far from complete and certain glaring omissions necessarily result. However, with the available data it has been possible to construct an index representing roughly the volume of consumer expenditures. The purpose of this section is to discuss briefly the series composing the final index, the sources from which they were obtained, and the manner in which they were combined.

All of the series which were used represent direct purchases of goods or services by consumers.

There are 13 general series incorporated in the final index; these cover the following items: (1) chaingrocery sales, (2) department-store sales, (3) rural general-store sales, (4) variety-store sales, (5) automobile sales, (6) restaurant sales, (7) gasoline sales, (8) natural and manufactured gas sales, (9) electric light and power revenues, (10) telephone revenues, (11) transit fares, (12) railroad passenger revenues, and (13) hotel receipts (excluding meals).

The index of chain-store sales was computed by the Department of Commerce from sample data supplied by chain grocery stores whose sales amounted to about 75 percent of the total grocery chain-store business. The index of department-store sales was computed by the Board of Governors of the Federal Reserve System from reports received from a large number of department stores located in various parts of the country. The index of rural retail sales was derived from the mail-order sales of three large mail-order houses and the store sales of a general merchandise chain whose business is predominantly rural. The index of variety-store sales was computed by the Department of Commerce from reports of seven chains covering identical stores doing more than 75 percent of the total business of chain units in this field. The index of automobile sales was based on the index of new passenger-car sales computed by the Department of Commerce; this was modified by data on financing of new and used cars in order to estimate total sales of all automobiles. The index of restaurant sales is a composite index based upon two separate indexes representing the sales of chain restaurants and hotel restaurants. Chain restaurant sales are represented by the combined sales of restaurants operated by the Childs Company, J. R. Thompson Company, and the Waldorf System, Inc.; while the index of hotel restaurant sales was based on data compiled by Horwath and Horwath from reports of a large number of hotels, transient and residential, throughout the country. The index of gasoline sales was specifically computed from data compiled by the American Petroleum Institute representing the quantity of gasoline sold or offered for sale as reported by wholesalers and dealers under provisions of the gasoline tax or inspection laws.

The index of sales of natural and manufactured gas

was based on data compiled by the American Gas Association. The index of electric power and light revenues was based on data compiled by the Edison Electric Institute, from reports representing over 90 percent of the industry. The index of telephone revenues was based upon data compiled by the Interstate Commerce Commission through 1933, and thereafter by the Federal Communications Commission. The index of transit fares was based upon data compiled by the American Transit Association after 1932, prior to that date by the American Electric Railway Association. The index of railroad passenger revenues was based on data compiled by the Interstate Commerce Commission from reports of all class I railroads exclusive of switching and terminal companies. The index of hotel receipts was based upon data compiled by Horwath and Horwath from reports of a large number of hotels located throughout the country.

The various indexes listed above were combined into a single index representative of consumer expenditures. This was accomplished by using a system of weights based on the proportion of sales of each series to total sales as indicated by Census Bureau data for 1929.

Table XIV gives the index of consumer income and of consumer expenditures for the years of the period 1929-38. The table also gives the estimated value of consumer expenditures for each year of the same period. These values were employed in table VI of chapter VI and chart XII of chapter VI.

in the preparation of the table is given in appendix 17. In this section a brief discussion is given of the modifications made in summarizing Leontief's table so as to cover much broader segments of the economy. The resulting summary is shown in table II and chart VI of chapter VI.

Each entry in table II of chapter VI has been obtained from table I of appendix 17 by summating the approximate items included within the respective segment associated with the entry. However, a few additional modifications were made which consisted in adding three new segments not appearing in Leontief's table.

The three additional segments are Government, financial enterprises, and trading enterprises. For Government and finance only one entry has been made, i. e., income received by consumers. This is income paid out estimated by the National Income Section, U. S. Department of Commerce.

The introduction of trading enterprises as an additional segment affects some of the entries in the segment for consumer expenditures. (Leontief's "consumption" item.) The following list gives a description of the entries related to trading enterprises:

(1) Money received by agricultural enterprises from consumption, as shown by Leontief, was allocated between sales to trading enterprises and direct sales to consumers on the assumption that 10 percent of farm sales were direct sales to consumers. (See Simon Kuznets, Capital Formation and Commodity Flow, p. 172.)

