Americas Needs and Resources

AMERICAS NEEDS AND RESOURCES

T H E T W E N T I E T H C E N T U R Y F U N D

T R U S T E E S

A. A. BERLE, JR.

FRANCIS BIDDLE

BRUCE BLIVEN

PERCY S. BROWN

HENRY S. DENNISON

JOHN H. FAHEY

OSWALD W . KNAUTH

MORRIS E. LEEDS

ROBERT S. LYND

JAMES G. MCDONALD

W ILLIAM I. MYERS

CHARLES P. TAFT

W . W . W AYMACK

OFF I C ERS

JOHN H. FAHEY, President

h e n r y s. d e n n is o n , Chairman, Executive Committee

m o r r i s E. l e e d s , Treasurer

e v a n s c l a r k , Executive Director

J . F r e d e r i c d e w h u r s t , Economist

1

N EED S A N D R E S O U R C E S S U R V E Y OF

T H E T W E N T I E T H C E N T U R Y F UN D

J . FREDERIC DEWHURST

Research Director and Editor

GEORGE B. GALLOWAY

Assistant Research Director

A. BENJAMIN HANDLER

Assistant Research Director

R E S EARCH A S SOC I A T E S

LOUIS H. BEAN

LAWRENCE N. BLOOMBERG

DOROTHY S. BRADY

HOWARD G. BRUNSMAN

W ILLIAM G. CARR

LOWELL J . CHAWNER

LOUISE P. FIELD

WILBERT G. FRITZ

ROBERT W . HARTLEY

HELEN HOLLINGSWORTH

MAYNARD M . HUFSCHMIDT

PEGGY KENAS

W YLIE KILPATRICK

MARGARET C. KLEM

BENSON Y . LANDIS

LEWIS L. LORWIN

WILFRED OWEN

LOUIS J . PARADISO

HAZEL K. STIEBELING

THEODORE A. SUMBERG

GLORIA WALDRON

LOUIS WEINER

FAITH M . W ILLIAMS

W . S. WOYTINSKY

AMERICAS NEEDS

AND RESOURCES

A Twentieth Century Fund Survey

WH ICH I N CLUDE S

E S T IMATE S FOR 1950 AND 1960

ByJ. Frederic Dewhurst and Associates

N E W Y O R K The Twentieth Century Fund - 1 9 4 7

COPYRIGHT 1 9 4 7 BY THE TW ENTIETH CENTURY FUND , IN C .

First published May 1947

Reprinted June 1947

MANUFACTURED in THE UNITED STATES OF AMERICA

BY E. L . HILDRETH & COM PANY , BRATTLEBORO, VERMONT

FOREWORD

Dr. D e w h u r s t and his associates have carried through an ambitious project in this sur

vey: they have taken the measure, so to speak, of our entire economy in all its many fields.

Their approach has been dynamic. They have taken, not a static, single measurement as

of a certain year, but a series of them to give a moving picture of accomplishments and

probabilities.

The picture is moving in both senses of the word: the subject matter moves, from the

past through the present and into the future; and the picture also moves the reader. When

we stand aside from the immediate concerns of this month or last, from the inflation or

deflation of the moment, and take a long look behind, the minor ups and downs flatten

out in a rising curve of economic activity, of increasing productive power, unique in thc

annals of this world. It is deeply impressive. And when we project this curve into the

future, assuming that we can continue to act as we have in the past, we begin to realize

Americas vast economic and social potential.

When it is expressed, as in this volume, in concrete terms of more income, more houses,

more shoes, more hours of leisure, more opportunities for culture and education, this

potential becomes closely personal and individual. It becomes a challenge to each of us

with definite rewards to us and to our children in courageous acceptance.

The challenge also cuts across the lines that all too often separate us into angry pres

sure groups. It tends to draw us all together in the one common cause of greater and

more continuous production with a more fair and reasonable distribution of the benefits.

Our inventive genius, our organizing ability and our skills have given us here in the

United States the greatest productivity and the highest standard of living in the world,

enjoyed by the largest proportion of the population in spite of our strikes, depressions,

unemployment and economic wranglings. If we can prevent the universal devastation of

atomic warfare, and if we can continue to spread the benefits of a constantly increasing

productivity in the United States, we can go on to economic and cultural heights as far

and farther above those of today as those of 1947 are beyond the imaginings of our

great-grandfathers back in 1847.

But the authors of this survey have confined themselves to facts and to projections of

fact. They have left the implications strictly to the reader. Nor has the Fund appointed

a special committee in this case to formulate a program of policies based upon the re

search findings. The area of research, covering as it does all parts of our economy, has

been too broad.

In authorizing and underwriting this survey the Trustees of the Fund have hoped to

provide those who work and plan in each separate field, as well as those whose concern

is the economy as a whole, with the bench marks essential to any intelligent planning or

appraisal. It is the Funds hope that the educator, the clothing manufacturer, the catde-

man, the wheat farmer, the Federal Reserve Board member, the labor unionist, the

senator from this state or that, the President himself, as well as the average citizen who

wants to know what this economy of ours is all about that each of them can find in this

volume some of the basic facts he needs to do his job more intelligently and therefore

more effectively.

Dr. Dewhurst and his associates have produced a document out of all proportion, both

in length and importance, to the size of the staff and the time at its disposal. This dispro

portion is a measure of the especially hard, meticulous, constant effort that they have

poured into the undertaking. It is a pleasure to recognize these services and to express

publicly the deep appreciation they deserve.

Evans C la rk , Executive Director The Twentieth Century Fund

330 W est 420 Street

N ew York 18, N . Y.

January i , 1947


ACKNOWLEDGMENTS

T h is v o l u m e as a whole as well as most of the individual chapters is in a very real sense the product of cooperative effort. The basic estimates of future employment and productivity and of income, consumption and expenditure patterns summarized in Chapters 2,4 and 5 are primarily the responsibility of the central staff of the survey. The authors of the individual chapters in Parts II, III and IV developed and presented their own material relating to demand and needs in 1950 and i960 within this consistent statistical framework.

In view of the many uncertainties regarding the postwar price level that existed at the time this survey was undertaken in 1943, and also because projections into the future were necessarily based largely on prewar trends and relationships, all estimates were originally projected in dollars of 1940 purchasing power. Estimates of future demands and needs for various classes of goods and services, as presented in Chapters 6 through 14 and 17 through 21, are therefore expressed in 1940 dollars.

What the price level will be in the 1950s is, of course, anybodys guess. But it is already clear that, barring drastic deflation, future prices are likely to fluctuate around a plateau far above the 1940 level though perhaps not as high as now. In order to present a more realistic picture of estimated dollar volumes, the basic estimates of gross national product and national income and of demand and needs for various classes of goods and services have been presented in the summary chapters 4,5,15,16 and 26 in terms of the 1944 price level, on the basis of a uniform increase of 32 per cent over 1940. (In comparing this surveys 1950 and i960 estimates with current dollar volumes, it is important to remember that the price level at the end of 1946, as measured by the cost of living index, was more than 50 per cent above 1940, and 15 per cent higher than the 1944 average. Thus, this surveys estimate of a 1950 gross national product of $134 billion at the1940 price level, and of $177 billion in 1944 prices, would be equivalent to about $204 billion in terms of the price level prevailing at the end of 1946. This compares with an estimated gross national product of $195 billion for the year 1946.)

Beyond this responsibility for providing a common statistical basis for the survey, the central staff participated in the review and criticism of the original chapter drafts and in varying degrees aided in revision, reorganization, editing and in the reconciliation of statistical data.

The Fund acknowledges with deep gratitude the services of the two assistant research directors who, in addition to their authorship of specific parts of the report, were responsible for much of the planning and coordination of the survey. Until his resignation late in 1944 to serve as Chairman of the Standing Committee on Congress of the American Political Science Association, George B. Galloway rendered invaluable aid in planning the survey, enlisting the cooperation of the experts and specialists who contributed


individual chapters of thc report, and reviewing the original drafts. A. Benjamin Handler discharged a heavy share of the responsibility for development of statistical techniques and organization and coordination of statistical material in the report.

It is difficult to express adequately the Funds appreciation and gratitude to the research associates, not regular members of the survey staff, who were the authors of most of the individual chapters or prepared material on which they were based. Without their specialized knowledge of particular fields and their diligence and patience in preparing and revising this material, at a time when there were many other calls on their energies, this report could not have been prepared. Primary responsibility for the authorship of the various chapters and the material contained in them is indicated on the first page of each chapter. The names of the research associates who contributed to the volume as authors, coauthors, collaborators or consultants, or in the preparation of material on which chapters were based, are listed on the page opposite the title page of the volume.

Special credit is due to three of the research associates who did not have specific responsibility for individual chapters. Louise P. Field carried through the difficult and important task of checking, correcting and clarifying statistical data in the survey. Gloria Waldron edited, revised and rewrote parts of the manuscript. Peggy Kenas assembled supplementary research material for various parts of the survey.

The survey staff is deeply indebted to the Funds Executive Director, Evans Clark, not only for his constructive criticism of the manuscript throughout its preparation, but for his unfailing encouragement when the staffs enthusiasm occasionally ebbed.

To Elizabeth Mann goes credit for the enormously complex task of designing and planning the actual volume in the face of what appeared to be insurmountable obstacles. The styling of the manuscript for the printer was in the competent hands of Elizabeth Maier. As secretary of the survey Helen Gowern carried the brunt of the burdensome administrative work that such a project involves. Jacob Steinberg directed the preparation of the index.

The Fund is also indebted to many public and private agencies and individuals for published and unpublished data and for generous aid in assembling the material used in the survey. Among the private institutions whose publications and staff members were drawn on extensively are the National Bureau of Economic Research, The Brookings Institution and the National Planning Association. Without the basic data on income

and expenditures growing out of the work of the Bureau of Foreign and Domestic Commerce, under the able directorship of Amos E. Taylor, and the help obtained fromS. Morris Livingston, William H. Shaw, Louis J. Paradiso and others of the Bureaus staff, this survey in its present form could not have been undertaken. The statistical resources of many other government agencies, notably the bureaus of the Census, Mines, Agricultural Economics, Labor Statistics and various agencies in the field of transportation, were also drawn on heavily.

