.631.932.1

33.134.034.535.335.4

38.240.241.842.945.1

46.748.350.852.254.7

57.760.663.665.9

Gov-ern-mentand

govern-mententer-prises

32.433.234.7

35.943.947.247.146.1

46.046.246.947.347.9

49.250.652.653.956.1

58.061.865.568.6

Allother»

6.77 1

10.6

12.113.014.014.313.5

14.412.713.116.014.1

14.716.317.917.417.8

15.819.420.017.6

i Mining, rest of the world, and residual (the difference between gross national product measured as sum of final prod-ucts and gross national product measured as sum of gross product by industries).


188

TABLE C-10.—Personal consumption expenditures, 1929-69


Yearor

quarter

1929....

1930...193119321933._1934...1935....1936....1937....1938....1939

194019411942....1943194419451946....1947....1948....1949

195019511952.. . .195319541955195619571958[959

I960. . . .19611962~"I1963.- . .19641965.".'..1966196719681969 p . .

1967:1.-II.IllIV

1968: 1..II.IllIV

1969:1.IIIIIIV

tion

Q.

Is

Pa.

77.2

69.960.548.645.851.355.761.966.563.966.8

70.880.688.599.308.319.743.460.773.676.8

91.006.316.730.036.554.466.781.4

290.1311.2

325.2335.2355.1375.0401 2432.8466.3492.3536.6576.0

Durable goods

is

9.2

7.25.53.63.54.25.16.36.95.76.7

7.89.66.96.66.78.0

15.820.422.724.6

30.529.629.333.232.839.638.940.837.944.3

45.344.249.553.959.266.370.873.083.389.6

COQ .

•a

Io

3

3.2

2.21.6.9

1.11.41.92.32.41.62.2

2.73.4.7.8.8

1.04.06.27.59.9

13.111.611.114.213.618.416.418.315.419.5

20.118.422.024.325.830.330.330.537.040.3

i

IsifI1

4.8

3.93.12.11.92.22.63.23.63.13.5

3.94.94.73.93.84.68.6

10.911.911.6

14.114.414.314.915.016.617.517.317.118.9

18.919.320.522.225.026.929.931.334.235.9

aJEL

O

1.2

1.1.9.6.5.6.7.8

1.0.9

1.0

1.11.41.61.92.22.53.23.33.43.2

3.33.63.94.14.24.65.05.25.45.9

6.36.56.97.58 59.1

10.511.212.113.4

Nondurable goods

"oh-

37.7

34.029.022.722.326.729.332.935.234.035.1

37.042.950.858.664.371.982.490.596.294.5

98.1108.8114.0116.8118.3123.3129.3135.6140.2146.6

151.3155.9162.6168.6178.7191.1206.9215.1230.6243.8

gco

. Q

£=CO

1

19.5

18.014.711.411.514.216.218.419.918.919.1

20.223.428.433.236.740.647.452.354.252.5

53.960.463.464.465.467.269.973.676.478.6

80.582.985.788.292 998.8

105.8108.1115.0120.0

1

.=1c"oo

9.4

8.06.95.14.65.76.06.66.86.87.1

7.48.8

11.013.414.416.518.218.820.119.3

19.621.221.922.122.123.124.124.324.726.4

27.327.929.630.633.535.940.342.546.349.9

oTJ{=

|

s

1.8

1.71.51.51.51.61.71.92.12.12.2

2.32.62.11.31.61.83.03.64.45.0

5.46.16.87.78.29.09.8

10.611.011.6

12.312.412.913.514.015.316.617.719.121.3

a>

O

7.0

6.35.74.84.65.25.45.96.36.26.7

7.18.09.3

10.611.713.013.815.717.517.7

19.221.121.722.722.624.025.427.128.230.1

31.232.734.436.338.241.144.446.850.152.7

I30.3

28.726.022.220.120.421.322.824.424.325.0

26.028.130.834.237.239.845.349.854.757.6

62.467.973.479.985.491.498.5

105.0112.0120.3

128.7135 1143.0152.4163 3175.5188.6204.2222.8242.5

DOC

|

11.5

11.010.39.07.97.67.78.08.58.99.1

9.410.211.011.512.012.513.915.717.519.3

21.323.926.529.331.733.736.038.541.143.7

46.348 752.055.459 363.567.571.877.483.7

Service:

olo

0>CO3O

X

4.0

3.93.53.02.83.03.23.43.73.63.8

4.04.34.85.25.96.46.87.58.18.5

9.510.411.112.012.614.015.216.217.318.5

20.020.822.023.124.325.627.129.131.233.5

>

12

2.6

2.21.91.61.51.61.71.92.01.92.0

2.12.42.73.43.74.05.05.35.85.9

6.26.77.17.87.98.28.69.09.3

10 1

10.810.611.011.411.612.613.614.716.117.5

o

12.2

11.510.38.67.98.28.79.5

10.29.9

10.1

10.411.212.314.015.616.819.721.423.323.9

25.426.928.730.833.235.538.641.344.348.0

51.654.958.062.568 173.880.488.698.1

107.8


480.9489.8495.7502.6

520.6530.3544.9550.7

562.0572.8579.8589.2

70.073.573.375.2

79.581.885.886.3

88.490.689.889.6

28.431.330.931.2

34.835.638.639.0

39.440.040.840.9

30.731.231.232.2

33.433.835.034.6

35.536.835.835.6

10.911.011.211.7

11.312.412.112.8

13.613.813.213.1

213.2214.4215.8216.8

226.1228.5233.3234.3

238.6242.1245.1249.4

107.8107.6108.1108.9

112.6114.8116.1116.4

118.4119.1119.9122.6

41.742.642.942.7

45.045.647.447.3

48.150.050.850.6

17.317.517.918.1

18.918.819.519.5

20.421.021.822.0

46.446.746.847.1

49.649.450.351.1

51.852.052.754.2

197.7201.8206.6210.6

215.1220.0225.8230.1

235.0240.1244.9250.2

70.171.172.373.7

75.276.777.979.8

81.382.884.486.3

28.229.029.330.1

30.530.731.631.9

32.733.133.934.2

14.414.514.815.0

15.515.916.316.5

17.117.317.717.9

85.087.290.391.8

93.896.7

100.0101.8

103.9106.9108.8111.8

1 Includes standard clothing issued to military personnel.2 Includes imputed rental value of owner-occupied dwellings.Source: Department of Commerce, Office of Business Economics.

3 7 2 - 1 1 1 O — 7 0 l 8 9

TABLE C-ll.—Gross private domestic investment, 1929-69


Year orquarter

1929..

1930..1 9 3 1 -1932..1933-1934..1935..1936..1937..1938..1939..

1940..1941..1942..1 9 4 3 -1944..1945..1946..1947..1948..1949-

1950..1951..1952-1953-1954..1955..1956-1957..1958..1959-

1960..1961..1962..1963..1964..1965..1966..1967..1968..1969 P

1967: I

III."IV._

1968: II I . .I I I . .IV..

1 9 6 9 : I . . .I I . .I I I .

Totalgrossprivate

domesticinvest-ment

16.2

10.35.61.01.43.36.48.5

11.86.59.3

13.117.99.85.77.1

10.630.634.046.035.7

54.159.351.952.651.767.470.067.860.975.3

74.871.783.087.194.0

108.1121.4116.0126.3139.6

Fixed investment

Total

14.5

10.66.83.43.04.15.37.29.27.48.9

11.013.48.16.48.1

11.624.234.441.338.8

47.349.048.852.153.361.465.366.562.470.5

71.369.777.081.388.298.5

106.6108.6119.0131.5

Nonresidential

Total

10.6

8.35.02.72.43.24.15.67.35.45.9

7.59.56.05.06.8

10.117.023.426.925.1

27.931.831.634.233.638.143.746.441.645.1

48.447.051.754.361.171.381.683.788.899.3

Structures

Total

5.0

4.02.31.2.9

1.01.21.62.41.92.0

2.32.91.91.31.82.86.87.58.88.5

9.211.211.412.713.114.317.218.016.616.7

18.118.419.219.521.225.528.527.929.333.4

Non-farm

4.8

3.92.31.2.9

1.01.21.62.41.81.9

2.22.81.81.21.72.76.16.78.07.7

8.510.410.511.912.313.616.517.215.815.9

17.417.718.518.820.524.927.827.228.632.6

Producers'durable

equipment

Total

5.6

4.32.71.51.52.22.94.04.93.54.0

5.36.64.13.75.07.3

10.215.918.116.6

18.720.720.221.520.623.826.528.425.028.4

30.328.632.534.839.945.853.155.759.565.9

Non-farm

4.9

3.72.41.31.31.82.43.34.12.93.4

4.65.63.53.24.26.39.2

14.015.513.7

15.717.717.618.618.021.224.225.922.025.4

27.725.829.431.236.341.648.450.954.661.4

Residential structures

Total

4.0

2.31.7.7.6.9

1.21.61.92.02.9

3.43.92.11.41.31.57.2

11.114.413.7

(193)17.217.218.019.723.321.620. 2-20,825.5

22.822.625.327.027.127.225.025.030.232.2

Non-farm

3.8

2.21.6.7.5.8

1.11.51.81.92.8

3.23.71.91.21.11.46.7

10.413.612.8

18.616.416.417.219.022.720.919.520.124.8

22.222.024.826.426.626.724.524.429.631.7

Farm

0.2

Change inbusiness

inventories

Total

1.7

- . 4-1 .1- 2 . 5-1 .6

l!l1.32.5

- . 9.4

2.24.51.8

- . 6-1 .0-1 .0

6.4- . 54.7

- 3 . 1

6.810.33.1.4

- 1 . 56.04.71.3

- 1 . 54.8

3.62.06.05.95.89.6

14.87.47.38.0


Non-farm

113.6109.4117.7123.3

119.4126.6125.2133.9

135.2137.4143.3142.4

104.7106.1109.9113.8

117.7116.7118.0123.4

128.6130.5132.5134.5

83.383.083.585.0

89.186.488.191.5

95.397.8

101.1103.0

29.027.227.827.8

29.828.329.030.1

32.332.134.734.4

28.326.427.027.0

29.027.628.329.3

31.631.434.033.6

54.255.855.757.2

59.458.159.161.4

63.065.766.468.6

49.650.950.852.3

54.253.154.356.7

58.761.062.463.6

21.423.126.528.8

28.630.329.931.9

33.332.731.431.6

20.922.525.928.3

28.029.729.431.4

32.832.230.931.0

0.6.6.6.6

.6

.6

.5

.5

.5

.5

.5

.5

9.03.47.89.5

1.69.97.2

10.5

6.66.9

10.77.8

1.8

- . 1-1 .6-2 .6- 1 . 4

.2

.42.11.7

-1 .0.3

1.94.0.7

- . 6- . 6- . 66.41.33.0

-2 .2

6.09.12.11.1

- 2 . 15.55.1.8

- 2 . 34.8

3.31.75.35.16.48.6

15.06.87.47.8

9.13.07.08.0

1.310.37.5

10.7

6.66.7

10.37.6


TABLE G-12.—National income by type of income, 1929-69


Year orquarter

1929

1930193119321933193419351936193719381939

1940 . . .19411942 . .194319441945 .1946194719481949

195019511952 . . .19531954195519561957 . . .19581959

196019611962196319641965196619671968 . . .1969 v

1967' 1| |IIIIV...

1 9 6 8 : 1 - - -IIM L .IV

1969: 1III I I . .IV v

Totalna-

tionalin-

come1

86.8

75.459.742.840.349.557.265.073.667.472.6

81.1104.2137.1170.3182.6181.5181.9199.0224.2217.5

241.1278.0291.4304.7303.1331.0350.8366.1367.8400.0

414.5427.3457.7481.9518.1564.3620 6654.0714.4771.5

639.3646 2658.5672.0

688.8707.4724.1737 3

751.3765 7780.6

Compensation ofemployees

Total

51.1

46.839.831.129.534.337.342.947.945.048.1

52.164.885.3

109.5121.2123.1117.9128.9141.1141.0

154.6180.7195.3209.1208.0224.5243.1256.0257.8279.1

294.2302.6323.6341.0365.7393.8435 5467.4513.6564.2

456.2461 1470.7481.7

495.1507.0519.8532 3

546.0558 2571.9580.9

Wagesandsala-ries

50.4

46.239.130.529.033.736.741.946.143.045.9

49.862.182.1

105.8116.7117.5112.0123.0135.4134.5

146.8171.1185.1198.3196.5211.3227.8238.7239.9258.2

270.8278.1296.1311.1333.7358.9394.5423.5465.0509.8

413.2417.7426.5436.5

448.2459.0470.7482 1

493.3504 3516.9524 8

Sup-ple-

mentsto

wagesand

sala-ries2

0.7

.7

.6

.6

.5

.6

.61.01.82.02.2

2.32.73.23.84.55.65.95.95.86.5

7.89.6

10.210.911.513.215.217.317.920.9

23.424.627.529.932.035.041.043.948.654.4

43.043 444.245.1

47.048.049.150 2

52.753 855.056 1

Business and pro-fessional income

Total

9.0

7.65.83.63.34.75.56.77.26.97.4

8.611.114.017.018.219.221.620.322.722.6

24.026.127.127.527.630.331.332.833.235.1

34.235.637.137.940.242.445.247.249.250.2

In-come

ofunin-corpo-ratedenter-prises

8.8

6.85.13.33.94.85.56.87.26.77.6

8.611.714.417.118.319.323.321.823.122.2

25.126.526.927.627.630.531.833.133.235.3

34.335.637.137.940.342.845.647.549.951.1

Inven-toryvalu-ation

adjust-ment

0.1

.8

.6

.3- . 5

*- . 1

*.2- . 2

*- . 6- . 4- . 2- . 1- . 1

- 1 . 7- 1 . 5- . 4

.5

- 1 . 1- . 3

2

- . 2- . 5- . 3- . 1- . 1

**••

- . 1- . 4- . 4- . 3- . 7- . 9

In-come

offarmpro-prie-tors 3

6.2

4.33.42.12.63.05.34.36.04.44.4

4.56.49.8

11.711.612.214.915.217.512.7

13.515.815.013.012.411.411.411.313.411.4

12.012.813.013.112.114.816.114.714.616.1

Rentalin-

comeof

per-sons

5.4

4.83.82.72.01.71.71.82.12.62.7

2.93.54.55.15.45.66.67.18.08.4

9.410.311.512.713.613.914.314.815.415.6

15.816.016.717.118.019.020.020.821.221.6


46.547 147.847.5

48.449.249.349 7

49.750 150.550 4

14.314.714.814.9

14.814.314.814.4

14.916.416.816.3

20.620.820.921.0

21.121.221.221.4

21.521.621.721.8

Corporate profitsand inventory

valuationadjustment

Total

10.5

7.02.0

- 1 . 3- 1 . 2

1.73.45.66.84.96.3

9.815.220.324.423.819.219.325.633.030.8

37.742.739.939.638.046.946.145.641.151.7

49.950.355.758.966.376.182.479.287.988.7

78.378.379.181.1

82.588.290.690.3

89.589.288.8

Corpo-rate

profitsbeforetaxes <

10.0

3.7

-2.31.02.33.66.36.84.07.0

10.017.721.525.124.119.724.631.535.228.9

42.643.938.940.638.348.648.847.241.452.1

49.750.355.459.466.877.884.280.391.194.3

78.479.179.584.4

87.990.791.594.5

95.595.492.5

Inven-toryvalu-ation

adjust-ment

0.5

3.32.41.0

- 2 . 1- . 6- . 2- . 7

*1.0- . 7

- . 2- 2 . 5- 1 . 2- . 8- . 3- . 6

- 5 . 3- 5 . 9- 2 . 2

1.9

- 5 . 0- 1 . 2

1.0- 1 . 0- . 3

- 1 . 7- 2 . 7- 1 . 5- . 3- . 5

.2- . 1

.3- . 5

-~L7- 1 . 8- 1 . 1- 3 . 2- 5 . 6

- 0 . 1- . 7- . 4

- 3 . 3

- 5 . 3- 2 . 6- . 9

- 4 . 2

- 6 . 1- 6 . 2- 3 . 7- 6 . 4

Netinter-

est

4.7

4.95.04.64.14.14.13.83.73.63.5

3.33.23.12.72.32.21.51.91.81.9

2.02.32.62.83.64.14.65.66.87.1

8.410.011.613.815.818.221.424.728.030.6

23.524.325.125.9

26.727.528.429.3

29.830.330.931.6

» National income is the total net income earned in production. It differs from gross national product mainly in that itexcludes depreciation charges and other allowances for business and institutional consumption of durable capital goods,and indirect business taxes. See Table C 13.

> Employer contributions for social insurance and to private pension, health, and welfare funds; compensation forinjuries; directors' fees; pay of the military reserve; and a few other minor items.

3 Includes change in inventories.< See Table C-71 for corporate tax liability and profits after taxes.Source: Department of Commerce, Office of Business Economics.

TABLE C-13.—Relation of gross national product and national income, 1929-69


Year or quarter

Grossna-

tionalprod-

uct

Less:Capital

con-sump-

tionallow-ances

Equals:Netna-

tionalprod-

uct

Plus:Sub-sidies

lesscurrentsurplusof gov-

ern-mententer-prises

Less:

Indirect business taxes

Total FederalStateandlocal

Busi-ness

transferpay-

ments

Sta-tistical

dis-crep-ancy

Equals:Na-

tionalincome

1929..

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

1940..1941..1942..1943..1944..1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954.1955.1956.1957.1958.1959.

1960...1961...1962...1963...1964...1965—1966...1967...1968...1969 v_

103.1

90.475.858.055.665.172.282.590.484.790.5

99.7124.5157.9191.6210.1211.9208.5231.3257.6256.5

284.8328.4345.5364.6364.8398.0419.2441.1447.3483.7

503.7520.1560.3590.5632.4684.9749.9793.5865.7932.3

1967: I . . .II...III.IV..

1968: I . . .II...III..IV..

1969: I . . .II...III..IV p.

7.9

8.07.97.47.06.86.97.07.27.37.3

7.58.29.8

10.211.011.39.9

12.214.516.6

18.321.223.225.728.231.534.137.138.941.4

43.445.250.052.656.159.863.968.673.377.9

95.2

82.468.050.748.658.265.475.483.377.483.2

92.2116.3148.1181.3199.1200.7198.6219.1243.1239.9

266.4307.2322.3338.9336.6366.5385.2404.0408.4442.3

460.3474.9510.4537.9576.3625.1685.9725.0792.4854.4

- 0 . 1

- . 1

.9

.9

.21.41.4.8

1.31.32.31.4.8

1.1

7.0

7.26.96.87.17.88.28.79.29.29.4

10.011.311.812.714.115.517.118.420.121.3

23.325.227.629.629.432.134.937.338.541.5

45.247.751.554.758.462.565.770.177.986.6

1.2

1.0.9.9

1.62.22.22.32.42.22.3

2.63.64.04.96.27.17.87.88.08.0

8.99.4

10.310.99.7

10.711.211.811.512.5

13.513.614.615.316.116.515.716.318.018.8

5.8

6.16.05.85.45.66.06.46.86.97.0

7.47.77.77.88.08.49.3

10.612.113.3

14.515.817.318.719.721.423.625. £27.028.9

31.734.136.939.442.345.949.953.859.967.8

0.6

.5

.6

.7

.7

.6

.6

.6

.6

.4

.5

. 4

.5

.5

.5

.5

.5

.5

.6

.7

.8

.91.01.21.11.21.41.51.61.7

1.92.02.12.32.52.73.03.23.43.6

0.7

- . 8.7.3.6.5

- . 21.2

*.6

1.31.0.4

- 1 . 1- 2 . 0

2.53.9

- 2 . 0.3

1.53.32.23.02.72.1

- 1 . 1

1.6

- 1 . 0- . 8

.5- . 3

- 1 . 3- 3 . 1- 1 . 0- 1 . 0- 2 . 5- 6 . 2


774.2783.5800.4816.1

835.3858.7876.4892.5

908.7924.8942.8953.1

66.867.969.270.4

71.773.073.774.6

75.977.278.679.9

707.4715.6731.2745.7

763.6785.6802.6817.9

832.8847.6864.2873.2

1.71.21.41.2

.6

.71.1.9

1.1.9

1.11.3

67.969.270.872.7

73.977.079.481.4

83.385.788.089.3

15.916.216.516.7

17.417.918.318.5

18.518.619.118.9

52.053.054.355.9

56.559.261.162.9

64.867.168.970.4

3.13.23.23.3

3.33.43.43.5

3.53.63.63.6

- 1 . 2- 1 . 7

.1- 1 . 1

- 1 . 8- 1 . 6- 3 . 3- 3 . 4

- 4 . 2- 6 . 5- 6 . 9

86.8

75.459.742.840.349.557.265.073.667.472.6

81.1104.2137J170.3182.6181.5181.9199.0224.2217.5

241.1278.0291.4304.7303.1331.0350.8366.1367.8400.0

414.5427.3457.7481.9518.1564.3620.6654.0714.47(71.5

639.3646.2658.5672.0

688.8707.4724.1737.3

751.3765.7780.6


192

T A B L E G-14.—Relation of national income and personal income, 1929—69


Year or quarter

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

195019511952 . . . .1953195419551956 .195719581959

196019611962196319641965196619671968 - -1 9 6 9 P

1967: 1II.IllIV _

1968: LIIIIIIV

1969: 1IIIIIIV P

Nationalincome

86.8

75.459.742.840.349.557.265.073.667.472.6

81.1104.2137.1170.3182.6181 5181.9199.0224.2217.5

241.1278.0291.4304.7303.1331.0350.8366.1367.8400,0

414.5427.3457.7481.9518.1564.3620.6654.0714.4771.5

639.3646.2658.5672.0

688.8707.4724.1737.3

751.3765.7780.6

Less:

Corpo-rate

profitsand in-ventory

valuationadjust-ment

10.5

7 02.0

- 1 . 3- 1 2

1.73.45.66 84.96.3

9 815.220.324 423 819.219 325 633.030.8

37.742 739.939.638 046.946.145 641.151.7

49.950.355 758.966.376.182.479 287.988.7

78.378.379 181.1

82.588 290.690.3

89.589.288 8

i

Contri-butions

forsocialinsur-ance

0.2

3.3.33

.3

.3

.61 82.02.1

2 32.83.54 55.26.16 05 75.25.7

6.98 28.78.89 8

11.112.614 514.817.6

20.721.424.026.927.929.638.042.447.054.4

Wageaccruals

lessdis-

burse-ments

0 0

00

.000

.0

.00

.0

.0

.0

.0

.0

- . 2.00

.0

.0.0

.01

.0- . 1

0.0.0.0.0.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

.0

Plus:

Gov-ernmenttransferpaymentsto per-

sons

0.9

1.02.11.41.51.61.82.91.92.42.5

2.72.62.62.53.15.6

10.811.110.511.6

14.311.512.012.814.916.117.119.924.124.9

26.630.431.233.034.237.241.148.855.861.9

Interestpaidby

govern-ment(net)

and byconsumers

2.5

1.81.81.71.61.71.71.71.91.91.9

2.12.22.22.63.34.25.25.56.16.5

7.27.68.19.09.5

10.111.212.012.113.6

15.115.016.117.619,120.522.223.626.128.7


41.142.042 843.7

45.446 547.648.6

52.753.855 156.1

0.0.0.0.0

.0

o.0.0

.0

.0o.0

47.648.449.050.0

52.955 356.758.1

60.161.362 563.6

23.423.023.624.3

25.025 726.427.4

27.928.528 929.5

Divi-dends

5.8

5.54.12.52.02.62.84.54.73.23.8

4.04.44.34.44.64.65.66.37.07.2

8.88.68.68.99.3

10.511.311.711.612.6

13.413.815.216.517.819.820.821.523.124.6

21.121.722.021.1

22.222 923.623.8

23.824.324 925.2

Busi-ness

transferpay-

ments

0.6

.5

.6

.7

.7

.6

.6

.6

.6

.4

.5

.4

.5

.5

.5

.5

.5

.5

.6

.7

.8

.8

.91.01.21.11.21.41.51.61.7

1.92.02.12.32.52.73.03.23.43.6

3.13.23 23.3

3.33 43.43.5

3.53.63 63.6

Equals:

Personaincome

85.9

77.065.950.247.054.060.468.674.168.372.8

78.396.0

122.9151.3165.3171.1178.7191.3210.2207.2

227.6255.6272.5288.2290.1310.9333.0351.1361.2383.5

401.0416.8442.6465.5497.5538.9587.2629.4687.9747.1

615.2622.2634.5645.9

664.3680 1696.1711.2

724.4740.5756 5766.9


193

TABLE C-15.—Disposition of personal income, 1929-69

Year orquarter

Per-sonal

income

Less:Per-

sonaltaxand

nontaxpay-

ments

Equals:Dispos-

ableper-

sonalincome

Less: Personal outlays

Total

Per-sonalcon-

sump-tion

expend-itures

Interestpaid by

con-sumers

Per-sonal

transferpay-

mentsto for-eigners

Equals:Per-

sonalsaving

Percent of disposablepersonal income

Personaloutlays

Total

Con-sump-

tionexpend-

itures

Per-sonalsaving

Billions of dollars Percent

1929.

1930....1931....1932....1933 ...1934....19351936193719381939

1940..1941..1942..1943..1944..1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954..1955..1956..1957..1958..1959..

I960....1961196219631964....1965....1966196719681969 v

1967: I..II...M L .IV...

1968: I...II..III..IV..

1969: I...

IV p.

85.9

77.065.950.247.054.060.468.674.168.372.8

78.396.0

122.9151.3165.3171.1178.7191.3210.2207.2

227.6255.6272.5288.2290.1310.9333.0351.1361.2383.5

401.0416.8442.6465.5497.5538.9587.2629.4687.9747.1

2.6

2.51.91.51.51.61.92.32.92.92.4

2.63.36.0

17.818.920.918.721.421.118.6

20.729.034.135.632.735.539.842.642.346.2

50.952.457.460.959.465.775.482.997.9

117.5

83.3

74.564.048.745.552.458.566.371.265.570.3

75.792.7

116.9133.5146.3150.2160.0169.8189.1188.6

206.9226.6238.3252.6257.4275.3293.2308.5318.8337.3

350.0364.4385.3404.6438.1473.2511.9546.5590.0629.6

79.1

71.161.449.346.552.056.462.767.464.867.7

71.881.789.3

100.1109.1120.7144.8162.5175.8179.2

193.9209.3220.2234.3241.0259.5272.6287.8296.6318.3

333.0343.3363.7384.7411.9444.8479.3506.2551.6592.0

77.2

69.960.548.645.851.355.761.966.563.966.8

70.880.688.599.3

108.3119.7143.4160.7173.6176.8

191.0206.3216.7230.0236.5254.4266.7281.4290.1311.2

325.2335.2355.1375.0401.2432.8466.3492.3536.6576.0

1.5

.9

.7

.5

.5

.5

.5

.6

.7

.7

.7

.8

.9

.7

.5

.5

.5

.81.11.51.9

2.42.73.03.84.04.75.45.85.96.5

7.37.68.19.1

10.111.312.413.114.215.3

0.3

.3

.3

.2

.2

.2

.2

.2

.2

.2

.2

.2

.2

.1

.2

.4

.5

.7

.7

.7

.5

.5

.4

.4

.5

.5

.5

.6

.6

.6

.6

.5

.5

.5

.6

.6

.7

.6

.8

.8

.7


4.2

3.42.6

- . 6- . 9

.42.13.63.8.7

2.6

3.811.027.633.437.329.615.27.3

13.49.4

13.117.318.118.316.415.820.620.722.319.1

17.021.221.619.926.228.432.540.438.437.6

615.2622.2634.5645.9

664.3680.1696.1711.2

724.4740.5756.5766.9

80.880.684.186.1

89.392.7

102.6107.0

114.2118.5117.5119.8

534.4541.6550.3559.8

575.0587.4593.4604.3

610.2622.0639.0647.1

494.5503.9509.7516.6

535.1545.1560.2566.2

577.7588.8596.0605.5

480.9489.8495.7502.6

520.6530.3544.9550.7

562.0572.8579.8589.2

12.913.013.213.4

13.714.014.414.7

15.015.215.415.5

0.61.1.7.6

.7

.7

.8

.7

.7

.7

.8

.7

40.037.740.743.1

39.942.333.238.0

32.533.343.141.6

95.0

95.495.9

101.3102.099.396.394.694.798.996.3

94.988.276.475.074.580.390.595.792.995.0

93.792.492.492.893.694.393.093.393.094.4

95.194.294.495.194.094.093.692.693.594.0

92.593.092.692.3

93.192.894.493.7

94.794.793.393.6

92.7

93.894.499.8

100.698.095.293.393.497.695.0

93.686.975.774.474.079.789.694.691.893.8

92.391.090.991.191.992.491.091.291.092.3

92.992.092.292.791.691.591.190.191.091.5

90.090.490.189.8

90.590.391.891.1

92.192.190.791.1

5.0

4.64.1

- 1 . 3- 2 . 0

.73.75.45.31.13.7

5.111.823.625.025.519.79.54.37.15.0

6.37.67.67.26.45.77.06.77.05.6

4.95.85.64.96.06.06.47.46.56.0

7.57.07.47.7

6.97.25.66.3

5.35.36.76.4


194

TABLE C-16.—Total and per capita disposable personal income and personal consumptionexpenditures, in current and 1958 prices, 1929—69

Year or quarter

Disposable personal income

Total (billionsof dollars)

Currentprices

1958prices

Per capita(dollars)

Currentprices

1958prices

Personal consumption expenditures

Total (billionsof dollars)

Currentprices

1958prices

Per capita(dollars)

Currentprices

1958prices

Popu-lation(thou-

sands) i

1929. .

1 9 3 0 -1931- .1932.-1933 . .1934 . .1935 . .1936.-1937 . .1938. .1939.-

1940. .1941 . .1942 . .1943 . .1944. .1945. .1946. .1947. .1948. .1949. .

1950.-1951 . .1952. .1953. .1954. .1955. .1956. .1957. .1958. .1959. .

I960 . .1961. .1962. .1963. .1964. .1965. .1966. .1967 . .1968. .1969 v.

1967: I . . .II . . .III..IV..

1968: I . . .II . . .III..IV..

1969: I . . .II...III.IV»».

83.3

74.564.048.745.552.458.566.371.265.570.3

75.792.7

116.9133.5146.3150.2160.0169.8189.1188.6

206.9226.6238.3252.6257.4275.3293.2308.5318.8337.3

350.0364.4385.3404.6438.1473.2511.9546.5590.0629.6

150.6

139.0133.7115.1112.2120.4131.8148.4153.1143.6155.9

166.3190.3213.4222.8231.6229.7227.0218.0229.8230.8

249.6255.7263.3275.4278.3296.7309.3315.8318.8333.0

340.2350.7367.3381.3407.9435.0458.9477.7497.6509.4

683

605516390362414459518552504537

573695867976

1,0571,0741,1321,1781,2901,264

1,3641,4691,5181,5831,5851,6661,7431,8011,8311,905

1,9371,9832,0642,1362,2802,4322,5992,7452,9333,098

1,236

1,1281,077921893952

1,0351,1581,1871,1051,190

1,2591,4271,5821,6291,6731,6421,6061,5131,5671,547

1,6461,6571,6781,7261,7141,7951,8391,8441,8311,881

1,8831,9091,9682,0132,1232,2352,3312,3992,4742,507

77.2

69.960.548.645.851.355.761.966.563.966.8

70.880.688.599.3

108.3119.7143.4160.7173.6176.8

191.0206.3216.7230.0236.5254.4266.7281.4290.1311.2

325.2335.2355.1375.0401.2432.8466.3492.3536.6576.0

139.6

130.4126.1114.8112.8118.1125.5138.4143.1140.2148.2

155.7165.4161.4165.8171.4183.0203.5206.3210.8216.5

230.5232.8239.4250.8255.7274.2281.4288.2290.1307.3

316.1322.5338.4353.3373.7397.7418.1430.3452.6466.0

634

567487389364406437483516492510

536604656726782855

1,0141,1151,1841,185

1,2591,3371,3811,4411,4561,5391,5851,6431,6661,758

1,8001,8241,9021,9802,0882,2242,3682,4722,6682,834

1,145

1,0591,016919897934985

1,0801,1101,0791,131

1,1781,2401,1971,2131,2381,3081,4391,4311,4381,451

1,5201,5091,5251,5721,5751,6591,6731,6831,6661,735

1,7491,7551,8131,8651,9452,0442,1232,1612,2502,293

534.4541.6550.3559.8

575.0587.4593.4604.3

610.2622.0639.0647.1

471.6476.0479.4483.7

492.1497.4498.9502.1

502.6506.2514.1514.5


2,6942,7242,7602,799

2,8692,9242,9462,991

3,0143,0653,1403,171

2,3782,3942,4042,419

2,4552,4762,4772,485

2,4822,4942,5262,521

480.9489.8495.7502.6

520.6530.3544.9550.7

562.0572.8579.8589.2

424.4430.5431.9434.3

445.6449.0458.2457.6

462.9466.2466.5468.5

2,4252,4632,4862,513

2,5972,6402,7052,726

2,7762,8222,8492,887

2,1402,1652,1662,172

2,2232,2352,2752,265

2,2862,2972,2922,295

121,875

123,188124,149124,949125,690126,485127,362128,181128,961129,969131,028

132,122133,402134,860136,739138,397139,928141,389144,126146,631149,188

151,684154,287156,954159,565162,391165,275168,221171,274174,141177,073

180,684183,756186.656189,417192,120194,592196,907199,114201,152203,216

198,349198,845199,417199, 996

200,425200,899201,450202,015

202,472202,964203,507204,093

i Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960.Annual data are for July 1; quarterly data are for middle of period, interpolated from monthly data.

Sources: Department of Commerce (Office of Business Economics and Bureau of the Census) and Council of EconomicAdvisers.

195

TABLE C-17.—Sources of personal income, 1929-69


Year or quarter

1929

1930193119321933193419351936193719381939 . . .

1940194119421943194419451946194719481949

1950195119521953195419551955195719581959

I960196119621963 - -196419651966196719681969P .

1967' 1 - -II .III.IV

1968* 1IIIIIIV

1969: I . .IIIIIIV v

Totalper-

sonalincome

85.9

77.065.950.247.054.060.468.674.168.372.8

78.396.0

122.9151.3165.3171.1178.7191.3210.2207.2

227.6255.6272.5288.2290.1310.9333.0351.1361.2383.5

401.0416.8442.6465.5497.5538.9587.2629.4687.9747.1

615.2622.2634.5645.9

664.3680.1696.1711.2

724.4740.5756.5766.9

Wage and salary disbursementsl

Total

50.4

46.239.130.529.0

•33.736.741.946.143.045.9

49.862.182.1

105.6116.9117.5112.0123.0135.3134.6

146.7171.0185.1198.3196.5211.3227.8238.7239.9258.2

270.8278.1296.1311.1333.7358.9394.5423.5465.0509.8

413.2417.7426.5436.5

448.2459.0470.7482.1

493.3504.3516.9524.8

Commodity-producingindustries

Total

21.5

18.514.39.99.8

12.113.515.818.415.317.4

19.727.539.148.950.345.846.054.361.057.7

64.676.181.889.485.492.8

100.2103.899.7

109.1

112.5112.8120.8125.7134.1144.5159.3166.5181.5197.7

164.5163.9167.2170.6

175.7179.3183.0187.8

191.5196.5200.5202.1

Manu-factur-

ing

16.1

13.810.87.77.89.6

10.812.414.611.813.6

15.621.730.940.942.938.236.542.547.244.7

50.359.464.271.267.673.979.582.578.786.9

89.789.896.7

100.6107.2115.6128.1134.2145.9157.5

Distrib-utive

indus-tries

15.6

14.512.59 88.89.9

10.711.813.212.613.3

14.216.318.020.122.724.831.035.237.637.7

39.944.346.949.850.253.457.760.560 864.8

68.169.172.576.081.286.993.8

100.3109.2119.5

Serviceindus-tries

8.4

8.07.15.85.25.75.96.57.16.87.1

7.58.19.09.9

10.912.014.416.117.918.6

19.921.723.325.126.428.931.633.935.938.7

41.544.046.849.954.158.363.770.578.388.1

Gov-ern-ment

4.9

5.25.35.05.16.16.57.97.58.28.2

8.410.216.026.633.034.920.717.418.920.6

22.428.933.134.134.636.238.340.443.545.6

48.752.256.059.564.369.377.786.296.0

104.5


132.3132.3134.6137.4

141.2144.2147.4150.7

153.3156.6159.9160.3

97.999.4

101.0102.7

105.1107.9110.8113.1

115.5118.3121.1123.2

67.869.771.472.9

75.177.378.982.0

85.487.188.791.2

83.084.786.990.3

92.394.597.999.2

100.8102.4106.6108.4

Otherlabor

in-come1

0.6

.6

'5.4.4.5.6.66

.6

.7

.7

.91.11.51.81.92.32.73.0

3.84.85.36.06.37.38.49.59 9

11.3

12.012.713.914.916.618.720.722.124.226.2

21.821.922.322.6

23.423.924.525.0

25.526.026.426.9

Propriinco

Busi-nessand

profes-sional

9.0

7 65.83 63 34.75.56.77.2

" 6 9.7.4

8 611.114.017 018.219.221.620.322.722.6

24.026.127.127.527 630.331.332.833 235.1

34.235 637.137.940.242.445.247.249.250.2

46.547.147.847.5

48.449.249.349.7

49.750.150.550.4

e tors'me

Farm 2

6.2

4 33.42 12 63.05.34.36.04 44.4

4 56.49.8

11 711.612.214.915.217 512.7

13.515.815 013.012 411 411 411 313 41L4

12.012 813.013.112.114 816.114.714.616.1

14.314.714.814.9

14.814.314.814.4

14.916.416.816.3


I96

TABLE C—17.—Sources of personal income, 1929—69—Continued


Year orquarter

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

195019511952195319541955195619571958 -. .1959

I96019611962 . . .196319641965 _19661967. . . .19681969 v

1967: L. .IIIIIIV

1968: 1IIIIIIV

1969: 1IIIII . . . .IV p . . . .

Rentalincomeof per-sons

5.4

4.83.82.72.01.71.71.82.12.62.7

2.93.54.55.15.45.66.67.18.08.4

9.410.311.512.713.613.914.314.815.415.6

15.816.016.717.118.019.020.020.821.221.6

20.620.820.921.0

21.121.221.221.4

21.521.621.721.8

Divi-dends

5.8

5.54.12.52.02.62.84.54.73.23.8

4.04.44.34.44.64.65.66.37.07.2

8.88.68.68.99.3

10.511.311.711.612.6

13.413.815.216.517.819.820.821.523.124.6

21.121.722.021.1

22.222.923.623.8

23.824.324.925.2

Personalinterestincome

7.2

6.86.76.35.75.85.75.55.65.55.5

5.45.55.35.35.66.36.87.57.98.5

9.29.9

10.611.813.114.215.717.618.920.7

23.425.027.731.434.938.743.648.354.159.3

46.847.348.750.2

51.753.254.856.7

57.658.859.861.1

Total

1.5

1.52.72.22.12.22.43.52.42.83.0

3.13.13.13.03.66.2

11.311.711.212.4

15.112.513.014.016.017.318.521.425.726.6

28.532.433.335.336.739.944.152.059.265.5

50.751.652.253.3

56.358.760.161.6

63.664.966.167.2

Transfer payments

Old-age,survivors,disability,and healthinsurancebenefits

***

*0.1.1.2.2.3.4.5.6.7

1.01.92.23.03.64.95.77.38.5

10.2

11.112.614.315.216.018.120.825.730.333.1

Stateunem-ploy-

ment in-surancebenefits

*0.4.4

.5

.3

.3

.1

.1

.41.1.8.8

*1.7

1.4.8

1.01.02.01.41.41.83.92.5

2.84.02.92.82.62.21.82.12.12.1

Vet-erans'

benefits

0.6

.61.6.8.5.4.5

1.9.6.5.5

.5

.5

.5

.5

.92.86.76.75.85.1

4.93.93.93.73.94.34.34.44.64.6

4.64.84.85.05.35.65.76.67.28.2

Other

0.9

.91.11.41.61.81.91.61.81.92.0

2.02.22.22.22.42.73.13.74.14.9

7.95.96.06.36.56.87.27.98.79.4

10.010.911.212.212.914.015.717.619.722.0


24.525.826.026.4

28.230.330.931.8

32.432.933.333.7

2.12.12.22.0

2.21.92.12.0

2.21.92.22.2

6.56.56.56.8

7.17.27.17.3

7.88.28.48.6

17.717.117.518.1

18.919.420.020.5

21.321.922.222.6

Less:Personalcontri-butions

for socialinsur-ance

0.1

.1

.2

.2

.2

.2

.2

.2

.6

.6

.6

.7

.81.21.82.22.32.02.12.22.2

2.93.43.84.04.65.25.86.76.97.9

9.39.6

10.311.812.513.417.720.622.626.2

19.820.420.821.2

21.822.422.923.3

25.425.926.627.0

Non-agricul-

turalpersonalincome3

77.6

70.860.846.743.249.853.963.066.762.666.9

72.387.8

111.0137.3151.2156.4161.0173.0189.4191.3

210.9236.4254.1271.9274.7296.4318.5336.6344.3368.5

385.2400.0425.5448.1480.9519.5566.3609.7667.9725.1

595.8602.5614.5625.8

644.1660.4675.7691.2

703.7718.2733.9744.7

1 The total of wage and salary disbursements and other labor income differs from compensation of employees inTable C-12 in that it excludes employer contributions for social insurance and the excess of wage accruals over wagedisbursements.

2 Includes change in inventories.3 Nonagricultural-income is personal income exclusive of net income of unincorporated farm enterprises, farm wages,

agricultural net interest, and net dividends paid by agricultural corporations.


197

TABLE G-18.—Sources and uses of gross saving, 1929-69


Year or quarter

1929

1930193119321933193419351936193719381939

1940194119421943194419451946 .194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969*

1967: L_ _ ._._IIIIIIV

1968: LIIIIIIV

1969: 1IIIIIIV v

Gross

Total

16.3

11.85 1.8.9

3.26.67.2

11.97.08.8

13.618.610.75.52.55.2

35.142.049 935.9

50.456.149.547.548.564 872.771.259.273.8

77.575.585.090.5

101.0115.3124.9119.2128.4145.2

private saving and government surplus ornational income and product accounts

Private saving

Total

15.3

12.18.02.52.35.68.6

10.311.58.7

11.0

14.322.442.049.754.344.729.727.541.439.0

42.550.353.354.455.662.167.870.571.775.9

73.979.887.988.7

102.4113.1123.8133.7135.1136.2

Per-sonalsaving

4.2

3.42.6

- . 6- . 9

.42.13.63.8.7

2.6

3.811.027.633.437.329.615.27.3

13.49.4

13.117.318.118.316.415.820.620.722.319.1

17.021.221.619.926.228.432.540.438.437.6

Grossbusi-ness

saving

11.2

8.65.33.23.25.26.46.77.78.08.4

10.511.414.516.317.115.114.520.228.029.7

29.433.135.136.139.246.347.349.849.456.8

56.858.766.368.876.284.791.393.396.798.6

deficit,

Government surplusor deficit ( - )

Total

1.0

-2^9- 1 . 8- 1 . 4- 2 . 4- 2 . 0- 3 . 1

.3- 1 . 8- 2 . 2

- . 7- 3 . 8

-31 .4-44.1-51 .8-39 .5

5.414.48.5

- 3 . 2

7.85.8

- 3 . 8- 6 . 9- 7 . 0

2.74.9.7

-12 .5- 2 . 1

3.7- 4 . 3- 2 . 9

1.8- 1 . 4

2.21.1

-14 .5- 6 . 7

9.0

Fed-eral

1.2

.3- 2 . 1- 1 . 5- 1 . 3- 2 . 9- 2 . 6- 3 . 6- . 4

- 2 . 1- 2 . 2

- 1 . 3- 5 . 1

-33.1-46.6-54 .5-42.1

3.513.48.4

- 2 . 4

9.16.2

- 3 . 8- 7 . 0- 5 . 9

4.05.72.1

-10 .2- 1 . 2

3.5- 3 . 8- 3 . 8

- 3 . 01.2

- . 2-12.7- 5 . 2

9.7

Stateandlocal

- 0 . 2

- . 6- . 8- . 3

~!5.6.5.7.4

(2)

.61.31.82.52.72.61.91.0.1

- . 7

-1 .2- . 4(3 )

1-1 .1-1 .3- . 9

-1 .4-2 .3- . 8

.2- . 5

.91.21.71.01.3

-1 .8-1 .5

Gross investment

Total

17.0

11.05 81 i1.63.86.48.4

11 87.6

10.2

14 619.09.63.55 09 1

35.242.947 936.2

51.859.551 650.551.366 971.671.260.773.0

76.574.785.590.399.7

112.2123.9118.3125.9139.0

Grossprivatedomes-tic in-vest-ment

16.2

10.35 61 01.43.36.48.5

11 86.59.3

13 117 99.85.77 1

10 630.634.046 035.7

54.159.351.952.651.767 470.067.860.975.3

74.871.783.087.194.0

108.1121.4116.0126.3139.6

Netforeigninvest-ment i

0.8

.722

.2

.4- . 1- . 1

11.1.9

1 51 l

- . 2-2 .2—2 1- 1 4

4.68.91 9.5

-2 .2.2

- 3-2 .1- . 5- 51.53.4

- . 2-2 .3

1.73.02.53.15.74.12.42.2

- . 3- . 6

Statis-ticaldis-

crep-ancy

0.7

- . 873

.6

.5- . 21.2

*.6

1.3

1 04

-1 .1-2 .0

2 53 9.1.9

—2 0.3

1.53 32 23 02.72 1

- 1 1

1.6- . 8

-1 .0— 8

-*3-1 .3- 3 1-1 .0-1 .0-2 .5-6 .2


117.5113.6119.9125.6

120.5128.8129.1135.4

138.4142.7150 2

131.6129.6134.5139.0

132.0139.6132.6136.3

130.2131.3142.8

40.037.740.743.1

39.942.333.238.0

32.533.343.141.6

91.691.993.895.9

92.197.299.398.3

97.798.099.7

-14.1-16 .0-14.6-13 .4

-11 .5-10 .8- 3 . 5- . 9

8.311.47.4

-12 .0-13 .2-13 .4-12 .3

- 8 . 4- 9 . 5- 2 . 8- . 1

10.113.57.7

-2 .1-2 .8-1 .3-1 .0

-3 .1-1 .3- . 7- . 8

-1 .8-2 .1

2

116.3112.0120.0124.5

118.7127.2125.8132.0

134.2136.2143 3142.3

113.6109.4117.7123.3

119.4126.6125.2133.9

135.2137.4143.3142.4

2.72.52.31.3

- . 7.6.6

-1 .9

-1 .0-1 .2

.0- . 1

-1 .2-1 .7

.1-1 .1

-1 .8-1 .6- 3 . 3-3 .4

-4 .2-6 .5-6 .9

1 Net exports of goods and services less net transfers to foreigners.2 Surplus of $32 million.3 Deficit of $41 million.

Note.—Corporate profits tax and related items for 1969 reflect repeal of investment tax credit.


198

TABLE C-19.—Saving by individuals, 1946-69 *


Year orquarter

1946194719481949

1950195119521953195419551956195719581959

196019611962196319641965196619671968

1967" 1I I . . .III. .IV...

1968: l . . ._I I . . .III . .IV...

1969: I . . . .I I . . .III . .