(2) It is assumed that all sales of mining enterprises went directly to trade and Leontief's figure on money received by mining enterprises from consumption was transferred to trade.

(3) The amount received by manufacturing enterprises direct from consumers was obtained by applying the ratio of sales by manufactures direct to ultimate consumers to the total cost of finished commodities to ultimate consumers (see Kuznets, loc. cit., p. 206) to the total summated items representing money received by manufacturing from consumption as obtained from Leontief's table. This figure subtracted from Leontief's total resulted in the amount received by manufacturing enterprises from trading enterprises.

(4) The amount received by trading enterprises from trading enterprises consists of sales by wholesalers to retailers of total finished commodities less sales of producers' durable commodities as given in Kuznets (loc. cit., p. 197).

(5) The amount received by trading enterprises from exports was derived from value of total finished commodities exported by wholesalers less exports by wholesalers of producers' durable commodities. (See Kuznets, loc. cit., p. 197).

(6) The amount received by trading enterprises from consumer expenditures consists of total cost of finished commodities to ultimate consumers less cost to ultimate consumers of producers' durable goods as given in Kuznets (loc. cit., p. 205); from this figure were deducted the amounts received by agricultural and manufacturing enterprises from consumer expenditures-see (1) and (3) above.

(7) Leontief's item "amount paid for imports for consumption" was assumed to go through trading enterprises and was allocated to this segment.

(8) The income received by consumers from trading enterprises consists of income paid out plus noncorporate business savings of trading enterprises estimated by the National Income Section, U. S. Department of Commerce.

The items in the column, "money payments not allocated," and the row, "money receipts not allocated," were derived by deducting from the gross total the sum of all the other items appearing in the respective column or row (excluding the item "net total").

15. Demand Deposits of Single

Individuals and Families With Incomes
Under $5,000, December 31, 1935

On page 88 of chapter VI, an estimate is given representing the proportion of total demand deposits held by consumers with incomes under $5,000. This estimate was derived by making use of two sources, namely, an article by Lauchlin Currie entitled "The Economic Distribution of Demand Deposits," Journal of American Statistical Association, June 1938, and a report of the National Resources Committee published in August of 1938 entitled Consumer Incomes in the United States.

The procedure used is briefly this: to estimate the total consumer deposits of less than $100,000 and correct this figure for total consumer deposits of between $5,000 and $100,000. The latter totals were estimated on the assumption that these consumers included only those with incomes between $5,000 and $100,000 and that their proportion of total consumer deposits was the same as their proportion of total consumer income. The result is necessarily rough since it depends on how closely the assumption fits the actual condition.

Table XVI gives the steps used in making the esti

17. New Capital Issues, 1919-37

The data upon which chart X of chapter VI is based are presented in table XVIII. These data which represent the amount of money expended by governments and corporations for new capital issues in the United States for the years of the period 1919 to 1937, were compiled by the Commercial and Financial Chronicle and reported in the Survey of Current Business. An important fact that should be noted in connection with the data is that the amount expended for new real investment, i. e., "chiefly additions to fixed plant and equipment and all types of inventories" is considerably less than the amount reported by the Chronicle for new capital issues. Included within the Chronicle's classification of new capital issues are issues which involve transactions of a purely financial character. Thus it has been estimated by George A. Eddy that real investment issues amounted in 1929 to approximately one-fourth of the total new capital issues as reported by the Commercial and Financial Chronicle.

5

1922

3, 144

[Billions of dollars]

1924.

3, 322

1925

4,086

1926.

4,286

1927

5, 216

1928.

5,293

1929

6, 417

1 These figures exclude issues which specifically indicate that they are for refunding purposes and those issued by companies that can clearly be designated investment trusts, trading and holding companies. In spite of the exclusion of such issues, a large part of the funds appear to have been used for the retirement of outstanding issues, purchase of securities, the purchase of property, and the addition to money balances; only a part was used to finance capital formation. The data are shown here only to emphasize the wide swings in funds derived from new security issues.

