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Full text of "Investigation of concentration of economic power; monograph no. 1[-43]"

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Northeastern University 





School of Law 
Library 



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76th Congressl SENATE COMMITTEE PRINT 

3d Session J 



INVESTIGATION OF CONCENTRATION 
OF ECONOMIC POWER 



TEMPORARY NATIONAL ECONOMIC 
COMMIHEE 

A STUDY MADE FOR THE TEMPORARY NATIONAL 

ECONOMIC COMMITTEE, SEVENTY-SIXTH CONGRESS, 

THIRD SESSION, PURSUANT TO PUBLIC RESOLUTION 

NO. 113 (SEVENTY-FIFTH CONGRESS), AUTHORIZING 

AND DIRECTING A SELECT COMMITTEE TO MAKE A 

FULL AND COMPLETE STUDY AND INVESTIGATION 

WITH RESPECT TO THE CONCENTRATION OF ECONOMIC 

POWER IN, AND FINANCIAL CONTROL OVER, 

PRODUCTION AND DISTRIBUTION 

OF GOODS AND SERVICES 



MONOGRAPH No. 7-8 
MEASUREMENT OF THE SOCIAL 
PERFORMANCE OF BUSINESS 



Printed for the use of the 
Temporary National Economic Committee 




UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1940 



/NORTHEASTERN UNIVERSITY SCHOOL of LAW UBPSl?? 



TEMPORARY NATIONAL ECONOMIC COMMITTEE 

JOSEPH C. O'MAHONEY, Senator from Wyoming, Chairman 

HATTON W. SUMNERS, Representative from Texas, Vice Chairman 

WILLIAM H. KING, Senator from Utah 

WALLACE H. WHITE, Jr., Senator from Maine 

CLYDE WILLIAMS, Representative from Missouri 

B. CARROLL REECE. Representative from Tennessee 

THURMAN W. ARNOLD, Assistant Attorney General 

•WENDELL BERQE, Special Assistant to the Attorney General, 

Representing the Department of Justice 

JEROME N. FRANK, Chairman 

•SUM:nER T. PIKE, Commissioner, 

Representing the Securities and Exchange Commission 

GARLAND S. FERGUSON, Commissioner 

•EWIN L. DAVIS, Chairman, 

Representing the Federal Trade Commission 

ISADOR LUBIN, Commissioner of Labor Statistics 

•A. FORD HINRICHS, Chief Economist, Bi*eau of Labor Statistics, 

Representing the Department of Labor 

JOSEPH J. O'CONNELL, JR., Special Assistant to the General Counsel 

•CHARLES L. KADES, Special Assistant to the General Counsel, 

Representing the Department of the Treasury 



•Alternatea. 



Representing the Department of Commerce 

LEON HENDERSON, Economic Coordinator 
DEWEY ANDERSON, Executive Secretary 
THEODORE J. KREPS, Economic Adviser 



Monograph No. 7 ' 

MEASUREMENT OF THE SOCIAL PERFORMANCE OF BUSINESS 



CO 



THEODORE J. KREPS 

ASSISTED BY 

KATHRYN ROBERTSON WRIGHT '^^ 

O 

UJ, 

REPRINTED 
BY 

WILLIAM S. HEIN i CO.. INC. 

BUFFALO. N. Y. 
1968 



ACKNOWLEDGMENT 

This monograph was written by 

THEODORE J. KREPS 

Professor oj Business Economics, Stanford University 

ASSISTED BY 

KATHRYN ROBERTSON WRIGHT 
Associate Economist, Bureau of Labor Statistics, Department of Labor 

The Temporary National Economic Committee is greatly indebted 
to these authors for this contribution to the literature of the subject 
under review. 

The status oJ the materials in this volume is precisely the same as that 
oj other carefully prepared testimony when given by individual witnesses; 
it is information submitted for Committee deliberation. No matter what 
the official capacity of the witness or author may be, the publication of 
his testimony, report, or monograph by the Committee in no way signifies 
nor implies assent to, or approval of, any of the facts, opinions, or recom- 
mendations, nor acceptance thereof in whole or in part by the merribers 
of the Temporary National Economic Committee, individually or collec- 
tively. Sole and undivided responsibility for every statement in such 
testimony, reports, or monographs rests entirely upon the respective 
authors. 

(Signed) Joseph C. O'MAfeoNEY, 
Chairman, Temporary National Economic Committee. 

Ill 



TABLE OF CONTENTS 



Letter of transmittal ix 

CHAPTER I 

Tests of Social Performance 1 

CHAPTER II 

Social Performance of Twenty-two Industries ■ 

Baking and confectionery industry 

Knit-goods industry 

Canning and preserving industry 

Agricultural-implements industry 

Petroleum-refining industry 

Automobile industry . 

Boot and shoe industry 

Slaughtering and meat-packing industry 

Cotton-goods industry 

Woolen and worsted-goods industry 

Chemical industry 

Electric light and power industry 

Iron and steel industry 

Paper and pulp industry 

Flour and other grain-mill products _- 

Oil- and gas-producing industry 

Furniture industry 

Metal-mining industry 

Tobacco industry , j. 

Coal-minrng industry 

Lumber- and timber-products industry 

Steam-railroads industry 

Composite ranking ■ 

CHAPTER III 

Groups of Industries. ^ 53 

Agriculture ^v 53 

Manufacturing 55 

Mining 60 

Transportation and other public utilities 62 

Construction 65 

Summary of performance of segments in first group 68 

Segments of the economy in the second group 71 

Government 71 

Finance 72 

Service 74 

Trade 76 

Summary 76 

CHAPTER IV 

Social Performance of Individual Companies ■ 8S 

General Motors 83 

United States Steel Corporation 85 

The American Telephone & Telegraph Co 87 

Corrclusion ^ 92 



VI TABLE OF CONTENTS 

CHAPTER V P«W 

All Corporations -- 95, 

Mami facturing corporations -- — »o 

All corporations ^'^ 

All business -^o 

CHAPTER VI 

The Economic System - 101 

CHAPTER VII 

patterns of Social Performance -^ - -- 109 

CHAPTER VIII 

A Bureau of Industrial Economics 119 

A national commission on economic policy 122 

APPENDIX A 

Some Methodological Considerations 125 

The basic series 125 

Comparability of the series 127 

The base period • ' 128 

The dividends-and-interest figures -__ 128 

The consumer-funds-absorbed figures .--'. 131 

The industries selected for study -' -•__ 133 

APPENDIX B 

Statistical Tables - ....^1... 135 

APPENDIX C 

Method of Computing Composite Ratings 175 

J 

APPENDIX D 

"National Income at Nearly $70,000,000,000 in 1939", reprinted from 

Survey of Current Business, June 1940 177 



SCHEDULE OF CHARTS AND TABLES 

CHARTS 

Page 

1. Social performance of the baking and confectionery industry 9 

2. Social performance of the knit goods industry 11 

3. Social performance of the canning and preserving industry 12 

4. Social performance of the agricultural implements industry ;_ 14 

5.' Social performance of the petroleum refining industry 16 

6. Social performance of the automobile industry 18 

7. Social performance of the boot and shoe industry 19 

8. Social performance of the slaughtering and meat packing industry.... 21 

9. Social performance of the cotton goods induistry 22 

10. Social performance of the woolen and worsted goods industry 24 

1 1 . Social performance of the chemical industry 25 

12. Social performance of electric light and power industry 27 

13. Social performance of the iron and steel industry 28 

14. Social performance of the paper and pulp industry 30 

15. Social performance of flour and other grain-mill products S'l 

16. Social performance of the oil and gas producing industry 33 

17. Social performance of the furniture industry... 34 

1 8. Social performance of the metal mining industry 36 

19. Social performance of the tobacco industry 37 

20. Social performance of the coal mining industry.. 39 

21. Social performance of lumber and timber products industry 40 

22. Social performance of steam railroads .. 42 

23. Social performance of agriculture 54 

23-A. Family and hired workers in agriculture- 56 

24. Social performance of all manufacturing industries ' 58 

25. Social performance of all mining activities ^ 61 

26. Social performance of transportation and other public utilities 63 

27. Social performance of construction 66 

27-A. Trend of wholesale prices " 67 

28. Social performance of government » 72 

29. Social performance of finance . -» — 73 

30. Social performance of all commercialized service . 75 

31. Social performance of trade 76 

32. Social performance of the General Motors Corporation 84 

33. Social performance of United States Steel Corporation and' subsidiaries^ 86 

34. Social performance of the Bell System . 88 

35. Social performance of the telephone and telegraph industry 91 

36. Dividends, interest, and taxes, all corporations 97 

37. Social performance of the economy 102 

38. Patterns of social performance . 1^0- 

39. An economic study — The flow of goods in the United Sta+es Face p. 113 

TABLES 

1. Summary of performance ratings of 22 industries, individual rating, 7 

criteria, 1927-38 44 

2. Factory pay rolls, dividend and interest payments, and compensation 

of officers in all manufacturing industries, 1919-38 59 

3. Industry groups rated for social behavior, eight criteria, 1919-38 69 

4. Industry groups rated for social behavior, five criteria, 1919-38 7-8 

5. Consolidated operating statement, all manufacturing corporations, 

1929andl937 96 

6. Consolidated operating statement rll privately owned business, 1937.. 98 

7. Indexes of national income, retan sales and prices 1929-39 104 

8. Changes in employment between 1929 and 1939 106 

9. Employment performance of industries and industry groups 107 

10. Owner-manager share in national income, 1929-39 ■ 108 

VII 



LETTER OF TRANSMITTAL 



Hon. Senator Joseph C. O'Mahoney, 

Chairman, Temporary National Economic Committee, 

Washington, D. C. 

My Dear Senator: I have the honor to transmit herewith a study 
on "Measurement of the Social Performance of Business." It bases 
itself squarely on the premise, to quote President Roosevelt in his 
message advocating the creation of the Temporary National Economic 
Committee, that — 

* * * a realistic system of business regulation has to reach more than con- 
sciously immoral acts. The community is interested in economic resuHs. 

* * . ■* Xhe larger, more important, and more difficult part of our problem is to 
deal with men who are not selfish and who are good citizens but who cannot see 
the social and economic consequences of their actions in a modern, economically 
interdependent community. They fail to grasp the significance of some of our 
most vital social and economic problems because they see them only in the light of 
their own personal experience and not in perspective * * * for the Nation 
as a whole. 

In this study certain criteria of social performance ''for the Nation 
as a whole" are set up — criteria advanced by such responsible business 
groups as the National Association of Manufacturers and the United 
States Chamber of Commerce. The performance of individual indus- 
tries, of groups of industries, and of the economy as a whole is meas- 
ured in terms of these criteria. It is urged that these or similar 
economic tests when carefully made by a bureau of industrial 
economics afford a basis for the application of corrective measures 
superior to those traditionally employed. 

This study would have been impossible without the generous co- 
operation of numerous individuals and departments of government. 
The assistance of the Bureau of Internal Revenue, the Department 
of Commerce, and especially of Dr. Robert R. Nathan, who gave 
extensively of his time and information, is hereby gratefuUy acknowl- 
edged. Invaluable aid and criticism was also received from four re- 
viewers: Mr. Blackwell Smith, of the firm of Wright, Gordon^ Zachry 
& Parlin, New York City; Dr. Robert R. Nathan, Chief,- National 
Income Division, Department of Commerce; Dr. Walton Hamilton, 
professor of law, Yale University Law School ; and Dr. Calvin Hoover, 
dean, graduate school of arts and sciences, Duke University. All of 
them have read the entire manuscript and offered numerous construc- 
tive suggestions. 

Above all, I wish to express my deep appreciation for the cheerful 
and unstinted collaboration o/ Kathryn Robertson Wright, associate 
economist of the Bureau of Labor Statistics. She mined all the statis- 
tics from most refractory source materials. She has given the whole 
study painstaking scrutiny. 

Needless to say, for whatever errors of fact or opinion that remain, 
1 alone am responsible. 

Respectfully submitted. 

Theodore J. Kreps, 

Economic Adviser. 

August 21, 1940. 



CHAPTER I 
TESTS OF SOCIAL PERFORMANCE 

Business is not merely nor even in the first instance a struggle of 
individuals for wealth. It is a way-of life, a system of providing goods 
and services. It is not a segment of the community, cooperating or 
warring with other segments such as labor, consumers, or farmers. 
It is not superior or inferior to the community. It is the community 
engaged in getting its daily bread. Its goals, its ethics, its welfare' 
are inseparable from the goals and aspirations and welfare of the 
community. No matter how much or how often the business phases 
of social or community activity may be abstracted, analyzed, and 
separately discussed, the fundamental and organic Unity between 
business and the community is indissoluble. , 

• Nowhere is more complete acknowledgment m^tde of this fact than 
by business itself. Thus the National Industrial Conference Board, 
a research organization largely financed by me^mbers of the National 
Association of Manufacturers, made the following statement in the 
preface of its extensive survey of business enterprise in the United 
States: ' 

Any economic system or process of making a living is a part or aspect df the 
organic life of the individual persons or groups invci/lved. It is not a separate 
mechanism or arrangement designed or constructed or operated by anybody to 
supply a group of people called consumers with goods or services, or to distribute 
to a group called employees amounts of money called wages or salaries, or to 
provide a group called investors with dividend or i^ iterest checks, or to pay taxes 
to a group called government officials. In either such a mechanism nor these 
groups of people really exist at all. * * * People, individual human persons, 
are the only things there are in any economic system and in any political S3'stem. 
Apart from thoiiil there is nc such thing as "busi/ness" or "government," or even 
"society."' 

Precisely because business is not sepai/ate from the community and 
by virtue of the very fact that business activity is inextricably a 
function of community life that which businessmen do must be guided 
not by that which serves their partici^lar interest but by that which 
serves the interest of the community. Businessmen are part of the 
community and their acts are part of /community activity. Business, 
therefore, must take its place in the ranks of those who serve the 
community. 

In no instance has this been more mlly appreciated or better stated 
than by H. W. Prentis, Jr., president of the National Association of 
Manufacturers, in his speech to the Forty-fourth Congress of American 
Industry on December 8, 1939. He said: 

* * * they [businessmen] must be good stewards of the responsibilities with 
which individual freedom has entrusted them; they must constantly endeavor to 
create, bfetter conditions of employment by the elimination of health and accident 
hazards; they must steadily seek ways and means of regularizing employment and 

» National Indjostrial Conference Board, Studies in Enterprise and Social Progress (New York, 1939), . 
p. xii. 



2 CONCENTRATION OF ECONOMIC POWER 

cushioning the effect of advancing technology on the lives and fortunes of their 
workers; they must raise the standard of living by passing along the benefits 
of improved technique and quantity production through lower prices and higher 
wages; they must seek to be industrial statesmen rather than mere businessmen. 

In a similar vein the Chamber of Commerce of tli€ United States has 
repeatedly stressed the social functions of busmess. Thus, for 
example, in a widely distributed pamphlet entitled "Policies Supported 
as in the Public Interest" published in 1936, the chamber has gone on 
record as follows: 

The function of business is to" prdvide for the material interests of mankind, 
and to increase the wealth of the world and the value and happiness of life. * *- * 
When business enterprise is successfully carried on with constant and efficient 
endeavor to reduce the cost of production and distribution, to improve the quality 
of its products, and to give fair treatment to customers, capital, management, and 
labor, it rpnders public service of the highest value. ^ 

Business is not an end in itself. .Society has not given away to 
individuals in fee simple millions of acres of land and a vast empire 
of mineral and power and forest resources without expecting a return. 
The faith which the American public has in private enterprise is 
based squarely on the experience and conviction that by permittnig 
individuals to profit from the results of their individual effort, the total 
production of goods and services and the sum of employment will be 
greater than under any other system of economic organization- 
Private enterprise, like public organization and other forms of 
enterprise, justifies itself only insofar as it provides the American 
people with the highest possible level of consumption or standard Qi 
living. Any practice that restricts production, keeps up prices to 
consumers, or keeps down wages and other forms of mass income is 
contrary to the charter under which business receives public protection 
and approval. The acid test of business is not the profit-and-loss 
statement but the social audit. 

Concerning the basic elements of such an audit there has been a 
great deal of controversy. But it has been centered for the most part 
on certain impyonderables that are not capable of exact measurement. 
Such 'imponderables are, of course, of great importance. There is no 
doubt, for example, that the American people want their economic 
system of free private enterprise to promote (1) the growth, health, 
and education of the population; (2) resourcefulness and invention; 
(3) the democratization of business organization; (4) reason and 
effectiveness in labor organization; (5) international peace; (6) the 
enlargement of individual liberty; (7) increased opportunity for each 
individual to develop to the full all his intellectual, aesthetic, spirituajl, 
and economic capacities. 

But such tests are difficult, if not impossible, to apply. How 
measure quantitatively, for example, the extent to which human 
liberty has been increased even by business as a whole? Freedom 
for whom? The worker, the management, or the customer? Freedom 
from what? Factory routine and the regimentation of the assembly 
line? Or freedom from government interference? Or relief from 
high-pressure sales propaganda? The room for controversy is large, 
quantitative measurements nearly impossible. 

If difficult or impossible for business as a whole, how much more so 
for segments of business or for individual industries or for individual 



CONCENTRATION OF ECONOMIC POWER 3 

companies. Any attempt to make an ol^iective social audit of business 
must be limited to the items that are measurable. 

These, while few in number, are by no means of small import or 
significance. In fact they are basic to the concept of business, even 
as defined by business itself. Note the tests of performance implied,^ 
for example, in business as defined by the National Industrial Con- 
ference Board. It states: 

Enterprise may be broadly described as a way of collective life in which the 
arrangements and processes of making a living are based upon unconscious, volun- 
tary cooperation of individuals in producing, exchanging, and consuming the great- 
est possible amount of the goods and services they want with the least aggregate 
loss or sacrifice to themselves, through their experimental, competitive efforts 
to utilize available natural resources and develop potential human capacities.^ 

The measurable social objectives of business implied in this definition 
are maximum production of goods and services; maximum consump- 
tion; maximum pay rolls; minimum cost, i. e., the surrender by con- 
sumers of a minimum amount of effort in return for the products of 
business; maximum employment; full utilization of capacity. Cover- 
ing all of these items there exist statistics extending over different 
periods of time, possessing varying degrees of continuity and homo- 
geneity. The problem of selection is difficult but imperative. 

In tliis study hundreds of statistical series were examined and 
tested, num.erous adjustments m.ade.* But the scarcity of data to- 
gether with the lim.itations of tim.e and funds which made impossible 
any attem.pt to collect new figures on a large scale have restricted this 
attem.pt at a social audit of business to the 20-year period from. 1919 
to 1938 and in addition limited it to only six m.easurem.ents: 

1. Employment.- — Wliat has happened to the num.ber of workers 
who have been afforded opportunity for utilizing their abilities? No 
correction has been made for underemployment due to voluntary 
industrial m.ake-work programs nor has any account been taken of the 
shortening of the workweek since 1919. Comparison is made merely 
of the numbers at work. 

2. Production. — What has happened to the size of the stream of 
physical goods produced? No adjustment was attempted for changes 
in usability such as the greater mileage per barrel of petroleum nor 
for changes in quality or shifts in the size of the unit typically produced 
such as the purchase in recent years of relatively more lower-priced 
cars. 

3. Consumer effort commanded. — What has happened to the cost of 
the stream, of goods produced? How much has exchange value in 
terms of other goods and services changed? When the price of 
wheat drops by one-half the farmer has to do twice as much work to 
pay a given amount of debt. What has been the experience of con- 
sumers? What have they been compelled to surrender in exchange 
for what they got? 

These three may be said to constitute the real or physical tests of 
social performance, performance measured, be it noted, in each case 
against performance by the industry or business itself in a base year, 
1927, or base period 1923-25.^ In addition three dollar tests are 
made. 

3 National Industrial Conference Board, op. cit., p. xiii. 

* For a discussion of methodological problems and a description of the series used, see appendi.x A. 

» Reasons for selecting these years are given in appendix A, p. 128. 



A CONCENTRATION OF ECONOMIC POWER 

4 Consumer fy.nds absorbed.'^ — What has happened to the stream of 
dollars which the industry (broadly regarded as including the man- 
at^ement, stockholders, bondholders, and laborers but excluding sup- 
ptiers of raw materials and the Government) has collected from the 
public and its customers, in exchange for services rendered? Relative 
to collections in the base period or base year what has happened to 
the flow of consumer purchasing power absorbed by the industry in 

other years? ,,.,.,• 

5. Pay rolls. — What has happened to the size ol the income stream 
going to laborers in the form of pay rolls? How does mass intake 
here'compare with m.ass outgo in the form of consumer purchases? 

6. Dividends and interest.— What has happened to the flow of funds 
paid out to the proprietorship account in the form of dividends and 
interest? Is the trend here above, below, or the same as that for pay 
rolls or consumer funds absorbed? Due to the lack of adequate data, 
dollar receipts of the owners and controllers of enterprise in the form 
of rents, royalties, com.m.issions, m^anagerial salaries, etc., are ignored. 
In most industries (exceptions will be noted) rents and royalties are 
not important. They have decreased a good deal during the depres- 
sion. Managerial salaries are likewise a relatively small item, at least 
in the' industries characterized by large-scale production.^ Relative 
to pay rolls they declined less durmg the depression but have in most 
industries increased less rapidly in the last few years. Where returns 
to the owner-operator are important, as in agriculture, they have been 
included as part of the income to labor. 

In com.paring dividends and interest with, say, pay rolls, one should 
be careful not to exaggerate or deny the im.portance of disparities of. 
fluctuation ; on the one hand, no exaggeration: 

The emergence and existence of disparity em'phatically does not per se prove or 
indicate that dividend and interest payments have been paid out of wages or sub- 
tracted from them. * * * j^ merely shows that the fluctuations were not 
the. same. * * * Both categories, be it noted, combine a stable item with an 
unstable one; interest with dividends, salaries — and wages- in sheltered industries 
with wages in the unsheltered or heavy iiidustries, ^ 

On the other hand, let not preoccupation with present legalisms 
bias one toward denying the validity of lumping dividend payments 
with interest payments and comparing them with pay rolls which 
lump together wages and salaries. The former represent a sub- 
stantial portion of the payments to owners as a group (though among 
them many are both debtors and creditors), the latter comprise 
nearly all the income of the workers as a group. Pay rolls are properly 
comparable with dividends and interest.* 

« Those seeking at once an explanation of the limitations of the teruio and concepts here introduced should 
turn to appendix A, especially pp. 128-133. ' 

' .See appendix D, table 2, p. 181 below. 

9 T. J. Krcps, "Dividends, Interest, Profits, Wages, 1923-35," Quarterly Journal ui jiconomics, vol. 
XLIX. p. 5M. 

> See p. 96 below. Editor's footnote: "While the logic of the combination can be recognized, from the 
point of view of a statement of payments maclo to the owners of capital, the combination leads to seriotis 
misapprehension when compared with trends in pay roUsand other things over a period of time. A com- 
)arison of pay rolls with interest is relatively unimportant because interest charges are rarely, if ever, vol- 
jntarily assumed. On the other hand, a comparison of pay rolls with dividends produces a result almost 
Spposite in nature, if taken separately from interest. In other words, if the meaningless comparison with 
interest is not permitted to bury the interesting comparison with dividends, a very different picture is 
obtained which indicates the impropriety of permitting interest to obscure the facts as to dividends. The 
implication tJlat maintenance of interest and dividends through bad times is significant is quite unsatis- 
factory because the interest has to be maintained and the dividends, in fact, are not, in most industries. 
In other words, where the element of management discretion enters, the sacrifice of dividends is likely to 
be as drastic, if not more so, than the sacrifice in pay roll. 

"Even in the evaluation of pay roll trends, the .sacrifice of volume where there is no customer for the goods 
Is meanmgless, and therefore some differentiation is indicated between durable-goods industries and others 
^Ith postponable demand, on the one hand, and nondurable, nonpostponable demand situations on the 
ather."— Blackwell Smith. 



CONCENTRATION OF ECONOMIC POWER § 

These six items by no means constitute a complete or thorough- 
going audit. For they give no indication of such vitally important 
facts as percent of capacity operated, investment outlets provided, 
opportunity for new entrants, stability of operations, fullness of use 
of patents, modernization, tariff- or subsidy- or nuisance-cost to con- 
sumers and the like. None of these tests indicates whether business, 
is making a wise use of our natural resources, preventing soil erosion 
and wasteful exploitation. Nor do they permit evaluation of the 
impact of business, business publicity and business standards on the 
spread via newspapers, magazines, motion pictures, and radio of 
scientific economic- fact. Nor is any measurement made of the 
extent to which the dollar sign has been placed on the sacred religious, 
aesthetic, cultural, and ethical aspirations of the American people. 

But the six tests enumerated above do afford a ray of illumination 
on each of six important kinds of business policy. The figures on 
employment give a fragmentary critique of the employment policies 
of an industry. Those on production measure o a certain extent 
the amount of restraint on production. When compared with em- 
ployment they indicate industrial policies on technology. The 
series on consumer effort commanded shows in part the relative 
strength of industrial prices and the social cost or benefit of industrial 
price policies. The figures on consumer funds absorbed measure the 
stream of funds available for apportionment (to labor and to the 
proprietorship account), while those on pay rolls give an important 
clue to wage policies. The series on dividend and interest payments 
indicates in a general way the nature of business policies vis-^-vis 
stoclcholders and bondholders. In each instance the series used 
affords a sharp indication of social benefit or detriment, though it by 
no means affords a conclusive answer. 

Industries may, for example, show large increases in employment 
during the period from 1919 to 1938, and employment policies in 
general be none the less unsatisfactory when measm'ed by figures, 
e. g., on labor turn-over, child labor, hours of labor, or hiring of 
members of trade luiions. Production may likewise have increased 
but production poUcies be antiquated when measured by expenditure 
for research, by amount of irrenlaceable natural resources utilized, 
by cost of production, or by quality of product. '° In short, in no in- 
stance does one set of figures afford a complete, well-rounded audit 
even of the item measured whether it be employment, production, 
consumer effort commanded, consumer funds absorbed, pay rolls, or 
dividends and interest. 

In the forthcoming chapters it is planned to utilize these 6 tests 
to measure the social performance first of some 22 individual indus- 
tries (ch. II), next of some 9 segments of the economy (ch. Ill), then 
of 3 individual companies (ch. IV), and subsequently to make an 
extremely fragmentary analysis of the social performance of all 

m Editor's footnote — "Taking the criteria of social performance as a whole, some method must be found, 
before the system is thoroughly workable, to properly weight the judgment- in favor of efficiency of produc- 
tion that involves reducing employment and pay rolls relative to unit of product, thereby making available 
additional reserves of employables and funds for production of more poods. In other words, increased 
employment and pay rolls are not in themselves advantages, unaccompanied by advances in efficiency and 
passing on of the advantages to the consumer. One serious weakness in the total collection of "standards 
here presented, which is admittedly very difficult to remedy, is the absence of recognition or measurement o f 
increased values and improvements in quality, etc."— Blackwell Smith. 



a CONCENTKATION OF ECONOMIC POWER 

corporations (ch. V), and of the economy as a whole (ch. VI). In 
chapter VII certain emergent patterns of social performance are dis- 
cussed, while the concluding chapter is devoted to indicating how a 
bureau of industrial economics might use measurements of this sort 
as economic criteria to assess the need or lack of need for application 
of techniques of social control. 



CHAPTER 11 
SOCIAL PERFORMANCE OF TWENTY-TWO INDUSTRIES 

The 22 industries studied in this chapter comprise,. in addition to 
steam railroads and the utilities, the largest of the mining and manu- 
facturing industries. Together these account in boom times for 
more than 75 percent of all employment in manufacturing, mining, 
and public utilities. Some are highly competitive, others strongly 
organized. All types of products are included — raw materials, finished 
manufactures, durable, nondurable producers' and consumers' goods. 
In each instance one of the major reasons for including the 
industry is that reasonably satisfactory statistics could be pieced and 
spliced together. 