Early drafts of many of the chapters were circulated for criticism to individual specialists in various fields. The survey staff is grateful for many suggestions and criticisms received and especially for the help of the experts named below, who, of course, are in no degree responsible for the findings of the survey in its present form.

ACKNOWLEDGMENTS

In the field of population (Chapter 3): Halbert L. Dunn, John D. Durand, A. Ross Eckler and Leon E. Truesdell of the Bureau of the Census.

In the field of food consumption (Chapter 6): Callie M. Coons, George Pepperdine College; Helen Monsch, Cornell University; Agnes F. Morgan, University of California; H. C. Sherman, Columbia University.

In the field of clothing (Chapter 7): Benjamin Caplan, Office of Price Administration; Harry A. Cobrin, Clothing Manufacturers Association; Dorothy Dickins, Mississippi Agricultural Experiment Station; Solomon Fabricant, National Bureau of Economic Research; Margaret G. Reid, Department of Agriculture.

In the field of housing and urban redevelopment (Chapters 8 and 18): Charles S. Ascher and R. Harold Denton of the National Housing Agency; Frederick Biggar, Herbert S. Colton and Shirley K. Hart of the Federal Housing Administration; Walter H. Blucher, American Society of Planning Officials; Harold S. Buttenheim, Citizens Housing Council of New York; Robert L. Davison, Robert L. Davison Associates; Edmond H. Hoben, National Association of Housing Officials; C. Theodore Larson, Committee on Military Affairs, United States Senate; S. Morris Livingston, Bureau of Foreign and Domestic Commerce; Walter F. Stettner, Federal Reserve System.

In the field of household equipment and operation (Chapter 9): Alfred Auerbach, Alfred Auerbach Associates; Reavis Cox, University of Pennsylvania; Margaret G. Reid, Department of Agriculture; Nathan S. Sachs, Retail Credit Institute of America.

In the field of transportation (Chapter 10): Richard C. Breithut; Oliver T. Burnham, Lake Carriers Association; D. O. Cowgill, Committee for Economic Development;C. L. Dearing, The Brookings Institution; C. E. Fleming, Transcontinental & Western Air, Inc.; R. V. Fletcher and J. H. Parmelee, Association of American Railroads; General George R. Goethals, War Department; W. P. Hedden, Port of New York Authority; L. E. Peabody, Interstate Commerce Commission; O. P. Pearson, Automobile Manufacturers Association; Leonard C. Peskin; Hawley S. Simpson, American Transit Association.

In the field of medical care (Chapter 11): Franz Goldmann and C.-E. A. Winslow of Yale University; C. E. Rudolph, University of Minnesota; Barkev S. Sanders, Social Security Board; Nathan Sinai, University of Michigan.

In the field of recreation (Chapter 12): George D. Butler and Arthur M. Williams, National Recreation Association; Milo F. Christiansen, Superintendent of Recreation, District of Columbia; Robert Kingery, Chicago Regional Planning Association; J. F. Steiner, University of Washington; Conrad L. Wirth, Department of the Interior.

In the field of education (Chapter 13): Frank Aydelotte, The Institute for Advanced Study; Donald J. Cowling, Carleton College; Emery M. Foster and Ernest V. Hollis, U.S. Office of Education; Charles H. Judd; Paul R. Mort, Columbia University.

In the field of religion and welfare (Chapter 14): Mildred H. Esgar, National Social Work Council; Louis Finkelstein, The Jewish Theological Seminary of America; Philip Klein, The New York School of Social Work; Marietta Stevenson, University of Illinois; Mabel Uzzell, Family Welfare Association of America.

In the field of rural and regional development (Chapter 19): G. H. Collingwood,

xi


National Lumber Manufacturers Association; J. C. Dykes, Department of Agriculture; Mortimer Foster, War Production Board; F. H. Geech, Lee Muck, John R. Riter, F. E. Schmitt and Joel Wolfsohn of the Department of the Interior; General George R. Goethals, War Department; David E. Lilienthal, Tennessee Valley Authority; Lyle F. Watts, Department of Agriculture; Abel Wolman, The Johns Hopkins University.

In the field of government expenditures (Chapter 20): William Anderson, University of Minnesota; Gerhard Colm, Bureau of the Budget; M. Slade Kendrick, Cornell University; L. H. Kimmel, The Brookings Institution; I. M. Labovitz, Bureau of the Budget; Simeon E. Leland, University of Chicago; S. Morris Livingston, Bureau of Foreign and Domestic Commerce; Howard Myers, Committee for Economic Development; Mabel Newcomer, Vassar College; Lawrence H. Seltzer, Wayne University; Carl Shoup, Columbia University.

In the field of natural resources (Chapter 23): Wallace W. Atwood, Clark University; Melvin G. de Chazeau, Committee for Economic Development; Solomon Fabricant, National Bureau of Economic Research; Donald M. Liddell; W. H. S. Stevens, Interstate Commerce Commission; W. H. Voskuil, Illinois State Geological Survey Division; J. P. Watson, University of Pittsburgh; Robert M. Weidenhammer, Bureau of Foreign and Domestic Commerce.

In the field of agriculture (Chapter 24): J. S. Davis, Stanford University; J. S. Gould, Foreign Economic Administration; F. A. Harper and W. I. Myers of Cornell University; Malcolm F. Hill, Oliver Farm Equipment Company; W. W. Hubbell, Bureau of Foreign and Domestic Commerce; Sherman E. Johnson, Department of Agriculture; Theodore W. Schultz, University of Chicago.

In the field of industrial capacity (Chapter 25): Frank G. Garfield, Federal Reserve System; S. Morris Livingston, Bureau of Foreign and Domestic Commerce; E. G. Nourse, The Brookings Institution; George Terborgh, Machinery and Allied Products Institute; Philon Wigder, Foreign Economic Administration.

To all these and the many others who have made this survey possible I should like to express my warm personal gratitude.

J. F r e d e r ic D e w h u r s t

CONTENTS

PART I

BASIC TRENDS

PAGE

1. T h e W a r P o te n t ia l . . . . . . . . . 3

Production Records of 1944 . . . . . . . . 4Disposition of War Income . . . . . . . . 8Factors Accounting for Wartime Output . . . . . 1 0War Output and Future Productive Capacity . . . . . 1 5

2. P a st Trends and F u tu re O u tp u t . . . . . 1 7 Trends and Projections . . . . . . . . 1 7 Output in 1950 and i960 . . . . . . . . . 24Comparison With Other Estimates of Gross National Product . . . 2 6

3. Population Trends . . . . . . . . . 3 0 Growth of the Population . . . . . . . . 3 0 Estimates of Future Population . . . . . . . 3 5 Geographic Distribution of Population . . . . . 3 9 Geographical Shifts During World War II . . . . . . 4 3 Implications of Population Trends . . . . . . . 48

4. Income , E xpenditures and Savings . . . . . . . 5 2 Gross Product as Measure of Output, Income and Expenditures . . . 52 Income-Expenditure Relationships and Assumptions . . . . 5 3 Trends in Consumer Income . . . . . . . . 62Wartime Savings and Consumer Demand . . . . . . 69Basic Assumptions of This Survey . . . . . . . 7 3

PART II

CONSUMER REQUIREMENTS

5. Consumer Spending P a tte rn s . . . . . . . . 7 9 Consumption Trends: 1909-1941 . . . . 8 0 Sensitivity of Consumer Expenditures to Income Changes . . . 8 2 Consumption Expenditures by Groups: 1950 and i960 . . . . 8 5

6. F ood, L iquor and T obacco . . . . . . . 8 8

Developments in Food and Nutrition . . . . . . . 8 8 Consumption Expenditures . . . . . . . . 9 5 Wartime Effects on Diets . . . . . . . 1 0 1

xiii


Estimated Consumption in 1950 and i960 . . . . . . . 1 0 2 Nutritional Requirements . . . . . . . . 1 0 5

7. C lo th in g , Accessories and P ersonal C a re . . . . . . 1 1 9 Trends in Production and Taste . . . . . . . 1 2 0 Consumer Expenditures for Clothing and Personal Care . . . . 1 2 3 Effects of World War II . . . . . . . . . 1 2 8 Future Demand for Clothing . . . . . . . . 1 2 9 Future Clothing Needs . . . . . . . . . 1 3 2 Summary . . . . . . . . . . . 1 3 7

8. H o u s in g . . . . . . . . . . . 1 4 1 Housing Trends . . . . . . . . . . 141Effects of World War II . . . . . . . . . 1 5 1 Future Demand for Housing . . . . . . 1 5 3Housing Needs . . . . . . . . 1 5 7 Comparison of Needs and Demand . . . . . . 169

9. H o u s e h o l d O p e r a t io n . . . . . . . . 1 7 2 Trends in Production and Taste . . . . . . 174 Consumption Expenditures . . . . . . . . 1 8 0 War-Deferred Demand . . . . . . . . . 1 8 3 Estimated Demand in 1950 and i960 . . . . . . . 1 9 1 Needs for Household Equipment and Operation . . . . . 1 9 6

10. Consum er T ran sporta tion . . . . . . . . 2 0 2

The Transportation System: Prewar Status and Growth . . . . 2 0 3 Effects of the War . . . . . . . . . . 2 1 0 Future Demand for Transportation Services and Facilities . . . 2 1 4 Peacetime Transportation Needs . . . . . . . 2 2 6 Needs vs. Demand for Transport Facilities . . . . . . 234

11. M ed ica l C a re . . . . . . . . . . 236

Personnel and Facilities . . . . . . . . . 2 3 6 State of the Nations Health . . . . . . . . 245Income and Cost . . . . . . . . . . 249Future Expenditures . . . . . . . . . 2 5 7 Standards and Needs . . . . . . . . . 2 5 9 Cost of Adequate Care . . . . . . . . . 267