Total

25.420.723.919.2

27.330.326.329.927.933.734.933.532.333.2

28.930.937.337.745.052.554.561.759.9

14.47.2

19.220.3

16.34.7

18.518.1

16.25.1

20.8

Increase in financial assets

Total 2

18.413.39.2

10.0

13.718.021.922.122.328.028.828.131.035.0

28.334.339.343.751.356.052.866.766.6

11.812.320.721.1

13.511.019.819.3

14.49.8

21.2

Cur-

de-mandde-

posits

4.8- . 5

- 2 . 5- 1 . 9

2.24.61.7.5

1.8.8

1.2- . 53.2

.5

- 1 . 4.7

Z- 94*36.57.33.1

10.210.7

- 1 . 12.03.76.9

- 5 . 0*

6.25.7

- 4 . 62.53.8

Sav-ingsac-

ounts

6.33.42.32.6

2.54.57.78.39.28.89.5

12.114.011.4

12.417.423.423.023.926.419.132.527.7

9.010.08.05.5

8.15.76.37.7

7.52.9

- 2 . 1

Securities

Gov-ern-ment

bonds3

- 1 . 12.31.21.8

.3- . 51.42.41.05.93.41.9

- 1 . 57.9

2.9.7.8

4.34.24.47.8

- . 66.9

- 1 . 5- 4 . 7

3.6.5

3.9- . 83.2

.7

5.7- 1 . 012.3

Corpo-rateandfor-eign

bonds

- 0 . 9- . 8- . 2- . 4

- . 8- . 2- . 1

- . 41.1.9

1.0.7.6

*.4

5- ! 6- . 5

.82.04.64.0

.7

.61.31.5

.61.6.9

1.3

.9

.82.5

Corpo-rate

stock4

1.11.11.0.8

.7

1 6!9.7

1.12.01.51.5.6

- . 4.4

2 0- 2 ! 7- . 1

- 1 . 9- 1 . 0- 4 . 9- 7 . 7

- . 8- 2 . 2- 1 . 6- . 2

.7- 2 . 4- 2 . 6- 3 . 3

.3- 2 . 2- 1 . 2

Insur-anceandpen-sionre-

serves(°5.35.35.25.5

6.96.27.77.97.98.49.69.5

10.011.4

11.612.212.813.915.217.118.120.119.3

4.45.75.05.0

4.35.44.85.0

4.15.95.1

Net investment in

Non-farm

homes

4.87.9

11.210.1

15.213.913.414.014.818.416.714.514.118.2

15.814.516.517.517.717.516.014.319.2

2.62.84.34.7

4.04.35.35.4

4.74.85.3

Con-sumer

du-rables

5.87.57.17.0

10.25.53.66.44.99.95.94.9.6

5.5

5.12.96.78.9

11.214.815.212.416.9

.83.82.15.7

1.74.43.37.5

2.25.02.8

Non-cor-po-rate

busi-ness

assets

2.72.26.61.4

4.94.31.91.11.62.71.61.61.91.4

.8

.61.82.11.03.42.72.01.3

.8

.6

.3

.2

.9

.7- . 3

*

.4

.42

Less

Mort-gagedebton

non-farm

homes

4.14.74.94.2

7.56.87.07.69.0

12.311.08.79.1

12.6

10.511.012.714.915.815.311.811.115.0

1.62.03.44.0

3.53.53.74.3

3.74.14.1

Increase indebt

Con-sumercredit

2.73.22.82.9

4 11.24.83.91.16.43.52.6.2

6.4

4.61.85.87.98.5

10.07.24.6

11.1

- 2 32.11.33.5

- 1 . 23.63.05.6

- 1 . 24.01.6

Otherdebt9

- 0 . 42.32.72.2

5.13.22.72.25.76.73.74.36.07.8

6.08.68 4

11.611.913.913.118.118.0

? 28.13.63.9

1.58.52.84.3

3.06.72.6

1 Individuals'saving sector includes households, private trust funds, nonprofit institutions, farms, and other noncorporatebusinesses. Revisions in account structure and estimation procedure are reflected in these data.

2 Includes miscellaneous financial assets not shown separately.3 U.S. Government and agency securities and State and local obligations.4 Includes investment company shares.5 Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and

pension reserves.6 Security credit, policy loans, noncorporate business debt, and other debt.Sources: Securities and Exchange Commission and Board of Governors of the Federal Reserve System.

199

TABLE C-20.—Number and money income (in 1968 prices) of families and unrelated individuals,by race of heady 1947-68

Year

FAMIUES:i1947—19481949 .

1950...195119521953-1954...195519561957...19581959

1960196119621963—1964 . . . .19651966.

19662 _1967 219682

UNRELATEDINDIVIDUALS^194719481949

1950...19511952...1953 .1954195519561957—19581959

1960196119621963196419651966

1966 21967 21968 2

Total

Totalnum-ber

(mil-lions)

37.238.639 3

39.940.640 841 242.042.9.43.543.744.245.1

45.546 347.047.447.848 348.9

49.149.850.5

8.28.49 0

9.49 19.79.59.79.99.8

10.410.910 9

11.111.211.011.212.112.112.4

12 313.113.8

Medianincome

$4,7164,6134,537

4,8044,9655,1055,5245,4025,7446,1206,1316,1206,472

6,6046 6716,8517,1017,3677 6667,971

8,0408,3188,632

1,5381,4631,532

1,5121 5981,8531,8221,5851,7181,8351,8821,8441 891

2,0212,0412 0172,0522,2352,3842,438

2,4912,786

With incomesunder $3,000

Num-ber

(mil-lions)

9.710.311 0

10.49.99 49.09.89.08.38.58.68.1

8.18 37.87.57.16 86.4

6.25.95.2

Per-cent

26.026.728 0

26.124.323.121.923.420.919.119.419.418.0

17.918 016.7

"15.814.914 113.0

12.711.810.3


Num-ber

(mil-lions)

4.04.34.5

4.74 44.24.34.74.54.34.54.84 6

4.54.54 34.34.54.14.1

4.34.0

Per-cent

49.351.149.6

49.848 643.745.248.645.944.242.943.642 5

40.940.038.838.336.933.933.3

32.828.8

White

Totalnum-ber

(mil-lions)

34.135.3

38.239.039.539.740.240.9

41.141 942.442.743.143 544.0

44.144.845.4

7.27.3

8.28.58.58.99.29.3

9.69.69.59.7

10.410.510.8

10 711.312.0

Medianincome

$4,9164,7904,718

4,9855,1735,4025,7335,6295,9916,4046,3796,3776,742

6,8576,9577,1707,4437,6917 9958,290

8,3668,6258,937

1,6341,5241,654

1,6131,6821,9921,9231,7101,8301,8871,9811,9401,991

2,1872,2032,1742,1662,3542,4782,536

2,6072,952


Num-ber

(mil-lions)

7.88.4

8.07.26.56.76.76.3

6.46 46.05.75.55 35.0

4.84.64.0

Per-cent

22.823.525.2

23.421.220.019.420.918.416.416.616.615.5

15.515.314.413.513.112 111.3

11.010.28.9


Num-ber

(mil-lions)

3.43.6

3.83.73.63.73.93.7

3.73.63.53.53.73.43.4

3.63.3

Per-cent

47.949.647.7

48.447.642.044.146.544.043.041.041.840.0

38.637.736.636.535.232.632.0

31.427.2

Negro and other races

Totalnum-ber

(mil-lions)

3.13.3

3.83.94.04.04.04.2

4.34 54.64.84.84 84.9

5.05.05.1

1.01.1

1.51.41.31.51.61.6

1.51.61.51.51.61.71.6

1.61.81.8

Medianincome

$2,5142,5592 414

2,7042,7253,0643,2293,1263,3203,3803,4213,2703,482

3,7943 7093,8253,9404,3034 4194,945

4,9945,3525,590

1,1631,1481,205

1,1901 2991,3891,5041,1841,2641,4481,3541,3451,351

1,3321,3701,4461,4751,6631,8471,866

1,9171,999


Num-ber

(mil-lions)

1.91.9

1.81.81.81.81.91.8

1.71 91.81.81.61.51.4

1.41.31.2

Per-cent

60.058.060.8

55.454.948.846.448.445.744.444.946.843.8

40.541.238.337.432.831.427.8

27.625.922.8


Num-ber

(mil-lions)

0.6.7

.9

.8

.7

.8

.9

.9

.8

.9

.8

.8

.8

.7

.7

.7

.7

Per-cent

59.862.160.3

59.055.153.549.959.957.251.554.754.754.2

55.254.051.850.747.042.842.8

41.639.5

1 The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing to-gether; all such persons are considered members of the same family.

2 Based on revised methodology.3 The term "Unrelated individuals" refers to persons 14 years old and over (other than inmates of institutions) who are

not living with any relatives.

Source: Department of Commerce, Bureau of the Census.

200

POPULATION, EMPLOYMENT, WAGES, ANDPRODUCTIVITY

TABLE G-21.—Population by age groups: Estimates, 1929-69, and projections, 1970-85l

[Thousands of persons]

July 1

Estimates:1929

1930.19311932..1933.11934

19351936193719381939

19401941194219431944

1945.1946194719481949

19501951195219531954

19551956195719581959

1960...19611962.1963..1964

19651966.19671968.//19694

Projections:1

1970: Series CSeries D

1975: Series C. ._.Series D . . . .

1980: Series C.___Series D

1985: Series C . . .Series D___.

Total

121,767

123,077124,040124,840125,579126,374

127,?50128,053128,825129,825130,880

132,122133,402134,860136,739138,397

139,928141,389144,126146,631149,188

152,271154,878157,553160,184163,026

165,931168,903171,984174,882177,830

180,684183,756186.656189,417192,120

194,592196,92fr<|>7199,11-8-201,1^6^203,216

206,039204,923

219,366215,367

235,212227,665

252,871241,731

Age (years) 7Under 5

11,734

11,37211,17910,90310,61210,331

10,17010,04410, 00910,17610,418

10,57910, 85011,30112,01612,524

12,97913,24414,40614,91915,607

16,41017,33317,31217,63818,057

18, 56619,00319,49419,88720,175

20,36420,65720,74620,75020,670

20,40419,81119,19118,52117,960

18,74017,625

21,21118,323

24,29820,736

26,64523,030

5-15

26,800

26,98326,98426,96926,89726,796

26,64526,41526,06225,63125,179

24,81124,51624,23124,09323,949

23,90724,10324,46825,20925,852

26,72127,27928,89430,22731,480

32,68233,99435,27236,44537,368

38,50439,76841,16841,62042,294

42,96343,82244,48844,97745,260

\ 45,273

43,83642,726

44,36040,376

49,94443,123

16-19

9,127

9,2209,2599,2849,3029,331

9,3819,4619,5789,7179,822

9,8959,8409,7309,6079,561

9,3619,1199,0978,9528,788

8,5428,4468,4148,4608,637

8,7448,9169,1959,543

10,215

10,69811,09311,25812,06112,819

13,56314,30414,16714,33814,655

20-24

10,694

10,91511,00311,07711,15211,238

11,31711,37511,41111,45311,519

11,69011,80711,95512,06412,062

12,03612,00411,81411,79411,700

11,68011,55211,35011,06210,832

10,71410,61610,60310,75610,969

11,11611,40811,88912,62013,154

13,67914,06315,19715,78816,484

} 15,087|/j 17,261

} 16,614

) 16,9401

15,213 i14,509 |

} 19,299

} 20,997

} 21,068

25-44

35,862

36,30936,65436,98837,31937,662

37,98738,28838,58938,95439,354

39,86840,38340, °6141,42042,016

42, 52143,02743,65744,28844,916

45,67246,10346,49546,78647,001

47,19447,37947,44047,33747,192

47,13447,06146,96846,93246,881

46,80746,85547,07747,61447,994

} 48,276

53,881

62,374

72,083

45-64

21,076

21,57322,03122,47322,93323,435

23,94724,44424,91725,38725,823

26,24926,71827,19627,67128,138

28,63029,06429,49829,93130,405

30,84931,36231,88432,39432,942

33,50634,05734,59135,10935,663

36,20836,75637,31637,86938,438

39,01539,60140,19440,76841,393

} 41,817

43,364

43,180

42,940

65 andover

6,474

6,7056,9287,1477,3637,582

7,8048,0278,2588,5088,764

9,0319,2889,5849,86710,147

10,49410,82811,18511,53811,921

12,39712,80313,20313,61714,076

14,52514,93815,38815,80616,248

16,65917,01317,31117,56517,863

18,16218,46418,79619,12919,470

19,585

} 21,159

} 23,063

24,978

i Two of four series projected by the cohort method and based on different assumptions with regard to completedfertility, which moves gradually toward a level of 2,775 children per 1,000 women for Series C and 2,450 children per1,000 women for Series D. For further explanation of method of projection and for additional data, see "Population Esti-mates, Current Population Reports, Series P-25, No. 381," December 1967.

Note.—Data for Armed Forces overseas included beginning 1940. Includes Alaska and Hawaii beginning 1950>>


201

TABLE G-22.—Noninstitutional population and the labor force, 1929-69

Year or month

Nonin-stitu-tionalpopu-lation

Totallaborforce

(includ-ing

ArmedForces)

ArmedForces

Civilian labor force

Total

Employment

TotalAgri-cul-tural

Non-agri-cul-tural

Unem-ploy-ment

Totallabor

force aspercentof non-institu-tionalpopu-lation

Unem-ploy-ment

as per-cent ofcivilian

laborforce

1929..

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

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

1940..1941..1942.1943.1944.

1945.1946.1947.

1947..1948..1949..

1950..1951..1952..1953..1954..

1955..1956..1957..1958..1959..

I960..1961..1962..1963.1964.

1965.1966.1967.1968.1969.

1968:Jan.. .Feb...Mar . .Apr...May..June..

July..Aug..Sept..Oct...Nov..Dec...

Thousands of persons 14 years of age and over Percent

100,380101,520102,610103,660104,630

105,530106,520107,608

49,440

50,08050,68051,25051,84052,490

53,14053,74054,32054,95055,600

56,18057,53060,38064,56066,040

65,30060,97061,758

260

260260250250260

270300320340370

5401,6203,9709,02011,410

11,4403,4501,590

49,180 47,630

49,82050,42051,00051,59052,230

52,87053,44054,00054,61055,230

55,64055,91056,41055,54054,630

53,86057,52060,168

45,48042,40038,94038,76040,890

42,26044,41046,30044,22045,750

47,52050,35053,75054,47053,960

52,82055,25057,812

10,450 37,180

10,34010,29010,17010,0909,900

10,11010,0009,8209,6909,610

9,5409,1009,2509,0808,950

8,5808,3208,256

35,14032,11028,77028,67030,990

32,15034,41036,48034,53036,140

37,98041,25044,50045,39045,010

44,24046,93049,557

1,550

4,3408,02012,06012,83011,340

10,6109,0307,70010,3909,480

8,1205,5602,6601,070

670

1,0402,2702,356

56.056.758.862.363.1

61.957.257.4

3.2

8.715.923.624.921.7

20.116.914.319.017.2

14.69.94.71.91.2

1.93.93.9

Thousands of persons 16 years of age and over Percent

103,418104,527105,611

106,645107,721108,823110,601111,671

112,732113,811115,065116,363117,881

119,759121,343122,981125,154127,224

129,236131,180133,319135,562137,841

134,576134,744134.904135,059135,249135,440

135,639135,839136,036136,221136,420136,619

60,94162,08062,903

63,85865,11765,73066,56066,993

68,07269,40969,72970,27570,921

72,14273,03173,44274,57175,830

77,17878,89380,79382,27284,239

79,81180,86980,93881,14181,77084,454

84,55083,79282,13782,47782,70282,618

1,5911,4591,617

1,6503,1003,5923,5453,350

3,0492,8572,8002,6362,552

2,5142,5722,8282,7382,739

2,7233,1233,4463,5353,506

3,4643,4673,4913,5073,5363,567

3,5863,5893,5913,6033,5173,500

59,35060,62161,286

62,20862,01762,13863,01563,643

65,02366,55266,92967,63968,369

69,62870,45970,61471,83373,091

74,45575,77077,34778,73780,733

76,34777,40277,44777,63478,23480,887

80,96480,20378,54678,874

! 79,18579,118

57,03958,34457,649

58,92059,96260,25461,18160,110

62,17163,80264,07163,03664,630

65,77865,74666,70267,76269,305

71,08872,89574,37275,92077,902

73,27374,11474,51775,14375,93177,273

77,74677,43275,93976,36476,60976,700

7,8917,6297,656

7,1606,7266,5016,2616,206

6,4496,2835,9475,5865,565

5,4585,2004,9444,6874,523

4,3613,9793,8443,8173,606

3,3663,4623,5373,8513,9964,516

4,4764,1073,8363,7673,6073,279

49,14850,71349,990

51,76053,23953,75354,92253,903

55,72457,51758,12357,45059,065

60,31860,54661,75963,07664,782

66,72668,91570,52772,10374,296

69,90870,65370,98071,29271,93572,757

73,27073,32572,10372,59673,00173,421

2,3112,2763,637

3,2882,0551,8831,8343,532

2,8522,7502,8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,831

3,0743,2882,9292,4912,3033,614

3,2172,7722,6062,5112,5772,419

58.959.459.6

59.960.460.460.260.0

60.461.060.660.460.2

60.260.259.759.659.6

59.760.160.660.761.1

59.360.060.060.160.562.4

62.361.760.460.560.660.5

3.93.85.9

5.33.33.02.95.5

4.44.14.36.85.5

5.56.75.55.75.2

4.53.83.83.63.5

4.04.23.83.22.94.5

4.03.53.33.23.33.1


202

TABLE G-22.—Noninstitutional population and the labor force, 1929-69—Continued

Year or month

1969:Jan..Feb.Mar_Apr-May.June

July.Aug.Sept.Oct.Nov.Dec.

1968:Jan.. .Feb...Mar . .Apr.. .May. .June..

July._Aug. .Sept..Oct. . .Nov..Dec...

1969: Jan...Feb. .Mar__Apr . .May._June.

Ju ly -Aug__Sept..Oct...Nov._D e c .

Nonin-stitu-tionalpopu-lation

Totallaborforce

(includ-ing

ArmedForces)

ArmedForces

Civilian labor force

Total

Employment

TotalAgri-cul-tural

Non-agri-cul-tural

Unem-ploy-ment

Thousands of persons 16 years of age and over

136,802136,940137,143137,337137,549137,737

137,935138,127138,317138,539138,732138,928

81,71182,57982,77083,13783,08585,880

86,31886,04684,52785, 03884,92084,856

3,4773,4753,5043,5163,5223,524

3,5213,5303,5433,5283,4933,440

78,23479,10479,26679,62179, 56382,356

82,79782.51680,98481,51081,42781,416

75,35876,18176, 52077,07977,26478,956

79,61679,64678,02678,67178,71678,788

3,1653,2853,3273,6073,8944,367

4,1553,9773,6293,5613,3222,984

72,19272,89673,19373,47173,37074, 589

75,46075,66974,39775,11075,39575,805

2,8762,9232,7462,5422,2993,400

3,1822,8692,9582,8392,7102,628

Totallabor

force aspercentof non-institu-tionalpopu-lation

Unem-ploy-ment

as per-cent ofcivilian

laborforce

Seasonally adjusted

81,34482,03582,13781,93382,27882,486

82,50482,33882,43882,40382,55982,868

83,35183,83183,99983,96683,59383,957

84,27784,58484,90285,01484,78885,029

77,88178, 56978,64578,42778,74278,919

78,91778,74978,84778,80079,04279,368

79,87480,35680,49580,45080,07180,433

80,75681,05481,35981,48681,29581,589

75, 08675,64075,76475,65375,93276,005

76, 02075,97376,00076, 00276,38876,765

77,22977,72977,76777,60577,26577,671

77,87478,18778,12778,32578,49778,779

3,9624,0743,9783,9163,9053,849

3,8253,7513,6513,5253,7063,842

3,7523,8813,7323,6643,8053,705

3,5513,6343,4583,3323,4293,505

71,12471,56671,78671,73772,02772,156

72,19572,22272,34972,47772,68272,923

73,47773,84874,03573,94173,46073,966

74,32374,55374,66974,99375,06875,274

2,7952,9292,8812,7742,8102,914

2,8972,7762,8472,7982,6542,603

2,6452,6272,7282,8452,8062,762

2,8822,8673,2323,1612,7982,810

Percent

59.760.360.460.560.462.4

62.662.361.161.461.261.1

3.73.73.53.22.94.1

3.83.53.73.53.33.2

3.63.73.73.53.63.7

3.73.53.63.63.43.3

3.33.33.43.53.53.4

3.63.54.03.93.43.4

Note.—Labor force data in Tables C-22 through C-25 are based on household interviews and relate to the calendarweek including the 12th of the month. For definitions of terms, area samples used, historical comparability of the datacomparability with other series, etc., see "Employment and Earnings."


203

TABLE C-23.—Civilian employment and unemployment, by sex and age, 1947-69

[Thousands of persons 16 years of age and over]

Year ormonth

Employment

Total

Males

Total 16-19years

20yearsandover

Females

Total 16-19years

20yearsandover

Unemployment

Total

Males

Total 16-19years

20yearsandover

Females

Total 16-19years

20yearsandover

1947. . . .19481949

1950.1951.1952..1953.1954..

1955.1956.1957.1958.1959.

57,039 40,99458,344 41,72657,649 40,926

58,920 41,58059,962141,78060,254 41,68461,181 42,43160,110 41,620

62,17142,62163,802143,380

2,218 38,776 16,0452,34539,382 16,6182,124 38,803 16,723

64,071 43,35763,036 42,42364,630 43,466

1960 \§5J7S 43,9041961 d65774is}43,6561962 1667702144,1771963 67,762 44,6571964 69,305|45,474

2,186 39,2,156 39,2,106 39,2,135 40,1,985 39,

2,095 40,2,164 412,117 412,012 40;2,198 41

1965 71,088 46,3401966 172,89546,9191967 ,74,372' 47,4791968 ^ 9 2 0 48,1141969 4^902,48,818

1,6911,683 14;1,588

14,354 2,311 1,69214,937 2,276 1,55915,137 3,637 2,572

1,394 17,3401,626 18,1821,578 18,5701,296 18,7501,634 18,490

1,526 19,550,216 20,422,239120,7141,411,20,613,267 21,164

517 15,824 3,288 2,23916,570! 2,055 1,221

612 16,958; 1,883! 1,18517,164 1,834 1,20217,000 3,532 2,344

1968:Jan.Feb.Mar.Apr.Vlay.June.

AprMay

July..Aug...Sept..Oct. . .Nov.-Dec...

1969:Jan...Feb...M a r -Apr...May..June..

July..Aug...Sept..Oct...Nov...Dec...

75,086 47,75275,640 47,98675,764 48,03475,653 48,05875,932 48,07376,005 48,102

76,020 48,162

2,360 41,543 2;" " * U l , 3 4 2 r. 141,815 .

J, 406 42,251 23,1052,587 42,886 23,831

2,918 43,422 24,7483,252 43,667 25,9763,186 44,293126,8933,254 44,859l27^J073'430|45v

548 18,002654 18,767663 19,052570 19,043640 19,524

1,769 20,105* — 20,296

20,693849 21,257929 21,903

2,118 22,6302,469 23,5072,496 24,3972,525! 25,281

) 2,687 26,397

2,8522,7502.8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,831

1,8541,7111,8413,0982,420

2,4862,9972,4232,4722,205

1,9141,5511,5081,4191,403

270255352

318191205184310

274269299416398

425479407500487

479432448427441

1,4221,3052,219

1,9221,029980

1,0192,035

1,5801,4421,5412,6812,022

2,0602,5182,0161,9711,718

1,4351,1191,060993963

619717

1,065

1,049834698632

1,188

998,039,018,504,320

,366,717,4881,5981,581

1,4521,3241,4681,3971,428

Seasonally adjusted

75,973 48,20376,000 48,12076,002 48,03076,388 48,23576,765 48,579

77,229 48,68677,729 48,87577,767 48, —77,605 48,77,265 48,77,671

,9191,766,609

48,653

77,874 48,63877,187 48,86478,127 48,93978,325 48,82578,497 49,03678,779 49,111

3,064 44,688 27,3343,216 44,770 27,6543,257 44,777 27,7303,278 44,780 27,5953,286 44,787 27,8593,24144,86127,903

3,249 44,913 27,858. 27,770

3,262 44,858 27,8803,257 44,773 27,9723,295 44,940 28,1533,325 45,254 28,186

28,5433,455 45,231 ,3,453 45,422 28 , , .3,497 45,422 28,8483,48145,285 28,8393,382 45,227 28,6563,393 45,

3,345 45,293 29,2363,313 45,55129,3233,497 45,442 29,1883,401 45,424 29,5003,549 45,487 29,4753,502 45,609 29,670

2,558 24,7762,615 25,0392,603 25,1272,567 25, 0282,578 25,2812,592 25,311

2,517 25,3412,530 25,2402,505 25,3752,477 25,4952,45125,7022,384 25,802

2,544 25,9992,590 26,2642,620 26,2282,670:26,1692,610 26,0462,767 26,251

2,73126,5052,701 26,6222,669 26,5192,789 26,7112,780 26,6952,738 26,932

144152223

195145140123191

176209197262256

286349313383386

395404390412412

475564841

854689559510997

823832821

1,2421,063

1,3681,1751,2161,195

1,056919

1,078985

1,015

2,7952,9292,8812,7742,8102,914

2,8972,7762,8472,7982,6542,603

2,6452,6272,7282,8452,8062,762

2,8822,8673,2323,1612,7982,810

1,4561,4911,4591,3851,3821,498

L,434[,3881,4061,4411,3511,276

1,3611,2831,3301,3561,3601,341

1,4851,3701,6081,6011.4611,448

417438441406399456

431403401432420437

461425455446416395

456414482473459437

1,0391,0531,018979983

1,042

1,003985

1,0051,009931839

900858875910944946

1,029956

1,1261,1281,0021,011

1,3391,4381,4221,3891,4281,416

1,4631,3881,4411,3571,3031,327

1,2841,3441,3981,4891,4461,421

1,3971,4971,6241,5601,3371,362

320412437421450442

450412422372375392

333378437453443410

391442457454372402

1,0191,026985968978974

1,013976

1,019985928935

951966961

1,0361,0031,011

1,0061,0551,1671,106

965960

Note—See Note, Table C-22.


204

TABLE C-24.—Selected unemployment rates, 1948-69

[Percent]

Year or month

1948.1949.

1950.1951.1952.1953.1954.

1955.1956.1957.1958.1959.

1960.1961.1962.1963.1964.

1965.1966.1967.19681969.

1968:Jan..Feb..Mar_Apr..May.June.

July.Aug.Sept.Oct..Nov.Dec.

1969:Jan..Feb.Mar.Apr..May.June

July.Aug.Sept.Oct..Nov.Dec.

Allwork-

ers

3.85.9

5.33.33.02.95.5

4.44.14.36.85.5

5.56.75.55.7:5

3.83.83.63.5

By sex and age

Bothsexes,16-19years

9.213.4

12.28.28.57.6

12.6

11.011.111.615.914.6

14.716.814.717.216.2

14.812.812.812.712.2

Men,20

yearsandover

3.25.4

4.72.52.42.54.9

3.83.43.66.24.7

4.75.74.64.53.9

3.22.52.32.22.1

Wom-en, 20yearsandover

3.65.3

5.14.03.22.95.5

4.44.24.16.15.2

5.16.35.45.45.2

4.53.84.23.83.7

By color

White

3 55.64.93.12.82.75.0

3.93.63.86.14.8

4.96.04.95.04.6

4.13.43.43.23.1

Negroand

otherraces

5.9

9.05.35.44.59.9

8.78.37.9

12.610.7

10.212.410.910.89.6

8.17.37.46.76.4

By selected groups

Expe-riencedwageand

salaryworkers

3.76.2

5.63.22.92.66.2

4.84.44.67.25.7

5.76.85.65.55.0

4.33.53.63.43.3

Mar-ried

men*

3.5

4.61.51.41.74.0

2.62.32.85.13.6

3.74.63.63.42.8

2.41.91.81.61.5

Full-time

work-ers 2

5.4

5.02.62.5

5.2

3.83.74.07.2

6.7

5.44.8

4.23.43.53.13.1

Blue-collarwork-ers 3

4.28.0

7.23.93.63.47.2

5.85.16.2

10.27.6

7.89.27.47.36.3

5.34.24.44.13.9

Laborforce

time lost*

Seasonally adjusted

3.63.73.73.53.63.7

3.73.53.63.63.43.3

3.33.33.43.53.53.4

3.63.54.03.93.43.4

11.612.713.012.412.613.3

13.312.312.512.312.212.7

11.711.712.712.812.511.6

12.212.513.213.011.611.9

2.32.32.22.12.12.3

2.22.12,22.22.01.8

2.01.91.92.02.02.0

2.22.12.42.42.22.2

4.03.93.83.73.73.7

3.83.73.93.73.53.5

3.53.53.53.83.73.7

3.73.84.24.03.53.4

3.23.33.23.13.23.3

3.33.23.23.13.03.0

3.02.93.13.13.13.0

3.23.23.63.53.13.2

6.67.16.96.86.57.1

6.86.46.67.36.56.0

6.05.76.06.96.57.0

6.46.56.86.96.25.5

3.43.53.43.33.23.5

3.53.33.43.33.23.1

3.13.03.13.23.13.2

3.53.53.83.63.33.3

1.71.71.71.61.61.7

1.61.61.61.61.61.4

1.41.41.41.51.51.5

1.61.51.71.71.51.6

3.33.33.23.13.13.2

3.33.13.03.03.02.7

2.92.82.93.23.13.1

3.13.13.43.23.03.1

4.34.44.44.03.84.1

4.34.24.14.03.93.6

3.83.63.74.13.83.7

3.83.84.44.34.24.3

5.15.38.16.6

6.78.06.76.45.8

5.04.24.24.03.9

4.14.24.03.83.74.1

4.24.04.03.93.83.6

3.63.63.73.73.53.9

4.14.14.44.44.03.8

* Married men living with their wives. Data for 1949 and 1951-54 are for April; 1950, for March.2 Data for 1949-61 are for May.3 Includes craftsmen, operatives, and nonfarm laborers. Data for 1948-57 are based on data for January, April, July,

and October.< Man-hours lost by the unemployed and persons on part time for economic reasons as a percent of potentially available

labor force man-hours.

Note.-See Note, Table C-22.


372-111 O—70205

TABLE G-25.— Unemployment by duration, 1947-69

Year or month

194719481949

19501951195219531954 . . . .

19551956195719581959

1960 '._196119621963 _ . .1964 . .

19651966196719681969 . _ _ __..

1968:Jan. „ .FebMarAprMayJune _ _ _ _ _ _ _ __ _

JulyAug _ _ _SeptOctNovDec

1969:JanFeb. - ._ _ _MarApr __ _ ___ __MayJune _ _ _ _ _ _ _ _ _ _ _

July. . _AugSeptoct : : : _ : : : _ _ _ _ : _ _NovDec

Total un-employ-

ment

Duration of unemployment

Less than5 weeks

5-14weeks

15-26weeks

27 weeksand over

Thousands of persons 16 years of age and over

2,3112,2763,637

3,2882,0551,8831,8343,532

2,8522,7502,8594,6023,740

3,8524,7143,9114,0703,786

3,3662,8752,9752,8172,831

1,2101,3001,756

1,4501,1771,1351,1421,605

1,3351,4121,4081,7531,585

1,7191,8061,6591,7511,697

1,6281,5351,6351,5941,629

704669

1,194

1,055574516482

1,116

815805891

1,3961,114

1,1761,3761,1341,2311,117

983804893810829

234193427

425166148132495

367301321785469

502728534535490

404295271256242

164111256

3571378478

317

336232239667571

454804585553482

351241177156133

Seasonally adjustedl

2,7952,9292,8812,7742,8102,914

2,8972,7762,8472,7982,6542,603

2,6452,6272,7282,8452,8062,762

2,8822,8673,2323,1612,7982,810

1,3801,7071,7031,5421,6811,701

1,6571,6291,6311,5421,5761,363

1,4761,4361,6461,7241,7771,591

1,6771,6361,8181,8571,5641,436

855808768829711830

844765811892785825

741829757737629813

830861

1,000948910910

290285111244278260

295238235253221177

193237237254278258

244244233240244262

181168177158140163

175162138128127145

123109118139131125

175138156130140120

I Because of independent seasonal adjustment of the various series, detail will not necessarily add to totals.

Note.—See Note, Table C-22.


206

T A B L E

Year or month

19401941 .- .1942194319441945 . . .1946194719481949

195019511952195319541955195619571958...1959

1960196119621963196419651966196719681969 p

1968: JanFebMarAprMayJune

JulyAugSeptOctNovDec

1969: Jan. . . . . .FebMarAprMayJune.. .

JulyAugSeptOctNov p.-Dec p

C-26.— Unemployment

All programs

Cov-eredem-ploy-

ment1

Insuredunem-ploy-ment

(weeklyaver-

age) 2 s

Thousands

24,29128,13630,81932,41931,71430,08731,85633,87634,64633,098

34,30836,33437,00638,07236,62240,01842,75143,43644,41145,728

46,33446,26647,77648,43449,63751,58054,73956,342

P57,969

55,74755,95656,41957,15757,67658,771

P58,833P59,179P59,036P58 738P58,865s 59,249

1 331842661149111720

2,8041,7931,4462,474

1,6051,0001,0691,0672,0511,3991,3231,5713,2692,099

2,0712,9941,946

U,9731,7531,4501,1291,2701 1871,175

1,7191,6531,4801,2161,026

944

1 0581,024

868862985

1,2531,5851,5511 3851 163

970912

1 0891 016

903930

1,1061,449

Totalbenefits

paid(mil-lions

of dol-lars) 2 4

534 7358.8350.480.567.2

574.92,878. 51,785.51,328 72,269.8

1,467.6862.9

1,043 51,050.62,291.81,560.21,540.61,913.04,290.62,854.3

3,022.84,358.13,145.13,025.92,749.22 360 41,890.92,220.02 191 32,265.0

264 8259.4247.5207.2170.2139.3

156 9162.8133.4138 7134.8185.4

264.6250.8242 6214.9164.9145.7

171 8169 7148.3153.8147.7208.5

insurance programs, selected data, 1940-69

State programs

Insuredunem-ploy-

ment3

Initialclaims

Ex-haus-tions »

Weekly average, thousands

1 282814649147105589

1,295997980

1,973

1,513969

1,044990

1,8701,2651,2151,4462,5261,684

1,9082,2901,783

n , 8 0 61,6051 3281,0611,2051 1111,098

1,6241,5561,3901,142

964883

991955802794913

1,172

1,4911,4591,3001 090

906852

1 021948840864

1,0301,378

2141641223629

116189187200340

236208215218304226111270369277

331350302

7 297268232203226201197

316227183183156157

240174141154189261

275219173167144162

246172146167213289

503021425

38242037

36161815342520235033

31463230262115171615

181819201817

151513141314

161717191717

151413131213

Insured unem-ployment as per-cent of covered

employment

Unad-justed

Season-ally ad-justed

Percent

5 63.02.2.54

2.14.33.13 06.2

4.62.82 92.85.23.53 23.66.44.4

4.85.64.44.33>83 02 32.52 22.2

3.33.22.82.32.01.8

2.01.91.61 61.82.3

3.02.92.62.21.81.7

2.01.81.61.62.02.7

2.32.32.32.22.22.2

2 22.22.22 12.12.1

2.12.12 12.02.02.1

2.22.22.22.22.32.3

Benefits paid

Total(mil-

lions ofdol-

lars) 4

518.7344.3344.179.662.4

445.91,094.9

775.1789.9

1,736.0

1,373.1840.4998.2962.2

2,026.91,350.31,380.71,733.93,512.72,279.0

2,726.73,422.72,675.42,774.72,522.12 166.01,771.32,101.02 031 92,099. 5

248.5243.7231.1195.1159.1129.1

145.6150.0121.8126.0122.5170.3

246.1234.2226.5200.1153.0135.0

159.2156.7136.2140.9134.7194.8

Aver-age

weeklycheck(dol-lars) •

10.5611.0612.6613.8415.9018.7718.5017.8319.0320,48

20.7621.0922.7923.5824.9325.0427.0228.1730.5830.41

32.8733.8034.5635.2735.9237.1939.7541.2543 4346.10

42.6043.5843.6443.1242.4242.26

42.3943.7343.7844.3744.7245.34

46.1646.8046.7046.0345.1444.88

45.3046.1645.7046.1746.9147.25

1 Includes persons under the State, UCFE (Federal employee, effective January 1955), and RRB (Railroad RetirementBoard) programs. Beginning October 1958, also includes the UCX program (unemployment compensation for ex-service-men).

2 Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), andSRA (Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and Stateprograms for temporary extension of benefits from June 1958 through June 1962, expiration date of program.

3 Covered workers who have completed at least 1 week of unemployment.* Includes benefits paid under extended duration provisions of State laws, beginning June 1958. Annual data are net

amounts and monthly data are gross amounts.8 Individuals receiving final payments in benefit year.8 For total unemployment only.7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.1 Preliminary; December 1968 is latest month for which data are available for all programs combined. Workers covered

by State programs account for about 88 percent of the total.

Source: Department of Labor, Manpower Administration.

207

TABLE C-27.—Wage and salary workers in nonagricultural establishments, 1929-69

[All employees; thousands of persons]

Year ormonth

1929

19301931193219331934

19351936193719381939

1940 . . . .1941194219431944

1945 . . . . . . . .1946194719481949

1950. .195119521953 ._1954

1955.... . .1956195719581959

19601961.. . .196219631964

19651966 . .196719681969 v

Totalwageand

salarywork-

ers

31,339

29,42426,64923,62823 71125^953

27 05329,08231,02629 20930,618

32,37636,55440,12542,45241,883

40,39441,67443,88144,89143,778

45,22247,84948,82550,23249,022

50,67552,40852,89451,36353,313

54,23454,04255,59656,70258,331

60,81563,95565,85767,86070,139

Manufacturing

Total

10,702

9,5628,1706,9317 3978,501

9,0699,827

10,7949,440

10,278

10,98513,19215,28017,60217,328

15,52414,70315,54515,58214,441

15,24116,39316,63217,54916,314

16,88217,24317,17415,94516,675

16,79616,32616,85316,99517,274

18,06219,21419,44719,76820,121

Dura-ble

goods

4,715

5,3636,9688,823

11,08410,856

9,0747,7428,3858,3267,489

8,0949,0899,349

10,1109,129

9,5419,8349,8568,8309,373

9,4599,0709,4809,6169,816

10,40611,28411,43911,62411,881

Non-dura-ble

goods

5,564

5,6226,2256,4586,5186,472

6,4506,9627,1597,2566,953

7,1477,3047,2847,4387,185

7,3407,4097,3197,1167,303

7,3367,2567,3737,3807,458

7,6567,9308,0088,1448,240

Min-ing

1,087

1,009873731744883

897946

1,015891854

925957992925892

836862955994930

901929898866791

792822828751732

712672650635634

632627613610628

Con-tractcon-

struc-tion

1,497

1,3721,214

970809862

9121,1451,1121,0551,150

1,2941,7902.1701,5671,094

1,1321,6611,9822,1692,165

2,3332,6032,6342,6232,612

2,8022,9992,9232,7782,960

2,8852,8162,9022,9633,050

3,1863,2753,2083,2673,410

Trans-porta-tionandpub-lic

utili-ties

3,916

3,6853,2542,8162 6722^750

2,7862,9733,1342 8632,936

3,0383,2743,4603,6473,829

3,9064,0614,1664,1894,001

4,0344,2264,2484,2904,084

4,1414,2444,2413,9764,011

4,0043,9033,9063,9033,951

4,0364,1514,2614,3134,449

Whole-saleand

retailtrade

6,123

5,7975,2844,6834 7555; 281

5,4315,8096,2656,1796,426

6,7507,2107,1186,9827,058

7,3148,3768,9559,2729,264

9,3869,742

10,00410,24710,235

10,53510,85810,88610,75011,127

11,39111,33711,56611,77812,160

12,71613,24513,60614,08114,644

Fi-nance,insur-ance,andreal

estate

1,509

1,4751,4071,3411 2951̂ 319

1 3351,3881,4321 4251,462

1,5021,5491,5381,5021,476

1,4971,6971,7541,8291,857

1,9191,9912,0692,1462,234

2,3352,4292,4772,5192,594

2,6692,7312,8002,8772,957

3,0233,1003,2253,3833,558

Serv-ices

3,440

3,3763,1832,9312 8733^058

3 1423,3263,5183 4733,517

3,6813,9214,0844,1484,163

4,2414,7195,0505,2065,264

5,3825,5765,7305,8676,002

6,2746,5366,7496,8067,130

7,4237,6648,0288,3258,709

9,0879,551

10,09910, 59211,102

Government

Fed-eral

533

526560559565652

753826833829905

9961,3402,2132,9052,928

2,8082,2541,8921,8631,908

1,9282,3022,4202,3052,188

2,1872,2092,2172,1912,233

2,2702,2792,3402,3582,348

2,3782,5642,7192,7372,756

Stateandlocal

2,532

2,6222,7042,6662 6012^647

2 7282,8422,9233 0543,090

3,2063,3203,2703,1743,116

3,1373,3413,5823,7873,948

4,0984,0874.1884,3404,563

4,7275,0695,3995,6485,850

6,0836,3156,5506,8687,248

7,6968,2278,6799,1099,471


208

TABLE C-27.—Wage and salary workers in nonagricultural establishments,1929-69—Continued

[All employees; thousands of persons}

Year ormonth

1967: Jan. . .Feb...Mar...Apr...May..June..

July. .Aug...Sept..Oct.. .Nov...Dec...

1968: Jan. . .Feb...Mar...Apr...May..June..

July...Aug...Sept._Oct. . .Nov...Dec...

1969: Jan.. .Feb...Mar. .Apr...May..June..

July._Aug._Sept..Oct...Nov p_Dec v.

Totalwageand

salarywork-

ers

Manufacturing

TotalDura-

blegoods

Non-dura-

blegoods

Min-ing

Con-tractcon-

struc-tion

Trans-porta-tionandpub-lic

utili-ties

Whole-saleand

retailtrade

Fi-nance,insur-ance,andreal

estate

Serv-ices

Government

Fed-eral

Seasonally adjusted

65,34265,37965,45965,46965,56365,747

65,79966, 01666, 00366, 08366,60066,734

66, 72067,16567,28667,46667,55067,816

67,94568, 08868,19568,42768,66468, 875

69,19969,48769,71069, 78970,01370,300

70,24770,50070, 39070,65170,65370,639

19,61619,56219,50419,43119,36219,364

19,30719,43719,33519,32919, 54619, 582

19,61719,62719,63119,70219,73719, 790

19,80419,80019, 82019, 84019,89719, 958

19,99920, 06120,12220,11120,11820,198

20,16420,33420,19720,15620,01819,988

11,56011,54111,50011,42711,40711,391

11,35611,47111,32111,29711,49711,513

11,55711,53811,53611,59011,60611,620

11,66611,63411,64611,64911,70011,744

11,81911,83911,88111,86811,87411,931

11,91212,08111,96511,93211,75811,732

8,0568,0218,0048,0047,9557,973

7,9517,9668,0148,0328,0498,069

8,0608,0898,0958,1128,1318,170

8,1388,1668,1748,1918,1978,214

8,1808,2228,2418,2438,2448,267

8,2528,2538,2328,2248,2608,256

628626626622619618

621606601598597598

596599600617614615

619620622573622623

626628626624622622

629631631631632636

3,2373,2133,2053,1923,1753,192

3,2033,2003,1993,2083,2423,243

3,0753,2653,2693,2723,2663,267

3,2683,2723,2863,3053,3133,330

3,3383,3663,3743, 363 .3,4073,466

3,4343,4103,4203,4183,4603,446

4,2474,2454,2554,2204,2724,274

4,2864,2684,2644,2514,2774,275

4,2804,2974,2994,2984,2504,300

4,3154,3274,3334,3414,3524,360

4,3534,3734,3994,4394,4444,467

4,4834,4844,4804,4804,4884,493

13,45713,46113,48413,52413,55713,584

13,61513,64213,68713,69513,77713,781

13,78613,89013,93813,98414,01714, 057

14,09314,15414,19814,26514,29114,271

14,41214,46814, 50814,53314,60914,665

14,67114, 70214,71614,80914,82314,785

Stateandlocal

3,1463,1593,1723,1873,2023,225

3,2313,2523,2643,2713,2883,304

3,3143,3273,3363,3483,3593,363

3,3763,3993,4143,4333,4533,463

3,4903,5023,5153,5313,5413,557

3,5683,5813,5863,5953,6103,615

9,8399,8889,9469,98710,02610,067

10,11610,16110,20710,25010,33010,370

10,39810,46510,49010,48810,51010,554

10, 58210,62510,63510,72110,78710,838

10,90010,96711,03411,04411,06511,066

11,06711,12011,15011,24411,26511,288

2,6672,6792,6912,6942,7042,728

2,7352,7352,7212,7182,7192,719

2,7212,7242,7212,7232,7242,774

2,7792,7432,7212,7082,7092,724

2,7602,7672,7592,7582,7542,790

2,7772,7522,7492,7292,7212,713

8,5058,5468,5768,6128,6468,695

8,6858,7158,7258,7638,8248,862

8,9338,9719,0029,0349,0739,096

9,1099,1489,1669,2419,2409,308

9,3219,3559,3739,3869,4539,469

9,4549,4869,4619,5899,6369,675

Note.—Data in Tables C-27 through C-33 are based on reports from employing establishments and relate to full- andpart-time wage and salary workers in nonagricultural establishments who worked during, or received pay for, any part ofthe pay period which includes the 12th of the month.

Not comparable with labor force data (Tables C-22 through C-25), which include proprietors, self-employed persons,domestic servants, and unpaid family workers, and which count persons as employed when they are not at work becauseof industrial disputes, bad weather, etc.

For description and details of the various establishment data, see "Employment and Earnings."


209

TABLE C-28.—Average

Year or month

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

196019611962196319641965 .1966196719681969 v

1968:JanFebMarAprMayJune _JulyAugSept .Oct...NovDec

1969:JanFebMar-AprMay..JuneJulvAugSeptOctNov pDec p

Totalnon-agri-

culturalpri-

vate i

40.340.039.439.839.939.939.639.139.639.338.838.539.0

38.638.638.738.838.738.838.638.037.837.7

weekly hours of work

Manufacturing

Total

44.2

42.140.538.338.134.636.639.238.635.637.738.140.643.145.045.243.540.340.440.039.140.540.640.740.539.640.740.439.839.240.339.739.840.440.540.741.241.340.640.740.6

Durablegoods

32.534.733.837.240.939.934.937.939.242.045.046.546.544.040.440.540.439.441.141.541.541.240.141.341.040.339.540.740.140.340.941.141.442.042.141.241.441.3

Non-durablegoods

41.940.035.136.137.737.436.137.437.038.940.342.543.142.340.540.239.638.939.739.539.739.639.039.939.639.238.839.739.239.339.639.639.740.140.239.739.839.7

in selected nonagricultural industries, 1929-69

Con-tractcon-

struc-tion

38.238.137.737.438 138.937.937 237.137.537.036.837.036.736.937.037.337.237.437.637.737 438.0

Retailtrade

43.443.242.841.840.941.040.941.3

3 40.340.240.440.440 439.839.139 239.038.638.138.138.238.037.637.437.337.036.635.935.334 734.2

Whole-sale

trade

41.642 943 142 341.841 341.141.442 343.042.841 641.141.040.840.740 840.740.640 540.740.540.340.240.640.540 540 640 640 640 840 740.340 140.2

Seasonally adjusted

1 37.737.937.837.737.837.937.937.937.937.837.637.637.837.537.837.837.837.837.837.837.837.637 637.5

40.240.740.840.140.940.940.940.741.040.940.840.840.640.140.940.840.740.740.740.640.840.540 540.6

41.041.341.440.641.641.641.541.341.641.641.641.341.340.941.541.441.441.341.241.341.541.241.141.2

39.339.939.939.239.940.039.939.940.039.939.739.939.839.139.939.839.839.839.739.639.739.539.539.8

36.537.636.937.737.537.537.337.537.537.536.237.638.238.037.938.038.137.637.537.938.137.538.238.2

34.934.934.834.834.734.834.834.834.734.534.534.334.434.234.334.134.334.234.234.334.233.934.033.9

40.040.040.040.040.040.240.140.240.240.140.040.040.140.140.140.240.140.040.040.340.340.340.240.3

Bitumi-nouscoaland

lignitemining

38 1

33 328 127 029 326 826 228 527 723 326.827 830.732.436 343.042.041 340.337.732.334.734 933.834.132 337.337.536.333.335.835.835 9

<37 0*38 9*39 2MO 2M0 8M0.7*39 7

40.0

40.740.641.140.540.541.5

40.940.629.040.641.141.640.738.841.540.535.7

40.840.540.639.5

Class 1rail-roads

43.744 345.847.048 748.948.546 046.446.243.740.841 040.640.640 841.941.741.741.641.941.742 342 642 943 543 643 943.243 9

Tele-phonecom-muni-cation

38 838 939.139 540.140.541 942.3

a 41.739 437.439.238.538.939 138.538.738 939.639.539.038.439.239.639 439 940 040 240 440 639.339 740.4

Jnadjusted

44.344.042.744.345.043.044.743.742.944.543.943.844.745.343.044.344 543.5

39.239.139.138.638.139.940.239.940.640.641.539. S40.040.639.939.539.840.440.840.340.840.440.8

Mn addition to industries shown separately, total includes other mining; other transportation and public utilities;finance, insurance, and real estate; and services.

2 Nine-month average, April through December, because of new series started in April 1945.3 Beginning 1947, data include eating and drinking places.* Eleven-month average; excludes data for July.Note.—Hours and earnings data in Tables C-28 through C-33 relate to production workers in manufacturing and mining,

to construction workers in contract construction, and generally, to nonsupervisory employees in other industries. See TableC-31 for unadjusted weekly hours in manufacturing. See also Note, Table C-27.


210

T A B L E C-29.—Average

Year or month

1929

19301931. .19321933193419351936193719381939

1940194119421943194419451946194719481949-

19501951195219531954....1955...1956195719581959

19601961196219631964196519661967 .19681969 v

1968: Jan... .Feb. . .Mar...AprM a y -June...

July...Aug...Sept...Oct....Nov .Dec . . .

1969: Jan. . . .Feb....Mar...AprMay...June...

July...Aug. . .Sept.Oct. . . .Nov *>._Decp...