In each case a chart wUl be shown giving indexes for the period 1919 
to 1938. Each will be divided into two parts: the top section com- 
paring annual fluctuations in employment, production, and consumer 
effort commanded ; the bottom section comparing covariation in the 
annual dollar totals of consumer funds absorbed, pay rolls, and 
dividends and interest. In analyzing the charts the following sets of 
questions have been put to the data: 

1. Taking each curve in turn (employment, production, consumer 
effort commanded, consumer funds absorbed, pay rolls, and dividends 
and interest), does one find a net increase or decrease, that is, is the 
curve higher at the end of the period or lower than it was in some 
earlier year or period, say 1929, or the base year? 

2. Is the average amount of such increase or decrease per year 
relatively large or small compared, for example, mth that for industry 
as a whole? 

3. Is such increase or decrease steady or are there pronounced 
cyclical variations? 

4. Taking groups of curves, does one find pronounced divergence 
from the relationships that existed in the base year or base period or 
have these remained substantially the samS? At no time should the 
mistaken inference be made that any particular relationship is 
assumed to be "normal" or "good" or "ideal" in the base year. Nor 
do divergence or confluence of the curves indicate or measure anything 
more than a departure from, or persistence of, those relationships. 
Thus, for example, pay rolls or dividends and interest relative to 
consumer funds absorbed may in some industries have been abnormal 
in the base year or base period; so also the relation of employment 
to production or oC total output to the amount it commanded in the 
market. The charts measure. They do not evaluate. 

While these are the questions asked, the answers are in many 
instances of insufficient significance to warrant special mention. 
Consequently, only the statistical highlights are dealt with. More- 
over, no attempt is made to explain why an industry performed as it 
did. The reasons for such performance are as numerous and varied 

25&147— 40 — No. 7 2 7 



g . CONCENTRATION OF ECONOMIC POWER 

as the executive decisions, market forces of demancT and supply, legal 
compulsions, and institutional influences which affect modern business. 
Even to understand completely a single chart requires a sketch of two 
decries of economic history for each of the industries concerned, a 
task far beyond the scope of this study. 

BAKING AND CONFECTIONERY INDUSTRY 

The facts for the baking and confectionery industry are shown in 
chart 1. It is an industry which in 1938 employed 5 persons for every 
4 that were employed in 1927. Employment has increased faster than 
production, due in part to a reduction in the length of the. workweek 
from levels of over 50 hours in the twenties to about 42 at the present 
time. Production has sirnilarly exceeded 1927 and 1929 levels sub- 
stantially keeping pace Avith the growth in population. It has also 
been steady. At the same time, the baking and confectionery 
industry has commanded smaller amounts of consumer effort — in 
other words, prices of bakery and confectionery products have gone 
down more than has the index of general prices which includes all 
goods, wages, and rents. The industry has been steadily rendering 
more service to the public, at the same time offering more opportunity 
for those seeking .jobs. 

In turning to the bottom section of the chart, note that the industry 
has expanded its pay rolls faster than its payments to stockholders. 
In short, by its wage disbursements it has injected into the stream of 
mass buying power an unusually large proportion of total funds 
absorbed. In 1937 it collected net from the public only $94 for every 
$100 it absorbed in 1927 while paying out 15 percent more in wages. 
Dividends and interest payments have remained relatively low. 

The baking and confectionery industries have been combined, be- 
cause thereby it was possible to make use of the Bureau of Internal 
Revenue data on dividends and interest which are not available for 
the two industries separately. The production indexes for the two 
industries also correspond rather closely. Furthermore, the baking 
industry accounted for almost 75 percent of the total employment and 
about 80 percent of the pay rolls and consumer dollars absorbed in 
the base year. Thus the chart reflects predominantly the trends in 
the baking industry. In short, the figures are homogeneous. 

The industry as a whole satisfactorily meets all the social perform- 
ance tests. But the pattern for individual areas may, of course, be 
considerably different. The baking industry varies considerably from 
city to city. Regionally the prices for baking products between 1927 
and 1937 show dissimilar fluctuations. The price of bread in Chicago 
in 1937 was 77.7 percent of the 1927 price; in Cincinnati, 89.9 percent; 
in New Orleans, 91.5 percent; in New York, 96.9 percent; and in San 
Francisco, 101.7 percent. 

Such difference in pattern from that for the industry as a whole 
exists not only regionaUy but also appears between different types of 
products. Thus, according to data taken from the Census of Manu- 
factures covering both baking and confectionery prices for the country 
as a whole, the prices of bread, rolls, and coffee cake were almost 
exactly the same but 1937 prices for biscuits, crackers, and cookies 
declined to about 73 percent of their 1927 averages and pretzels to 
65 percent. Prices of confectionery goods have decreased much more 
than those for bread. 



CONCENTRATION OF ECONOMIC POWER. 



CHART I. 

SOCIAL PERFORMANCE OF THE BAKING 
AND CONFECTIONERY INDUSTRY 

UNITED STATES, 1921-1938 



160 
140 












1 
































■ 


























































1 




cc 


)NSU 


MER 


EFF 


ORT 




PRODUCTION 








EMKLUTMtNl 


COMMANDED 


1 >-^ 


100 
















1 J> 




^^v^^ 


r 
























1 7 " ' 








"V"*^ "*' ->^ 1 1^ 1 ■■'■ 








JO 
60 
40 

ao 

o 


•■"■*" 





...*^ 


"■' 




\ 


C1l>- 


^... 












»•■' 













































































































































































1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 r932 1933 1934 1935 1936 1937 1936 1939 1940 









































































































OIVI 

l_ "* 


)ENC 
TER 


>S A 
EST 


4D 










PAY 


ROL 


lS 










c 


1 
3MSUMER FU 
ABSORBED 


XDS 






J^ 


^. 










V 


f" 


■•' 










\ 


V 


- 


^ 


'^ 


^ 


.' 








\ 


S^ 


, 


' 's 


y 


y° 












<r^ 


>- 




















\: 


^ 


/> 


<^ 








































V 









































































































1919 1920 1921 1922 1923 1924 I92S 1926 1927 I92B 192a 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



10 



CONCENTRATION OP ECONOMIC POWER 



Finally, in intorpreting .the chart one should remember that the 
margin represented by "value added by manufacture" (the statistic 
here used to represent consumer funds absorbed) depends not only on 
volume of production and prices but, since "value added" is a residual, 
on what happens to the prices of the items whose cost is deducted, that 
is, raw materials, containers, power, and so forth. If there is a con- 
siderable rise, for example, in the prices of raw materials, the rnargin 
representing consumer dollars absorbed may show a decline simply 
because the price and volume of production of the finished articles are 
not hkely immediately to show a compensating rise. Thus in the case 
of confectionery goods the margin representing consumer dollars ab- 
sorbed declined 29 percent while the value of products declined only 
22 percent due in large part to the fact that the prices of containers 
and of certain raw materials relative to 1926 were higher in 1937 than 
those of the finished products. 

KNIT GOODS INDUSTRY 

The industry manufacturing knitted outerwear, hosiery, under- 
wear, children's wear, and the like, has grown steadily in the last 20 
years, reaching levels of production in 193'7 nearly double those of 
1919. As is evident from chart 2, employment has hkewise increased 
beyond 1919 levels, the figure in 1937 being a third higher. Particu- 
larly favorable, however, is its price record. Notice that the curve of 
consumer effort commanded, while paralleling that of production until 
1927, has steadily diverged until in 1937 it was nearly 40 points below 
the figure for production. The exchange value of knitted goods, in 
other words, has .gone down. The knitted goods industry is giving a 
greater amount of service in return for the dollars it secures from the 
public. 

The industry is also disbursing more in wages per dollar of funds 
collected from the public than it did in the twenties. While total pay 
rolls have not reached 1929 levels, they do exceed the average level of 
the twenties. Dividends a.nd interest in this industry have tlu-oughout 
remained low. 

CANNING AND PRESERVING INDUSTRY 

The canning and preserving industry^by ,1937 had increased its em- 
ployment 65 percent above the level of 1927 and nearly 30 percent 
above that of 1929. In fact, employment (see chart 3) increased some- 
what faster than production, again due in large part to a reduction in 
the length of the work-week. The additional fact should be borne in 
mind, however, that operations in the industry are highly seasonal. 
Figures concerning, the average number of employed tend to hide such 
underemployment and are likely to be high when compared with pro- 
duction and pay rolls. These obviously reflect the length of time 
worked — that is, total man-hours rather than number of workers on 
pay roll.^ 

' For detailed discussion of this point, see Biennial Census of Manufactures, 1937, pt. I, p. 86. 



CONCENTRATION OF ECONOMIC POWER 



11 



CHART 2 

SOCIAL PERFORMANCE OF THE KNIT 
GOODS INDUSTRY 

UNITED STATES, 1919-1938 



INDEX NUMBERS 









































































PRODUCTION 


















\ 












cc 


)NSUMEP 
COMMA 


EFFORT 
NOEO 














- 








EMPLOYMENT 






7 1 >"- 


,,,„^ 


\^ 


^ 






\ 






^^ 


J 


.^^^»<%^ 1 1 1 ^ 










\ 




^^^ 




NC? 


,-==■ 


r^- 




1 
1 
1 


1 '**"' 




...... 




..^.. 





- 








- 


^. 


'^"' 









































































































































































1919 1920 1921 1922 1923 1924 I92S 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 

















































160 
140 


J40 
















































































P 


AYR 


)LLS 














:ONSUMER FUNDS 
ABSORBED 






^ 


A 


Ov 


NTEREST 






J 








100 


T 




. ^-'''■ 


/ 














/ 


A 




^ 


>^j^^ 


\ 


/ 








/' 


^ 


N 
\ 










^\. 


• 














^ 


^ 


^ 


/ 
















\ 


\ 

^ 


^ 


• 






1 
f 






























\ 








\ 

\ 






^ 


J 










































■'^ 


../ 




































































1919 1920 1921 1922 1923 1924 1929 1926 1927 I92S 1929 1930 1931 1932 1933 1934 1935 1936 1937 1936 1939 1940 



12 



CONCENTRATION OF ECONOMIC POWER 



CHART 3. 



SOCIAL PERFORMANCE OF THE CANNING 
AND PRESERVING INDUSTRY 

UNITED STATES, 1919-1938 



indA numbers 

(1927 • 1001 
180 




1919 1920 I92hl922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1938 193.4 1935 1936 1937 1938 1939 1940 



INDEX NUMBERS 
(1927' 1001 

ISO 

































s 


1 1 ■! 1 

DIVIDENDS AND 
llNTFRFST 1 




















CONS 


UMER F 
ikBSORBE 


UNO' 











./I. 












7. 






















A 










!/ i/oV 


























^ \a 










/ 


/i 


\ 






H 


YROLLS 






-— ' 






-4 


/ / 






t 








/ 


.J 




\ 








V 


-A 

// 


k 




t 




s/' 






\ 






1 














\ 


— 


— 










\ 















INDEX NUMBERS 
II927'I00) 

ISO 



1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



CONCENTRATION OF ECONOMIC POWER 13 

This industry has not only increased its^ production more than 25 
percent beyond 1929 levels but has been offering it at prices which 
afford consumers more for their money. The amount of consumer 
effort commanded since 1929 has steadily remained below production, 
indicating a lower exchange value for products of the canning and 
preserving industry. 

In looking at the dollar figures, notice that pay rolls have in the 
main kept pace with the number of dollars absorbed from consumers, 
being somewhat lower in 1929 and risin'g to levels somewhat above 
consumer funds absorbed in 1937. The dividends and interest record 
shows an interesting lag behind pay rolls, rising in 1930 by more than 
.20 percent over 1929 and faffing less rapidly in 1931 and 1932. But 
they continued to fall in 1933 while pay rolls began to pick up. By 
1936 they were again nearly 35 percent higher tlian pay rolls and ind- ed 
nearly 40 percent larger than the total for dividends and interest in 
1929.' 

AGRICULTURAL IMPLEMENTS INDUSTRY 

In recent years a good deal of attention has been given to the 
agricultural implements industry. The cyclical variations in its pro- 
duction and prices have frequently been contrasted with the course 
of output^and prices in agriculture. During the depression the volume 
of agricultural products remained relatively steady, but note in chart 
4 the terrific drop in the production of agricultural implements. The 
indexes of production fell from 128.7 i^ 1929 to 10.8 in 1933 and -ose 
back to 137.5 in 1937. The high is 13 time? the low. The swing in 
emplo3mient has been less, faffing from 125.3 in 1929 to 37.3 in 1933 
and rising to 150.1 in 1937. Employment since 1929 has, on the whole, 
been kept at lev.els liigher than production. 

Consumer effort commanded has likewise been kept at levels higher 
than production, especially since 1927. In fact, in 1933 the exchange 
value of agricultural implements was roughly twice as great as it had 
been in 1927; that is, more than twice as much community effort was 
required to buy a unit of product in this industry as was required lq 
1927 or 1937. The index for production declined to 10.8, that for 
consumer effort commanded to only 22.3. 

In turning to the bottom part of chart 4, note that pay rolls also show 
extraordinary fluctuations going down from 126.9 in 1929 to 19.3 in 
1932, rising to 161.7 in 1937, a more than eightfold increase in pay 
rolls in the 5-year period. But iiii the thirties they have consistently 
stayed above the amount of consumer dollars absorbed; that is, a 
proportionately larger share of the dollar which the industry received 
from consumers has been paid out to labor. On the whole, pay rolls 
have also been kept above dividends and interest payments although 
here again should be noted the lag in readjustment downward in the 
early thirties. The chart strikingly shows the instability of the 
industry, an instability which during the trough of the depression 
made it one of the poorest performers in the econom3^ 



14 



CONCENTRATION OF ECONOMIC POWER 



CHART 4. 



SOCIAL PERFORMANCE OF THE AGRICULTURAL 
IMPLEMENTS INDUSTRY 

UNITED STATES. 1919-1938 



WDex NUMBERS 



INDEX NUMBERS 

(1920'MOO) 

180 




919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 r932 I93J 1934 1935 1936-1937 1938 1939 1940 



Noex NUMBERS 

(I927'I00) 

180 



INDEX NUMBER 











' 


( 


1 1 1 

;ONSUMER FUNDS 
ABSORBED 




DIVIDENDS 


IXND 
































V 


V 






7 












A 




























% 


i 










1 

1 / 
1 I 


\ 

\ 












PAYROLLS 








WT\ \.r" 










ll 


\ 














w 






Jl\^\ 










* 


















\ 

\ 


/ 


/ 


./ 




\ 


1 








/F 
















y 


^ 


V 
"V 




/ 










V 


^ 




/ 


•A 

1 1 














^ 




















V 


\ 




/ 


/ 

f 




































\ 

1 


>.v 




/ 








































V 
















1*19 


1920 


1921 


1922 


1923 


1924 


1925 


1926 


1927 


1928 


1929 


1930 


1931 


1932 


1933 


1934 


I93S 


1936 


1937 


1938 


939 


940 



CONCENTRATION OP ECONOMIC POWER 15 

PETROLEUM REFINING INDUSTRY 

In few industries has the produttivity of labor increased more 
rapidly in recent years than in the refining of petroleum. With an 
output 50 percent above 1927 levels (see chart 5) the industry has 
increased employment by one-sixth. It has also passed on a good 
deal of the benefits to consumers particularly in the thirties. Notice 
that the line of constimer effort commanded forms a scissors with 
that of production from a point in which the index was roughly 2K 
times that of production in 1919 to one in which it is only 9 percent 
of production in 1937. Pay rolls have kept pace throughout with the 
trend in consumer funds absorbed. The industry has tended to 
disburse to its workers in the form of pay rolls about the same percent 
of the consumer dollar. 

The dividends and interest series fluctuates widely, increasing 96 
percent from 1927 to 1930. Even in 1931 it was 64 percent above 
1927 figures. Precisely what the figures should be in 1934 and 1935 
cannot be ascertained from the data as published by the Bureau of 
Internal Revenue. Petroleum refining is classified by the Bureau 
under "Chemical and allied products," but in 1934 a change was made 
in industrial classification which made subsequent data incomparable. 
From the record of certain large petroleum corporations and their 
dividend disbursements in 1934 and 1935 as reported in the Wall 
Street Journal and in the publications of the Standard Statistics Co., 
the fact is known that dividends and interest disbursements on the 
whole did not seriously depart from the levels of 1933. In short, they 
were not out of line \vith the trend in consumer funds absorbed. 

In conclusion, the fact should be noted that the curve of production 
in the petroleum refining industry is an excellent indicator of consumer 
enjoyment. As is well known, the record of depressions is usually 
kept in terms of the production of durable goods such as iron and 
steel, building materials, and the like. Yet consumer -enjoyment 
depends not on the number of new houses but on the total amount of 
housing available and the use made of it, not on the number of new 
cars produced but on the total number of cars in use and the mileage 
wiiich those cars run. The index of petroleum refining faithfully 
reflects the use made by consumers of their automobiles, together, of 
course, with such other facts as the use of oil burners in the home, use 
of steamships, Diesel engines, and the like. Thus in terms of consumer 
enjoyment this index would tend to show that the level of consumption 
fell about 20 percent between 1929 and- 1932, the 3 years in which the 
Federal Reser^J^ Board index of industrial production fell more than 
50 percent. Since 1932 it has increased by nearly 50 percent to a 
level more than 20 percent higher than in 1929. This is not only an 
increase greater than that of the population as a whole but an increase 
conservatively stated inasmuch as technical improvements both in 
tne extraction of values from petroleum and in the utilization of 
gasoline and kerosene by automobiles and other internal-combastion 
engines have considerably increased the amount of consumer enjoy- 
itient from a gallon of gasoline or kerosene. 



16 



CONCENTRATION OF ECONOMIC POWER 



CHART 5. 



SOCIAL PERFORMANCE OF THE PETROLEUM 
REFINING INDUSTRY 

■ UNITED STATES. 1919-1938 





























































































( 


;oNs 


UMER EF 


FOR 


■ 






















r 


- 










COMMANDED 


,, 


EMPLOYMENT 




p 


RODUCTION 




/ ' 












\ 




X 


■M 


/ 




A A 












\/i 




^/ 1 


.^ / 


J-'-^^^ 


^ 








^-N^// 


/ 


-^ 


\ >?=:•*: 










-■^ 


^ 


/ 


/ 




■^ 






V 




^ 










~ 














/ 
^ 




















. 














.-i 


_^ 


^ 


/ 





























































































































INDCX NUMBCRS 

(1927 >100) 

200 



I>I9 1920 IMI 1922 1923 1924 1925 1926 1927 1929 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1938 1939 1940 















DIVIDENDS AND 




A 






































! 


\ 
























\ 


1 








a 


iNSl 


MER 


Fu^ 


DS 






r 






\ 
































/ 

/ X- 


A 




■ 












A- 












\ 


\ 


PAYROLL 


s 






y 


iX 


\/ ..'- 


\\ 




V 








..-f/ 








^1 


/ 




"^y^ .' 




\ 


^"^ 


■ /^ 




•^ 


^ 


-= 


"«L - 


^-»** 










^ 


-,l 


<^ 


■^ 


' 










' 












■ 


































































































































































1 



1919 1920 1921 1922 (923 (924 (925 (926 (927 (926 (929 (930 (93( (932 (933 (934 (935 (936 (937 (933 (939 (940 



CONCENTRATION OF ECONOMIC POWER 17 

AUTOMOBILE INDUSTRY 

The automobile industry from a cyclical point of view is one of the 
more unstable industries in the economy, manufacturing a durable 
consumer's goods, the purchase of which can be and is postponed during 
periods of unemployment and low income, though those already on 
the road are more intensively utilized. The number of motor vehicles 
sold even in good years such as 1937 is somewhat less than a fifth of 
the total number of motor-vehicle registrations. In average years it 
is less than a sixth. So far as cyclical stability is concerned, the rating 
of the industry is at best unsatisfactory. But in terms of trends the 
industry employed more men in 1937 (see chart 6) than in any other 
year in the period from 191?) to 1938. Production was likewise higher' 
than in any other year except 1929. Furthermore, the amount of 
consumer effort commanded has tended steadily downward. In com- 
paring 1925 and 1935, note that production increased 10 percent but 
the exchange value of that production was a fourth lower. The 
consumer's dollar, in other words, went about a third further. 

One qualification should, however, be kept in mind. While prices 
have declined to some extent in this industry a good deal of the in- 
creased spread between production and exchange value is due to the 
fact that in recent years relatively more small and. moderate priced 
cars have been merchandized than during the twenties. 

Turning to the dollar figures, note that pay rolls have more than 
kept pace with the dollars turned over to the automobile industry by 
consumers. In other v*'ords, a larger share of the consumer dollar 
goes to labor now than went to labor in 1929 or 1925. But the in- 
stability of pav-roll disbursements has been marked, the index declin- 
ing from 122. fin 1928 to 41.1 in 1933, rising threefold to 123.4 va 1937. 
A similar instability characterizes dividends and interest disbursements 
which declined in 1932 to about one-fourth what they were in 1928 
and increased fourfold in 1936 over what they had been in 1933. The 
automobile industry as a matter of fact has been a bonanza among 
industries in the economy. 

BOOT AXD SHOE INDUSTRY 

The boot and shoe industry, on the other hand, is one of the most 
stable industries. In the 20-year period since 1919 (see chart 7) the 
index of production has never fallen lower than 78 in 1921 nor risen 
higher than 115.5 in 1936. Employment has been even more stable 
though in recent years it has not kept up with production due to certain 
rather striking technological advances. Relative to 1929 a 6 percent 
larger number of employees in 1937 were putting out a 10 percent larger 
volume of product. The price record of the industry has been most 
commendable. Compared with 1927, for example, it gave the con- 
sumer 14.4 percent larger volume of service in 1937 while receiving from 
him in return in terms of effort 16.6 percent less. It gave one-seventh 
more and got one-sixth less in return, though providing increased 
emplo3^ment opportunity. 

Pay rolls, however, have not been so stable. In 1932 they were 40 
percent lower than in 1927. Even in 1937 they failed b}" more than 
15 percent to reach the level of 1927 and by nearly 30 percent to 
reach the level of 1923. Dividends and interest, on the other hand, 



18 



CONCENTRATION OP ECONOMIC POWEU 



CHART 6 

SOCIAL PERFORMANCE OF THE 
AUTOMOBILE INDUSTRY 

UNITED STATES. 1919-1938 




1919 1920 1921 1922 1923 1924 1925 1926 I9L-7 1928 1929 1930 1931 i932 1933 1934 1935 1936 1937 1938 1939 1940 



INDEX NUMSEI 







■ ■- 






i ' i 1 \ i 1 

1 1 CONSUMER FUNDS | 


i 


















1 




1 / ' ' 1 OIVIOENOS AND 

^i ; INTEREST 1 














Pt 


YRO 


i? 








,/ 


A i 




t 
















\ 

!> 


4^ 


y- 


;A\h~ 1 












"^ 






1 
// 


1 






' 1 
1 


1 y 








\ 


1 


// 
// 
11 




1 


Vi\ 










» 








■ 




V 


i ■ 1 ' 


1 i \^^^\M \j 




















,j 1 1 1 j V\^\J.^' 






1 






o 








'!"■! M ! ! H 1 i 1^ 






' 




, 



1919 1920 1921 1922 1923 (924 I32S 1926 1927 1926 1929 1930 I93l 1932 1933 1934 1935 193^ 1937 1938 1939 1940 



CONCENTRATION OF ECONOMIC POWER 



19 



CHART 7 

SOCIAL PERFORMANCE OF THE 
BOOT AND SHOE INDUSTRY 

UNITED STATES, 1919-1938 



y 






































































































CO 


NSUMER EFF 
COMMANDED 


3RT 




























£0 


-E«*LOYMENT 


7 






PKOOUC 1 ION 




^ 




y 


M^ 








/ 








y' 


/ 


^ 


^ 


■v 








>v 




-; 


^^ 


\, 


- 


-^ 


y^^ 


"«M-»r 




s:;;;: 


•••., 


-^ 


^,.,, 














































































































1 



















































































1919 1920 1921 1922 1923 1924 1925 I92S 1927 1928 1929 1930 1931 1932 1933 1934 I93S 1936 I93T 1936 1939 1940 

















1 — 






K 




OiVIOENOS AND 
INTEREST 




















1 ' 1 




1 • 




i>r 


























/ 


V 


> 
























1 i 


PAYROLLS 




i 






\ 




















ISO 


CONSUMER FUNDS 
■ ABSORBED i ./ 


/l 








\ 




1 


\ 


1 
































A 1 ,' 


' < 




H 


\ 






t? 


*-^ 




r yT 












"■'' 


'% 


\ 




\ 






x' 


/ 


































\ 


^ 


,'' 


^ 




s 
































































































n 













































NOeX NUMSENS 

1 1927 •1001 

ISO 



1919 1920 1921 I9Z2 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



2Q CONCENTRATION OF ECONOMIC POWER 

have held up remarkably well, the percent of consumer funds absorbed 
. going to dividends and interest increasing noticeably between 1927 
and 1930 and still being considerably out of line in 1936. The volume 
of shoes sold to consumers was one-seventh larger in 1937 than in 1927; 
the amount of money received was nearly 22 percent less. 

SLAUGHTERING AND MEAT PACKING INDUSTRY 

In the slaughtering and meat packing industry employment in re- 
cent years (see chart 8) has run well ahead of production due possibly 
to the decreased length of the working day. The amount of consumer 
effort commanded has likewise run ahead of production. The indus- 
try is one therefore which is requiring more goods from the public in 
retm-n for what it gives. In 1937 the industry produced 10 percent 
less product and commanded 8.7 percent more consumer effort than 
it did in 1927. But it also employed 7 percent more laborers. 

Despite the fact that production was 10 percent lower in 1937 than 
in 1927, the number of consumer dollars absorbed was 2.2 percent 
higher. But pay rolls were also higher by 5.5 percent. Most un- 
stable of the income streams has been that going to stockholders. 
From a level of 117.7 in 1929, it declined to 8.1 in 1932 since which 
time it has increased nearly eightfold to 62.7 in 1936. During the 
depression, in other words, the slaughtering and meat packing in- 
dustry decreased most of all the payments going to stockholders and 
maintained a relatively steady volume of pay rolls and of employment. 

COTTON GOODS INDUSTRY 

The cotton goods industry, while also a consumer-goods industry, 
shows fully as much instability as did the Federal Reserve Board index 
•of general industrial production. In chart 9 notice that despite the 
considerably decreased length of the workmg day, the amount of 
employment has barely kept pace with the amount of production, 
indicating the substantial increase that has taken .place in man-hour 
productivity. Employment in the ihdustry at no time regained the 
levels of 1927 even though m 1937 it did reach the levels of 1929. But 
its product has also never been able to command the amount of con- 
sumer effort since 1927 that it commanded in that aijicl certain other 
previous years, notably 1923 and 1919. In short, as is well known, the 
prices of cotton goods have been low relative to the prices of other 
fii^ished manufactures. 

Turning to *the dollar figures, note 'that the instability there is 
^eater than that in production or employment. Pay rolls in 1932 
were down to only 41 percent of what they had been in 1927. Though 
they had doubled by 1937 they never reached the 1927, 1923, or 1920 
■levels. Bui neither for that matter .did the income stream absorbed 
from consumers ever reach the 1927 level. In 1937, despite the fact 
that production was only 5 percent less than in 1927, the dollars 
absorbed from consumers were more than, 20 percent less, while those 
paid out to labor were 17.7 percent less. Even greater, however, has 
been the diminishing income of those receiving dividends and interest. 
While increasing in 1928 and 1929 over 1927, sue' payments in the 
thirties never came up to 60 percent of that level. Stockholders in 
the cotton goods industry have not fared well. They probably have 
little responsibiUty for the present excess of idle money. 



CONCENTRATION OF ECONOMIC POWER 



21 



CHART 8. 



SOCIAL PERFORMANCE OF THE SLAUGHTERING 
AND MEAT PACKING INDUSTRY 

UNITED STATES. 1919-1938 





1 










































i 1 






































•u 












CONSUMER EFFORT 
COMMANDED i 

— V 1 




nn/^ni i^-ri/\Li 














T 








-f 




1 








■^>^ 


c~ 


_^..., 




■^ 
^ 


yj\^ 


/^ 


-^ 








60 


^i^f 




















\ 

V 


'H' 






j ! 

i ! 






































40 
20 


i 












































j i 
1 1 


1 
































I ! ! j 1 i 





























I<il9 isao 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 193$ 1937 1938 1939 1940 



: M i 






^ 


























1 ! 