12. R ecrea tion . . . . . . . . . . 273

Nature and Importance of Recreation . . . . . . 2 7 3 Expenditures for Recreation . . . . . . . . 2 7 9 Recreation in Wartime . . . . . . . . . 2 8 6 Future Demand for Recreation . . . . . . . . 2 8 8 Peacetime Recreational Needs . . . . . . . . 2 9 3 Needs and Demand for Recreation . . . . . . . 2 9 7

13. E d u c a t i o n . . . . . . . . . . . 299Prewar Status of American Education . . . . . . . 2 9 9

xiv

CONTENTS

Education in the Transition Period . . . . . . . 3 1 5 Education in the Postwar Period . . . . . . . 3 1 6

14. R e l i g i o n a n d P r i v a t e W e l f a r e . . . . . . . 326Organized Religion . . . . . . . . . 3 2 6 Private Social Welfare . . . . . . . . . 3 3 9 Summary . . . . . . . . . . . 344

15. C o n s u m p t i o n N e e d s a n d D e m a n d s : S u m m a r y . . . . . 345Deferred Demand . . . . . . . . . 345Consumption Needs and Demands in 1950 . . . . . . 3 5 1 Consumption Needs and Demands in 1960 . . . . . . 3 6 8

PART III

CAPITAL REQUIREMENTS

16. C a p ita l Needs and Demands : Summary . . . . . . 3 7 3 Past Trends and Relationships . . . . . . . . 3 7 4 Wartime Deficiencies and Transition Demands . . . . . 3 7 7 Future Needs and Demands . . . . . . . 3 8 0

17. P r o d u c t iv e F a c il it ie s . . . . . . . . . 3 9 0 Factors Affecting Capital Expenditures . . . . . . 390Two Decades of Experience: 1920-1939 . . . . . . 394Wartime Changes . . . . . . . . . 3 9 6 Backlog and Reconversion Demand . . . . . . . 4 0 1 Future Expenditures . . . . . . . . . 405

18. U rban Redevelopm ent . . . . . . . . . 4 1 1 Nature of Cities and Slums . . . . . . . . 4 1 2 Development of Slums and Blighted Areas . . . . . . 4 1 4 Attempts to Cope With Slums and Blight . . . . . . 4 1 8 Urban Redevelopment in Operation . . . . . . . 4 2 1 An Urban Redevelopment Program . . . . . . . 4 2 5

19. R u ra l and R eg ion a l D eve lopm en t . . . . . . . 4 3 1

Conservation and Development of Crop and Grazing Lands . . . 431 Forest Conservation and Recreational Development . . . . 4 3 7 River Valley Development . . . . . . . . 443Summary . . . . . . . . . . . 455

PART IV

GOVERNMENT COSTS AND FOREIGN TRANSACTIONS

20. G overnment E xpenditures . . . . . . . . 4 5 9 Framework of Study . . . . . . . . . 4 5 9 Government Expenditures: 1913,1932 and 1941 . . . . . 463 Causes of Expenditure Behavior . . . . . . . 4 6 7

XV


General-Government Expenditures at Different Levels . . . . 4 7 5 Expenditure Estimates for 1950 and i960 by Function . . . . 479 Estimated Total Expenditures in 1950 and i960 . . . . . 499 Needs vs. Probable Government Expenditures . . . . . 5 0 3

21. Fore ign T rade and Investm en t . . . . . . . 5 1 1 Importance of American Foreign Transactions . . . . . 5 1 2 Prewar Trends in Foreign Trade and Investment . . . . . 5 1 3Effects of World War I I ....................................................................................... 522Future Trade and Investment Possibilities . . . . . . 524Foreign Investment Problems . . . . . . . . 5 3 3

PART V

RESOURCES AND CAPACITIES

22. T he L abor Force . . . . . . . . . . 539Characteristics of Labor Force . . . . . . . . 5 4 0 Long-Term Trends . . . . . . . . . 5 4 1 Effects of World War II . . . . . . . . . 5 5 4 Demobilization and Readjustment . . . . . . . 562Labor Force and Future Output . . . . . 5 6 5

23. N atural R esources . . . . . . . . . 5 7 3 Factors Determining Capacity of Natural Resources . . 5 7 4 Requirements and Resources: 1919-1944 . . . . . . 578Future Requirements . . . . . . . . . 5 9 3 Summary and Conclusions . . . . . . . . 5 9 7

24. A gricultural C apacity . . . . . . . . . 5 9 9 Domestic Requirements for Agricultural Products . . . . 6 0 0 Physical Requirements for Expanded Production . . . . . 6 0 9 Human Resources for Expanded Agricultural Capacity . . . 6 1 9 Summary . . . . . . . . . . . 624

25. Industrial C apacity . . . . . . . . . 6 2 6 Nature of Capacity . . . . . . . . . 627Prewar Industrial Capacity . . . . . . . . 6 2 8 Wartime Production Records . . . . . . . . 6 3 3 Postwar Production Under Full Employment . . . . . 634Wartime Expansion and Future Capacity . . . . . . 6 3 7

PART VI

SUMMARY

26. N eeds vs. R esources . . . . . . . . . 6 5 1 War Output and Deferred Demand . . . . 6 5 1 Demand and Output in 1950 and i960 . . . . . . 6 5 4

xvi

CONTENTS

Needs vs. Demand in 1950 and i960 . . . . . . .Capacity to Fill Future Needs . . . . . . . .Productivity: Key to Welfare . . . . . . . .

APPENDIXES

1. Labor Force, Employment, Unemployment and Working Hours, by Months, 1940-1946 . . . . . . . . . . .

2. Hypothetical Reconstruction of Gross National Product on Basis of Changes in Prices, Employment and Working Hours, 1940-1944 . . . .

3. Estimated Employment and Average Weekly Working Hours, 1850-1960 .4. Gross National Product and National Income at Current and Constant Prices,

i99- i944 .......................................................Table A. National Income and National Product, 1909-1944, at Current Prices . . . . . . . . . . .Table B. National Income and National Product, 1909-1944, at 1940 Prices and 1944 Prices . . . . . . . . .

5. Derivation of Estimates of Distribution of Consumer Units, Families and Single Individuals, and Urban, Rural Nonfarm and Farm Consumer Units and of Cash Income Received by These Groups for 1950 . . . . .

6. Consumption Expenditures by Type of Product or Service, 1909-1942 .7. Percentage Distribution of Selected Classes of Consumption Expenditures,

1909-1942 . . . . . . . . . . .8. Consumption Expenditures in 1941 Classified According to Sensitivity to

Changes in Disposable Income During 1929-1940 . . . . .9. Methods Used to Estimate Industrial Production, and Probable Expenditures

for Consumption Goods and Services and for Capital Goods, in 1950 and i960Table A. Estimated Consumption Expenditures, 1950 and i960 Table B. Estimated Expenditures for Capital Goods, 1950 and i960 .

10. Methods of Estimating Food Requirements . . . . . .11. Personal Care, Clothing and Related Industries, Trades and Businesses, 193912. Average Expenditures for Clothing, and Savings, or Deficit, by Money-income

Class, 1941 . . . . . . . . . . .13. Standards for Clothing Developed by the Mississippi Agricultural Experi

ment Station . . . . . . . . . .14. Residential Construction and Gross National Product, 1921-194015. Residential Construction and Gross National Product, 1899-193816. Families, Population and Rent, 1921-1941 . . . . . .17. Statistical Methods Used in Estimating Housing Needs . . . .

Table A. Estimated Urban Housing Needs of the United States, 194018. Estimated Number of Communities Having Parks and Estimated Park Acre

age, 1940 . . . ..................................................................19. Estimates of Population Distribution for Ages 3 to 22 for 1950 and i960

xvii

666674679

690

694695

696

696

697

698700

714

720

726732738741743

746

747749750751752753

754755


20. Expenditures for Capital Goods, 1920-1942 . . . . . .21. Percentage Distribution of Expenditures for Capital Goods, 1920-194222. Capital Goods Expenditures as Per Cent of Gross National Product, 1920-194023. Methods of Estimating Needs for Productive Facilities in 1950 and i96024. Manufacturing and Capital Expenditures by Geographic Regions and States,

I 9 I 9~I 944 ..............................................................................................................25. Methods Used in Estimating Magnitude of Urban Redevelopment Program

Table A . Estimated Housing Needs in Urban Areas of the United States and Urban Redevelopment Program, 1940 . . . . .

26. Estimated Cost of Acquiring Land and Buildings in Residential Slum and Blighted Areas . . . . . . . . . .

27. Government Price Index . . . . .Table A. Government Price Index Formula Constructed for American General-Government and Business Enterprise Expenditures for Fiscal Years 1913, 1932 and 1941 . . . . . . . .

28. Imports and Exports of Merchandise and Services and Flow of Long-Term Capital Between the United States and Foreign Countries, 1919-1939 .

29. Differences Between Labor Force and Gainful Workers Concepts .30. Estimates of Normal Labor Force in 1950 and i960 . . . .

Table A. Percentages of Working Women in Different Age Classes as Reported by Census for 1930 and 1940 and as Estimated for 1935,1945 and 1950 Table B. Estimated Labor Force by Sex and Age Groups, 1950 and i960 .

31. Wartime Peak Activity of Selected Industries Compared With 1939 .32. Estimates of Energy Supply From Mineral Fuels and Water Power and of

Energy Output Used in Performance of Work From Mineral Fuels and Water Power, Animals and Human Workers, 1850-1960 . . . . .

Table A. Number of Farm and Nonfarm Work Animals and Estimated Horsepower-Hours of Work Done by Work Animals, 1850-1960 .Table B. Estimated Supply of Energy and Work Energy Output From Mineral Fuels and Water Power Compared With Energy Output of Work Animals and Human Workers, 1850-1960 . . . . .

I n d e x . . . . . . . . . . . .