Totalnon-

agricul-tural

private

$1,1311.2251.275

1.3351.451.521.611.651.711.801.891.952.02

2.092.142.222.282.362.452.562.682.853.04

2.762.782.792.802.832.84

2.852.852.902.912.922.92

2.942.962.972.983.013.03

3.043.053.103.113.123.11

IV

Total

$0. 560

.546

.509

.441

.437

.526

.544

.550

.617

.620

.627

.655

.726

.851

.9571.0111.0161.0751.2171.3281.378

1.4401.561.651.741.781.861.952.052.112.19

2.262.322.392.462.532.612.722.833.013.19

2.942.942.962.972.993.00

3.002.993.043.063.083.11

3.123.123.133.153.163.17

3.193.193.243.243.263.28

lanufactu

Durablegoods

$0.492.467.550.571.580.667.679.691

.716

.799

.9371.0481.1051.0991.1441.2781.3951.453

1.5191.651.751.861.901.992.082.192.262.36

2.432.492.562.632.712.792.903.003.193.38

3.133.123.143.153.183.18

3.183.173.233.243.273.30

3.313.313.323.333.353.36

3.373.393.443.443.453.48

gross hourly earnings in

ing

Non-durablegoods

$0,412.419.505.520.519.566.572.571

.590

.627

.709

.787

.844

.886

.9951.1451.2501.295

1.3471.441.511.581.621.671.771.851.911.98

2.052.112.172.222.292.362.452.572.742.91

2.672.682.692.702.722.73

2.752.752.782.792.802.82

2.832.842.852.872.882.89

2.922.922.952.962.972.99

Con-tractcon-

struc-tion

$1,5411.7131.792

1.8632.022.132.282.392.452.572.712.822.93

3.083.203.313.413.553.703.894.114.404.77

4.364.294.304.294.344.31

4.364.404.494.524.544.55

4.584.564.624.644.714.71

4.744.794.914.954.954.99

Retailtrade

$0.484

.494

.518

.559

.606

.653

.699

.7974.838

.901

.951

.9831.061.091.161.201.251.301.371.421.47

1.521.561.631.681.751.821.912.012.162.30

2.092.112.122.132.142.16

2.162.162.192.202.222.21

2.242.262.262.272.292.30

2.302.302.332.352.362.33

selected industries, 1929-69

Whole-sale

trade

$0,610.628.658.674.688

.711

.763

.828

.898

.948

.9901.1071.2201.3081.360

1.4275?

.617076

.83

.942.022.092.18

2.242.312.372.452.522.612.732.883.053.23

2.963.003.013.023.043.04

3.043.043.093.083.113.12

3.123.163.163.183.203.24

3.233.243.2933.3

293334

Bitu-minous

coal andlignitemining

$0 659

.662

.626

.503

.485

.651

.720

.768

.828

.849

.858

.854

.9601.0301.1011.1471.1991.3571.5821.8351.877

1.9442.142.222.402.402.472.722.922.933.11

3.143.12

5 3.125 3.155 3. 305 3.495 3.665 3.755 3.86

4.17

3.823.793.793.773.783.82

3.783.803.794.134.14

4.124.124.114.16..4.18..4.09..

"4." 14"4.184.374.42

Classrail-

roads

$0,730

.733743837

.852

.948955

1 0871.1861.3011.427

1.5721.731.831.881.931.962.122.262.442.54

2.612.672.722.762.803 003.093.243 44

3.333.383.353.353.343.40

3.463.493.533.503.563.55

3.583.643.603.603.623.65

Tele-phonecom-

munication

$0 774.816.822

.827820843870

.9113 9621 1241.1971.2481.345

1.3981.491.591.681.761.821.861.952.052.18

2.262.372.482.562.622.702.792.883 043.24

2.902.902.912.892.963.05

3.043.063.143.163.193.17

3.173.203.163.173.223.22

3.223.243.303.283.31

Agri-cul-

tures

$0,241

226172129115129

.142152172

.166

.166

.169206268

.353

.423472515

.547

.580

.559

.561

.625

.661

.672

.661

.675

.705

.728

.757

.798

.818

.834

.856

.880

.904

.9511.031.121.211.33

1.24

T6iT

1.18

I.~27~

1.38

I.~2T

1.29

1.37

*• For coverage, see footnote 1, Table C-28.2 Weighted average of all farm wage rates on a per hour basis.3 Nine-month average, April through December, because of new series started in April 1945.* Beginning 1947, data include eating and drinking places.6 Eleven-month average; excludes data for July.Note—See Note, Tables C-27 and C-28.Sources: Department of Labor (Bureau of Labor Statistics) and Department of Agriculture.

211

T A B L E C-30.—Average

Year or month

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

1950195119521953195419551956..195719581959

1960196119621963196419651966196719681969 v

1968:JanFeb . . .MarAprMayJune

July.AugSept...OctNov.Dec. . .

1969:JanFebMarApr _M a y -June

JulyAugSeptOctNov p

Dec p

Totalnon-

agricul-turalpri-

vate i

$45. 5849.0050.24

53.1357.8660.65'63.7664.5267.7270.7473.3375.0878.78

80.6782.6085.9188.4691.3395.0698.82

101.84107.73114.61

103.22104. 53104.90104. 72106. 69108.20

108.87109.16110.49110.29109.50110.38

110.25110.11111.67111.75113.48115.14

115.82116 51117 80117.25117 00117.25

gross weekly earnings

Manufacturing

Total

$24.76

23.0020.6416.8916.6518.2019.9121.5623.8222.0723.64

24.9629.4836.6843.0745.7044.2043.3249.1753.1253.88

58.3263.3467.1670.4770.4975.7078.7881.5982.7188.26

89.7292.3496.5699.63

102.97107. 53112.34114.90122.51129.51

117.60119.36120.18118.21122.29123. 30

122.10121.69125.25125.77125.97127.82

126. 05124.80127. 39127. 58128.61129.65

129.20129 51132 84131.87132 36134.15

Dura-ble

goods

$26.84

24.4220.9815.9916.2018.5921.2423.7226.6123.7026.19

28.0733.5642.1748.7351.3848.3646.2251.7656.3657.25

62.4368.4872.6376.6376.1982.1985.2888.2689.2796.05

97.44100.35104.70108.09112.19117.18122.09123.60132.07139. 59

127. 70128. 54129.68127.26132.29132. 92

131.02130.29135.01135.43136.36137.61

136.04135.05137.45137.20138.69139.44

137. 83139 33143.45142.42142 14144.77

Non-durabiegoods

$22.47

21.4020.0917.2616.7617.7318.7719.5721.1720.6521.36

21.8324.3928.5733.4536.3837.4840.3046.0349.5050.38

53.4856.8859.9562.5763.1866.6370.0972.5274.1178.61

80.3682.9285.9387.9190.9194.6498.49

102.03109. 05115.53

103.86106.40106.79104.76108.26109.47

110.00110.55112.03111.88111.72113.08

111.50110.48113.15113.08114.34115.31

116.22116 51118 00117.51117 91119.60

in selected nonagricultural industries, 1929-69

Con-tractcon-

struc-tion

$58.8765.2767.56

69.6876,9682.8686.4188.9190.9096.38

100. 27103.78108.41

113.04118.08122.47127.19132. 06138.38146.26154.95164. 56181.26

152.60155.30155. 60160.02163.18165. 50

168. 30'170.72173.76173. 57159. 35168.81

168. 09166. 90171.86174.46179.92181.34

183.91187 77192.96190. 08183 65188.12

Retailtrade

$21.01

21.3422.1723.3724.7926.7728.5932.92

3 33.7736.2238.42

39.7142.8243.3845.3647.0448.7550.1852.2054.1056.15

57.7658.6660.9662.6664.7566.6168.5770.9574.9578.66

72.1172.8072.9373.4973.4075.82

77.3377.3375.9975.4675.7076.47

76.1676.3976.6176.7377.6379.35

80.9681 1979.6979.2079.3079.69

Whole-sale

trade

$26.7525.1925.4425.3826.9628.3628.5128.76

29.3631.3634.2837.9940.7642.3746.0550.1453.6355.49

58.0862.0265.5369.0271.2874.4878.5781.4184.0288.51

90.7293.5696.2299/47

102.31106.49111.11116.06122.31129. 85

118.10119.40120.10120.20121.30122.51

123.12122. 82124.22123.82124.40125. 74

124. 80126. 08126.40127.20128.00129.92

130.17131.22132. 59132. 59133.87135.27

Bitumi-nouscoaland

lignitemining

$25.11

22.0417.5913 5814 2117.4518.8621.8922.9419.7822.99

23.7429 4733.3739.9749 3250.3656.0463.7569.1860.63

67.4674.6975.0481.8477.5292.13

102.00106.0097.57

111.34

112.41112.01114.46121.43128.91140.26149.74153.28153.65165.91

155.47153.87155.77152.69153.09158.53

157.70154.60154.28109.91167.68170.15

171.39167.68159.47172.64169. 29146. 01

159.18168 91169.29177.42174.59

Class 1, rail-roads

$31.90

32.4734 0339.3441.4946 3646.3250.0055.0360.1162.36

64.1470.9374.3076.3378.7482.1288.4094.24

101.50106.43

108.84112.94115.87118.40121.80130. 80135.65139.97151.02

147. 52148.72143.05148.41150.30146.20

154.66152.51151.44155.75156.28155.49

160. 03164. 89154.80159.48

Tele-phonecom-mu-nica-tion

$30 0331 7432.14

32.6732 8834 1436 4538 54

2 40 1244 2944.7748.9251 78

54.3858.2661.2265.0268.4672.0773.4776.0578.7285.46

89.5093.3898.95

102.40105.32109. 08113.27113.18120.69130.90

113.68113.39113.78111.55112.78121.70

122.21122. 09127.48128.30132.39126.48

126. 80129.92126. 08125. 22

161.09 | 128.16158.78 130.09

131.38130 57134.64132. 51135. 05

1 For coverage, see footnote 1, Table C-28.2 Nine-month average, April through December, because of new series started in April 1945.* Beginning 1947, data include eating and drinking places.Note—See Note, Tables C-27 and C-28.Source: Department of Labor, Bureau of Labor Statistics.

2 1 2

TABLE C-31.—Average weekly hours and hourly earnings, gross and excluding overtime, inmanufacturing industries, 1939-69

Year or month

1939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969 *

1968: JanFebMar . .AprMay... .June

JulyAugSeptoct ""::::NovDec


JulyAugSeptOctNov pDec P

Al1 manufacturing industries

Averageweeklyhours

Gross

37.7

38.140.643.145.045.243.540.340.440.039.1

40.540.640.740.539.640 740.439.839.240.3

39.739.840.440.540.741.241.340.640.740.6

40.040.640.639.840.941.1

40.740.741.241.140.941.1

40 440.040.740 540.740.9

40.540.641.040.740.640.9

Ex-clud-

ingover-time

37.637.537.237.6

37.337.437.637.737.637.637.437.237.137.0

36.737.337.336.937.337.4

37.237.137.237.237.037.2

36.836.737.237.037.137.2

37.036.937.037.037.037.4

Average hourlyearnings

Gross

$0,627

.655

.726

.851

.9571.0111.0161.0751.2171.3281.378

1.4401.561.651.741.781.861.952.052.112.19

2.262.322.392.462.532.612.722.833.013.19

2.942.942.962.972.993.00

3.002.993.043.063.083.11

3.123.123.133.153.163.17

3.193.193.243.243.263.28

Ex-clud-

ingover-time

$0.691.793.881.933

3.9491.0351.181.291.34

1.391.511.591.681.731.791.891.992.052.12

2.202.252.312.372.442.512.592.722.883.05

2.832.832.842.862.872.87

2.882.862.902.922.942.97

2.983.003.003.023.033.03

3.063.063.093.103.123.15

Adjustedhourly

earnings,(1957-

59=100)i

32.2

2 33.42 37.52 40.82 43.72 45.52 50.4

57.863.266.1

68.273.677.481.684.386.991.596.2

100.2103.4

106.8109.9112.7115.5118.4121.5125.6131.5139 5147.7

136.1136.9137.5138.2138.6138.8

139.1139.8141.2141.7142.6143.6

144.4144.9145.2146.0146.6146.9

147.8148.4149.5150.2151.0152.0

Durable goods manufac-turing industries

Averageweeklyhours

Gross

37.9

39.242.045.046.546.544.040.440.540.439.4

41.141.541.541.240.141 341:040.339.540.7

40.140.340.941.141.442.042.141.241.441.3

40.841.241.340.441.641.8

41.241.141.841.841.741.7

41.140.841.441.241.441.5

40.941.141.741.441.241.6

Ex-clud-

ingover-time

38.037.937.638.0

37.738.038.138.238.138.137.837.737 637.5

37.337.837.837.437.837.9

37.637.537.637.637.537.6

37.437.237.737.637.737.6

37.337.337.537.537.538.0

Averagehourly

earnings

Gross

$0,691

.716

.799937

1.0481.1051 0991 1441.2781.3951 453

1 5191.651 751 861.901 992.082 192.262.36

2.432.492.562.632.712 792.903.003 193.38

3.133.123.143.153.183.18

3.183.173.233.243.273.30

3.313.313.323.333.353.36

3.373.393.443.443.453.48

Ex-clud-ing

over-time

$6.762.872.966

1.0193 1 031

1.1111.241.351.42

1.461.591.681.791.841 912.012.122.212.28

2.362.422.482.542.602.672.762.883 053.23

3.003.003.023.033.043.04

3.043.033.073.093.113.15

3.163.173.173.193.203.21

3.233.243.273.293.313.34

Nondurable goods manu-facturing industries

Averageweeklyhours

Gross

37.4

37.038.940 342.543.142 340.540.239.638 9

39.739.539.739.639.039 939.639 238.839.7

39.239.339.639.639.740 140.239.739.839.7

38.939.739.738.839.840.1

40.040.240.340.139.940.1

39.438.939.739.439.739.9

39.839.940.039.7

,39.740.0

Ex-clud-ing

over-time

37.237.036.637.0

36.736.836.936.936.836.936.836.636.536.3

35.936.636.636.136.636.7

36.636.736.536.636.436.6

36.135.936.536.236.436.5

36.436.436.336.236.336.6

Averagehourly

earnings

Gross

$0.571

.590

.627

.709

.787

.844

.886

.9951.1451.2501.295

1.3471.441.511.581.621 671.771.851.911.98

2.052.112.172.222.292.362.452.572.742.91

2.672.682.692.702.722.73

2.752.752.782.792.802.82

2.832.842.852.872.882.89

2.922.922.952.962.972.99

Ex-clud-ing

over-time

$6,613.684.748.798

3 841.962

1.111.211.26

1.311.401.461.531.581 621.721.801.861.92

1.992.052.092.152.212.272.352.472.632.79

2.572.582.592.612.612.62

2.632.642.662.672.692.70

2.722.732.742.762.772.77

2.802.792.822.832.852.87

1 Earnings in current prices adjusted to exclude the effects of overtime and interindustry shifts.2 Annual average not available; April used.3 Eleven-month average; August 1945 excluded because of VJ Day holiday period.

Note—See Note, Tables C-27 and C-28.See Table C-28 for seasonally adjusted average gross weekly hours.Source: Department of Labor, Bureau of Labor Statistics.

213

TABLE G—32.—Average weekly earnings, gross and spendable, total private nonagriculturalindustries, in current and 1957-59 prices, 1947-69

Year or month

Average gross weeklyearnings

Currentprices

$45.5849.0050.24

53.1357.8660.6563.7664.5267.7270.7473.3375.0878.78

80.6782.6085.9188.4691.3395.0698.82

101.84107.73114.61

103.22104. 53104.90104.72106.69108.20

108.87109.16110.49110.29109.50110.38

110.25110.11111.67111.75113.48115.14

115.82116.51117.80117.25117.00117.25

1957-59prices *

$58.5958.4760.53

63.4063.9365.5768.4168.9372.5874.7074.8374.5677.62

78.2479.2781.5582.9184.4986.5087.3787.5788.8989.75

87.0387.8487.7887.3488.6989.50

89.6089.5590.4289.7488.7489.23

88.8488.3788.9188.4189.5090.24

90.3490.5391.1190.3389.6689.30

Average spendable weekly earnings2

Worker with nodependents

Currentprices

$39.1643.1144.15

46.0248.6850.0752.4553.7656.2758.6360.4761.8364.52

65.5967.0869.5671.0575.0478.9981.2983.3886.7190.96

84.4385.4285.7084.1185.5786.68

87.1887.3988.3788.2387.6488.29

87.7687.6588.8088.8690.1391.35

91.8592.3593.3092.8992.7192.89

1957-59pricesl

$50.3351.4453.19

54.9253.7954.1356.2857.4460.3161.9161.7061.4063.57

63.6264.3866.0066.5969.4271.8771.8771.6971.5471.23

71.1971.7871.7270.1571.1371.70

71.7571.6972.3271.7971.0271.37

70.7270.3570.7070.3071.0871.59

71.6571.7672.1671.5671.0470.75

Worker with threedependents

Currentprices

$44.6448.5149.74

52.0455.7957.8760.3160.8563.4165.8267.7169.1171.86

72.9674.4876.9978.5682.5786.3088.6690.8695.2899.99

91.9693.0193.3092.9094.4095.55

96.0796.2997.3097.1596.5597.22

96.6896.5797.7697.8299.13

100.40

100.92101.45102.44102.01101.82102. 01

1957-59prices1

$57.3857.8959.93

62.1061.6562.5664.7165.0167.9669.5069.0968.6370.80

70.7771.4873.0573.6376.3878.5378.3978.1378.6178.30

77.5478.1678.0877.4878.4779.03

79.0778.9979.6279.0578.2478.59

77.9077.5077.8377.3978.1878.68

78.7278.8379.2378.5978.0277.69

1 Earnings in current prices divided by the consumer price index.2 Average gross weekly earnings less social security and income taxes.Note.—"Total private" consists of manufacturing; contract construction; retail and wholesale trade; mining; transporta-

tion and public utilities; finance, insurance, and real estate; and services.See also Note, Tables C-27 and C-28.Source: Department of Labor, Bureau of Labor Statistics.

214

TABLE C-33.—Average weekly earnings, gross and spendable, in manufacturing industries, incurrent and 1957-59 prices, 1939-69

Year or month

Average gross weeklyearnings

Currentprices

1957-59pricesl

Average spendable weekly earnings2

Worker with nodependents

Currentprices

1957-59prices'

Worker with threedependents

Currentprices

1957-59prices *

1939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969 P

1968: Jan..Feb—Mar..

June.

July..Aug..Sept.Oct..Nov..Dec..

1969: Jan..Feb..Mar_.Apr..May.June.

July..Aug.Sept.Oct__Nov pDec p

$23.64

24.9629.4836.6843.0745.7044.2043.3249.1753.1253.88

58.3263.3467.1670.4770.4975.7078.7881.5982.7188.26

89.7292.3496.5699.63102.97107. 53112.34114.90122. 51129. 51

117.60119.36120.18118.21112.29123.30

122.10121.69125.25125.77125.97127.82

126.05124. 80127.39127. 58128.61129.65

129.20129. 51132.84131.87132. 36134.15

$48.84

51.1557.4764.5871.4374.5570.4963.7163.2063.3964.92

69.5969.9972.6175.6175.3181.1483.1983.2682.1486.96

87.0288.6291.6193.3795.2597.8499.3398.80

101.08101.42

99.16100.30100.5798.59101.65101.99

100.4999.83102. 50102.34102. 08103.33

101.57100.16101.43100.93101.43101.61

100.78100.63102.74101. 59101.43102.17

$23.37

24.4627.9631.8035.9537.9936.8237.3142.1046.5747.21

50.2652.9755.0457.5958.4562.5164.9266.9367.8271.89

72.5774.6077.8679.8284.4089.0891.5793.2897.70

101.90

95.3396.6697.2994.0797.0897.83

96.9496.6499.2799.6599.80

101.17

99.3698.44

100. 34100.48101.24102.00

101.67101.90104. 34103.63103.99105.30

$48.29

50.1254.5055.9959.6261.9758.7254.8754.1155.5756.88

59.9858.5359.5061.7962.4567.0068.5568.3067.3570.83

70.3971.5973.8774.8178.0881.0680.9680.2180.6179.80

80.3881.2381.4178.4680.7080.92

79.7979.2881.2481.0880.8881.79

80.0679.0079.8979.4979.8479.94

79.3179.1880.7079.8479.6980.20

$23.40

24.7129.1936.3141.3343.7642.5942.7947.5852.3152.95

56.3660.1862.9865.6065.6569.7972.2574.3175.2379.40

80.1182.1885.5387.5892.1896.7899.45

101.26106.75111.44

103.43104.85105.50103.23106.38107.16

106 23105.91108.66109.06109.22110.65

108.78107. 82109.81109.95110.74111.54

111.20111.44114.01113.25113.63115.03

$48.35

50.6456.9063.9368.5471.3967.9362.9361.1662.4263.80

67.2666.5068.0970.3970.1474.8076.2975.8374.7178.23

77.7078.8781.1582.0885.2788.0687.9387.0788.0887.27

87.2188.1188.2886.1088.4388.64

87.4386.8888.9288.7488.5189.45

87.6686.5387.4386.9987.3387.41

86.7486.5988.1787.2587.0787.61

1 Earnings in current prices divided by the consumer price index.

2 Average gross weekly earnings less social security and income taxes.

Note—See Note, Tables C-27 and C-28.


215

TABLE C-34.—Indexes of output per man-hour and related data, private economy, 1947-69

[1957-59=100]

Year

1947...1948...1949...

1950...1951...1952...1953...1954...

1955...1956—1957...1958...1959...

1960...1961...1962...1963...1964...

1965...1966—1967—1968...1969 v_

1947...1948.1949...

1950...1951...195219531954...

19551956—19571958...1959...

1960 . .1961...1962...1963...1964

1965...1966—1967—1968...1969 v.

Output per man-hour

Totalpri-vate

Farm

Nonfarm industries

TotalMan-ufac-tur-ing

Non-man-ufac-tur-ing

Output i

Totalpri-vate

Farm

Nonfarm industries



Man-hours2

Totalpri-vate

Farm

Nonfarm industries



Establishment basis 3

69.072.074.2

80.382.784.387.889.9

93.994.196.999.8

103.4

105.0108.6113.8117.9122.5

126.6131.7134 3138.7139.9

49.858.056.5

64.464.770.379.6

•83.7

84.488.093.3

103.0104.8

110.7119.4122.2133.1135.5

148.1153.8168.5168.5181.4

74.176.579.5

84.486.387.089.691.6

95.795.297.299.7

103.1

104.4107.4112.3115.7120.0

123.6127.9129 9134.2134.8

72.376.479.3

85.086.987.390.291.8

97.296.298.298.1

103.7

105.5107.9114.3118.9124.7

129.8131.8132.1139.2142.8

75.176.379.6

84.185.686.788.891.5

94.794.396.7

100.6102.9

103.9107.4111.5114.3118.0

120.5125.8128.7131.6130.6

67.670.870.6

77.982.884.889.187.9

95.497.298.697.3

104.1

106.6108.6116.0120.8127.8

136.2144.9148.2155.6160.1

82.191.888.9

93.788.991.896.698.6

101.0100.598.1

100.5101.9

105.8107.2106.8110.1107.7

114.5108.2114 5112.6113.5

66.869.869.7

77.082.584.588.887.4

95.197.198.697.2

104.2

106.7108.7116.5121.4128.8

137.3146.9150.0157.9162.6

69.372.768.7

79.787.889.797.190.3

100.9101.3101.793.4

104.9

106.4106.0116.8122.7131.2

143.9155.4155.3166.6173.6

65.668.370.2

75.779.881.984.586.0

92.294.997.199.1

103.9

106.8110.1116.3120.8127.7

134.0142.6147.3153.5157.0

98.098.495.1

97.0100.1100.6101.597.8

101.6103.3101.897.5

100.7

101.5100.0101.9102,5104.3

107.5110.1110.4112.2114.4

164.8158.4157.3

145.6137.5130.6121.4117.8

119.6114.2105.197.697.2

95.689.887.482.779.5

77.370.167.766.662.4

90.191.387.7

91.295.697.199.195.4

99.4102.0101.497.5

101.1

102.2101.2103.7104.9107,3

111.1114.8115.4117.6120.6

95.895.186.6

93.8101.0102.7107.798.4

103.8105.3103.695.2

101.2

100.998.2

102.2103.2105.2

110.9117.9117.6119.7121.6

87.489 588.2

90.093.294 595.294.0

97.4100.6100.498.5

101.0

102.8102.5104.3105.7108.2

111.2113.4114 4116.6120.2

Labor force basis4

67.970.271.9

78.582.184 588 490.8

94.794.697.299.4

103.4

104.5107.3113.0116.7121.0

125.0130.7133.3138.6140.1

49.858.056.1

64.164.369.979 183.3

84.087.593.3

103.1104.7

110.7119.9122.3133.5135.8

148.3153.7168.2169.1182.0

72.974.576.8

82.485.787 590 492.8

96.795.997.799.2

103.1

103.8105.9111.4114.4118.4

121.8126.7128.7133.9134.8

67.670.870.6

77.982.884.889 187.9

95.497.298.697.3

104.1

106.6108.6116.0120.8127.8

136.2144.9148.2155.6160.1

82.191.888.9

93 788.991 896 698.6

101.0100.598.1

100.5101.9

105.8107.2106.8110.1107.7

114.5108.2114 5112.6113.5

66.869.869.7

77.082.584.588 887.4

95.197.198.697.2

104.2

106.7108.7116.5121.4128.8

137.3146.9150 0157.9162.6

99.6100.898.2

99.2100.9100.4100.896.8

100.7102.7101.497.9

100.7

102.0101.2102.7103.5105.6

108.9110.9111.2112.3114.3

164.8158.2158.6

146.2138.3131.3122.1118.3

120.3

91.693.790.8

93.496.396.698.294.2

98.3114.9 101.2105.2 100.997.597.3

95.689.487.382.579.3

77.270.267.866.362.4

98.0101.1

102.8102.6104.6106.1108.8

112.8115.9116.5117.9120.6

1 Output refers to gross national product in 1958 prices.2 Hours of all persons in private industry engaged in production, including man-hours of proprietors and unpaid family

workers.3 Man-hours estimates based primarily on establishment data.* Man-hours estimates based primarily on labor force data.Note.—For information on sources, methodology, trends, and underlying factors influencing the measures, see Bureau

of Labor Statistics, Department of Labor, Bulletin No. 1249 "Trends in Output per Man-Hour in the Private Economy,1909-58," December 1959.


2l6

PRODUCTION AND BUSINESS ACTIVITYTABLE G-35.—Industrial production indexes, major industry divisions, 1929—69

[1957-59=100]

Year or month

1929

19301931. . . .19321933193419351936193719381939 - .

1940...19411942 . . .194319441945194619471948.1949

195019511952. .19531954195519561957 - . . .19581959

I960196119621963196419651966..1967 . .19681969'

1968:JanFebMarAprMayJune.. .

JulyAugSept.OctNov..Dec

1969:Jan.-FebMarAprMay—.June

July. .AugSeptOctNovDec »

Totalindustrialproduction

38.4

32 026.520.724.426.630.736 339.731.438.3

43.956 469.382.981.770.559.565 768.464.7

74.981.384.391.385.896.699.9

100.793.7

105.6

108.7109.7118.3124.3132.3143.4156.3158.1165.5172.7

Total

38.6

31.725.919.923.726.030.636 439.730.537.9

43.858.373.188.786.373.060.066 468.965.1

75.881.985.292.786.397.3

100.2100.893.2

106.0

108.9109.6118.7124.9133.1145.0158.6159.7166.9173.8

Manufacturing

Durable

38.2

28.419.511.915.518.824.131.235.222.631.4

40.057.779.9

102.9100.978.254.764.367.060.9

74.183.588.599.988.4

101.9104.0104.090.3

105.6

108.5107.0117.9124.5133.5148.4164.8163.7169.8176.4

Nondurable

38.3

34.832.828.932.833.837.441.644.139.144.9

47.357.663.770.768.265.664.867.269.568.3

76.078.580.083.683.691.695.496.796.8

106.5

109.5112.9119.8125.3132.6140.8150.8154.6163.3170.5

Mining

54.2

47.040.333.638.540.343.750.356.749.053.8

60.164.867.069.074.273.072.279.984.074.5

83.291.390.592.990.299.2

104.8104.695.699.7

101.6102.6105.0107.9111.5114.8120.5123.8126.6130.2

Utilities

12.7

13.112.511.711.512.213.214.916.416.518.3

20.322.825.628.330.130.631.836.540.843.4

49.556.461.266.871.880.287.993.998.1

108.0

115.6122.3131.4140.0151.3160.9173.9184.9202.5221.3

Seasonally adjusted

161.5162.5163.3163.0164.9166.0

166.5165.1165.9166.3167.8168.7

169.1170.1171.4171.7172.5173.7

174.6174.3173.9173.1171.4170.9

163.1163.9164.7164.4166.4167.6

167.8166.0166.9167.9169.2170.1

170.2171.8173.1173.0173.8174.8

175.6175.4175.2174.1171.9171.2

167.5167.9168.2167.3169.9171.2

171.2167.9168.6169.4171.0172.1

173.0174.5175.9175.7176.7178.3

178.7178.8178.7177.3172.5171.3

157.7158.9160.2160.7162.0163.0

163.5163.6164.8166.1167.1167.5

166.7168.3169.5169.6170.3170.5

171.8171.3170.9170.1171.1171.1

121.9124.3126.5127.2127.9128.6

130.3129.7127.3120.8126.6127.8

125.8124.8126.7128.8130.3134.4

133.2131.2131.6130.2132.0133.9

196.1198.5198. C196.8198.4198.9

202.0204.7206. S209.2207.2210.6

215.1214.9215.1216.3213.6215.6

222.2222.6222.5224.4224. S225.5


217

TABLE C-36.—Industrial production indexes, market groupings, 1947-69

[1957-59=1001

Year.or month

Totalindus-trialpro-duc-tion

Final products

Total

Consumer goods *

TotalAuto-motiveprod-ucts

Homegoods

Equipment

Total,includ-

ingdefense

Busi-ness

Materials

TotalDura-

blegoods

Non-durablegoods

1947.1948.1949.

1950.1951.1952.1953.1954.

1955.1956..1957..1958-.1959..

1960.1961.1962.1963.1964.

1965..1966.1967..1968..1969 "

65.768.464.7

74.981.384.391.385.8

96.699.9

100.793.7

105.6

108.7109.7118.3124.3132.3

143.4156.3158.1165.5172.7

1968:Jan.Feb.Mar.Apr.May.June

July.Aug_Sept.Oct..Nov.Dec

1969:Jan..Feb.Mar.Apr.May.June

July.Aug.SeptOct..Nov_Dec

64.266.664.5

72.878.684.389.985.7

93.998.199.494.8

105.7

109.9111.2119.7124.9131.8

142.5155.5158.3165.1170.8

67.169.268.8

78.677.879.585.084.3

93.395.597.096.4

106.6

111.0112.6119.7125.2131.7

140.3147.5148.5156.9162.4

69.472.672.0

90.680.172.191.385.0

118.397.8

105.286.7

108.1

123.2111.8131.1141.2145.1

167.2163.0149.1174.3172.9

68.871.766.3

91.478.778.890.286.0

97.3100.996.692.8

110.7

110.8112.2122.2129.6141.1

154.8168.9166.0175.4184.1

55.458.352.0

56.478.494.1

100.588.9

95.0103.7104.691.3

104.1

107.6108.3119.6124.2132.0

147.0172.6179.4182.6188.6

69.972.663.5

68.083.194.196.685.1

91.9104.7105.389.8

104.9

110.2110.1122.1128.3139.1

156.7181.2182.8184.7195.6

67.070.264.8

76.983.884.392.685.9

99.0101.6101.992.7

105.4

107.6108.4117.0123.7132.8

144.2157.0157.8165.8174.6

68.271.064.2

79.587.888.9

100.788.4

104.7105.3104.890.0

105.1

106.6104.8114.1121.2131.2

144.3156.9151.9157.8165.5

64.968.264.2

73.378.879.084.183.3

93.097.798.995.4

105.7

108.7112.2120.0126.3134.4

144.1157.2163.9174.1184.0

Seasonally adjusted

161.5162.5163.3163.0164.9166.0

166.5165.1165.9166.3167.8168.7

169.1170.1171.4171.7172.5173.7

174.6174.3173.9173.1171.4170.9

161.2162.2163.5162.2163.7165.5

165.2165.4166.0167.3167.6167.9

168.2169.3170.8170.2170.0170.7

172.8172.7172.2170.7168.0167.6

151.9153.1155.0154.0155.5157.4

157.2157.6157.9159.0159.2160.2

161.0161.7162.8161.8160.7161.5

164.4164.2162.8160.8159.6159.1

164.7162.7173.0169.3178.3179.8

180.4177.0175.5178.9180.8177.8

176.2174.7175.4166.1165.8178.7

184.6179.5176.6172.8167.5161

168.4171.5173.5170.1170.4173.2

172.3174.5175.9176.9178.6180.4

184.3183.0186.3186.1185.9186.1

184.4184.5181.2179.5167.7

181.1181.6181.9179.8181.3183.1

182.5181.9183.7183.6185.5184.5

183.5185.5187.8188.4190.0190.4

190.8190.3192.4191.8185.9185.8

183.1182.9183.5181.5182.9184.2

183.3182.4185.5187.7190.3189.3

191.4191.9192.9194.1195.7197.0

196.9197.0200.4200.8194.6195

162.3162.6162.9163.8166.4167.0

168.2164.6166.3165.9168.1168.8

169.6170.8172.1172.9174.5176.3

176.5175.9176.0175.9174.6174.0

155.4156.4156.5158.1160.4160.4

161.3153.9155.4155.4158.6158.9

161.2162.6164.0165.8165.5167.0

167.0167.3166.6165.8163.1162

169.5168.9169.5169.7172.6173.8

175.3175.7177.4176.6177.9179.0

178.3179.2180.3180.3183.7185.9

186.4184.7185.5186.3186.5187

1 Also includes apparel and consumer staples, not shown separately.Source: Board of Governors of the Federal Reserve System.

2l8

TABLE G-37.—Industrial production indexes, selected manufactures, 1947-69

[1957-59=100]

Year ormonth

Durable manufactures

Pri-mary

metals

Fabri-catedmetalprod-ucts

Ma-chinery

Trans-porta-tion

equip-ment

Instru-ments

and re-latedprod-ucts

Clay,glass,and

lumber

Furni-tureand

miscel-laneous

Nondurable manufactures

Textile,apparel,

andleatherprod-ucts

Paperand

printing

Chem-ical,

petro-leum,and

rubberprod-ucts

Foods,bever-ages,and

tobacco

1947.1948.1949.

19501951195219531954

1955..1956..1957..1958..1959..

I960..1961.1962.1963.1964.

1965. . .1966. . .1967. . .1968....1969 P..

1968: J a n . . .F e b . . .Mar_.Apr__May . .June . .

Ju ly . .Aug_.Sept . .Oct . . .N o v . .D e c . . .

1969: J a n . . .F e b . .M a r . .A p r . .M a y . .June.

Ju ly . .Aug_.Sept . .Oct . . .N o v . .Dec p.

90.794.379.4

99.9108.799.3

112.591.3

118.4116.4112.287.5

100.4

101.398.9

104.6113.3129.1

137.6142.7132.5137.0149.2

75.977.269.8

85.491.289.0

100.390.2

98.398.8

101.592.9

105.5

107.6106.5117.1123.4132.7

147.8163.0161.9167.9179.8

65.366.559.0

72.783.092.1

100.587.7

96.5107.1104.288.8

107.1

110.8110.4123.5129.2141.4

160.5183.8183.4184.3195.6

42.946.947.1

56.462.973.191.783.8

102.097.4

106.489.5

104.0

108.2103.6118.3127.0130.7

149.2166.9165.7179.5174.6

53.755.249.2

57.365.778.185.382.9

88.795.498.092.1

109.9

116.5115.8123.0130.2136.4

151.4176.5184.8184.2194.2

75.879.772.3

87.792.089.392.789.6

100.7102.097.594.1

108.5

105.7104.5109.3114.4121.1

127.6132.9130.7137.4142.1

73.577.471.6

83.780.282.489.786.8

97.9101.097.693.3

109.0

113.3114.1124.5129.1138.4

151.8165.0162.6169.9176.6

81.084.580.6

89.187.489.590.786.9

95.598.096.995.0

108.1

107.5108.4115.1118.5125.2

135.8141.6139.4144.8143.9

66.769.469.3

76.779.477.782.685.0

92.597.197.897.0

105.2

109.0112.4116.7120.1127.5

135.3146.4149.6155.5164.7

47.550.849.4

60.767.469.975.274.7

86.891.495.695.5

108.9

113.9118.9131.2141.8152.5

164.6181.9190.0207.7222.4

Seasonally adjusted

138.1140.3140.3144.3148.1148.6

147.4124.1120.6123.2127.9134.8

139.5143.6146.2147.9149.3153.1

152.4151.3149.3150.4151.1151

163.9165.7166.5161.3164.9167.6

166.1166.2167.5172.1173.7175.4

176.4177.6178.5178.3179.2180.6

179.1180.6179.1179.5179.2180

183.4183.5183.3179.4180.4181.7

183.0183.8186.4186.2187.4188.5

191.8192.7194.7194.6196.9197.2

198.1199.4201.2198.9188.2188

175.6175.1177.6175.3180.4182.6

183.2181.7180.5180.4180.0176.4

171.2173.1174.1172.4171.8176.6

181.1179.1178.8175.7168.2164

186.7184.7183.8181.4181.2181.3

179.2182.6184.3185.8188.5189.7

191.6190.4192.8195.4195.3195.7

194.7194.9195.4193.9194.9194

132.7130.7129.0137.8137.9137.1

136.2135.3138.8140.0140.5144.3

143.8145.6145.1143.2143.6140.6

138.3140.2140.6140.6141.0141

165.2166.9166.9166.5169.8169.5

169.5170.1170.9172.2173.4173.4

176.6175.7176.5178.4179.0179.1

176.3176.2175.4174.7175.2174

141.1141.9143.9144.2144.8145.6

144.3144.1144.8146.9147.3145.1

143.6142.6144.7143.7146.3146.0

145.4143.3141.1141.7141.3142

150.0150.1152.4152.3155.1155.2

155.8156.9158.2158.0158.8160.8

160.2161.2162.2162.4163.8164.4

165.9166.3165.8165.7166.9166

197.9200.5201.6202.9204.6206.3

208.0208.3211.0213.1216.7215.9

214.1218.0.219.6221.7222.7223.2

225.2222.4223.3224.3224.9224

80.780.080.8

83.685.487.388.289.8

93.196.696.799.4

103.9

106.6110.2113.3116.8120.8

123.4128.1131.7135.3138.9

132.8133.7133.9134.3134.4135.6

136.0135.2135.3136.3135.0137.3

138.0139.5139.8138.2136.9137.0

138.4141.0140.4136.2138.6140


219

TABLE G-38.—Manufacturing output, capacity, and utilization rate, 1948-69

Period

1948. . .1949

195019511952.19531954

1955195619571958 . . .1959 . ._

19601961 -19621963 .1964

1965196619671968.1969 v

1963: 1IIIIIIV

1964- 1II . .INIV

1965: 1IIIIIIV

1966: 1 .IIIII „ .IV

1967: 1IIIllIV

1968:1 _

IIIIV . - - — _

1969" 1 * -| | V

HI vIV *

Output Capacity *

1957-59 output=100

68.965.1

75.881.985.292.786.3

97.3100.2100.893.2

106.0

108.9109.6118.7124.9133.1

145.0158.6159.7166.9173.8

76.881.1

84.387.492.798.4

103.3

108.4114.3120.7125.8130.1

134.9139.6144.4149.8155.6

164.0175.0186.1196.9207.7

Utilization rate 2

Total Advancedproducts

Primaryproducts

Percent

89.780.2

90.494.091.394.283.5

90.087.783.674.081.5

80.678.582.183.385.7

88.590.585.384.683.7

87 980 3

87 391 091 994.183.8

87 886.082.373.681.0

81.178.982.583.184.4

87.690.585.983.881.5

92 280 0

94 898 190 494 483.0

93 290 185 374.682.1

80.078.181.683.687.4

89.790.584.685.886.8

Seasonally adjusted

121.3124.9126.0127.2

129.4132.5134.7135.9

141.4143.5146.1148.9

154.5157.7159.9161.7

159.0157.5158.3161.3

163.9166.1166.9169.1

171.7173.9175.4172.4

147.8149.1150.5151.8

153.3154.9156.4158.0

160.1162.7165.3167.9

170.7173.6176.5179.3

182.1184.8187.5190.1

192.8195.5198.2200.9

203.6206.3208.9212.2

82.083.983.783.7

84.585.786.386.2

88.588.488.588.6

90.590.890.690.0

87.185.084.384.8

85.085.184.284.2

84.584.584.281.8

82.282.983.683.7

83.884.784.984.4

87.287.187.488.7

90.290.490.690.6

87.886.285.184.3

84.583.883.783.2

82.782.282.379.0

81.785.283.983.8

85.587.188.388.8

90.290.190.188.5

90.991.490.689.1

86.283.483.285.6

85.786.984.985.6

87.087.886.785.6

1 For description and source of data see "A Revised I ndex of Manufacturing Capacity " Frank de Leeuw, Frank E. Hopkins,and Michael D. Sherman "Federal Reserve Bulletin". November 1966, pp. 1605-1615. See also McGraw-Hill surveys on'Business Plans for New Plants and Equipment" for data on capacity and oparating rates.

2 Output as percent of capacity; based on unrounded data.Source: Board of Governors of the Federal Reserve System (output) and sources in footnote 1 (capacity and utilization

rate).

2 2 0

TABLE C-39.—Business expenditures for new plant and equipment, 1947-69l


Year or quarter

1947... . .19481949

1950195119521953...1954

1955.1956... . .195719581959

196019611962. .19631964

1965... . .196619671968 .1969 P

1967' 1IIIIIIV .

1968: 1 .

IIIIV.. .

1969: 1I I . . . .III

Total

19.3321.3018.98

20.2125.4626.4328.2027.19

29.5335.7337.9431.8933.55

36.7535.9138.3940.7746.97

54.4263.5165.4767.7675.30

Manufacturing

Total

8.449.017.12

7.3910.7111.4511.8611.24

11.8915.4016.5112.3812.77

15.0914.3315.0616.2219.34

23.4428.2028.5128.3731.74

Dura-ble

goods

3.25

2 45

2.944.825.215.314.91

5.417.457.845.615.81

7.236.316.797.539.28

11.5014.0614.0614.1215.99

Non-durablegoods

5.195.714.68

4.455.896.246.566.33

6.487.958.686.776.95

7.858.028.268.70

10.07

11.9414.1414.4514.2515.74

Mining

0.69.93.88

.841.111.211.251.28

1.311.641.691.431.36

1.301.291.401.271.34

1.461.621.651.631.87

Transportation

Rail-road

0.911.371.42

1.181.581.501.42.93

1.021.371.58.86

1.02

1.16.82

1.021.261.66

1.992.371.861.451.83

Other

1.301.28.87

1 191 461.471.531.47

1.551.651.711.432.10

1.971.962.171.982.52

2.913.393.774.154.20

Publicutili-ties

1.542.543.10

3.243.563.744.343.99

4.034.525.675.525.14

5.245.004.904.985.49

6.137.438.74

10.2011.56

Com-mer-cialand

others

6.456.165.58

6 367.047.067.798.27

9.7311.1510.7910.2711.16

11.9912.5213.8415.0616.63

18.4920.5020.9421.9724.10


65.2365.6065.4865.66

68.0966.2967.7769.05

72.5273.9477.84

29.7829.1627.8527.51

28.0227.8428.8628.70

29.9931.1633.05

14.4614.2613.9213.71

14.1113.5114.4714.39

15.4715.9816.53

15.3214.9013.9313.80

13.9114.3314.4014.31

14.5215.1816.52

1.541.521.761.78

1.801.661.571.52

1.831.881.89

2.121.781.721.82

1.681.491.291.34

1.681.762.06

3.043.814.014.20

4.313.474.344.62

4.763.883.88

7.988.518.869.46

10.0810.249.82

10.63

11.5211.6811.48

20.7620.8321.2820.90

22.2021.5921.8922.24

22.7423.5925.49

1 Excludes agricultural business; real estate operators; medical, legal, educational, and cultural service; and nonprofitorganizations. These figures do not agree precisely with the fixed investment data in the gross national product estimates,mainly because those data include investment by farmers, professionals, institutions, and real estate firms, and certainoutlays charged to current account.

2 Commercial and other includes trade, service, finance, insurance, communications, and construction.Note.—Annual total is the sum of unadjusted expenditures; it does not necessarily coincide with the average of season-

ally adjusted figures.Series revised beginning 1947. Comparable data prior to 1947 are not available. A full description of the new actual ex-

penditure series will appear in the January 1970 issue of the "Survey of Current Business" and of the revised expectationsdata in the February 1970 issue.

Sources: Department of Commerce (Office of Business Economics) and Securities and Exchange Commission.

372-111 O—70 2 2 1

TABLE G-40.—New construction activity, 1929-69

[Value put in place, millions of dollars]

Year or month

1929

1930193119321933193419351936193719381939

1940194119421943194419451946

New series5

1946194719481949

1950195119521953195419551956 - - . .195719581959

1960196119621963New seriesfl

19621963196419651966196719681969 7.. .

Totalnewcon-

struc-tion

10,793

8,7416 4273,5382,8793,7204,2326,4976,9996,9808,198

8,68211,95714,0758,3015,2595,809

12,627

14,30820,04126,07826,722

33,57535,43536,82839,13641,38046,51947,60149,13950,15355,305

53,94155,44759,57662,755

59,66763,42366,20072 31975,12076,16084,69092,020

Private construction

Total

8,307

5,8833,7681,6761,2311,5091,9992,9813,9033,5604,389

5,0546,2063,4151,9792,1863,411

10,396

12,07716,72221,37420,453

26,70926,18026,04927,89429,66834,80434,86935,08034,69639,235

38,07838,29941,70743,859

41,79844,05745,81050,25351,12050,58756,99663,730

Residential build-ing (nonfarm)

Total*

3,625

2,0751 565

630470625

1,0101,5651,8751,9902,680

2,9853,5101,715

885815

1,2764,752

6,2479,850

13,12812,428

18,12615,88115,80316,59418,18721,87720,17819, 00619,78924,251

21,70621,68024,29225,843

24,29226,18726,25826,26823,97123,73628,82331 600

Newhous-

ingunits

3,040

1,5701,320

485290380710

1,2101,4751,6202,270

2,5603,0401,440

710570720

3,300

4,7957,765

10,50610,043

15,55113,20712,85113,41114,93118,24216,14314,73615,44519,233

16,41016,18918,63820,064

18,63820,38520,35420,35117,96417,88522,42323,640

Nonresidential building and otherconstruction

Total

4,682

3,8082,2031,046

761884989

1,4162,0281,5701,709

2,0692,6961,7001,0941,3712,1355,644

5,8306,8728,2468,025

8,58310,29910,24611,30011,48112,92714,69116,07414,90714,984

16,37216,61917,41518,016

17,50617,87019,55223,98527,14926,85128,17332,130

Com-mer-cials

1,135

893454223130173211290387285292

3484091553356

2031,153

1,153957

1,3971,182

1,4151,4981,1371,7912,2123,2183,6313,5643,5893,930

4,1804,6744,9555,200

5,1444,9955,3966,7396,8796,9828,333

10,010

In-dus-trial

949

53222174

176191158266492232254

442801346156208642

1,689

1,6891,7021,397

972

1,0622,1172,3202,2292,0302,3993,0843,5572,3822,106

2,8512,7802,9492,962

2,8422,9063,5655,1186,6796,1315,5946,380

Others

2,598

2,3831,528

749455520620860

1,1491,0531,163

1,2791,4861,199

9051,1071,2902,802

2,9884,2135,4525,871

6,1066,6846,7897,2807,2397,3107,9768,9538,9368,948

9,3419,1659,5119,854

9,5209,969

10,59112,12813,59113,73814,24615,740

Public construction

Total

2,486

2,8582,6591,8621,6482,2112,2333,5163,0963,4203,809

3,6285,751

10,6606,3223,0732,3982,231

2,2313,3194,7046,269

6,8669,255

10,77911,24211,71211,71512,73214,05915,45716,070

15,86317,14817,8S918,896

17,86919,36620,39022,06624,00025,57327,69428,290

Fed-erallyowned

155

209271333516626814797776717759

1,1823,7519,3135,6092,5051,737

865

865840

1,1771,488

1,6242,9814,1854,1393,4282,7692,7262,9743,3873,724

3,6223,8793,9133,970

3,9134,0103,9054,0183,9573,5123,4563,430

Stateand

locallyowned *

2,331

2,6492.3881,5291,1321,5851,4192,7192,3202,7033,050

2,4462,0001,347

713568661

1,366

1,3662,4793,5274,781

5,2426,2746,5947,1038,2848,946

10,00611,08512,07012,346

12,24113,26913,95614,926

13,95615,35616,48518,04820,04322,06124,23824,860


222

TABLE C-40.—New construction activity, 1929-69—Continued

[Value put in place, millions of dollars]

Year or month

1968: JanF e b . . . .M a r . . . .A p r . . . .May . . . .J u n e . . .

J u l y . . . .AugSep t . . . .OctN o v . . . .D e c . . .

1969: JanF e b . . . .M a r . . . .AprMay . . . .J une . . . .

JulyAugSep t . . .O c t . . -N O V P . .