Source: Based on data compiled by the Commercial and Financial Chronicle as reported in the Survey of Current Business, February 1938, pp. 14-20; and May 1938, pp. 17-20.

18. Distribution of Economic Units and Number of Persons Employed in the American Economy, 1937

Data on the number of economic units and the corresponding employment from which it would be pos

George A. Eddy, "Security Issues and Real Investment in 1929," The Review of Economic Statistics, May 1938, pp. 79–91.

sible to distribute the economic units and employment by the number employed are quite incomplete and unsatisfactory. The data collected by the Social Security Board for industry and the Interstate Commerce Commission for railways are reasonably accurate and complete. In the case of agriculture the data are less satisfactory, while for the remaining segments, particularly the services, the available data are very sketchy.

6

The Social Security Board compiles data for many industries under the old-age insurance program on employer returns and employee wage items, which it has grouped in a frequency distribution according to the number of wage items per employer return. The returns covering the period July to December 1937 were used here in making estimates. However, there is a considerable amount of duplication in the employee wage items since over the 6 months' period. the same individual may be reported by more than one employer. Some employees who are ordinarily attached to industries other than those reporting to the Social Security Board may also appear in the returns. Finally, some who would ordinarily be considered as unemployed might also appear. Thus, the Social Security Board estimates that there were about 32.5 million different wage earners represented during the latter half of 1937 by the 37.1 million wage items reported by the 1.7 million employer returns to the board. This latter figure overstates the actual number of economic units as the term is defined in chapter VII. This is due to the fact that all corporate subsidiaries make separate employer returns. For example, General Motors Corporation was represented by 54 or more employer returns. This has the effect of understating both the number of economic units and employees in the 10,000 and over class, appearing in table I of chapter VII, while overstating both in the classes under 10,000; the net effect being an overstatement of employer units.

The number of wage items reported to the Social Security Board was adjusted in each class, shown in table I of chapter VII, to approximate the actual number employed. This was done in each class by applying the proportion of the total number employed as estimated by the Social Security Board to the corresponding number of wage items, i. e., 87.6 percent. There was no basis for making a corresponding adjustment in the number of employer returns and so in the 10,000 and over class the number of employer returns is probably slightly larger than it would be if the distribution were based on the actual employment.

The data covering railroads, published by the Interstate Commerce Commission," are perhaps the most

John J. Corson, Wages and Employment Under the Old-Age Insurance Program, Social Security Board, October 1938, table 2.

7 Interstate Commerce Commission, Statistics of Railu ays in the United States, 1936.

satisfactory of any for the purposes at hand. The Commission reported, for the calendar year 1936, the average number of employees for each class I steam railway company, from which a frequency distribution of employees and employer companies according to the number of employees per company was derived. Although 1936 data were used, as the 1937 report was not yet published, the difference in the total number of employees and companies for the 2 years is relatively insignificant.

The distribution of agricultural employment and number of farms is based on a frequency distribution of hired labor according to the number per farm, since no data are available relating to the combination of family and hired labor. This has necessitated making certain assumptions in order to approximate a distribution for total engaged. It has been assumed that farms employing four hired laborers or less would not individually aggregate more than five laborers-family and hired. This assumption is not unreasonable as the average number of family workers per farm reporting hired workers is 1.3. The use of this assumption resulted in approximately 6.8 million farms, engaging 11.9 million persons, falling in the 1 to 5 persons employed class, and about 41,300 farms, engaging about 356,000 persons, which were involved in the gainful activity of over 5 persons per farm. There are other limitations to these data, however, that necessitate their being used with the greatest caution. For instance, the census reports family and hired workers as of the first week in January 1935, only. Obviously, this can be only a crude approximation of the average number employed during 1937.

The total number of employees in the Federal Government during 1937 was estimated by the Department of Commerce to have been about 1.2 million. This number was allocated to the class, 10,000 and over, as the Federal Government is counted as one economic unit.

The total number of State employees during 1937 was estimated by the Department of Commerce to have been about 367,000. In addition, there were about 59,000 employees engaged in public education. The 426,000 engaged in State employment and the 48 States were apportioned in a frequency distribution by means of a sample of 28 States obtained from the Department of Commerce.