756760764765

766768

769

770771

773

774775776

776777778

781

786

787789

xviii

TABLES

PAGE

1. Gross National Product and War Expenditures, 1940-1944 . . . 52. National Income, Government Finance, Savings and Prices, 1940-1944 . 9 '3. Estimated Employment, Weekly Hours, Annual Man-Hours, Output Per

Man-Hour, National Income, 1850-1960 . . . . . . 2 34. Estimates of Gross National Product in 1950 . . . 2 75. Growth of Population of the United States, 1850-1940 . . . 3 26. Marriage, Birth and Death Rates in the United States, 1910-1943 . . 337. Net Reproduction Rates of Urban and Rural White Population in the United

States, 1905-1910 and 1935-1940 . . . . . . . 348. Immigration and Emigration and Admissions and Departures of Other Per

sons, 1931-1944 . . . . . . . . . . 359. Estimated Age Distribution of the Population, 1940-1960 . . . 3 7

10. Population, Number of Families and Ratio of Population to Families, 1890-1940 . . . . . . . . . . . 3 8

11. Distribution of Families by Size, 1930 and 1940 . . . . . 3 812. Estimated Population and Consumer Units, 1930-1960 . . . 3 913. Urban and Rural Population Growth, 1920-1940 . . . . . 4014. Distribution of Consumer Units by Type of Community, 1940-1960 . . 4115. Percentage Distribution of Population by Type and Size of Community,

1900-1940 . . . . . . . . . . . 4216. Interstate Migration of Civilian Population, April 1 , 1940-November 1,1943 4417. Estimated Net Balance of Interstate Civilian Migration in 1940-1943 As

Compared With 1930-1940 and 1920-1930 . . . . . . 4618. Income and Expenditure Relationships for 1929,1940 and 1941 and Assump

tions for 1950 and i960 . . . . . . . . . 5 519. Personal Taxes and Savings of Individuals Compared With Income Pay

ments to Individuals and Disposable Income, 1925-1944, and Estimates for1950 and i960 . . . . . . . . . . 60

20. Income Payments to Individuals, or Consumer Income, 1929-1941 and 1944, With Estimates for 1950 and i960 . . . . . . 63

21. Distribution of Consumer Units and of Consumer Cash Income, 1935-1936and 1941, With Estimates for 1950 . . . . . . . 65

22. Estimated Cash Income Distribution for Families and Single Individuals in

1950 ....................................................... .......... , . . . . 6723. Estimated Urban-Rural Cash Income Comparisons for 1950 . . . 6 824. Estimated Percentage Distribution of Urban and Rural Consumer Units in

1941 and 1950 and of Cash Income in 1950, by Cash Income Groups . . 6925. Estimates by Securities and Exchange Commission and Department of Com

merce of Amounts Saved by Individuals, 1940-1946 . . . . 7 026. Basic Assumptions for 1950 and i960 Compared With 1940 . . . 74

xix

27. Consumption Expenditures by Major Groups, 1909-1941 . . 8 128. Estimated Consumption Expenditures, by Groups, in 1950 and i960 Com

pared With 1940 Expenditures . . . 8 729. Trends in Per Capita Consumption of Foods by Major Food Groups, 1909-

1939 9130. Alcoholic Beverage Consumption, 1910-1917 and 1934-1942 . . . 9431. Tobacco Consumption, 1921-1941 . . . . . . . 9532. Consumption Expenditures for Food, Liquor and Tobacco, 1909-1942 . 9633. Expenditures for Food and Beverages Consumed Inside and Outside the

Home, 1929-1942 . . . . . . . . . 9734. Money Expenditures for Food in Relation to Expenditures for Living, by

Families and Single Consumers in Various Income Classes, 1941 . . 9835. Weekly Consumption of Certain Foods Per Person in Housekeeping Fami

lies and by Single Persons, by Type of Community and Annual *Net Money- Income Class, Spring 1942 . . . . . . . . 1 0 0

36. Estimated Per Capita Consumption of Certain Foods by Civilian Population,1940-1943 . . . . . . . . . . . 1 0 2

37. Estimated Per Capita Demand for Foods, 1936,1940,1950 and i960 . . 1 0 338. Estimated Consumption Expenditures for Food, Liquor and Tobacco in 1950

and i960 Compared With 1940 . . . . . . . 1 0 539. Average Quantities of Nutrients Available for Civilian Consumption Per

Capita Per Day, Uncooked Basis, 1920-1943 . . . . . 1 1 040. Daily Nutritive Value of Civilian Food Supply Per Capita and Contribution

of Specified Food Groups, 1930-1939 Average . . . . . 1 1 341. Daily Dietary Allowances Recommended by Food and Nutrition Board of

National Research Council . . . . . . . 1 1 442. Market List for Moderate-Cost Meals in Terms of Kinds and Quantities of

Food Per Person Per Week . . . . . 1 1 643. Annual Quantities of Specified Groups of Food Needed Per Capita in 1940,

1950 and i960 for Home Consumption (Kitchen Weight) to Supply the Moderate-Cost Nutritionally Adequate Diet of Table 42 . . . 1 1 7

44. Clothing, Accessories and Personal Care: Industries, Trades and Businesses,

by Groups, 1939 . . . . . . . . . . 1 2 045. Indexes of the Physical Volume of Production of Textile and Leather Prod

ucts, 1899-1937 . . . . . . . . . . 1 2 246. Trends in Consumption Expenditures for Clothing, Jewelry and Personal

Care, 1909-1941 . ., . . . . . . . 1 2 547. Annual Clothing Purchases in American Cities at Two Different Income

Levels, 1941 . . . . . . . . . 1 2 648. Indexes of Production of Clothing and Shoes for Civilians, 1935-1943 . . 13049. Estimated Consumption Expenditures for Clothing, Jewelry and Personal

Care in 1950 and i960 Compared With Prewar Expenditures . . . 1 3 250. Suggested Clothing Standards for Men and Boys and for Women and Girls,

16 Years and Older . . . . . . . . . 1 3 4


XX

TABLES

51. Comparison of Annual Clothing Replacement Rates in Two Different Standard Budgets and Standard Suggested in This Chapter .

52. Estimated Needs and Demand for Clothing, Jewelry and Personal Care in 1950 and i960 Compared With 1940 Expenditures . . . .

53. Population, Families and Dwelling Units in the United States, 1900-1940 .54. Nature and Condition of American Housing, 1940 . . . .55. Consumption Expenditures for Housing, 1909-1941 . . . .56. Net Nonfarm Family Formation and Additions to the Nonfarm Housing

Supply, 1 9 0 0 - 1 9 3 9 ........................................................................................57. Estimated Private Residential Construction Expenditures, 1946-1960, Com

pared With 1919-1940 . . . . . . . . .58. Estimated Current Expenditures for Housing and Utilities in 1950 and i960

Compared With 1940 . . . . . . . . .59. Estimated 15-Year Program for Filling Housing Needs .60. Estimated Current Consumption Expenditures Needed for Adequate Hous

ing and Utilities in 1950 and i960 . . . . . . .61. Estimated Capital Needs and Demand for Housing, 1946-1960 .62. Estimated Consumption Needs and Demand for Housing and Utilities in

1950 and i960 and Consumption Expenditures in 1940 . . . .63. Selected Household Equipment Industries and Trades, 1939 .64. Utilization of Mechanical Household Appliances, 1925-1942 .65. Consumption Outlays for Household Equipment and Operation, 1909,1929

and 1940 . . . . . . . . . . .66. Number and Age of Household Appliances and Equipment in 1944 .67. Families Who Said They Would Buy Durable Goods and Appliances in 1944

If All Were Readily Available . . . . . . .68. Consumers Intentions to Purchase Six Major Household Appliances .69. Comparative Estimates of Prospective Postwar Markets for Durable Con

sumer Goods . . . . . . . . . .70. Comparison of Three Surveys of Consumer Buying Intent in 1942 and 194371. Estimated Expenditures for Household Equipment and Operation in 1950

and i960 Compared With 1940 . . . . . . .72. Estimated Sales of Selected Household Electrical Appliances Compared

With Replacement Demand, i960 . . . . . . .73. Standard for Household Equipment and Operation for Family of Four74. Estimated Needs and Demand for Household Equipment and Operation in

1950 and i960 Compared With Expenditures in 1940 . . . .75. Indexes of Passenger Traffic, 1929-1941 . . . . . .76. Trends in Railroad Passenger Travel, 1900-1940 . . . . .77. Trends in Airline Passenger Traffic, 1930-1940 . . . . .78. Trends in Consumption Expenditures for Transportation, 1909-1940 .79. Family Expenditures for Transportation, 1935-1936 . . . .80. Private Capital Expenditures for Transportation, 1929-1940 .81. Estimated Consumption Expenditures for Transportation in 1950 and i960

Compared With 1940 . . . . . . . . .

xxi

140142143149

150

155

157166

169170

170173179

182184

186188

189190

192

194198

201204205207208209210

138

224


82. Estimated Capital Outlays for Transportation Construction and Equipment in 1950 and i960 Compared With Expenditures in 1940 . . . .

83. Mileage and Condition of American Highways, 1941 . . . .84. Estimated Annual Capital Outlays for 1950 and i960 to Meet Needs and De

mand for Transportation Facilities, Compared With Expenditures in 1940 .85. Average and Median Net Income of Nonsalaried Physicians by Size of Com

munity, 1941 . . . . . . . . . .86. Average Net and Gross Income of Dentists by Size of Community, 1941 .87. Number of Registered Hospitals and Hospital Beds by Type of Hospital and

Type of Control, 1942 . . . . . . . . .88. Number of Persons Employed in Hospitals, by Type of Activity, 1942 .89. Death Rates for Selected Causes of Death in the United States, 1900, 1920,

1930 and 1942 . . . . . . . . . .90. Medical Care Expenditures of Families and Single Consumers by Money-

Income Level, 1942 . . . . . . . . .91. Estimated Government Expenditures for Health, 1941-1942 .92. Estimated Expenditures for Medical Care in 1950 and i960 Compared With

1940 Expenditures . . . . . . . . .93. Medical Services Received Per Year During 1928-1931 Compared With Esti

mated Needs . . . . . . . . . .94. Hospital Facilities Available in 1942 and Estimated Facilities Needed in

1942, 1950 and i960 . . . . . . . . .95. Number of Physicians, Nurses and Dentists Available for Civilian Service

in 1941 and Estimated Number Needed to Provide Adequate Service in 1950 and i960 . . . . . . . . . . .