Totalnewcon-

struc-tion

Private construction

Total

Residential build-ing (nonfarm)

Total*New

hous-ing

units

Nonresidential building and other

Total

construction

Com-mer-c ia l

In-dus-trial

Others

Public

Total

construction

Fed-erallyowned

Stateand

locallyowned «


82,87383,88483,57285,29985,70782,050

81,65883,73685,26687,75787,81288,068

91,97292,06691,72292,69692,25491,539

91,78791,68793,60893,89691,950

55,31655,38056,05557,40357,26054,981

54,98856,68257,44459,25959,01458,899

62,87562,55062,76262,96263,56463,197

64,24264,00865,56465,81163,756

26,98826,75427,69829,32029,62828,187

27,77028,32529,35029,82330,15230,937

31,08431,43632,42332,93032,86631,805

31,38530,88031,05331,53031,203

21,22621,28221,67722,30022,31221,450

21,24821,91922,77123,56224,11824,953

24,97225,47225,45824,99524,49023,887

23,21422,57722,62423,00322,604

28,32828,62628,35728,08327,63226,794

27,21828,35728,09429,43628,86227,962

31,79131,11430,33930,03230,69831,392

32,85733,12834,51134,28132,553

7,7218,3288,2588,5128,1118,122

8,2728,6418,5348,9398,2628,046

9,9719,9419,7519,0669,284

10,020

10,41710,34311,11810,8569,557

6,3305,7405,5285,4845,2754,852

4,7525,5755,4926,0966,2715,905

6,8006,3186,0195,8575,9236,050

6,4046,4146,7146,9466,526

14,27714,55814,57114,08714,24613,820

14,19414,14114,06814,40114,32914,011

15,02014,85514,56915,10915,49115,322

16,03616,37116,67916,47916,470

27,55728,50427,51727,89628,44727,069

26,67027,05427,82228,49828,79829,169

29,09729,51628,96029,73428,69028,342

27,54527,67928,04428,08528,194

3,5283,6923,5613,3813,4363,287

3,0523,3843,3403,5393,5453,839

3,5513,4633,5303,7843,4883,574

3,1143,4133,4313,4373,168

24,02924,81223,95624,51525,01123,782

23,61823,67024,48224,95925,25325,330

25,54626,05325,43025,95025,20224,768

24,43124,26624,61324,64825,026

1 Total includes additions and alterations and nonhousekeeping units not shown separately.2 Office buildings, warehouses, stores, restaurants, and garages.3 Farm, institutional, public utilities, and all other private.4 Includes Federal grants-in-aid for State and locally owned projects.5 New series in 1946 reflects differences due to the new higher level series of housing starts and farm construction ex-

penditures and the reduced level value in place series for public utilities. See "Construction Report C30-61 (Supplement)"for a description of the differences.

6 New series differs from old in that it reflects differences in 1962 due to the introduction of new series for private non-residential buildings and differences in 1963 due to the introduction of new series for State and locally owned publicconstruction. See "Construction Report C30-65S" for a description of the differences.

7 Preliminary estimates by Council of Economic Advisers.Source: Department of Commerce, Bureau of the Census, except as noted.

223

TABLE G-41.—New housing starts and applications for financing, 1929-69[Thousands of units]

Year ormonth

Housing starts

Private andpublic i

Total(farm

andnon-

farm)

Non-farm

Private i

Total (farm and nonfarm)

Total

Type ofstructure 2

Onefamily

Two ormore

families

Nonfarm

Total

Governmenthome programs

FHA3 VA

Newprivatehousing

unitsauthor-ized*

Proposedhome con-struction «

Appli-cations

forFHAcom-mit-

ments 3

Re-quests

forVAap-

prais-als

1929.

1930.1931.1932.1933.1934.1935.1936.1937.1938.1939.

1940.1941.1942.1943.1944.

509.0 509.0

330.0254.0134.0

330.0254.0134.0

93.0126.0221.0319.0336.0406.0515.0

602.6706.1356.0191.0141.8

New series19451946194719481949

1950..1951.1952.1953.1954.1955.1956.1957.1958.1959.

1960...1961...1962...1963...1964...1965...1966...1967...1968...1969 P..

326.11,023.21,268.51,362.11,466.1

.93.0

126.0215.7304.2332.4399.3458.4529.6619.5301.2183.7138.7

324.91,015.21,265.11,344.01,429.8

1,951.91,491.01,503.91,437.61,550.51,646.01,349.1

,553.5

,296.0,365.0,492.4,642.0,561.6,509.61,196.21,321.91,547.71,496.6

1,223.9,382.0,531.3

1,274.01,336.81,468.71,614.81,534.71,487.51,172.81,298.81,523.61,479.0

1,516.8

1,252.11,313.01,462.71,610.31,529.31,472.91,165.01,291.61,507.71,463.2

1,234.1

994.7974.4991.3

1,020.7971.5963.8778.5843.9899.5809.3

282.7

257.4338.6471.4589.6557.8509.1386.5447.7608.2653.8

908.1419.8445.4402.1531.8626.6324.9174.8314.2494.6

,230.1,284.8,439.0,582.9,502.3,450.6,141.5, 268.4

1,483.61,445. 5

13.248.857.0

106.8144.7

176.6217.1160.2126.183.6

38.967.1178.3216.4252.6

328.2186.9229.1216.5250.9268.7183.4150.1270.3307.0

225.7198.8197.3166.2154.0159.9129.1141.9147.7153.6

6 20.647.849.

131.1179.8

231.2288.5238.5144.462.9

78.891.8

160.371.190.8

191.2148.6141.3156.5307.0392.9270.7128.3102.1109.3

74.683.377.871.059.249.436.852.556.151.2

1,208.3

998.01,064.21,186.61,334.71,285.8,239.8971.9

,141.0,341.4, 296.2

56.6121.7286.4293.2327.0

397.7192.8267.9253.7338.6306.2197.7198.8341.7369.7

242.4243.8221.1190.2182.1188.9153.0167.2168.9187.6

Monthly totals, unadjusted

1968: Jan...Feb...Mar..Apr...May..June..

July..Aug..Sept..Oct..Nov..D e c .

82.787.2

128.6165.2145.1142.9

142.5141.0139.8143.3129.599.8

164.4226.3251.4535.4620.8401.5159.4234.2234.0

142.9177.8171.2139.3113.6102.199.2

124.3131.7138.2

82.085.3

126.0162.2143.3141.1

140.0138.9138.0140.6127.598.9

80.584.6

126.6162.0140.9137.9

139.8136.6134.3140.8127.196.4

45.255.479.398.086.881.4

86.482.580.285.664.853.8

35.329.247.364.054.156.5

53.454.154.155.262.342.6

79.882.8

123.9159.1139.0136.0

137.3134.5132.4138.1125.195.5

9.710.612.014.313.812.3

12.913.612.214.511.410.5

3.44.14.55.45.55.0

4.94.84.65.34.24.4

73.488.8

115.5132.4130.5113.9

118.0113.7116.3127.6104.395.9

11.212.415.914.715.713.7

13.215.114.017.113.612.3

8.410.611.612.411.010.4

12.511.510.412.711.49.0


224

TABLE G-41.—New housing starts and applications for financing, 1929-69—Continued

[Thousands of units]

Year ormonth

Housing starts

Private andpublic^

Total(farm

andnon-

farm)

Non-farm

Private1

Total (farm and nonfarm)

Total

Type ofstructure2

Onefamily

Two ormore

families

Nonfarm

Total

Governmenthome programs

FHA3 VA

Newprivatehousing

unitsauthor-ized *

Proposedhome con-struction 5

Appli-cations

forFHAcom-mit-

ments3

Re-quests

forVAap-

prais-als

Monthly totals, unadjusted

1969:JanFebM a r . . . .AprM a y . . . .June

JulyAugSept . . . .O c t . . . .Nov *>-._Dec *>___

105.894.8

135.6159.9157.7150.8

126.5127.6132.9125.897.481.8

1968: Jan...Feb..Mar..Apr..May..June-July..Aug..Sept..Oct...Nov...Dec...

1969:Jan...Feb...Mar__Apr...May..June-

July...Aug...Sept...Oct...Nov p..Dec p..

104.593.9134.4158.3156.1148.3

124.3126.2131.2124.595.981.5

101.590.1

131.9159.0155.5147.3

125.2124.9129.3123.494.680.5

51.347.971.985.091.382.7

73.569.571.568.054.442.2

50.242.260.074.064.264.6

51.755.457.955.340.238.3

100.289.2

130.6157.4154.0144.8

122.9123.5127.6122.193.180.2

8.89.2

12.716.013.413.9

13.112.613.115.112.213.4

3.83.53.94.44.34.6

4.74.24.85.03.94.2

92.794.6

119.4146.4126.2123.2

111.8104.0104.7109.182.981.0

12.513.916.116.915.516.2

15.314.616.820.014.815.2

10.19.9

12.212.211.511.4

13.613.011.111.411.510.1


1,4561,5371,5111,5911,3641,365

1,5311,5181,5921,5701,7331,507

1,8781,6861,5841,5631,5091,469

1,3711,3841,5421,3921,2971,245

9121,075

920922838790

904867944965905922

1,066975828797883808

765723846777783718

544462591669526575

627651648605828585

812711756766626661

606661696615514527

1,4301,4991,4791,5621,3451,348

1,5071,4961,5701,5411,7051,492

1,8451,6641,5671,5481,4951,446

1,3491,3701,5221,3791,2771,240

157164149147133137

134144145153158158

137138157166134147

137143152163179193

526363595754

495154555365

575253484748

464754525359

1,1481,3941,4161,3401,2801,281

1,2891,2901,3931,3781,4251,463

1,4031,4771,4211,5021,3231,340

1,2281,2451,2011,1831,1911,177

163152160144161157

146167169199212187

179169161166168175

175170193231239209

122141127126110120

135127125147172136

148132136124122126

145151127130184147

1 Military housing starts, including those financed with mortgages insured by FHA under Section 803 of the NationalHousing Act, are included in publicly financed starts but excluded from total private starts and from FHA starts.

2 Not available prior to 1959 except for nonfarm for 1929-44.s Units are for 1 - to 4- family housing.< Data beginning 1967 cover approximately 13,000 permit-issuing places. Data for 1963-66 are based on 12,000 places

and 1959-62,10,000 places. The addition of approximately 1,000 permit-issuing places in 1967 contributed an increase of3 percent in total permit authorizations.

« Units in mortgage applications or appraisal requests for new home construction.« FHA program approved in June 1934: all 1934 activity included in 1935.i Monthly estimates for September 1945-May 1950 were prepared by Housing and Home Finance Agency.Sources: Department of Commerce (Bureau of the Census), Department of Housing and Urban Development, Federal

Housing Administration (FHA), and Veterans Administration (VA), except as noted.

225

TABLE C-42.—Sales and inventories in manufacturing and trade, 1947-69

[Amounts in millions of dollars]

Year or month

Total manufacturingand trade

Sales i Inven-tories 2 Ratio 3

Manufacturing

Sales i Inven-tories 2 Ratio s

Merchant wholesalers

Sales i Inyen-tories 2 Ratio 3

Retail trade

Salesi Inven-tories 2 Ratio 3

1.261.391.41

1.381.641.521.531.51

1.431.471.441.431.40

1.451.441.381.391.40

1.401.441.471.441.49

1947—1948—1949—

1950—1951—1952—1953—1954—

1955—1956—1957—1958—1959—

1960...19614..1962...1963...1964...

1965...1966—1967...1968...1969 K.

35,26033,788

38,59643,35644,84047,98746,443

51,69454,06355,87954,23359,661

52,50749,497

59,82270,24272,37776,12273,175

79,51687,30489,05286,92291,891

60,74661,13365,417 10168,96973,685 111

94,74795,728.01,149105,525-",548

80,276 12187,184 13788,962 143;96,915 "•_,

103,896 164,

,140,184,694

153,764164,992

1.421.53

1.361.551.581.581.60

1.471.551.591.601.50

1.561.541.511.491.47

1.451.481.581.531.54

15,51317,31616,126

18,63421,71422,52924,84323,355

26,48027,74028,73627,28030,219

30,79630,89633,11335,03237,335

41,00344,87645,71250,31054,780

25,89728,54326,321

31,07839,30641,13643,94841,612

45,06950,64251,87150,07052,707

53,81454,94358,21260,02763,370

68,17978,12582,81988,57995,416

1.581.571.75

1.481.661.781.761.81

1.621.731.801.841.70

1.761.741.721.691.64

1.601.621.771.701.68

6,16,514

7,6958,5978,7829,0528,993

9,89310,51310,47510,25711,491

11,65611,98812,67413,38214,527

15,59516,97917,09918,32919,776

7,9577,706

9,2849,88610,21010,68610,637

11,67813,26012,73012,73913,879

14,12014,48814,93616,04816,977

18,27420,69121,55722,52824,039

1.131.19

1.071.161,121.171.18

1.131.191.231.241.15

1.221.201.161.151.13

1.141.141.211.201.18

10,20011,13511,149

12,26813,04613,52914,09114,095

15,32115,81116,66716,69617,951

18,29418,24919,63020,55621,823

23,67725,33026,15128,27729,340

14,24116,00715,470

19,46021,05021,03121,48820,926

22,76923,40224,45124,11325,305

26,81326,29728,00129,45031,201

34,68738.36839,31842,65745,537

Seasonally adjusted

1968: JanFeb.._.M a r . . . .AprM a y . . .June.__

Ju ly . . .AugSept—Oct.__.N o v . . .Dec

1969: Jan..__Feb..__M a r . . .Apr.._May. .June__

July..Aug.. .Sept..Oct.. .Nov *>.Decp.

93,18493,758 144;94,463 145,94,552 146,96,069 147,97,423 148,

144,029••1,738

i,082,405,7271,436

98,368 148,97,08398,549 150;99,675

100,142 152i 83098,671

.1,972149,825150,652152,017152,830153,764

100,137 154101,390 155,101,510 156,102,352 157,103,232104,127

104,201104,644 161105,903 162106,907106,036 164;

,086,3391,401,477

158,602159,264

160,631"",659

J.733164,250' " , 9 9 2

1.551.541.541.551.541.52

1.511.541.531.531.531.56

1.541.531.541.541.541.53

1.541.541.541.541.56

48,44748,35648,44648,75550,01450,729

51,42549,82551,44152,56052,54851,494

52,80153,30253,07853,29853,74154,786

55,39255,23956,43456,99956,143

82,89083,40883,75984,38285,27885,582

85,82986,71387,10987,56687,94788,579

88,90589,55690,31791,01892,13992,215

93,16693,72894,21194,91695,416

1.711.721.731.731.711.69

1.671.741.691.671.671.72

.68

.68

.70

.71

.71

.68

1.681.701.671.671.70

17,69417,95318,02118,00617,89718,374

18,26918,49818,79218,41818,78818,830

18,34718,79919,51619,61220,10519,970

19,71920,05920,21020,28820,345

21,56421,54221,54721,78121,84322,012

22,07822,10222,11922,23122,39522,528

22,44122,76923,08023,34123,43823,611

23,59123,60923,71623,95624,039

1.22.20.20.21.22.20

.21

.19

.1821.19.20

.22

.21

.181.191.171.18

1.201.181.171.181.18

27,04327,44927,99627,79128,15828,320

28,67428,76028,31628,69728,80628,347

28,98929,28928,91629,44229,38629,371

29,09029,34629,25929,62029,54829,581

39,57539,78839.77640,24240,60640,842

41,06541,01041,42442,22042,48842,657

42,74043,01443,00443,11843,02543,438

43,87444,32244,80645,37845,537

1.461.451.421.451.441.44

1.431.431.461.471.471.50

1.471.471.491.461.461.48

1.511.511.531.531.54

1 Monthly average for year and total for month.2 Seasonally adjusted, end of period.31nventory/sales ratio. For annual periods, ratio of weighted average inventories to average monthly sales; for monthly

data, ratio of inventories at end of month to sales for month.< Manufacturing sales prior to 1961 not completely comparable with later data. See Department of Commerce, Bureau

of the Census, "Series M3-1.1," page 9, September 1968.5 Where December data not available, data for year calculated on basis of no change from November.

Mote.—The inventory figures in this table do not agree with the estimates of change in business inventories includedin the gross national product since these figures cover only manufacturing and trade rather than all business, and showinventories in terms of current book value without adjustment for revaluation.

Source: Department of Commerce (Office of Business Economics and Bureau of the Census).

226

TABLE C-43.—Manufacturers9 shipments and inventories, 1947-69

[Millions of dollars]

Year or month

19471948 . . .1949

1950 . .1951195219531954

19551956 - -195719581959

196019613

196219631964 .

19651966 .19671968 . - - -1969* - . - .

1968: JanFebMarAprM a y . . . .June

JulyAugSept . . - .OctNovDec

1969:JanFebMarAprMayJune

JulyAugSeptOct p . —Nov *_-.

Shipments i

Total

15,51317,31616,126

18,63421,71422,52924,84323,355

26,48027,74028,73627,28030,219

30,79630,89633,11335,03237,335

41,00344,87645,71250,31054,780

Dura-ble

goodsindus-tries

6,6947,5797,191

8,84510,49311,31313,34911,828

14,07114,71515,23713,57215,544

15,81715,54417,10318,24719,634

22,21624,63524,97327,57930,452

Non-durablegoodsindus-tries

8,8199,7388,935

9,78911,22111,21611,49411,527

12,40913,02513,49913,70814,675

14,97915,35216,01016,78617,701

18,78820,24020,73922,73124,328

Inventories 2

Total

25,89728,54326,321

31,07839,30641,13643,94841,612

45,06950,64251,87150,07052,707

53,81454,94358,21260,02763,370

68,17978,12582,81988,57995,416

Durable goods industries

Total

13,06114,66213,060

15,53920,99123,73125,87823,710

26,40530,44731,728

Mate-rialsandsup-plies

8,9667,894

9,19410,41710.608

30,095 9.' 84731,839

32,360

10,585

10.28632,518 10:24134,60935,80738,433

42,20449,79753,54057,42263,076

10,80310,99711,928

13,28515,48415,59216,63717,194

Workin

process

10,7209,721

10,75612,31712,83712,29412,952

12,78013,22114,21015,00016,254

18,14421,97624,67526,35729,660

Fin-ishedgoods

6,2066,040

6,3487,5658,1257,7498,143

9,1909,0569,5969,810

10,251

10,77512,33713,27314,42816,222

Nondurable goods industries

Total

12,83613,88113,261

15,53918,31517,40518,07017,902

18,66420,19520,14319,97520,868

21,45422,42523,60324,22024,937

25,97528,32829,27931,15732,340

Mate-rialsandsup-plies

8,3178,167

8,5568,9718,7758,6719,089

9,1139,4639,8379,999

10,179

10,47811,26611,24711,59811,963

Workin

process

2,4722,440

2,5712,7212,8642,8002,928

2,9353,1923,3033,4123,519

3,8234,2554,4964,8555,058

Fin-ishedgoods

7,4097,415

7,6668,6228,6248,4988,857

9,3539,770

10,46310,80911,239

11,67412,80713, 53614,70415,319

Seasonally adjusted

48,44748,35648,44648,75550,01450,729

51,42549,82551,44152,56052,54851,494

52,80153,30253,07853,29853,74154,786

55,39255,23956,43456,99956,143

26,92526,71126,84426,88827,50927,633

28,21126,83727,98528,96028,78627,742

29,32529,91429,53029,64329,57330,136

30,60530,86831,74231,88931,099

21,52221,64521,60221,86722,50523,096

23,21422,98823,45623,60023,76223,752

23,47623,38823,54823,65524,16824,650

24, 78724,37124,69225,11025,044

82,89083,40883,75984,38285,27885,582

85,82986,71387,10987,56687,94788,579

88,90589,55690,31791,01892,13992,215

93,16693,72894,21194,91695,416

53, 52554,00954,29554,72455,23455,442

55,46156,06956,45856,65756,95357,422

57,87958,28258,97859,42660,22260,479

61,44161,72462, 03662,63163,076

15,48915,64815,84016,07116,37916,498

16,75316,78116,70416,76316,67616,637

16,70616,61316,98016,93517,05517,045

17,15917,01117, 02317,10417,194

24,64124,92625,07825,21425,39225,490

25,23725,54425,77225,82526,08526,357

26,63126,96127,26427,46327,87228, 072

28,71428,97729,22429,49429,660

13,39513,43513,37713,43913, 46313,454

13,47113,74413,98214,06914,19214,428

14,54214,70814,73415,02815,29515,362

15,56815,73615,78916,03316,222

29,36529,39929,46429,65830,04430,140

30,36830,64430,65130,90930,99431,157

31,02631,27431,33931,59231,91731,736

31,72532, 00432,17532,28532,340

11,30611,24911,12811,22811,31211,333

11,36611,50811,51111,60911,51211,598

11,49711,55411,51911,67211,78311,704

11,68411,79011,83712,04811,963

4,4824,4974,5084,5224,6044,619

4,6824,7294,6794,7244,7524,855

4,9915,0144,9434,9705,0164,946

4,9454,9885,0285,0625,058

13,57713,65313,82913,90914,12814,188

14,32014,40714,46114,57614,73014,704

14, 53814,70614,87714,95015,11815,086

15,09615,22615,31015,17515,319

1 Monthly average for year and total for month.2 Book value, seasonally adjusted, end of period.3 Data prior to 1961 not completely comparable with later data. See Department of Commerce, Bureau of the Census,

"Series M3-1.1," page 9, September 1968.< Where December data not available, data for year calculated on basis of no change from November.


227

TABLE C-44.—Manufacturers1 new and unfilled orders, 1947-69

[Amounts in millions of dollars]

Year or month

1947..1948..1949..

1950..1951..1952..1953..1954..

1955..1956..1957..1958..1959..

I960..1961 *1962..1963..1964..

1965..1966..1967..1968..1969 5.

1968: Jan..Feb..Mar..Apr..May_.June.

July..Aug_.Sept..Oct...Nov..Dec.

1969: Jan...Feb..Mar_.Apr_.May..June.

July...Aug...Sept—Oct....NOVP.

New orders1

Total

15,25617,69215,614

20,11023,90723,20323,53.322,313

27,42328,38327,51426,90130,679

30,11531,08533,00535,32237,952

41,80345,93845,92850,59754,956

Durable goodsindustries

Total

6,3888,1266,633

10,16512,84112,06112,10510,743

14,95415,38114,07313,17015,951

15,22315,69817,02618,52220,258

22,98625,71025,18927,86830,630

Machin-ery andequip-ment

2,0841,770

2,4992,8702,5662,3542,878

2,7912,8543,0903,4123,935

4,4355,2685,2505,8046,402

Non-dura-

blegoodsindus-tries

8,8689,5668,981

9,94511,06611,14211,42811,570

12,46913,00213,44113,73114,728

14,89215,38715,97916,80017,694

18,81720,22820,73922,72824,327

Unfilled orders2

Total

34,41530,71724,506

43,05569,78575,64961,17848,266

60,00467,37553,18348,88254,494

46,13348,48547,35150,96058,536

68,20881,07283,68687,15289,288

Dura-ble

goodsindus-tries

28,53226,60120,018

36,83865,83572,48058,63745,250

56,24163,88050,35245,73950,654

43,40145,33644,53147,98055,652

64,98077,98780,57884, 07186,235

Non-dura-

blegoodsindus-tries

5,8834,1164,488

6,2173,9503,1692,5413,016

3,7633,4952,8313,1433,840

2,7323,1492,8202,9802,884

3,2283,0853,1083,0813,053

Unfilled orders-ship-ments ratio 3

Total

3.42

3.633.873.352.602.85

2.582.522.462.412.50

2.632.922.832.78

Dura-ble

goodsindus-tries

Seasonally adjusted

4.12

4.274.554.003.493.44

3.213.022.962.892.99

3.133.503.393.38

Non-dura-

blegoodsindus-tries

48,35348,45349,56649,23749,65049,850

50,18150,20151,87753,93153,10053,101

53,11953,90153,28354,63554,13353,861

55,79354,79956,82956,91756,103

26,83726,81428,00527,37327,17226,701

26,92527,32928,38130,28029,32529,380

29,68430,48229,69730,94429,99829,171

31,06930,48232,13531,79531,049

5,4665,3805,3825,4925,4475,968

5,7146,0275,9166,5506,0896,237

6,2046,5116,4147,0996,4286,528

6,3466,2457,3526,4506,402

21,51621,63921,56121,86422,47823,149

23,25622,87223,49623,65123,77523,721

23,43523,41923,58623,69124,13524,690

24,72424,31724,69425,12225,054

83,59283,68984,80985,29184,92784,048

82,80683,18483,61784,99185, 53987,152

87,46988, 06488,26789,60389,98689, 058

89,45689, 01489,41189,33389,288

80,49080,59381,75482,23981,90280,970

79,68480,17780,57281,89482,42984,071

84,43184,99485,15986,46186,87885,910

86,36985,98486,37786,28886,235

3,1023,0963,0553,0523,0253,078

3,1223,0073,0453,0973,1103,081

3,0383,0703,1083,1423,1083,148

3,0873,0303,0343,0453,053

2.802.792.822.832.782.72

2.642.792.672.642.672.78

2.682.652.672.692.702.64

2.642.622.572.522.55

3.373.363.393.413.363.28

3.173.383.243.193.223.38

3.223.183.213.243.263.17

3.203.153.073.033.07

0.96

1.121.04.85.55

.63

.75

.68

.65

.59

.62

.56

.53

.48

0.52.52.52.50.49.50

.50

.50

.48

.48

.48

.48

.47

.47

.48

.48

.47

.47

.45

.45

.45

.44

.45

1 Monthly average for year and total for month.2 Seasonally adjusted, end of period.3 Ratio of unfilled orders at end of period to shipments for period. Annual figures relate to seasonally adjusted data

for December.* Data prior to 1961 not completely comparable with later data. Comparable data for new orders (total, durable, and non-

durable) are available for 1958, 1959, and 1960 only. See Department of Commerce, Bureau of the Census, "SeriesM3-1.1," page 9, September 1968, for these data.

5 Where December data not available, data for year calculated on basis of no change from November.


228

PRICESTABLE G-45.—Consumer price indexes, by major groups, 1929-69

For city wage earners and clerical workers

[1957-59 = 100]

Yeaf or month

1929 .

193019311932193319341935 .1936193719381939

19401941194219431944 . .19451946194719481949

1950195119521953 . .195419551956195719581959

196019611962 . . . . .196319641965 . . . .1966196719681969

1968: Jan. .F e b . . . .MarAprMayJune .

July..AugSept.OctNovDec

1969:Jan...FebMar.Apr._ .MayJune..

JulyAug.Sept . ._OctNov.Dec

Allitems

59.7

58.253.047.645 146 647.848.350 049.148.4

48.851 356.860.361 362 768.077.883 883.0

83 890.592.593 293 693.394 798 0

100 7101.5

103.1104.2105 4106.7108.1109.9113.1116 3121.2127.7

118.6119.0119.5119.9120.3120.9

121 5121.9122.2122.9123.4123.7

124.1124 6125 6126.4126.8127.6

128 2128 7129.3129 8130.5131.3

Food

55.6

52 943.636.335 339 342.142.544 241.039.9

40.544 251.957.957 158 466.981.388 284.7

85 895.497.195 695 494.094 797 8

101.9100.3

101.4102.6103 6105.1106.4108.8114.2115 2119.3125.5

117.0117.4117.9118.3118.8119.1

120.0120.5120.4120.9120.5121.2

122.0121 9122 4123.2123.7125.5

126 7127.4127.5127 2128.1129.9

Housing

Total

56.357.159 160.159.7

59.961 464 264.966 467 569.374.579 881 0

83 288.289.992 393 494.195 598 5

100 2101.3

103.1103.9104 8106.0107.2108. 5

in. i114 3119.1126.7

116.4116 9117.2117.5117.8118.7

119 5120.1120 4120.9121.7122.3

122.7123 3124 4125.3125.8126.3

127 0127 8128.6129 2129.8130.5

Rent

85.4

83 178.770.660 857 056.958.360 962.963.0

63.264 365 765.765 966 166.568.773 276 4

79 182.385.790 393 594.896 598*3

100 1101.6

103.1104.4105 7106.8107.8108.9110.4112 4115.1118.8

113.7113 9114.2114 4114.6114.9

115 1115.4115 7116.0116.3116.7

116.9117 2117 5117.8118.1118.5

118 8119 3119.7120 1120.5121.0

Appareland

upkeep

55.3

54 149.243.642 146 146.546.949 349.048.3

48.851 159 662.266 770 176.989.295 091.3

90 198.297.296 596 395.997 899 599 8

100.6

102.2103.0103 6104.8105.7106.8109.6114 0120.1127.1

115.9116.6117.6118.4119.5119.9

119.7120.3122.2123.3124.0124.3

123.4123 9124 9125.6126.6127.0

126 8126.6128.7129 8130.7130.8

Trans-porta-tion

49.449.850 651.049.8

49.551 255.755.555 555 458.364.371 677.0

79 084.089.692 190 889.791 396 599.7

103.8

103.8105.0107 2107.8109.3111.1112.7115 9119.6124.2

118.7118.6119.0119.0119.1119.7

119.8120.0119.5120.6121.2120.2

120.7122 0124 3124.6124.0124.6

124 3124 2123.6125 7125.6126.4

Medicalcare

49.449.650 050.250.2

50.350 652 054.556 257 560.765.769 872 0

73 476.981.183 986 688.691 895 5

100 1104.4

108.1111.3114 2117.0119.4122.3127.7136.7145.0155.0

141.2141.9142.9143.5144.0144.4

145.1145.5146.4147.4148.2149.1

150.2151 3152 5153.6154.5155.2

155 9156.8157.6156 9157.4158.1

Personalcare

42.643.245 746.746.5

46.447 652 257.661 763 668.276.279 178.9

78 986.387.388 188 590.093 797 1

100 4102.4

104.1104.6106 5107.9109.2109.9112.2115.5120.3126.2

117.6117.6118.4119.0119.6120.1

120.4120.9121.5122.1122.8123.4

123.7124 1124 8125.5125.8126.2

126 6126 8127.3127 3127.8128.1

Readingand

recrea-tion

50.251.052.554.354.4

55.457 360.065.072 075.077.582.586.789.9

89.392.092.493 392.492.193 496.9

100.8102.4

104.9107.2109.6111.5114.1115.2117.1120.1125.7130.5

122.7123.0124.2124.9125.3125.6

125.9126.3126.7127.5128.0128.2

128.4128 4128.7129.6130.2130.4

130.7131.2131.6132.0132.3132.7

Othergoodsand

services

52.752.654.054.555.4

57.158.259.963.064.767.369.575.478.981.2

82.686.190.692.894.394.395.898.599.8

101.8

103.8104.6105.3107.1108.8111.4114.9118.2123.6129.0

121.9122.1122.4122.5122.6123.5

123.9124.2124.4125.1125.4125.6

125.6125.8126.1126.6126.9127.9

129.1130.1131.3132.2133.1133.5


229

TABLE C-46.—Consumer price indexes, by special groups, 1935-69


[1957-59=100]

Year ormonth

19351936193719381939

19401941194219431944 , .19451946194719481949..

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969

1968: Jan. . .Feb...Mar._Apr...May. .June..

July..Aug. .Sept..Oct. . .Nov..Dec...

1969: Jan. . .Feb...Mar . .Apr...May. .June..

July..Aug. .Sept..Oct...Nov..D e c -

Allitems

47.848.350.049.148.4

48.851.356.860.361.362.768.077.883.883.0

83.890.592.593.293.693.394.798.0

100.7101.5

103.1104.2105.4106.7108.1109.9113.1116.3121.2127.7

118.6119.0119.5119.9120.3120.9

121.5121.9122.2122.9123.4123.7

124.1124.6125.6126.4126.8127.6

128.2128.7129.3129.8130.5131.3

Allitemslessfood

52.553.054.955.555.1

55.356.960.962.665.066.569.475.881.382.1

83.188.490.592.392.893.194.797.9

100.1102.0

103.7104.8106.1107.4108.9110.4113.0116.8121.9128.6

119.3119.7120.2120.6121.0121.6

122.1122.6123.0123.8124.4124.7

124.9125.6126.8127.5127.9128.4

128.8129.3130.0130.8131.4131.9

Allitemsless

shel-ter

46.146.748.246.846.0

46.349.155.359.560.562.168.479.485.684.1

84.791.893.693.993.993.494.797.8

100.7101.5

103.0104.2105.4106.7108.0109.6112.9115.9120.6126.3

118.2118.5119.1119.6120.0120.4

120.8121.2121.5122.2122.5122.7

123.1123.5124.4125.0125.4126.3

126.7127.1127.6128.1128.6129.5

Commodities

Allcom-modi-ties

45.045.647.445.644.7

45.148.255.260.160.862.669.483.489.487.1

87.695.596.796.495.594.695.598.5

100.8100.9

101.7102.3103.2104.1105.2106.4109.2111.2115.3120.5

113.2113.5113.9114.3114.7115.1

115.5115.9116.1116.8117.1117.2

117.4117.8118.7119.3119.6120.5

121.0121.4121.7122.4122.9123.6

Food

42.142.544.241.039.9

40.544.251.957.957.158.466.981.388.284.7

85.895.497.195.695.494.094.797.8

101.9100.3

101.4102.6103.6105.1106.4108.8114.2115.2119.3125.5

117.0117.4117.9118.3118.8119.1

120.0120.5120.4120.9120.5121.2

122.0121.9122.4123.2123.7125.5

126.7127.4127.5127.2128.1129.9

Commodities less food

All

50.250.853.053.052.1

52.455.061.263.867.370.074.483.990.389.0

88.995.696.496.695.694.995.998.899.9

101.2

101.7102.0102.8103.5104.4105.1106.5109.2113.2118.0

111.2111.5111.9112.2112.5113.0

113.2113.5113.9114.7115.3115.2

115.0115.7116.8117.2117.5118.0

118.1118.2118.7119.8120.2120.3

Dura-ble

47.147.850.851.750.6

50.253.660.962.968.773.977.383.889.991.2

92? 299.2

100.599.897.395.495.498.5

100.0101.5

100.9100.8101.8102.1103,0102.6102.7104.3107.5111.6

106.3106.4106.6106.9106.9107.4

107.6107.7107.6108.5109.3108.7

108.6109.7111.1111.4111.3111.7

111.9111.9111.6113.2113.5113.6

Non-dura-

ble

48.849.251.250.950.1

50.652.858.460.964.066.371.181.788.086.3

86.292.793.294.094.494.496.599.199.8

101.0

102.6103.2103.8104.8105.7107.2109.7113.1117.7123.0

115.1115.6116.1116.4117.0117.5

117.6118.1118.9119.7120.2120.3

120.1120.5121.4121.9122.4123.0

123.1123.3124.4125.1125.5125.7

Totalnon-

dura-ble

44.545.146.844.743.8

44.347.454.359.059.561.268.082.088.085.4

85.994.095.194.994.894.195.498.4

101.0100.6

101.9102.8103.6104.9106.0107.9111.8114.0118.4124.1

116.0116.4116.9117.3117.8118.2

118.7119.2119.6120.2120.3120.7

121.0121.1121.8122.5123.0124.1

124.7125.2125.8126.1126.7127.7

AMservices

Services

52.252.854.455.455.5

55.756.458.259.360.761.562.765.369.472.6

75.078.982.486.088.790.592.896.6

100.3103.2

106.6108.8110.9113.0115.2117.8122.3127.7134.3143.7

130.8131.3132.1132.5133.0133.9

134.9135.5136.0136.6137.4138.1

139.0139.7140.9142.0142.7143.3

144.0145.0146.0146.5147.2148.3

Rent

56.958.360.962.963.0

63.264.365.765.765.966.166.568.773.276.4

79.182.385.790.393.594.896.598.3

100.1101.6

103.1104.4105.7106.8107.8108.9110.4112.4115.1118.8

113.7113.9114.2114.4114.6114.9

115.1115.4115.7116.0116.3116.7

116.9117.2117.5117.8118.1118.5

118.8119.3119.7120.1120.5121.0

Allserv-iceslessrent

49.349.049.549.949.9

50.050.652.855.257.959.161.264.368.071.4

73.477.881.584.987.489.491.996.1

100.2103.6

107.4110.0112.1114.5117.0120.0125.0131.1138.6149.2

134.6135.2136.1136.6137.1138.1

139.3140.0140.5141.2142.0142.9

143.9144.6146.1147.4148.1148.8

149.6150.7151.7152.3153.1154.3


230

TABLE C-47.—Consumer price indexes, selected commodities and services, 1935-69


(1957-59=100)

Year ormonth

Durable commodities

Total i Newcars

Usedcars

House-hold

dura-bles

Housefur-nish-ings

Nondurable commod-ities less food

TotalApparel

com-mod-ities

Non-dura-bleslessfoodand

apparel

Services less rent

Total

House-holdserv-iceslessrent

Trans-porta-tion

serv-ices

Med-icalcareserv-ices

Other*

1935.1936.1937.1938.1939.

1940.1941..1942..1943.1944..1945.1946.1947.1948..1949.

1950..1951..1952..1953.1954..1955..1956.1957.1958.1959.

47.147.850.851.750.6

40.340.641.443.442.4

50.253.660.962.968.773.977.383.889.991.2

92.299.2

100.599.897.395.495.498.5

100.0101.5

100.9100.8101.8102.1103.0102.6102.7104.3107.5111.6

106.3106.4106.6106.9106.9107.4

107.6107.7107.6108.5109.3108.7

108.6109.7111.1111.4111.3111.7

111.9111.9111.6113.2113.5113.6

42.545.7

67.974.281.2

81.885.793.194.092.589.291.796.599.6

103.9

102.5102.5102.1101.5101.299.097.298.1

100.8102.4

101.0100.8100.6100.3100.3100.1

99.899.198.4

102.8103.8102.7

51.252.156.756.755.6

54.958.765.768.274.680.384.993.999.997.2

98.4107.8105.0103.8101.098.397.999.6

100.3100.2

100.198.998.898.598.496.996.898.2

101.4105.5

99.699.9

100.4100.8101.1101.3

101.5101.6102.0102.3102.8103.0

103.3103.7104.4105.0105.6105.8

106.0106.0106.2106.4106.5106.5

48.048.852.852.451.3

50.954.461.963.669.173.980.693.499.195.7

96.3106.8104.2103.7101.9100.098.9

100.599.899.8

100.199.598.998.598.497.998.8

100.8104.7109.0

102.6103.1103.8104.2104.4104.7

104.8104.9105.4105.9106.5106.6

106.6107.1107.8108.3108.8109.0

109.3109.4109.9110.2110.4110.6

48.849.251.250.950.1

50.652.858.460.964.066.371.181.788.086.3

86.292.793.294.094.494.496.599.199.8

101.0

102.6103.2103.8104.8105.7107.2109.7113.1117.7123.0

115.1115.6116.1116.4117.0117.5

117:6118.1118.9119.7120.2120.3

120.1120.5121.4121.9122.4123.0

123.1123.3124.4125.1125.5125.7

46.747.249.849.448.6

49.251.760.463.267.671.278.590.996.592.7

91.6100.299.198.097.597.098.699.799.7

100.6

102.0102.6103.0104.0104.9105.8108.5113.0119.3126.5

114.8115.6116.6117.6118.7119.1

118.9119.5121.5122.7123.4123.7

122.6123.1124.3124.9126.0126.4

126.2125.9128.1129.3130.4130.3

51.451.953.253.152.4

52.954.757.860.261.963.165.874.981.881.9

82.587.689.391.692.592.895.198.899.9

101.3

102.8103.3104.2105.3106.2108.0110.3113.1116.8121.0

115.3115.5115.8115.8116.0116.6

116.9117.3117.4117.9118.3118.3

118.6118.9119.7120.2120.3121.0

121.3121.7122.2122.6122.6123.0

49.349.049.549.949.9

50.050.652.855.257.959.161.264.368.071.4

73.477.881.584.987.489.491.996.1

100.2103.6

107.4110.0112.1114.5117.0120.0125.0131.1138.6149.2

134.6135.2136.1136.6137.1138.1

139.3140.0140.5141.2142.0142.9

143.9144.6146.1147.4148.1148.8

149.6150.7151.7152.3153.1154.3

46.646.245.946.246.4

46.346.649.149.149.049.150.151.757.764.2

68.474.880.185.288.989.190.594.8

100.8104.3

107.0109.5111.2112.4115.0119.3124.3128.4133.5142.9

131.5131.9132.4132.7132.9133.3

133.5133.6133.8134.6135.2136.8

139.2139.8140.9141.4141.8142.3

142.5143.1144.0145.1145 8148.4

46.346.547.147.247.3

47.347.649.051.653.755.258.463.367.670.1

71.775.380.183.085.588.091.495.3

100.0104.8

109.1113.1116.8120.3123.2127.1133.9145.6156.3168.9

151.4152.3153.6154.3155.0155.5

156.6157.1158.2159.4160.3161.4

162.8164.3165.8167.2168.2169.1

170.1171.1172.2171.2171.8172.8

1960...1961...1962...1963...1964...1965...1966...1967...1968...1969....

1968:Jan. . .Feb_.Mar..Apr_.May..June..

July...Aug...Sept..Oct . . .Nov..D e c .

1969: Jan_.Feb_.Mar_.Apr. .May..June.

July-Aug-Sept.Oct . .Nov-D e c .

102.3102.3102.4101.9101.8101.8

101.6101.099.5

104.2105.1104.9

108.492.287.283.994.097.4

108.8

101.6105.6115.2116.6121.6120.8117.8121.5

125.3

125.8123.6

126.3126.7

126.7

118.7

115.5122.6130.5131.2126.8128.2

127.0125.4121.4125.8124.9123.9

90.495.7

100.8103.6

10&0109.2110.6113.0114.8117.0121.5127.0134.5146.4

129.9130.6131.1131.5132.1133.7

135.6136.7137.0137.6138.5139.2

139.8140.6142.5144.2145.0145.7

146.9148.2149.5150.4151.4152.4

93.597.2

100.2102.6

106.2109.7112.6115.3118.5121.8126.5131.5138.8145.5

134.8135.3137.0137.6138.3138.9

139.2139.7140.3140.9141.5142.0

142.3142.7143.2144.2144.7145.2

145.7146.5147.2147.6148.2148.9

» Includes certain items not shown separately.3 Includes the services components of apparel, personal care, reading and recreation, and other goods and services.Source: Department of Labor, Bureau of Labor Statistics.

231

TABLE G-48.— Wholesale price indexes, by major commodity groups, 1929-69

[1957-59=100]

Year or month

1929

193019311932193319341935.1936193719381939

194019411942 .1943. .194419451946194719481949

1950195119521953 .19541955195619571958 . . .1959

1960 . .196119621963196419651966196719681969

1968* JanFebMarApr . . . .MayJune



JulyAugSentOctNovDec . . .

All com-modities

52 1

47.339.935.636.141.043.844.247.243.042.2

43 047.854.056.556.957.966.181.287.983.5

86.896.794.092.792.993.296.299.0

100.4100.6

100.7100.3100.6100.3100.5102.5105.9106.1108.7113.0

107.2108.0108.2108.3108.5108.7

109.1108.7109.1109.1109.6109.8

110.7111.1111.7111.9112.8113.2

113.3113.4113.6114.0114.7115.1

Farmproducts

63 9

54.039.629.431.339.948.049.452.741.939.9

41.350.164.674.875.378.390.6

109.1117.1101.3

106.4123.8116.8105.9104.497.996.699.2

103.697.2

96.996.097.795.794.398.4

105.699.7

102.2108.5

99.0101.3102.1102.1103.6102.5

103.9101.4102.8101.2103.1103.3

104 9105.0106.5105.6110.5111.2

110.5108.9108.4107.9111.1111.7

Processedfoods and

feeds

92.699.190.0

93.2103.5102.397.699.395.094.897.6

102.599.9

100.0101.6102.7103.3103.1106.7113.0111.7114.1119.8

112.4113.3112.9112.8113.6114.6

115.9114.9115.3114.4114.7114.7

116.0116.3116.4117.3119.4121.4

122.0121.5121.3121.6121.8122.6

Total

51 7

48.142.439.740.244.244.044.948.146.146.0

46 850.353.954.755.656 361.775.381.780.0

82.991.589.490.190.492.496.599.299.5

101.3

101.3tO(T8100.8100.7101.2102.5104.7106.3109.0112.7

107.8108.3108.6108.8108.6108.8

108.8108.9109.2109.7109.9110.2

110.9111.4112.0112.1112.2112.2

112.4112.8113.2113.8114.2114.6

Industrial commodities

Textileproducts

andapparel

105 7110.3100.9

104.8116.9105.5102.8100.6100.7100.7100.898.9

100.4

101.599.7

100.6100.5101.2101.8102.1102.0105.7108.0

104.3104.6104.6104.7104.8105.2

105.8106.0106.5107.0107.2107.1

107.4107.2107.1107.1106.9107.2

107.7108.7109.0109.1109.2109.2

Hides,skins,

leather,and

relatedproducts

56 6

52.044.738.042.044.946.549.554.348.249.6

52 356.161.161.060.561.370.796.597.592.5

99.9114.892.894.189.989.594.894.996.0

109.1

105.2106.2107.4104.2104.6109.2119.7115.8119.5125.8

116.5116.7117.9118.3118.8118.7

119.5119.5120.7122.3122.4122.8

123.5123.4123.4126.0126.1125.7

126.4126.4128.2127.4126.8126.5

Fuels andrelated

products,and

power

61 5

58.250.052.149.354 354.556.557.556.654.2

53 256.658.259.961.662.366.779.793.889.3

90.293.593.395.994.694.597.4

102.798.798.7

99.6100.7100.299.897.198.9

101.3103.6102.4104.6

101.8102.5102.0102.4102.4103.7

103.3102.6102.5101.9102.0102.2

102.4102.7104.2104.5104.5105.0

105.0104.7104.7105.4105.5105.1

Chemicalsand alliedproducts

46.648 850 951.253.651.050.7

51 656.162.363.163.864 269.492.294.486.2

87.5100.195.096.197.396.997.599.6

100.4100.0

100.299.197.596.396.797.497.898.498.298.3

98.298.198.698.898.798.5

98.298.197.997.897.897.7

97.697.898.097.998.198.3

98.298.798. S98.698 998.8


232

TABLE C-48.—Wholesale price indexes, by major commodity groups, 1929-69—Continued[1957-59=100]

Year or month

1929

1930193119321933193419351936193719381939

19401941194219431944 . . .19451946194719481949

1950195119521953195419551956195719581959

19601961196219631964196519661967 .196819691968: Jan..

Feb..MarAprMayJune

JulyAugSeptOct_ .Nov...Dec

1969: Jan.. . .FebMarAprMay.June

July.AugSeptOctNov..Dec

Industrial commodities—Continued

Rubberand

rubberproducts

57.6

50.442.837.139.045.545.849.458.157.159.3

55.359.669.471.370.468.368.668.370 568.3

83.2102.192.586.387.699.2

100.6100.2100.199.7

99.996.193.393.892.592.994.896.9

100.3102.199.599.599.799.799.899.9

100.7100 6100.7101.0101.1101.1

100.0100.5100.9101.2101.1101.2

102.5103.0102.7103.5104.4104.5

Lumberand

woodproducts

26.4

24 119.616 920.023.522.623.627.925.426.1

28 934 537.539.742.843 449.777.488 581.9

94.1102.599.599 497.6

102.3103.898.597 4

104 1

100 495.996.5

. 98.6A100 6

v. ioi. 1Y 105.6

105.4119.3132. 0

108.6111.6113.9115.8117.0117.2

119.2120 5122.6124.9126.8133.5

137.8144.5149.5143.3138.0129.8

125.3124.0123.2122.6123.9122.5

Pulp,paper,

andallied

products

75.378.675.2

77.191.389.088.788.891.197.299.0

100.1101.0

101.898.8

100.099.299.099.9

102.6103.8105.2108.2

105.2105.7105.2105.2105.5104.7

104.9104.9105.1105.2105.2105.2

106.2106.8107.4108.0108.1108.3

108.4108.7108.8109.0109.3109.5

Metalsand

metalproducts

44.1

39.735.732.833 637.137.037.843.241.641.2

41 442.242.842.742.743.448.560.268 569.0

72.780.981.083.684.390.097.899.799.1

101.2

101.3100.7100.0100.1102.8105.7108.3109.6112.4118.9

112.2113.3113.8113.3111.7111.7

111.4111 3112.2112.5112.4112.8

114.4115.2115.8116.5117.5117.9

118.7120.4121.7122.4122.9123.8

Machin-ery andequip-ment

""~46.~2~

46.347.147.847.447.147.251.960.065.168.2

70.578.878.980.782.184.691.597.9

100.0102.1

102.9102.9102.9103.1103.8105.0108.2111.8115.2119.0

113.9114.1114.3114.8115.0115.0

115.2115 4115.8116.1116.6116.7

117.0117.3117.8118.0118.3118.6

119.0119.1119.9120.5121 0121.9

Furni-ture andhouse-hold

durables

56.4

55.551 145.045.149.048 649.354.753.453.2

54 457 862.562.163.863 967 877.882 583.8

85.692.891.192 993 994 396.999.4

100 2100.4

100 199.598.898.198 598.099.1

101.1104.0106.1

103.0103.3103.6103.8104.0103.9

104.1104 2104.4104.5104.7105.0

105.3105.4105.7105.8105.9105.9

106.1106.2106.4106.5106 9107.2

Nonme-tallic

mineralproducts

53.4

53.249.746.549.252.652 652.753.952.251.2

51 252.454.554.755.858 161.869.174 776.7

78.683.583.586.988.891.395.298.999.9

101.2

101.4101.8101.8101.3101.5101.7102.6104.3108.1112.8

106.0106.9107.3107.4107.8108.3

108.4108 7108.7108.9109.2109.3

110.6111.2111.9112.3112.6112.8

113.0113.0113.5113.8113 9114.5

Trans-portationequip-ment:Motor

vehiclesand

equip-ment i

42 8

40.338 337.335.637.536 035 738.240.840.0

41 344 248.248.248.549 457.265.572 477.4

77.081.185.885 485.688.293.297.2

100 3102.5

101.0100.8100.8100.0100.5100.7100.8102.2104.9107.0

104.3104.3104.3104.3104.2104.5

104.2104 4104.1106.5106.6106.6

106.5106.4106.3106.4106.5106.6

106.6106.0106.1108.7109.0109.0

Miscel-laneousproducts

80.383.685.2

86.691.791.293.694.494.595.898.6

100.6100.8

101.7102.0102.4103.3104.1104.8106.8109.3111.8114.7

111.0111.3111.5111.8111.8111.8

111.5111.6111.9112.0112.5112.5

112.5112.5112.5112.7112.8115.1

115.5115.9116.4116.7117.0117.0

i Index for total transportation equipment available only beginning December 1968.