'Ill 
; PAYROLLS 
































\ \ /" i CONSUMER FUNDS 
1 1 y; 1 ABSORBED | 


DIVI 

1 n 


1 i 

3ENCS AND 
JTEREST 
















I >x K., 


^^^^tM 




<f 


















\ 


V 


y 




— 7" T7V 

! /i "^ 


J 




'\V 




/'>K'' 


■ 


















. 






V 




\ 


^ 




•■ 
































\ 




/ 


/^ 


y 














1 


















\ 


V 


















._. 
















,. 














1 



1919 1920 1921 1922 1923 1924 1923 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



22 



CONCENTRATION OF ECONOMIC POWER 



CHART 9 

SOCIAL PERFORMANCE OF THE 
COTTON GOODS INDUSTRY 

UNITED STATES, 1919-1938 



ISO 






























































































-N 




CON 


SUMER EFFO 
COMMANDED 


RT 








































N- 




A. 








1 
PRODUCTION 






\ 1 
EMPL0YMEN1 


• 












T 




"^ 


PP 








— ^ 


^ 


9 




^ 


as^ 




^ 


4 


k 






^ 


y 




^ 


V-^ 












^ 




1 












^ 


^ 


s/ 


^ 


Q 


^ 

-y 


/■ 




>1 
































C 


















































































































1919 


1920 


1921 


1922 


1923 


1924 


1929 


»26 


1987 


1928 


1929 


I9S0 


i93r 


1932 


1933 


19 


34 


1935 


1936 


1937 


1938 


1939 


1940 



KX NUMBERS 

Ii9ar-i(x)) 

180 



INDEX NUMBEH 
(1927 •100) 

ISO 




1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1938 1939 1940 



CONCENTRATION OF ECONOMIC I'OWER 23 

•WOOLEN AND WORSTED GOODS INDUSTRY 

The story for the woolen and worsted goods section of the textile 
industry is different only in minor details. In this industry employ- 
ment has kept even with production (see chart 10) though failmg by 
25 percent even in 1937 to reach the levels of 1923. Production 
similarly, while exceeding in 1935, 1936, and 1937 that of 1929 by as 
much as 15 percent^ has never reached the level of 1923. The reduc- 
tion in consumer effort commanded has on the whole been about equal 
to that in production — in short, prices have stayed relatively in line 
with prices in general. 

Pay roll disbursements similarly kept pace almost exactly with the 
size of the income stream" which the woolen and worsted goods indus- 
try obtained from the public. There has been marked instability 
despite the fact that this is also a consumer goods industry. Pay 
rolls in 1923, for example, were 128.8 percent of 1927 levels; in 1932, 
45.9 percent. This i5istability is likewise reflected in the dividends 
and interest figures which in 1932 reached a level only 22.6 percent 
of that existmg in 1927. This industry has likewise not yielded 
adequate or stable revenue to its proprietorsliip account. 

CHEMICAL INDUSTRY 

Among the industries that have shown rapid growth since 1927, 
the chemical industry is outstanding. It is an industry (see chart 11) 
in which production in 1936 was 63 percent greater than in 1927 and 
more than 20 percent larger than it was in 1929 and higher now (August 
1940) than at any previous period in American liistory. Employment 
figures in 1937 were also higher than in 1927 by more than 50 percent. 
Growth has been fairly steady, not because of any substantial decrease 
in prices but because modern productive processes tend to become 
increasingly chemical in nature. This has sometimes been called the 
chemical phase of the industrial re volution. ^ 

Since the World War the industry has been making a higher type 
of product in the United States with the result that the increase in 
consumer dollars absorbed has been fully as rapid as the increase in 
physical volume of production. The lag in pay rolls as well as em- 
ployment is indicative of the increased mechanization and the intro- 
duction of automatic processes. Nonetheless, pay foils in 1937 ex- 
ceeded 1929 levels by 20 percent. Suffice it to say that if every 
industry^ in the economy had behaved as the chemical industry, 
there would be a higher volume of production per capita today than 
at any previous period in American history. There would be no 
unemployment. 

ELECTRIC LIGHT AND POWER INDUSTRY 

Of more than usual interest are the results obtained in the electric 
fight and power iiidustry. (See chart 12.) It is the first of the indus- 
tries so far mentioned in which an extensive amount of govwnmental 
regulation exists. It is likewise an industry that has undergone rapid 
technological changes. Above all, it is the industry in which^ there 

» See among others, T. J. Kreps, Chemical Phase cf the Industrial Revolut-on, in T. N. Carver, 
Economics Sociology and the lyfodern World (Harvard' University Press. 1935). 

2.56147— 40— No. 7 3 



24 



CONCENTRATION OF ECONOMIC POWER 



CHART 10. 



SOCIAL PERFORMANCE OF THE WOOLEN 
AND WORSTED GOODS INDUSTRY 

UNITED STATES, 1919-1938 







r 




RT 




































co^ 


JSUMER EFFC 
COMMANDED 








































lV 












■y{- 


>A 
















1 1 

PRODUCTION 












••.. 





..•;■ >5<5 \ 






A 





"1/ 


/N 




^ 


^ 


'j"^ 
















t:. 


•^ 


^ 








N 


\^ 


^ 










""^ 


•■■»r^ 


C: 


^ 




■i'^ 


V 


\ 


























c 


s/ 


/ ' 








\ 











































































































































1919 1920 1921 1922 1923 1924 1925 1926 1927 1926 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1938 1939 1940 

















01 


^IDENDS AND 
























































ABSORBED 


r 








/ 




\^ 




V 






%\ 




\ 




























>^/ 




\\ 


V, 


■\ 








PAYROLL 


s 


















/ 








^ 


^ 


' 




















->, 


^ 

"N 












r" 


'•^' 


-^ 




























\ 


0- 


\ 


"~~~~- 


-y 


/, 


* 

~1 


/ 




\ 




























\ 






• 


































\ 


v. 


.J 


/ ^ 


'J 

























































1919 1920 1921 1922 1923 1924 1923 1926 1927 1928 1929 1990 1931 1932 1933 (934 1933 1936 1937 1936 1939 1940 



CONCENTRATION OF ECONOMIC POWER 



25 



CHART II. 

SOCIAL PERFORMANCE OF THE 
CHEMICAL INDUSTRY 

UNITED STATES, 1919-1938 







































-/ 

v. 


/ 






























1 1 1 1 1 

CONSUMER EFFORT 
COMMANDED , 


; 


\ 


















I 


1 1 

:mployment 






S, 






ly* /y 




\ 












V 






yr 


7 






p 


ROD 


JCTI 


3N 










/ 


^ 




















r 






— II ^ 






\ 


w J ^' 






/ 


\{ 


r 




^ 


S^ 




^■■' 










\^ 


/ 


















V 


/ 
/ 











































































































































































INDEX NUMBERS 
(IM7>IOO) 

leo 



1919 1920 1921 1922 1923 1924 I92S 1926 1927 I92S 1929 1930 1931 1932 1933 1934 I93S 1936 1937 I9i8 1939 1940 







































/ 






















CON 


5UMER FUNDS 
ABSORBED 1 


DIVIDENDS AND 
INTEREST 




k 








— 7r-i 






^ 














PAV 


ROL 


LS 






\ 


7 


^ 


\^ 












> 
















T 


\ 


- 


u 


>< 


\ 






/ 






. 




-- 












o-- 






' 


V 

\ 




// 




































^ 




i 


/ 
















































































- 



































































1919 1920 1921 1922 1923 1924 I92S I92S 1927 1928 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1936 1939 1940 



2g CONCENTRATION OF ECONOMIC POWER 

have been large volume of securities issues, especially by holding 
companies, a great deal of political agitation, culminating in the Public 
Utility Holding Company Act and the Tennessee Valley Authority. 
The figures on which chart 12 is based measure to no small extent 
the social performance of governmental regulation as well as private 
enterprise. 

If indeed this be true, note that production in the electric light and 
power industry in 1937 was more than double that in the period from 
1923-25 and nearly 30 percent higher than that in 1929. In other 
words, despite all the' so-called discouragements to production alleged 
to arise from the "death sentence" and other regulations in the utility 
industry, production was so large that had every industry in the econ- 
omy behaved as well as the electric light and power industry 1929 
levels of production would have, been exceeded in 1937 by 30 percent. 

But there still would have been an unemployment problem. Notice 
that employment in 1937 was slightly below total employment in 1929. 
In short, due to policies of rationalization and mechanization the 
industry has been able to produce more current with less labor. 
Labor costs have gone down. A substantial portion of such economies, 
however, have been passed on to consumers. In 1937 the amount of 
consumer effort commanded was 10 percent below that of 1929 and 
more than 20. percent telow that in 1931, although the amount of 
service rendered was nearly 30 percent greater. 

Turning to the dollar figures, note that in 1938 the quantity of 
consumer dollars absorbed is 25 percent below that of 1930. Payrolls 
are almost exactly equal while dividends and interest have declined 
about 20 percent. The industry has thus been spurred on to further 
production and to maintenance of pay rolls despite lower receipts from 
the public and lower payments since 1930 in dividends and interest. 
It is quite obvious that this industry has more than made its full 
contribution to recovery, at least so far as production, prices, and 
consumption are concerned. 

IRO>J AND STEEL INDUSTRY 

Among the most unstable of unstable industries has been the iron 
and steel industry. In comparison with the production and employ- 
ment record of other industries, the iron and steel industry (see chart 
13) shows marked fluctuation, production decreasing frorti a level of 
126.6 in 1929 to 33.5 in 1932, recovering to a level of 12.1 in 1937. The 
record for employment does not fluctuate quite so widely as this, 
going down in 1932 to 60 percent of 1927 levels. In 1937, 20 percent 
more people were employed in the steel industry than at any other 
time in recent industrial history. This, of course, was primarily due 
to the reduction in hours. With this increase in employment there has 
occurred a certain tren'd toward increasing the amount of consumer 
effort commanded. The abrupt price rise in steel products in 1937 
shows up in the fact that the index of consumer effort commanded is 
42 percent above 1927 levels while production is only 21 percent higher. 

Turning to the dollar figures, note that the percentage of consumer 
dollars absorbed which have been paid out in pay rolls has remained 
relatively constant though tending in recent years to lag. A substan- 
tial decline has taken place in dividends and interest. From the 



CONCENTRATION OF ECONOMIC POWER 27 

record level of 122.6 in 1929 dividends and interest fell to 21.4 in 1933 
recovering to 98.6 in 1935. But the industry has been unable to 
maintain dividends and interest even though it has collected a some- 

CHART 12 

SOCIAL PERFORMANCE OF ELECTRIC LIGHT 
AND POWER 

UNITED STATES, 1919-1938 



INOCX l«WBCRS 



















1 1 1 1 I 1 1 1 1 

1 ' 1 ! 1 i 1 1 ! 1 


1 














CONS 


JME( 


! 1 

R EFFORT 


,±.., 


PRODUCTION 


_l^ 






















COMMANDED 


_#'" 


V r 1 X 


S 










.V 


X 1 


^y 


/ 




















y _ 


i IH 


j 1 


























> 












E 


MPLOYMENT 






y^ 










^ 


■o ^^^^ 




\ ! 1 _ 


^^* 


11' 








\ 


^ 


'^""^ 








! ^^i 














J 


\^ 












i i • 




. i 








- 


'^ 


^ 
















! i ! 1 1 ! 




[ 


J_.,..- 


,..•' 
















U i 1 1 M 


. 




























1 

1 


M ! ! i 




1 




















1 


Mil 






1919 


1920 


1921 


1922 


192J 


■924 


1925 


1926 


1927 


1928 


l»2» 


1930 


1931 


1932 1933 1934 


1931 


i93e 


1937 


(936 


1939 


1940 



• 














\ ! 1 

DIVIDENDS AND. 


r 


^^ 




































' ^^VT CONSUMER FUNDS ^ 








i.lZ 




"V^ 


/ 




1 -.1 ABSORBED 1 ' 
























-^ 


1 


> 


/| 
































. 




■ \l 


vL- 


























A- 




\i 


i 

1 


^ 


Tr 






















/' 


' 




\ ^ 


H^ 


\ 

1 


















'/ 


<^' 










1 \^ 
















PAYROLLS 

T 




/ 


'/ 












i 


1 ■ 
1 














i 





• 
















1 i I 
















'< 


>>> 


. 










1 1 1 { 1 i 1 i 

III i ; 






























! 1 I 


, 


1 






























1 

1 ! 


i 1 -1 















1919 1920 1921 1922 1923 1924 1923 I92& 1927 1928 1929 1930 193' 1932 



'534 9;5 i95e 1937 '938 I9J9 1940 



what laiger number of dollars from consumers for a given unit of 
product and paid out somewhat less of it in pay rolls. The out- 
standing fact exhibited by chart 13, of course, is instability. 



'28 



CONCENTRATION OF ECONOMIC POWER 



CHART 13. 



SOCIAL PERFORMANCE OF THE IRON AND 
STEEL INDUSTRY 

UNITED STATES. 1919 - 1938 



INOEX NUMBERS 
(,927.100) 


































INOEX NUMBERS 
11927 = 100) 














































































f 




















CONSUMER EFFORT 
1 COMMANDED | 


^ 














A 












F 


>RO0UCT 


ON 


1 / 1 y 






EMPLOYMENT 


/ 


\ 


\ 






/ 




\ 


^ 


\\ 






^ i^ 


kr--^ 










\ 


\ 


H 




\ 


\ 


i 








v/ 


\ 
i 
















J\4 






- 


\ 


i 

1 










V 




! 












\r \~/^ 




































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1 


[ 


i 1 




1 


1 


. 






1 





1919 1920 1921 1922 1923 1324 1925 1926 1927 1928 1929 1930 1931 1932 1933 it?i4 :--J5 1936 1937 1938 1939 I9'.0 



INDEX NUMBERS 

(1927=100) 

180 



INOEX NUMBERS 
(1927= 100) 

180 




1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



CONCENTRATION OP ECONOMIC POWER 29 

PAPER AND PULP INDUSTRY 

In the paper and pulp industry (chart 14) the outstanding feature 
is the rapid increase in production without equivalent increase in 
employment since 1934. In 1938 the industry produced in excess of 
20 percent over 1934 levels with employment remaining roughly the 
same. The industry has likewise not sold its product at cheaper 
prices. The index of consumer effort commanded has -risen fully as 
much as production. 

In the dollar figures the notable feature is that of instability. The 
position of pay rolls, while above that of consumer funds absorbed in 
the early twenties has since 1928 been consistently lower. It is 
interesting that in 1936 dividends and interest exceeded any figm-e in 
the twenties except that of 1928. In terms of pay rolls and in terms of 
dollars collected from the public, dividends and interest have held up 
remarkably well. 

FLOUR AND OTHER GRAIN MILL PRODUCTS 

In the flour and grain-milling industry (see chart 15) all trends have 
declined steadily from 1919 to the present day. While a cycHcal low 
was experienced in 1932, employment and pay rolls can in reality be 
said to exhibit a downward tendency throughout. Production held 
up moderately well in the twenties remaining on a plateau of about 
101 at the same time that employment decreased from 136.1 in 1920 
to 90 2 in 1929. In the thirties the decline in production continued 
with some slight decline also in employment. In terms of consumer 
effort commanded tj^e industry shows no record of greater service 
rendered, dBspite the magnitude of the fall that is kno'WTi to have 
occurred in the wholesale prices of grain. One would expect a priori 
that this industry would have given consumers steadily more for their 
money. Instead, as the figures show, the industry did not permit its 
product to decline in prices faster than the declines that occurred in 
wages and in prices in general. Flour prices, in short, stayed up 
relative to grain prices. 

Further light is cast on this phenomwuon m the dollar figures which 
show that pay rolls have, if anything, declined faster than employ- 
ment and on the whole faster than tlie number of dollars which the 
industry absorbed from the public. Not so the dividends and interest 
payments. Notice that from 1927 to 1929 although production 
remained the same, employment went down 10 percent and pay rolls 
were off nearly 7 percent. Dividends and interest increased 20 
percent and nearly 9 percent more was taken from consumers. 

Similarly in 1935, dividends and interest had decjined less than 
7 percent from the 1927 level while production had gone down more 
than one-sixth and pay rolls more than one-fourth. The industry, 
in short, seems to have done its best to pay out dividends and interest. 
A priori one would expect that the consumption and production of 
flour would be the one to hold up best in hard times. It would seem 
to be the kind of article that people would have to buy. Interestingly 
enough it declined nearly 20 percent during the depression. 



30 



CONCENTRATION OF ECONOMIC POWER 



CHART 14 

SOCIAL PERFORMANCE OF THE 
PAPER AND PULP INDUSTRY 

UNITED STATES, 1919-1938 











































































































p 


^ODUCTK 


w 


1 1 1 

CONSUMER EFFORT 












EMPLOYMENT 


^ 


k 




COMMANDED 


.^ 


/ 


/ 










- 


^. 


^v 




V.^ 








-/ ^ 


V 


--'\j^'"-Zy 


/^ 








S 


^ 


V 


^ 


/d/ 














> 













































































































































































1919 1920 1921 1922 1923 1924 I92S 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



























































































/ 
/ 

/ 

/ 


I 


'AYROLL 


> 




BiVlDENDS AN 
INTEREST 


b 




1 1 1 1 

CONSUMER FUNDS 














y 










^ 




ABSORBED 




/ 1 

1 \ 














^ 




y 










/•'/ 


<. 








\ 

1 
\ 

\ 


/ 


r- 


'^ 


^ 


^ 


<«' 






^ 








A' 




\ 






\ 




A 
















\ 


^ 
> / 


7 








































^/ 











































































































I»I9 1920 1921 1922 i923 1924 1925 1926 1927 1928 1929 1930 193' !932 1933 1934 1935 1936 1937 1938 1939 1940 



CONCENTRATION OF ECONOMIC POWER 



31 



CHART 15. 

SOCIAL PERFORMANCE OF FLOUR AND 
OTHER GRAIN MILL PRODUCTS 

UNITED STATES, 1919-1938 



-^ 


















































































t 


y 






V 
















PRODUCTION 




XWSUMER EFFORT 
COMMANDED 1 








\ 




v. 




' — vL' 
1^ 


.■>" 


:s?* 


*^ 


- 




r 






y 














\ 


" 




■•■••" 




^- 


■■»•■■ 


Ci^J^ 


3i: 


*^ 


r^~ 


~ 




























^ 




^ 








































































































1 






1 

L 































1919 1920 1921 1922 1923 1924 1925 I92S 1927 1928 1929 1930 1931 1932 1933 1934 1935 I93« 1937 1938 1939 1940 





1 1 1 

CONSUMER FUNC 
ABSORBED 


1 

s 












t 


























-^ 


1 

1 












DIVIDENDS M 
INTEREST 


ID 




















I40 








1 








PAYROLLS 


1 1 




























\\ 


f 1 










Y 


\;^J,J..T7 


->- / 






























1 




' 




-*' 




"*V 


t 


X's 






-^' 


/• 


— 


<' 


-- 






























v*^^^^ 
'n 


it 




X 




"^^^ 











































































































1 

































1919 1920 1921 1922 )923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 I'^IO 



32 CONCENTRATION OF ECONOMIC POWER 

OIL AND GAS PRODUCING INDUSTRY 

The oil and gas producing industry is one in which production has 
reached levels in recent years (see chart 16) from 30 to 40 J^ercent in 
excess of those in 1927. Yet so great has been the increase in pro- 
ductivity that employment in 1938 was 7 percent less than it was in 
1927 while pay rolls were nearly 19 percent less. In this' industrjT 
the figures on "value added by manufacture" or "income produced" 
are not available so that no measure can be given on the net amount 
of consumer dollars absorbed by the industry available lor its dis- 
bursement. But the end product here is a raw material. Value of 
products is nearly the same as value added by manufacture except 
for taxes and outlays for power. 

One other qualification needs to be borne in mind. The industry 
has been making considerable investment in automatic equipment 
and the like, supplanting some of the labor that was formerly employed. 
Thus the ratio of value added by manufacture to total value may 
have decreased throughout the period. To compute indexes in terms 
of "value of products" may overstate somewhat the net levy on the 
pocketbooks of consumers made by the industry at least in recent 
years. Yet in 1937 the industry gave 44 percent additional product 
for only 26 percent additional money. 

In terms of dollars of constant purchasing power, however, the levy 
upon the consumer pocketbook was no smaller inasmuch as prices 
have gone down by more than 15 percent from 1927 levels. While 
collecting a larger sum of money from the public, the industry dis- 
bursed in 1937 one-sixth less money to laborers in the form of pay 
rolls than it did in 1927. Figures on dividends and interest must be 
interpreted with caution because the Bureau of Internal Revenue 
changed its industrial classification completely in 1934. Such as they 
are, they show a steep decline beginning in 1926 and continuing until 
1931. The improvement in 1934 and thereafter brought dividends 
and interest considerably above pay rolls but not above consumer 
funds absorbed. 

In sum, the industry has done an excellent job of production. It 
has not helped to solve the problem of employment. 

FURNITURE INDUSTRY 

Statistics for the construction industry are notoriously inadequate. 
In many cases even more inadequate are the figures for industries 
that make artitiles essentially accessories in the home, for example, 
furnishings, kitchen utensils, drapes, and rugs. None the less, an 
appreciable portion of the consumer's dollar is spent for that congeries 
of articles called home furnishings. 

While the figures given in chart 17, applying to the furniture 
industry, do not have the accuracy which characterizes the figures 
for other industries, they do show the main trends. The industry 
has been one of the most backward in the recovery procession. Pro- 
duction in 1937 recovered to only 80 percent of U27 levels, and em- 
ployment to only 90 percent. Moreover, consumer effort commanded 
nas remained constant relative to production. 



CONCENTRATION QF ECONOMIC POWER 



33 



< 

CD 
Q 
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34 



CONCENTRATION OF ECONOMIC POWER 



CHART 17 



SOCIAL PERFORMANCE OF THE 
FURNITURE INDUSTRY 

.UNITED STATES, 1919-1938 



IWeX NUMBERS 

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19!2 


1933 


1934 


1935 


1936 


1937 


1938 


1939 


1940 



CONCENTRATION OF ECONOMIC POWER 35 

As might be expected, pay roll experience has likewise been dis- 
appointing, the industi*y in 1933 disbursing only 55 cents for every 
dollar that it disbursed in 1927. But its collections had gone down 
about the same percentage, and so also dividends and interest which 
have at no time been out of line except for the year 1928. In short, 
the chart provides a graphic outline of depression. 

METAL MINING INDUSTRY 

The striking features of chart 18 are, first, the extraordinary depth 
of the depression in the metal mining industry and, second, the re- 
markable degree to which the various series fluctuate together. Note 
that employment and pay rolls in the industry in declining from their 
post-World War peak at no time regained the levels of 1919 and 1920. 
In 1932 and 1933 they were less than one-fourth of what they had 
been in 1919, a so-called depression year. Production shows similar 
fluctuations; value of products tends to fluctuate above and below 
production which indicates that the prices of minerals swing in wide 
amplitude. One further fact is outstanding — the enormous jump of 
dividends and interest in 1929, together with an utter collapse in 
1932 to levels less than one-tenth of that in 1929. 

TOBACCO INDUSTRY 

The behavior of the tobacco industry is particularly noteworthy 
inasmuch as it is an industry whose product in all countries is subject 
to a liigh degree of taxation. As is well known, the tobacco industry 
comprises in addition to cigarette manufacture the manufaci re of 
cigars, chewing and smoking tobacco, and snuff. It has been an in- 
dustry characterized by enormous technological change. Despite 
the high excise tax, production in 1937 (see chart 19) was one-third 
greater than in 1927. But the number of persons employed had gon- 
down by more than one-fourth and pay rolls by one-third. A strik- 
ing decrease has taken place in the exchange value of tobacco. Thus 
in 1937 total consumer effort commanded by a product more than 
one-third larger was some 5 percent below that in 1927. Turning to 
the dollar figures notice that the record of dividends and interest has 
been particularly satisfactory to stockholders. At a time when pay 
rolls were 40 percent below 1927 levels, dividends and interest in 1936 
were 56 percent higher. In sum, the industry has fired its men, de- 
creased its pay rolls, and divided the benefits of technology between 
consumers and owners. Even in 1932 dividends and interest were 
larger than in 1929. In that year, in fact, the net profits of the four 
largest companies exceeded the total amount received by all farmers 
for their whole year of work in producing all the tobacco processed by 
all the companies. 3 This industry employs less than half the men 
that it employed in 1919 and pays out less than one-half the pay rolls 
that it paid out in 1920. But dividends have been "satisfactory." 

' See complaint filed by the Department of Justice in the District Court for the Eastern District ofEeD- 
tucky, July 24, 1940. 



36 



CONCENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 



37 



CHART 19. 



SOCIAL PLRFORMANCE OF THE 
TOBACCO INDUSTRY 

UNITED STATES, 1919-1938 















































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1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 t935 1936 1937 1938 1979 1940 



3g CONCENTRATION OF ECONOMIC POWER 

COAL MINING INDUSTRY 

In chart 20 is shown the graph of a sick industry. The downward 
trend in all of the figures is pronounced, being about the same whether 
one compares 1920 and 1929, or 1929 and 1937. Employment held 
up relatively better, being about three-fourths of the 1927 figures, but 
pay rolls were down to less than half of their total in 1927 and less 
than two-fifths of the amount in 1923. The data on "value added by- 
manufacture" are not available but as in other raw material and 
mining industries, the figures for value of products afford an accept- 
ably close approximation of "consumer funds absorbed." Note that 
value of products in 1938 was just half of what it was in 1926 and less 
than one-third of what it was in 1920. The stockholders have like- 
wise suffered. 

When the fact is remembered that total energy consumption in 
1937 exceeded that in 1929 by nearly one-third,* the fact is clear that 
no moderate amount of recovery is going to restore full employment 
in the coal mining industry. Competition of oil and water power, to- 
gether with increasing spread of mechanization of coal mining, is 
likely to bring on the economy an appreciable problem of reemploy- 
ment, particularly when it is recalled that there were in this industry 
in 1927 a total of 675,000 coal miners .getting paid more than 
$1,000,000,000 a year. 

This industry, moreover, is a good example of the type of industry 
which while failing to meet social performance tests cannot be said 
thereby to be at bottom responsible for its plight. It is a major casu-- 
alty of economic change. It seems hard to believe that any change 
in industrial poUcies pecuUar to coal could substantially have altered 
the pattern here presented. Notice that even the' extraordinary 
prosperity of 1929 did not enable the industry to recover to the so- 
called minor depression level of 1927. In short, in this industry the 
problem of idle men, idle money, insufficient purchasing power, and 
lack of profits is spelled out in capital letters. 

LUMBER AND TIMBER PRODUCTS INDUSTRY 

The story for the lumber and timber products industry varies omy 
in detail from that of the coal industry with the single exception that 
a larger impact of cyclical forces is added to that of declining secular 
trend. In terms of production, note that the industry reached its 
all-time liigh in 1925. In 1932 the index of production of lumber and 
timber products only (not shown on the chart but given in table 
XXI, appendix B) was 29 percent of what it had been in 1927 
Fluctuations in employment, while not quite so great, show the im- 
pact of the same forces, reaching an all-time high in 1923. Even the 
prosperity of 1929 did not enable the industry to employ 85,000 men 
who had employment in 1923. In the 1930's while there has been 
a substantial amount of recovery so that in 1937 production was 
nearly double that in 1933, nonetheless in terms of the boom year 
1923, more than 200,000 men were out of work who had formerly 
been attached to the industry. 

See Hearings before the Temporary National Economic Committee, Part 30, Exhibit 2744. 