96. Estimated Needs and Demand for Medical Care in 1950 and i960 Compared With 1940 Expenditures . . . . . . . .

97. Recreation Industries, Trades and Businesses, 1939 . . . .98. Consumption Expenditures for Recreation and Vacation Travel, 1909-194199. Consumption Expenditures for Recreational Goods and Services, 1909-1941100. Increases and Decreases in Consumer Recreational Expenditures, 1929-1941101. Government Expenditures for Recreation, 1913,1932 and 1941 .102. Facilities and Personnel in Municipal Recreation, 1920,1930,1932,1940103. Estimated Consumption Expenditures for Recreation in 1950 and i960 Com

pared With 1940 . . . . . . . . .104. Average Ratio of Population to Park Acreage in Cities Reporting in 1935 and

1940 . . . . . . . . . . .105. Estimated Recreational Expenditures to Meet Needs and Demand in 1950

and i960 Compared With 1940 and 1941 . . . . . .106. School Attendance as Per Cent of Population in Each Age Group, 1890,1910

and 1940 . . . . . . . . . . .107. Educational Level of Adult Population by Age Groups, 1940 .108. Distribution of Samplings of Enlisted Men in the Army by Years of Educa

tion, World Wars I and II . . . . . . .

xxii

227230

235

238240

242244

246

251253

259

263

264

266

270276280281284285286

292

295

298

300301

302

TABLES

109. Public Elementary and Secondary School Expenditures, 1890-1940 .no. Number of Public and Private Institutions of Higher Education, 1900-1940 .h i . Schools, Teachers and Enrollments, by Type of School and Age Group, 1940112. Expenditures for Organized Education in 1940 . . . . .113. Educational Differentials in the United States, 1940 . . . .114. Urban-Rural Public School Differences, 1940 . . . . .115. Racial Differences in Public Schools in Certain States, 1940116. Expenditures for Certain Types of Informal Education in 1940 .117. Estimated Probable and Adequate Expenditures for Education in 1950 and

i960 Compared With 1940 Expenditures . . . . . .118. Estimated Number of Persons in Each Age Group Who Would Be Enrolled

in Schools in 1950 and i960 . . . . . . . .119. Church and Sunday School Trends, 1906-1942 . . . . .120. Average Salaries of Rural Ministers, 1924,1930,1936 . . . .121. Gifts and Membership in 16 Religious Bodies, 1920-1944122. Average Outlay of American Families for Gifts for Church Support, 1935-

1 9 3 6 ....................................................................................................................123. Number of Church Members Compared With Population 13 Years Old or

Over, 1926 and 1930-1940 . . . . . . . .124. Membership of 50 Larger Church Bodies in the United States, 1926,1936 and

1941-1942 . . . . . . . . . . .125. Sunday School Enrollment as Percentage of Communicant Church Mem

bers, 1890-1927 . . . . . . . . . .126. Estimated Consumption Needs and Demand for Religion and Private Social

Welfare in 1950 and i960 Compared With 1940 Expenditures .127. Indications of Possible Deferred Demand for Electrical Appliances at End

of 1945 ............................................................................. ..........128. Estimated Consumption Expenditures in 1950 Compared With 1940 and

1941 Expenditures . . . . . . . . .129. Estimated Current Consumption Expenditures to Meet Needs and Demand

in 1950 and i960 . . . . . . . . . .130. Expenditures for Capital Goods, 1920-1939 . . . . .131. Ratio of Capital Goods Expenditures to Gross National Product, 1879-1938132. Distribution of Capital Goods Expenditures by Types, 1920-1940133. Defense and Wartime Expenditures for Capital Goods Usable in Peacetime

Compared With 1925-1929 and 1935-1939 . . . . . .134. Estimated Capital Goods Expenditures, 1946 and 1947 . . . .135. Estimated Needs and Demand for Capital Goods in 1950 and i960 .136. Estimated Needs and Demand for Public and Private Civilian Capital Goods

in 1950 and i960 Compared With Expenditures in 1929 and 1940137. Expenditures for Productive Facilities, 1920-1939 . . . . .138. Wartime Expenditures for Productive Facilities Compared With 1929 and

1939 ........................................................................................................................xxiii

305306307308 310312313 315

318

320327328330

331

332

334

336

344

348

354

367375377378

379 381 384

388395

398

139. Regional Distribution of Manufacturing and Capital Expenditures, 1919-

1944 . '140. Total Defense and Wartime Outlays for Productive Facilities Usable in

Peacetime, Compared With Outlays in 1925-1929 and 1935-1939 .141. Planned Outlays for Productive Facilities in First Postwar Year Compared

With 1929 and 1939 . . . . . . . . .142. Estimated Needs and Demand for Productive Facilities in 1950 and i960,

Compared With Expenditures in 1940 . . . . . .143. Dwelling Units in Slum and Blighted Areas in Selected Metropolitan Dis

tricts, 1940 . . . . . . . . . .144. Population Changes From 1930 to 1940 in Selected Metropolitan Districts .145. Estimated Cost of 15-Year Program for Urban Housing Replacement, Re

habilitation and Redevelopment . . . . . . .146. Estimated Costs and Time Required for Land Conservation and Develop

ment Programs . . . . . . . . . .147. Estimated Costs and Time Required for Forest Conservation and Recrea

tional Development Programs . . . . . . .148. Estimated Costs and Time Required for River Valley Development Pro

grams . . . . . . . . . . .149. Estimated Costs of Rural and River Valley Development Programs .150. Cost of American Government, 1941 . . . . . .151. Federal, State and Local General-Government Expenditures, 1941 .152. General and Enterprise Expenditures by Federal, State and Local Govern

ments, 1913, 1932 and 1941 . . . . . . . .153. Per Capita General and Enterprise Expenditures of Federal, State and Local

Governments, 1913,1932 and 1941 . . . . . . .154. Total General-Government Expenditures, 1913,1932 and 1941 .155. Percentage Changes From 1932 to 1941 in Per Capita Costs of General Gov

ernment, by Function . . . . . . . . .156. Price Indexes for Government Expenditures, 1913,1932 and 1941157. Role of Prices, Population and Services in Expenditure Growth, 1913-1941 .158. Distribution of Expenditures for General Government at Federal, State and

Local Levels, 1913,1932 and 1941 . . . . . . .159. Expenditures for General Government Before and After Intergovernmental

Transfers, 1941 . . . . . . . . . .160. Indexes of State and Local Government Finance by Geographic Regions,

i94i .................................................................................................. 161. Number of Military Pensioners and Amount of Benefit Payments in Selected

Years, 1917-1945 . . . . .162. Estimated Veterans Expenditures in 1950 and i960 . . . .163. Estimated Range of Government Expenditures for Social Insurance in 1950

and i960 . . . . . . . . . . .164. Gross Government Debt in Relation to National Income in Selected Years,

I9I3- I 945 .............................................................................................................xxiv


403

404

408

414416

429

433

438

445455460462

464

465 468

470471472

475

476

478

482483

489

401

494

TABLES

165. Selected Finances of Government Business Enterprises, 1942 .166. Functional Distribution of General-Government Expenditures in 1941 Com

pared With Estimates for 1950 and i960 . . . . . .167. Relation of General-Government Expenditures to Gross National Product

and National Income in Selected Years, 1913-1960 . . . .168. General-Government Expenditures by Level of Government and by Func

tion in 1941 Compared With Estimates for 1950 and i960169. Distribution of Expenditures for Own Functions by Level of Government

in 1941 Compared With Estimates for 1950 and i960 . . . .170. Summary of General-Government Expenditures by Major Classes in 1941

Compared With Estimates for 1950 and i960 . . . . .171. Estimated Probable Expenditures and Expenditures to Meet Needs for Gen

eral Government, 1950 . . . . . . . . .172. Estimated Probable Expenditures and Expenditures to Meet Needs for Gen

eral Government, i960 . . . . . . . . .173. Foreign Merchandise Trade of the United States, 1851-1940 .174. Selected United States Merchandise Exports and Imports, 1925-1929 and

1935-1939 ..............................................................................................................175. United States Foreign Trade by Continents, 1926-1941 . . . .176. International Service Transactions of the United States, 1925-1929 and 1935-

1939 177. Geographic Distribution of United States Long-Term Foreign Investments,

December 31, 1940 . . . . . . . . .178. Capital Transactions and Gold Movements Between the United States and

Foreign Countries, 1919-1939 . . . . . . . .179. Exports and Imports of Merchandise and Services, 1928 and 1937, Compared

With Estimates for 1950 . . . . . . . .180. Hypothetical Balance of Payments of United States, 1950 and i960181. Growth of Labor Force in United States, 1870-1940 . . . .182. Number and Proportion of Male and Female Gainful Workers, 1870-1940 .183. Percentage of Persons Gainfully Occupied, by Age and Sex, 1870-1940184. Distribution of Gainful Workers by Occupational Divisions, 1870-1930185. Income and Education of Experienced Workers in Occupational Groups

That Reflect Social-Economic Status, 1940 . . . . . .186. Social-Economic Status of Gainful Workers and Persons in Labor Force,

1910-1940 . . . . . . . . . . .187. Productivity in Selected Industries, 1909-1940 . . . . .188. Comparison of Productivity in Mechanical Industries and White-Collar

Trades, 1923-1940 . . . . . . . . .189. Participation in Labor Force of Persons 14 Years Old and Over by Sex and

Age Groups, 1940 and 1944 . . . . . . . .190. Nonagricultural Employees by Industrial Divisions and Manufacturing

Wage Earners by Industries in the United States, 1940-1944 .191. Size and Composition of Labor Force in March 1940 and Estimated Nor

mal Labor Force in March 1945 and 1950, by Sex and Age

XXV

500

502

504

506

507

508

509515

516518

519

521

522

527530542543544 546

548

549552

553

557

558

566

498


192. Estimated Capacity of the Labor Force Under Normal and Emergency Conditions in 1950 and i960, Compared With 1940 and 1944 .