233

TABLE C-49.— Wholesale price indexes, by stage of processing, 1947-69

[1957-59=100J

Year or month

194719481949

1950....1951195219531954

19551956195719581959

19601961 r_.1962 [...1963 "y...1964 ?l..X

i965 y.1966196719681969





Allcom-modi-ties

81.287.983.5

96.794.092.792.9

93.296.299.0

100.4100.6

100.7100.3100.6100.3100.5

102.5105.9106.1108.7113.0

107.2108.0108.2108.3108.5108.7

109.1108.7109.1109.1109.6109.8

110.7111.1111.7111.9112.8113.2

113.3113.4113.6114.0114.7115.1

Crude materials

Intermediate materials, supplies, and components1

Total

100.8110.595.6

104.2119.6109.9101.5100.6

96.797.299.4

101.699.0

96.696.197.195.094.1

98.9105.399.6

101.1107.9

99.1100.9101.6101.4102.0101.4

102.6100.8100.9100.2101.5101.3

102.8103.8105.2105.7109.7111.2

110.2109.5108.7108.7109.0109.9

Food-stuffsand

feed-stuffs

113.0122.2101.5

108.9126.0118.6106.2106.2

96.294.298.4

104.297.4

96.294.996.894.091.9

98.3107.2101.2102.5110.4

99.1101.8102.6102.9104.1103.2

104.9102.0102.1101.2103.2102.6

104.5105.9107.6107.6113.5115.6

113.8112.1110.4110.5111.0112.2

Non-food

mate-rials,

exceptfuel

86.596.287.5

100.0115.399.995.693.8

99.1102.8101.497.6

101.0

96.897.997.496.297.8

99.8101.995.597.4

102.0

98.298.498.997.696.696.7

96.897.497.797.096.897.1

97.998.399.5

101.1101.8102.1

102.6104.1104.8104.0104.0104.2

Total

Fuel

73.687.086.5

86.187.788.391.487.3

87.193.398.699.8

101.6

102.5102.3101.8103.0102.5

103.3106.4110.5112.7117.6

111.4111.7112.2112.3112.4112.2

112.5112.4112.6113.2114.3115.3

115.7115.4115.8116.2116.4116.8

117.1117.2118.1119.9121.1121.5

76.582.779.4

83.093.090.390.891.3

93.097.199.499.6

101. 0

101.0100.3100.2100.5100.9

102.2104.8105.6108.0111.8

106.9107.6107.7107.9107.7107.8

107.9107.9108.3108.5108.6109.2

110.1110.7111.4111.4111.4111.4

111.4111.9112.4112.8113.1113.5

Materials and components for

Total

75.581.578.0

81.892.788.890.290.4

92.696.999.399.7

101.0

101.099.899.299.4

100.4

102.0104.0104.7107.1110.8

106.3106.9107.1107.2106.9106.8

106.9106.8107.3107.4107.6107.8

108.5109.1109.6109.8110.2110.4

110.6111.4111.8112.2112.6112.9

manufacturing

For food

factur-ing

102.6105.891.0

94.7105.5101.4101.6100.7

97.597.999.7

102.098.3

99.5102.6100.5105.5104.0

106.6111.3109.2110.7116.8

108.7109.9109.6109.7110.6111.3

112.0111.3111.6110.6111.3111.5

112.7113.1113.4114.1116.3117.8

117.8118.4118.3119.2120.0119.9

Vlaterials

Fornon-durablemanu-factur-

ing

94.099.590.7

95.2110.399.398.596.9

97.398.8

100.199.1

100.8

100.898.698.097.197.8

98.799.598.7

100.2101.2

99.8100.199.9

100.0100.3100.0

100.0100.1100.4100.4100.5100.5

100.5100.6100.7100.8100.9101.1

101.2101.7101.7101.5101.7101.6

Fordurablemanu-factur-

ing

58.866.468.2

72.180.180.383.985.7

90.095.798.899.5

101.8

101.9100.5100.4100.5102.5

104.6106.6108.1111.7118.1

110.9112.0112.7112.3110.9110.9

110.9110.9111.9112.2112.1112.9

114.8116.0117.0117.3117.5117.1

117.4118.7119.6120.0120.4121.4

Com-ponents

63.068.069.3

71.981.681.88S.383.7

87.495.499.199.9

101.1

100.699.698.898.899. lr

101.3104.9108.0110.5114.0

109.4109.9110.0110.6110.5110.3

110.4110.5110.6111.0111.3111.4

111.5111.9112.4112.6113.1113.4

113.9114.3115.1116.1116.7117.0

Mate-rialsand

com-ponentsfor con-

struc-tion

69.677.077.2

81.288.888.289.790.1

93.798.599.199.1

101.8

10L199.799.399.6

^100.6

101.4104.1105.41UU116.9

107.4108.5109.3109.9109.8110.0

110.4110.9111.7112.4112.9114.6

116.3118.3119.7118.4117.6116.0

115.4115.5115.8116.2116.7116.8


234

TABLE G-49.—Wholesale price indexes, by stage of processing, 1947-69—Continued

[1957-59=1001

Year or month

194719481949

19501951195219531954

19551956195719581959

I9601961196219631964

196519661967 . . . . .19681969

1968: JanFebMar.AprMay . . . .June

July.. .AugSeptOctNovDec


JulyAugSeptOctNovDec . . . .

Total

80.186.484.0

85.593.693.092.192.3

92.595.198.6

100.8100.6

101.4101.4101.7101.4101.8

103.6106.9108.2111.3115.3

109.7110.2110.4110.5110.9111.3

111.9111.4112.0112.0112.5112.6

113.2113.3113.7113.8114.7115.4

115.9115.7116.0116.5117.6118.0

Finishec1 goods

Consumer finished goods

Total

86.192.688.3

89.898.297.095.495.3

94.796.198.9

101.0100.1

101.1100.9101.2100.7100.9

102.8106.4107.0109.9114.0

108.2108.9109.0109.0109.5110.0

110.7110.0110.7110.6111.0111.1

111.8111.7112.2112.3113.5114.2

114.8114.4114.7115.1116.2116.5

Foods

90.799.091.0

92.8104.2103.397.997.1

94.794.597.8

103.598.7

100.8100.4101.3100.1100.6

104.5111.2109.5113.4120.3

110.6112.0111.9111.7113.0113.6

115.3113.7115.6113.9114.8115.2

116.8116.4117.1116.9120.1121.3

122.3121.2121.6121.2123.9124.5

Othernon-

durablegoods

86.592.088.2

89.696.594.195.095.3

95.897.799.999.3

100.8

101.5101.5101.6101.9101.6

102.8104.8107.2109.4112.3

108.0108.4108.6109.0109.1109.8

110.0109.7109.9110.0110.2110.2

110.4110.7111.2111.5111.4112.2

112.6113.0113.3113.6113.8114.1

Du-rablegoods

75.981.183.2

84.189.790.491.191.8

92.895.998.7

100.1101.3

100.9100.5100.099.599.9

99.6100.2101.7103.9105.8

103.5103.5103.6103.5103.5103.5

103.3103.6103.4104.9105.0105.0

105.1105.1105.3105.4105.4105.5

105.6105.2105.3106.9107.1107.2

Pro-ducer

finishedgoods

61.867.470.7

72.479.580.882.183.1

85.692.097.7

100.2102.1

-102.3102.5102.9103.1104.1

105.4108.0111.6115.3119.3

114.0114.2114.4

.114.8114.9115.1

115.2115.4115.7116.4116.9117.1

117.6117.8118.0118.1118.5118.7

119.3119.3119.9120.8121.5122.3

Special groups of industrialproducts

Crudemate-rials 2

79.292.584.0

93.6102.993.192.488.0

96.6102.3100.996.9

102.3

98.397.295.694.397.1

100.9104.5100.0101.8110.5

101.4102.4103.1101.7100.5100.6

100.9101.0101.5102.2103.0103.8

105.0105.5107.2109.0109.7110.2

110.7112.5113.9113.7114.1114.5

Inter-mediate

materials,supplies,and com-ponents 3

73.479.877.8

81.491.288.389.489.8

92.597.099.699.4

101.0

101.4100.199.999.6

100.2

101.5103.6104.8107.5111.3

106.3107.0107.3107.5107.3107.2

107.3107.4107.8108.1108.2108.8

109.7110.4111.1111.0111.1110.8

110.9111.3111.8112.2112.6112.9

Con-sumer

finishedgoods ex-

cludingfoods

83.188.486.5

87.894.292.993 794 1

94.897 199.599.6

100.9

101.3101.2101 0101.0100.9

101.7103.2105.2107.4109.9

106 4106.7106.8107.0107.0107.5

107.5107.5107 5108.2108.4108.3

108.4108 7109.0109.2109 2109.7

110.0110 1110.3111.1111.3111.5

> Includes, in addition to subgroups shown, processed fuels and lubricants, containers, and supplies.> Excludes crude foodstuffs and feedstuffs, plant and animal fibers, oilseeds, and leaf tobacco.> Excludes intermediate materials for food manufacturing and manufactured animal feeds.

Note.—For a listing of the commodities included in each sector, see monthly report "Wholesale Prices and PriceIndexes," January-February 1967.


235

MONEY SUPPLY, CREDIT, AND FINANCETABLE C-50.— Money supply, 1947-69

[Averages of daily figures, billions of dollars]

Year and month

Totalmoneysupply

andtime

depos-itsad-

justed

Money supply

Total

Cur-rencycom-po-

nent1

De-mand

depositcom-

ponent2

Timede-

positsad-

just-

Totalmoneysupply

andtime

depos-its

ad-justed

Money supply

Total

Cur-rencycom-po-

nent1

De-mand

depositcom-

ponent2

TimeAa

positsad-

just-ed 3

U.S.Gov-ern-mentde-

mandde-pos-its 4

1947: Dec1948: Dec1949: Dec

1950: Dec1951: Dec.1952: Dec1953: Dec.1954: Dec.

1955: Dec.1956: D e c1957: Dec..1958: Dec..1959: Dec

1960: Dec1961: Dec1962: Dec1963: Dec1964: Dec

1965: Dec..1966: Dec..1967: Dec.1968: Dec..1969: Dec p.

1968:Jan.. .Feb. . .Mar . .Apr . .May..June..

July..Aug_.Sept..Oc t . .Nov..D e c .

1969:Jan...Feb..Mar. .Apr. .May..June.

July.. .Aug. . .Sept . .O c t . . .Nov.. .Dec p..

Seasonally adjusted Unadjusted

148.5147.6147.6

152.9160.8168.6173.3180.6

185.2188.8193.3206.6209.3

213.9228.1245.2265.2285.9

313.4328.9365.4399.7393.8

366.7369.1371.5372.8375.1376.9

380.7384.8387.8391.3395.7399.7

399.0398.7399.1400.4400.0399.8

397.0393.5393.1392.6392.7393.8

113.1111.5111.2

116.2122.7127.4128.8132.3

135.2136.9135.9141.1141.9

141.1145.4147.4153.0159.3

166.7170.4181.7194.8199.7

182.6183.3184.2185.1186.8188.2

189.6191.0191.4191.8193.6194.8

195.8196.3196.8198.1198.3199.0

199.3199.0199.0199.1199.3199.7

26.425.825.1

25.026.127.327.727.4

27.828.228.328.628.9

28.929.630.632.534.2

36.338.340.443.446.0

40.640.741.141.341.641.9

42.142.442.742.843.243.4

43.543.844.144.244.544.8

45.045.345.245.645.946.0

86.785.886.0

91.296.5

100.1101.1104.9

107.4108.7107.6112.6113.1

112.1115.9116.8120.5125.1

130.4132.1141.3151.4153.7

35.436.036.4

36.738.241.144.548.3

50.051.957.465.467.4

72.982.797.8

112.2126.6

146.7158.5183.7204 9194.1

142.0 184.1142.6 185.8143.2143.8145.3146.3

187.2187.7188.21I88.6

147.5 191.1148.6 193.8148.8 196.4149.1 199.4150.5 202.1151.4 204.9

152.3 203.2152.5 202.4152.6 202.3154.0 202.3153.8 201.7154.2 200.8

154.4 197.7153.8 194.5153.7153.6153.4153.7

194.1193.5193.4,194.1

151.1150.0150.0

155.6163.8171.7176.4183.6

188.2191.7196.0209.3212.2

216.8231.2248.2268.2289.2

317.3332.7369.5404.1398.4

371.8367.7370.3374.2371.8375.2

379.3382.7386.7391.6396.5404.1

404.5397.2397.9401.9396.6398.0

395.5391.4391.9393.0393.6398.4

115.9114.3113.9

119.2125.8130.8132.1135.6

138.6140.3139.3144.7145.6

144.7149.4151.6157.3164.0

172.0175.8187.5201.0206.0

188.1181.9

26.826.225.5

25.426.627.828.227.9

28.428.828.929.229.5

29.630.231.233.135.0

37.139.141.244.347.0

40.540.3

182.6186.1183.2186.4

188.1188.0190.1192.0195.3201.0

201.7194.8195.0199.2194.4197.0

197.8195.9197.6199.3201.0203.0

40.741.041.341.8

42.342.542.742.843.644.3

43.543.443.743.844.244.7

45.245.445.245.646.447.0

88.188.4

93.899.2

103.0103.9107.7

110.2111.5110.4115.5116.1

115.2119.2120.3124.1129.1

134.9136.7146.2156.7159.1

147.5141.6141.9145.1141.9144.6

145.9145.5147.4149.2151.7156.7

158.2 202.8151.4 202.4151.3 202.9155.3 202.7150.3 202.2152.3 201.0

35.135.736.1

36.438.040.944.248.0

49.651.456.764.666.6

72.181.896.7

111.0125.2

145.2156.9182.0203.1192.4

183.8185.8187.8188.0188.6188.8

191.1194.7196.6199.6201.3203.1

152.7150.5152.4153.7154.7159.1

197.7195.5194.3193.7192.6192.4

1.01.82.8

2.42.74.93.85.0

3.43.43.53.94.9

4.74.95.65.15.5

4.63.45.05.05.5

5.07.26.74.36.55.6

5.85.66.16.34.55.0

4.96.94.85.49.26.0

5.64.35.34.25.15.5

1 Currency outside the Treasury, the Federal Reserve System, and the vaults of all commercial banks.2 Demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Govern-

ment, less cash items in process of collection and Federal Reserve float, plus foreign demand balances at Federal Reservebanks.

3 Time deposits adjusted are time deposits at all commercial banks other than those due to domestic commercial banksand the U.S. Government.

4 Deposits at all commercial banks.Note.—Effective June 1966, balances accumulated for payment of personal loans are reclassified for reserve purposes and

are excluded from time deposits reported by member banks. The estimated amount of such deposits at all commercialbanks ($1.1 billion) is excluded from time deposits adjusted thereafter.


236

TABLE C-51.- -Bank loans and investments, 1930-69


End of year or month *

1930 June1931 June .1932 June1933 June1934 June193519361937. . .1938193919401941..194219431944 .1945194619471948

19481949195019511952 .19531954 . .1955 .195619571958 . .19591960.. .19611962 .1963 . .1964 _19651966196719681969 P

1968: Jan . . . .FebMar.Apr _.MayJune . .JulyAugSeptOct .Nov ._Dec

1969:Jan .FebMarAprMay.June . . .JuneJulyAugSeptOctpNov vDec v

All commercial banks

Total loansand invest-

ments 2

48.944.936.130.432.736.139.638.438.740.743.950.767.485.1

105.5124.0114.0116.3114.2

Loans 2

34.529.221.816.315.715.216.417.216.417.218.821.719.219.121.626.131.138.142.4

Investments

U.S. Govern-ment securities

5 06.06 27.5

10.313 815.314.215 116.317.821.841.459 877.690.674.869 262.6

Othersecurities

9.49.78.16.56.77.17.97.07.27.17.47.26.86.16.37.38.19.09.2

Seasonally adjusted

113.0118.7124.7130.2139.1143.1153.1157.6161.6166.4181.2185.9194.5209.6227.9246.2267.2294.4

s 310.5346 5384.6398.6349.9353.9352.5355.2357.3357.8365.9370.4374.6379.4381.6384.6385.9387.9386.6390.7392.2392.5

6 397 3397.7397.5396.5396.8399.7398.6

41.542.051.156.562.866.269.180.688.191.595.6

107.8113.8120.4134.0149.6167.7192.6

s 208.2225 4251.6276.2227.5229.2229.0231.4232.6233.5238.4241.1243.6246.7250.4251.6253.7258.4257.3261.0264.1264.3

6 269 2269.9270.3271.3273.3275.5276.2

62.366.461.160.462.262.267.660.357.256.965.157.759.865.364.661.760.757.153.659 761.551.860.062.059.960.361.060.463.163.964.064.261.061.560.858.157.457.756.156.2

6 56 356.856.954.753.453.251.8

9.210.312.413.414.214.716.416.816.317.920.520.520.823.929.235.038.744.8

M8.761.471.570.562.462.763.663.463.663.964.465.567.068.570.271.571.471.571.972.172.072.0

671.871.070.370.570.171.070.5

Weekly re-porting largecommercial

banks 3

Business loans*

5.14.24.75.37.16.36.46.57.3

11.314.715.6

15.613.917.921.623.423.422.426.730.831.831.730.732.232.935.238.842.1

3 53.160.765.873.181.664.964.966.467.466.969.069.068.069.369.771.273.172.973.775.076.776.678.4

77.676.678.177.678. C81.6

1 Data are for last Wednesday of month (except June 30 and December 31 call dates used for all commercial banks).2 Adjusted to exclude interbank loans beginning 1948.s Loans by weekly reporting large commercial banks beginning 1965 and formerly weekly reporting member banks.* Commercial and industrial loans and prior to 1956, agricultural loans. Beginning July 1959, loans to financial institu-

tions excluded. Prior to 1943, published data adjusted to include open-market paper.s Effective June 1966, balances accumulated for payment of personal loans (about $1.1 billion) are excluded from loans

at all commercial banks, and certain certificates of CCC and Export-Import Bank totaling about $1 billion are included inother securities rather than in loans.

e New series beginning June 1969; for details see "Federal Reserve Bulletin", August 1969.Source: Board of Governors of the Federal Reserve System.

3 7 2 - 1 1 1 O—70 237

TABLE C-52.—Total funds raised in credit markets by nonfinancial sectors, 1961—69


Nonfinancial sector

Total funds raised .

U S Government

Public debt securities..Budget agency issues

All other sectors

Capital market instruments

Corporate equity sharesDebt capital instruments....

State and local govern-ments

Corporate and foreignbonds

Mortgages

Home.. . .Other residential..CommercialFarm

Other private credit

Bank loans n.e.cConsumer credit.. .Open-market paperOther

Total funds supplied directly

U S GovernmentU.S. Government credit agencies, net.

Funds advancedLess funds raised

Federal Reserve System . .Commercial banks, netPrivate nonbank finance

Savings institutions, netInsuranceFinance n e c , net. ,


Foreign

Private domestic nonfinancial . .

BusinessState and local government,

general fundsHouseholds.Less net security credit

1961

46.9

7.2

6.7.6

39.6

31.9

2.829.1

5.2

5.118.8

11.12.64.01.1

7.7

2.91.81.02.0

46.9

1.6.4

1.0.7

1.515.723.8

10.913.1- . 2

3.33.5

.8

3.1

.5

.83.01.3

1962

54.1

7.0

6.2.8

47.1

33.1

.632.6

5.3

5.521.7

12.82.84.81.3

14.0

5.25.8

.12.8

54.1

2.0.1

1.61.5

2.019.526.6

12.914.4- . 7

4.65.3

1.5

2.4

1.8

1.2- . 8- . 2

1963

57.7

4.0

4.1- . 1

53.7

35.7

35! 9

5.9

4.925.1

15.13.25.11.6

18.0

6.07.9

4.1

57.7

1.5.1

1.6

2.919.129.9

15.514.3

.1

5.85.8

.9

3.4

2.9

1.11.32.0

1964

66.9

6.4

5.41.0

60.5

37.9

1.636.3

5.7

4.526.1

15.64.53.82.1

22.6

8.38.5

5.1

66.9

2.8.4

.7

.4

3.421.831.0

16.015.6- . 5

5.56.1

.6

7.0

2.0

.94.0

- . 2

1965

70.4

1.7

1.3.4

68.7

39.1

.338.8

7.3

5.925.6

15.43.64.42.2

29.5

14.210.0

5.7

70.4

2.8*

2.22.3

3.828.330.1

13.717.9

- 1 . 4

6.98.3

- . 3

5.6

1.0

2.52.5.3

1966

68.5

3.5

2 31.2

64.9

39.9

.939.0

5.7

11.022.3

11.43.15.72.1

25.0

10.37.21.06.4

68.5

4.9.3

5.14.8

3.516.725.9

7.819.3

- 1 . 3

5.87.1

- 1 . 8

19.1

3.6

3.411.9- . 2

1967

82.6

13.0

8 94.1

69.6

48.0

2.445.7

7.7

15.922.0

11.63.64.72.1

21.6

9.64.62.15.2

82.6

4.6.5

- . 1- . 6

4.836.836.1

16.920.4

- 1 . 2

4.45.6

2.8

- 3 . 0*

1.2- 2 . 0

2.2

1968

97.4

13.4

10 33.0

84.1

50.5

- . 751.2

9.9

14 027.3

15.23.56.62.1

33.6

13.411.11.67.5

97.4

5.2- . 2

3.23.5

3.739.033.5

14.521.5

- 2 . 5

9.812.3

2.5

13.8

9.0

.75.51.4

See footnote at end of table.

238

TABLE C—52.—Total funds raised in credit markets by nonjinancial sectors, 1961—69—Continued


Nonfinancial sector

1969 unadjusted quarter-ly totals

1

17.0

.2

.1

.1

16.8

12.4

*12.3

2.53.86.0

3.4.9

1.3.5

4.4

.7- 1 . 2

1.73.2

17.0

1.2*

.9

.9

- . 5-7 .4

8.7

4.55.5

-1 .3

-2 .3-1 .0

- . 3

15.2

3.63.57.3

- . 8

II

23.0

-10.9

-11.6.8

33.9

15.4

.415.0

3.43.97.6

4.31.11.4.7

18.5

8.34.01.54.7

23.0

1.4- . 1

2.32.3

1.79.07.5

3.04.6

5.65.6

- . 1

3.5

3.42.2

-2 .2- . 1

III

20.8

3.4

4.6-1 .2

17.5

12.7

.212.4

1.63.67.2

4.41.01.4.5

4.8

- 1 . 51.61.43.3

20.8

1.7- . 2

2.52.7

-4 .57.6

1.76.2

- . 3

1.61.9

1.8

14.4

3.8- . 311.3

.3

1969 seasonally adjustedannual rates

1

96.3

- . 4

- . 4- . 1

96.7

56J. 1

. 256.0

11.516.328.2

16.33.75.92.2

40.6

15.19.95.79.8

96.3

5.1- . 2

4.85.0

.14.6

31.6

16.320.8

-5 .5

-6 .7-1 .2

- . 1

55.2

21,29.3

21.8-2 .8

II

88.8

-18.7

-22.53.8

107.5

55.9

1.754.2

11.514.728.0

16.24.35.12.4

51.6

17.910.45.2

18.1

88.8

5.9-1.1

6.57.6

2.315.335.8

16.221.0

-1 .4

17.118.5

.4

30.2

15.96.96.8

- . 6

III

100.9

15.1

19.2-4 .1

85.8

48.1

1.047.2

6.813.127.2

15.93.95.32.1

37.6

5.88.25.6

18.0

100.9

7.3- . 6

11.812.3

3.5- . 230.7

6.424.5- . 2

15.715.8

5.7

54.4

22.34.5

29.1

Total funds raised

U.S. Government

Public debt securities

Budget agency issues

All other sectors

Capital market instruments

Corporate equity sharesDebt capital instruments . .

State and local governmentsCorporate and foreign bondsMortgages

HomeOther residentialCommercialFarm

Other private credit

Bank loans n.e.c .Consumer creditOpen-market paperOther

Total funds supplied directly

U.S. GovernmentU.S. Government credit agencies, net


Federal Reserve System._.Commercial banks, netPrivate nonbank finance

Savings institutions, netInsuranceFinance, n.e.c, net

Funds advanced

Less funds raised

Foreign

Private domestic nonfinancial

BusinessState and local government, general fundsHouseholds -.Less net security credit

Source: Board of Governors of the Federal Reserve System

239

TABLE G-53.—Selected liquid assets held by the public, 1946-69 *

[Billions of dollars, seasonally adjusted]

End of year or month

1946194719481949 .

19501951195219531954

19551956195719581959

19601961196219631964

19651966»196719681969 v

968"JanFebMar-AprMayJune


1969:JanFebMarAprMayJune

JulyAug .SeptOctpNov*Dec p

Total

239.1246.2254.1262.1

271.4281.0296.0311.5320.3

332.5343.2356.0373.1393.9

399.2424.6459.0495.4530.5

573.1601.5650.4709.6729.0

655 8658.6665.6664.6667.8670.8

676.5679.6684.9693.1699.4709.6

i 703.7705.7713.2710.0714.3713 8

2 709.5713.1718.0714.3720.6729.0

Demanddeposits

andcurrency2

108.5112.4110.5110.4

115.5120.9125.5127.3130.2

133.3134.6133.5138.8139.7

138.4142.6144.8149.6156.7

164.1168.6180.7

• 199.2206.2

179.6178.2181.7181.1183.9186.7

186.2185.9186.4188.0190.6

6199.2

188.8189.8192.4190.8191.5194.1

2 191.8193.2194.1193.6195.0206.2

Time deposits

Com-mercialbanks 3

33.935.335.936.3

36.638.241.244.648.2

49.752.057.565.467.4

73.182.598.1

112.9127.1

147.1159.3183.1203.8195.9

186.5187.6187.9187.6187.7187.9

191.5194.0196.2200.4204.7203.8

203.4202.9201.9200.6202.7200.4

197.5195.7195.6195.4197.1195.9

Mutualsavingsbanks

16.917.818.419.3

20.120.922.624.426.3

28.130.031.633.934.9

36.238.341.444.549.0

52.655.260.364.767.1

60.661.161.461.762.162.6

62.863.063.463.864.364.7

64.865.265.565.766.166.3

66.366.466.666.767.067.1

Postalsavingssystem

3.33.43.33.2

2.92.72 52.42.1

1.91.61.31.1.9

.8

.6

.5

.4

.3

.1

Savingsandloan

shares

8.59.7

11.012.5

14.016.119 222.827.2

32.037.041.747.754.3

61.870.579.890.9

101.4

109.8113.4123.9131.0134.7

123.6124.6125.8125.9126.4

127.2128.1129.5130.0130.8131.0

131.0132.0133.4133.3133.5133.6

133.6134.1135.3134.9135.3134.7

U.S.Govern-

mentsavingsbonds4

48.650.953.455.0

55.855.455 755 655.6

55 954.851.650.547.9

47.047 447.649.049.9

50.550.951.952 552.4

51.951.851.851.851.851.9

51.952.052.052.052.152.5

52.552.352.252.252.252.2

52.252.152.052.052.052.4

U.S.Govern-

mentsecuritiesmaturing

within1 year4

19.416.621.625.5

26.426.829 334.430.6

31.633.238.835.648.8

41.942.646.848.146.1

48.653.950.558.572.7

53.655.457.056.555.954.9

56.956.657.458.957058.5

7 63.463.467.767.568.367.3

68.171.674.671.774.272.7

1 Excludes holdings of the U.S. Government, Government agencies and trust funds, domestic commercial banks, andFederal Reserve banks. Adjusted wherever possible to avoid double counting.

2 Agrees in concept with the money supply, Table C-50, except for deduction of demand deposits held by mutual savingsbanks and savings and loan associations. Data are for last Wednesday of month. Data prior to July 1969 have not been re-vised to conform to the money supply revision.

3 Time deposits at all commercial banks other than those due to domestic commercial banks and the U.S. Government(same concept as in Table C-50). Data are for last Wednesday of month, except that June 30 and December 31 calldata are used where available.

4 Excludes holdings ot Government agencies and trust funds, domestic commercial and mutual savings banks, FederalReserve banks, and beginning February 1960, savings and loan associations.

» Effective June 1966, balances accumulated for the payment of personal loans (about $1.1 billion) are excluded fromtime deposits at all commercial banks and from total liquid assets.

«Estimates for Tuesday, December 31, rather than last Wednesday of December.7 Beginning 1969, data have been adjusted to conform to the new budget concept.

Source: Board of Governors of the Federal Reserve System (except as noted).

240

TABLE C-54.—Federal Reserve Bank credit and member bank reserves, 1929—69

[Averages of daily figures, millions of dollars]

Year and month

1929: Dec

1930: Dec1931: Dec .1932: Dec1933: Dec1934: Dec1935: Dec. .1936: D e c . . .1937: Dec1938: Dec1939: Dec

1940: Dec1941: Dec1942: Dec1943: D e c . . .1944: D e c .1945: Dec1946: Dec1947: Dec.1948: D e c . . .1949: Dec

1950: Dec1951: Dec1952: Dec1953: Dec1954: Dec1955: Dec .1956: D e c . . .1957: Dec1958: Dec1959: Dec

1960: D e c .1961: Dec1962: Dec .1963: Dec1964: Dec1965: Dec1966: Dec1967: Dec .1968: Dec1969: Dec*

1968: JanFeb. .MarApr. .May .June

July. . . . . .AugSeptOct .NovDec

1969: JanFebMarApr. .MayJune

July. .Aug .SeptOctNovDec*

Reserve Bank credit outstanding

Total

1,643

1,2731,9502,1922,6692,4722,4942,4982,6282,6182,612

2,3052,4046,035

11,91419,61224,74424,74622,85823,97819,012

21,60625,44627,29927,10726,31726,85327,15626,18628,41229,435

29,06031,21733,21836,61039,87343,85346,86451,26856,61064, 083

51,28750,87351,86352,50952,99853,813

54,57355,04854,77855,77056,18956,610

56,47655,78655,47758,82159,99960,565

60,88760,87660,45961,51662,76764,083

U.S.Govern-ment se-curities

446

644777

1,8542,4322,4302,4302,4342,5652,5642,510

2,1882,2195,549

11,16618,69323,70823,76721,90523,00218,287

20,34523,40924,40025,63924,91724,60224,76523,98226,31227,036

27,24829,09830,54633,72937,12640,88543,75048,89152,52957, 500

49,04648,93049,51150,09050,58151,306

52,09052,64652,22253,30053,38852,529

52,66552,26552,12252,46353,39054, 028

54,29854,59953,84054,70856,49957, 500

Memberbank

borrow-ings

801

337763281951067

1673

354

90265334157224134118

142657

1,593441246839688710557906

87149304327243454557238765

1,087

237361671683746692

525565515427569765

697824918996

1,4021,407

1,1901,2491,0671,1351,2411,087

Allother,mainlyfloat

396

29241057

142325857474799

114180482658654702822729842607

1.119,380,306,0?7t 154,41?, 703,494, 543493

1,7251,9702,3682,5542,5042,5142,5472,1393,3165,496

2,0041,5821,6811,7361,6711,815

1,9581,8372,0412,0432,2323,316

3,1142,6972,4375,3625,2075,130

5,3995,0285,5525,6735,0275,496

Member bank reserves

Total

2,395

2,4152,0692,4352,5884,0375,7166,6656,8798,745

11,473

14,04912,81213,15212,74914,16816,02716,51717,26119,99016,291

17,39120,31021,18019,92019,27919,24019,53519,42018,899

2 18,932

19,28320,11820,04020,74621,60922,71923,83025,26027,22128,012

25,83425,61025,58025,54625, 50525,713

26,00126,06926,07726,65326,78527,221

28, 06327,29126,75427,07927,90327,317

26,98027,07926,97127,34027,76428,012

Re-quired

2,347

2,3422,0101,909

i l , 8 2 22,2902,7334,6195,8085,5206,462

7,4039,422

10,77611,70112,88414,53615,61716,27519,19315,488

16,36419,48420,45719,22718,57618,64618,88318,84318,38318,450

18,52719,55019,46820,21021,19822,26723,43824,91526,76627,774

25,45325,21125,22425,27625,08525,362

25,70225,69425,69426,39326,46126, 766

27, 84627,06326, 53726,92727,60326,974

26, 86426,77626, 73527,19727,51127,774

Excess

48

7360

5261766

1,7482,9832,0461,0713,2265,011

6,6463,3902,3761,0481,2841,491

900986797803

1,027826723693703594652577516482

756568572536411452392345455238

381399356270420351

299375383260324455

217228217152300343

116303236143253238

Memberbank freereserves(excessreservesless bor-rowings)

- 7 5 3

- 2 6 4- 7 0 3

245671

1,7382,9772,0391,0553,2195,008

6,6433,3852,372

9581,0191,157

743762663685

885169

- 8 7 0252457

- 2 4 5-36

- 1 3 3-41

- 4 2 4

669419268209168- 2

- 1 6 5107

- 3 1 0- 8 4 9

14438

- 3 1 5- 4 1 3- 3 2 6- 3 4 1

- 2 2 6- 1 9 0- 1 3 2- 1 6 7- 2 4 5- 3 1 0

- 4 8 0- 5 9 6- 7 0 1—844

—1,102—1,064

—1,074- 9 4 6- 8 3 1- 9 9 2- 9 8 8- 8 4 9

1 Data from March 1933 through April 1934 are for licensed banks only.2 Beginning December 1959, total reserves held include vault cash allowed.Source: Board of Governors of the Federal Reserve System.

241

TABLE G-55.—Bond yields and interest rates, 1929-69

[Percent per annum]

Year or month

1929

1930.193119321 9 3 3 . . .1934

19351936193719381939

19401941194219431944

19451946194719481949

19501951195219531954

19551956195719581959

I 9 6 0 . . . . ,1961196219631964

19651966196719681969 . .-

1967: Jan..FebMarAprMayJune


U.S

3-monthTreas-

urybills i

(6)

(6)1.402

879.515.256

.137

.143447

.053

.023

014.103.326.373.375

.375

.375

.5941.0401.102

1.2181 5521.7661.931.953

1.7532.6583.2671.8393.405

2.9282.3782.7783.1573.549

3.9544.8814.3215.3396.677

4.7594.5544.2883.8523.6403.480

4.3084.2754.4514.5884.7625.012

Government securities

9-12monthissues2

0.75.79

.81

.82

.881.141.14

1.261 731.812.07

.92

1.892.833.532.094.11

3.552.913.023.283.76

4.095.174.845.627.06

4.714.644.354.034.094.40

4.985.105.215.325.555.69

3-5year

issues3

2 662.12

1 291.111 40

83.59

5073

1.461.341.33

1.181.161.321.621.43

1.501 932.132.561.82

2.503.123.622.904.33

3.993.603.573.724.06

4.225.165.075.596.85

4.714.734.524.464.684.96

5.175.285.405.525.735.72

Taxablebonds4

2.462.472.48

2.372.192.252.442.31

2.322 572.682.942.55

2.843.083.473.434.08

4.023.903.954.004.15

4.214.654.855.266.12

4.40

I

1

i

I

I

1.471 451.511.761.86

1.861.951.995 195.445.36

Corporatebonds

(Moody's)

Aaa

4.73

4.554.585.014.494.00

3.603.243.263.193.01

2.842.772.832.732.72

2.622.532.612.822.66

2.622.862.963.202.90

3.063.363.893.794.38

4.414.354.334.264.40

4.495.135.516.187.03

5.205.035.135.115.245.44

5.585.625.655.826.076.19

Baa

5.90

5.907.629.307.766.32

5.754.775.035.804.96

4.754.334.283.913.61

3.293.053.243.473.42

3.243.413.523.743.51

3.533.884.714.735.05

5.195.085.024.864.83

4.875.676.236.947.81

5.975.825.855.835.966.15

6.266.336.406.526.726.93

High-grade

munic-ipal

bonds(Stand-ard &

Poor's)

4.27

4.074.014.654.714.03

3.413.073.102.912.76

2.502.102.362.061.86

1.671.642.012.402.21

1.982.002.192.722.37

2.532.933.603.563.95

3.733.463.183.233.22

3.273.823.964.515.81

3.583.563.603.663.923.99

4.054.034.154.314.364.49

Averagerate onshort-termbankloans

to busi-n e s s -

selectedcities

(7)

( 7 )(7)v>( 7 )

2.1

2.12 02.22.62.4

2.22.12 12.52.68

2.693.113.493.693.61

3.704.204.624.34

9 5.00

5.164.975.005.014.99

5.066.00

i° 6.006.688.21

io 6.13

5.95

5.95

5.96

Primecom-mer-cial

paper,4-6

months

5.85

3.592 642.731.731.02

.75

.75

.94

.81

.59

.5653

.66

.69

.73

.75

.811.031.441.49

1.452.162.332.521.58

2.183.313.812.463.97

3.852.973.263.553.97

4.385.555.105.907.83

5.735.385.244.834.674.65

4.925.005.005.075.285.56

Fed-eral

ReserveBankdis-

countfate

5.16

3.042.112.822.561.54

1.501 501.331.001.00

1.001.00

8 1.008 1.008 1.00

8 1.008 1.00

1.001.341.50

1.591.751.751.991.60

1.892.773.122.163.36

3.533.003.003.233.55

4.044.504.195.175.87

4.504.504.504.104.004.00

4.004.004.-004.004.184.50

FHAnew

homemort-gage

yields s

4.34

4.174.214.294.614.62

4.644.795.425.495.71

6.185.805.615.475.45

5.466.296.557.138.19

6.776.626.466.356.296.44

6.516.536.606.636.656.77


242

TABLE G-55 .—Bondyields and interest rates, 1929-69— Continued

[Percent per annum]

Year or month


JulyAug _SeptOctNovDec



U.S. Government securities

3-monthTreas-

urybills i

5.0814.9695.1445.3655.6215.544

5.3825.0955.2025.3345.4925.916

6.1776.1566.0806.1506.0776.493

7.0047.0077.1297.0407.1937.720

9-12monthissues2

5.395.375.555.636.066.01

5.685.415.405.445.566.00

6.266.216.226.116.267.07

7.597.517.767.637.948.34

3-5year

issues 3

5.535.595.775.695.955.71

5.445.325.305.425.475.99

6.046.166.336.156.336.64

7.027.087.587.477.577.98

Taxablebonds4

5.185.165.395.285.405.23

5.095.045.095.245.365.66

5.745.866.055.845.856.05

6.076.026.326.276.526.81

Corporatebonds

(Moody's)

Aaa

6.176.106.116.216.276.28

6.246.025.976.096.196.45

6.596.666.856.896.796.98

7.086.977.147.337.357.72

Baa

6.846.806.856.977.037.07

6.986.826.796.847.017.23

7.327.307.517.547.527.70

7.847.868.058.228.258.65

High-grademunic-

ipalbonds

(Stand-ard &Poor's)

4.344.394.564.414.564.56

4.364.314.474.564.684.91

4.955.105.345.295.475.83

5.846.076.356.216.376.91

Averagerate onshort-termbankloans

to busi-ness-

selectedcities

6.36

6.84

6.89

6.61

7.32

7.86

8.82

8.83

Primecom-mer-cial

paper,

months

5.605.505.645.816.186.25

6.195.885.825.805.926.17

6.536.626.827.047.358.23

8.658.338.488.578.468.84

Fed-eral

ReserveBankdis-

countrate

4.504.504.665.205.505.50

5.505.485.255.255.255.36

5.505.505.505.956.006.00

6.006.006.006.006.006.00

FHAnew

homemort-gage

yields s

6.816.816.786.836.94

7.527.427.357.287.297.36

7.50

7.998.058.068.06

8.358.368.368.408.488.48

* Rate on new issues within period. Issues were tax exempt prior to March 1,1941, and fully taxable thereafter. For theperiod 1934-37, series includes issues with maturities of more than 3 months.

2 Certificates of indebtedness and selected note and bond issues (fully taxable).8 Selected note and bond issues. Issues were partially tax exempt prior to 1941, and fully taxable thereafter.4 First issued in 1941. Series includes bonds which are neither due nor callable before a given number of years as fol-

lows: April 1953 to date, 10 years; April 1952-March 1953,12 years; October 1941-March 1952, 15 years.5 Data for first of the month, based on the maximum permissible interest rate (JlA percent beginning late January 1969).

Thru July 1961, computed on 25-year mortgages paid in 12 years and thereafter, 30-year mortgages prepaid in 15 years.0 Treasury bills were first issued in December 1929 and were issued irregularly in 1930.' Not available on same basis as for 1939 and subsequent years.> From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by

Government securities maturing in 1 year or less.9 Beginning 1959, series revised to exclude loans to nonbank financial institutions.

10 Beginning February 1967, series revised to incorporate changes in coverage, in the sample of reporting banks, andin the reporting period (shifted to the middle month of the quarter).

Note.—Yields and rates computed for New York City except for short-term bank loans.

Sources: Treasury Department, Board of Governors of the Federal Reserve System, Moody's Investors Service, Stand-ard & Poor's Corporation, and Federal Housing Administration.

243

TABLE C-56.—Short- and intermediate-term consumer credit outstanding, 1929-69[Millions of dollars]

Adden-dum:Policy

...... .._r_.. loans byEnd of year or month Total _ Auto- con- and Per- _ Charge life in-

surancecom-

panies 3

1929

1930193119321933193419351936193719381939

1940194119421943194419451946194719481949

1950195119521953195419551956195719581959

1960196119621963196419651966196719681969 41968: Jan..

Feb.Mar.Apr,May.June.July.Aug.Sept.Oct..Nov.Dec-

1969:Jan..Feb..Mar.Apr -May.June-July.Aug.Sept.Oct_.Nov.Dec*.

Total

7,116

6,3515,3154,0263,8854,2185,1906,3756,9486,3707,2228,3389,17?5,9834,9015,1115,6658,384

11,59814,44717,36421,47122,71227,52031,39332,46438,83042,33444,97145,12951, 54456,14157,98263,82171,73980,26890,31497,543

102,132113,191122,200101,260100,771100.981102,257103,411104,620105,680107,090107,636108,643110,035113,191112,117111,569111,950113,231114,750115,995116,597117,380118,008118,515119,378122,200

Instalment credit

Total

3,524

3,0222,4631,6721,7231,9992,8173,7474,1183,6864,5035,5146,0853,1662,1362,1762,4624,1726,6958,996

11,59014,70315,29419,40323,00523,56828,90631,72033,86833,64239,24742,96843,89148,72055,48662,69271,32477,53980,92689,89098,10080,37980,23380,47481,32882,31283,43384,44885,68486,18487,05887,95389,89089,49289,38089,67290,66391,81393,08793,83394,73295,35695,85096,47898,100

Auto-mobilepaper

1,384

986684356493614992

1,3721,4941,0991,4972,0712,458

742355397455981

1,9243,0184,5556,0745,9727,7339,8359,809

13,46014,42015,34014,15216,42017,65817,13519,38122,25424,93428,61930,55630,72434,13036,80030,57930,68230,94231,33131,81832,36432,87433,32533,33633,69833,92534,13034,01334,05334,26234,73335,23035,80436,08136,24536,32136,59936,65036,800

Othercon-

sumergoodspaper

1,544

1,4321,214

834799889

1,0001,2901,5051,4421,6201,8271,9291,195

819791816

1,2902,1432,9013,7064,7994,8806,1746,7796,7517,6418,6068,8449,028

10,63111,54511,86212,62714,17716,33318,56520,97822,39524,89927,30022,11721,76721,64421,84122,01122,24822,45222,77722,98823,24823,66824,89924,68224,40424,30624,39924,63624,95625,17225,46725,73225,85526,22327,300

Repairand

modern-izationloans i

27

2522181537

253364219218298371376255130119182405718853898

1,0161,0851,3851,6101,6161,6931,9052,1012,3462,8093,1483,2213,2983,4373,5773,7283,8183,7893,9254,0003,7343,7083,6883,6973,7463,7693,8083,8573,8813,9103,9313,9253,8863,8753,8743,9033,9644,0224,0394,0634,0964,0844,0764,000

Per-sonalloans

569

579543464416459572721900927

1,0881,2451,322

974832869

1,0091,4961,9102,2242,4312,8143,3574,1114,7815,3926,1126,7897,5828,1169,386

10,61711,67313,41415,61817,84820,41222,18724,01826,93630,00023,94924,07624,20024,45924,73725,05225,31425,72525,97926,20226,42926,93626,91127,04827,23027,62827,98328,30528,54128,95729,20729,31229,52930,000

Noninstalment credit

Total

3,592

3,3292,8522,3542,1622,2192,3732,6282,8302,6842,7192,8243,0872,8172,7652,9353,2034,2124,9035,4515,7746,7687,4188,1178,3888,8969,924

10,61411,10311,48712,29713,17314,09115,10116,25317,57618,99020,00421,20623,30124,10020,88120,53820,50720,92921,09921,18721,23221,40621,45221,58522,08223,30122,62522,18922,27822,56822,93722,90822,76422,64822,65222,66522,90024,100

Chargeac-

counts

1,996

1,8331,6351,3741,2861,3061,3541,4281,5041,4031,4141,4711,6451,4441,4401,5171,6122,0762,3812,7222,8543,3673,7004,1304,2744,4854,7954,9955,1465,0605,1045,3295,3245,6845,9036,1956,4306,6866,9687,7558,1006,4245,8595,7106,0266,2766,3686,4576,5746,5506,6926,9647,7557,0976,4036,3406,5576,9717,0027,0396,9887,0057,0857,2388,100

Other 2

1,596

1,4961,217

980876913

1,0191,2001,3261,2811,3051,3531,4421,3731,3251,4181,5912,1362,5222,7292,9203,4013,7183,9874,1144,4115,1295,6195,9576,4277,1937,8448,7679,417

10,35011,38112,56013,31814,23815,54616,00014,45714,67914,79714,90314,82314,81914,77514,83214,90214,89315,11815,54615,52815,78615,93816,01115,96615,90615,72515,66015,64715,58015,66216,000

2,379

2,8073,3693,8063,7693,6583,5403,4113,3993,3893,248

3,0912,9192,6832,3732,1341,9621,8941,9372,0572,240

2,4132,5902,7132,9143,1273,2903,5193,8694,1884,618

5,2315,7336,2346,6557,1407,6789,117

10,05911,219

10,14010,22410,33610,44510,56910,69710,82410,94211,04211,13411,19711,28411,39911,52511,69911,90312,09012,32312,65212,92113,17213,40613,580

1 Holdings of financial institutions only; holdings of retail outlets are included in "other consumer goods paper."2 Single-payment loans and service credit.3 Year-end figures are annual statement asset values; month-end figures are book value of ledger assets. These loans

are not included in consumer credit series.* Preliminary; December by Council of Economic Advisers.Sources: Board of Governors of the Federal Reserve System and Institute of Life Insurance (except as noted).

244

TABLE C-57.—Instalment credit extended and repaid, 1946-69


Year or month

1946.194719481949

19501951195219531954

19551956195719581959

I9601961196219631964

19651966196719681969

1968: Jan..Feb..Mar..Apr...May..June-July..Aug-Sept..Oct...Nov-Dec.

1969: Jan...Feb...Mar...Apr...May...June..

July...Aug...Sept..Oct...Nov...Dec i_.