CONCBNTRATIOK OF ECONOMIC POWEIt 



39 



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40 



CONCENTRATION OF ECONOMIC POWER 



CHART 21 

SOCIAL PERFORMANCE OF LUMBER 
AND TIMBER PRODUCTS 

UNITED STATES, 1919-1938 

















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COMMANDED 






























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1927 


1928 


1929 


1930 


1931 


1932 


1933 


1934 


1935 


1936 


1937 


1938 


1939 


1940 



CONCENTRATION OF ECONOMIC POWER 41 

Notice that the industry has constantly been one in which the ex- 
change vahie of the product has been equal to or higher than the 
index' of prQduction, In other words, on the whole, the consumer 
effort comni,'anded per unit of product has remained high despite the 
low levels oi production. The industry, in short, has not sought to 
attract consumer buying by offering greater value/ 

A glance at the dollar figures shows similar instability and decline. 
At no time did the public pay out more dollars than in 1923, the level 
in 1937 being only slightly more than hdf that in 1923. At no time 
did the industry pay out more in pay rolls than in 1923. In 1932 it 
paid out less than one-fifth and in 1938 less than one-half of the funds 
to laborers which it disbursed in 1923. But it has also not paid out 
funds to its proprietorship account. Dividends and interest have at 
no time been seriously out of line either with pay rolls- or with con- 
sumer dollars absojbed. 

STEAM RAILROAD INDUSTRY 

Last in the sample of industries which are here examined and to 
which social performance tests have been applied are the steam rail- 
roads. This industry in 1927 employed more than 1,500,000 m.en. 
Yet employment and pay rolls have been steadily declining since 
1920. Several divergent trends are to be noted. In the first place, 
throughout the period there has been an increasing tendency for em- 
ployment and pay rolls to lag behind production, particularly in 
recent years. This, as is well known, has been duie to a wholejseries 
of technological improvements, no one of which might be called truly 
revolutionary in character but with a cumulative character that is 
epoch making. 

In 193.7 thfe volume of -traffic was about 85 percent of what it had 
been in the period from 1923 to 1925 but employment had gone down by 
more than one- third. Moreover, the industry has been steadily de- 
creasing its rates so that the exchange value of railway services has 
on the whole fallen more rapidly than production. Pay rolls have 
also suffered, though for the most part they have kept pace with the 
volume of consumer dollars paid out for railway services. 

Outstanding is the rapid increase in dividends and interest from 
1919 to 1927 at a time w^hen pay rolls were dechliing and production 
was barely holding even. Also outstanding is the fact that in the 
years 1930 and 1931 dividends and interest tended to maintain them- 
selves at a high level. Only in the last year or so have tiiey come 
down in line with pay rolls. In sum, from a position in 1919 substan- 
tially below pay rolls, dividends and interest began to diverge in 1924 
and have been maintained by wide margins above the level of pay 
rolls until 1938. 

Extraordinary efforts have been made by railway managements to 
continue making interest payments. Too small a percentage of the 
dollars which they collected from the public were made available for 
the improvements and betterments necessary to maintain competi- 
tive position. In short, instead of writing obsolete capital off the 
books — capital made obsolete, it should be said, by the development 
of newer methods of transportation, the industry has written em- 
ployment and pay rolls off the books but handicapped itself in its 
competitive struggle by heavy fixed charges. 

' Prices of lumber were h igher in 1937 than in 1929. See Investigation of Concentration of Economic Power, 
Part ri, construftion Industry, hearings before tha_y. N. E. C, p. 5232 fl. 



42 



CONCENTRATION OF ECONOMIC POWER 



CHART 22.- 



SOCIAL PERFORMANCE OF 
STEAM RAILROADS 

UNITED STATES, 1919-1938 



INDEX NVMBERb 
(I925-19?5 = I00) 

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sO 



CONCENTRATION OF ECONOMIC POWER 43 

This industry, it should be noted, is one in which government regu- 
lation has existed for a long time. It is one, moreover, in which gov- 
emitient regulation has found greatest acceptance. In essence it is a 
public Utility, with problems not substantially different in character 
from those of electric light and power industry also under government 
regulation. But in this industry there has been a relatively small vol- 
ume of protests and yet the performance of the industry has been so 
poor that were the performance in the rest of the economy no better, 
the total number of unemployed in the United States today would 
come to something like 25,000,000 mstead of less than 10,000,000. 

On the other hand, actual performance here so well meets the tests 
of consumption and production that had all industry performed as 
fully as the electric light and power industry, per capita production 
and enjoyment today would be some 10 percent larger than in any 
previous year in our industrial history. Protest against governmental 
regulation does not seem to correlate highly with actual damage to 
the economy. 

COMPOSITE RANKING 

The order in which the industries have been cited above was not a 
haphazard one. It is exactly that shown in table 1, derived from com- 
putations of the ranking of the various industries in terms of their 
social performance. Seven tests or criteria have been used. 

The first is that of production. Industries which increased their 
production over the base year are regarded as industries that have 
rendered increasing services to the public while industries that have 
decreased their production are regarded as industries that have not 
increased their services to the public. Production in all cases is meas- 
ured in terms of physical volume. Moreover, it should be remembered 
that, as was specifically noted above in the case of coal mining, the 
industry in many instances may have been subject to forces clearly 
beyond its control.^ It is possible that no conceivable alteration of 
its policies would have sufficed to change its performance so far as 
production is concerned. That none the less does not alter the social 
fact. Whether a baby is pushed out of a second-story window or jumps 
out is not likely to make the impact of the fall any different. Similarly 
the impact upon the economy of the failure of an industry to increase 
the output of an article which consumers need is in the usual instance 
detrimental no matter who is responsible. Table 1 is not a matter of 
moral judgm.ent in any sense whatsoever. It shows the facts. Ques- 
tions of m.otive or responsibility are com.pletely irrelevant. In table 1 
there is represented a purely objective measurero.ent of the im.pact 
upon the econom.y of the things that happened over a period of time 
to individual industries. Industries with rising trends show better 
results than those in which trends are downward. 

• Editor's footnote: "The main question which I raise is the suitability of assigning responsibility or credit 
to specific industries, major industrial categories, or single companies for their economic performance. Xot 
enough discussion and emphasis are given to the fact that no attempt is made here to blame or congratulate 
an industry for a bad or good record irrespective of external factors. For instance, 1 1 now no one would crit- 
icize the carriage industry in the early part of this century, or the bicycle industry during the period when 
automobile usige was expanding rapidly. Also, blacksmiths and livery stables showed a bad record over 
many years because of a trend which obviously they could not by themselves reverse or adjust themselves 
to. Of course this is not true of all industries and many which have poor records can well be "blamed." 

On the other hand, there are many companies or industries with good records which, almost of necessity, 
show favorable results. For instance, the automobile industry was bound to develop with any kind of 
advantage taken of technical developments. Whether Ford, Chrysler, or Kettering were predominantly 
responsible for this success or whether the nature of individual demand was the important factor is not 
necessarily relevant. The important fact to take note of is the interference of external factors in the progress 
of particular companies or industries." — Robert Nathan. 



44 



CONCENTRATION OF ECONOMIC POWER 



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46 CONCENTRATION OF F<]ONOMIC POWER 

Turning to the matter of production, the fact should be empha- 
sized that each industry was compared not with other industries but 
with its own performance, taking some year such as 1927 or the years 
1923-25 as a base. In each case there was measured the average 
annual increment in, production on the assumption that those which 
showed the largest average annual increase in physical volume of 
production were the ones, which rendered -the largest amount of 
service to the public. 

These annual increments having been computed, industries were 
ranked numerically. The industry, for example, showing the largest 
annual increase in production was chemicals and therefore it rates 
number 1 . Canning and preserving was next, electric light and power 
was third, and so on, with furniture at the bottom of the list. Those 
at the bottom of the list in many cases showed actual decreases and 
furniture showed the largest annual decrease. 

So far as employment is concerned, that industry which increased 
its employment the most throughout the period was regarded as an 
industry which had made the maximum social contribution. Again 
the fact should be emphasized that no moral or other responsibility 
is necessarily attached to the industry for its employment record. 
Irrespective of the good intentions of the industry, if it fails to in- 
crease its employment a^ rapidly as population increases, and par- 
ticularly if it actually on balance throws men out of work, society 
will have such men on its hands unless they are absorbed by other 
industries. There will be an unemployment problem and ultimately 
the Government will have to take care of such men either on relief 
rolls, on Work Projects Administration, or otherwise. 

The ranking of the various industries simply means that the aver- 
age annual increase in employment in the canning and preserving 
industry was greater than that of any other industry here studied. 
Chemicals came next while steam railroads come at the bottom of 
the list. In 11 of the industries there have been actual decreases in 
employment, the steam railroads in recent years employing a million 
fewer persons than they did in 1920. 

With respect to the third criterion, namely pay rolls, the assump- 
tion made is that those industries which increased pay rolls the most 
were industries conferring the largest benefit upon the public. The 
chief form of mass purchasing power is pay rolls. It is the pay rolls 
paid out by industry to labor which find their way almost immediately 
into the hands of retailers and other distributing groups and absorb 
the product of industry. Pay rolls constitute the mass market which 
is necessary in modern times for mass production to keep operating 
at full capacity. 

The industries have been ranked again in terms of their own per- 
formance. The industry which has increased its pay rolls on the 
average each year more than the other industries here studied is the 
chemical industry, with the canning and preserving and agricultural- 
implement industries tied for second place. At the bottom of the 
list comes the lumber and timber products industry in which there 
has been actual decline in pay rolls greater per year on the average 
than in any other of the industries included among the 22 here listed. 

The next four criteria are coefficients or ratios. In the first of 
these there has been computed for each industry the ratio of the 



CONCENTRATION OF ECONOMIC POWER 47 

employment index to the production index, the assumption being 
that those industries in which employment had increased on a par 
with production are industries contributing more to social benefit 
than industries that increase production without increasing employ- 
ment. 

This is of course a debatable point!' Perhaps business is not sup- 
posed to furnish opportunity to workers to utilize the abilities with 
which Nature endowed them. It may well be argued that increases 
in production obtained without the employment of additional labor, 
due for example to technological improvements, cause no greater 
problems to society than those which utilize additional labor. 

It may well be that human beings are not the central and focal 
point in a democratic scheme of government. But a society which 
taxes itself to the extent of a billion dollars a year in order to educate 
the human abilities latent in its population, and furthermore a society 
which has made the possibility of sharing in the increased production 
-of industry largely dependent upon securing jobs and receiving pay — 
is probably a society in which the industries that are most in harmony 
with its democratic, free-enterprise structure are those which in in- 
creasing production tend, pari passu, to give additional opportunity 
for hurnan beings to get additional wages so that they may buy and 
consume the additional product. '^ 

The industry which has increased employment most relative to 
production in recent years is the baking and confectionery industry. 
Whether its favorable rating now is due to the fact that hours worked 
in the twenties were higher than in other industries cannot be checked 
in detail, but seems to be in part the case. The industries at the 
bottom of the list may likewise be the industries in which technological 
advances were most striking, another fact impossible to establish, 
for how compare developments in one industry with those in another. 
But if such be the case, then the petroleum refining, oil and gas 
producing, electric light and power, and tobacco industries would 
seem to be the industries characterized by the greatest amount of 
technological advance among the 22 here shown. 

The fifth criterion applied is one which compares total production 
with the consumer effort commanded by that production. It is 
assumed that oi. the whole society tends to be benefited whenever it 
gets more and more product for less and less effort. The consumer 
effort commanded series, it will be remembered, was obtained by 
taking the consumer dollars absorbed and relating them to the effort 
spent by consumers to get hold of those dollars. Technically the 
process was one of deflating the index of "doUars absorbed" by 
Snyder's index of the general price level, an index which, it should be 
remembered, includes rents, wages, and in fact all forms of prices. In 
simple economic terms the consumer funds absorbed figure adjusted 
represents exchange value; that is, the amount of commodities and 
services commanded by each of the products. Industries which give 
consumers increasing value are regarded as industries excelling in the 
performance of their social obligations. It is regarded as one of the 
social obligations upon an industry to put out its product at ever 
lower cost. Again the average annual increment or decrement was 

' Editor's footnote: Sinple-lndustry judgments imist not be pushed this far. Eayon may .soon all come 
from two or three mechanical one-man plant". This will leave more men for plastics, flutomobiles, air- 
craft, etc., lower the price of rayon and diminish the effort involved in prr>iL:cinc it.— Blackwell Smith. 



4g CONCENTRATION OP ECONOMIC POWER 

computed and the industries ranked in order of the size of the in- 
crement. 

On this basis the knit goods industry comes first. It has given 
steadily more of its product in exchange for other things. The 
electric light and power industry is second, indicating the extent to 
which in that industry the benefits of increasing technology have been 
passed on tq consumers in the form of lower prices, due in part perhaps 
to Governmental competition. The tobacco industry comes third. 

At the bottom of the list come the lumber and timber, products, 
slaughtering and meat packing, iron and steel, and chemical industries, 
all of them being industries characterized, as the records of the Federal 
Trade Commission and the Department of Justice abundantly show, 
by various forms of price maintenance and "price administration 
effectively carried out under private control. These industries, in 
fact, have increased the exchange value per unit of their product. 
They have taken more from consumers. It has required more con- 
sumer effort to get a given unit of their product. 
' The sixth criterion of social performance is the ratio of pay rolls to 
consumer funds absorbed. Obviously business has to meet its pay 
rolls out of its sales. Any going business has to collect from its 
customers the dollars it disburses to labor. It is constantly making 
efforts to adjust its expenses to its receipts, trying of course always to 
keep expenses as low as possible. 

But pay rolls of industry constitute the major form of national 
income. Workers as a class are the primary group among whom 
business finds a market for its wares. Pay rolls constitute the pur- 
chasing power that moves the products of industry into consumption 
channels. The motive power of expansion in national income is 
expansion of consumer buying power which in the main means the 
expansion and maintenance of pay rolls both through expansion of 
investment and through enlarged consumption. 

Any industry, therefore, which tends to increase its collections from 
consumers relative to the funds which it disburses to labor is an 
industry cutting off the market both for other industries and for 
itself. An industry, on the other hand, which makes large invest- 
ments, and particularly that process of making capital investments 
which result in advances to labor without increasing the supply of 
consumer goods, is an industry increasing the market for all enterprise. 
In short, in the measure an industry maintains and expands pay rolls 
it performs a social benefit. It helps to maintain the national income. 
Insofar as an industry contracts pay rolls, it contracts national income 
and may contribute to retarding a boom or hastening a decline. 

Over the period here considered the agricultural implements 
industry stands at the top of the list. The automobile, baking and 
confectionery, knit goods, and canning and preserving industries 
follow in close succession. On the other hand, there are a number of 
industries that, relative to the amount of consumer funds collected 
in the base year, decreased the proportion of their sales dollar that 
they paid out to labor in the form of wages and salaries. Among those 
i which this decrease is greatest are the chemical, tobacco, and oil 
and gas producing industries. In these industries a smaller pro- 
portion of the consumer dollar was paid out to labor and larger 
amounts went to stockholders in the form of dividends and interest or 
were accumulated in the form of cash or other surplus reserves. 



CONCENTRATION OF ECONOMIC POWER 49 

These accumulations have in recent years become so large in the 
American economy as to constitute the grave problem of idle money. 

The seventh criterion of social performance is one which compares 
the trend in pay rolls with that in dividends and interest payments. 
Pay rolls are paid out to millions of wage earners in sums ranging 
from amounts lower than $6 and $7 a week to salaries of more than 
$10,000 a week. Pay rolls represent disbursement to the masses. 
On the other hand, dividends and interest, by and large, represent 
disbursements, usually on a quarterly basis, to a relatively small 
proportion of the income recipients. In the study made by the 
National Resources Committee called Consumer Incomes in the 
United States, Their Distribution in 1935-36, there were estimated to 
be 29,000,000 families and 10,000,000 individuals who receive income 
of one sort of another. By far the larger proportion of these derive 
almost the whole of their income from wages and salaries. .On the 
other hand, the income-tax returns of the Bureau of Internal Revenue 
show that about 600,000 families receive more than 75 percent of all 
the dividends and interest payments in the United States. While 
there are millions of security holders, most of them own only a few 
shares of stock and receive an insignificant part of their income in the 
form of dividends and interest. 

Even in companies so widely owned as the American Telephone & 
Telegraph Co., which bad in 1935, 664,095 stockhoWers, the per- 
centage of stock owned by 382,000 of the stockholders W^s less than 
10 percent. At the other extreme, 33,938 stockholders on ^record 
owned 10(> ^ares or more with a total of 9,416,899 shares; to put it in 
anothei form, 5.1 percent of the stockholders according to the ledger? 
of the American Telephone & Telegraph Co. owned 50.5 percent of 
tlie outstanding shares.^ 

It is therefore clear that disbursements in the form ot dividends 
and interest go in the main to relatively few families to which should 
be added the fact that stocks and bonds are owned in large part by 
persons who already have a relatively high income from other sources. 
For stocks and bonds represent savings. And those wl > have an 
annual income of over $5,000 do about 85 percent of the tutal saving 
that is done. In other words, even when disbursements oi dividends 
and interest are made in small amounts, they tend to hf. made to 
persons whose income is already adequate to take care of ordinary 
consumption requirements. Such dividends and interes, disburse- 
ments, therefore, are added to the pool of savings. They are not 
spent for consumable goods. In short, without laboring the point 
further, dividends and interest disbursements go in the main into 
reservoirs of savings; they do not become purchasing power unless 
invested. Investment is, of course, highly beneficial unless there 
already exists sufficient capacity to produce in excess of consumption 
requirements. 

Insofar as an industry collects more and more dollars from the 
public but takes larger and larger slices of such dollars and puts them 
into dividends and interest, it contributes in a period of abundant 
productive capacity to the problem of excess savings and idle money. 
On the. other hand, insofar as a company maintains its pay rolls, it 
gives employment to labor, it helps maintain the stream af consumer 
income which maintains and opens the market for industrial products. 

• N. R. Danielian, A. T. & T.. The Story of Industrial Conquest, (New York: 1939) p. 177. 



50 CONCENTRATION OF ECONOMIC POWER 

Industries, therefore, in which the trend has been that of increasing 
pay rolls rather than dividends and interest are given a favorable 
rating.. 

On that basis the petroleum refining industry ranks first, the knit 
goods industry second, and the woolen and worsted goods industry 
third. These are industries that have turned the dollars which they 
have collected from consumers back to labor and so back into the 
channels of business and the stream of buying. On the other hand, 
the industries at the bottom of the list are the canning and preserving, 
the electric light and power, and tobacco industries. These have 
paid less and lees to labor of the dollars which they collected from the 
public and diverted more and more of it from the channels of trade 
to the reservoirs of idle funds. Instead of putting dollars to work by 
disbursing them to labor, they have retired them into inactivity and 
in the process have helped to bring upon the economy in exaggerated 
fashion not only a problem of idle money but also a problem of idle 
machines and idle men. 

In conclusion, turn to the bottom section of table 1. There the 
industries are given a composite rating based on a combination of the 
separate rankings just discussed. Two sets of ratings are given: one 
on the narrow but important basis of the three criteria — production, 
employment, and. pay rolls; the other on the broader basis of all 
seven criteria. In each instance two measurements are given, the 
first siinply cumulating the increments (a procedure which assumes 
that a 1 percent change in pay rolls upward or downward is no more 
or less important than a 1 percent change in production, employment, 
etc.), the second cumulating the respective numerical ranks (a pro- 
cedure which assumes as between industries that unequal differences 
in increment are equally important, e. g., the 0.28 difference between 
chemicals and canning and preserving is given no more weight than 
the 0.01 difference between the latter and electric light and power). 
The results, while broadly identical, do present interesting differences. 

In terms of the first three criteria — production, employment, and 
pay rolls the rating, if one cumulates increments, is as follows: 
Chemicals and canning and preserving stand clearly at the top of the 
list; petroleum refining, knit goods, agricultural implements, baking 
and confectionery, electric light and power belong in the next highest 
group; paper and pulp, slaughtering and meat packing, oil and gas 
producing, boots and shoes, woolen and worsted manufacturing, iron 
and steel, and automobiles belong in the average to medium low 
class; tobacco, cotton goods, flour and other grain milling come in 
the definite y below-average category; while metal mining, coal 
mining, furniture making, manufacture of lumber and timber products 
and steam railroads are conspicuously low in performance. 

If one rates the industries by cumulating respective ranks, the 
grouping given above romaiiis entirely unchanged, even though 
priority of individual industries within the respective groups may be 
slightly different. 

Not nearly so complete, however, is the agreement if one takes the 
seven criteria. Baking and confectionery and knit goods come up in 
the top group while chemicals go down from first to tenth place (cumu- 
lative -ank) or from second to seventh place (cumulative increment). 
The automobile industry comes up into the second group while the 
electric light and power industry goes down into the average to mediurr 



CONCENTRATION OF ECONOMIC I'OWER 5^ 

low class. The cotton goods industry shifts up several grades from 
fifteenth or sixteenth to ninth or eleventh place, as does oil and gas 
producing. Tobacco comes down two grades into the group of lowest 
performance. Otherwise the ratings whether by three or seven criteria, 
by cumulating increment or cumulative ranks, are nearly identical. 
It is notable that all the composite ratings place five industries at 
the foot of the list, namely, metal mining, coal mining, furniture 
manufacturing, lumber and timber products manufacturing, and steam 
radroads. These industries have substantial if not major responsi- 
bility for the present unemployment problem and the insufficient 
pressure of purchasing power in the markets. If it were lack of con- 
fidence which causes unemployment and un^derproduction, the curious 
queLtion arises why such lack of confidence should be centered in these 
particular industries. In only one of these — namely, steam railroads — 
is government regulation of any importance and that regulation is not 
complained about. In fact, the Interstate Commerce Commission 
is often held up by industry itself as a model. In the other industries, 
except for attempts to stabilize prices during the last few years in 
coal mining, the Government has not even the semblance of regulation. 
Yet it is here that we find the problem of unemployment in concen- 
trated form. These, it should be mentioned, do not differ from Chose 
of excellent performance in that they make durable goods, for clearly 
the agricultural implements industry which is near the top of the list 
represents a durable-goods industry. Nor can it be that they differ 
in that they make industrial products because the .chemical industry, 
which is near the very top of the list sells almost exclusively to indus- 
trial markets. Clearly something other than lack of confidence or 
Government regulation or durability of product or nature of the market 
must also be at work. That something is obviously to be found in the 
economic circumstances of each of these industries. What that some- 
thing may be obviously goes beyond the scope of this study. 



CHAPTER III 
GROUPS OF INDUSTRIES 

In the preceding chapter individual industries Vere taken up, the 22 
mentioned accounting for more than 75 percent of employment in 
manufacturing, mining, and public utilities in the United States. In 
this chapter an attempt is made to compare the social performance of 
various segments of the economy. These in turn are placed for pur- 
poses of convenience into two groups, the first consisting of agricul- 
ture, manufacturing, mining, transportation and other public utilities, 
and construction, the second consisting of government, finance, service 
enterprises, and trade. Eight criteria of social performance have 
been worked out for the first group, five for the second. Together 
they comprise the important segments of the American economy. 

A.GRICULTURE 

Turning first to agriculture, note in this industry that .over 11,000,- 
000 persons were gainfully occupied in the period from 1923-25. 
Moreover, it has substantially maintained employment since then 
(see chart 23) despite the extraordinary severity of the world depres- 
sion. It has also gradually increased production. In 1937 the total 
amount was greater than in any previous year in American history". 
Even in 1938 production was greater than in any previous year except 
1937 and 1931. This fact may come as a surprise to those accustomed 
to lay great emphasis on the alleged restriction of production carried 
out by the Agricultural Adjustment Administration. Many such do 
not seem to understand the difference between "adjustment" and 
"restriction." Frequently those who speak in season and out of season 
of alleged restriction of production by the Agricultural Adjustment 
Administration are completely silent about the enormous real restric- 
tion of production that takes place in industry. Like the Pharisees 
of old such persons see the moat and ignore the beam. They become 
excited over agricultural adjustment and placidly condone or even- 
defend that collective withdrawal of efficiency which characterizes 
monopoly and a good deal of large-scale business. In fact, Professor 
Slichter, of the Harvard Graduate School of Business Administration, 
goes so far as to say "under existing economic arrangements, most 
enterprises must normally restrict output in order to maintain 
solvency."' 

Notice, too, that agriculture has decreased its employnient rela- 
tively little, particularly during the depression. If all of industry 
had done its job as well as agriculture, unemployment in 1932 and 
1933 would never have reached figures larger than 2,000,000. 

1 Sumner S?ichter, Modern Economic Society (New York: 1928) p. 5 .(Italics in the original). 

53 



54 



CONCENTRATION OF ECONOMIC POWER 



CHART 23. 

SOCIAL PERFORMANCE OF AGRICULTURE 

UNITED STATES, 1919-1938 



III 

CONSUMER EFFO 
COMMANDED 


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1940 



CONCENTRATION OF ECONOMIC POWEB 55 

Agriculture, moreover, has been giving the consumers extraordinary 
value. If 2 years are compared in which production was about the 
same, say 1928 and 1938, the gain to consumers during the decade was 
nearly 20 percent. Tliis fact should again be emphasized. Contrary 
to certain well-entrenched prejudices, agricultural adjustment pro- 
grams have not penalized consumers. As a matter of fact, there is 
hardly an industry in the whole list of industries which were analyzed 
in the preceding chapter whose record of performance is as beneficial 
to consumers as is the record of agriculture. 

Turn now to the dollar figures. Notice that the total ot consumer 
dollars collected from the public by agriculture 'declined precipitously 
from 1929 to 1932, being in the latter year reduced to less than one- 
third of what they were in '1925. Since 1932 the dollars which have 
been received by farmers for their product have increased two and 
one-half times. But these dollars, as shown by the labor income 
figure, have gone directlj'' to those gainfully employed on the farm. 
They have not gone to dividends and interest. 

Dividends and interest figures are relatively low, particularly since 
1935. During the early part of the depression, for example in 1932, 
while the farmers got only 35 percent of the dollars that they collected 
in the period 1923-25 they still had to pay out 86.7 percent as much 
in dividends and interest. Grovernmental policy in the early thirties 
was directed toward taking what little income the farmers had and 
seeing to it that it went to those who held farm mortgages. In recent 
years, however, that situation has been adjusted. 

In chart 23-A some further details are given concerning employ-, 
ment and labor income on the farm. Since 1930 there has been a 
tendency for family- workers on the farm to increase while the percent- 
age of hired workers has gone down so that in 1938 it was 88 percent 
of what it had been in the period from 1923-25. 

Interesting also is the contrast between the income of the hired 
laborer and the income of the farm operator. The income of the 
farm operator began to decline in 1925 and reached a low in 1932 of 
less than 30 percent of what it had been in the period from 1923-25, 
from which level it recovered to 92.7 in 1937. The curve showing 
income of hired labor is practically level from 1923 until 1929. In 
that year it began to fall rapidly though not as rapidly as the income 
of farm operators. Since 1933 it has been lower than that of farm 
operators due primarily to the fact that the number of hired workers 
has only ircreased about 8 or 9 percent since 1934. 

In short, the workers got the major benefit of the boom and were 
let down easy during the slump. This should be contrasted with the 
almost universal pattern in industry in which labor income not only 
failed to rise as rapidly as owner income during prosperity but fell 
first during the depression, as a general rule falling far more than 
dividends and interest which, as was noted above in industry after 
industry, did not even start to decline until 1930 and in nearly every 
instance failed to decline as much as did pay rolls. 

MANUFACTURING 

The data for all manufacturing industries are" summarized in chart 
24. Here are added together the results not only for the 17 manu- 
facturing industries contained in the sample of 22 which were dis- 

2.-6147 — 40— No. 7 5 



66 



CONCENTRATION OF ECONOMIC POWER 



CHART 23-A. 