193. Fuel Economy in Consumption of Coal, 1920-1943 . . . .194. Indexes of Production of Mineral Raw Materials, Lumber, Water Power,

Total Electric Power for Public Use and Manufactured Gas, 1919-1944195. Value of Mineral Output in 1939, and Percentage Change in Physical Vol

umes Produced, 1929-1940 . . . . . . . .196. Output of Principal Industrial Metals in the United States, 1919-1945 .197. Share of the United States in World Production and Consumption of Se

lected Minerals in 1937 . . . . . . . . .198. Proved Reserves of Mineral Fuels and Their Heat Value, United States199. Results of Exploratory Drilling, United States, 1934-1944200. Sources of Energy in the United States for Selected Years, 1899-1944 .201. Forest Resources of the United States, 1938 . . . . . .202. Requirements for Natural Resources, 1929, 1940 and 1942, With Estimates

for 1950 and i960 . . . . . . . . .203. Labor Requirements and Productivity in Mining, 1929,1940 and 1942, With

Estimates for 1950 and i960 . . . . . . . .204. Indexes of Employment, Man-Hours and Output in Mining Industries,

1919-1944 .............................................................................................................205. Per Capita Food Consumption in the United States, 1909 and 1939 .206. Daily Per Capita Food Consumption, 1909-1939 . . . . .207. Index Numbers of the Volume of Agricultural Production for Sale and for

Consumption in the Farm Home, 1909-1943 . . . . .208. Per Capita Consumption of Fibers in the United States, 1909-1939 .209. Comparison of Actual Acreages and Livestock Production With Acreages,

Production or Numbers Required to Supply 133.9 Million People With Three Diets Which Meet the Nutritional Standards Established by the National Research Council . . . . . . . .

210. Percentage Contribution of Exports to Gross Farm Income, 1869-1937211. Index Numbers of Acreage of Crops Harvested, Agricultural Production,

Production Per Harvested Acre, 1909-1944 . . . . . .212. A ll Land in Farms, Land Available for Crops, and Cropland Harvested,

1849-1959 .............................................................................................................213. Index Numbers of Crop Yields Per Acre, 1919-1944 . . . .214. Number of Tractors, Horses and Mules Two Years Old and Over, and

Equivalent Work-Animal Units on Farms, 1910-1943 . . . .215. Labor Force in Agricultural and Nonagricultural Pursuits, 1820-1940216. Percentage of Labor Force in Agriculture, 1860-1940 . . . .217. Indexes of Net Agricultural Production Per Worker, 1909-1944218. Harvested Acres, Workers in Agriculture and Acres Per Worker, 1870-1960219. Peak Wartime Industrial and Commercial Activity . . . .220. Estimated Industrial and Commercial Activity at Wartime Peak and in 1950

and i960 . . . . . . . . . . .

xxvi

571576

578

580581

585588589590591

593

595

596 600 601

602603

604605

609

611614

616620621622623635

636

TABLES

221. Wartime Expansion of Facilities in Manufacturing, Mining and Other Selected Industries . . . . . . . . . . 6 3 9

222. Major Components of Gross National Product, 1929, 1940 and 1941, With Estimates of Needs and Demand in 1950 and i960 . . . . 6 5 8

223. Estimated Needs and Demand for Consumption Goods and Services in 1950 and i960, and Percentage Distribution of 1909-1941 Consumption Expenditures . . . . . . . . . . . 6 5 9

224. Estimated Needs and Demand for Capital Goods in 1950 and i960 Compared With 1920-1941 Expenditures . . . . . . . 6 6 1

225. General-Government Expenditures in Fiscal Years 1913,1932 and 1941 Compared With Estimates of Probable and Needed Government Expendituresin Calendar Years 1950 and i960 . . . . . . . 663

See also A p p e n d ix e s , listed on pages xvii-xviii.

FIGURES1. Factors Contributing to Wartime Increases in Gross National Product . 142. Trends in Employment, Working Hours, Output Per Man-Hour and Na

tional Income, 1850-1960 . . . . . . . 2 53. Population Growth and Immigration, 1850-1960 . . . . . 3 14. Estimated Distribution of Consumer Units and Cash Income by Cash In

come Classes, 1935-1936,1941 and 1950 . . . . . . 645. Sensitivity of Consumption Expenditures to Changes in Disposable Income

During 1929-1940 . . . . . . . . 8 36. Civilian Per Capita Consumption of Fruits, 1909-1942 . . . . 9 07. Per Capita Consumption of Wheat, Corn and Other Cereals for Food, 1909-

1939 928. Per Capita Consumption of Meats, 1909-1939 . . . . . 929. Per Capita Consumption of Fats and Oils, 1909-1939 . . . . 9310. Consumption Expenditures for Housing, 1909-1942, Compared With Esti

mated Consumption Demand and Needs, 1950 and i960 . . . 1 7 111. Utilization of Mechanical Appliances in Wired Homes, 1925-1942 . 17712. Estimated Demand for Consumer Transportation in 1950 and i960, Com

pared With Consumption Expenditures, 1909-1942 . . . . 22513. Average Net Income of Physicians and Dentists by Size of Community, 1941 23914. Consumption Expenditures for Recreation, 1909-1942 . . . . 2 8 315. Educational Levels of Three Generations, 1940 . . . . . 3 0 216. Estimated Needs and Demand for Consumption Goods and Services in 1950

and i960 Compared With Consumption Expenditures in 1940 and 1941 All Figures at 1944 Prices . . . . . . . . 366

17. Capital Goods Expenditures: Consumer Construction, Productive Facilitiesand Developmental Works, 1920-1940 . . . . . . 376

18. Capital Goods Expenditures as Per Cent of Gross National Product, 1920-1940 . . . . . . . . . . . 382

xxvii


19. Outlays for Productive Facilities Compared With Gross National Product,1920-1940 . . . . . . . . . . .

20. Outlays for Productive Equipment Compared With Gross National Product, Ten-Year Moving Averages . . . . . . . .

21. Gross Government Debt and National Income, 1913, 1922, 1932, 1940 and

1945 .................................................................................................. ..........22. Balance of Trade on Current Transactions and Net Long-Term Capital

Movement, 1920-1939 . . . . . . . . .23. Changing Composition of American Labor Force, 1870-1940 .24. Wartime Expansion and Contraction of Labor Force, 1940-194625. Employment, Weekly Hours and Total Man-Hours Per Week, 1940-1946 .26. Share of United States in World Mineral Production and Consumption, 193727. Net Production of A ll Farm Products, 1910-1944, With Estimated Future

Trends in Production and Requirements to i960 . . . . .28. Crop and Livestock Production Per Acre Harvested, 1910-1944, With Esti

mated Trend to i960 . . . . . . . . .29. Crop Yields Per Acre, 1919-1944 . . . . . . .30. Per Cent of Labor Force in Agriculture and Production and Acreage Per

Worker, 1870-1960 . . . . . . . . .31. Wartime Expenditures for Facilities for War Materiel Manufacturing and

Their Estimated Peacetime Value . . . . . . .32. Wartime Expenditures for Nonmanufacturing and Civilian-Type Manu

facturing Facilities Compared With 1929 and 1939 Rates33. Gross National Product, Consumer Expenditures and Expenditures for Capi

tal and Other Goods and Services, 1910-1941; With Estimates for 1950 and i960 at 1944 Price Level . . . . . . . .

34. Components of Gross National Product and Government Expenditures, 1929,1940 and 1941, With Estimates of Needs and Demand for 1950 and i960 All Figures at 1944 Price Level . . . . . . .

35. Estimated Work Energy Output From Minerals, Animals and Human Workers, 1850-1960 . . . . . . . . .

36. Estimated Total and Mineral Work Energy Output, National Income and Total Man-Hours Worked, 1850-1960 .

37. Estimated Net Dollar Output, and Animal and Mineral Energy Used, Per Man-Hour, 1850-1960 . . . . . . . . .

A . Relation Between Consumption Expenditures for Furniture and Disposable Income, 1909-1941, Extended to 1950 and i960 . . . . .

B. Relation Between Consumption Expenditures for Household Mechanical Appliances and Disposable Income, 1909-1940, Extended to 1950 and i960

C. Relation Between Rent and Imputed Rent and Disposable Income, 1909-1941, Extended to 1950 and i960 . . . . . . . .

D. Trend in Ratio of Rent and Imputed Rent to Total Consumption Expenditures, 1909-1941, Extended to 1950 and i960 . . . . . .

E. Relation Between Expenditures for Capital Goods and Gross National Product

xxviii

391

392

495

514545556561586

607

608 613

621

642

644

656

657

682

683

684

728

729

730

731 737

PART I

BASIC TRENDS

CHAPTER I

THE WAR POTENTIAL

W orld W ar II showed what the American economy can produce working under forced draft. Four years after the defense program got under way we had reached our war potential with a gross output of nearly $200 billion of goods and services in 1944 more than twice the dollar total produced in 1940. Allowing for the higher price level of 1944, our total physical output of goods and services in that year was undoubtedly well over half again as large as in 1940.

As the arsenal of democracy in that peak year of the war effort, the United States not only outproduced the Axis in combat munitions by more than 50 per cent, but alone accounted for nearly 45 per cent of the armament output of all belligerent nations. These tremendous achievements meant that we were devoting nearly one fourth of our total productive power to the manufacture of combat armaments, more than 40 per cent to meeting total war needs and approximately half to supplying total government requirements. Yet the volume of goods and services supplied to American civilian consumers was sustained at not far from the highest prewar levels ever achieved. In spite of inconveniences, annoyances, shortages and lowered quality, the American consumer and his family remained by far the best-fed, best-housed, and best- clothed civilians in the world.1

Thus this huge war program was attained largely by increasing total production. It was superimposed upon the aggregate flow of goods and services to civilians rather than displacing the latter. It disturbed and distorted that flow, no doubt, by forcing sharp reduc

By J. F r e d e r ic D e w h u r s t , Economist of the

Twentieth Century Fund and Research Director

of this survey.

tions in some sectors, but at the same time it stimulated further expansion in others.2

Moreover, even the vast war output of 1944 could probably have been surpassed had military necessity required it. A larger proportion of our total output could have been diverted to war purposes by further curtailment of civilian consumption. The War Production Board said in 1944: Because output per capita in the United States is the highest in the world, American civilians would still be left much better provided with goods and services than those of any other belligerent even if this country used a substantially larger proportion of its economic resources for war purposes than it does.3 Beyond this, it is probable that we could have expanded total output by further lengthening hours of work and by mobilizing a still larger proportion of our total population into the labor force. In other words, by working harder we could have produced more, and by getting along on less we could have devoted more of what we produced to war needs.