Total

Ex-tended

8,49512,71315,58518,108

21,55823,57629,51431,55831,051

38,97239,86642,01940,11048,048

49,79349,04856,19163,59170,670

78,58682,33584,69397, 053102,800

Re-paid

6,78510,19013,28415,514

18,44522,98525,40527,95630,488

33,63437,05639,87040,33942,603

46,07348,12451,36056.82563,470

69,95776,12081,30688, 08994,600

Automobilepaper

Ex-tended

1,9693,6925,2176,967

8,5308,95611,76412,98111,807

16,73415,51516,46514,22617,779

17,65716,02919,69422,12624,046

27,22727,34126,66731,42432, 500

Re-paid

1,4432,7494,1235,430

7,0119,05810,00310,87911,833

13,08214,55515,54515,41515,579

16,41916,55217,44719,25421,369

23,54325,40426,49928, 01829,900

Other consumergoods paper

Ex-tended

3,0774,4985,3835,865

7,1507,4859,1869,2279,117

10,64211,72111,81011,73813,981

14,52514,55115,70117,92020,821

22,75025,59126,95230, 59332,800

Re-paid

2,6033,6454,6255,060

6,0577,4047,8928,6229,145

9,75210,75811,57411,55712,402

13,61314,23514,93516,36918,666

20,51823,17825,53528, 08930,400

Repair and mod-ernization loans

Ex-tended

423704714734

835841

1,2171,3441,261

1,3931,5821,6741,8712,222

2,2152,092 ,2,084 i2,1862,225

2,2662,2002,1132,2682,300

Re-paid

200391579689

717772917

1,1191,255

1,3161,3701,4771,6261,765

1,8762,0152,0102,0462,086

2,1162,1102,1422,1322,200

Personalloans

Ex-tended

3,0263,8194,2714,542

5,0436,2947,3478,0068,866

10,20311,05112,06912,27514,070

15,39616,37718,71021,35923,578

26,34327,20328,96132,76835,200

Seasonally adjusted

Re-paid

2,5393,4053,9574,335

4,6605,7516,5937,3368,255

9,48410,37311,27611,74112,857

14,16515,31916,96919,15621,349

23,78025,42827,13029,85032,100

7,4537,8477,9037,8638,0338,003

8,2478,1878,4168,5338,2888,277

8,3718,4148,3818,7208,6808,705

8,5218,6808,6698,6618,6328,650

7,0547,1117,2817,2227,3017,287

7,3907,2537,7017,5867,4547,502

7,7307,6167,7357,9607,8347,910

7,8998,0807,9717,9928,0128,050

2,3852,5592,6052,5092,5902,570

2,6732,6842,7832,7822,6812,592

2,6612,7162,7302,7722,7572,725

2,5822,6342,7942,8082,6832,650

2,2542,2752,3162,2972,3272,289

2,3522,3272,4822,3912,3632,357

2,4672,4682,5012,5192,4882,460

2,4712,5622,4982,4632,5032,500

2,3392,4582,5312,5972,5352,536

2,6222,4832,5602,6452,6402,656

2,6542,5982,6252,7632,7672,869

2,7772,8192,7402,7072,8412,800

2,2232,2692,3722,3402,3122,324

2,3742,2092,4282,4512,3882,422

2,4422,3522,4612,5692,5072,602

2,5112,5742,6002,6152,6232,600

169184183189197179

195185196202191192

179201198219209218

185177180175164200

182173185176184175

181170179177175175

173172180185183183

191185156189179200

2,5602,6462,5842,5682,7112,718

2,7572,8352,8772,9042,7762,837

2,8772,8992,8282,9662,9472,893

2,9773,0502,9552,9712,9443,000

2,3952,3942,4082,4092,4782,499

2,4832,5472,6122,5672,5282,548

2,6482,6242,5932,6872,6562,665

2,7262,7592,7172,7252,7072,750

* Preliminary; December by Council of Economic Advisers.Source: Board of Governors of the Federal Reserve System (except as noted).

245

TABLE G-58.—Mortgage debt outstanding, by type of property and of financing, 1939-69


End of yearor quarter

1939.

19401941194219431944

1945 . .1946194719481949

19501951195219531954

19551956195719581959

196019611962 . .19631964

196519661967 v1968 v1969 P

1966: 1IIIII—.IV

1967: \v—.II *>111 p . .IV P__.

1968: 1 r .—\\v...Ill p . .IV P...

1969: 1 p . . . .II p . . .Ill p . .IV p . . .

Allprop-erties

35.5

36.537.636.735.334.7

35.541.848.956.262.7

72.882.391.4

101.3113.7

129.9144.5156.5171.8190.8

206.8226.2248.6274.3300.1

325.8347.4370.2397.5424.7

331.9338.7343.6347.4

350.5356.2363.3370.2

375.8382.9389.8397.5

403.7411.7418.5424.7

Farmprop-erties

6.6

6.56.46.05.44.9

4.84.95.15.35.6

6.16.77.27.78.2

9.09.8

10.411.112.1

12.813.915.216.818.9

21.223.325.527.529.6

21.822.523.023.3

23.724.324.925.5

26.026.727.227.5

28.128.829.329.6

r

Total

28.9

30.031.230.829.929.7

30.836.943.950.957.1

66.775.684.293.6

105.4

120.9134.6146.1160.7178.7

194.0212.3233.4257.4281.2

304.6324.1344.8370.0395.0

310.2316.2320.6324.1

326.8331.9338.3344.8

349.8356.1362.6370.0

375.7382.9389.2395.0

Yonfarm properties

1- to 4-familyhouses

16.3

17.418.418.217.817.9

18.623.028.233.337.6

45.251.758.566.175.7

88.299.0

107.6117.7130.9

141.3153.0166.5182.2197.6

212.9223.6236.1251.2266.8

216.2219.6221.9223.6

224.9227.8232.0236.1

239.1243.2247.0251.2

254.8259.5263.4266.8

Multi-family

5.6

5.75.95.85.85.6

5.76.16.67.58.6

10.111.512.312.913.5

14.314.915.316.818.7

20.322.925.829.033.6

37.240.343.947.351.7

38.239.139.740.3

41.041.942.843.9

44.645.346.247.3

48.349.450.651.7

Com-mer-cial

prop-erties i

7.0

6.97.06.76.36.2

6.47.79.1

10.210.8

11.512.513.414.516.3

18.320.723.226.129.2

32.436.441.146.250.0

54.560.164.871.476.5

55.857.559.060.1

60.962.263.564.8

66.167.669.371.4

72.674.075.276.5

Nonfarm properties by type of mortgage

FHA-VA underwritten

Total

1.8

2.33.03.74.14.2

4.36.39.8

13.618.1

22.126.629.332.136.2

42.947.851.655.259.2

62.365.569.473.477.2

81.284.188.293.4

82.182.783.484.1

84.585.386.488.2

89.490.792.093.4

94.596.698.5

1- to 4

Total

1.8

2.33.03.74.14.2

4.36.19.3

12.515.0

18.922.925.428.132.1

38.943.947.250.153.8

56.459.162.265.969.2

73.176.179.984.4

74.174.775.476.1

76.477.278.379.9

81.082.183.284.4

85.387.188.9

-family houses

FHAin-

sured

1.8

2.33.03.74.14.2

4.13.73.85.36.9

8.69.7

10.812.012.8

14.315.516.519.723.8

26.729.532.335.038.3

42.044.847.450.6

43.043.744.444.8

45.245.746.647.4

48.148.749.650.6

51.452.253.4

VAguar-

anteed

0.22.45.57.28.1

10.313.214.616.119.3

24.628.430.730.430.0

29.729.629.930.930.9

31.131.332.533.8

31.131.031.031.3

31.231.531.732.5

32.933.433.633.8

33.934.935.5

Conventional2

Total

27.1

27.728.227.125.825.5

26.530.634.137.339.0

44.649.054.961.569.2

78.086.894.5

105.5119.4

131.7146.9164.0184.0204.0

223.4240.0256.6276.6

228.1233.5237.2240.0

242.3246.6251.9256.6

260.4265.4270.6276.6

281.2286.3290.7

1- to 4-familyhouses

14.5

15.115.414.513.713.7

14.316.918.920.822.6

26.328.833.138.043.6

49.355.160.467.677.0

84.893.9

104.3116.3128.3

139.8147.5156.1166.8

142.1145.0146.5147.5

148.4150.6153.7156.1

158.1161.1163.8166.8

169.6172.3174.6

i Includes negligible amount of farm loans held by savings and loan associations.> Derived figures.

Source: Board of Governors of the Federal Reserve System, estimated and compiled from data supplied by variousGovernment and private organizations.

246

TABLE C-59.—Mortgage debt outstanding, by lender, 1939-69


End of year or quarter

1939

19401941194219431944

194519461947 . . . .19481949 - . . .

19501951195219531954

1955 . . .1956195719581959

19601961 - .196219631964 . .

196519661967 P1968 P1969 P

1966: 1IIIIIIV

1967* 1 pII pIN pIV p

1968: 1 p _II pIII pIV p

1 9 6 9 : 1 pII vIII vIV p

Total

35.5

36.537.636.735.334.7

35.541.848.956.262.7

72.882.391.4

101.3113.7

129.9144.5156.5171.8190.8

206.8226.2248.6274.3300.1

325.8347.4370.2397.5424.7

331.9338.7343.6347.4

350.5356.2363.3370.2

375.8382 9389.8397.5

403.7411.7418.5424.7

Total

18.6

19.520.720.720.220.2

21.026.031.837.842.9

51.759.566.975.185.7

99.3111.2119.7131.5145.5

157.6172.6192.5217.1241.0

264.6280.8298.8319.9339.1

269.6274.7278.2280.8

282.9287.6293.3298.8

302.6308.1313.5319.9

324.7331.0335.5339.1

Selected financial institutions

Savingsandloan

associa-tions

3.8

4.14.64.64.64.8

5.47.18.9

10.311.6

13.715.618.422.026.1

31.435.740.045.653.1

60 168.878.890.9

101.3

110.3114.4121 8130.8140.2

112.3114.0114.4114.4

114.8116.9119.5121.8

123.3125.9128.3130.8

133.0136.2138.6140.2

Mutualsavingsbanks

4.8

i

i

t

i

1.9I 81 61.41.3

1.2I 44.95.86.7

8.39.9

11.412.915.0

17.519.721.223.325.0

26.929.132.336.240.6

44.647.350.553.555.8

45.445.946.647.3

48.148.949.750.5

51.251.852.553.5

54.254.855.455.8

Com-mercialbanks *

4.3

4.64.94.74.54.4

4.87.29.4

10.911.6

13.714.715.916.918.6

21.022.723.325.528.1

28.830.434.539.444.0

49.754.459.065.770.9

50.752.353.654.4

54.555.757.559.0

60.162.063.865.7

67.169.170.270.9

Lifeinsurance

com-panies

5.7

6.06.46.76.76.7

6.67.28.7

10.812.9

16.119.321.323.326.0

29.433.035.237.139.2

41.844.246.950.555.2

60.064.667 570.072.1

61.262.563 664.6

65.566.166.667.5

68.068 468.970.0

70.470.971 372.1

Other lenders

U.S.agencies2

5.0

4.94.74.33.63.0

2.42.01.81.92.4

2.73.44.04.44.6

5.26.07.47.8

10.0

11.211.812.211.211.4

12.415.818 421.726.8

13.514.415.215.8

16.416.717.518.4

19.620.621.121.7

22.623.424 926.8

Indi-viduals

andothers

11.9

12.012.211.711.511.5

12.113.815.316.517.4

18.419.420.521.823.4

25.427.329.332.535.4

38 041.844.045.947.7

48.750.953.055.858.8

48.849.650.250.9

51.351 952.553.0

53.554 255.155.8

56 457.258 158.8

1 Includes loans held by nondeposit trust companies, but not bank trust departments.2 Includes former FNMA and new GNMA, as well as FHA, VA, PHA, Farmers' Home Administration and in earlier years

RFC, HOLC, and FFMC. Also includes U.S.-sponsored agencies such as new FNMA and Federal Land Banks. Other U.S.agencies (amounts small or current separate data not readily available) included with "individuals and others."

Sources: Board of Governors of the Federal Reserve System, based on data from various Government and private or-ganizations.

247

TABLE C-60.—Net public and private debt, 1929-68*

(Billions of dollars]

End of year

1929

19301931193219331934

19351936193719381939

19401941194219431944

19451946194719481949

19501951195219531954

1955.19561957 . . . - •19581959

19601961196219631964

1965196619671968

Total

191.9

192.3182.9175.0168.5171 6

175.0180.6182.2179.9183.3

189.8211.4258 6313.2370.6

405.9396.6415.7431.3445.8

486.2519.2550.2581.6605.9

664.9698.3728.3769.1831.4

872.4929.8997.1

1,071.71,153.7

1,245.61,340.81,436.41,568.5

Public

Fed-eral 2

16.5

16.518.521.324.330.4

34.437.739.240.542.6

44.856.3

101.7154.4211.9

252.5229.5221.7215.3217.6

217.4216.9221.5226.8229.1

229.6224.3223.0231.0241.4

239.8246.7253.6257.5264.0

266.4271.8286.4291.9

Fed-eral

finan-cial

agen-cies 3

0.7.6.7

.71.31.31.41.3

2.92.42.42.53.7

3.54.05.37.27.5

8.911.29.0

21.5

Stateandlocal

13.6

14.716.016.616.315.9

16.116.216.116.116.4

16.416.115.414.513.9

13.413.715.017.019.1

21.724.227.030.735.5

40.244.448.653.258.0

63.070.078.184.792.4

99.9107.1117.9128.6

Total

161.8

161.1148.4137.1127.9125.3

124.5126.7126.9123.3124.3

128.6139.0141.5144.3144.8

140.0153.4178.3198.4208.4

246.4276.8300.4322.7340.0

392.2427.2454.3482.4528.3

566.1609.1660.1722.3789.7

870.4950.6

1,023.11,126.6

Cor-porate

88.9

89.383.580.076.975.5

74.876.175.873.373.5

75.683.491.695.594.1

85.393.5

108.9117.8118.0

142.1162.5171.0179.5182.8

212.1231.7246.7259.5283.3

302.8324.3348.2376.4409.6

454.3502.7541.7604.5

Total

72.9

71.864.957.151.049.8

49.750.651.150.050.8

53.055.649.948.850.7

54.759.969.480.690.4

104.3114.3129.4143.2157.2

180.1195.5207.6222.9245.0

263.3284.8311.9345.8380.1

416.1447.9481.4522.2

Private

Individual and noncorporate

Farm*

12.2

11.811.110.19.18.9

8.98.68.69.08.8

9.19.39.08.27.7

7.37.68.6

10.812.0

12.313.715.216.817.5

18.719.420.223.223.8

25.127.530.233.236.0

39.342.448.350.2

Total

60.7

60.053.847.041.940.9

40.842.042.541.042.0

43.946.340.940.542.9

47.452.360.769.778.4

92.0100.6114.2126.4139.7

161.4176.1187.4199.7221.2

238.2257.3281.7312.6344.1

376.8405.5433.2472.0

Nonfarm

Mort-gage

31.2

32.030.929.026.325.5

24.824.424.324.525.0

26.127.126.826.126.0

27.031.837.242.447.1

54.861.768.976.786.4

98.7109.4118.1128.1141.0

151.3164.5180.3198.6218.9

236.8252.8266.9285.5

Com-mer-cialand

finan-cial «

22.4

21.617.614.011.711.2

10.811.211.310.19.8

9.510.08.19.5

11.8

14.712.111.912.913.9

15.816.217.818.420.8

24.024.424.326.528.7

30.834.837.642.345.0

49.755.264.273.2

Con-sumer

7.1

6.45.34.03.94.2

5.26.46.96.47.2

8.39.26.04.95.1

5.78.4

11.614.417.4

21.522.727.531.432.5

38.842.345.045.151.5

56.158.063.871.780.3

90.397.5

102.1113.2

i Net public and private debt is a comprehensive aggregate of the indebtedness of borrowers after eliminating certaintypes of duplicating governmental and corporate debt.

> Net Federal Government and agency debt is the outstanding debt held by the public, as defined in the "Budget of theUnited States Government, for the Fiscal Year ending June 30,1971." Figures shown here are subject to revision.

3 This comprises the debt of federally sponsored agencies, in which there is no longer any Federal proprietary interest.The obligations of the Federal Land Banks are included here beginning in 1947; the debt of the Federal Home Loan Banksis included beginning in 1951; and the debts of the Federal National Mortgage Association—Secondary Market Operations,Federal Intermediate Credit Banks, and Banks for Cooperatives are included beginning with 1968.

* Farm mortgages and farm production loans. Farmers' financial and consumer debt is included in the nonfarm categories.* Financial debt is debt owed to banks for purchasing or carrying securities, customers' debt to brokers, and debt owed

to life insurance companies by policyholders.Sources- Department of Commerce (Office of Business Economics), Treasury Department, Department of Agriculture,

Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board, Federal Land Banks, and FederalNational Mortgage Association.

248

GOVERNMENT FINANCETABLE C-61.—Federal budget receipts and outlays, 1929-71


Fiscal year

Administrative budget:1929 .1930

1931.. . . . .193219331934...1935

193619371938 .1939

Consolidated cash statement:1940

1941.. . .1942..194319441945

19461947194819491950

1951.. . .19521953

Unified budget:19541955 . . . . . . .

19561957 . .19581959.I960

1961.1962196319641965

19661967....19681969 . .19701

1971 i

Receipts

3,8614,058

3,1161,9241,9973,0153,706

3,9974,9565,5884,979

6,879

9,20215,10425,09747,81850,162

43,53743,53145,35741,57640,940

53,39068,01171,495

69,71965,469

74, 54779,99079,63679,24992,492

94,38999,676

106, 560112,662116,833

130,856149, 552153,671187,792199,386

202,103

Outlays

3,1273,320

3,5774,6594,5986,6456,497

8,4227,7336,7658,841

9,589

13,98034,50078,90993,95695,184

61,73836,93136,49340,57043,147

45,79767,96276,769

70,89068, 509

70,46076,74182,57592,10492,223

97,795106,813111,311118,584118,430

134,652158,254178 833184,556197,885

200,771

Surplus ordeficit ( - )

734738

-462-2 ,735-2 ,602-3 ,630-2 ,791

-4 ,425-2,777-1,177-3 ,862

-2 ,710

-4 ,778-19,396-53,812-46,138-45,022

-18,2016,6008,8641,006

-2,207

7,59349

-5 ,274

-1 ,170-3,041

4,0873,249

-2 ,939-12,855

269

-3 ,406-7,137-4,751-5 ,922-1,596

-3,796-8,702

- 2 5 1613,2361,501

1,331

i Estimate.

Note.—Certain interfund transactions are excluded from receipts and outlays starting in 1932. For years prior to 1932 theamounts of such transactions are not significant

Refunds of receipts are excluded from receipts and outlays starting in 1913; comparable data are not available for prioryears.

Source: Bureau of the Budget.

249

T A B L E G-62.—Federal budget receipts, outlays, financing, and debt, 1960-71

[Millions of dollars; fiscal years]

DescriptionActual

1960 1961 1962 1963 1964 1965

RECEIPTS, EXPENDITURES, AND NET LEND-ING:

Expenditure account:ReceiptsExpenditures (excludes net lending)...

Expenditure account surplus ordeficit ( - )

Loan account:Loan disbursements.Loan repayments

Net lending.

Total budget:ReceiptsOutlays (expenditures and net lending).

Budget surplus or deficit (—)

BUDGET FINANCING:Net borrowing from the public or repay-

ment of borrowing ( - )Other means of financing

Total means of financing.

OUTSTANDING DEBT, END OF YEAR:Gross Federal debt

Held by the public

92,49290,341

2,151

8,3106,427

1,882

92,49292,223

269

2,174-2,443

-269

290,862237,177

94,38996,597

-2,208

7,8696,671

1,198

94,38997,795

-3,406

1,4271,979

3,406

292,895238,604

99,676104,462

-4,786

9,6217,271

2,351

99,676106,813

-7,137

9,769-2,632

7,137

303,291248,373

106,560111,456

-4,896

9,6469,791

-145

106,560111,311

-4,751

6,088-1,337

4,751

310,807254,461

112,662118,039

-5,377

10,2379,693

545

112,662118,584

-5,922

3,0922,830

5,922

316,763257,553

116,833117,181

-347

10,9119,662

1,249

116,833118,430

-1,596

4,061-2,465

1,596

323,154261,614

BUDGET RECEIPTS.Individual income taxesCorporation income taxesEmployment taxes and contributionsUnem ployment insurance 2_. _Contributions for other insurance and

retirementExcise taxesEstate and gift taxesCustoms dutiesMiscellaneous receipts3

MEMORANDUM:Federal funds..Trust funds. . .

BUDGET OUTLAYS (EXPENDITURES ANDNET LENDING)

National defenseInternational affairs and financeSpace research and technologyAgriculture and rural developmentNatural resourcesCommerce and transportationCommunity development and housingEducation and manpowerHealthI ncome securityVeterans benefits and servicesInterestGeneral governmentAllowancesUndistributed intragovernmental trans-

actions

92,49240,74121,49411,2482,667

76811,6761,6061,1051,187

75,65019,228

92,22345,9083,054401

3,3221,0194,774971

1,286756

17,9775,4268,2991,327

94,38941,33820,95412,6792,902

85711,8601,896982919

75,17921,800

97,79547,3813,357744

3,3401,5685,048191

1,499873

20,9565,6888,1081,491

99,67645,57120,52312,8353,337

87512, 5342,0161,142843

79,70322,652

106,81351,0974,4921,2574,1231,6865,408589

1,7321,139

22,2055,6258,3211,650

106,56047,58821,57914,7464,112

94613,1942,1671,2051,023

83,55025,799

111,31152,2574,1152,5525,1391,5055,743-8801,7321,393

23,8545,5209,2151,810

112,66248,69723,49316,9594,045

1,00813,7312,3941,2521,084

87,20528,518

118,58453, 5914,1174,1705,1851,9726,482-1852,0281,737

24,8335,6819,8102,040

MEMORANDUM:Federal fundsTrust fundsIntragovernmental transactions.

-2,297

74,86519,743

-2,385

-2,449

79,33621,048

-2,589

-2,513

86,59422,898

-2,680

-2,644

90,14123,958

-2,788

-2,877

95,76125,884

- 3 , 061

116,83348,79225,46117,3593,819

1,08114,5702,7161,4421,594

90,94329,230

118,43049,5784,3405,0914,8072,0637,364

2882,5331,730

25,4535,722

10,3572,210

-3,109

94,80726,962

-3,339


250

TABLE G-62.—Federal budget receipts, outlays, financing, and debt, 1960-71—Continued[Millions of dollars; fiscal years]

DescriptionActual

1966 1967 1968 1969

Estimate

1970

RECEIPTS, EXPENDITURES, AND NET LEND-ING:

Expenditure account:Receipts,Expenditures (excluding net lending). _

Expenditure account surplus ordeficit (-)___..__-_

130,856130,820

Loan account:Loan disbursements.Loan repayments

Net lending.

Total budget:Receipts.. -_-_.__.Outlays (expenditures and net lending).

Budget surplus or deficit ( - ) — - . - .

BUDGET FINANCING:Net borrowing from the public or repay-

ment of borrowing (—)._Other means of financing —.'___

Total means of financing.

OUTSTANDING DEBT END OF YEAR:Gross Federal debt .Held by the public -

36

14,62810,796

3,832

130,856134,652

—3,796

3, 076720

3,796

329,474264,690

149,552153,201

-3,649

17,67612,623

5,053

149,552158,254

-8,702

2,8385, 863

8,702

341,348267, 529

153,671172,802

-19,131

20,32714,297

6,030

153,671178,833

-25,161

23,1002,061

25,161

369,769290,629

187,792183,080

4,712

13,11711,640

1,476

187,792184, 556

3,236

-1,044-2,192

1-3,236

367,144279,483

199,386194,985

4,401

9,4896,589

2,900

199,386197,885

1, 501

-2,5831,082

1-1,501

374,734278,483

BUDGET RECEIPTS.

Individual income taxesCorporation income taxes.Employment taxes and contributionsUnemployment insurance 2 .Contributions for other insurance and re-

tirementExcise taxes...Estate and gift taxesCustoms duties —Miscellaneous receipts 3.

MEMORANDUM:Federal funds-Trust funds. __

BUDGET OUTLAYS (EXPENDITURES AND NETLENDING)

National defenseInternational affairs and financeSpace research and technologyAgriculture and rural development....Natural resources. .Commerce and transportationCommunity development and housing.Education and manpower ..Health. . . . . .Income securityVeterans benefits and servicesInterestGeneral government .AllowancesUndistributed intragovernmental trans-

actions _ _

130,856

55,44630,07320,6623,777

1,12913,0623,0661,7671,875

101,42732,997

134,652

56,7854,4905,9333,6792,0357,135^2,6444,5232,54328,7515,92011,2852,292

149,552

61, 52633,97127,8233,659

1,86713,7192,9781,9012,108

111,83542,935

158,254

153,671

68,72628,66529,2243,346

2,05214,0793,0512,0382,491

114,72644,716

178,833

70,0814,5475,4234,3761,8607,5542,6166,1356,721

30,8816,897

12,5882,510

80,5174,6194,7215,9431,7028,0474,0767,0129,672

33,8356,882

13,7442,561

187,792

87,24936,67834,2363,328

2,35315,2223,4912,3192,916

143,32952,009

184,556

81,2403,7854,2476,2212,1297,8731,9616,825

11,69637,3997,640

15,7912,866

MEMORANDUM:Federal funds. . . .Trust funds.._ ._Intragovernmental transactions.

-3,364

106,51231,708-3,568

-3,936

126,77936,693-5,218

-4,499

143,10541,499-5,771

-5,117

148,81943,284-7,547

199,386

92,20037,00038,9143,340

2,55115,9403,5002,2603,681

149,57958,141

197,885

79,4324,1133,8866,3432,4859,4363,0467,53813,26543,8328,68117,8213,620475

-6,088

156,70349,517-8,335

1 Excludes changes due to reclassification and to conversion of mixed-ownership enterprises to private ownership. (Seefootnote to Table 9 of the 1971 Budget Document.)

2 Includes Federal funds of $339 million in 1960.3 Includes both Federal funds and trust funds.

Source: Bureau of the Budget

251

TABLE C-63.—Relation of the Federal Budget to the Federal sector of the national income andproduct accounts, 1968-71

[Billions of dollars; fiscal years]

Receipts and expendituresActual

1968 1969

Estimate

1970 1971

RECEIPTS

Total receipts, budget-

Government contribution for employee retire-ment (grossing) _ .

Other netting and grossing ...Adjustment to accruals .Other

Federal sector, national income and product accounts,receipts —

EXPENDITURES

Total outlays, budget. __

Loan account. __..Financial transactions in the expenditure account-Government contribution for employee retirement

(grossing) . : .Other netting and grossing.. _.._Defense timing adjustment..Dollar expenditures to finance agricultural exports.O t h e r . . . . . .

Federal sector, national income and product accounts,expenditures

153.7

1.91.14,3

- . 1

160.9

178.8

-6 .0-1 .6

1.91.1

-2 .1

172.4

187.8

2.11.31.7

- . 2

192.7

184.6

-1 .5- 1 . 0

2.11.3.7

q'.9

186.7

199.4

2.41.4

- . 9- . 4

201.8

197.9

-2 .9-1 .8

2.41.41.7

- . 3- . 2

198.1

202.1

2.61.4*

205,4

200.8

- . 7- 1 . 9

2.61.41.3

!

203.8

Note.—See Special Analysis A, "Budget of the United States Government for the Fiscal Year Ending June 30,1971," fordescription of these categories.

Sources: Bureau of the Budget and Department of Commerce (Office of Business Economics).

252

T A B L E G—64.—Receipts and expenditures of the Federal Government sector of the national income

and product accounts, 1946—71


Year or quarter

Receipts

Total

38.442.743.640.042.060.865.169.365.867.275.880.777.985.494.895.3

104.2110.2115.5120.5132.8147.3160.9192.7201.8205.4

39.143.243.338.949.964.067.270.063.872.177.681.678.789.796.598.3

106.4114.5115.0124.7142.5151.1176.3201.6

Darrer-sonalf n ylaxandnon-fayId A

ceipts

16.918.820.016.316.523.228.831.430.329.733.636.736.338.242.543.647.349.650.751.357.664.471.390.595.593.6

17.219.619.016.118.126.131.032.229.031.435.237.436.839.943.644.748.651.548.653.861.767.579.595.6

Cor-po-rate

profitstaxac-

cruals

8.310.611.211.011.921.519.319.717.318.721.120.617.821.522.320.322.923.525.727.731.031.134.340.038.838.4

8.610.711.89.8

17.021.518.519.517.020.620.620.218.022.521.721.822.724.626.429.332.130.638.340.4

Indi-rect

busi-nesstaxandnon-taxac-cru-alcais

7.47.97.98.08.29.59.7

10.710.410.010.811.711.611.913.213.314.215.015.616.915.716.117.218.619.120.5

7.87.88.08.08.99.4

10.310.99.7

10.711.211.811.512.513.513.614.615.316.116.515.716.318.018.8

Con-tribu-tionsfor

socialinsur-ance

5.85.54.64.85.56.67.37.57.88.7

10.211.712.213.816.718.119.922.123.524.628.535.838.043.648.352.9

5.55.14.54.95.97.17.47.48.19.3

10.612.212.414.817.718.220.523.123.825.133.036.740.546.9

Expenditures

Total

55.529.530.939.642.444.666.075.874.267.369.876.083.190.991.398.0

106.4111.4116.9118.5131.9154.6172.4186.7198.1203.8

35.629.834.941.340.857.871.077.069.768.171.979.688.991.093.0

102.1110.3113.9118.1123.5142.8163.8181.5191.9

Pur-chases

ofgoodsand

serv-ices

40.113.013.219.319.025.146.656.153.243.945.247.750.754.752.755.560.963.465.764.471.785.395.3

101.1100.896.6

17.212.516.520.118.437.751.857.047.444.145.649.553.653.753.557.463.464.265.266.977.890.799.5

102.0

Transferpayments

Toper-sons

8.38.78.1

11.38.18.59.3

10.512.112.814.417.819.820.623.625U26.427.328.331.837.342.448.254.762.8

9.28.87.68.7

10.88.58.89.5

11.512.413.415.719.520.121.524.925.527.027.830.333.440.045.750.4

Tofor-

eign-ers

(net)

1.82.65.04.33.12.62.11.72.11.81.91.71.81.82.12.12.12.22.22.32.22.12.22.22.2

2.21.93.85.13.63.12.12.01.82.01.91.81.81.81.92.12.22.22.22.22.32.22.11.9

Grants-in-aid

to Stateandlocal

govern-ments

0.91.51.82.12.42.42.52.82.93.03.23.74.76.26.86.97.68.49.8

10.912.714.817.618.922.424.8

1.11.72.02.22.32.52.62.82.93.13.34.25.66.86.57.28.09.1

10.411.114.415.918.319.9

Netin-ter-estpaid

3.74.24.24.34.44.64.84.85.04.95.15.55.75.97.06.86.87.58.18.59.09.9

10.812.313.613.3

4.24.24.34.44.54.74.74.95.04.95.35.75.66.47.16.67.27.78.38.79.5

10.311.613.0

Subsi-diesless

cur-rentsur-plusof

gov-ern-mententer-prises

2.1.7.5.8

1.01.31.1.9

1.01.31.72.82.52.42.33.23.83.63.84.14.55.14.14.14.54.1

1.6.6.7.8

1.21.31.0.8

1.11.52.42.62.72.12.53.84.03.64.24.35.44.74.34.6

Fiscal year:194619471948194919501951.1952195319541955195619571958195919601961196219631964196519661967196819691 9 7 0 1 . . : . .19711

Calendar year:1946194719481949195019511952 _19531954._195519561957195819591960196119621963196419651966196719681969 v

1968: 1 . . .I I . . .I I I . .IV__

1969: l ._ ._I I . . .I I I . .IV v_


165.7170.8181.4187.3

198.6202.8201.3

72.174.783.787.4

93.896.995.096 6

37.038.138.439.8

40.741.039.8

17.417.918.318.5

18.518.619.118.9

39.340.140.941.7

45.646.447.548.1

174.1180.3184.2187.4

188.5189.3193.6196.2

96.399.0

100.9101.9

101.6100.6103.2102.7

43.345.546.547.6

49.150.050.951.6

1.82.02.32.41.72.11.82.0

17.718.218.419.019.019.319.821.4

11.011.411.712.212.512.913.113. b

4.04.14.64.44.64.44.64.9

i Estimates.Note.—Includes the transactions of the trust accounts and excludes certain financial transactions. Corporate profits

taxes are included in receipts on an accrual basis; purchases of goods and services from business are timed with delivery;and CCC guaranteed price-support crop loans are counted as expenditures when the loans are made, not when CCC re-deems them.

Receipts for 1969 reflect repeal of investment tax credit.Sources: Department of Commerce (Office of Business Economics) and Bureau of the Budget.

253

TABLE G-65.—Public debt securities by kind of obligation, 1946-69


End of year or month

1946 .194719481949

19501951195219531954..19551956195719581959

1960196119621963.19641965 - -1966 - -19671968 -1969 _. _

1968' JanFebMar - -AprMayJune

julvAugSeptOctNov .--Dec

1969' JanFebMarAprMayJune


Totalpublicdebt

securi-ties

259.1256.9252.8257.1

256.7259.4267.4275.2278.7280.8276.6274.9282.9290.8

290.2296.2303.5309.3317.9320.9329.3344.7358.0368.2

346.3351.6349 5347.0352.3347.6

351 1354.4354 7357.2356.9358.0

359.4358.8359.5358 5360.1353.7

357.0360.2360.7364.4368.1368.2

interest-bearing public debt

Marketable public issuesby maturity class

Within1 year

54.849.644.649.4

49.447.157.773.962.861.768.675.372.679.9

75.385.987.389.488.593.4

105.2104.4108.6118.1

107.2116.3114.6111.8109.0106.4

110.8106.1106.5116.0104.9108.6

110.4100.3103.3101.2111.9103.9

107.4112.6112.6109.6120.1118.1

1 to 10years

61.756.155.151.8

50.556.762.250.464.768.658.956.971.083.7

89.584.795.694.2

100.495.687.597.0

103.493.3

97.092.092.091.997.895.2

95.2102.1102 195.7

105.9103.4

103.4111.5109.2109.197.697.6

97.694.194.1

101.093.393.3

10yearsandover

60.160.057.753.9

52.538.828 730.330.232.932.932.032.024.6

24.225.420.124.023.625.625.425.124.824.4

25.125.025.025.025.025.0

24 924.924 924.924.824.8

24.824.724.724 724.624.6

24.624.524.524.524.424.4

Nonmarketable public issues

Specialissues1

24.629.031.733.9

33.735.939 141.242.643.945 645.844.843.5

44.343.543.443.746.146.352.057.259.171.0

55.957.256.757.059.259.5

58.960.159 758.859.059.1

59.860.961.162.364.966.8

66.868.468.968.169.371.0

U.S.sav-ings

bonds 2

49.852.155.156.7

58.057.657.957.757.757.956 352.551.248.2

47.247.547.548.849.750.350.851.752.352.2

51.751.751.851.851.951.9

52.052.052 152.252.352.3

52.352.352.352.252.252.2

52.252.152.152.152.152.2

For-eignand

inter-na-

tional

0.5.7

1.31.72.41.53.14.33.8

3.23.43.33.53.53.7

3.53.33 73.84.44.3

4.44.54.54.54.44.1

4.03.83.84.13.83.8

Other

6 77.46.39.3

10.120.919 619 317.712.711 910.49.27.8

6 35.34.63.83.63.02.82.72.63.4

2.72.72.72.62.62.6

2.62.62 62.62.62.6

2.62.62.62.62.52.5

2.62.72.83.13.13.4

Maturedpublicdebtanddebtbear-ing nointer-

est

1 52.72.22.1

2.42.32 12 33.03.02 42 02.13.1

3 43.54.34.14.44.44.33.J2.J2.(

3 43.23.33.43.43.2

3.13.13 23.13.(2.S

l.J2.(l.Jl.Jl.J2.(

l.Jl.Jl.J2.(l.J2.(

1 Issued to U.S. Government accounts. These accounts also held $18.4 billion of public marketable and nonmarket-able issues on December 31,1969.

2 Includes sales of U.S. savings notes beginning May 1967.

Source: Treasury Department.

254

TABLE C-66.—Estimated ownership of public debt securities, 7939-69

[Par values,1 billions of dollars]

End of year ormonth

1939

19401941194219431944 - —194519461947 . .19481949

19501951195219531954. . . .19551956195719581959

1960 .1961...196219631964 . - _1965196619671968 . . . .1969 . -

1968: J a n . . . . . . . .FebMar...AprMayJune . .

July...Aug...SeptOctNov . . . .Dec

1969: Jan . . . .FebMarAprMayJune

July.AugSeptOctNovDec

Total public debt securities 2

Total

41.9

45.057.9

108.2165.9230.6278.1259.1256.9252.8257.1

256.7259.4267.4275.2278.7280.8276.6274.9282.9290.8

290.2296.2303.5309.3317.9320.9329.3344 7358.0368.2

346.3351.6349.5347.0352.3347.6

351.1354.4354.7357.2356.9358.0

359.4358.8359.5358.5360.1353.7357.0360.2360.7364.4368.1368.2

Heldby

Govern-ment

ac-counts

6.1

6.78.5

10.514.519.023 927.430 833.735.9

36.039 342.945.446 749.051.252.852.151.4

52.852.553.255.358.459.765.873 176.689.0

71.873.472.973.175.776.1

75.676.976.576.276.676.6

77.378.779.079.882.784.8

85.086.686.986.187.089.0

Heldby

FederalReservebanks

2.5

2.22.36.2

11.518.824.323.322.623.318.9

20.823 824.725.924 924.824.924 226.326.6

27.428 930.833.637.040 844.349 152 957.2

49.149.049.750.550.652.2

52.453.053.353.353.452.9

52.152.352.453.153.854.1

54.154.954.155.557.357.2

Held by private investors

Total

33.4

36.247.191.5

139.8192.8230.0208.3203.6195.8202.4

199.9196.3199.8203.8207 1207.0200.5197.9204.5212.7

210.0214.8219.5220.5222.5220.5219.2222 4228 5222.0

225.3229.2226.9223.4226.0219.2

223.1224.5224.9227.7226.9228.5

230.0227.8228.1225.6223.6214.8

217.9218.6219.6222.7223.8222.0

Com-mercialbanks 3

12.7

13.717.138.257.376.790.874.568.762.466.8

61.861.563.463.769.162.059.559.567.560.3

62.167.267.164.263.960.757.463.865.556.1

62.863.762.059.860.859.8

61.262.163.565.363.965.5

64.260.860 658.656.454.956.054.754.455.756.456.1

Mutualsavingsbanks

and in-surance

com-panies

8.4

9.211.015.420.828.034.736.735.932.731.5

29.626.225.525.124.123.121.220.119.819.4

18.017.417.516.816.515.614.112.711.610.1

12.512.512.612.312.412.0

12.011.911.911.711.611.6

11.511.411.311.111.611.0

10.610.410.210.110.210.1

Othercorpo-

rations*

2.0

2.04.0

10.116.421.422.215.314 114.816.8

19.720.719.921.519 123.218.717.718.121.4

18.718.518.618.718.215.814.912 214.615.8

13.414.814.113.615.613.0

14.314.512.914.014.814.616.817.817.617.017.415.1

15.816.815.216.416.815.8

Stateandlocal

govern-ments 5

0.4

.5

.71.02.14.36.56.37.37.98.1

8.89.6

11.112.714.415.416.316.616.518.0

18.719 020.121.121.122 924.925 127 127.1

25 626.427 126.926.826.6

26.726.926.726.826.727 1

27.828.428 128.728.127.3

27.527.327.627.027.327.1

Indi-viduals6

9.4

10.013.023.337.253.164.064.165.765.566.3

66.364.665.264.863.565.065.964.963.769.4

66.165.966.068.269.872.174.674.075.379.4

74.575.275.275.275.474.2

74.774.975.275.074.775.3

75.976.176.476.676.876.4

76.977.277.878.578.779.4

Miscel-laneousinves-tors?

0.5

.81.33.56.09.3

11.811.411.912.512.9

13.613.714.716.116.918.318.919.118.924.3

26.526.930.131.533. t33.433.334.734.433.5

36.536.635.935.634.933.7

34.234.234.734.835.234. ^

33.733.133. S33.533.230.2

31. C32.334.-35. C34.233.1

1 United States savings bonds, series A-F and J, and U.S. savings notes are included at current redemption value.2 Not all of total shown is subject to statutory debt limitation.3 Includes commercial banks, trust companies, and stock savings banks in the United States and Territories and island

possessions; figures exclude securities held in trust departments. Since the estimates in this table are on the basis of parvalues and include holdings of banks in United States Territories and possessions, they do not agree with the estimatesin Table C-51, which are based on book values and relate only to banks within the United States.

4 Exclusive of banks and insurance companies.8 Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories

and possessions.«Includes partnerships and personal trust accounts.7 Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers,

Federal oriented agencies not included in Government accounts, and investments of foreign balances and internationalaccounts in this country. Beginning with December 1946, the international accounts include investments by the InternationalBank for Reconstruction and Development, the International Monetary Fund, the Internationa} Development Association,the Inter-American Development Bank, and various United Nations' funds, in special non-interest-bearing notes andbonds issued by the U.S. Government.

Source: Treasury Department.255

TABLE C-67.—Average length and maturity distribution of marketable interest-bearingpublic debt, 1946-69

End of year or monthAmount

out-standing

Maturity class

Within1 year

1 to 5years

5 to 10years

10 to 20years

20 yearsand over

Average length

Millions of dollars Years

Fiscal year:1946—-1947....1948....1949....

1950..1951..1952..1953-1954-

1955..1956-1957-1958..1959-

1960-1961..1962..1963-1964..

1965..1966..1967..1968..1969-

1968: Jan...Feb..Mar..Apr...May..June..

1969: Jan...Feb...Mar..Apr...May_.June..

July..Aug..

Nov..Dec-

July. . . .AugSeptOct.Nov. . . .Dec

189.606168,702160,346155,147

155,310137,917140,407147,335150,354

155,206154,953155,705166,675178,027

183,845187,148196,072203,508206,489

208,695209,127210,672226,592226,107

229,285233,273231,651228,718231,761226,592

230,977233,167233,556236,651235,653236,812

238,543236,535237,272234,968234,097226,107

229,581231,230231,203235,029237,919235,863

61,97451,21148,74248,130

42,33843,90846,36765,27062,734

49,70358,71471,95267,78272,958

70,46781,12088,44285,29481,424

87,63789,13689,648106,407103,910

107,199116,253114,646111,783109,012106,407

110,824106,121106,534116,040104,938108,611

110,377100,282103,342101,159111,855103,910

107,416112,618112,616109,550120,144118,124

24,76321,85121,63032,562

51,29246,52647,81436,16129,866

39,10734,40140,66942,55758,304

72,84458,40057,04158,02665,453

56,19860,93371,42464,47062,770

78,15767,96767,96967,92267,01764,470

64,46964,99664,99758,60670,75168,260

68,26075,77873,49473,40762,76962,770

62,76369,51969,52274,76273,30573,302

41,80735,56232,26416,746

7,7928,70713,93315,65127,515

34,25328,90812,32821,47617,052

20,24626,43526,04937,38534,929

39,16933,59624,37830,75434,837

18,85924,00524,00624,00630,75230,754

30,75437,14337,14337,14235,13035,130

35,12935,72735,72635,72634,83734,837

34,83724,55324,55326,24720,02620,026

17,46118,59716,22922,821

28,03529,97925,70028,66228,634

28,61328,57826,40727,65221,625

12,63010,2339,3198,3608,355

8,4498,4398,4258,4078,374

8,4168,4148,4138,4118,4098,407

8,4068,4028,4018,4008,3988,396

8,3958,3948,3908,3868,3798,374

8,3728,3708,3678,3638,3608,358

43,59941,48141,48134,888

25,8538,7976,5941,5921,606

3,5304,3514,3497,2088,088

7,65810,96015,22114,44416,328

17,24117,02316,79716,55316,217

16,65416,63516,61716,59616,57116,553

16,52516,50416,48216,46416,43516,415

16,38216,35416,32016,29116,25716,217

16,19416,17016,14516,10716,08316,054

Note.—All issues classified to final maturity except partially tax-exempt bonds, which were classified to earliest calldate (the last of these bonds were called on August 14,1962, for redemption on December 15,1962).

Source: Treasury Department.

256

T A B L E C-68.—Receipts and expenditures of the government sector of the national income and productaccounts, 1929-69


Calendar year or quarter

1929

19301931 . . . . . . . . .19321933 . .193419351936 . . . .193719381939

19401941194219431944 . . .19451946194719481949

1950195119521953195419551956195719581959..

I960196119621963196419651966 - -196719681969*

1967:1IIIIIIV

1968:1 .

IllIV

1969:1 -IIIllIV*

Total government

Re-ceipts

11.3

10.89.58.99.3

10.511.412.915.415.015.4

17.725.032.649.251.253.250.956.858.956.0

68.784.889.894.389.7

100 4109.0115.6114.7128.9

139.8144 6157.0168 8174'. 1189.1213 3228.4264.2302.0

222.0224.4230.1237.0

248.5257.3271.1279.7

294.1302.0303.4

Ex-pendi-tures

10.3

11.112.410 610.712.913.416.115.016.817.6

18.428.864.093.3

103.092.745.542.450.359.1

60.879.093.7

101.296.797.6

104.1114.9127.2131.0

136.1149.0159.9166 9175.4186.9212.3242.9270.8293.0

236.1240.4244.8250.4

260.0268.1274.5280.6

285.9290.6296.0299.7

Sur-plus ordeficit

nationalincome

andprod-

uct ac-counts

1.0

- . 3- 2 . 9- 1 8- 1 . 4- 2 . 4- 2 . 0- 3 . 1

.3- 1 . 8- 2 . 2— 7

- 3 . 8-31.4-44.1-51.8-39.5

5.414 48.5

-3 .27.85.8

- 3 . 8-6 .9- 7 . 0

2.74.9.7

-12.5-2 .1

3.7- 4 . 3- 2 . 9

1 8—1.4

2.21.1

-14.5-6 .7

9.0

Federal Government *

Re-ceipts

3.8

3.02.01 72.73.54.05.07.06.56.7

8 615.422.939 341.042.539.143 243.338.9

49 964.067.270.063.872 177.681.678.789.7

96.598 3

106.4114 5115.0124.7142.5151.1176.3201.6

Ex-pendi-tures

2.6

2.84.23.24.06.46.58.77.48.68.9

10.020.556.185.895.584.635.629.834.941.3

40.857.871.077.069.768.171.979.688.991.0

93.0102.1110.3113.9118.1123.5142.8163.8181.5191.9

Sur-plus ordeficit

nationalincome

andprod-

uct ac-counts

1.2

.3- 2 . 1—1.5- 1 . 3- 2 . 9- 2 . 6- 3 . 6

—2.1- 2 . 2

—1.3- 5 . 1

- 3 3 . 1—46.6- 5 4 . 5- 4 2 . 1

3.513.48.4

- 2 . 4

9.16.2

- 3 . 8- 7 . 0- 5 . 9

4.05.72.1

. - 1 0 . 2- 1 . 2

3.5—3.8—3.8

7—3.0

1.2—» 2

- 1 2 . 7—5.2

9.7

State and localgovernment

Re-ceipts

7.6

7.87.77.37.28.69.18.69.19.39.6

10.010.410.610.911.111.612.915.317.619.3

21.123.325.227.228.831.434.738.241.646.0

49.953.658.663 469.575.585.293.2

106.2120.2


-14.1-16.0-14.6-13.4

-11.5-10.8-3 .5- . 9

8.311.47.4

147.5148.3152.0156.4

165.7170.8181.4187.3

198.6202.8201.3

159.5161.4165.3168.8

174.1180.3184.2187.4

188.5189.3193.6196.2

- 1 2 . 0—13.2- 1 3 . 4- 1 2 . 3

- 8 . 4- 9 . 5- 2 . 8- . 1

10.113.57.7

89.690.994.497.9

100.5104.7108.0111.4

114.5118.5121.9

Ex-pendi-tures

7.8

8.48.57 67.28.18.68.18.49.09.6

9 39.18.88 48.59.0

11.014 317.420.0

22.323.725.327.029.932.735.639.544.046.8

49.654.157.662 267 874.583 995.0

107.6121.0

91.793.695.699.0

103.6106.0108.7112.2

116.3120.5122.2124.9

Sur-plus ordeficit

nationalincome

andprod-

uct ac-counts

- 0 . 2

- . 6- . 8— 3

* E

:6

.7

1.31.82.52.72.61.91.0

-.7—1.2

- 1 . 1—1.3

—1.4- 2 . 3

. 2—.5

.91 21 71.01.3

—1.8—1.5

- 2 . 1—2.8- 1 . 3- 1 . 0

—3.1- 1 . 3

-'.B

- 1 . 8- 2 . 1

- . 3

iSee Note, Table C-64.2 Surplus of $32 million.3 Deficit of $41 million.

Note.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and localreceipts and expenditures. Total government receipts and expenditures have been adjusted to eliminate this duplication.

Federal receipts for 1969 reflect repeal of investment tax credit.