FAMILY AND HIRED WORKERS 
IN AGRICULTURE 

UNITED STATES, 1919-1938 



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1932 


1933 


1934 


1935 


1936 


1937 


I93S 


1939 


1940 



CONCENTRATION OF ECONOMIC POWER 57 

cussed in tlie last chapter, but data for -all the other manufacturing 
industries employing in the aggregate in the period from 1923-25 
7,738,700 persons. This is the segment of the economy characterized 
by large-scale production and rapid advances in technology. It is the 
segment typically controlled by the businessmen who form the Na- 
tional Association of Manufacturers. This segment in 1938 — a mild 
depression year — produced the same volume of commodities as it did 
in the mild post-war depression year of 1919. Yet the number of 
laborers employed in 1919 was nearly 20 percent larger, a matter of a 
million and a half persons. 

None the less in 1937 manufacturmg employed more persons than 
in any other year in recent industrial history, even more than in 1929 
though the total volume of manufacturing. in 1929 was some 10 per- 
cent larger. The reason, of course, is largely to be found in the de- 
crease in hours from an- average of more than 48 a week to one of less 
than 40. The exchange value of manufactured products has on the 
whole stayed in line with production although it is a well-known fact 
that the prices of manufactured products held up remarkably well in 
the depth of the depression. 

Turning to the dollar figures in chart 24, note the wide yearly 
variation in the amount of dividends and interest paid. From a level 
of 70.3 in 1919 dividends and interest disbursements rose sharply to a 
level of 149.2 in 1930. By 1933 they had fallen to a level of 62.1 but 
in 1937 dividends and interest disbursements reached an all-time high. 
Particularly striking is the fact that dividends and interest should 
keep rising after 1921, remain relatively high throughout the collapse 
of 1930-33 and-rise much more sharply than pay rolls in the period 
from 1933-37, remaining throughout the period since 1925 in a highly 
favoj-ed po.sitibn, both relative to pay rolls and relative to consumer 
funds absorbed. The singular spurt in 1936 and 1937 is undoubtedly 
due, in part, to the influence of tax legislation, especially the tax on 
undistributed earnings. 

At no time have pay rolls ever reached the level that they had in 
1920. Even in 1929 pay rolls were below 1920 levels with production 
more than one-third higher and dividends and interest nearly 80 per- 
cent higher. In the early thirties pay rolls not only fell immediately 
but fell faster and deeper than dividends and interest. Since 1933 
they have risen less quickly than dividends and interest, only reaching 
a level of 102.5 in- 1937, which is roughly twice the 1933 level, as 
opposed to dividends and interest which were two and one-half times 
their 1933 level. Stockholders in recent years have been favored 
over wage earners. 

Of interest is the fact that the manufacturers' toll upon consumers 
has kept pace ^vith production and that they have paid out an increas- 
ing percentage of that take in dividends and interest and a decreasing 
percentage in pay rolls in the period froni 1926 to 1933. Only with the 
advent of a change in governmetital policy were pay rolls brought to a 
level which relative to consumer funds absorbed equaled that in 1926. 
In short, as I have said elsewhere, manufacturing corporations have — 

met a part of their dividend payments and interest charges out of surplus. Indeed 
the very purpose of accumulating surplus in boom times is that of being able to 
maintain stability of dividend and interest payments in lean years. Sound 
business policy has for decades dictated "ploughing in" a substantial part of 
earnings during periods of smooth sailing in order. to weather successfully the 
recurrent financial storms. The period since 1926 has been no exception. 



58 



CONCENTRATION OF ECONOMIC POWER 



CHART 24. 



SOCIAL PERFORMANCE OF ALL 
MANUFACTURING INDUSTRIES 

UNITED STATES, 1919-1940 



INDEX NUM 


BERS 

00) 


1 — 




--- 




1 — 




1 — 


















■ 










NO£)l 

(192 


NUMBEAS 

-25-IOO) 
180 


140 




EM 


PL01 


ME^ 


T 






— 


















— 












140 




/ 


c 


ONSUMER EFFORT 




PRODUCTION. 








/ 




COMMANOEt 


) 




.^)' 












^ 












100 




/^ riiC' 


-Ii^'i'"J^ 


\ 


N^ 


100 


1 \ 


/ 


T^^^^^ 


1 






NJ- 













w 






80 


xUv 


f 
















\ 






^'- 






\^ 






eo 




•A / 


f 


















\ •• 


^/•^ 














60 






V 


— ' 








— ' 




— 








V 


/* 


— 















60 
40 
20 


20 






— 


























__ 













1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1338 1939 1940 




. J9I9 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1935 !937 1938 1939 1940 



CONCENTRATION OF ECONOMIC POWER 



59 



In short, corporate financial policy has succeeded rather admirably in doing 
that which it was designed to accomplish, namely maintain dividend and interest 
payments. It is beside the point to argue that property income was thereby 
placed in a favored and sheltered position, while millions of unemployed saw their 
incomes stop completely and more millions of wage earners through short work- 
weeks and wage cuts participated fully in the economic catastrophe. * * * 
Inability to meet fixed charges means threat of bankruptcy, no matter how con- 
tinuously and steadily employm6nt-a,nd wages have been maintained, no matter 
how reasonable the prices, and how excellent the service to the consumer. The 
wages of capital are not cut as easily as the wages of labor. Business enterprise is 
often under contract to pay a fixed return to capitcl, a return sometimes econom- 
ically unearned upon capital goods long since worn out or obsolete. If necessary 
this return is paid out of surplus.^ 

Such was the story revealed for manufacturing as a whole in 1935. 
Such is still the case. 

In order to get a more realistic grasp of the difference in experience 
of the various parties that receive funds from manufacturing concerns, 
note carefully the data given in table 2. These figures compare 
factory pay rolls with dividends, interest payments, and compensation 
of officers. Outstanding is the fact that interest payments have on 
the whole declined steadily, particularly since 1930 when they 
amounted to $244,000,000 as opposed to $143,000,000 in 1938. On 
the other hand, notice the extraordinary difference in the behavior of 
dividends which in 1937 reached an all-time high for the period, 
$2,871,000,000. The index number is 161.8. In 1929 they were 
some 10 percent lower, $2,575,000,000. In 1923, a more normal year, 
they were $1,762,000,000. Thus the disparity between dividends and 
factory pay rolls is considerably larger than the disparity noted above 
between dividends and interest and factory pay rolls. 



Table 2. — Factory -pay rolls, dividend and interest payments, and 
officers in all manufacturing industries, 1919-38 


compensation of 




Factory 
pay rolls ' 

index, 

1923-25= 

100 


Dividends 2 


Interest payments » 


Compensation of 
officers 


Year 


J 
Millions 


Index, 

1923-25= 

100 


Millions 


Index, 

1923-25= 

100 


Millions 


Index, 

1923-24=- 

100 


1919 _ 

1920 

1921 


98.0 
117.2 
75.6 
81.2 
102.9 
96.0 
101.1 
104.2 
102.4 
103.5 
'10.4 
89.4 
67.8 
46.7 
50.1 
64.5 
74.1 
85.8 
102.5 
77.9 

(3) 


$1, 261 
1,487 
1,323 
1,309 
1,762 
1,651 
1,909 
2,117 
2,225 
2,506 
2,575 
2,613 
1,894 

,1,116 
1,009 
1,221, 
1,580 
2,405 
2,871 
1,668 
(3) 


71.1 

83.8 

74.6 

73.8 

99.3 

93.1 

107.6 

119.3 

125.4 

141.3 

145.2 

147.3 

106.8 

62.9 

56.9 

68.8 

89.1 

135.6 

161.8 

94.0 


$85 
107 
137 
105 
117 
154 
153 
151 
153 
183 
210 
244 
225 
192 
181 
139 
161 
148 
142 
143 


60.3 

75.9 

97.2 

74.5 

83.0 

109.2 

108.5 

107.1 

108.5 

129.8 

148.9 

173.0 

159.6 

136.2 

128.4 

98.6 

114.2 

105.0 

100.7 

101.4 


$823 
997 
879 
911 
961 
971, 

(}) 

(') 

(') 

1,108 

1,172 

1,096 
935 
734 
706 
754 
812 
95t 
« 1,076 

«956 

(») 


85.2 
103.2 
01.0 


1922 .. . . 


94.3 


1923 


99.5 


1924 


100.fi 


192o_. 

1926. 

1927. 


(») 
(») 
(') 


1928 


114.7 


1929 .... 


121.3 


1930 


n3.4 


1931 


96.8 


1932 


76.0 


1933 


73.1 


1934... 


78.0 


1935 


84.0 


1936 


08.4 


1937 


« 111.4 


1938- 


<99.0 


1939... 


P) 


(3) 


(«) 



' Annual a%-erage of 1 weekly pay roll each month. 

' Exclude intercorporate dividend and interest paynfents and short-term interest. Department of Com- 
merce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929, the Department of 
Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau 
of Economic Research, shown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

' Comparable data not available 

* Estimated from total salary compensations lu all manufacturing industries as computed by the Depart- 
ment of Commerce. 

Sources: Factory pay rolls from U. S. Bureau of Labor Statistics, Employment and Pay Rolls; dividends 
and interest pa^ ments from Departmen'. ci Commerce. National Income Division; compensation of officers 
from U. S. Bureau of Internal Revenue, Statistics of Income. 

' T. J. Kreps, "Dividends, Interest, Profits, Wages, 1923-35" in The Quarterly Journal of Economics, 
vol. xlix, August 1935, pp. 573-575. 



QQ CONCENTRATION OF ECONOMIC POWER 

Not only has management? been considerate of the stockholder, a 
considerateness frequently acknowledged and publicized, it has been 
considerate of itself. In the twenties, while pay rolls rose from a 
level of 102.9 in 1923 to 110,4 in 1929 (7.5 points m that 6-year 
period) compensation of officers rose 21.8 points, or practically 3 
times as much. On the other hand, between 1929 and 1933 factory 
pay rolls declined by more than half to a level of 50.1; that is, they 
declined 60.3 points, whereas compensation of oflBcers declined to 
73.1, or a total of only 48.2 points from a higher level. Again in 1937| 
pay rolls reached to a level of 102.5, or about the same as they 
were in 1923. But officers' com.pensations had increased to 111.4, as| 
com.pared with 99.5 in 1923. 

Thus pay rolls not only rose less during periods of prosperity but 
declined sooner and faster in periods of depression. Not so the com- 
pensation and salaries which the officers of corporations allot t9 them,- 
selves. They are the first to benefit when prosperity com.es and, 
the last to suffer in days of depression. 

In conclusion, the fact should be noted that the com.parisons here 
made, if anything, fail adequately to represent the disparity between 
payments to labor and paym.ents to the owner-m.anager-property 
account. For the salariecl officers of a corporation, by and large, not 
only have relatively high incomes but also own stock and bonds either 
in that corporation or in other corporations. Moreover, they receive 
bonuses directly or through participation in management profit- 
sharing corporations. 

Particularly in the case, of smaller concerns, officers' com.pensation 
and perhaps even interest on som.e of the bonds represent a com.m.uted 
sort of return on what the managers have in the business. This fact 
is im.portant in understanding som.e of the reductions in surplus that 
occurred di'ring the early and middle thirties, for sm.all concerns 
often show m.or6 or less fictitious reductions of surplus or increases 
in deficits on their balance sheets because of the practice of accruing 
compensation of officers (for tax purposes) and balancing these accruals 
by loans from officers.^ Management and property are not only 
substantially identical in economic interest (not of course in thb 
individual enterprise, particularly if it be large, but in the' aggregate 
or class) but m.ust .be so to a great extent for obvious legal reasons. 
Consequently the comparisons shown in chart 24 understate the case. 
The disadvantage to labor is m.inimized, the gains of the owners and 
managers understated. 

MINING 

The outstanding feature of the m.ining industry (see chart 25) is 
the m.anner in which production in recent years has outrun em.ploy- 
ment despite the decrease in the number of hours. In no branch of 
enterprise' have technological advances been so rapid.* Employment 
at no tim.e reached the level of 1920. Output in 1929 was nearly a 
fifth larger than 1920 levels but em.ploym.ent was nearly a fifth less. 
In 1937 the industry again reached the 1929 peak of production but 
it employed still fewer workers. 

Since 1929 the industry has sold its product on the bargain counter. 

Thfe iimount of consumer effort comm.anded in 1937 was more than 

^ 

3 See Solomr.n Fabricant, Profits. Losses, and Business Assets, 1929-34. National Bureau of Economic 
Research, Bulletin 55, April 11, 1935, p. 3. 
* See So ^rgeon Bell, Productivity, Wages, and National Income, pp. 65-66. 



CONCENTRATION OP ECONOMIC POWER 



61 



CHART 25. 

SOCIAL PERFORMANCE OF ALL 
MINING ACTIVITIES 

UNITED STATES, i919-l938 

























































;oNs 


UME 


? EF 


FOR 


r 




































COMMANDED 




























[ 






PRODUCTION 




1 


EMPLOYMEr 


JT 








/^ 














\ 






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XiA 


^ .-^- 


^-r 


A' 


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/I 
1 


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cay 




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1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 !93l 1932 1933 1934 r935 1936 1937 1938 1939 1940 



! 1 
1 1 

CONSUMER 


■UNDS 




DIVIDENDS AN 


D_ 
























_ 










INTEREST 


























J 


f 






/ 




A- 


k 




PAYfi 


OLL 

'/ \ 


s 


/ 


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^/ 


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L 


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.7 


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1 


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1919 1920 1921 1922 1923 1924 I92S 1926 1927 1928 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1938 1939 1940 



Q2 CONCENTRATION OF ECONOMIC POWER 

10 percent less than that which the industry got for the same amount 
of product in 1929. In other words, except for the spurt in 1937 the 
prices of copper, zinc, lead, and other minerals have consistently 
stayed considerably below the level of general prices, wages, rents, 
and the like. 

Turning to the dollar figures, note first of all the great instability of 
the industry. The peak of all-time net-sales realization occurred in 
1920. By 1929 the industry hh,d diminished its net absorption of 
consumer funds by nearly 20 percent while in 1932 the index of 
consumer funds absorbed was only 25.8 (1923-25=100) as compared 
with 116.4 in 1926. .By 1937 the figure had increased threefold. 
Pay-roll figures, except for the years 1921-24 and 1930-33, have 
remained consistently below the index of consumer fund^ absorbed. 

On the whole, the industry has been paying out a smaller part of the 
dollar collected from the public to its labor. This again is but a 
reflection of the rapid increase in labor-saving devices in the mining 
industry. On the other hand, the proprietorship account has been 
consistently favored. Comparing 1923 with 1929, for example, 
although there had been only a decline of 11.4 points in the number of 
consumer dollars absorbed, there was a decline in the index of pay 
rolls of 31.3 points. But dividends and interest paymeilts increased 
more than 50 percent from 92.1 to 144.1. During the depression they 
jiever decline I as low as wages and were the first to pick up in the late 
thirties. Comparing 1933 and 193/, for example, notice that the 
amount of consumer funds absorbed increased 49 points, pay rolls 
only 28.5 points, but dividends and interest 68 points — that is, more 
than double the increase in pay rolls. 

TRANSPORTATION AND OTHER PUBLIC UT' LITIES 

The group of industries called transportation and other public utili- 
ties, in which are included in addition to steam railroads, the electric 
light and power and gas industries, street railways, and telephone and 
telegraph industry, on the whole represents a series of in,dustries reg- 
ulated by commissions such as the Interstate Commerce Commission, 
the Federal Communications Commission, and various State public- 
utility commissions. Measures of social performance in this segment 
reflect, therefore not only the adequacy of business policies but the 
- economic theories of regulatory bodies. They show the purposes and 
goals of regulatioTi as formulated by the judiciary and carried out by 
the various commissions. 

Turning to chart 20, notice that in this segment of the economy 
production has likewise tended to run ahead of employment, notice- 
ably so in the last few years. The reason is again largely one of rapid 
technological advance. Comparing the years 1923 and 1936, for ex- 
ample, years in which production was roughly identical, notice that 
the amount of employment had declined by over 20 percent, despite 
the decrease in number of hours worked per week. In an industrial 
group employing 3,651,000 workers in the period 1923-25, such a de- 
I cline in employment accounts for more than 700,000 of those seeking 
jobs in 1930 who would have had jobs in 1923 under the conditions 
of production then obtaining. 

A good deal of this has been passed on to consumers in lower prices 
is is shown by tlic fact that since 1925 the curve showing consumer 



CONCENTRATION OF ECONOMIC POWER 



63 



CHART 26 

SOCIAL PERFORMANCE OF TRANSPORTATION 
AND OTHER PUBLIC UTILITIES 

UNITED STATES, 1919-1938 















1 


























f — 




















































Dmpi 


-OYK 


ENT 








PRODUCTION 
























■U 


T 




r 


^r- 


^ 


..-H>. 




C( 


JNSUMEr' EFFORT 
COMMAMOEO 




'N 
















1- 


























. 








V 


■^ 





















































































































































1919 1320 1921 1922 1923 1924 1925 I92S 1927 I92S 1929 I9» 1931 1932 1933 1934 I93S I93S 1937 1938 1939 1940 

























OIV 


lOENOS 


r 

AND 

r 


























rn 


NSUI 


ilF-R 


FMN 


5S 


















/ 












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ABSORBED 


-^ 




\ 


















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1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



g^ CONCENTRATION OF ECONOMIC POWER 

effort commanded has remained (except for the years 1931-34, inclu- 
sive) fairly consistently below the index of production, especially so in 
1936 and 1937 when the Interstate Commerce Commission and the 
Tennessee Valley Authority began to explore the possibilities of 
creating more volume by quoting lower rates. 

^ The effects of the economic doctrines held by the judiciary which 
has controlled governmental regulation are quite clearly shown in the 
dollar figures, the outstanding fact there being the perfectly extraor- 
dinary rise in dividends and interest from 1921 to. 1930 together with 
the failure by a good deal of dividends and interest to fall as much as 
pay rolls or the index of consumer funds absorbed. Comparing 1923 
and 193jB, both years of moderate prosperity, notice that production 
was nearly the same yet pay rolls declined from 100.4 in 1923 to 78.6 
in 1936, or more than 20 percent. The story of dividends and mterest, 
however, is exactly the reverse. They increased 20 percent. 

The main effort of judges and of commissioners has been so to regu- 
late public utilities that th^ might earn as nearly as may be a so- 
called "fair rate of return" on the fair value of the property invested 
for the benefit of the public. The wide spread between the pay rolls 
and dividends and interest curves is interesting evidence of the prac- 
tical realization of such judicial economics. The result was not only 
to place the weight of government behind attempts to give capital a 
rate of return regarded by judges as "fair" though economically more 
than the industry could earn. It was to set rates at levels regarded 
high enough to earn such a return. But- the high rates decreased 
consumption and increased costs, especially the overhead cost per unit. 
The decreased consumption resulted in actual or constructive decreases 
in employment. Profits adequate to produce the "fair" rate of return 
were still not being earned. In short, the maintained rates, the low 
volume, high costs, depression, and unemployment in this segment of 
the economy represent to no small degree the cost to society of a 
judicial economics which, while geared to the dire need for protection 
of capital that existed in feudal society (out of which grew Anglo- 
Saxon law) is not wholly suited to the modern economy of abundance 

) which needs markets, maintenance of pay rolls, mass purchasing power, 
and low prices to consumers. 

As I have said on a previous occasion, "Due to a tragically mistaken 
policy taxpayer funds w^re even doled out by the billion in order to 
keep inflated capital structures from being put through the wringer." * 
The first public moneys spent by the Reconstruction Finance Corpo- 
ration were those which went to the relief of railroad bondholders. 
How great a deterrent to prosperity this mistaken policy has been can 
scarcely be guessed. The capital load and the resultant fixed charges 

' form a considerable incubus on productive enterprise. Needless to 
say, the debt load which the courts have tried to' validate into the 
public-utility price structure is an uneconomic subsidy to capital. 
Only by Government interference and by threatening managers with 
displacement through banl.ruptcy proceedings would the managers of 
the railroads ever have maintained dividends and interest payments 
at the inflated level which has existed since 1925. Such governmental 
interference with economic processes should be removed. Capital 
should rece ive only what it ^rns, what it is worth economically. 

\'^-J- ^reps, "Dividends, Interest, Profits, Wages, 1923-35," in the Quarterly Journal of Economics, 
VDl. xlix, August 1935, p. 585. 



CONCENTRATION OF ECONOMIC POWER 65 

In view of the enormous amount of excess savings in recent years 
the price of capital is bound to be low just the way the price of pota- 
toes is low when the harvest of potatoes is abundant. Yet the rail- 
roads and the utilities have not been allowed to take advantage of 
this economic fact. Judges still talk of 6, 7, and 8 percent as a "fair" 
rate of return in an age when the market price of savings is less than 
3 percent. The high rates not only fail to produce net revenue but 
cause unemployment and loss of traffic. Until the interest burden, 
that is, until the debt load in the railroad and utility industries is 
brought down to a sound -and healthy basis, there may not be sound 
and healthy recovery in those industries. 

CONSTRUCTION 

As is well known, the segment of the economy which has suffered 
the most during the last 10 years has been that series of industries 
lumped together in the construction industry. In no chart in this 
chapter is the dip as pronounced as that which shows up in chart 27. 
Notice that production in the industry reached its high in 1926 and 
declined steadily thereafter until in 1933 it had gone down by more 
than 70 percent, the index being only 33 in that year as opposed to 
119 in 1926. Since 1933 construction has more than doubled but it is 
still at levels only two-thirds as- high as in the base period from 1923-25. 

On the whole, the employment curve has followed the curve of pro- 
duction though it did not rise as sharply between 1919 and 1926 as did 
production. Moreover^ it' remained consistently below production, 
especially in the early thirties. In short, the industry has shoWn little 
if any teclmological change, in that regard being an outstanding excep- 
tion in an economy otherwise undergoing revolutionary teclmological 
transformation. 

The index of consumer effort commanded shows, if anything, a 
greater variation than the index of production. If one were to take 
the index as it stands, one would be led to the conclusion that the 
construction industry had, especially since 1925, continuously been 
giving consumers greater value for their money. Such a conclusion, 
however, cannot be reconciled with the well-known fact that through- 
out the period, particularly since 1929, cost of housing and construc- 
tion has remained relatively high. 

As has been pointed out by numerous experts and, in particular, by 
Prof. Frederick C. Mills in his series of studies on prices, especially 
in his volume Prices in Recession and Recovery, the wholesale prices 
of building materials have remained on a high plateau ever since 1925 
but especially since 1930. In chart 27A« are shown the results of 
Dr. Mills' study. Notice that the price of producers' goods, building 
materials, the dotted line in the chart, fell much more slowly than did 
other commodities from 1929 to 1933. It rose early in 1933 and again 
in 1937 and has consistently remained above the index of prices in 
general. This is likewise true for capital equipment. The chart 
gives a valuable clue concerning the reason why recovery in the capital- 
goods industry, including construction, has been lagging behind 

' Investigation of Concentration o' Economic Power, hearings before Temporary National Economic 
Committee. Ft. 11, Construction Industry, exhibit 915, p. 5232; cp. National Resources Committee, Housing 
Monograph Series No. 3, Land, Materials, and Labor Costs, fig. 32, "Comparison Between Building Mate- 
rial Prices and All Commodities, Wholesale Prices 1913-37," p. 59. 



66 



CONCENTRATION OF ECONOMIC POWER 



CHART 27. 

SOCIAL PERFORMANCE OF CONSTRUCTION 

UNITED STATES, 1919- 1938 























— 1^ 






















lec 
























































COMMANDED 
























_^I 1^ 


1 
















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r 


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1919 1920 1921 1922 1923 1924 I92» 1926 1927 1929 1929 1930 1931 1932 1933 1934 1935 1936 1937 1936 1939 1940 





















1 t 1 

DIVIDENDS AND 
INTEREST 






















140 












^ 










V 


^ 




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CON 


SUMER F 
iBSORBE 


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1919 1920 1921 197^ I9e3 1924 1923 1926 1927 1926 1929 1930 IMI 1932 1939 1934 I93S 1936 1937 1936 «3» l»40 



CONCENTRATION OF ECONOMIC POWER 



67 



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g§ CONCENTRATION OF ECONOMIC POWER 

recovery in other industries, notably those producing consumers' 
goods. 

If prices and costs in the construction industry ha v6 been high, 
why do the figures show relatively less consumer effort being com- 
manded? The reason for this discrepancy is a technical one. It lies 
in the fact that the consumer-funds-absorbed index is here made up 
as elsewhere of the figures representing income produced published 
by the Department of Commerce. As indicated in appendix A, this 
is teclmically accurate in every industry in which the amount of specu- 
lation and inventory adjustment is either small or consistent through- 
out the period. Normally income produced represents the value of 
net product. But where the volume of negative business savings is 
hkely to be overestimated the figures for income produced are very 
likely to be too low. Negative business savings on the whole are rep- 
resented by business on its accounting books as net losses. As such 
they are most likely to be overestimated in those industries such as 
housing, in which there is a great deal of speculative activity. 

As is well, known housing throughout the twenties was mainly 
carried on by speculative builders who would build a large number of 
houses and then try to sell them. But the housing shortage was sub- ■ 
stantially over in 1925. The housing market began to decline shortly 
thereafter and was doubly liit by the depression. As a result the 
speculative builders charged off as losses the declines that took place 
in the value of the properties which they had put up. In effect, they 
wrote down the price of their inventories. This write-down was 
charged against current receipts so that their reported net income; 
that is, the figure representing income produced, was substantially 
less than the funds which they actually collected from the public. In 
other words, the income produced figure being too low, the index of 
consumer funds absorbed is too low and even with adjustment for 
changes in the price level the index of consumer effort commanded is 
too low. In short, the performance of the industry is not as favorable 
as would seem from the u])per section of chart 27. 

Turning to the dollar figures the fact must again be noted that the 
curve for consumer funds absorbed is probably too low. Notice that 
low as it is it remains on a level with pay rolls, showing that on the 
whole labor if anything got a smaller proportion of the consumer dollar 
during the depression than it did previously. 

The figures for dividends and interest show an altogether different 
story. Despite the decline of 17 points in production, for example, 
between 1926 and 1930, note that dividends and interest rose by more 
than 50 percent. At no time did dividends and interest get as low 
IS pay rolls and yet between 1934 and 1937 they more than tripled 
vhen pay rolls and consumer funds absorbed just barely doubled. 
In other words, depressed as the construction industry has been, divi- 
dends and interest have been maintained relative to pay rolls. 

SUMMARY OF PERFORMANCE OF -SEGMENTS IN FIRST GROUP 

Each of the five segments in the first group have now been discussed 
individually. The task remains of comparing them with each other; 
nam(>ly, agriculture, manvifacturing, mining, transportation, and other 
public utilities, and construction. In table 3 such a comparison is 
made, together with a composite ranking. 



CONCENTRATION (\ ECONOMIC POWER 



69 



Table 3. — Industry groups rated for social behavior, 8 criteria, 1919-38 

PART I 



Industry group 



Production ' 



Incre- 
ment 



Rank 



Employment ' 



Incre- 
ment 



Rank 



Pay rolls ' 



Ratio of em- 
ployment to 
production ' 



Incre- 
ment 



Rank 



Incre- 
ment 



Rank 



Agriculture 

Manufacturing _ 

Mining ..- 

Transportation and other public 

utilities.-- 

Construction 



-fO. 66 
+.08 
+.78 

-.10 
-1.45 



-0.26 
-.61 
-1.51 

-1.43 
-2.52 



-3.03 
-1.50 
-3.21 

-1.72 
-2. 74 



-0.92 
-.69 
-2.29 



-1.33 
-1.07 







PART 


II 












Industry group 


Ratio of pro- 
duction to 
consumer 
effort 

commanded ' 


Ratio of pay 
rolls to con- 
sumer funds 
absorbed * 


Ratio of pay 
rolls to divi- 
dends and 
interest » 


Ratio of con- 
sumer funds 
absorbed to 
dividends and 
interest ' 




Incre- ^ ^ 
ment ^^^^ 


Incre- 
ment 


Rank 


Incre- 
ment 


Rank 


Incre- 
ment 


Rank 




+2. 77 2 


-0.01 

-1.12 

.00 

-.63 
-.02 


2 
5 
1 

4 
3 


-1.41 
-2.99 
-2.70 

-3.69 
■ -3.66 


1 
3 
2 

5 
4 


-1.40 
-1.87 
-2.70 

-3.06 
-3.84 


1 




-.27 
+3.30 

-f.lO 
+.84 


5 
1 

4 
3 


2 


Mining . 