With the ending of the European war, however, it was already clear that 1944 marked the high-water mark of the war production effort. Following Japans defeat, drastic cutbacks in the munitions program were made and, although production of civilian durable goods has expanded rapidly, employment and national income have fallen somewhat below 1944 levels. With emergency workers withdrawing from the labor force and working hours curtailed, the productive achievements of 1944 and early 1945 will probably not be surpassed for many years to come. It is worth while considering these achievements, there-

1. War Production in 1944, Report of the Chairman of the War Production Board, June 1945, p. 24.

2. "The Economy in the Third Year of War, Survey oj Current Business, Department of Commerce, February 1945. P- 3-

3. War Production tn 1944, p. 22.

3

AMERICA'S NEEDS AND RESOURCES

in 1944, whose output was negligible in 1940, were: 17,565 tanks, 595,330 Army Service Forces trucks, 3,284 heavy field guns and howitzers, 7,454 light guns, 152,000 army aircraft rocket launchers, 2x5,177 bazookas and 1,4x6,774 short tons of ground artillery ammunition.

b . CONSTRUCTION AND FACILITIES

This tremendous war production program was made possible in part by a large-scale conversion of prewar plants from civilian to military products, especially in the automotive and durable goods fields. But it also necessitated a vast program of construction of new plants and facilities, about half of which was financed by the federal government. This program reached a peak in 1942 when $22 billion of new facilities, of which $14 billion were financed by the federal government, were added to the nations productive plant. By 1944 the bulk of needed new facilities were already in use and the new additions of $9 billion in that year were nearly back to the 1940 level. New war facilities added during the four-year period amounted to $70 billion. New manufacturing facilities alone amounted to well over half the value of all the manufacturing plant in existence at the time the defense program began.

The trend of private gross capital formation, as shown in Table 1, reflects the development of the war plant and equipment expansion program. Rising from less than $15 billion in 1940 to more than $19 billion in 1941, it fell sharply to $2 billion or less in 1943 and 1944. This decline reflects the elimination o all nonessential construction, the financing by the federal government of most facilities expansion after 1941 and the tapering off of this program after 1942. It reflects also the steady decline in private residential construction from nearly $3 billion in 1941 to about $500 million in 1944.

c. CONSUMER GOODS AND SERVICES

In spite of the vast accomplishments of this war production program, American consum

ers continued to be well supplied with most of the necessities as well as with many of the luxuries of life. After 1941, it is true, automobiles and other durable goods could not be replaced as they wore out, but the rising prosperity of 1940-1941 meant that consumers capital plant was in good condition when the war came. It is also true that shortages of food and other products had become acute by 1944, black markets were flourishing, and the quality of many kinds of apparel and household furnishings had been lowered. In spite of these annoyances and difficulties, however, the consumption level of civilian consumers did not fall much below the record high levels of1941 during the three following years.Measured in dollars, consumer expenditures

for goods and services rose from $66 billion in 1940 to I75 billion in 1941 and then advanced steadily to a peak of nearly $98 billion in 1944, as shown in Table 1. After 1941, however, the dollar gains were nearly offset by advancing prices. Subsequent increases in consumer expenditures were confined to services and nondurable goods; durable goods fell off sharply and production of many kinds was discontinued entirely.

This change in the composition of wartime consumption aside from the problem of measuring the rise in prices and deterioration in quality of goods makes it difficult, if not impossible, to decide to what extent we were able to have both guns and butter during the war. A family unable to obtain a new refrigerator might have spent the same amount of money for liquor and theater tickets, and thus consumed as much as if they had been able to get what they wanted. Only in a narrow statistical sense, however, can it be said that their standard of living, or consumption level, was just as high as if they had been able to exercise free consumer choice. Perhaps the best evidence that we had to forego butter during the war in order to get guns is the fact that consumers a year after V-J Day were still faced with a wide range of acute shortages from white shirts to automobiles. Even though civilians were able to buy as large a total volume

6

THE WAR POTENTIAL

of goods and services at the peak of the war as in the best prewar year, they were not nearly so well off in terms of what they wanted.

d . FOOD AND AGRICULTURE

War production accomplishments have been nowhere more spectacular than in the field of agriculture. Civilian per capita food consumption was the highest in history in 1944, yet almost a fourth of our total food output went to the armed forces and to our allies through lend-lease. Civilian per capita consumption in 1944 was 9 per cent above the 1935-1939 average, a gain accompanied by an improvement in the nutritive quality of the diet and, because of higher incomes and rationing, in the dietary level of the lower income classes. Although consumption of'sugar, canned fruits, butter and cheese dropped below prewar averages, per capita consumption of such protective foods as milk and cream, eggs, meats, chickens and turkeys in 1944 showed larger increases over prewar averages than the over-all gain in food consumption.

This remarkable achievement, involving new production records year after year and a 25 per cent rise in total farm output between1939 and 1944, was accomplished in spite of an actual decline in farm employment and an increase in crop acreage of only 6 per cent. It was due to a number of factors, perhaps the most important of which was a long run of unusually favorable weather. Government planning and price policies helped to stimulate maximum agricultural effort, while greatly increased use of fertilizer, more intensive cultivation and rapid extension of farm mechanization brought marked gains in efficiency. Taken together, all of these factors were responsible for an increase of more than one third in output per farm worker between 1939 and 1944, and of one sixth in average crop yields per harvested acre.7

e. TRANSPORTATION AND SHIPPING

Successful prosecution of the war on both

7. Survey oj Current Business, February 1945, pp. 10- 12.

the military and economic fronts would have been impossible without a fabulous expansion of freight and passenger transportation. This great task was accomplished in the face of such war-created difficulties as the submarine warfare on Atlantic coastal shipping and the shortage of rubber and motor fuel, and in spite of serious shortages of manpower and equipment.

The railroads bore the brunt of the burden in domestic transportation. With the total volume of domestic freight movement rising from some 600 billion ton-miles in 1940 to more than a trillion in 1944, the railroads almost doubled their load and carried nearly three quarters of the peak years total freight loads. This compares with a much smaller proportion of the smaller prewar total freight volume and was accomplished with only 20 per cent more freight cars and 10 per cent more locomotives than in 1939. At the same time, railroad passenger traffic of 98 billion passenger-miles in 1944 was nearly four times the 1940 total. The brilliant record of the railroads in this war demonstrates the importance of large traffic volume in ensuring high efficiency and low unit costs and is also evidence of the lessons learned by management and government in World War I.

The Office of Defense Transportation with the full cooperation of management and workers in the industry instituted a number of special measures to penalize shippers for holding freight cars, to prevent freight congestion at the ports, which caused such serious tie-ups in World War I, and to compel maximum loading of freight cars and ensure maximum utilization of equipment. As a result of these measures the equivalent of 141,000 freight cars was added to the existing supply, and

The ratio of serviceable freight cars to total cars on line increased from 92.2 percent in 1940 to97.5 percent in 1944; gross ton miles per serviceable freight locomotive increased from 59,000,- 000 miles in 1940 to 85,000,000 miles last year. Movement of cars on line and through terminals increased from 39 miles per day in 1940 to 52 miles in 1944. The average haul per ton of freight

7


increased from 351 miles in 1940 to 471 miles in

I944-8

Although the railroads carried the great bulk of wartime traffic, most other common carriers were also called upon to shoulder greater burdens. In spite of the handicaps suffered by the motor-carrier industry, loads increased year by year. With only 195,000 new trucks and buses added since March 1942, or less than 10 per cent o normal replacements and expansions, intercity buses handled four times as many passenger-miles in 1944 as in1939, and local and intercity trucks hauled about the same tonnage as before the war.9

Inland waterway freight movement totaled 145 billion ton-miles in 1944, as compared with 118 billion in 1940, while Great Lakes tonnage broke all previous records. Because of the drastic reduction of coastwise traffic, however, total domestic waterborne freight in 1944 was less than two thirds of the prewar volume of more than 300 billion ton-miles. With the completion of the emergency pipeline expansion program in 1944, movement of crude and refined oil by pipeline rose to a new high record.

Although still a small factor in commodity movement, airplanes accounted for 65 million ton-miles of mail and freight in 1944 up from 11 million ton-miles in 1939. With the return of nearly all the planes borrowed by the army, the airlines also recorded their largest percentage increase in passenger traffic in

I944,10Our great wartime shipbuilding program

made the United States more than self-suffi- cient in transportation of ocean cargo on a peacetime basis. United States ships carried 59 million long tons of cargo in 1944 more than three fourths of all our ocean shipping in that year. This compares with an average of 8 mil-

8. This quotation from Problems of Mobilization and Reconversion, First Report by the Director of War Mobilization and Reconversion, January 1, 1945, p. 39; see also p. 38 and War Production and VE-Day, Second Report, April 1, 1945, p. 24.

9. Problems of Mobilization and Reconversion, p. 39; The Road to Tokyo & Beyond, p. 18.

10. Problems of Mobilization and Reconversion, pp. 39 40; Survey of Current Business, February 1945, pp. 16-17.

lion tons, or less than a quarter of all United States cargoes, carried in American ships during the 1930s. By the end of the war the American merchant fleet numbered 5,700 vessels, of which 2,500 were efficient C-type and Victory dry-cargo ships and tankers as compared with about 1,100 ocean ships flying the American flag in 1939.11

2. D ispo s it io n o f W ar In com e

It has become fashionable to say that finance loses all importance when a country goes to war, but it is still true that money has to be used to make the wheels go round. Not only are the accomplishments and costs of the war at least in its economic phases measured in monetary terms, but financial incentives provide the most powerful motivation to maximum effort. The war resulted in a phenomenal growth in our output of goods and services and also led to profound changes in the receipt and disposition of income by farmers, workers and business firms.