257

T A B L E G-69.—Receipts and expenditures of the State and local government sector of the nationalincome and product accounts, 1946-69

[Billions of dollars; calendar years]

Year orquarter

194619471948___1949

1950_1951195219531954

195519561957 -19581959

196019611962- .1963 . .1964

19651966196719681969 T>

1967' 1IIIIIIV

1968: 1IIIIIIV

1969: 1IIIIIIV p

Receipts

Total

12.915.317.619.3

21.123.325.227.228.8

31.434.738.241.646.0

49.953.658.663.469.5

75.585.293.2

106.2120.2

Per-sonaltaxand

nontaxreceipts

1.51.82.12.4

2.62.93.13.43.7

4.14.75.25.66.3

7.37.78.79.4

10.8

11.813.715.418.421.9

Cor-porateprofits

taxaccruals

0.5.6.7.6

.8

.9

.8

.8

.8

1.0

1

nn01.2

1 447q

2.12.22.43 03.1

Indirectbusi-nesstaxand

nontaxaccruals

9.310.612.113.3

14.515.817.318.719.7

21.423.625.527.028.9

31.734.136.939.442.3

45.949.953.859.967.8

Contri-butions

forsocialinsur-ance

0.5.6.7.8

1.0

1.31.5

1.82.02.32.52.7

3.03.23.53.84.1

4.55.05.76.57.5

Fed-eral

grants-in-aid

1.11.72.02.2

2.32.52.62.82.9

3.13.34.25.66.8

6.57.28.09.1

10.4

11.114.415.918.319.9

Expenditures

Total

11.014.317.420.0

22.323.725.327.029.9

32.735.639.544.046.8

49.654.157.662.267.8

74.583.995.0

107.6121.0

Pur-chases

ofgoodsand

serv-ices

9.812.615.017.7

19.521.522.924.627.4

30.133.036.640.643.3

46.150.253.758.263.5

70.179.089.3

100.7112.7

Trans-fer

pay-ments

toper-sons

1.72.32.92.9

3.53.03.23.33.4

3.73.84.24.64.8

5.15.55.76.06.5

6.97.78.8

10.011.4

Netinterest

paid

0.3.3.3.3

.33

.3

.3

.4

.55

.5

.6

.7

7.8.8.8.7

.5

.3

.2

.3

.4

Less:Currentsurplusof gov-

ern-mententer-prises

0.7.8.8.9

.91.11.11.21.4

1.61.71.81.82.0

2.22.32.62.82.9

3.03.13.33.43.5

Surplusor

deficit

nationalincome

andprod-

uct ac-counts

1.91.0.1

- . 7

- 1 . 2— 4

- 1 . 1

—1.3— 9

—1.4—2.3

2—.5

.91.2

1.01.3

- 1 . 8—1.5

y


89.690.994.497.9

100.5104.7108.0111.4

114.5118.5121.9

14.715.215.716.1

17.218.018.919.5

20.521.522.523.3

2.42.42.42.5

2.93.03.03.1

3.13.13.0

52.053.054.355.9

56.559.261.162.9

64.867.168.970.4

5.45.65.86.0

6.26.46.66.9

7.17.47.78.0

15.114.716.217.4

17.718.218.419.0

19.019.319.821.4

91.793.695.699.0

103.6106.0108.7112.2

116.3120.5122.2124.9

86.488.190.092.9

97.199.4

101.7104.8

108.5112.3113.8116.2

8.48.68.99.3

9.79.8

10.210.5

11.011.311.611.9

0.2.1.1

.2

.3

.3

.4

.4

.4

.4

.4

3.23.33.33.3

3.43.43.53.5

3.53.53.63.6

- 2 . 1- 2 . 8- 1 . 3- 1 . 0

- 3 . 1- 1 . 3- . 7- . 8

- 1 . 8- 2 . 1- . 3

* Deficit of $41 million.Source: Department of Commerce, Office of Business Economics.

258

T A B L E G—70.—State and local government revenues and expenditures, selected fiscal years, 1927—68[Millions of dollars]

Fiscal year *

General revenues by source2

TotalProp-ertytaxes

Salesand

grossre-

ceiptstaxes

Indi-vidualincometaxes

Corpo-ration

netincometaxes

Reve-nue

fromFederalGovern-

ment

Allotherreve-nue 3

General expenditures by function2

Total Edu-cation

High-ways

Publicwel-fare

Allother*

1927

19321934.19361938

1940. . . . . . . .1942194419461948

1950 . . .195219531954

19551956195719581959

1960196119621963

1962-63*1963-64 5... .1964-65«_.__1965-66 »„ . .1966-67 31967-68»

7,271

7,2677,6788,3959,228

9,60910,41810,90812,35617,250

20,91125,18127,30729,012

4,730

4,4874,0764,0934,440

4,4304,5374,6044,9866,126

7,3498,6529,3759,967

31,073 10,73534,667 11,74938,164 12,86441,219 14,04745,306 14,983

50,50554,03758,25262,890

16,40518,00219,05420,089

62,269 19,83368,443 21,24174,000 22,58383,036! 24,67091,197 26,047101,264, 27,747

470

7521,0081,4841,794

1,9822,3512,2892,9864,442

5,1546,3576,9277,276

7,6438,6919,4679,829

10,437

11,84912,46313,49414,456

14,44615,76217,11819,08520,53022,911

70

7480153218

224276342422543

788998

1,0651,127

1,2371,5381,7541,7591,994

2,4632,6133,0373,269

3,2673,7914,0904,7605,8267,308,

92

7949113165

156272451447592

593846817778

744890984

1,0181,001

1,1801,2661,3081,505

1,5051,6951,9292,0382,227

116

2321,016948800

945858954855

1,861

2,4862,5662,8702,966

3,1313,3353,8434,8656,377

6,9747,1317,8718,722

8,663

1,793

1,6431,4491,6041,811

1,8722,1232,2692,6613,685

4,5415,7636,2526,897

7,5848,4659,2509,699

10,516

11,63412,56313,48914,850

14,556

7,210

7,7657,1817,6448,757

9,2299,1908,863

11,02817,684

22,78726,09827,91030,701

33,72436,71140,37544,85148,887

51,87656,20160,20664,816

10,002 15,95111,029 17,25013,214 19,26915,370: 21,197

2,518, 17,181 23 ,"~

63,97769,30274,54682,84393,350

598102,411

2,235

2,3111,8312,1772,491

2,6382,5862,7933,3565,379

7,1778,3189,390

10, 557

11,90713,22014,13415,91917,283

18,71920,57422,21623,776

23,72926,28628,56333,28737,91941,158

1,809

,741,509,425,650

,573,490

1,2001,6723,036

3,8034,6504,9875,527

6,4526,9537,8168,5679,592

9,4289,84410,35711,136

11,15011,66412,22112,77013,93214,481

151

444889827

1,069

1,1561,2251,1331,4092,099

2,9402,7882,9143,060

3,1683,1393,4853,8184,136

4,4044,7205,0845,481

5,4205,7666,3156,757

3,015

3,2692,9523,2153,547

3,8623,8893,7374,5917,170

8,86710,34210,61911,557

12,19713,39914,94016,54717,876

19,32521,06322,54924,423

23,67825,58627,44730,029

8,218 33,2819,857j 36,915

i Fiscal years not the same for all governments. See footnote 5.» Excludes revenues or expenditures of publicly owned utilities and liquor stores, and of insurance-trust activities.

Intergovernmental receipts and payments between State and local governments are also excluded.* Includes licenses and other taxes and charges and miscellaneous revenues.* Includes expenditures for health, hospitals, police, local fire protection, natural resources, sanitation, housing and

urban renewal, local parks and recreation, general control, financial administration, interest on general debt, and un-allocable expenditures.

> Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years include local govern-ment amounts grouped in terms of fiscal years ended during the particular calendar year.

Note.—Data are not available for intervening years.See Table C-60 for net debt of State and local governments.Source: Department of Commerce, Bureau of the Census.

259

CORPORATE PROFITS AND FINANCETABLE G-71.—Profits before and after taxes, all private corporations, 1929-69


Year orquarter

1929 _.

1930 . .193119321933193419351936 .1937193819391940 . .1941. .19421943 . . .1944 . . .19451946 . _ _1947. _. .19481949

1950 ._.19511952195319541955195619571958195919601961196219631964 . . .19651966196719681969"

1967: IIIIIIIV

1968: 1IIIIIIV

1969: 1|lIIIIV p

Corporate profits (before taxes)inventory valuation adjustment

Allin-

dus-tries

10.57.02.0

- 1 . 3- 1 . 2

1.73.45.66.84.96.39.8

15.220.324.423.819.219.325.633.030.837.742.739.939.638.046.946.145.641 151.749.950.355.758 966.376.182.479.287.988.7

Manufacturing

Total

5.23.91.3

- . 5- . 41.12.13.23.82.33.35.59.5

11.813.813.29.79.0

13.617.616.220.924.621.622.019.926.024.724.019 326.324 423.326.628 832.739.342.639.044.444.0

Dur-able

goodsin-

dus-tries

2.61.5.0

- 1 . 0- . 4

.3

.91.71.7.8

1.73.16.47.28.17.44.52.45.87.58.1

12.013.211.711.910.514.312.813.39 3

13.612 011.414.115 817.822 824 020.924.523.7

Non-dur-able

goodsin-

dus-tries

2.62.41.3.5.0.8

1.11.52.11.61.72.43.14.65.75.95.26.67.8

10.08.18.9

11.49.9

10.19.4

11.811.910.710.012.712.411.912.513.014.916.618.618.119.920.2

Trans-porta-tion,com-muni-cation,

andpublic

utilities

1.81.2.5.2.0.4.4.7.8.5

1.01.32.03.44.43.92.71.82.23.03.04.04.64.95.04.75.65.95.85 97.07.57.98.59.5

10.111.111.9.10.811.611.9

and

Allotherin-

dus-tries

3.41.9.2

- . 9- . 8

.3

.91.72.22.12.03.03.75.16.26.76.78.59.9

12.511.612.713.513.312.613.415.215.615.815 918.417.919.120.520 623.525.627.929.431.932.9

Cor-po-rateprof-itsbe-fore

taxes

10.03.7

- . 4- 2 . 3

1.02.33 66.36.84.07.0

10.017.721.525.124.119.724.631.535.228.942.643.938.940.638.348.648.847.241 452.149 750.355.459 466.877 884.280.391.194.3

Cor-po-ratetaxlia-bil-ity i

1.4.8.5.4

'.71.01.41.51.01.42.87.6

11.414.112.910.79.1

11.312.510.417.822.319.420.317.721.621.721.219 023.723.023.124.226 328.331.334.333.041.343.5

Corporate profitsafter taxes

Total

8.62.9

- . 9- 2 . 7

.41.62.64.95.32.95.67.2

10.110.111.111.29.0

15.520.222.718.524.921.619.620.420.627.027.226.022 328.526 727.231.233 138.446 549.947.349.850.8

Divi-dendpay-

ments

5.85.54.12.52.02.62.84.54.73.23.84.04.44.34.44.64.65.66.37.07.28.88.68.68.99.3

10.511.311.711 612.613 413.815.216 517.819 820.821.523.124.6

Un-dis-trib-utedprof-its

2.8- 2 . 6- 4 . 9- 5 . 2- 1 . 6- 1 . 0

.4

.6- . 21.83.25.75.96.66.54.49.9

13.915.611.316.013.011.011.511.316.515.914.210 815.913 213.516.016 620.626.729.125.926.726.3

Corpo-rate

capitalcon-

sump-tion

allow-ances 2

4.24.34.34.03.83.63.63.63.63.73.73.84.25.05.46.16.44.75.87.07.98.8

10.311.513.215.017.418.920.822.023.524.926.230.131.833.936.439.542.645.949.1

Profitsplus

capitalcon-

sump-tion

allow-ances 3

12.87.23.51.34.25.26.38.58.96.69.3

11.014.415.216.417.215.420.226.029.726.533.731.831.033.535.544.446.146.844 352.051.653.561.364 872.382.989.590.095.799.9


78.378.379.181.182.588.290.690.389.589.288.8

39.238 838 339.541.144.945.446.245.144 943.8

21.020 820 421.222.025.125.025.824.723 923.8

18.217.918 018.319.119.820.420.420.321.020.0

10.910.710.810.911.311.512.011.611.811.711.9

28.228 830.130.730.131.833.132.632.632 633.1

78.479 179 584.487 99̂0.7

91.594.595.595 492.5

32.332 632 534.539.941.141.442.943.944.142.8

46.146 447.049.947.949.750.051.651.751.349.7

21.121.722.021.122.222.923 623.823.824.324.925.2

24.924.825.028.825.726.726.527.827.927.024.9

41.542.243.043.844.845.846.246.747.748.649.650.5

87.588.690.093.792.895.596.398.499.4

100.099.3

1 Federal and State corporate income and excess profits taxes.2 Includes depreciation and accidental damages.3 Corporate profits after taxes plus corporate capital consumption allowances.Note.—Corporate profits tax and related items for 1969 reflect repeal of investment tax credit.Source: Department of Commerce, Office of Business Economics.

T A B L E C—72.—Sales, profits, and stockholders' equity, all manufacturing corporations {exceptnewspapers*), 1947-69

{Billions of dollars]

Year orquarter

194719481949

1950 . .195119521953 .1954

195519561957 .19581959

I9601961196219631964

1965196619671968

1967: 1IIIIIIV

1968: 1IIIIIIV

1969: l»I P . . . .Ill i

All manufacturingcorporations

Sales(net)

150.7165.6154.9

181.9245.0250 2265.9248.5

278.4307.3320.0305.3338.0

345.7356.4389.9412.7443.1

492.2554.2575.4631.9

137.0145 1141.5151.8

148.9158.9155.7168.4

162.8176.1172.4

Profits

Beforetaxes

16.618.414.4

23.227.422.924.420.9

28.629.828.222.729.7

27.527.531.934.939.6

46.551.847.855.4

11.412 611.012.8

12.514.813.214.9

14.115.813.9

Aftertaxes

10.111.59.0

12.911.910.711.311.2

15.116 215.412.716.3

15.215.317.719.523.2

27.530.929.032.1

6.77.66.77.9

7.48.37.68.7

7.98.98.0

Stock-holders'equity2

65.172.277.6

83.398.3

103.7108.2113.1

120.1131.6141.1147.4157.1

165.4172.6181.4189.7199.8

211.7230.3247.6265.9

240.9245.6249.7254.3

258.6263.4268.4273.2

281.5288.0293.0


Sales(net)

66.675.370.3

86.8116.8122.0137.9122.8

142.1159.5166.0148.6169.4

173.9175.2195.5209.0226.3

257.0291.7300.6335.5

71.177.072.680.0

78.886.081.089.8

86.094.289.8

Profits

Beforetaxes

7.68.97.5

12.915.412.914.011.4

16.516.515.811.415.8

14.013.616.718.521.2

26.229.225.730.7

6.27.25.47.0

6.78.66.88.6

7.88.97.1

Aftertaxes

4.55.44.5

6.76.15.55.85.6

8.18.37.95.88.1

7.06.98.69.5

11.6

14.516.414.616.5

3.44.13.14.0

3.74.53.74.7

4.14.73.8

Stock-holders'equity 2

31.134.137.0

39.947.249.852.454.9

58.865.270.572.877.9

82.384.989.193.398.5

105.4115.2125.0135.6

121.6123.7126.0128.6

130.9134.1137.2140.4

143.4146.8148.9

Nondurable goodsindustries

Sales(net)

84.190.484.6

95.1128.1128.0128.0125.7

136.3147.8154.1156.7168.5

171.8181.2194.4203.6216.8

235.2262.4274.8296.4

65.968.268.971.8

70.172.974.878.6

76.881.982.7

Profits

Beforetaxes

9.09.57.0

10.312.110.010.49.6

12.113.212.411.313.9

13.513.915.116.418.3

20.322.622.024.7

5.25.45.65.9

5.86.26.46.3

6.36.96.8

Aftertaxes

5.66.24.6

6.15.75.25.55.6

7.07.87.56.98.3

8.28.59.2

10.011.6

13.014.614.415.5

3.33.53.63.9

3.73.84.04.1

3.84.24.2

Stock-holders'equity2

34.038.140.6

43.551.153 955.758.2

61.366 470.674.679.2

83.187.792.396.3

101.3

106.3115.1122.6130.3

119.3121.8123.6125.7

127.7129.4131.2132.9

138.0141.2144.1

11 ncludes newspapers beginning 1969.2 Annual data are average equity for the year (using four end-of-quarter figures).Note.—For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing

Corporations," Federal Trade Commission and Securities and Exchange Commission.Data are not necessarily comparable from one period to another due to changes in accounting procedures, industry

classifications, sampling procedures, etc. Specific information about the effects of the more significant changes and re-visions is contained in the following issues of the "Quarterly Financial Report": third quarter 1953, third quarter 1956,first quarter 1959, and first quarter 1965.

Sources: Federal Trade Commission and Securities and Exchange Commission.

2 6 l

T A B L E G—73.—Relation of profits after taxes to stockholders1 equity and to sales, all manufac-

turing corporations {except newspapers1), by industry group, 1948-69

Year orquarter

Allman-ufac-tur-ingcor-

pora-tions(ex-cept

news-pap-ers*)


Totaldur-able 2

Mo-tor

vehi-clesand

equip-ment

Air-craftandparts

Elec-tricalma-

chin-ery,

equip-ment,and

sup-plies

Ma-chin-ery

(ex-ceptelec-trical)

Fab-ri-

catedmetalprod-ucts

Pri-maryironandsteel

in-dus-tries

Pri-marynon-fer-rousmetal

in-dus-tries

Stone,clay,and

glassprod-ucts

Fur-nitureandfix-

tures

Lum-berand

woodprod-ucts(ex-cept

furni-ture)

In-stru-mentsandre-

latedprod-ucts

Ratio of profits after Federal taxes (annual rate) to stockholders' equity—percent 3

19481949

1950195119521953195419551956195719581959

19601961196219631 9 6 4 . . . . . . . .196519661967.1968

1968: IIIIIIIV

1969: lIP....

16.011.6

15.412.110.310.59.9

12.612.310.98.6

10.4

9.28.99.8

10.311.613.013.411.712.1

11.512.611.412.8

11.312.410.9

15.712.1

16.913.011.111.110.313.812.811.38.0

10.4

8.58.19.6

10.111.713.814.211.712.2

11.313.410.713.3

11.412.910.3

19.922.1

25.314.313.913.914.121.713.114.28.2

14.5

13.511.416.316.716.919.515.911.715.1

16.517.97.4

18.5

15.414.57.2

17.713.28.1

7.39.8

12.711.312.215.214.412.914.2

13.614.414.314.5

12.111.09.7

16.113.6

20.914.013.713.112.412.311.412.510.212.5

9.58.9

10.010.111.213.514.812.812.2

11.811.411.513.9

11.211.311.2

16.311.6

14.113.011.39.88.6

10.312.610.76.99.7

7.57.89.19.6

12.514.115.012.912.3

11.113.612.312.1

11.214.611.7

17.010.4

16.013.410.19.87.6

10.010.79.37.38.0

5.65.97.98.3

10.113.214.712.711.7

10.012.512.112.3

10.812.511.1

14.710.0

14.312.38.5

10.78.1

13.512.711.47.28.0

7.26.15.47.08.89.8

10.27.77.6

8.610.54.56.77.48.76.1

14.28.1

15.113.811.611.110.415.516.49.36.07.9

7.17.17.57.69.8

11.914.810.910.8

8.911.59.9

12.6

11.312.911.5

15.013.1

17.714.211.711.812.515.614.912.410.212.7

9.98.98.98.79.6

10.39.98.29.2

3.911.712.09.14.9

11.912.2

15.98.1

15.211.38.68.26.09.2

11.68.56.38.9

6.54.97.98.3

10.113.414.212.112.2

9.112.812.514.6

11.013.413.5

19.29.1

17.511.98.57.16.3

11.18.74.75.79.4

3.64.15.68.29.9

10.110.08.6

14.6

10.916.116.315.1

17.118.98.6

14.012.1

16.713.211.611.412.312.512.412.010.613.1

11.610.612.012.114.417.520.918.016.6

14.115.518.018.4

13.816.015.7

Profits after taxes per dollar of sales—cents

194819491950...19511952195319541955..19561957195819591960196119621963196419651966196719681968: I

II.III . .IV..

1969: 1 1 . . .IM.IIP

7.05.87.14 84.34.34.55.45.34.84.24.8

4.44.34.54.75.25.65.65.05.15.05.24.95.2

4.95.14.6

7.16.47.75.34.54.24.65.75.24.83.94.8

4.03.94.44.55.15.75.64.84.9

4.75.24.55.2

4.85.04.3

6.97.98.34.74.73.95.16.95.25.44.06.3

5.95.56.96.97.07.26.24.95.7

6.16.23.46.3

5.65.23.1

~~2.y2.41.6

1.41.82.42.32.63.33.02.73.2

2.93.23.43.3

3.53.33.0

5.95.77.25.04.54.14.54.43.84.23.84.4

3.53.53.73.84.24.84.84.44.3

4.24.14.14.7

4.03.94.0

7.36.47.35.54.84.24.45.15.44.83.74.8

3.94.14.54.75.86.26.45.75.5

5.15.75.65.4

5.26.15.3

7.15.16.85.04.03.63.13.84.03.63.13.2

2.42.53.13.23.74.54.94.54.1

3.64.44.24.1

3.84.13.6

7.66.57.95.84.75.35.37.26.76.65.45.4

5.14.63.94.85.65.75.84.84.6

5.15.52.94.6

4.54.83.6

9.06.9

10.27.86.76.36.68.39.36.64.75.8

5.45.35.55.36.57.38.26.86.2

5.46.45.96.9

6.46.86.2

8.68.6

10.17.16.66.57.48.68.27.56.87.9

6.65.85.65.35.65.95.64.85.2

2.66.46.34.9

2.95.75.9

5.53.35.13.42.72.62.12.93.42.62.02.7

2.11.62.32.42.93.73.93.53.42.83.63.53.8

3.13.63.8

9.95.99.45.54.13.53.45.43.92.32.84.2

1.71.92.53.33.94.03.83.45.34.45.75.85.4

6.36.63.2

7.87.18.66.14.84.65.56.05.85.75.46.5

5.95.45.96.07.28.69.58.58.1

7.47.68.78.5

7.37.88.1


262

TABLE C-73.—Relation of profits after taxes to stockholders* equity and to sales, all manufac-turing corporations {except newspapers1), by industry group, 1948-69—Continued

Year orquarter

19481949.19501951195219531954195519561957 _.19581959.. . .1960196119621963 . . .1964..1965.1966196719681968: 1

I I . . . .Ill —IV.. . .

1969: 1 »... .II i._.IIH- .

1948194919501951195219531954... .19551956... .195719581959.196019611962196319641965..1966196719681968: 1

I I — .III . . .I V - . .

1969: \K...II i . . .III*. .

Nondurable goods industries

Totalnon-dur-

able::

16.211.214.111.29.79.99.6

11.411.810.69.2

10.49.89.69.9

10.411.512.212.711.811.911.711.712.112.211.111.911.5

Foodandkin-dredprod-ucts

To-baccoman-ufac-tures

Tex-tilemill

prod-ucts

Ap-pareland

relatedprod-ucts

Paperand

alliedprod-ucts

Print-

andpub-lish-ing

(ex-cept

news-pa-

pers i)

Chem-icalsand

alliedprod-ucts

Petro-leumrefin-ing

Rub-berandmis-

cella-neousplasticprod-ucts

Ratio of profits after Federal taxes (annualjrate) to stockholders' equity—percent 3

12.811.812.38.17.68.18.18.99.38.78.79.38.78.98.89.0

10.010.711.210.810.89.9

10.211.411.49.6

10.711.9

13.612.611.59.58.49.4

10.211.411.712.513.513.413.413.613.113.413.413.514.114.414.413.513.615.914.812.114.815.6

18.77.6

12 78.24.24.61.85.75.84.23.57.55.85.06.26.18.5

10.910.17.68.87.19.19.59.37.28.87.7

12.17.5

10.12.94.45.14.56.18.16.34.98.67.77.29.37.7

11.712.713.312.013.012.09.3

15.015.310.311.415.9

16.410.716 213.910.510.19.9

11.511.68.98.19.58.57.98.18.19.39.4

10.69.19.78.5

10.59.2

10.69.8

11.19.6'

14.711.411.510.39.19.49.2

10.213.011.79.0

11.410.68.5

10.39.2

12.614.215.613.012.510.910.714.813.810.813.112.4

15.813.217.812.210.910.711.614.714.213.311.413.712.211.812.412.914.415.215.113.113.313.413.612.813.312.913.812.4

15.213.313.412.713.413.912.510.09.8

10.110.310.111.311.411.812.412.512.312.911.912.112.212.011.911.4

12.38.7

16.914.811.111.310.613.212.211.19.1

11.09.19.39.69.2

10.611.712.210.312.310.813.511.812.99.6

11.99.5

Leatherand

leatherprod-ucts

10.46.2

10.92.15.86.05.98.57.27.05.i8.S6.34.46.96.9

10.511.612. <11. S13. t13.312. (12 J14.48.68.C9.4

Profits after taxes per dollar of sales—cents

6.85.46.54.54.14.34.45.15.34.94.44.94.84.74.74.95.45.55.65.35.25.35.25.35.25.05.15.6

3.33.33.42.01.92.02.12.32.42.22.22.42.32.32.32.42.72.72.72.62.62.52.52.72.72.42.62.8

5.25.14.93.83.23.74.24.85.05.25.45.45.55.75.75.95.95.95.95.95.55.75.56.05.14.65.25.6

8.34.15.83.41.92.21.02.62.61.91.63.02.52.12.42.33.13.83.62.93.12.73.23.43.22.73.22.8

3.12.12.8.60

.?

,3.6

.0f>

.43

1.6

2.12.32.42.32.42.51.92.72.62.22.23.0

8.56.58.86.65.75.45.66.16.15.04.75.25.04.74.64.55.14.95.44.74.74.45.14.55.04.75.24.7

5.24.54.53.73.33.43.43.64.23.73.14.03.62.83.43.24.34.85.14.44.13.83.6i.81.31.1i.9

4.7

8.88.2

10.36.56.16.16.88.38.07.67.07.97.57.37.47.57.97.97.86.96.87.06.96.66.66.76.86.3

11.110.110.410.611.111.610.69.59.59.9

10.39.7

10.810.911.111.211.010.711.210.610.710.310.610.210.0

4.73.85.84.53.63.84.04.44.44.23.54.03.63.83.73.64.14.34.43.94.54.24.84.54.63.74.13.5

3.32.23.7

1.11.11.!2.52.12.1i.;2.21.6i.:I.II.I2.12.13.13.13.23.33.:3.23.(2.42.22.6

1 Includes newspapers beginning 1969.2 Includes certain industries not shown separately.a Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity

at end of quarter only.Note—For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing

Corporations," Federal Trade Commission and Securities and Exchange Commission. See also Note, Table C-72.

Sources: Federal Trade Commission and Securities and Exchange Commission.

263

TABLE C—74.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1958-68[Billions of dollars]

Source or use of funds

Sources, total-

Internal sources l

Undistributed profits iCorporate inventory valuation ad-

justmentCapital consumption allowancesL

External sources

Stocks..BondsMortgagesBank loans n.e.cOther loansTrade debtProfits tax liabilityOther liabilities

Uses, total _..._-<-

Purchases of physical assets

Nonresidential fixed investment-Residential structuresChange in business inventories. _

Increase in financial assets

Liquid assetsDemand deposits and cur-

rencyTime depositsU.S. Government securitiesOpen-market paper.State and local obligations

Consumer creditTrade creditOther financial assets

Discrepancy (sources less uses)

1958

44.2

29.5

8.3

-.321.4

14.7

2.15.72.9-.3-.24.7

-2.62.4

40.5

27.3

28.41.4

-2.5

13.2

2.7

1.5.9.0

-.2.5

.68.31.7

3.7

1959

57.9

35.0

12.6

-.522.9

22.9

2.23.03.03.5-.35.52.43.6

53.1

36.9

31.11.74.1

16.2

5.6

-1.0-.46.6

J

.87.72.0

4.8

1960

48.1

34.4

10.0

.224.2

13.7

1.63.52.51.91.9.6

-2.24.0

43.7

39.0

34.91.13.0

4.7

-3.2

-.51.3

-5.41.7-.2

.45.32.2

4.3

1961

56.6

35.6

10.2

-.125.4

21.0

2.54.63.9.7.65.41.41.7

52.2

36.7

33.21.91.5

15.6

3.7

1.71.9-.2.4.0

.29.52.1

4.3

1962

64.9

41.8

12.4

.329.2

23.1

.64.64.53.0.0

4.6.6

5.2

60.0

44.0

37.02.34.7

16.0

3.5

-.93.7.5.6

-.3

.78.53.2

5.0

1963

67.1

43.9

13.6

-.530.8

23.2

l.*94.93.7.25.31.93.7

63.2

45.6

38 62.64.3

17.7

4.7

-.83.9

.2

1.08.13.9

3.8

1964

71.8

50.5

18.3

-.532.8

21.3

1.44.03.63.8.9

3.6.5

3.5

64.9

52.1

44.12.15.9

12.8

1.2

-2.33.2

-1.51.6.2

1.38.12.2

6.9

1965

93.1

56.6

23.1

-1.735.2

36.5

.05.43.910.6.69.12.24.6

85.8

62.8

52.82.07.9

23.1

1.7

-1.53.9

-1.6

'.5

1.215.15.1

7.2

1966

100.6

61.2

24.7

-1.838.2

39.4

1.210.24.28.41.47.3.26.5

92.5

77.1

61.61.114.4

15.5

1.9

,7

-~1.*22.01.0

1.211.31.0

8.0

1967

94.2

61.2

21.2

-1.141.2

33.0

2.314.74.56.41.42.6

-4.15.2

85.9

72.5

63.82.26.4

13.5

.6

-2.24.1

-2.5

-;!

.98.83.2

8.2

1968

110.4

63.1

22.0

-3.244.3

47.3

- . 812.95.89.63.65.73.76.9

103.5

76.9

68.02.36.5

26.6

10.1

1.32.21.84.5.4

1.714.8

.1

6.9

*The figures shown here for "internal sources," "undistributed profits," and "capital consumption allowances"differ from those shown for "cash flow, net of dividends," "undistributed profits," and "capital consumption allowances"in the gross corporate product table in the national income and product accounts of the Department of Commerce forthe following reasons: (1) these figures include, and the statistics in the gross corporate product table exclude, branchprofits remitted from foreigners net of corresponding U.S. remittances to foreigners; and (2) these figures exclude, andthe gross corporate product figures include, the internal funds of corporations whose major activity is farming.


264

TABLE C-75.—Current assets and liabilities of United States corporationss 1939-69[Billions of dollars]

End of yearor quarter

1939194019411942 .1943194419451946 .

19471948 . . .1949195019511952 _1953.195419551956 . .1957.19581959 . .19601961New series5

1961 . . .19621963196419651966196719681967:1

IIMLIV

1968:1IIIIIIV

1969:1IIIII

Current assets

Total

54.560.372.983.693.897.297.4

108.1

123.6133.0133.1161.5179.1186.2190.6.194.6224.0237.9244.7255.3277.3289.0306.8

304.6326.5351.7372.2410.2442.6463.1506.3443.2444.2451.9463.1470.9481.2491.5506.3515.7526.7536.8

Cashon

handandin

banks1

10 813.113. &17.621.621.621.722.8

25.025.326.528.130.030.831.133.434.634.834.937.436.337.241.1

40.743.746.547.349.949.351.455.146.646.948.351.449.350.551.955.151.952.651.2

U.S.Gov-ern-ment

securi-ties 2

2.22.04.0

10.116.420.921.115.3

14.114.816.819.720.719.921.519.223.519.118.618.822.820.120.0

19.219.620.218.617.015.412.213.714.111.310.612.214.513.012.613.715.413.011.8

Re-ceiv-ablesfromU.S.Gov-ern-

ments

0.1.6

4.05.04.72.7.7

Notesandac-

countsreceiv-able

22.123.927.423.321.921.823.230.0

38-3424-

1.12.72.82.62.42.32.62.82.82.93.13.4

3.43.73.63.43.94.55.15.14.44.64.75.14.84.74.85.14.84.84.6

.4

.055.758.864.665.971.286.695.199.4

106.9117.7126.1135.8

133.3144.2156.8169.9190.2205.2214.6235.6205.2207.6211.5214.6216.6223.5229.4235.6239.8247.1254.7

In-ven-

tories

18.019.825.627.327.626.826.337.6

44.648.945.355.164.965.867.265.372.880.482.281.988.491.895.2

95.2100.7107.0113.5126.9143.1152.3164.6146.6147.7149.7152.3155.0158.3162.1164.6169.2174.0178.7

Othercur-rentas-

sets <

1.41.51.41.31.31.42.41.7

1.61.61.4

1.72 12.42.43.14 25.96.77 59.1

10.611.4

12.914.717.819.622.325.127.632.226.426.027.127.630.731.230.832.234.635.335.7

Current liabilities

Total

30.032.840.747.351.651.745 851.9

61.564.460.779 892.696.198.999.7

121.0130.5133.1136.6153.1160.4171.2

155.8170.9188.2202.2229.6?54.4264.3293.9?5? 4?5?,5256.9264.3266.6273.5282.7293.9300.8310.4322.2

Ad-vances

andpre-pay-

ments,U.S.Gov-ern-

ment3

0.6.8

2.02.21.8.9.1

.-" *.373937

.41.32.32.22.42.32.4£ 31.71.71.81.8

1.82.02.52.73.14.45.86.44.95.45.75.86.16.26.36.46.97.27.5

Notesandac-

countspay-able

21.922.625.624.024.125.024.831.5

- ' — •<•

.6

.3

.547.953.657.057.359.373.881.584,388.799.3

105.0112.8

110.0119.1130.4140.3160.4179.0186.4205.2176.3179.8181.4186.4184.7190.9196.8205.2206.1215.3222.9

Fed-eralin-

cometax

liabili-ties

1.22.57.1

12.616.615.510.48.5

10.711.59.3

16.721.318.118.715.519.317.615.412.915.013.514.1

14.215.216.517.019.118.314.616.817.812.213.014.616.514.815.116.819.115.416.4

Othercur-rentlia-

bili-ties

6.97.17 28.78.79.49.7

11.8

13.213.514.014.916.518.720.722.525.729.031.133.337.040.142.5

29.834.538.742.246.952.857.465.453.555.156.757.459.361.564.665.468.8-72.575.4

Network-

ingcapi-tal

24.527. £32.336.342.145.651.656.2

62.168.672.481.686.590.191. E94.9

103. C107.4111.6118.7124.2128.6135.6

148. f155.6163.1170. C180.7188.2198.8?\?A190.7191.6195. C198.8?04.?207.1208.7212.4215. C216.3214. (

1 Includes time certificates of deposit.2 Includes Federal agency issues.3 Receivables from and payables to U.S. Government do not include amounts offset against each other on corporations'

books or amounts arising from subcontracting which are not directly due from or to the U.S. Government. Wherever possible,adjustments have been made to include U.S. Government advances offset against inventories on corporations' books.

* Includes marketable investments (other than Government securities and time certificates of deposit) as well as sundrycurrent assets.

s Generally reflects definitions and classifications used in "Statistics of Income" for 1961.

Note.—Data relate to all United States corporations, excluding banks, savings and loan associations, insurance com-panies, and beginning with the new series for 1961, investment companies. Year-end data through 1956 are based on"Statistics of Income" (Treasury Department), covering virtually all corporations in the United States. "Statistics ofI ncome" data may not be strictly comparable from year to year because of changes in the tax laws, basis for filing returns,and processing of data for compilation purposes. All other figures shown are estimates based on data compiled from manydifferent sources, including data on corporations registered with the Securities and Exchange Commission.

Source: Securities and Exchange Commission.

265

TABLE C--76.—State and municipal and corporate securities offered, 1934-69


Year or quarter

State andmunicipalsecurities

offeredfor cash

(principalamounts)

939

1,2321,121908

1,1081,128

1,238956524435661

7951,1572,3242,6902,907

3,5323,1894,4015,5586,969

5,9775,4466,9587,4497,681

7,2308,3608,55810,10710,544

11,14811,08914,28816,37411,442

4,0463,7993,0383,404

3,6583,7714,5114,435

2,7383,4262,3762,902

Corporate securities offered for cash

Totalcorpo-rate

offer-ings

397

2,3324,5722,3102,1552,164

2,6772,6671,0621,1703,202

6,0116,9006,5777,0786,052

6,3617,7419,5348,8989,516

10,24010,93912,88411,5589,748

10,15413,16510,70512,21113,957

15,99218,07424,79821,96626,790

5,4646,2086,8326,294

5,1785,7055,1335,950

6,2197 3546,3326,880

Type of corporate security

Com-mon

stock

19

222722852587

1081103456163

397891779614736

8111,2121,3691,3261,213

2,1852,3012,5161,3342,027

1,6643,2941,3141,0112,679

1,5471,9391,9593,9467,740

298518447696

740832986

1,389

1,7862,1411,6162,200

Pre-ferredstock

2714068698

183167112124369

7581,127762492425

631838564489816

635636411571531

409450422343412

725574885637690

92208231354

249124179

236128182150

Bondsandnotes

371

2,2254,0291,6182,0441,980

2,3862,390917990

2,669

4,8554,8825,0365,9734,890

4,9205,6917,6017,0837,488

7,4208,0029,9579,6537,190

8,0819,4208,96910,85610,865

13,72015,56121,95417,38318,360

5,0745,4826,1545,244

4,1894,7493,9674,477

4,1975,0854,5344,530

Industry of corporate user

Manu-fac-

turing 1

67

7971,3321,120848604

992848539510

1,061

2,0263,7012,7422,2261,414

1,2003,1224,0392,2542,268

2,9943,6474,2343,5152,073

2,1524,0773,2493,5143,046

5,4177,07011,0586,9796,310

2,5023,0842,8802,591

1,9071,703',657,712

,407,774,862

1,270

Elec-tric,

andwater 2

133

1,2842,040

7711,2341,271

1,2031,357

472477

1,422

2,3192,1583,2572,1872,320

2,6492,4552,6753,0293,713

2,4642,5293,9383>8043,258

2,8513,0322,8252,6772,760

2,9363,6654,9355,2816,700

1,0111,3041,2811,339

1,4421,2441,1601,435

1,3451,8791,5441 930

Trans-porta-tions

176

12679734455186

32436648161609

1,454711286755800

813494992595778

893724824824967

718694567957982

1,0131,9722,0671,8752,120

503437659469

404470427574

807612371320

Com-munica-

tion

902571

399612760882720

1,1321,4191,4621,424717

1,0501,8341,3031,1052,189

9472,0031,9791,7662,190

548556601274

422536490319

474432684600

1 Prior to 1948, also includes extractive, radio broadcasting, airline companies, commercial and miscellaneous companyissues.

2 Prior to 1948, also includes telephone, street railway, and bus company issues.3 Prior to 1948, includes railroad issues only.

Note.—Covers substantially all new issues of state, municipal, and corporate securities offered for cash sale in the UnitedStates in amounts over $100,000 and with terms to maturity of more than 1 year; excludes notes issued exclusivelyto commercial banks, intercorporate transactions, investment company issues, and issues to be sold over an ex-tended period, such as employee-purchase plans.

Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle," and "The Bond Buyer."

366

TABLE C-77.—Common stock prices,

Year or month

193919401941194219431944 _ . . .1945 __., . . .1946 .1947194819491950.195119521953195419551956...1957195819591960. .19611962 . . .196319641965 . . .1966 . . . . . . . .19671968.1969 P

1968: JanFebMarAprMay....JuneJulyAugSeptOctNov....Dec

1969: JanFeb .MarAprMayJuneJuly .AugSeptOctNovDeep _ _

earnings, and yields, and stock market credit, 1939-69

Standard & Poor's common stock data

Price index *

Total(500

stocks)

Indus-trials(425

stocks)

Publicutilities

(55stocks)

Rail-roads(20

stocks)

1941-43=10

12.0611.029.828.67

11.5012.4715.1617.0815.1715.5315.2318.4022.3424.5024.7329.6940.4946.6244.3846.2457.3855.8566.2762.3869.8781.3788.1785.2691.9398.7097.8495.0490.7589.0995.6797.87

100.53100.3098.11

101.34103.76105.40106.48102.04101.4699.30

101.26104.6299.1494.7194.1894.5195.5296.2191.11

11.7710.699.728.78

11.4912.3414.7216.4814.8515.3415.0018.3322.6824.7824.8430.2542.4049.8047.6349.3661.4559.4369.9965.5473.3986.1993.4891.0899.18

107.49107.13103.1198.3396.77

104.42107.02109.73109.16106.77110.53113.29114.77116.01110.97110.15108.20110.68114.53108.59103.68103.39103.97105.07105.86100.48

16 3415.0510.937.74

11.3412.8116.8420.7618.0116.7717.8719.9620.5922 8624.0327.5731.3732.2532.1937.2244.1546.8660.2059.1664.9969.9176.0868.2168.1066.4262.6468.0265.6162.6263.6662.9265.2167.5566 6066.7766.9370.5970.5468.6569.2466.0765.6366.9163.2961.3259.2057.8458.8059 4655.28

9 829.419.398.81

11.8113.4718.2119.0914.0215.2712.8315.5319.9122.4922.6023.9632.9433.6528.1127.0535.0930.3132.8330.5637.5845.4646.7846.3446 7248.8445.9543 3842.3541.6844.7948.0051.7251.0148 8051.1154.2653.7455.1954.1154.7850.4649.5349.9746.4343.0042 0442.0341.7540 6336.69

Divi-dend

yield 2(per-cent)

4 055.596.827.244.934.864.173.854.935.546.596.576.135.805.804.954.084.094.353.973.233.472.983.373.173.013.003.403.203.073.243.133.283.343.123.073.003.003.093.012.942.922.933.063.103.173.113.023.183.343.373.333.333.313.52

Price/earn-ings

ratio 3

13 8010.258.278.80

12.8413.6616.3317.699.366.916.646.639.27

10.479.69

11.2511.5114.0512.8916.6417.0517.0921.0616.6817.6218.0817.0814.9217.5217.20

16.40

17.23

17.61

17.54

17.68

16.59

15.70

Stock market credit

Customer credit (excludingU.S. Government

securities)

TotalNet

debitbal-

ances*

Bankloans

to"others"«

Bankloans tobrokers

anddealers •

Millions of dollars

1,374976

1,032968

1,2491,7981,8261,9802,4453,4364,0303,9843,5764,5374,4614,4155,6025,4947 2427,0537,7707,444

10,34712,48810,02610,2189,8409,622

10,04710,62511,13811,27710,97611,23811,41611,66612,48811,79311,94911,09910,80711,24010,95110,2169,6849,6559,8169,635

10,026

942473517499821

1,2371,2531,3321,6652,3882,7912,8232,4823,2853,2803,2224,2594,1255,5155,0795,5215,3297,8839,7907,4477,7977,4197,2487,7018,2688,7288,8618,4898,7238,8599,0299,7909,0429,1488,3188,0448,4748,2147,5157,0197,0397,2437,1117,447

353432503515469428561573648780

1,0481,2391,1611,0941,2521,1811,1931,3431,3691,7271,974

«2,2492,1152,4642,6982,5792,4212,4212,3742,3462,3572,4102,4162,4872,5152,5572,6372,6982,7512,8012,7812,7632,766

7 2,7372,7012,6652,6162,5732,5242,579

715584535850

1,3282,1372,7821,471

7841,3311,60*1,7421,4192,0022,2482,6882,8522 2142,1912,56$2,58'2,6143,3914 3524,7544,631

8 4,2774,5015,0825,7965,1465,8265,0524,3054,3764,2824,5846,3276,1566,4525,6424,96C5,7964,53S4,3343,6974,36^4,05:

7 4,37S4,4623,38$3,5753,5884,1975,14€

1 Annual data are averages of monthly figures and monthly data are averages of daily figures.2 Aggregate cash dividends (based on latest known annual rate) divided by the aggregate monthly market value of the

stocks in the group. Annual yields are averages of monthly data.s Ratio of quarterly earnings (seasonally adjusted annual rate) to price index for last day in quarter. Annual ratios are

averages of quarterly data.4 As reported by member firms of the New York Stock Exchange carrying margin accounts. Includes net debit balances

of all customers (other than general partners in the reporting firm and member firms of national exchanges) whose com-bined accounts net to a debit. Balances secured by U.S. Government obligations are excluded through 1967 and includedthereafter. Data are for end of period.

«Loans by weekly reporting member banks (weekly reporting large commercial banks beginning 1965) to others thanbrokers and dealers for purchasing or carrying securities except U.S. Government obligations. Data are for last Wednesdayof period.

6 Loans by weekly reporting member banks (weekly reporting large commercial banks beginning 1965) for purchasingor carrying securities, including U.S. Government obligations. Data are for last Wednesday of period.

7 Revised series; not strictly comparable with earlier data.Sources: Board of Governors of the Federal Reserve System, Standard & Poor's Corporation, and New York Stock

Exchange.

267

TABLE C-78.—Business formation and business failures, 1929-69

Year or month

1929

1930193119321933 31934193519361937193819393

19401941 -19421943194419451946194719481949

195019511952. .195319541955195619571958195919601961.196219631964 .1965.19661967...1968 .1969

1968* JanFebMarAprMay . .June

JulyAug .Sept . . .Oct. .NovDec

1969: JanFebMar .AprMayJuneJulyAugSeotO c t . : : . . . . : . . . . :Nov . - .Dec

Indexof net

businessformation

(1957-59=100)

123.196.7

102.3102.8108.0103.599.8

107.6103.298.397.1

104.699.895.498.0

100.6104.5106.0105.5107.7117.8

Newbusinessincorpo-rations(num-ber)

132,916112,89796,34685,64093,09283,77892,946

102,706117,411139,915141,163137,112150,781193,067182,713181,535182,057186,404197,724203,897200,010206,569233,635

Business failures 1

Busi-ness

failurerate 2

103.9121.6133.4154.1100.361.161.747.845.961.169.663.054.544.616.46.54.25.2

14.320.434.434.330.728.733.242.041.648.051.755.951.857.064.460.856.353.253.351.649.038.637.3

Seasonally adjusted

113.5114.7113.8112.8112.7114.5119.0119.1121.2123.9123.4125.3125.2125. 8123.2123.9123.1123.6124.6124.1123.0123.5120.5

17,22318,01417,97418,65918,79619,19719,53020,01120,98621,39421,15520,29220,57822,19921 35323,46723,23023,71123,77122,99123,14124,68322,749

38.237.544.343.540.936.941.036.540.337.535.729.932.035.638.036.436.939.834.936.039.939.540.938.2

Number of failures

Total

22,90926,35528,28531,82219,85912,09112,2449,6079,490

12,83614,76813,61911,8489,4053,2211,222

8091,1293,4745,2509,2469,1628,0587,6118,862

11,08610,96912,68613,73914,96414,05315,44517,07515,78214,37413,50113,51413,06112,3649,6369,154

844832

1,0211,003

909751810734705768696563689731868823812792689702726815759748

Liability sizeclass

Under$100,000

22,16525,40827,23030,19718,88011,42111,6919,2859,203

12,55314,54113,40011,6859,2823,1551,176

7591,0033,1034,8538,7088,7467,6267,0818,075

10,22610,11311,61512,54713,49912,70713,65015,00613,77212,19211,34611,34010,83310,1447,8297,192

651682839833707616646607598614569467545566722643661630537563573600570582

$100,000andover

744947

1,0551,625

979670553322287283227219163123664650

126371397538416432530787860856

1,0711,1921,4651,3461,7952,0692,0102,1822,1552,1742,2282,2201,8071,962

19315018217020213516412710715412796

144165T146180151162152139153215189166

Amount of currentliabilities (millions

of dollars)

Total

483.3668.3736.3928.3457.5334.0310.6203.2183.3246.5182.5166.7136.1100.845.331.730.267.3

204.6234.6308.1248.3259.5283.3394.2462.6449.4562.7615.3728.3692.8938.6

1,090.11,213.61,352.61,329.21,321.71,385.71,265.2

941.01,142.1

104.579.688.680.191.474.790.365.858.765.458.783.475.090.084.1

118.892.691.9

112.762.873.7

116.4127.196.8

Liability sizeclass

Under$100,000

261.5303.5354.2432.6215.5138.5135.5102 8101.9140 1132.9119.9100.780.330.214.511.415.763.793.9

161.4151.2131.6131.9167.5211.4206.4239.8267.1297.6278.9327.2370.1346.5321.0313.6321.7321.5297.9241.1231.3

20.421.426.124.821.918.619.218.319.118.617.914.818.117.723.419.721.619.017.818.617.919.218.719.4

$100,000andover

221.8364.8382 2495.7242.0195.4175.1100 481.4

106 449.746.835.420.515.117.118.851.6

140.9140.7146.797.1

128.0151.4226.6251.2243.0322.9348.2430.7413.9611.4720.0867.1

1,031.61,015.61,000.01,064.1

967.3699.9910.8

84.158.262.555.369.556.071.147.539.546.840.868.656.972.360.799.171.072.995.044.255.897.2

108.477.4

* Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933, of real estate,insurance, holding, and financial companies, steamship lines, travel agencies, etc.

2 Failure rate per 10,000 listed enterprises.3Series revised; not strictly comparable with earlier data.Sources: Department of Commerce (Bureau of the Census) and Dun & Bradstreet, Inc.