3 


Transportation and other public 


4 




6 







PART III 



Industry group 



Agriculture -■-_ 

Manufacturing 

Mining 

Transportation and other public utilities 
Construction.- ..-. 



Composite rating 



Cumulation of 
> ranks 



Rating 



Cumulation of 
increments 



1 

2.3 

2,3 

4 

5 



-3.60 
-8.97 
-8.33 
-11.5*6 
-14.26 



Rating 



' Rated on basis of average annual increments. 

' Rated on basis of employment increment minu production increment. 

3 Rated on basis of production increment minus consumer /unds absorbed, adjusted, increment. 
* Rated on basis of pay rolls increment mi;nus consumer funds absorbed, unadjusted, increment. 
' Rated on basis of pay rolls increment minus dividends and interest increment. 

« Rated on basis of consumer funds absorbed, unadjusted, increment minus dividends and interest 
increment. 

So far as production is concerned the mining industry throughout 
the period increased its production the most; then agriculture. On the 
whole, manufacturing increased slowly at the rate of about one-tenth 
of 1 percent a year. On the other hand, transportation has declined 
somewhat slowly while the construction industry throughout the 
period declined at the rate of almost 1^ percent a year. 

All the industries show decreases in employment but agriculture the 
least, with manufacturing running a close second. Notice that in the 
mining and transportation industries the amount of emploj'^ment de- 
clined by about V/i percent a year wliile in the construction industry 
the declines took place at the rate of 2^ percent a year. 



7Q CONCENTRATION OF ECONOMIC POWER 

All the industries similarly showed a decline in pay rolls throii2:hout 
the period, a phenomenon not unexpected when the fact is remembered 
that on the whole prices declined by nearly 50 percent from 1919 to 
1938. Pay rolls held up best of all in manufacturing; then in trans- 
portation and other public utilities; while they decreased at a rate in 
excess of 3 percent a year in agriculture and in mining. 

So far as the ratio of men to product is concerned it would seem that 
in all the industries employment failed to keep up with production. 
Particularly great seems to have been the increase in the productivity 
of labor in the mining industry. So far as its relationship to produc- 
tion is concerned, employment held up best on the whole in the manu- 
facturing industry and next best in agriculture. The advances of 
technology appear to have been particularly rapid in mining and trans- 
portation and other public utilities. 

No index affords a better comparison of what industry gives as 
opposed to what it gets than a comparison of production with con- 
sumer effort commanded. All of the industries except manufactur- 
ing show' a tendency to give consumers more value; that is, to give 
them the same amount of product with less effort. Heading the list 
of such industries is mining, which tended to increase the amount of 
product it gave consumers per unit of exchange value by more than 3 
percent a year. Agriculture has liivewise been "giving consumers a 
break" at the rate of more than 2% percent a year. Transportation, 
etc., likewise has tended to become slightly cheaper. Only the manu- 
facturing industries have by and large commanded increased effort 
from consumers. In short, manufactured goods have been able to 
command relatively more of the services of farmers and of miners; that 
is, of primary products throughout the period. This corroborates the 
finding which was made by Dr. Frederick C. Mills who, in his book 
Economic Tendencies in the United States, has documented a similar 
trend for a variety of industries. The position of the manufacturing 
industries has been steadily improved and that of the primary pro- 
ducers and consumers has grown somewhat worse throughout the 
period of 1919-38. 

One of the most interesting tests is always the extent to which an 
industry pays out in pay rolls what it collects from consumers. With 
the exception of mining there was a tendency in all industries to give 
to pay rolls a smaller percentage of the dollar collected from the pul)lic, 
notably so in manufacturing where the amount of decrease in the per- 
centage of the consumer dollar which went to labor was more than 1 
percent a year. In transportation, etc., a similar tendency was preva- 
lent. In mining, agriculture, and construction the proportion of the 
consumer dollar going to labor remained about the sanie. 

It is, of course, the endea^^or of all business to please the stock- 
holders. Table 3 affords two measures of the extent to whicii industry 
has endeavored to maintain dividends and interest. Pay rolls have 
in no case maintained themselves. Even in agriculture the disburse- 
ments to labor have been decreasing on the average of nearly I/2 per- 
cent a year. In manufacturing and construction dividends and inter- 
est are favored over pay rolls to the extent of about 3 percent a year, 
wherea.^ in the transportation and other public-utility industries the 
rate is in excess of Vh percent a year, reflecting in part the success of 
government regulation especially in tlie matter of earning a "fair rate 
of return." 



CONCENTRATION OF ECONOMIC POWER y^ 

A comparison of the changes that have taken place in the percent- 
age of the consumer dollar paid out in dividends and interest yields a 
similar result. Agriculture tended to increase the percentage of the 
consumer dollar going to those who hold mortgages less than any of the 
segments here discussed. But that increase has been at the rate of 
neariy IK percent a year. Manufacturing comes next, then mining, 
then transportation, and finally construction. There the percentage 
of the consumer dollar going to dividends and interest has increased 
on the average more than Sji percent a year, an indirect measure of the 
extent to which interest on mortgages has been held up. 

SEGMENTS OF THE ECONOMY IN THE SECOND GROUP 

As was indicated at the beginning of this chapter, for some segments 
of the economy production data are not to be had. As a result the 
research worker must be content with figures on employment, pay rolls, 
dividends and interest, and consumer funds absorbed. The charts 
instead of being divided into two parts will consist of one part of four 
lines. The segments in this second group are government, finance, 
service, and trade. They will be discussed in that order. 

GOVERNMENT 

The figures so far as government is concerned are given in chart 28. 
The outstanding fact there is the tendency for pay rolls to outrun 
the funds taken from consumers, notably in the period 1924-30 
but again in the period 1934-38. Except for the period before 
1924 and the period 1933-34 pay rolls have tended to increase faster 
than employment. This again is particularly true in the twenties 
and early thirties. In short, the Government has tended to pay out 
to labor in the form of pay rolls an increasing part of the funds which 
it takes from consumers. It has also uniformly increased its employ- 
ment s^ fast as it has increased its receipts from the public. On the 
other hand, its payments of interest, except for the period 1920-24 
and the year 1934, have consistently been below the indexes for 
emploA'ment, pay rolls, and consumer funds absorbed. The rela- 
tively favorable showing of the interest curve is, of course, largely 
expli'cable in terms of the steady decline in the rate of interest, to- 
gether with the fact that the Government does not pay out dividends. 

Some further qualifications and explanations of the figures are in 
order. Notice the relatively steady increase in the curve for con- 
sumer funds absorbed. Except for the jog in the thirties the rate of 
increase throughout the period has been consistent. This might seem 
highly surprising to some, especially since the figures for consumer 
funds absorbed include, in addition to taxes, all net borrowings. 
Many would expect that the figures for Federal, State, and local 
governments when added together ought to show an increase much 
greater in the period 1930 40 than in the period 1919-30. Such is 
not the case. 

The reason, of course, is that in the twenties public expenditures 
were increasing rapidly ifor roads and schools, largely on the pert of 
State and local governments. In the thirties such expenditures have 
tapered off while those of the Federal Government have greatly 
increased. 



72 



COi^CENTRATlON OF ECONOMIC POWER 



Furthermore, employment furnished by all governmental units 
increased at about the same rate in the period 1922-30 as it did in 
the period 1930-40. This may also be surprising but it is due to 
the fact that in the twenties increasing numbers of men were hired 
on construction work, in schools, and in policing the public highways, 



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whereas iti the thirties the most conspicuous increase has occurred 
in the personnel of the Federal Government. 



FINANCE 



None of the charts shows so vividly the great speculative bubble 
culminating in 1929-30 as does chart 29. The finance industry, 
which includes not only commercial and other banking activities but 



CONCENTRATION OF ECONOMIC POWER 



73 



aiso brokerage houses and building and loan associations, shows the 
most rapid increase of any industry in the twenties. Dividend and 
interest payments increased nearly threefold from an index of 60 in 
1919 to 172 in 1930. During that same period pay rolls doubled 
while employment increased slightly more than 50 percent. 



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Peculiar, too, have been the fortunes of the industry since 1929. 
Dividends and interest have at no time shown a tendency to recover, 
declining slowly but steadily from 1930 to 1938. A similar decline 
took place in employment and pay rolls from the period 1929-33. 
Since 1933 employment has been staW~ while pay rolls have risen 
somewhat. Thus since 1936 the index ot pay rolls has exceeded that 
of dividends and interest — almoso the only industry so far discussed 
in which that particular fact is true. Pay rolls have been steadily 



y4 CONCENTRATION OF ECONOMIC POWER 

maintained above consumer funds absorbed since 1925. So has 
employment. 

Another peculiarity of this industry is that the sum total of con- 
sumer funds absorbed is considerably larger both in the base period 
and subsequently than the sum of pay rolls plus dividends and in- 
terest. In the base year consumer funds absorbed amounted to 
$6,704,000,000 while pay rolls were $1,720,000,000 and dividends and 
interest $1,581,000,000, which together amount to less than half of 
consumer funds absorbed. The remainder is comprised for the most 
part by net rents and royalties, which are a peculiarly important 
source of income to real-estate and financial concerns. The rapid 
decline in consumer funds absorbed since 1929 to a level lower than 
that in 1919 reflects therefore both the decline in speculative activity 
plus the decline in rents and income from real estate. Also involved 
in that decline is no doubt a considerable amount of write-down of 
values both of securities and of real estate which would tend to make 
the figure for consumer funds absorbed too low. In short, consumer 
funds absorbed since 1930 have probably been higher than that 
indicated in the chart. 

SERVICE 

Under service enterprises is included that wide variety of pre- 
dominantly small business which is engaged in furnishing personal 
services of various sorts — barbers, electrical repair shops, various 
professional groups, and the like. It does not, of course, include 
education, which belongs underrgovernment, nor does it comprise 
trade or finance. Here likewise me outstanding fact is the enormous 
rise in dividends and interest from 1919 to 1930, the index in that 
period going from 40 to 192. 

Beginning in 1930 there was a decline more precipitate than that in 
any other industry and greater than found in any other chart in this 
series. By 19^33 the index had gone down to less than one-third of its 
1930 figure. There has been notable improvement since that time 
though in no case coming close to 1930 levels. 

The other indexes show much greater stability. Pay rolls, for ex- 
ample, more than doubled between 1919-29, declined more than one- 
third during the depression, but regained a level in 1937 equivalent to 
that in 1926. 

Even better is the record of the industry so far as employment is con- 
cerned. In 1937 as many persons were employed in service enterprises 
as were employed in 1929, the largest figure in the 20-year period 
covered by the chart. The decline in employment was relatively 
moderate, in fact employment stayed considerably above the con- 
sumer funds absorbed indicating that service enterprises kept on their 
labor despite greatly reduced receipts from the public. Throughout 
the period from 1926 on, pay rolls have consistently been in excess of 
consumer funds absorbed showing that of the dollars which the service 
enterprises collected from the consumer, a relatively larger amount 
was paid out to labor. On the other hand, in the period from 1933-35 
and again in 1938 the index of dividends and interest was not only 
lower than that for pay rolls but lower than that for consumer funds 
absorbed. 

The service enterprises have operated, in short, in the manner in 
which the competitive system, according to traditional thinking, ought - 



CONCENTRATION OF ECONOMIC POWER 



75 



to operate. The entrepreneurs and owners are thought to be the risk 
bearers. Their returns are supposed to fluctuate much more than the 
returns to labor. In periods of depression their income should be 
lower than that of labor. But to compensate for losses during depres- 
sion they get and deserve higher incomes during periods of prosperity. 



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In the service enterprises that is almost exactly what has happened. 
The dividends and interest curve goes below pay rolls in periods of 
depression and rises above them in periods of prosperity. This be- 
havior, it should be noted, is completely contrary to that of practically 
every other industry or segment of the economy, especially manufac- 
turing. There the heavy investment in plant, together with the rela- 
tively heavy amount of fixed-income-bearing obligations, caused the 
managers to utilize every resource to keep up payments to property 



76 



CONCENTRATION OF ECONOMIC POWER 



during periods of depression. There the risk is shifted to labor. Here 
it is borne by those who are paid to undertake risk, the proprietors. ■. 



TRADE 



The segment of the economy comprised by wholesaling and retailing 
operations commonly called trade is a large one. In the period from 
1923-25 this, industry employed 4,662,000 persons and paid out in 



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wages more than $7,000,000,000 a year with dividends and interest 
equal to $429,000,000. The consumer funds absorbed in wholesaling 
and retailing are estimated to have been $10,500,000,000, which is 
equivalent to nearly one-seventh of the total national income. That 
which has happened to trade is therefore peculiarly important for the 
economy. 



CONCENTRATION OF ECONOMIC POWER 77 

The salient facts «.re shown in chart 31. In many respects they are 
similar to those shown for governme^t, finance, and service. For ex- 
ample, trade shows a considerable rise in dividends and interest, 
especially in the years 1936 and 1937, in which they reached an all- 
time high, the index in 1936 being 165 as opposed to 145 in 1929. 
Dividends and interest were more thac^ double 1922 levels. Notice 
tbat the course of pay rolls has been considerably different, not only 
did. they fail to rise as rapidly in the twenties but they failed to recover 
in the thirties in anything like the proportion with which dividends 
and interest have recovered. 

In the same period, 1922 to 1936, pav rolls increased only 5 percent. 
But they have nonetheless remaine(r consistently above consumer 
funds absorbed, at least since 1924. The qualification made in con- 
nection with finance needs to be reemphasized, however. For in the 
distribution trades the figure of income produced as reported by the 
Department of Commerce is likely to be too low in periods of price 
decline simply because the readjustments in inventory values; that is, 
inventory losses, cannot be adequately eliminated. It seems entirely 
probable, in short, that the percentage of the dollars collected from 
the public which businessmen in the wholesaling and retailing trades 
paid out to labor did not increase throughout this period. 

Employment has remained relatively steady. There was an increase 
during the twenties of about 15 percent and a decrease since 1929 from 
115 to 90, which means in human terms a disemoloyment of about 
1,200,000 persons. In short, this industry is responsible even at the 
present time for more than 10 percent of the total unemployment that 
exists in the United States. 

summary; 

Nine different segments have now been examined comprising the 
whole of the American economy. For four of these, those just dis- 
cussed, the absence of data on production makes possible a comparison 
of social performance of all the segments in only five ways. These 
are shown in table 4. The various segments are listed in order of 
their composite ranking. 

The result is surprising and indeed unpalatable, for Government 
stands at the top of the list. Such a result clearly shows the inade- 
quacy of the few measurements of social performance which have been 
utilized throughout this study. But that inadequacy, it will be 
remembered, is due to the absolute lack of data. 

The two industries, however, most regulated by Government — 
namely, finance and transportation and other public utilities — stand 
in the one case next to the top and in the other next to the bottom of 
the list. Interestingly enough, finance, which is secon^d, is the indus- 
try in which operate such Government agencies as thci Securities and 
Exchange Commission and the Federal Reserve Board, enforcing 
regulations such as the registration of securities whicti businessmen 
have criticized with no little vigor and persistence. Y^t in terms of 
social performance it comes second. On the other hand. Government 
regulation of the railroads has won wide acceptance by businessmen. 
Yet in terms of social performance it is the segment with next to the 
poorest rating. In between come the various other segments with 
constructiop definitely at the bottom of the list. 



7g CONCENTRATION OF ECONOMIC POWER 

Table 4. — Industry groups rated for social behavior, 6 criteria, 1919-38 
' PART I 



Industry group 


Employment ■ 


Pay rolls > 


Ratio of pay 
rolls to consumer 
funds absorbed ' 


Ratio of pay 

rolls to dividends 

and interest ' 




Incre- 
ment 


Rank 


Incre- 
ment 


Rank 


Incre- 
ment 


Rank 


Incre- 
ment 


Rank 


Oovftrnnifint 


+1.64 
+1.71 
+1.60 
+0.03 
-0.26 
-0.61 
-1.61 

-1.43 
-2.52 


2 

1 
3 
4 
6 
6 
8 

7 
9 


+2.88 

+1.71 

+1.35 

-0.63 

-3.03 

-1.60' 

-3.21 

-1.72 
-2. 74 


1 
2 
3 
4 
8 
5 
9 

6 
7 


-H).27 
+1.74 
+0.61 
+0.88 
-0.01 
-1.12 
0.00 

-0.63 
-0.02 


4 
1 
3 
2 
6 
9 
6 

8 

7 


+0.84 
-0.95 
-0.16 
-2.29 
-1.41 
-2.99 
-2.70 

-3.69 
-3.66 


1 


Finance . 


3 




2 


Trade 


5 




4 


Manufacturing. .. r. 


7 




6 


Transportation and other public 
utilities 


9 


Construction , 


8 







PART II 



Industry group 


Ratio of consumer 

funds absorbed to 

dividends and 

interest * 


Composite rating 




Increment 


Rank 


Cumula- 
tion of 
rank 


Rat- 
ing 


Cumula- 
tion of 
increments 


Rat- 
ing 


Government - 


+0.67 
-2.69 
-0.77 
-3.17 
-1.40 
-1.87 
-2.70 
-3.06 
-3.64 


1 
6 
2 
8 
3 
4 
6 
7 
9 


9 
12 
13 
23 
26 
31 
34 
37 
40 


1 
2 
3 
4 
5 
6 
7 
8 
9 


+6.10 

+1.52 

+2.53 

-5.08 

-6.11 

-8.09 

-10. 12 

-10:63 

-12.58 


1 


Finance 


3 


Service .- 


2 


Trade 


4 


Acriculture 


5 


Manufacturing ... . ... 


6 


Mining 


7 


Transportation and other public utilities 

Construction 


8 
9 







' Rated on basis of average annual increments. 

' Rated on basis of average annual increment for pay rolls minus average anntial increment for consumer 
unds absorbed, unadjusted. 

' Rated on basis of average annual increment for pay rolls minus average annual increment for dividends 
and interest. 

* Rated on basis of average annual increment for consumer funds absorbed, unadjusted, minns average 
annual increment for dividends and inter-est. 

Turning to the separate criteria, note that employment has in- 
creased on the average throughout the period only in the top four or 
group B seginents, namely, Government, finance, service, and trade. 
The greatest increase of all has occurred in finance, next in Government. 
The largest decrease has occurred in construction. There may be 
some who do not think that it is the function of industry to provide 
employment, but if it is then finance viewed as a business has shown 
in the period from 1919 to 1938 the largest annual increase in employ- 
ment with Government and service coming next. Transportation, 
mining, and construction have the worst record. Those are the seg- 
ments which have made the largest contribution to the army of unem- 
ployed, and insofar as unemployment is a social problem they have the 
major responsibility. 

The second criterion is based on the assumption, as has been said 
before, that it is the function of business to meet pay rolls. The 
industries are ranked in accordance with relative increases in the pay 
rolls disbursed by them. On that basis Government comes first. It 
has increased disbursements to personnel the most, thus tending to 



CONCENTRATION OF ECONOMIC POWER 79 

corroborate the well-known allegation, made particularly by politi- 
cians out of office, that the politicians in office are zealous in creating 
"fat jobs." Throughout this period Government has increased pay 
rolls on the average of 3 percent a year. Finance and service come 
next. All the other industries have decreased their pay rolls, notably 
agriculture and mining. In these enterprises pay rolls have declined 
on the average more than 3 percent a year. These industries are 
therefore placed at the bottom of the list. If all industry had thus 
restricted pay rolls, markets would have been further restricted. The 
depression would have been more severe. It is Government, finance, 
and service enterprise that have maintained mass purchasing power. 

The third criterion measures the percent of the consumer dollar 
absorbed which goes to pay rolls. Those which increase the percent- 
age going to pay rolls are regarded as exhibiting superior performance 
to those which disbursed less and less of the consumer dollar in the 
form of pay rolls. The leader here is finance, then trade, then service, 
with Government ranking in fourth place. Yet in all of these the 
percentage of consumer funds absorbed going to pay rolls has increased. 
Manufacturing is at the bottom of the list. It has spent less and less 
for labor of the dollar which it collects from the public in its sales. 
In fact the average annual decrease is in excess of 1 percent. Trans- 
portation comes a close second. In the other segments there was 
substantially no change. 

As has been often stated, payments going to pay rolls maintain mass 
purchasing power while those going to dividends and interest in the 
main fail to become purchasing power unless invested. In a decade 
characterized by capital saving innovation of an extensive sort the 
need for capital equipment in terms of money has tended to become 
less urgent because to replace the old equipment a more efficient 
machine can often be purchased for less money. 

Particularly in the thirties the maintenance of pay rolls has been 
vital to the maintenance of purchasing power. Industries, therefore, 
which increased their pay rolls relative to dividends and interest 
aided the economy to operate at expanded levels of activity. Those 
which restricted the flow of income to wage earners on the whole 
have tended to contribute to the problem of idle money. 

Interesting is the fact that only Government has increased its pay 
rolls relative to dividends and interest. In all the other segments of 
the economy dividends and interest have been maintained at higher 
levels than pay rolls. This, of course, is to be expected. Managers 
are keenly aware of their responsibilities to bondholders and stock- 
holders. Pay rolls are regarded as an item of expense, an item to 
be kept down. Dividends are regarded as an item showing the 
profitability and success of the enterprise. Managers in their annual 
reports to stockhf^lders take pride in showing that they have main- 
tained or in(ireased dividends. They also take justifiable pride in 
pointing out as evidence of their efficiency the many ways in which 
they have been able to cut down their expenses of production, inclujiug 
their labor costs. 

The success with which they have been able to cut their expendi- 
tures for labor as opposed to the flow of dividends and interest is 
shown by the increasing spread between the lines representing pay 
rolls and those showing dividends and interest. That spread is 
greatest for transportation and other public utilities where managerial 



go CONCENTRATION OF ECONOMIC POWER 

efforts to maintain interest payments have been backed by the pro- 
nouncements of regulating commissions and the courts. Construc- 
tion is next to the bottom. Service enterprises are next to the top, 
the others have an intermediary position. 

The fifth criterion of social performance which can be applied to the 
nine, segments of economic activity shown in table 4 is that which 
compares the percentage of the consumer dollar going to dividends and 
interest. If dividends and interest through the 20-year period take an 
increased percentage" of the consumer dollar obviously the social 
performance of the industry vis-a-vis the public is that much worse. 
On the other hand, if for every dollar it collects from the public it 
pays out smaller amounts for dividends and interest, by that much 
it tends to favor and benefit the public. 

Interestingly enough, the only segment of economic activity which 
paid out smaller proportions as interest is Government. This, of 
course, is in large part illusory because Government gets no return at 
all, whereas obviously for the rest of the economy dividends and 
interest represent returns to the entire proprietorship account. The 
fact should be noted that finance and agriculture show the best results. 
They have tended to give the consumers the greatest values and to 
receive the smallest compensation in return. On the other hand, 
construction is at the bottom of the list. It is in the housing and 
construction field that interest returns have been best maintained; 
then in the small business mortgage field, and then in transportation 
and other public utilities. 

There are no statistics which will. permit further tests to be made. 
Such further tests would undoubtedly change the ranking of the 
individual segments." In terms of procluction agriculture and mining 
would rank well in the lead. In terms of consumer effort commanded 
the ranking of the Government would certainl}'^ be unfavorable for not 
only have taxes increased but the consumer effort necessary to secure 
the dollars wherewith to pay the taxes has also increased. 

There are, moreover, a number of other tests that would have to 
be applied in any thoroughgoing evaluation of the social performance 
of these segments in the national economy. Various industries, for 
example, exist because of a protective tariff. In the sugar industry 
the cost to consumers runs around $300,000,000 a year, a cost which 
by being levied on the budgets of the working classes tends to be in- 
curred by those least able to bear it irrespective of what the per- 
formance of the sugar industry throughout this period might have 
been ; that is, irrespective of the increase in pay rolls that might have 
taken place, or increase in employment, or increase in production. So 
long as only a part of the whole domestic suppl}^ of sugar is obtained 
from domestic sources the loss to consumers through paying higher 
prices for their whole consumption may be such as to offset all the 
other favorable factors. 

This leads further to the observation that in ranking various seg- 
ments of the economy all the measurements have been weighted 
equally. An increase in employment has been regarded as not more 
important than an increase in pay rolls of a decrease in the percentage 
of consumer funds absorbed that is spent for dividends and interest. 
Obviously, however, dividends and interest are a relatively small item, 
only from one-fifth to one-sixth as large as pay rolls. An industry 



CONCENTRATION OF ECONOMIC POWER gl 

which ranked first in pay rolls and last so far as dividends and interest 
are concerned would have an aggregate ranking equal to that which 
ranked last in pay rolls and first so far as dividends and interest are 
concerned, yet obviously socially the effect of not mauitaining pay rolls 
is tar more important to the economy than that of keeping down divi- 
dends and interest payments. 

Greatest emphasis therefore should be placed on employment, pro- 
duction, and pay rolls. For the nine segments here discussed employ- 
ment and pay rolls are the only ones available. Notice that if the 
industries are ranked on the basis of these two tests alone the ranking 
differs but little from that based on all five criteria, the first four 
remaining in that order with manufacturing coming ahead of agri- 
culture, and mining shifting to the bottom of the list. 

One further observation is required. The method of ranking the 
industries tends to give equal weight to unequal differences. Thus 
Government ranks second although the annual increment of employ- 
ment is 0.19 percent lower than finance, whereas service ranks third 
although the increment employment is only 0.04 percent lower^ 
Again, trade ranks fourth although the increment of employment 
is 1.47 percent. All these individual differences tend to be giver 
equal weights, but a test cumulating the increments as such bring? 
but little change in the relative order of the nine segments. Govern 
ment, finance, service, and trade are still at the top, and mining 
transportation, and construction are still at the bottom of the list. 



CHAPTER IV 
SOCIAL PERFORMANCE OF INDIVIDUAL COMPANIES 

In this chapter the briefest sort of test will be made of the results 
which are obtained when the criteria utilized in the preceding chap- 
ters are applied to the operations of individual companies. Only 
three such companies are given here. 

The reason for this is twofold. In the first place, the making of an 
adequate study of individual businesses even when done on the basis 
of a representative sample is completely beyond the scope and the 
funds of this inquiry. For the sample study would have to be multiple 
in character, with an adequate number in it of each type of business 
whether corporation, partnership, or individual enterprise; of each 
size of enterprise, large, medium, and small ; for each branch of indus- 
try. Figures would have to be assembled for literally hundreds of 
businesses. 

But in the second place, there is a sheer lack of statistics, even of so 
fragmentary a character as have been pieced together in the preceding 
chapters, except for a handful of American corporations. This is 
particularly true of figures for employment and production and pay 
rolls. These figures are rarely published by individual companies 
and are, of course, never revealed in censuses or other governmental 
surveys. Even those issuing financial reports to the stock exchange 
usually give only financial data such as gross and net sales, taxes, 
dividends, earnings, and fixed and working capital, in short, the items 
which appear on the ordinary balance sheet and profit-and-loss state- 
ment. 

Thus, only three businesses are examined in this chapter. But they 
are three of the largest corporations now doing business in the United 
States, namely, General Motors, the United States Steel Corpora- 
tion, and the American Telephone & Telegraph Co. 

GENERAL MOTORS 

The story so far as General Motors is concerned is epitomized in 
chart 32. Outstanding in the chart is, of course, the steepness of the 
decline from 1929-32 parallelled by an equally steep recovery from 
1932-37 to new heights both of production and of employment. In 
the General Motors Corporation employment has increased faster 
than production. Particularly evident is the policy of the corporation 
to spread the work and maintain employment in slack periods, 
noticeably so in 1932. On the whole, consumer effort commanded has 
remained below the level of production. 