With gross national product and national income more than doubling between 1940 and 1944, marked gains occurred in all classes of corporate and individual income. Wages and salaries paid to workers showed the largest gain. Total compensation of employees, reflecting higher wage rates, more workers and longer hours, more than doubled between 1940 and 1944 and accounted for three quarters of the total rise of $83 billion in national income. Income of proprietors was twice as large in 1944 as in 1940, and this was due mainly to a very substantial rise in the income of farm proprietors. Corporate profits rose by more than two thirds over the four-year period (before taxes, they more than trebled). Interest and rents increased by somewhat less than half. These changes are shown in Table 2.

Changes in the disposition of income received by business firms and individuals also reflect the necessities of war. Business taxes more than doubled, rising from $12 billion to $29 billion, while personal tax payments of $19

11. Problems of Mobilization and Reconversion, pp. 41,42.

8

THE WAR POTENTIAL

T able 2

N a t io n a l In com e, G o v e rn m en t F in a n c e , S av in g s and P r ic e s , 1940-1944

(Dollar Figures in Billions')

1940 1941 1942 '943 1944

National income $77.6 $96.9 $122.2 $149.4 $160.7Compensation of employees 52.3 64.5 84.1 106.3 1 1 6.0Income of proprietors 12.0 15.8 20.6 23-5 24.1Interest and rents 7-5 8.0 8.8 9-7 10.6Corporate profits 5.8 8.5 8.7 9.8 9-9

Government revenues and expenditures Business taxes 12.4 18.5 23.1 27.4 29-3Personal taxes 3-3 4.0 6.7 18.5 19.3Social insurance contributions 2.1 2.6 3 2 3.8 3-9

Revenues 17.8 25.1 33-o 49.8 52.4Expendituresb 19-3 29.0 64.7 98.0 I04-7Deficit i -5 3-9 3I -7 48.2 52-3

Private savings and capital formation Corporate reserves, depreciation,

etc.0 7.2 5-i 6.2 11 .1 8.8Corporate savings Individuals savings

1.8 4.0 4-4 5-5 5-47-3 14.2 28.8 33-7 39-9

Private savings 16.3 23-3 39-4 50.3 54.1Private capital formation 14.8 19.4 7-7 2.1 1.8Excess of private savings over capital

formation i -5 3-9 y - 7 48.2 52-3Gross federal debt, end of year 45.0 58.0 108.2 165.9 23-6Price level index4 100 106 119 129 ! 32

Source: Survey of Current Business, Department of Commerce, February 1945, pp. 1, 5, 22; for1940, April 1944, pp. 13, 14. Figures for 1942, 1943 and 1944 have been slightly revised inlater issues.

a. Includes federal, state and local revenues and expenditures. Revenues include business tax and nontax liabilities, personal taxes, and nontax payments and contributions to social insurance funds.

b. Includes expenditures for goods and services and transfer payments.c. Includes depreciation and depletion charges, other business reserves and capital outlay charged

to current expense, with adjustments for inventory revaluation and discrepancies.d. Index computed by Everett E. Hagen in Postwar Output in the United States at Full Em

ployment, Review of Economic Statistics, May 1945, here converted to 1940 base and rounded to nearest one per cent. Mr. Hagen describes this index as follows: "The deflator used is an estimated index of the prices of nonwar goods, derived primarily from the index of prices of consumers goods and services implicit in United States Department of Commerce series for consumer outlay in current and 1939 dollars. The Department of Commerce performs this deflation by applying nation-wide weights to Bureau of Labor Statistics indexes of the change in prices of individual classes of goods and services in large cities. The index used here makes further adjustment in accordance with the Mitchell Committee estimate of the understatement by the B.L.S. indexes of the price rise from January 1941 to 1944. The assumption is made that inclusion of capital goods and public output leaves the index unchanged, the two having opposite effects upon it. It is believed that use of a more carefully prepared index would not materially alter the gross national product data in 1943 prices. The index used is as follows: 1939, 100; 1935-39, 101; 1940, 101; 1941, 107; 1942, 120; 1943, 130; 1944, 133.

billion in 1944 were almost six times as large as most twice as fast as revenues, with the resultthe amount collected from individuals in 1940. that a government deficit (for federal, stateGovernment expenditures, however, rose al- and local governments combined) of more

9


than $52 billion was incurred in 1944.Despite the sixfold increase in personal taxes

the vast rise in the dollar income of individuals left a much larger disposable income in the hands of consumers. Thus income payments to individuals rose from $76 billion in 1940 to $157 billion in 1944, and the increase in personal taxes absorbed only $16 billion of this $81 billion rise. This meant that consumers had cash incomes after taxes, which they were free to spend or save as they pleased, amounting to more than $137 billion in 1944 as compared with $73 billion in 1940. If all of this money had been allowed to enter the consumer market without restraint, it would have had a disastrous effect on prices, in view of the diversion of nearly half the gross national product to war purposes and the consequent curtailment in the supply of consumer goods and services.

Actually OPA price controls prevented runaway prices, rationing ensured an equitable distribution of essential foods, and Treasury war loan campaigns diverted a large proportion of consumer incomes into bond purchases. As a result of these measures and the general public awareness of the dangers of inflation, individuals probably spent a smaller proportion of their incomes for consumption purposes in 1944 than in any previous year in history. Consumer expenditures in 1944 amounted to about $98 billion, and even this $32 billion increase over the 1940 total of $66 billion largely reflected higher prices. Taking account of the 32 per cent increase in the price level between 1940 and 1944, consumer purchases, measured in 1940 dollars, rose by only $8 billion to a 1944 total of $74 billion.

That the price increase was held to such modest proportions to much less than half of the rise occurring during the corresponding period in World War I is due to the efficacy of price controls and to the fact that consumers saved such a large proportion of the increase in their disposable incomes. Individuals saved nearly $40 billion in 1944 more than five times as much as in 1940 and the total amount of savings in the hands of consumers

at the end of 1945 was more than $150 billion greater than it was four years earlier. Corporate savings in the form of depreciation and other reserves and additions to surplus also increased, though on a much more modest scale, so that total savings of individuals and corporations amounted to $54 billion for the year 1944, as compared with $16 billion for 1940. (See Table 2.)

Since private capital formation, which normally absorbs the bulk of savings, fell sharply from its peak in 1941, as shown in Table 2, a very large part of the increased savings of both corporations and individuals is held in the form of government securities and other liquid assets.

Although state and local governments were retiring obligations and accumulating surpluses during the war, the federal debt rose steadily and substantially. The gross federal debt stood at $231 billion at the end of 1944 up $186 billion in four years.

3. F actors A c co u n t in g for W ar t im e O u t pu t

The miracle of production achieved during the war is often cited as evidence of vast and hitherto unsuspected potentialities of production and of tremendous technological gains that have greatly increased our productive efficiency. Our war production records are sometimes held forth as a sort of par for the postwar peacetime economy, and indeed even as a level of output below which we can fall only at our peril.12

12. Stimulated by war demands, a decade of technological development has been crowded into a few months, thus giving a promise of further increases in efficiency when these developments are fully utilized for civilian production. from Markets After the War, S. Doc. 40, 78th Cong., 1st sess., p. 1.

Our experience in war production has shown that in America we can have an economy of abundance. It has shown that in producing for war we can reach an annual income of 200 billion dollars. The same manpower, the same plant and equipment, and the same know-how can produce just as abundantly for peace. from Conference Report of United Automobile Workers (CIO) quoted in Washington Post, April 8, 1944.

We are like a flying fortress which must maintain a given speed or crash. Stuart Chase, Wheres the Money Coming From?, Twentieth Century Fund, New York, 1943, p. n o .

10

THE WAR POTENTIAL

The tremendous accomplishments of American industry and labor during the war are undeniable. But the best measure of these accomplishments is to be found, not in statistics of national income and gross national product, but in the brilliant successes of American arms throughout the world and in the fact that the vast plenitude of the weapons of war helped to save American lives.

What this impressive war production record means in terms of the kinds of goods and services we will want in peacetime is a different question and an extremely difficult one to answer because wartime output cannot readily be compared with peacetime needs. The composition of the national output at the peak of the war effort was far different from what it was before the war and from what it is now that the war is over.13 Although the dollar volume of consumer expenditures held above prewar levels, there was virtually no production of the most important types of consumers durable goods, while some nondurable goods became unavailable. Other kinds of consumer goods had deteriorated in quality. At the same time, consumers services were limited in amount and changed in character.

About half of the gross national product in 1944 consisted of government expenditures, of which nearly half went for combat munitions destined for destruction. What our ability to produce $10 billion worth of artillery and ammunition at government contract prices in 1944 means in terms of refrigerators and oil burners at competitive market prices in 1950 is impossible to determine. Placing a dollar value on the priceless services of a division

13. The Federal Reserve Bulletin, in discussing revision of the index of industrial production, said, It is . . . difficult to judge how much output of war products in an industry corresponds to a given output of peacetime products. This problem of changing products exists to some degree in peacetime as the composition of output shifts within an industry, but the changes are far greater in the transition from peace to war production. Shifts occasioned by the widespread transition to manufacture of different products are extremely complex, with marked changes in the types and proportion of materials used and especially in the amount of processing applied to these materials. There is no wholly satisfactory way of showing what happens to production (value added in terms of constant prices) as industry goes on a wartime basis. October 1943, p. 948.

fighting on the Western Front is absurd enough though necessary in estimating wartime gross national product but it would be compounding an absurdity to try to evaluate the postwar equivalent of their wartime services.

Difficulties of measuring changes in prices and productivity during the war further aggravate the problem of translating wartime output into peacetime probabilities. This is particularly true of munitions, which must be produced primarily with an eye to quality and speed rather than economy, and which are priced outside the

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