268

AGRICULTURE

Year orquarter

1929.. ._

1930 .1931.1932193319341935193619371938939

940941. .942943944.945946947948. .949

950951952953954955956957958959

960961962. _ _363364365

967..968369*

968: 1IIIIIIV

969: 1 . . .IIIIIIV v

T A B L E G—79.—Income from

Personal incomereceived by totalfarm population

Fromall

sources

Fromfarm

sources1non-farm

sources2

agriculture, 1929-69

Income received from farming

Realized gross

Totals

Cashreceipts

frommarket-

ings

Produc-tion ex-penses

Net to farmoperators

Exclud-ing netinven-tory

change

Includ-ing netinven-tory

change *

Billions of dollars

5.47.77.29.07.27.4

7.610.114.116.516.617.220.021.123.819.5

20.422.722.119.818.417.617.817.719.518.1

18.719.720.420.620.623.624.923.924.927.1

3.25.44.66.24.74.8

4.86.8

10.112.112.212.815.515.818.013.3

14.116.215.413.412.511.411.211.012.811.0

11.512.212.312.111.313.514.413.013.114.5

2.22.32.62.72.52.6

2.83.33.94.44.44.44.65.35.86.2

6.36.56.76.45.96.26.66.66.77.0

7 27.58.28.59.3

10.010.510.911.812.6

13.9

11.58.46.47.18.69.7

10.811.410.110.6

11.113.918.823.424.425.829.534.134.731.6

32.337.136.835.033.633.134.334.037.937.5

38.139.841.342.342.644.949.749.051.154.6

11.3

9.16.44.75.36.47.18.48.97.77.9

8.411.115.619.620.521.724.829.630.227.8

28.532.932.531.029.829.530.429.733.533.5

34 235.136.437.437.239.343.342.744.447.4

7.7

6.95.54.54.44.75.15.66.25.96.3

6.97.8

10.011.612.313.114.517.018.818.0

19.422.322.621.321.621.922.423.325.226.1

26 427.128.629.729.530.933.434.836.338.6

6.3

4.52.91.92.73.94.65.15.24.24.3

4.26.18.8

11.812.112.815.017.115.913.6

12.914.814.113.712.011.211.910.712.711.4

11.712.612.612.613.114.016.314.214.816.0

6.2

4.33.32.02.62.95.34 36.04.44.4

4.56.59.9

11.711.712.315.115.417.712.8

13.716.015.113.112.511.511.411.313.511.5

12.113.013.213.212.315.016.314.714.716.2

Net income perfarm, includingnet inventory

change

Currentprices

1957-59prices5

Dollars

945

651506304379431775639905668685

7061,0311,5881,9271 9502,0632,5432,6153,0442,233

2,4212,9462,8962,6262,6062,4632,5352,5903,1892,795

3,0493,3993,5863,7083,5644,4875,0194,6834,8055,468

1,750

1,3021 177

822997

1,0021,8021 4862,0111,5531,631

1,6812,2913,0543,3223,1973,2233,5823,1513,4592,627

2,8153,1343,0482,7942,7722,5932,6412,6163,1892,767

2,9893,3323,4823,5653,3944,1924,5634,14^4,1074,446


50.050.951.851.9

52.955.155.355.1

43.444.245.045.0

46.048.248.047.5

35.636.136.537.2

37.938.838.838.9

14.414.815.314.7

15.016.316.516.2

14.914.414.914.5

15.016.516.916.4

4,8804,7104,8804,750

5,0505,5505,6905,520

4.21C4,03C4.14C3,99C

4,1704,51(4,6304,420

1 Net income to farm operators including net inventory change, less net income of nonresident operators, plus wagesand salaries and other labor income of farm resident workers, less contributions of farm resident operators and workersto social insurance.2 Consists of income received by farm residents from nonfarm sources, such as wages and salaries from nonfarm em-ployment, nonfarm business and professional income, rents from nonfarm real estate, dividends, interest, royalties,unemployment compensation, and social security payments.

s Cash receipts from marketings, Government payments, and nonmoney income furnished by farms.* Includes net change in inventory of crops and livestock valued at the average price for the year.«Income in current prices divided by the index of prices paid by farmers for family living items on a 1957-59 base.

Source: Department of Agriculture.3 7 2 - 1 1 1 O — 7 0 - 1 8 269

TABLE C—80.—Farm production indexes,

11957-59=100]

Year

1929...

1930...1931—1932...1933—1934...

1935...1936—1937...1938...1939—

1940—1941...1942...1943...1944...

1945...1946...1947...1948...1949—

1950...1951...1952...1953...1954...

1955...1956...1957...1958...1959...

1960...1961—1962...1963...1964...

1965...1966...1967...1968 ...1969 P..

Farmout-put*

62

6166645951

6155696768

7073828083

8184818887

8689929393

969795102103

106107108112111

114113118120121

Crops

Total 2

73

6977736554

7059817675

7879898388

8589859792

8991959493

969593104103

108106107111108

115111117120121

Feedgrains

62

5663735633

6038676565

6671817478

7582639180

8175797781

868593101106

1099910010895

111110124119123

Hayand

forage

79

6672746964

8266758175

8686939190

9387848483

8992909292

989410110297

103102106106107

112110115114117

Foodgrains

68

7479634745

5554747763

6979837288

929511110792

868510910088

83878212197

11510698102114

117118135141130

Vege-tables

73

7475767380

8175828181

8384899792

94105919794

9689909593

9610298102100

102108106106101

108109112113111

Fruitsandnuts

75

7392757671

9070938496

9399988498

891061019298

98100979899

9910394102104

98102103100101

106108112109131

Cot-ton

120

11313810510578

861011549796

1028810593100

747197122131

82124124134111

1201088993118

116116121125124

12178608982

To-bacco

88

9589588063

76689180110

84738181113

114134122115114

117135130119130

12712696100104

112119134135129

10710911499104

Oilcrops

13

1414131113

2116182229

3437566050

5452556761

7165636371

78929111198

104121122128128

153164170192196

Livestock and products

Total 3

63

6465666761

5963626570

7175849186

8683828085

8892929396

99999799104

102107108111114

111114117118118

Meatani-mals

62

6366677059

5360586371

7276879788

8482817983

8995959498

1031009698106

103107109114117

111116120123122

Dairyprod-ucts

75

7678797978

7879798182

8489929192

9594939093

9392929798

9910110110099

101103104103105

103100999898

Poul-try,andeggs

44

4544444441

4144444548

4954627171

7469686774

7881828487

869495101104

104112112115119

124132138135139

1 Farm output measures the annual volume of farm production available for eventual human use through sales fromfarms or consumption in farm households. Total excludes production of seeds and of feed for horses and mules.

2 Includes production of seeds and of feed for horses and mules and certain items not shown separately.s Includes certain items not shown separately.

Source: Department of Agriculture.

27O

TABLE C-81.—Farm population, employment, and productivity, 1929—69

Year

1929..

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

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

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

1945..1946..1947..1948..1949..

1950..1951..1952..1953..1954..

1955..1956..1957..1958..1959..

I960. .1961. .1962..1963..1964..

1965..1966..1967..1968..1969 v.

Farm population(April l ) i

Num-ber

(thou-sands)

30,580

30,52930,84531,38832,39332,305

32,16131,73731,26630,98030,840

30,54730,11828,91426,18624,815

24,42025,40325,82924,38324,194

23,04821,89021,74819,87419,019

19,07818,71217,65617,12816,592

15,63514,80314,31313,36712,954

12,36311,59510,87510,45410,300

As per-cent oftotalpopu-lations

25.1

24.824.825.125.825.5

25.324.824.223.823.5

23.122.621.419.217.9

17.518.017.916.616.2

15.214.213.912.511.7

11.511.110.39.89.4

8.78.17.77.16.7

6.45.95.45.25.1

Farm employment(thousands) s

Total

12,763

12,49712,74512,81612,73912,627

12,73312,33111,97811,62211,338

10,97910,66910 50410,44610,219

10,00010,29510,38210,3639,964

9,9269,5469,1498,8648,651

8,3817,8537,6007,5037,342

7,0576,9196,7006,5186,110

5,6105,2144,9034,7464,582

Familyworkers

9,360

9,3079,6429,9229,8749,765

9,8559,3509,0548,8158,611

8,3008,0177,9498,0107,988

7,8818,1068,1158,0267,712

7,5977,3107,0056,7756,570

6,3455,9005,6605,5215,390

5,1725,0294,8734,7384,506

4,1283,8543,6503,5323,429

Hiredworkers

3,403

3,1903,1032,8942,8652,862

2,8782,9812,9242,8072,727

2,6792,6522,5552,4362,231

2,1192,1892,2672,3372,252

2,3292,2362,1442,0892,081

2,0361,9531,9401,9821,952

1,8851,890*., 827,780,604

,482,360,253,213,153

Farm output

Perunit oftotalinput

Per man-hour

Total CropsLive-stockand

products

Index, 1957-59=100

63

6369696559

6962737472

7275827982

8285828886

8586899091

949696103101

105106107108107110106108108108

28

2830302827

3129333535

3639424244

4649505657

6162687174

808691103106

115122129138144

156164174182183

28

2730302727

3128333534

3739434144

4650505757

6361676973

778390105105

115118124132135

151154162170168

48

4747474643

4446464850

5051565856

5859616266

6872747680

858992100108

113123130140152

159170183193198

iFarm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian populationliving on farms, regardless of occupation.n farms, regardless o o c u p t i n .

l population of United States as of July 1 including Armed Forces abroad.3 Includes persons doing farm work on all fa Th d t b l i h d b th

S i diff f tho g i c l trms. These data, published by the Department of Agriculture, Statistical

Reporting Service, differ from those on agricultural employment by the Department of Labor (see Table C-22) because ofdifferences in the method of approach, in concepts of employment, and in time of month for which the data are collected.CAA m A nth I if r*iwyt\r+ An " C a r m I «Knr "

f e e c in th m o d of approacSee monthly report on "Farm Labor.

* Computed from variable weights for individual crops produced each year.

Sources: Department of Agriculture and Department of Commerce (Bureau of the Census).

271

TABLE G-82.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-69

{1957-59=1001

Year or month

Prices received by farmers

AHfarmprod-ucts i

Crops

Allcrops*

Foodgrains

Feed grains" and hay

Total Feedgrains

Cot-ton

To-bacco

Oil-bear-ing

crops

Livestock and products

Aiilive-stockand

prod-ucts i

Meatani-mals

Dairyprod-ucts

Poul-tryandeggs

1929

1930..19311932 .1933193419351936193719381939

19401941194219431944..19451946194719481949

195019511952...1953195419551956195719581959

1960...196119621963 1.1964....1965. . . . . .1966196719681969

1968: Jan 15 . . .Feb 15Mar 15Apr 15May 15June 15

July 15..Aug 15Sept 15O c t l 5 . . . . . . . .Nov 15Dec 15

1969: Jan 1 5 . . . . . . .Feb 15.Mar 15Apr 1 5 . . . . . . .May 15.June 15

July 15Aug 15.Sept 15Octl5_.Novl5Dec 15

61

52362729374547514039

42516680828698

114119103

107125119105102969597

10499

9999

10110098

103110105108114

105107108108108108

108108111108109108

109110112112117117

117115114115118118

61

52342632444649533637

414865848991102118114100

10411912010810810410510110099

100102104107107104106101103100

103103104105108103

100101103102103100

99101102102106103

100999697102

55

44272131434651573534

40465770788195128118103

1061151161111101071061069896

9699107106907787847673

808282797974

717071737573

737474747471

676872747575

74

67463136606865794546

54587296108106127161162112

1221431471301281161151059798

969598104105110114110100105

102104104103104103

9993959398100

102104103105109109

107105104104102103

77

68442836607068844544

54587397109104131171170109

1231471501321301161161059798

94949610210310811210897102

101101101102101

979092909697

9910199

102107107

10610310210199

100

57

40241926393838362728

3243606466699110510494

10812911910210510410310197102

971001041041009482737466

736666657069

708485867870

626466676569

706763706965

35

29201822323533413631

28325166727478777882

8390898991909396100104

103109109102101106114114117123

115116116116116116

117118119116119120

119120120121121121

122125127126125124

62

48321925455552564242

4560808897100114158153106

1201481291221331091111069896

93112108113112116128121115110

117119118118118118

117115111109111112

113114113114115114

114109102102105106

62

52382827324446494341

42536677768294111122106

10813011910497908894106100

9898999591101113107112125

107109110109109111

114113116113113115

116117119120124128

129128127127129133

50

43302019223838423736

35466066626781107117101

1101331159492807689

109102

96971019488104116109112130

106111113113113115

118115114110109111

113118122125136142

138137132130129133

10410611798

9711211810496969910199100

1011019999

100102115119124129

124122120119119117

120124128131132131

130128126124122121

124127131136138137

102

81625147567473706961

627796121312126127141153140

11814413014011312111210210890

10192929290921028490102

848484817885

91921059497

103

10599

1019585

10197104102116126

See footnotes at end of tabie.

272

TABLE G-82.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-69—Continued[1957-59=100]

Year or month

1929193019311932 .19331934193519361937—19381939 .194019411942—194319441945194619471948 .1949195019511952195319541955195619571958195919601961196219631964196519661967196819691968- Jan 15

Feb 15...Mar 15...Apr 15...May 15..June 15..July 15 .Aug 15...Sept 15..Octl5Nov 15...Dec 15...

1969: Jan 15 .Feb 15...Mar 15...Apr 15...May 15 .June 15..July 15...Aug 15Sept 15..Octl5Nov 15Dec 15...

Prices paid by farmers

Allitems,in-

terest,taxes,andwagerates(parityindex)

5552443837414242454242424552586265718289868796989595949598100102102103105107107110114116121127118119120121121121121121122122123123124125126127128128128127128128129129

Allitems

555144383843454548454445485561646672859288901001009696959698101101101101103104104106109111114119112113113114114114114114115115115116116117118118120120120119120120120121

Fam-i l y

l i v i n gi t e m s

5 45 04 33 73 84 34 34 34 54 34 24 24 55 25 86 16 47 18 38 88 58 69495949495969 9

1 0 01 0 11 0 21021 0 31 0 41051071101131171 2 31 1 51 1 61 1 61 1 71 1 71 1 71 1 81 1 81 1 81 1 91 1 91 1 91 2 01201 2 21 2 21231 2 31 2 31 2 31 2 41 2 4125125

Commodities and service.

AHproduc-tion

items i

565243383844464650474647505763666773859591941041049797969598100102101101103104103105108109111116110111111111112112112111111111112113113114115116117117116116116116117117

Production items

Feed

68614332375253556247475054667887861001181251031051181261141131061031019910098981001041031041091061021031031041031031031021019910099101101102102102103104103103103103102102104

Motorve-

hicles

3635353434363738394240404245475153556371787883878686878996100104102102105109111113117121128133

126

129129

128

130130

132

133133

133

135

F a r mm a -

c h i n -e r y

4343424039404142434443434346484949515867767883868787879296100104107110111113116119124129135142

133

136

138

139

140

143

145

Fer-til-izer

85837566616968646767666464717677797988969894100102103102101100100100100100100100100991001001009794100100100989898989896969696969696949494949493939393

inter-ests

11611310810190807468646058565451464341404243454954596368748391100109120131145162182206231255283315283283283283283283283283283283283283315315315315315315315315315315315315

Taxes3

5657565144383636363837383838373739434856606568717477818793100107117125132139147156165179192206192192192192192192192192192192192192206206206206206206206206206206206206

Wagerates*

323024181517182022222222263445546266727674738187888889929699105109110114116119125135146158174150150150157157157159159159166166166166166166177177177174174174179179179

Parityratio«

92836758647588929378778193105 (113 (108 (109 (113115110100101 (107 (100 (928984838285818079807876778074 (7474737474747373747475737373727373737576757574747676

66)80)9 s ) )9 5 )9 7 )8 3 )

( 8 5 )

98)0 9 )

L 1 6 )1 0 )11)L15IB111

onn?)08)(in9389

84858882(81)(83)83)(81)fan)(8?)f8fi)

(79)(80)(79)(80)(80)(80)(79)(79)797981797979)78)79)79)79)8?)82)(82)(81)(79)(80)(82)82)

1 Includes items not shown separately.2 Interest payable per acre on farm real estate debt.3 Farm real estate taxes payable per acre (levied in preceding year).* Monthly data are seasonally adjusted.5 Percentage ratio of prices received for all farm products to parity index, on a 1910-14=100 base. The adjusted parity

ratio (shown in parentheses in the table) reflects Government payments made directly to farmers.Source: Department of Agriculture.

273

Year

1929 _

1930...1931193219331934

193519361937_ . .19381939

19401941194219431944

19451946194719481949

1950 .1951195219531954.. .

19551956.195719581959

19601961196219631964

19651966196719681969 P.

TABLE

Cropsharvested(millions

ofacres) i

365

369365371340304

345323347349331

341344348357362

354352355356360

345344349348346

340324324324324v

324303295300301

298295308303294

C-83.—Selected measures of farm resources and inputs, 1929-69

Man-hoursof

farmwork(bil-lions)

23.2

22.923.422.622.620.2

21.120.422.120.620.7

20.520.020.620.320.2

18.818.117.216.816.2

15,115.214.514.013.3

12.812.011.110.510.3

9.89.49.08.78.2

7.87.47.37.07.0

Index numbers of inputs (1957-59=100)

Total

98

9796939186

8889949194

9797100101101

999999100101

101104103103102

1021019999102

101101101104104

104107109111112

Farmlabor

218

216220213212190

198192208193194

192188194191190

177170162158152

142143136131125

1201131049997

9288848177

7369686666

Farmreal

estate 2

92

9189868786

8889909192

9292918988

8891929595

97989999100

10099100100100

101101103104106

106107108107107

Me-chani-cal

powerandma-

chinery

38

4038353232

3335384040

4244485051

5458647280

8692969798

999910099101

104101100104102

105110112114115

Ferti-lizerand

limingmaterials

21

2116111214

1720242324

2830343843

4553565761

6873808388

90919497109

111117125141155

162182203214217

Feed,seed, and

live-stockpur-

chases 3

27

2623242424

2331293037

4546576364

7269737269

7280818082

869193101106

109111117123126

127136139143147

Miscel-laneous

76

7678797669

6668687072

7374757676

7677787482

8588889191

949895100105

106109113117120

120123127130134

* Acreage harvested (excluding duplication) plus acreages in fruits, tree nuts, and farm gardens.2 Includes service buildings and improvements on land.3 Nonfarm portion of feed, seed, and livestock purchases.


274

TABLE C-84.—Comparative balance sheet of agriculture, 1929-70


Beginning ofyear

1929

19301931193219331934.

19351936193719381939

19401941194219431944

19451946194719481949

1 9 5 0 . . . . . . . . .19511952_.19531954

19551956195719581959

19601961196219631964

1965196619671968 _1969..1970 v

Assets

Total

68.5

52.955.062.973.784.6

94.2103.5116.4127.9134.9

132.5151.5167.0164.3161.2

165.1169.6178.0185.8202.2

203.1204.0212.9221.0229.8

238.5256.0269.9283.4298.0307.1

Realestate

48.0

47.943.737.230 832.2

33 334.335.235.234.1

33.634.437.541.648.2

53.961.068.573.776.6

75.386.695.196.595.0

98 2102.9110 4115.9124.4

130.2131 7138.0143 8152.1

160.9172.5182.5193.1202.6208.6

Other physical assets

Live-stock i

6.6

6.54.93.63.03.2

3.55.25.15.05.1

5.15.37.19.69.7

9.09.7

11.913.314.4

12.917.119.514.811.7

11.210.611.013.917.7

15.215.616.417.315.8

14.517.518.918.820.1

Ma-chin-eryand

motorvehi-cles

3.2

3.43.33.02.52.2

2.22.42.63.03.2

3.13.34.04.95.4

6.55.45.37.4

10.1

12.214.116.717.418.4

18.619.320.320.221.8

22.221.822.322.724.1

25.527.128.931.132.6

Crops 2

2.5

2.73.03.85.16.1

6.76.37.19.08.6

7.67.98.89.09.2

9.68.38.37.69.3

7.78.08.89.39.8

9.29.7

10.09.6

10.574.7

House-hold

equip-mentand

furnish-ings

4.0

4.24.24.95.05.3

5.66.17.78.59.1

8.69.7

10.39.99.9

10.010.510.09.99.8

9.68 99.19 08.9

8.68.68.48.79.1

Financial assets

De-positsandcur-rency

3.6

3.23.54.25.46.6

7.99.4

10.29.99.6

9.19.19.49.49.4

9.49.59.49.5

10.0

9.28.78.89.29.2

9.610.010.310.911.5

U.S.savingsbonds

0.2.4.5

1.12.2

3.44.24.24.44.6

4.74.74.74.64.7

5.05.25.15.15.2

4.74.6*4.54.44.2

4.24.13.93.83.8

2318

Invest-mentin co-opera-tives

0.6

.8

.9

.91.01.1

1.21.41.51.71.9

2.12.32.52.72.9

3.13.33.53.74.0

4.34.75.05.35.7

6.06.57.07.47.8

Claims

Total

68.5

52.955.062.973.784.6

94.2103.5116.4127.9\134.9

132.5151.5167.0164.3161.2

165.1169.6178.0185.8202.2

203.1204.0212.9221.0229.8

238. 5256.0269.9283.4298.0307.1

Realestatedebt

9.8

9.69.49 18.57.7

7.67.47.27.06 8

6.66.56.46.05.4

4.94.84.95.15.3

5.66.16.77.27.7

8.29.09.8

10.411.1

12.112 813.915.216.8

18.921.223.325.527.128.7

Otherdebt

5.0

3.43.94.14.03.5

3.43.23.64.26.1

6.87.08.08.99.2

9.49.89.6

10.012.5

12.713.414.816.518.1

18.620.422.424.927.529.4

Pro-prie-tors'equi-ties

53.9

42.944.652.463.775.7

85.995.5

107.9118.6173.5

120.1138.4152.3148.?144.3

147.5150.8158.6165.4178.6

178.2177.8184.2189.2194.«

201. (214. ^224./233. (243. J249. C

* Beginning with 1961, horses and mules are excluded.2 Includes all crops held on farms and crops held off farms by farmers as security for Commodity Credit Corporation

loans. The latter on January 1,1969, totaled $1,188 million.


275

INTERNATIONAL STATISTICSTABLE C-85.—United States balance of payments, 1946-69


Year orquarter

1946 _1947 _.19481949

1950 .1951195219531954

19551956.. .195719581959

I960. .19611962.. .19631964

1965. . .196619671968.1969W

1967:1IIIIIIV

1968:1III I I . - - -I V . . . .

1969:1IIIII P..

Exports of goods and services

Total

14,79219,81916,86115,834

13,89318,86418,12217,07817,889

19,94823,77226,65323,21723,652

27,48828,77030,50632,60137,271

39,39943,36046,18850,59454,275

Mer-chan-dise^

11,76416,09713,26512,213

10,20314,24313,44912,41212,929

14,42417,55619,56216,41416,458

19,65020,10720,77922,25225,478

26,44729,38930,68133,59835,489

Mili-tary

sales

8(8)(8)

1182200161375300302

335402656657747

830829

1,2401,4271,564

Income oninvestments

Pri-vate

7511,0361,2381,297

1,4841,6841,6241,6581,955

2,1702,4682,6122,5382,694

3,0003,5613,9484,1514,930

5,3845,6596,2346,9347,887

Gov-ern-ment

2166

10298

109198204252272

274194205307349

348381471498456

509593638765951

Otherserv-ices

2,2562,6202,2562,226

2,0972,7392,8452,5642,551

2,8803,3933,8993,6583,849

4,1554,3184,6515, 0435,659

6,2306,8917,3947,8718,384

Imports of goods and services

Total

- 6 , 9 8 5—8,202

—10,343—9,616

—12,001—15,047—15,766—16,546- 1 5 , 9 3 0

- 1 7 , 7 9 5—19,627—20,752—20,861- 2 3 , 3 4 2

—23,355—23,148—25,357- 2 6 , 6 1 7- 2 8 , 6 9 1

—32,278—38,081- 4 1 , 0 1 1—48,078—52,405

Mer-chan-dise i

- 5 , 0 6 7—5,973—7,557—6,874

—9,081—11,176—10,838- 1 0 , 9 7 5—10,353

—11,527—12,803—13,291—12,952—15,310

—14,744—14,519—16,218—17,011—18,647

—21,496—25,463—26,821—32,972—35,193

Mili-taryex-

pend-itures

- 4 9 3--455—799—621

—576—1,270—2,054—2,615—2,642

—2,901—2,949—3,216—3,435- 3 , 1 0 7

—3,087- 2 , 9 9 8—3,105—2,961—2,880

—2,952—3,764—4,378—4,530—4,813

Otherserv-ices

—1,425—1,774—1,987—2,121

—2,344—2,601—2,874—2,956—2,935

—3,367—3,875- 4 , 2 4 5—4,474- 4 , 9 2 5

—5,523—5,631- 6 , 0 3 5- 6 , 6 4 7—7,164

—7,831—8,854—9,813

—10,577—12,399

Bal-anceon

goodsand

serv-ices

7,80711,6176,5186,218

1,8923,8172,356

5321,959

2,1534,1455,9012,356

310

4,1335,6225,1495,9848,580

7,1215,2795,1772,5161,869

Remit-tances

andpen-sions

- 6 4 8—728—631—641

- 5 3 3—480—571—644—633

- 5 9 7—690—729—745—815

—596—632- 6 9 5—798—809

—950—923

—1,196—1,159—1,152


45,84445,93646,30846,668

47,73650,67253,37650,612

47,65256,98058,192

30,75230,89230,67630,404

31,76433,58035,51633,532

29,87638,35238,240

1,3321,340

9561,328

1,2201,4121,6241,456

1,6721,3361,684

5,8245,6806,5966,836

6,2487,0727,3127,108

7,5447,6728,444

624640608680

836820848560

936932984

7,3127,3847,4727,420

7,6687,7888,0767,956

7,6248,6888,840

—40,400—40,132- 4 0 , 6 9 2—42,824

- 4 5 , 8 5 2—47,308- 4 9 , 7 4 0—49,408

—46,200—55,768—55,248

—26,640—25,860—26,168—28,616

—31,268—32,524—34,264—33,832

—30,288—38,364—36,928

—4,340- 4 , 3 0 0—4,424—4,448

—4,408—4,464—4,572- 4 , 6 7 6

—4,816- 4 , 8 3 2—4,792

—9,420—9,972

- 1 0 , 1 0 0—9,760

—10,176—10,320—10,904—10,900

—11,096- 1 2 , 5 7 2—13,528

5,4445,8045,6163,844

1,8843,3643,6361,204

1,4521,2122,944

—944—1,464- 1 , 3 6 0—1,012

—1,104—1,096- 1 , 3 0 0—1,140

—1,084—1,144—1,228


276

TABLE C-85.—United States balance of payments, 1946-69— Continued


Year orquarter

U.S.Gov-ern-ment

grantsand

capi-tal,net 2

U.S. private capital,net

Directinvest-ment

Otherlong-term

Short-term

For-eigncapi-tal,net 2

Errorsand

omis-sions

Balance

Li-quiditybasis s

Offi-cial

reservetrans-actionsbasis *

Changes in selected lia-bilities (decrease ( - ) ) «

To foreignofficial holders•

Liquid Non-liquid

Toother

foreignhold-ers?

Changesin gold,convert-ible cur-rencies,

andIMFgold

trancheposition

(increase()

1946..1947..1948..1949..

1950..1951..1952..1953..1954..

1955..1956..1957..1958..1959..

1960..1961..1962..1963..1964..

1965..1966196719681969 10

1967: L —II.._I I I . .IV...

1968: l.._.I I . . .I I L .IV...

1969: L._-II....Ill p.

-5,293-6,121-4,918-5,649

-3,640-3,191-2,380-2,055-1,554

-2,211-2,362-2,574-2,587-1,986

-2,768-2,779-3,013-3,578-3,564

-3,406-3,444-4,223•3,955-4,000

-230-749-721-660

-621-508-852-735-667

-1,951-2,442-1,181-1,372

-1,674-1,598-1,654-1,976-2,328

-3,468-3,639-3,154-3,025-4,107

127- 4 9- 6 9

-495-437-214

185-320

-241-603-859

-1,444-926

-855-1,025-1,227-1,698-2,103

-1,079-256

-1,292-1,082-1,505

-310-189-116

187

-149-103- 9 4167

-635

-191-517-276-311- 7 7

-1,349-1,556

-546- 7 8 5

-2,147

753-415

-1,209-1,049

-623

- 6 1 5-432-361

44

18154052

146249

297615545186736

364702

1,026690689

2702,5313,3608,5653,039

155861

1,115717

-12435449722060

371390

1,012361260

-1,156-1,103-1,246-509

-1,118

-576-489

-1,007-642

-4,319

9934,210

817136

-3,489- 8

-1,206-2,184-1 ,541

-1,242-973

578-3,365-3,870

-3 ,901-2 ,371-2 ,204-2 ,670-2 ,800

-1 ,335-1,357-3 ,544

168-10,795

-3,403-1,347-2,702-2,011-1,564

-1,289266

-3,4181,6381,949

«1,4489 681M571,6731,075

- 1 8-1 ,595

2,020-3 ,099

250- 3 9318

85761

1,3462,341

3081,084

214620

1,554

1312,3841,4723,811

- 6 2 3-3 ,315-1,736

-266

1,758- 3 3

-4151,256

480

182-869

-1 ,1652,2921,035

2,145606

1,533377171

1 22256852

Seasonally adjusted annual rates Quarterly totals unadjusted

-4,436-3,996•4,168-4,288

-4,388-4,220-3,872-3,340

-3,172-4,620-4,208

-2,868-2,132-3,788-3,824

-U-4,036-5,048-1,132

-3,712-4,228-4,380

-552-1,004-2,068-1,544

-548-588-916

-2,280

-1,024-1,708-1,784

-852-920

-1,244-1,820

-788-1,524-1,508-376

-628-2,072

832

3,4684,8843,1681,924

6,22010,0687,22010,752

6,5321,4201,164

-1,232-2,496

-276-24 .

-1,640-1,9201,236-240

-5,040-4,352-3,564

-1 ,980-1 ,320-4 ,124-6,752

-2,25636

-5563,448

-6 ,680-15,484-10,220

-6,844-2,876-284

-3,668

-1,5166,212

3881,468

4,5764,944

-3,672

-80540260

1,300

1,3582,190-38487

1,708-5432,239

332589135290

363777537664

45-360-515

-70990

1,331760

7212,2221,017-149

3,0314,6541,370

1,027-419- 3 7 5- 1 8 1

904-137- 5 7 1

-1 ,076

- 4 8-299-686

1 Adjusted from customs data for differences in timing and coverage.2 Includes certain special Government transactions.3 Equals changes in liquid liabilities to foreign official holders, other foreign holders, and changes in official reserve assets

consisting of gold, convertible currencies, and the U.S. gold tranche position in the IMF.* Equals changes in liquid and nonliquid liabilities to foreign official holders and changes in official reserve assets con-

sisting of gold, convertible currencies, and the U.S. gold tranche position in the IMF.« Includes short-term official and banking liabilities, foreign holdings of U.S. Government bonds and notes, and certain

nonliquid liabilities to foreign official holders.« Central banks, governments, and U.S. liabilities to the IMF arising from reversible gold sales to, and gold deposits with,

the United States.7 Private holders; includes banks and international and regional organizations; excludes IMF.s Not reported separately.• Includes change in Treasury liabilities to certain foreign military agencies; excluding these changes, data ($ millions)

are 1,258 (1960), 741 (1961), 918 (1962).10 Average of the first 3 quarters on a seasonally adjusted annual rates basis.

Note.—Data exclude military grant-aid and U.S. subscriptions to International Monetary Fund.


277

TABLE C-86.—-United States merchandise exports and imports, by commodity groups, 1958-69


Year or quarter

Merchandise exports *

Total, includ-ing reexports 2

Sea-sonally

ad-justed

Unad-justed

Domestic exports

Total 2s

Food,bever-ages,

and to-bacco

Crudemate-rialsand

fuels «

Man-ufac-tured

goods«

Merchandise imports

General imports *

Total*

Sea-sonally

ad-justed

Unad-justed

Food,bever-ages,

and to-bacco

Crudemate-rialsand

fuels«

Man-ufac-tured

goods8

Grossmer-chan-dise

tradesur-plus,sea-

sonallyad-

justed7

1959.

I960- . .1961—.196219631964—.

19651966—19671968

1967: 1 --IIillIV . .

1968: 111IllIV

19698:1IIIII..IV

7,7797,7837,7727,772

8,0288,4659,0198,581

7,5869,8599,8829,975

16,375 16,21116,426 j 16,24319,659 19,45920,226 19,98220,986 20,71722,467 22,18225,832 25,479

26,751 26,40829,490 29,05431,030 30,64634.063 33,62637,314 36,770

7,7138,0127,2818,024

8,0228,7048,4258,911

7,56810,1509,27610,348

7,6187,9127,1847,933

7,9228,5968,3178,792

7,45110,0099,137

10,201

2,6882,852

3,167I 3,466

3,7434,1884,637

4,5205,1864,7104,5924,446

1,1271,1571,1311,295

1,1951,0901,1221,185

6991,2561,1481,342

3,052 11,5472,996 11,179

3,942 12,5833,864 12,7843,356 13,6683,775 14,2974,337 16,529

4,275 17,4394,404 19,2184,726 20,8444,864 23,8195,008 26,764

1,1601,2081,1231,235

1,1801,2171,1741,293

8781,3891,2381,508

5,2295,4764,8365,303

5,4656,1825,9556,217

5,7747,2646,6137,135

6,7186,5256,6057,157

7,8678,1518,5488,527

7,6549,6419,3029,443

13,39215,690

15,07314,76116,46417,20718,749

21,42925,61826,88933,22636,052

6,6366,6066,4227,226

7,7648,2568,4578,750

7,4209,7879,1959,667

3,5503,580

3,3923,4553,6743,8634,022

4,0134,5904,7015,3655,309

1,2131,1251,1001,264

1,2571,3081,4301,369

1,0131,4781,3311,487

4,1644,615

4,4184,3344,6914,7555,029

5,4405,7185,3676,0316,391

1,3961,3481,2601,363

1,4431,4631,5701,555

1,4791,6411,5831,692

5,3117,117

6,8636,5377,6498,0709,106

11,24514,44615,75620,62423,021

3,8143,8583,7904,293

4,8045,1805,1425,499

4,6556,3285,9316,074

2,983736

4,5865,4654,5225,2607,083

5,3223,8724,141837

1,262

1,0611,2581,167615

16131447154

-68218580532

1 Beginning I960, data have been adjusted for comparability with the revised commodity classifications effective in 1965.2Totals exclude Department of Defense shipments of grant-aid military supplies and equipment under the Military

Assistance Program.3 Total arrivals of imported goods other than intransit shipments.* Total includes commodities and transactions not classified according to kind.6 Includes fats and oils.s Includes machinery, transportation equipment, chemicals, metals, and other manufactures. Export data for these items

include military grant-aid shipments.7 Exports, excluding military grant-aid, less general imports; quarterly data seasonally adjusted.s Quarterly data have not been revised and therefore do not add up to annual totals, which are based on more recent

data.Note.—Data are as reported by the Bureau of the Census adjusted to include silver ore and bullion reported separately

prior to 1969. Export statistics cover all merchandise shipped from the U.S. customs area, except supplies for U.S. ArmedForces. Export values are f.a.s. port of export and include shipments under Agency for International Development andFood for Peace programs as well as other private relief shipments. Import values are defined generally as the marketvalue in the foreign country, excluding the U.S. import duty and transportation costs such as ocean freight andmarine insurance.

Source: Department of Commerce, Bureau of International Commerce.

278

TABLE C-87.—United States merchandise exports and imports, by area, 1963-69


Area 1963 1964 1965 1966 1967 1968 1969 9

Exports (including reexports andspecial category shipments):Total _..

Developed countriesDeveloping countries

CanadaOther Western Hemisphere.Western Europe iEastern EuropeAsiaAustralia and OceaniaAfrica -

General imports: Total.

Developed countriesDeveloping countries

CanadaOther Western Hemisphere.Western Europe iEastern EuropeAsiaAustralia and OceaniaAfricaUnidentified countries2

23,387

15,1648,057

4,2613,6928,198167

5,450565

1,054

17,207

10,8326,283

3,8514,0634,731

813,1925047787

26,650

17,3438,967

4,9214,2939,222340

5,811804

1,259

18,749

11,9246,711

4,2654,1855,209

993,62044291712

27,530

18,3669,023

5,6584,2759,257140

6,015956

1,229

21,429

14,1017,174

4,8584,3996,155

1374,52845588314

30,430

20,12010,112

6,6794,7699,891

1986,740805

1,348

25,618

17,6327,795

6,1524,7377,679179

5,2775969926

31,622

21,4679,960

7,1724,71810,187

1957,1501,0181,182

26,889

18,9937,709

7,1404,6628,052

1775,3495839206

34,636

23,60010,821

8,0725,33911,132

2157,5821,0261,270

33,226

24,1308,886

9,0055,14310,139

1986,911697

1,12211

37,988

26,45811,281

9,1385,57612,370

2498,265998

1,392

36,052

26,4659,377

10,3905,16510,140

1968.276828

1,04512

1 Includes Finland, Yugoslavia, Greece, and Turkey.2 Consists of certain low-valued shipments not identified by country.Note.—Developed countries include Canada, Western Europe, Japan, Australia, New Zealand, and the Republic of

South Africa. Developing countries include rest of the world except Communist areas in Eastern Europe and Asia andunidentified countries.

Source: Department of Commerce, Bureau of International Commerce.

279

TABLE C-88.—United States overseas loans and grants, by type and[Millions of dollars]

Type of program and fiscalperiod

Total economic loans and grants(net obligations and loanauthorizations):»

1962-68 averageLoansGrants

1969LoansGrants

Economic loans and grants toless developed countries, byprogram:2

Net obligations and loanauthorizations:

1962-68 average1969

Repayments and interest:1962-68 average1969

Agency for internationalDevelopment:

Net obligations and loanauthorizations:

1962-68 average1969 . -


Export-Import Bank long-termloans:

Loan authorizations:1962-68 average1969

Repayments and interest:1962-68 average - --1969

Food for Peace:

Obligations:1962-68 average1969


Contributions and Subscriptionsto International Lending Or-ganizations:3

Obligations:1962-68 average1969

Peace Corps and other:4

Obligations:1962-68 average . . .1969


Total

4,7342,5452,189

3,9362,0231,912

4,5263,687

7191,080

2,2391,449

207301

404537

383546

1,3891,212

107198

267320

228170

2234

NearEastand

SouthAsia

1,5341,154

380

781604178

1,534781

260414

718285

114163

9368

74113

710416

68133

1312

54

LatinAmerica

1,191771420

1,022555467

1,1911,022

290411

548290

2449

196289

245317

162115

1120

181300

10428

1025

Vietnam

361*

362

358*

358

361358

105

282259

105

7999

*

EastAsia

520197323

774498275

449665

5573

227200

2231

2740

2528

160397

514

3529

31

area, fiscal years.

Africa

388172216

326143183

388326

3158

196108

1824

3058

1024

140139

210

2222

1

Europe

258216

42

16315211

14683

67113

2*

1727

5881

2964

872

2222

1962-69

Otherand

non-regional

48235

447

51372

441

457453

6

268308

31

5045

862C

548C

3A

1 Some data are preliminary.2 Countries have been classified "less developed" on the basis of the standard list of less developed countries used

by the Development Assistance Committee of the Organization for Economic Cooperation and Development. On thisbasis, "less developed" countries include all countries receiving U.S. loans or grants except the following which areconsidered "developed": Japan, Australia, New Zealand, Republic of South Africa, Canada, and all of Europe exceptMalta, Spain and Yugoslavia.

3 Includes capital subscriptions and contributions to the inter-American Development Bank, the International Develop-ment Association, and the Asian Development Bank.

* Data for certain programs from Department of Commerce (Office of Business Economics).Source: Agency for International Development (except as noted).

280

TABLE C-89.—International reserves, 1949, 1953, and 1964-69

[Millions of dollars; end of period]

Area and country

All countries

Developed areas

United States

United Kingdom

Other Western EuropeAustria.BelgiumFranceGermany.ItalyNetherlandsScandinavian coun-

tries (Denmark,Finland, Norway,and Sweden)

Spain-.:SwitzerlandOther 2

Canada.

Japan

Australia, New Zealand,and South Africa

Less developed areas 3

Latin AmericaMiddle EastOther Asia..Other Africa

1949

45,635

37,245

26,024

1,752

6,45592978580196

34

537

&

1,222

1,197

0)1,587

8,390

2,7751,4753,3954 290

1953

51,780

41,375

23,458

2,670

10,500325

1,144829

1,773768

1,232

1,026150

1,7681,484

1,902

1,953

10,405

3,4001,2003,8401,800

1964

68,740

59,015

16,672

2,316

32,3501,3172,2225,7247,8823,8242,349

2,3801,5133,1202,017

2,881

2,019

2,777

9,725

2,8552,3203,0701,415

1965

70,520

59,540

15,450

3,004

33,6651,3112,3346,3437,4294,8002,416

2,3281,4093,2442,052

3,027

2,152

2,245

10,980

3,2802,6753,3951,570

1966

71,980

60,330

14,882

3,100

35,0401,3332,3506,7338,0284,9112,448

2,3411,2053,3242,368

2,693

2,119

2,494

11,655

3,1802,8453,8401,725

1967

73,600

61,145

14,830

2,695

36,5401,4842,5906,9948,1525,4632,619

2,2361,0493,5552,396

2,709

2,030

2,341

12,460

3,4653,1953,9751,755

1968

76,565

62,940

15,710

2,422

35,7801,5102,1874,2019,9485,3422,463

2,3201,0953,9322,780

3,041

2,906

3,083

13,625

3,9503,2304,1102,160

1969 v

Sep-tember

79,615

64,925

16,743

2,434

36,4501,4452,1764,00612,1785,3702,365

1,734981

3,2182,977

2,949

3,299

3,052

14,685

4,1753,1004,6552,580

Decem-ber

16,964

2,527

1,5372,3863.8337,1345,0052,529

2,216833

3,995

3,100

3,654

1 Not available separately.2 In addition to other Western European countries, includes unpublished gold reserves of Greece and an estimate of

gold to be distributed by the Tripartite Commission for the Restitution of Monetary Gold.3 Includes unpublished gold holdings not allocable by area.* Estimate.

Note.—Includes gold holdings, reserve positions in the International Monetary Fund, and foreign exchange of all countriesexcept U.S.S.R., other Eastern European countries, Communist China, and Cuba (after 1960).

Beginning 1959, when most of the major currencies of the world became convertible, data exclude known holdings ofinconvertible currencies, balances under payments agreements, and the bilateral claims arising from liquidation of theEuropean Payments Union.

Source: International Monetary Fund, "International Financial Statistics."

2 8 l

TABLE G—90.—United States reserve assets: Gold stock, holdings of convertible foreign currencies,and reserve position in the International Monetary Fund, 1946-69


End of year or month Total reserveassets

Gold stock i

Total 2 Treasury

Convertibleforeign

currencies 3

Reserveposition in

InternationalMonetary Fund*

1946194719481949

195019511952.19531954

195519561957. . . . . .19581959

196019611962 -19631964

19651966196719681969

1968: Jan..Feb.Mar.Apr.May.June.

July.Aug..Sept.Oct...Nov..Dec .

1969:Jan...Feb..Mar..A p r -May..June..

July_.Aug. .Sept..Oct...Nov..D e c .

20,70624,02125,75826,024

24,26524,29924,71423,45822,978

22,79723,66624,83222,54021,504

19,35918,75317,22016,84316,672

15,45014,88214,83015,71016,964

14,62014,79013,92613,84014,34814,063

14,36614,42714,63414,42715,66015,710

15,45415,49915,75815,94816,07016,057

15,93616,19516,74316,31616,00016,964

20,70622,86824,39924,553

22,82022,87323,25222,09121,793

21,75322,05822,85720,58219,507

17,80416,94716,05715,59615,471

U3,80613,23512,06510,89211,859

12,00311,90010,70310,54710,46810,681

10,67610,68110,75510,78810,89710,892

10,82810,80110,83610,93611,15311,153

11,14411,15411,16411,19011,17111,859

20,52922,75424,24424,427

22,70622,69523,18722,03021,713

21,69021,94922,78120,53419,456

17,76716,88915,97815,51315,388

5 13,73313,15911,98210,36710,367

11,98411,88210,48410,48410,38410,367

10,36710,36710,36710,36710 36710,367

10,36710,36710,36710,36710,36710,367

10,36710,36710,36710,36710,36710,367

11699212432

7811,3212,3453,5282,781

2,1762 2352,7462,8043,3862,479

2,7732,8172,9532,7033,6553,528

3,3383,3993,6013,6243,4743,355

3,1663,3993,7973,3412,8652,781

1,1531,3591,461

1,4451,4261,4621,3671,185

1,0441,6081,9751,9581,997

1,5551,6901,0641,035

769

»863326420

1,2902,324

441655477489494903

917929926936

1,1081,290

1,2881,2991,3211,3881,4431,549

1,6261,6421,7821,7851,9642,324

* Includes gold sojd to the United States by the International Monetary Fund with the right of repurchase whichamounted to $800 million on December 31,1969. Beginning September 1965 also includes gold deposited by the IMF tomitigate the impact on the U.S. gold stock of purchases by foreign countries for gold subscriptions on increased IMFquotas. Amount outstanding was $219 million on December 31,1969. The United States has a corresponding gold liabilityto the IMF.

2 Includes gold in Exchange Stabilization Fund.* Includes holdings of Treasury and Federal Reserve System.4 In accordance with Fund policies the United States has the right to draw foreign currencies equivalent to its reserve

position in the Fund virtually automatically if needed. Under appropriate conditions the United States could draw addi-tional amounts equal to the United States quota.

5 Reserve position includes, and gold stock excludes, $259 million gold subscription to the Fund in June 1965 for a U.S.quota increase which became effective on February 23, 1966. In figures published by the Fund from June 1965 throughJanuary 1966, this gold subscription was included in the U.S. gold stock and excluded from the reserve position.

Note.—Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not included inthe gold stock of the United States.

Sources: Treasury Department and Board of Governors of the Federal Reserve System.

282

TABLE C-91.—Price changes in international trade, 1961-69

11963=1001

Area or commodity class 1961 1962 1963 1964 1965 1966 1967 1968

1969

Thirdquarter

Developed areas

Total:ExportsTerms of trade i .

United States *ExportsTerms of trade 1.

Developing areas

Total:ExportsTerms of trade i-

Latin AmericaExportsTerms of trade *.

Southern and Eastern Asia •ExportsTerms of trade i-

Primary commodities: Total.,

Foodstuffs

Coffee, tea, and cocoa..Cereals

Other agricultural commodities6

Fats, oils, and oilseeds..Textile fibers

WoolRubber

MineralsMetal ores..

Manufactured goods: Total f i...

Nonferrous base metals5..

10199

100100

103104

97

92

9994

102

1029384

115

100102

99

102

Unit value indexes by area

99100

100101

9798

9592

100102

100100

100100

100100

100100

100100

102100

10199

103102

107105

10099

103100

104101

103100

107102

10199

105100

107101

104102

108105

101100

105101

110102

103101

107103

9999

104101

111102

104102

108101

98100

World export price Indexes»

96

94

9699

97

949184107

9910099

100

100

100

100100

100

iiii

100100

100

100

103

105

121103

102

10410210395

102108

101

119

103

103

11199

103

114928697

104114

103

135

104

105

113104

104

111929091

104105

106

156

101

104

111106

96

102887775

103109

107

142

100

102

111102

96

100887473

102108

106

150

108102

115103

107104

3 1093 102

3 1013102

105

106

118100

102

998776

107

105119

109

173

1 Terms of trade indexes are unit value indexes of exports divided by unit value indexes of imports.2 Includes foreign trade of Alaska, Hawaii, and Puerto Rico.3 Data are for second quarter 1969.* Excludes Japan.5 Data for manufactured goods are unit value indexes.• Includes nonfood fish and forest products.

Note.—Data exclude trade of Communist areas in Eastern Europe (except Yugoslavia) and Asia.

Sources: United Nations and Department of Commerce (Bureau of International Commerce).

283

TABLE C—92.—Consumer price indexes in the United States and other major industrial countries,1957-69

Period

195719581959

19601961 _ . .19621963 .1 9 6 4 . . . .

196519661967196819691

1966: 1IIIllIV

1967: 1||_IllIV

1968: LIIIIIIV

1969: 1| |IllIV 2

UnitedStates

91.894.495.1

96.697.798.8

100.0101.3

103.0106.0109.0113.6119.7

104 5105.6106.6107.4

107.6108.4109.5110.4

111.6112.8114.2115.6

116.9119.0120 7122.3

Canada

91.794.195.1

96.297.198.3

100.0101.8

104.3108.2112.0116.7121.7

106 7107.9108.9109.5

109.9111.5113.2113.6

115.0116 0117.3118.5

119.4121.6123 0123.5

[1SC3-

Japan

79.378.979.8

82.687.093.0

100.0103.9

110.7116.412L.0127.5133.8

114 9116.4116.5117.6

119.8119.7120.2124.1

126.2126.4127.4129.8

130.4132.8135.8137.3

=100]

France

69.680.185.0

88.191.095.4

100.0103.4

106.0108.9111.8116.9123.7

107.7108.5109.2109.8

110.8111.2111.9113.5

115.1115.8117.2119.6

121 6123.2124.6126.3

Germany

88.190.090.9

92.194.397.1

100.0102.3

105.8109.5111.1113.1115.9

108.5109.8109.6110.1

110.9111.5111.2110.8

112.8113.0112.9113.8

115.4115.9116 0116.8

Italy

83.285.585.1

87.188.993.1

100.0105.9

110.7113.3116.9118.5121.0

112.7113.0113.3114.2

115.9116.6117.5117.9

118.2118.5118.3118.8

119.7120.9122 3

Nether-lands

889091

949597

100106

111117121126135

116120118118

120121122123

124126126128

134136135137

UnitedKingdom

86 989.590.0

90.994.098.0

100 0103.3

108.2112.4115.2120.6127.0

110 4112.5112.9113.8

114. 4115.4114.8116.2

117.8120.6121.3122.7

125.2127.2127.4128.7

1 Except for the United States, averages are for January-September for Italy; and January-November for all other coun-tries.

2 October-November average for all countries other than the United States.

Sources: Department of Labor and Organization for Economic Cooperation and Development.

284