The production figures in t^e last 10 years are not strictly compa- 
rable with the earlier period. In the first place, as is well known, the 
type of car produced in the thirties has changed considerably from that 
produced in the twenties. The automobile of 1939 has many acces- 
sories and conveniences tliat were completely unknown in 1926. It is 

83 



84 



CONCENTRATION OF ECONOMIC POWER 



CHART 32 

SOCIAL PERFORMANCE OF THE 
GENERAL MOTORS CORPORATION 

UNITED STATES, 1919- 1938 



INDEX NUMBERS 
(1923- 1925 MOO) 










































INDEX NUMBERS 
< 1923- I92S< 1001 
















































450 
































































































300 
















N 


ET 

(ADJI. 


SALES 

STED) 














^ 


























\ >^ 




1 1 ■ 

PRODUCTION 




V 






















yy 


"^ 


\ 


250 
200 




















/ 










X/ 




\ 








E 


MPL 


DYMf 


:nt 








/ 


<■'•■■ 






VN 


v 


y 


/ 


/ 






•\ 








.,/ 




^ 


V 


/ 










\ 


V 

V 


/ 


<:•• 


^ 












100 


"50 


•■■. 


^ 




f^ 


"-^i 











































































1919 1920 1921 1922 IS23 1924 I92S 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



INDEX NUMBERS 
(l923-t925'IOO) 










































INDEX NUMBERS 
(1923-1925*100) 




























































INTEREST 
















h 


















X 


1- 
1 


\ 






















/ 


\ 














\ 




























/ 






\ 


"1 








\ 


/' 


























/ 

T 

r , 




^^ 


\ 




\ 
\ 


PA 


YRO 


-LS 


\ 


1 
























/ 


/^ 


-\ 




\ 




/-/ 


! 


/ 


AV 












^ 


ET : 


SALE 


s 




1 

l/1 

''J 


/ 










\ 


/ 






\ 












( 


JNAOJUSTE 


Dl 




y 








"X^V—^i / 


















/ 


/ 






\ '-r y 






jSl>^ 


/ '" 


y 
















V 


^ 
























••y 









































1919 .920 1921 1922 1923 1924 1925 l926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 



CONCENTFATION OF ECONOMIC POWER g5 

a superior product. On the other hand, there has also been a tendency 
for consun:7.ers to concentrate their purchases in the low-price-car 
field in recent years. They have been buying Chevrolets instead of 
Cadillacs. Thus the production curve tends to be somewhat high, 
and the curve representing net sales tends to lag behind. 

The steep increase both in dividends and interest and in pay rolls 
in the period from 1924-28 is matched only by an even more steep 
increase in the period" from 1933-36. On the whole, dividends and 
interest and pay rolls have kept pace with each other. 

The index of net sales is not the same as the figure for consumer 
funds absorbed which was used in previous charts. There is simply 
no public information on the expenditures for raw materials, power, 
etc., which have been incurred by the General Motors Corporation 
throughout the period. It seems entirely possible, if not probable, 
that the curve of net sales shows considerably less fluctuation than 
would a curve representing the net amount which the General Motors 
Corporation collected from the public, representing the sum available 
for disbursement to labor and ownersl ip. Many of the raw materials 
in the thirties declined markedly in price. It is entirely probable 
that the percentage going for raw materials, power, etc., has declined. 

But in the absence of figures such statements represent only guesses. 
Suffice it to say insofar as net sales do represent consumer funds 
absorbed the industry seems to have paid out an increasing percentage 
of the dollar it collects from the public in dividends and interest and 
in pay rolls. 

UNITED STATES STEEL CORPORATION 

The experience of the United States Steel Corporation has received a 
'great deal of discussion. A notable hearing was conducted by the 
Temporary National Economic Committee concerning price pohcies 
in the steel industry. Incident to that discussion there was brought 
into evidence some of the first figures available on such items as 
employment, pay rolls, and the like. 

Unfortunately, while the hearings were extensive, nowhere was a 
■ sufficient analysis made of the components of cost to be able to answer 
with any degree of accuracy the question concerning the amount of 
consumer funds which the corporation was able to collect net from the 
public. Here, too-, one must perforce rest content with figures on net 
sales. 

Evidence presentqd at the hearing indicated that pay rolls consti- 
tuted about the same percentage of the consumer dollar in 1937 as in 
1929. Therefore the utihzation of the figure for net sales is not seri- 
ously inaccurate. 

In chart 33 is shown the extraordinary depth to which production 
and sales fell in the year 1932. In this industry not only has the 
trend of employment been downward but man-hours dechned even 
more. The industry shifted from a 48-hour to a 40-hour basis 
between 1929 and 1937. At no tune did the corporation employ as 
many persons as it did in 1920. On the other hand, ingot production 
reached an all time high level in 1929, recovering in 1937 only to the 
level that existed in 1927. Throughout employment has been more 
stable than production, indicating the extent to which the corporation 
has tried to soften the impact upon laborers of the violent fluctuations 
in its output. 



86 



CONCENTRATION OF ECONOMIC POWER 



CHART 33 



SOCIAL PERFORMANCE OF U.S. STEEL 
CORPORATION AND SUBSIDIARIES 

UNITED STATES, 1919-1938 



























































































NET SALES 
(ADJUSTED) 










PRODUCTION 
























\ 






r 








A 






-<^ 


9\ 




1 1 

EMPLOYME^ 


T 






f. 








tr\ 




^■•■.■•...v>^; 1 « 




^ 


/ 


\ 


J 


V 


V 




,s 


^ 




■ ■••.. 


,\ 


■y 






y 


/' 


1 


\ 








% 


/ 
















1 


K V 


^ 


^I 




) 
































\^ 


/ 






\ 
































\/ 































































1919 1920 1921 1922 1923 1924 I92S 1926 )927 I92S 1929 1930 1931 1932 1933 1934 I93S 1936 1937 1938 1939 1940 

















































iin 


















1 1 1 

DIVIDENDS AND 

INTEREST 


























A 




NET SALES 

(UNADJUSTED) 






v 




























J 






/\ 






I 






/-I A 


1 1 

PAYROLLS 
















inn 




A,_^ .-y^r-Jt^ _i .„,:^\ L\ 




/■ 1 






— 


V7 




V 


7- 




^V 


-_ 


_\ 


K> 










A 














w 


// 






■i_ 










\ 


la 










f/ 


'\ 


^ 
































\ 




•£ 


- 

/ 


1 

f 






































V 












































— 















1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1936 1936 1937 1938 1939 1940 



CONCENTRATION OF ECONOMIC POWER gf 

Equally striking is the extraordinary decline in pay rolls and divi- 
dends and interest during the early thirties. No industry, as a 
matter of fact, Shows a decline in dividends and interest which is 
equal to that of the Steel Corporation between 1929 and 1933 when 
the index fell from 120.7 to 14.4. This decline is considerably greater 
than that which occurred in pay rolls or in net sales. In short, the 
stockholders in the United States Steel Corporation have borne the 
impact of depression in steel even more than the laborers, constituting 
in that regard an outstanding exception to the reverse tendency 
sho\\Ti in preceding chapters to characterize most of business. 

All three dollar indexes — ^pay rolls, dividends and interest, and 
sales — have tended downward. Pay rolls, for example, never attained 
the levels that they reached in 1920, even in 1929 being one-fourth 
lower. In terms of production the level in 1937 was about equal to 
that in 1927, dollars collected from the public were more than 6 percent 
higher, pay rolls were less than 3 percent higher, but dividends and 
interest was about a third lower. 

Most striking is the fact that the index representing funds collected 
from consumers when adjusted for. changes in the general price level 
remained consistently below the index of production from 1925-30, 
since which time it has been consistently above except in the year 
1936. At no time, however, has the gap between consumer effort 
commanded and production been larger relatively than in 1938. 

In short, ^he price policy of the corporation has been such, par- 
ticularly in 1937 and 1938, as to take from consumers more in exchange 
per unit of output than in any previous year in the 20-year period 
■ here covered. Stated in another way, despite all the phenomenal 
improvements in technology in the steel industry, the effort required 
by consumers to get hold of a unit of steel is greater at the end of this 
period than at any other time during the period. 

In 1929 steel was relatively cheap, the index of production being 
117.8 while the index of consumer effort commanded was only 100.9. 
The situation in 1937 is strikingly different. Now it is the index of 
effort commanded which is higher, being 105.8, while the index of 
production is 99.8. In short, the exchange value of steel had in- 
creased. It was dearer. This relative dearness of steel throughout 
the thirties undoubtedly had some influence upon purchases, for it is 
a natural tendency to buy less of anything which is relatively ex- 
pensive. 

THE AMERICAN TELEPHONE & TELEGRAPH CO. 

The third company to be tested is the American Telephone & 
Telegraph Co., one of the largest in the wprld. The essential facts 
are shown in chart 34. 

This company, as is well known, is one which collects its income in 
small amounts monthly from millions of customers. It operates on 
the assumption that these millions of customers will have funds each 
month to pay for their small telephone bills. In short, the company 
taps the incomes of millions of persons. Its operations depend upon 
the maintenance of these millions of streams of income in something 
like undiminished volume. Any serious redistribution of income 
tending to diminish the incomes of persons using telephones is likely 
seriously to restrict the operations of the company. What the com- 



-An ■^I/^ T. 



88 



CONCENTRATION OF ECONOMIC POWER 



CHART 34. 

SOCIAL PERFORMANCE OF THE 
BELL SYSTEM 

UNITED STATES, 1919-1938 



INDEX NUMBERS 
(I923-I92S'I00) 










































INOC> 
11923 


NUMBERS 
-1925-I0O) 
200 






















OPE 


.RATING REVENUE 

tAOJUSTED) 


:s 








180 










ISO 


















(WEIOHTED) 


".#■■' 


•■•■' 


■■\-y 








>• 






lEO 




T 


\ 




_:i-..i . 


......!--| ' 


l«0 












PRODUCT IC 

(UNWEIGHTE 


)N 

0) 
















7f\ 












140 
120 


120 


















^^'P\ 




\ 1 


^^ 


.-^1 1 


.. 






EMPLOYMENT 






'^i^ 




^■^•L 1 .-•'•'■' 












100 




/ 




.■^ 










\ 1 'l 1 


100 




/ 


^ 


^ 


r* 
















V 


. 1 1 


^ 




^ 






eo 

60 
40 
£0 


i y 


n^' 














SO- 
SO 
40 
20 


^" 


«r' 








































••■ 


..* 






















































































1 




































1 — 









1319 1920 1921 1922 1923 1924 I92S 1926 1927 1928 1929 I93u 1931 1932 1933 1934 1933 1936 1937 1938 1939 1940 



INDEX NUMBERS 
IISZI-I92J-I00) 










































INDEX NUMBERS/ 
(1923-1925.100) 





















IVIDENDS AN 
INTEREST 


I r^ 

/ 


■■■ — 


_____ 


1 


—!. 1 










180 










^'h^, 


ISO 
160 
140 
120 
lOO 













'ER/ 

1 


kTIN( 

iiNAn 


1 1 
5 REVENUES 
JUSTED) 




J 




















140 
120 
100 


















4 






\ 


\ 






/ 


X 


^ 






















J^ 

^^^\ ^ 








\ 






^ 




f' 


•' 
















,1^ 


/■ 


.'' 












\ 


.^ 




.-'' 


'' 










PAYROLLS 




x^ 
































,,., 


80 
«0 
40 
20 


\ 


■^ 


■i^ 




80 
60 
40 
20 


V- 


'■^- 


y 






































■-' 





































































































































1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933' 1934 I93S 1936 1937 1938 1939 ^i940 



CONCENTRATION OF ECONOMIC POWER gg 

pany does to the distribution of the income stream is therefore of 
singular interest. 

The experience of this corporation also is interesting because it has 
pioneered and put into operation one of the greatest technical inno- 
vations of modern times, notably the substitution of the dial for the 
hand telephone. The facts pictured in chart 34 are therefore sin- 
gularly important. 

Looking at the top portion of the chart, notice that the line showing 
consumer funds absorbed has shifted from a position below that of 
production to one consistently above production, notably in the years 
1931 and 1932. No matter whether one calculates the production on 
a weighted or unweighted basis the company has steadily given less 
of its service per unit of consumer sacrifice. The exchange value of 
its service has steadily increased. Telephone service has steadily 
become more dear in terms of human effort. 

At the same time the company, since 1929, has accounted for more 
than 75,000 of the present eight or nine millions of unemployed. While 
the production index showing average daily conversations reached an 
all time high in 1938 of 154.6, a figure 10 percent above that in 1929, 
employment is more than 25 percent lower. In short, decreased 
opport'J'PJties have been given to human beings to utUize their ca- 
pacities and skflls. This, of course, is largely to be explained by the 
introduction of the dial telephone which supplanted not the highly 
skilled and highly paid workers, but precisely the lowest paid among 
the employees of the American Telephone & Telegraph Co., that is, 
the telephone girls, a large proportion getting less than $1,000 a year. 
These have been compelled to go elsewhere and in the absence of 
job opportunities now crowd the relief rolls and the Work Projects 
Administration . 

In the bottom portion of the chart the outstanding fact is the 
singular success achieved by the directors of the American Telephone 
& Telegraph Co. in maintaining dividends and interest, which have 
not only increased faster than pay rolls but kept increasing right 
through 1931 "v^hen they were more than 25 percent in excess of 1929. 
Since 1931 they have declined but slightly, being even in 1938 more 
than 16 percent above 1929 levels. Dividends and interest, in short, 
have been maintained since 1930 far above the level of operating 
revenues and pay rolls. Indeed, in 1933, the percentage going to 
dividends and interest was nearly double what it had been 10 years 
earlier in 1923. Had the figure in the depression year of 1933 only 
been as much as it was relatively in 1923, a year of prosperity, the 
index of dividends and interest instead of being 190.8 would have 
been slightly less than half that figure. In short, the directors have 
done a heroic job of maintaining dividends and interest. 

Naturally, pay rolls have not enjoyed any such fortunate ex- 
perience. While reaching an aU-time high in 1930 they declined more 
than one-third by 1933 and have never reached 1930 levels since. 
In fact, they have not kept pace with the dollars which the company 
has collected from the public. Since 1925 the index of pay rolls has 
steadily lagged behind the index of dollars which the companv col- 
lected from the pockets of the public. 

But the operations of the company assume that millions of house- 
holders will each month have the necessary small sums to pay their' 
telephone bills. Yet it disburses its funds in a manner such as to 



90 CONCENTRATION OF ECONOMIC POWER 

make the number of householders with small incomes steadily less. 
What in effect is happening to ttie stream of income here is that the 
company acts as a funnel or channel disbursing larger proportions of 
it to those whose income is already high, namely, those who own 
stock. It is steadUy disbursing relatively less to those who depend 
for an income upon selling their labor. 

To this a superficial objection is frequently made. The fact is 
pointed out that in the American Telephone & Telegraph Co. there 
are more than 600,000 stockholders. These are represented as, for 
the most part, elderly women with beatific faces knitting sweaters 
for their grandchildren, existing on a small dividend from the com- 
pany. No one of them, it is said, owns as much as 1 percent, a truly 
noteworthy fact even though a 1 percent ownership of a $2,500,000,000 
corporation amounts to an investment of nearly $25,000,000. 

But such statements assume that stock ownership is distributed 
equally. Actually, 382,000, or more than 60 percent of the stock- 
holders own less than 10 percent of ^he stock, whUe a mere 5 percent 
of the stockholders, 33,498 to be exact, own more than half the com- 
pany.^ It is they who receive more than half the benefits of the 
policy of maintaining dividends and interest. It is to them that 
income is being diverted. It is they who are pUing up idle money 
in the banks. 

In short, in chart 34 the pattern of social performance is one of un- 
employment, of economic disenfranchisement precisely of the most 
needy, of nontransference to the public of the benefits of technology, 
and of keeping on a high level the payments to those already in the 
high-income brackets. Unless somewhere in the economy there were 
compensation for the type of effect which the American Telephone & 
Telegraph Co. has had on purchasing power and employment the 
total volume of unemployed in the United States instead of being 
9,500,000 at the end of 1939 would be 19,000,000, that is, halt of the 
population . available for nonagricultural employment would be out 
of jobs. The total amount of idle funds would be roughly double the 
present amount. Judged in terms of social performance the American 
Telephone & Telegraph Co. does not measure up as well as the other 
two companies nor as well as most of the industries studied in the 
preceding chapters. 

In order to compare the behavior of a company with that of the 
industry as a whole, figures are shown in chart 35 for the telephone 
and telegraph industry. On a priori grounds one might expect the 
largest concern in an industry to make better adjustments than those 
less well fortified with business genius and funds. Inasmuch as the 
telephone company accounts for more than 80 perceiit of the total 
business, one would logically expect the fi^jures for the industry to be 
worse than those for the company. Though one. would expect the 
major trends to be similar, whatever difference appears would be 
expected to be in favor of the company. Such, however, proves 
surprisingly enough not to be the case. 

The upper portion of the chart shows that employment has lagged 
behind production, being in 1938 one-fourth lower than it was in 1929. 
Furthermore, the amount of consumer effort commanded instead of 
being consistently above production has been below production since 

I For a complete analysis-see N. R. Danlelian A. T. and T., The Stortt of Industrial Congu «f (New York: 
1939), p. 176. 



CONCENTRATION OF ECONOMIC POWER 



91 



CHART 35. 

SOCIAL PERFORMANCE OF THE TELEPHONE 
AND TELEGRAPH INDUSTRY 

UNITED STATES, 1919-1938 



INOCX r.UMBERS 

II923M92S-I0OI 

200 




1919 1920 1921 1922 1923 I92« 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 193S 1936 1937 1938 1939 19*0 



200 


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DIVIDENDS AND x— 
INTEREST 1 ./ 


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1919 1920 1921 1922 1923 1924 I92S 1926 1927 1928 1929 1930 1931 1932 1933 1934 193S 1936 1937 1938 1939 1940 



g2 CONCENTRATION OF ECONOMIC POWER 

1935. This, of course, is in direct contrast t^ the experience of the 
American Telephone & Telegraph Co. in which the amount of con- 
sumer effort commanded remained consistently above production 
from 1925 on, the spread being particularly large in the period from 
1931-36 and only decreasing in recent years. Yet in 1938 the index 
of consumer effort commanded was 170.9 or nearly 40 points above 
that of the weighted index of production, 131, and 26.3 points above 
the unweighted index of 154.6. This should be contrasted with the 
industry as a whole in which the index of consumer effort commanded 
was at a level of 122.1, or some 9 points below the weighted index of 
production, and 22.5 points below the unweighted index. 

The dollar figures show similar differences. To be sure, dividends 
and interest remamed considerably above pay rolls arid consumer 
funds absorbed. Moreover, they reached their all-time high level for 
the industry as a whole in 1933. The company reduced dividends 
and interest before the industry did. On the other hand, the decline 
in the last few years has been much more rapid. Particularly rapid 
has been the decline in consumer funds absorbed showing a con- 
siderable contrast to the course of net operating revenues for the 
company. In 1938, lor exanjple, the index for the American Tele- 
phone & Telegraph Co. is 157.2, while for the industry as a whole it is 
112.3, or some' 40 percent lower. Pay rolls are likewise lower, while 
in the industry as a whole they kept pace with that of the company 
until 1930 when the decline was greater for the industry as a whole. 
Recovery has not been as rapid. The index of pay rolls in 1938 for 
the industry, for example, is 120.7 as compared with 135.7 for the 
Bell System. 

In brief, the contrast between the company and the industry can be 
summarized as follows: The company has done a much better job 
of maintaining dividends and interest. It has also- maintained pay 
rolls at levels from 10 to 15 percent better than the industry. On the 
other hand, it has likewise maintained its collections from the public 
on a much higher level. Consistently since 1925 it has increased the 
funds absorbed from its customers faster than has the industry. In 
the period 1930-33 the operating revenues of the company declined 
from 167.5 to 130, or less than 20 percent, while income produced by 
the industry declined from 141.2 to 89.2, more than 30 percent. 
Between 1933 and 1938 the company has increased its tolls upon 
consumers from 130 to 157.2, or 27 points, while the industry has 
increased its tolls from 89.2 to 112.3, or 23.1 points. 

Finally, since 1930 the index of employment for the industry as a 
whole has pretty consistently remained above the index of employ- 
ment for the company. This probably means that the industry as a 
whole has not introduced mechanization as rapidly as has the American 
Telephone & Telegraph Co. 

CONCLUSION 

As was indicated above, statistics are not available nor are data 
at h9,nd for applying the social performance tests to other companies. 
What would be shown is hard to conjecture. Whether the large 
organizations would lead the performance of -the industry as does 
General Motors or whether they would lag behind the performance of 
the industry as do the performances of United States Steel and the 



CONCENTRATION OF ECONOMIC POWER 93 

American Telephone & Telegraph Co. is impossible to state. Suflfice 
it to say that the record for individual companies is hkely to be as 
varied within a particular industry as the record of individual in- 
dustries. 

It seems also entirely hkely that the record for the same company 
in its various departments and particularly in various regions might 
show a variation fully as great as that shown above between the various 
industries. The American Telephone & Telegraph Co., for example, 
operates in all the States of the Union under different regulatOx-y 
commissions with personnel of different efficiency and operating prob- 
lems of different technical and economic complication. Were the 
figures available there is no doubt that in certain areas or in certain 
States performance of the company might be even the inverse of that 
shown above. 

In brief, the record above, by grouping together all the operations 
of the company, comes as a result which is only true of the aggregate. 
But the method is capable of application to operations within the 
confines even of a single State. The social performance of individual 
companies is no less measurable than that of entire indtistries or seg- 
ments of the economy. 



CHAPTER V 
ALL CORPORATIONS 

The social performance tests that have been applied in the preceding 
chapters to individual companies, industries, and segments of the 
economy, will now be apphed to a particular though most important 
type of business organization, the corporation. Corporate enterprise 
in many respects forms a distinct segment of the economy, though by 
no means the whole of it. For corporate enterprise, as will be elabo- 
rated upon in chapter VII, is compelled by the very process of 
incorporation to behave in different fashion from the farmer or in- 
dividual enterpriser. When prices go down the "dirt" farmer keeps 
working, the service entrepreneur keeps striving for self-employment, 
the owner-operator keeps going — unless, of course, more desirable or 
less unprofitable opportunities appear elsewhere. The individual 
enterpriser cannot cut expenses by throwing himself out of work. 
So he keeps on producing. But the corporation ordinarily cuts down 
operations as soon as its books show that it is no longer earning a 
satisfactory profit. It cuts dowTi production because that is the easiest 
way to cut expenses. This central difference gives the economic 
behavior of corporations unusual importance and interest, an impor- 
tance warranting a separate discussion of them in this chapter. 

The behavior of corporations should not be regarded as identical 
with that of business as a whole. For a great deal of business enter- 
prise is unincorporated, notably in agriculture, in the service trades, 
and in distribution. Even many small manufacturing plants and 
some not so small financial houses are partnerships rather than cor- 
porations. Figures applying to corporations therefore cannot be 
taken to represent the experience of business as a whole for it is quite 
clear that unincorporated enterprise, even in the fields in which cor- 
porations do a large section of the business, does not have the same 
problems, nor does it do business in the same way, nor does it go 
through the same experiences as does incorporated enterprise. 

But" corporations constitute so large a share of modf rn enterprise ' 
and so completely dominate manufacturing, transportation, public utili- 
ties, and mining that even fragmentary data are of major interest. 

MANUFACTURING CORPORATIONS 

How sketchy the information is appears clearly in table 5. It 
gives only dollar figures, those customarily available in balance sheets 
and profits-and-loss statements. But it constitutes an unusually 
readable summary of the data on hand for all manufacturing corpora- 
tions. The item "Balance remaining for employees, management, 
and stockholders" is not the same as consumer funds absorbed for it 
does not include interest paid. Interest is regarded as a cost rather 
than a return. 

' See Investigation of Concentration of Economic Power, Hearings before the Temporary National Eco- 
nomic Omnmittee, vol. 1, Prologue, exhibit No. 55, p. f'S. 

95 



96 



CONCENTRATION OF ECONOMIC POWER 



Table 5. — Consolidated operating statement, all manufacturing corporations; 

1929 and 1937 ' 





1929 


1937 


Percent 
change 

1987 
against 

1929 


Items 


Millions of 
dollars 


Per- 
cent 


M'llions of 
-J dollars 


t Per- 
cent 


INCOME 

Gross sales; we sold during the year goods valued at.. 

fDividends from investments; we received dividends 

from other corporations amounting to.^ - - 


69,23S 

583 
2,405 


95.9 

.8 
3.3 


60,244 

617 
1,596 


96.6 

. 1.0 

2.6 


-13.0 
-}-6.8 


Other income; and interest, rents, and other income. 


-33.6 




72, 224 


100.0 


62, 457 


100.0 


-13.5 






DrSBURSEMENTS 

Goods and services purchased; we paid others for 


49, 879 

2,018 

267 

. 141 
1,161 


69.0 

2.8 

.4 

1.6 
1.6 


43,540 

1,592 

185 

670 
2,059 


69.7 

2.5 

.3 

1.1 
3.3 


—12.7 


Depreciation and depletion- wear and usage of our 


-21.1 


Provision for bad debts; we had to deduct for bad 


-30.7 


Interest and rent paid; the use of borrowed money 
and leaded property cost us '. 


-41.3 


Taxes; local. State, and Federal tax collectors took... 


-;-77. 3 


Balance remaining for employees, manage- 


17.759 


24.6 


14,411 


23.1 


-18.9 






Wages and salaries; of this balance, we paid our 
employees--- - - - - .-. 


12, 050 

1,172 
4, 537 


67.9 

6.6 
25.5 


lO, 338 

1,004 
3,069 


71.1 

7.0 
21.3 


-14.2 


Administrative expenses; manpgement received for 
its services 


—14.3 


Net earnings; balance remaining for stockholders 


-32.4 


Cash dividends paid; we paid our stockholders 

Surplus for the year; which left for future needs- 


3,159 
1,378 




2,954 
115 




-6.5 
-91.7 



> The number of corporations included was bs loHows: In 1929, 456,021; in 1937, 477,838. 

Source: Compiled by the Conference Board from ofii; iai data, and taken from the Conference Board 
Economic Record, May 22, 1940, p. 216. 

The Conference Board lumps together wages and salaries, but does 
not lump together dividends and interest, even though bondholders in 
effect are really privileged proprietors, their holdings sometimes being 
fully convertible into stock in ordinary times, and almost always in 
part dissolving into stockholdings in event of bankruptcy. The legal 
distinction hardly constitutes an economic difference of sufficient 
magnitude for the purposes of this study to warrant separate treatment. 

Other items in this operating statement require little explanation. 
Outstanding is the fact that the gross sales of manufacturing corpo- 
rations were in 1937 more than a third of the gross sales of business as 
a whole, $60,200,000,000 as opposed to $174,600,000,000. Secondly, 
the net amount of consumer funds absorbed is considerably less thin a 
third and only slightly more than a fourth of gross intake, the "balance 
remaining for employees, management, and stockholders" plus 
"mterest and rent paid" being in 1937 $15,080,000,000. Of this 
amount labor got two-thirds and owners and managers one-third. 
Particularly noteworthy is the enormous increase in taxes paid in 1937 
over 1929 compared with a percentage decline of dividends and interest 
nearly three times as great as that of pay rolls or administrative 
expenses. 

ALL CORPORATIONS 

In this regard the experience of manufacturing corporations differs 
somewhat from that of all corporations. (See chart 36.) Their taxes 



CONCENTRATION OF ECONOMIC POWER Qf 

in 1937 increased slightly more than 40 percent over 1929, about 
$800,000,000 of it LQ 1937 due irt part to the social-security tax. Cash 
dividends show less than a 15 percent decline. Interest payments rose 
about 60 percent between 1922 and 1929 only to lose all of that gain 
by 1936. In other words, the burden of corporate indebtedness 
declined by nearly a million doUars a day from 1930 to 1936. This 



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indicates the extraordinary manner in which business was paying off 
its bonds and refinancing its existing bonds at lower rates of interest. 

As was noted above, the other series show increases. Taxes 
increased by more than 50 percent between 1921 and 1929; then they 
declined untQ 1932 but rose thereafter to reach in 1937 an all-time 
high level, more than 40 percent in excess of any preexisting level. 