The total number of county employees during 1937 was estimated by the Department of Commerce to have been about 805,000, of which 506,000 were engaged in public education. The 805,000 employees and the 3,071 counties were apportioned in a frequency distribution on the basis of a sample of 280 counties collected by the Department of Commerce.

8 U. S. Census of Agriculture, 1935, vol. III, p. 164.

The total number of municipal and rural incorporated places in 1930 amounted to 16,598 according to the U. S. Census of Population, 1930, volume I, page 14. These incorporated places employed a total of about 1,332,000 employees, of which about 635,000 were engaged in public education. In order to estimate a frequency distribution of employees and incorporated places, the Census of Population was used as a basis. In volume I, page 14, of the 1930 Census of Population there appears a table of the population of the United States in groups of cities classified according to size. Using the Department of Commerce's sample of municipal places and the data from the Census of Population as a basis, it was estimated that 13 cities of 500,000 population or over in 1930, employed over 10,000 city employees in 1937; likewise that the 80 cities of from 100,000 to 500,000 population employed between 1,000 and 9,999 persons; that the 283 cities of from 25,000 to 100,000 population employed between 300 and 999 persons; and that the remaining some odd 16,220 places of under 25,000 population employed between 6 and 299 persons. The reason for not using solely the sample compiled by the Department of Commerce is because of its practically complete coverage of larger cities which would have caused, if it had been used, too large a proportion of the employees and incorporated places being placed in the class of 10,000 and over.

The data on private education concerning the number of economic units, or in this case schools, are somewhat unsatisfactory. The best estimate available for the number of private schools covers the year 1933-34 in which there were about 17,804.9 The total employment in private schools during 1937 was estimated by the Department of Commerce to have been about 216,000. It was assumed arbitrarily that all the school units employed between 6 and 299 persons or an average of about 12 per unit.

The data on services are most incomplete of all, there being none on the number of economic units. The Department of Commerce estimated that there were about 3,193,000 professional and domestic service employees in 1937. It was assumed that most of these employees worked in small units which did not employ more than 5 persons per unit. A reasonable guess as to the number of such units would appear to be between. 1,500,000 and 2,000,000, which was the range used in the summary table appearing in table I of chapter VII.

19. Employment in Governmental Units, 1935

The employment shown for 20 governmental units in table II of chapter VII have been derived from the following sources:

Employment for Federal Government and the

9 U. S. Department of the Interior, Biennial Survey of Education, 1932-35, p. 2

United States Post Office represent equivalent fulltime employment as estimated by the National Income Section of the Department of Commerce. The employment for State and municipal governments are also on an equivalent full-time basis. In each case the basic data were obtained from the unpublished material of the National Income Section of the Department of Commerce. These data were then adjusted to include public education by the addition of the respective employment in public education, estimated by the United States Office of Education (Statistics of City School Systems, 1935-36, page 28; Statistics of State School Systems, 1935-36, page 73; the data which were not available in these publications were obtained from the work sheets in the Office of Education).

1 Bureau of Labor Statistics' index of wholesale prices of all commodities. The Federal Reserve Bank of New York index. It is a combined index of hourly earnings, weekly wages, monthly wages, and annual salaries. Covers a sample of the entire economy.

Index of stock prices and bond prices weighted by ratio of capital stock to funded debt as shown by statistics of income, 1926-34, for corporations. Bureau of Labor Statistics' index of cost of living.

Based upon Paul H. Douglas data, 1913-18 and National Industrial Conference Board, 1919-37.

Based upon National Bureau of Economic Research data, 1913-28, and Department of Commerce data, 1929-37.

7 Standard Statistics prices of 45 domestic corporate issues."

Standard Statistics' index of the price of 419 stocks (347 industrials, 40 utilities, and 32 rails), listed on the exchange. Data for 1914-17, New York Times stock prices linked to Standard Statistics.

21. Wholesale Prices and Hourly and Weekly Earnings in Selected Industries, 1926-37

Table XX gives the data upon which chart IV of chapter VIII is based. The average weekly earnings