Particularly wide is the fluctuation in dividends paid. Between 
1922 and 1929 they more than double. In 1923 they were lower than 
any year in the period here covered. By 1937 they had more than 



98 



CONCENTRATION OF ECONOMIC POWER 



doubled again to a level substantially equal to that of 1927 and larger 
than that in any other year with the sole exception of the years 1928, 
1929, and 1930. 

ALL BUSINESS 

The record of all corporations differs in many important respects 
from that for business as a whole. This is particularly evident from 
a comparison of table 6 with table 5. Both were compiled by the 
same agency, give data' for the same year, 1937, published at the same 
time. May 22, 1940, in the Conference Board Economic Record. While 
the manner of compilation is not in all respects identical, some of the 
headings are completely comparable. 

Table 6. — Consolidated operating statement, all privately owned business, 1937 ' 

[Billions of dollars] 





Private 


Item 


Receipts 


Expendi- 
tures 


Balance 


Income: 

Gross sies 


174.6 






Gross profit from other operations -- 




20.4 


Total other income 


4.9 












Total income 1 


199.9 






Disbursements: 

Costofsales 


134.9 

4.6 

.8 

9.8. 

S. t 

29.6 




Pepreciation and depletion 






Provision for had debts _ . . _. 






Interest and rent paid _ _ __ _. 






Taxes.. . . 






Other expenditures 1 












Total disbursements 




184.8 










Net profit .. .^-^i " . . 






15. ^ 


Dividends 




5.7 
9.9 




Entrepreneurial withdrawals ' . . 












Total 






15.6 










Deficit 






.a 











' Compiled from table 5, p. 214. National Balance Sheets and Operating Statements 1936-37, National 
Industrial Conference Board, reprinted from the Conference Board Economic Record, May 22, 1940. Busi- 
ness embraces all privately owned enterprises, both corporate and noncorporate, in mining, agriculture, 
nSanufacturing, construction, transportation, and public utilities, trade, and service. 

There are many similarities. In both cases the percentage of "other 
income" to total income works out at 2.5. In both tables the ratio of 
depreciation and depletion to total disbursements is about the same 
(2.5). So are the percentages for "bad debts" and "taxes" (3.3). 

But there are also some outstanding differences. The ratio of "inter- 
est and rent paid" to total disbursements is nearly five times as high 
for business (5.4) as for manufacturing corporations (1.1). Retailing 
and service establishments, among others, do much more of their busi- 
ness in rented premises. Similarly the percentage of entrepreneurial 
withdrawals to total disbursements {b.5) is more than three times as 
high as the percentage in manufacturing corporations of "administra- 
tive expenses" to the same base (1.7). The withdrawals of owner- 
operators and entrepreneurs in small business, trade, service enter- 
prises, and agriculttire constitute not only the return, if any, on their 
investment but also the remuneration for their services and indeed 



CONCENTRATION OF ECONOMIC POWER gg 

may comprise their entire livelihood. Cash dividends paid are, how- 
ever, lower being only 3.2 percent of disbursements for business as a 
whole as opposed to 5.3 percent for all corporations. 

Finalh^ if entrepreneurial withdrawals, dividends, interest, and rent 
are all lumped together and expressed as a percentage of total income, 
the figure for business as a whole (12.7) is nearly twice thLt (7.4) ^ for 
manufacturing corporations. Tliis comparison may overstate the 
amount by which the share of the proceeds going to the owner-manager 
property-holding group in business exceeds that going to the same 
group in all corporations. For in the latter the incomes of a substan- 
tial proportion of the executive personnel are included under wages 
and salaries. But the fact should be remembered that the major items 
entered under "other expenditures" are other deductions, contribu- 
tions, and gifts, and total compensation of officers. In short, the indi- 
cations are that the proportion of the consumer dollar going to labor 
in that section of the economy dominated by corporations is fully as 
great and in all probability appreciably greater than that which goes 
to labor in the noncorpcrate section of the economy. Dividends and 
interest are just as large a fraction of consumer funds absorbed for 
business as a whole as they have been shown in preceding chapters ta 
be for individual corporations and industries. 

In conclusion, the fact need hardly be stressed that data do not exist 
for evaluating the social performance of corporations, either individu- 
ally, in groups, or in their entirety. Data on production and employ- 
ment are simply not to be had. But, none the less, the available 
figures for corporations, fragmentary as they are, have been included^ 
not because they throw any considerable light upon the social perform- 
ance of corporations as a group, but merely to indicate the extraordi- 
nary gaps that exist in public information on the subject at this time. 
Corporations in modern times are economic states with powers in 
many instances fully as great as that of political States of the American 
Union. Yet the operations of many of them are almost completely 
concealed from public scrutiny. Price policies, production policies, em- 
ployment policies, wage policies, industrial-relations policies of such 
corporations are of crucial importance for the economy, 3'et only in 
exceptional instances is even rudimentary information available. 
Most financial data test profit performance. That given above rep- 
resents the sum total now to be had bearing upon the social perfonn- 
ance tests which have been utilized throughout this study. 

•Interest and rent paid plus cash dividends paid plus administrative expenses. 



CHAPTER VI 

THE ECONOMIC SYSTEM 

So far as the economy is concerned, the performance standards set 
up in the preceding chapters may be said to constitute the acid test 
of business. For the thing that the public wants from business a±xd 
the sole groimd on which business can justifiably demand public con- 
fidence is the continual demonstration in fact that the community, 
trusting to the free and voluntary action of businessmen, thereby 
secures a larger volume of better goods and services than it could 
possibly get under any other form of economic organization. 

Private business, in short, is not primarily an end in itself. It is a 
means toward the real end, which in economic terms is often stated 
as "the greatest good of the greatest number." This idea finds re- 
peated elaboration in every fundamental treatise on economics, no 
matter what the school or variant of point of view to which the authors 
subscribe. Thus Prof. Sumner Slichter, of Harvard University, in 
a general textbook first published in 1928, states: 

There are six basic tests by which we may appraise an industrial system: (1) 
By its productivity; (2) by the costs at which production is obtained; (3) by the 
fairness with which income is distributed; (4) by the effect of the industrial system 
upon security; (5) by its effect upon liberty; and (6) by the extent to which indus- 
trial activities are guided by the general interests of the community rather than 
by the special interests of small groups.' 

The last three tests are not measurable in quantitative terms; the 
first three are the substance of the tests applied in this, study. For 
the American economic system was designed by the founding fathers 
to be a service economy. The essence of the "American dream" is 
the provision of the highest possible standard of living for the maximum 
number of our citizens — in short, maximum consumption. It demands 
the most efficient possible production limited only by natural and 
human resources. In a monetary society whose citizens obtain 
claims to needed goods and services by selling physical and mental 
effort it requires that maximum consumption be promoted, not by 
giving needy persons work relief in Government projects, but by 
employing as many as possible and preferably everybody in private 
enterprise at highest possible wages. 

The performance of the economy, so far as the tests utilized in this 
study are concerned, is shown in chart 37. During the 10-year period 
from 1919 to 1929 the number employed increased from 42,000,000 
to nearly 48,000,000. In the 3 years from 1929 to 1932 over 10,000,000 
persons lost jobs. Between 1932 and 1937 nearly 8,000,000 persons 
regained jobs, yet more than 7,000,000 remained out of work. 

Production likewise increased, both in industry and in agriculture, 
especially in the period from 1919 to 1929* Industrial production 
rose nearly 45 percent, agricultural output about 15 percent. In the 
next 3 years industrial production was almost cut in two while agri- 

» Modern Economic Society (New York, 1928), p. 850. 

101 



102 



CONCENTKATIOX OF ECONOMIC POWER 



CHART 37 

SOCIAL PERFORMANCE OF THE ECONOMY 

UNITED STATES, 1919-1939 

















NAT 10 


MAL income! 


































(1 


N CONSTANT PRICES ) 




DDUCTION 








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INDEX NUMBERS 
(I923-I92S<I00) 
ISO 



1919 1920 1921 1922 1923 1924 I92S 1926 1927 I92S 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 




INDEX NUI«eRS 
(I923-I925>I(X» 
(SO 



1919 1920 1921 1922 1923 1924 1925 1926 1927 I9j!e 1929 1930 1931 1932 I93C I9J4 I93S 1936 |937 1936 l»3» l»4I> 

/ 



CONCENTRATION OF ECONOMIC POWER 1Q3 

cultural output remained steady. Obviously no estimate is possible 
of the output of Government or of finance or of most of the service 
enterprises or of distribution. Between 1932 and 1937 industrial 
production rose over 70 percent. 

To obtain a figure for consumer effort commanded is difficult. 
Theoretically production and income for the economy as a whdle 
ought in real terms to be nearly identical, at leAst over a period of 
years. From year to year, however, substantial differences may 
occur. For real income depends not only on the annual volume of 
production but on Ihe annual increment of enjoyment received from 
durable consuiiiers' goods, such as automobiles, furniture, and housing. 

Moreover, industrial production measures the production ^lot only 
of consumers' goods but of producers' goods. The latter have, of 
course, no direct usefulness to consumers. The demand for them is 
a derived demand. They are wanted only because and insofar as 
they increase the abundance of consumable wealth. Thus industrial 
production as a whole may be lower, and yet the production of con- 
sumers' goods be higher. 

A numerical example may clarify this point. Suppose that in a 
given year a third of industrial production consists of producers' goods, 
that is, plant, capital equipment, and the like, and two-thirds consists 
of consumers' goods, durable, nondurable, and perishable. Suppose 
in a given year that maintenance expenditures are deferred amounting 
to 10 percent of total industrial production. The index of industrial 
production would fall to 90 but the output of consumers' goods be 
undiminished. Suppose that the producers' goods became longer 
lived (due, say, to superior design, use of alloys, corrosion resistanta^ 
etc.) the index of industrial production might fall though productiofi 
of consumers' goods rose. 

Moreover, in depression years an index of production, even of con- 
sumers' goods, considerably understates the amount of enjoyment, 
because the production of durable consumers' goods not only goes 
down much faster than consumer enjoyment, but may go d6wn at the 
same time that consumer usance of the entire stock is increasing. 
Consumer enjoyment of residential housing, for example, depends not 
on the number of new houses built, but on the use made of all the 
existing housing, including the new homes. 

Instead of an index for consumer effort commanded there is given 
in chart 37 a curve for national income in constant prices, obtained 
by dividing the index of national income produced by an index of 
wholesale prices. That is, of course, an unsatisfactory procedure 
because wholesale prices fluctuate more widely than wages, rents, 
retail prices, and other elements in the general price structure. In 
using the index of wholesale prices as a deflator one runs the risk of 
understating the amount of decline in real income during the deep 
depression years of 1931 to 1933. 

^ But it is interestng to note that indexes of real national income com- 
ptited by other methods yield results not substantially different. In 
the lower section of table 7 are shown two such additional computa- 
tions. The middle column, national income produced divided by 
wholesale prices, gives the same figures as those underlying the curve 
national income in constant prices, shown on chart 37. The figures 
have been reduced to a 1929 base. 

266147 — 40— No. 7 8 



2Q4 OONCaSJCTRATION OF ECONOMIC POWER 

Table 7 
INDEXES OF NATIONAL INCOME, RETAIL SALES AND PRICES. 1929-39 

[1929=100] 





Indexes of dollar volume 


Indexes of prices 


Year 


RetaU 

sales 1 


National 

income 

produced ^ 


National 

income 

paid out 3 


Retail 
prices ' 


Wholesale 
prices * 


Cost Of 
living » 


1929 


100.0 
88.7 
77.6 
61.4 
59.3 
67.1 
75.5 
84.8 
89.6 
81.7 
88.6 


100.0 
83.1 
65.5 
48.3 
51.2 
60.7 
67.4 
78.6 
85.9 
76.7 
83.7 


100.0 
92.1 
77.9 
61.1 
56.5 
64.2 
69.3 
79.6 
87.2 
80.6 
85.1 


100.0 
96.6 
86.6 
78.0 
76.0 
82.5 
84.4 
85.9 
90.2 
89.1 
87.6 


100.0 
90.7 
76.6 
68.0 
69.2 
78.6 
83.9 
84.8 
90.6 
82.5 
80.9 


100.0 


1930 - - 


97.5 


1931 


89.1 


1932 


80.2 


J933 


76.2 


1934 


79.1 


1935 


81.1 


1936 - 


82.1 


1937 


84.7 


1938 


83.4 


1939 


82.6 







INDEXES OF REAL NATIONAL INCOME 



Year 


Deflated 
retail 
sales I 


Real na- 
tional 
income 
produced' 


Real na- 
tional 
income 
paid out ' 


Year 


Deflated 
retail 
sales • 


Real na- 
tional 
income 
produced' 


Real na- 
tional 
income 
paid out ' 


1929 


100.0 
91.8 
89.6 

78.7 
77.9 
81.3 


100.0 
91.6 
8.5.5 
71.0 
73.9 
77.2 


100.0 
94.5 
87.4 
76.2 
74.1 
81.2 


1935 

1936 

1937 

1938_ 

1939 


89.5 
98.7 
99.4 
91.7 
101.2 


80.3 
92.7 
94.8 
92.9 
103.0 


85 4 


1930 - 


97.0 


1931 


103.0 


1932 


96 6 


1933..: 


103.0 


1934...- - 











1 Unpublished series of the Department of Commerce. Preliminary figures. 

' From table 1, p. 2. "National Income at Nearly 70 Billion Dollars in 1939," reprinted from Surveyo 
Current Business, June 1940. 
» Ibid., table 2, p. 3. 

* Bureau of Labor Statistics wholesale-price index. 
» Bureau of Labor Statistics cost-of-living index. 

• Index of national income produced divided by the Bureau of Labor Statistics index of wholesale prices. 
' Index of national income paid out divided by the Bureau of Labor Statistics cost-of-living index. 

The left-hand column represents retail sales in 1929 prices, obtained 
by deflating dollar vohirtie of retail sales by the index of retail prices 
published by the Bureau of L^.boi Statistics. This index applies only 
to commodities sold iq! the rfetail stores. All services are omitted. 
Obviously it reflects consumer enjoyment or real national income only 
insofar as the sale of commodities at retail affords a sensitive and 
reliable measure. 

The column on the/ right repreisents national income paid out divided 
by a cost-of-living index. That procedure is also unsatisfactory, 
mainly becauso the cost-of-livingr index only reflects changes in prices 
of the items entering the budgets of urban wage earners. Budgets of 
those on the farm, in rural communities, and in other occupational 
levels are known to be considerably different and price fluctuations 
diverse. But nonfarm wages and salaries usually comprise about 
Iwo-thirds of national income paid out in industry. Moreover, in 
really fundamental items, food, clothing, and the like, the market 
price is the same for everybody and the needs nearly so. The index 
may well serve as a test of other indexes. 



CONCENTRATION OF ECONOMIC POWER 1Q5 

Comparing fluctuations in the three indexes note that the fears 
expressed above that the curve showing national income in chart 37 
might be too high in years of deep depression, seem to be groundless. 
The cuf ve of real national income produced is somewhat lo-^er than 
the others from 1931 to 1937. The amount of similarity in fluctuation 
is striking. Real national income went down barely 25 percent be- 
tween 1929 and 1932-33 at a time when national money income was 
cut in half. All the indexes show a recovery beginning in 1934, which 
carried real national income back to 1929 levels in 1937 and lifted it 
somewhat above 1929 levels in 1939. Such is, of course, what one 
would expect seeing that agricultural production reached a new high 
in 1937, and the monthly index showing production of nondurable 
consumers' goods reached a new high in 1939. 

Thus the figure showing national income in real terms, while not 
strictly comparable with the figure in preceding charts representing 
the consumer effort commanded by production in a particular indus- 
try, is a highly significant index of the performance of business. Such 
as it is, it shows that consumer real income held up much better than 
either employment or production. The fact hardly needs to be 
mentioned that even the unemployed participate in consumer real 
income either by using their savings or by money income from public 
and private charity. 

At the bottom portion of the chart, the outstanding fact is the 
manner in which dividends and interest rose faster than national 
income or labor income in the twenties, maintained itself in 1930, and 
has kept well above both national income and labor income right up to 
the end of the period, though the gap has been narrowing rapidly in 
the last 2 or 3 years. This chart shows upon whom falls the real 
impact of depression. For labor income rose and fell with national 
income. Labor bore its full share of the depression. The theory 
held in some quarters that property, that is, stockholders and bond- 
holders, take the risk is not borne out by the chart. 

To be sure, as has been abundantly shown in the preceding chapters, 
laboiLhas not suffered equally in all industries. Unemployment has 
been much more severe in some industries than in others. The forces 
throwing men out of work hit particular industries with enormous 
impact and affected others scarcely at all. The variation in pattern 
appears clearly from table 8 and table 9. 

In the former, employment in 1939 is compared with employment 
in 1929, because in those 2 years the aggregate volume of production 
of all goods was roughlj *^^he same.^ In 1939, 3,000,000 fewer work- 
men v/ere needed,^ manufacturing and mining accounting for the 
disemployment of more than one out of three of them, transportation 
more than one out of four, agriculture about a fifth, construction the 
same, and trade and finance about a sixth. Service establishments, 
government, education, the professions, and domestic and personal 
services employed more persons in 1939 than in 1929. 

' In 1929 ihe Federal Reserve Board index of industriaT production (1935-39=100) was 110; in 1939, liT8. 
The index of agricultural production (1923-25 = 100) in the former year was 105, in the latter 110 

' The total unemployed in 1939, about 9,000,000, obviously includes in addition to these 3,000,000 those 
who have come on the labor market since 1929. 



IQQ OONOENTRATION OF ECONOMIC POWER 

Table 8. — Changes in employment belween 1929 and 1939 



Industry 



Thousands of workers 


Difference 
between 


1929 


1939 


1929 and 
1939 


47, 453 


44, 314 


-3, 139 


il,293 


10, 629 


-664 


8,305 
2,988 


8,150 
2,479 


-155 
-509 


36, 160 


33, 685 


-2,475 


31,876 
4,284 


29, 160 
» 4, 525 


-2,716 
+241 


11,041 
10, V15 
1,976 
1,784 
4,294 
3,909 
8,887 
6,944 
3,022 
2,102 
3,714 
3,196 
3, 225 


(2)- 

9,593 
(») 

1,169 
(») 

3,021 
(») 

6,457 
(?) 

2,000 
(') 

3,661 

3,258 




-1,122 


-615 


-888 


-487 


-102 


+465 
+33 



Total, employees and officials 

Agriculture - 

Family workers - --. 

Hired workers 

Nonagricultural industries .-.. 

Employees 

Officials, proprietors, and self-employed persons 

Employees only: 

Manufacturing and mining 

Employees _ - 

Construction 

Employees.- 

Transportation and public utilities.. _ 

Employees 

Trade and finance 

Employees 

Service establishments and miscellaneous industries 

Employees 

Government, education, and professional services 3_. 

Employees 

Domestic service and related employment 



' Estimates of agricultural, employment are from U. S. Bureau of Agricultural Economics; estimates for 
other industries are from U. S. Bureau of Labor Statistics, Revised Estimates of Nonagricultural Em- 
ployment by Loring Wood. The nonagricultural estimates have been revised as of January 1940 but are 
subject to further revision. 

> Estimates for individual industries for 1939 are not available. In computing total nonagricultural em- 
ployment, the Bureau of Labor Statistics has assumed there was no change in the number of officials 
and self-employed workers between 1938 and 1939. 

* Does not include persons in the Civilian Conservation Corps and on Work Projects Administration 
and National Youth Administration work projects. 

Even that picture is too general. For in table 9 a computation is 
made of the amount of unemployment that would have existed had 
the economy performed as well or as poorly as the industry or segment. 
If, for example, industry in general had done no better than construc- 
tion in 1939, there would have been over 23,000,000 unemployed 
instead of 9,000,000. Had it done as well as the service industries, 
the number of unemployed would have been about 2,500,000. 



CX)NCENTRATION OF ECONOMIC POWER J 07 

Table 9. — Employment performance of industries and industry groups ' 



Industry or group 



Industry groups: 

Activity necessary to maintain 1929 levels of em- 

ployrnent ' -- _ 

Service industries - 

Agriculture - - 

All workers 

Trade, distribution and finance 

Manufacturing . 

Public utilities 

Forestry and fishing.. 

Transportation 

Extraction of minerals 

Construction , 

Industries; 

Baking ' 

Canning and preserving ' 

Activity necessary to maintain 1929 levels of em- 
ployment. 

Chem icals 

Slaughtering and meat packing 

Paper and pulp 

Boots and shoes 

Iron and steel (blast furnaces, steel works, rolling 

mills) 

Flour 

I'etroleum refining 

All workers 

Cotton goods 

Automobiles 

Woolen and worsted goods 

Agricultural implements (including tractors) 

Confectionery : 

Furniture 

Tobacco 

Lumber, millwork. 



Employment indexes 



1929 



100.0 
100.0 
100.0 
100.0 
100. 
100.0 
100.0 
100.0 
100.0 
100.0 
100.0 

100.0 
100.0 

100.0 
100.0 
100.0 
100.0 
100.0 

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



1938 



111.1 

103.5 
104.2 
91.0 
91.4 
86.2 
80.7 
75.3 
73.0 
70.3 
56.3 

116.6 
113.4 

111. 1 
105.7 
101.2 
98.3 
99.0 

88.1 
95.9 
98.1 
91.0 
84.9 
68. 1 
85.0 
87.1 
81.4 
71.0 
77.7 
63.5 



112.4 
108.1 
105. 1 
94.6 
92.6 
92.0 
80.5 
78.7 
76.4 
66.3 
6.5.4 

117.6 
112.6 

112.4 
112.4 
103. 9 
102.3 
99.7 



98.3 
96.8 
94.6 
92.7 
88.0 
86.3 
83.7 
81.6 
77.7 
77.0 
70.2 



Total unemployed if 
each industry were 
representative of 
economy 



1939 



4.54, 325 
4, 090, 025 
3, 761, 1.50 
10, 099, 000 
9, 895, 5.50 

12, 387, 650 

15, 023, 525 
17,611,475 

18, 713. 7.50 
20, 007, 725 
26, 717, 225 

3 -2,181 ,.550 
-647,950 

454, 325 
3, 042, 275 

5, 198, 900 

6, 588, 725 

6, 253, 250 

11,477,075 

7, 738, 925 
6, 684, 575 

19, 099, 000 

13, 010, 675 
21,062.075 
12, 962, 750 
11,956,325 

14, 688, 050 

19, 672, 250 

16, 461, 275 
23, 266, 625 



477, 375 
2, 586, 075 
4, 023, 825 
9, 080, 000 
10,014,450 
10, 014, 450 
1.5, S13, 375 

16, 670, 025 

17, 778, 300 
22, 618, 725 
23, 0.50, 050 

-1,966,800 
429, 450 

477, 375 

525, 300 

4, 598, 925 

5, 365, 725 

6,611,775 

7, 043, 100 
7, 282, 725 
8, 001, 600 
9, 080, 000 
9, 966, 525 
12,219,000 
13, 033, 725 

14, 279, 775 

15, 286, 200 
17, 155, 265 
17, 490, 750 
20, 749, 6.50 



> Indexes for the economy as a whole and for industry groups were computed from data published by the 
.National Industrial Conference Board, Economic Record, March 20, 1940, pp. 78-83. Employment indexes 
for separate industries were computed from Bureau of Labor Statistics publication Indexes of Factory 
Employment and Pay Rolls, September 1939 and May 1940. 

2 For purposes of indicating the total unemplo.ved force, the Conference Board statistics were accepted, 
and the following assumptions made: (1) The working force numbered 48,354,000 in lv29, .53,699,000 in 19.38, 
and 54,393,000 in 1939; (2) there were 429,000 unemployed in 1929 (a very low estimate); (3) the phrase "main- 
tain 1929 levels of employment" means a maintenance of the 1929 ratio of employed to working force. 

' A minus sign indicates a surplus demand for labor. 

The variation in performance among the individual industries is no 
less striking. Had the whole economy in 1939 performed as well, for 
example, as did baking, there would have been a shortage of nearly 
2.000,000 workers. On the other hand, had industry in general done 
only as well as the tobacco industry, society and with it the Govern- 
ment, would have had twice as large an unemployment problem on its 
hands. Similar computations made for individual companies show 
that had the economy as a whole done as little to employ labor as did, 
for example, the American Telephone & Telegraph Co., the number 
of unemployed would have been over 24,000,000 persons. 

The record of reward to stockholders, bondholders, and manc^ge- 
ment is an entirely different one, both in general and in detail. As 
was noted above, the dividends and interest curve remained high above 
the curves for national income and labor income throughout the 
thirties though coming closer to base-period relationships in recent 
vcars. 



108 



OONCENTRATION OF ECONOMIC POWER 



Corroborative details are given in table 10. Interest payments, for 
example, were equal to 7.3 percent of national income in the boom year 
of 1929. During the depression the burden on national income in- 
creased nearly 60 percent until, in 1932, 1 dollar out of 9 went to 
bondholders and other recipients of interest. Bankruptcies pai'alyzed 
the economy. But as national income rose to prosperous levels the 
percentage taken by interest again declined to the proportion given to 
bondholders in the prosperous twenties. A contributing factor to the 
lightening of the interest burden has been the decrease in the total 
debt between 1929 and 1939 by about $10,000,000,000, and an appre- 
ciable lowering of the interest rate nearer peacetime levels that 
obtained before the World War. 



Tab 


LE 10. 


Owner-manager share in nc 


ional income, 1929-39 * 






Millions of dollars 


Percent of national income 


Year 


Divi- 
dends 


Interest 


Net rents 

and 
rdyaJtles 


Entrepre- 
neurial 
with- 
drawals 


Divi- 
dends 


Interest 


Net rents 

and 
royalties 


Entrepre- 
neurial 
with- 
drawals 


1929 

1930 

1931 . 


6,945 
5,634 
4,280 
2,727 
2,193 
2,725 
2.931 
4,6£1 
4, 75'^ 
3,370 
4,124 


5,906 
6,081 
5,990 
6,666 
5,158 
5,212 
6,124 
6,070 
5,042 
4,888 
4,8j2 


3,364 
2,674 
2,036 
1,224 
1,208 
1,455 
1,691 
1,909 
;j, 113 
1,976 
2,050 


12,620 
11,903 
10, 148 
8,156 
7,364 
8,149 
8,911 
9,818 
10, 813 
10, 473 
10, 826 


7.4 
7.6 
6.8 
5.6 
4.8 
6.3 
6.2 
7.3 
6.7 
5.2 
6.0 


7.3 

8.2 

9.5 

11.6 

11.4 

10.1 

9.2 

7.9 

7.2 

7.5 

7.1 


4.2 
3.6 
3.2 
2.5 
2.7 
2.8 
3.0 
3.0 
3.0 
3.0 
3.0 


16.6 
16.0 
16.2 


1932 


16.6 


1933.. 

1934 . . . 


16.1 
15.7 


1935 


16.0 


1936 

1937 


15.2 
15.4 


1938 


16.2 


1939 .. 


15.7 







• Source. See appendix D. 

To sum up, the same tendencies dominate the economy as dominate 
individual industries and segments of the economy. Production tends 
to outrun employment. Consumer funds absorbed, except in highly 
competitive industries such as agriculture and the service trades, tend 
to outrun production. Dividends and interest paym.ents tend to out- 
run both pay roUs and national income. A substantial part of industry, 
in short, seems to work constantly toward producing more and more 
goods with less and less labor, toward taking m.ore and more purchasing 
power from consumers in exchange for less and less, toward paying out 
less and less to labor and more and more to stockholders and bondhold- 
ers. Management, in other words, has accomplished in fact what it 
publicly claims is its major obligation. It has protected and made 
money for its owners, precisely what it was hired to do. But in accom- 
phshing that, it has in many instances and in many ways failed to meet 
the social performance standards which, as was said at the beginning 
of this chapter, constitute the acid test of business. 



CHAPTER VII 
PATTERNS OF SOCIAL PERFORMANCES 

An inductive study has now been made of 22 industries, 9 com- 
ponent segments of the economy, 3 large corporations, all manufac- 
turing corporations, business as a whole, and the economy as a whole. 
Thirty-seven charts have been presented, each comparing in terms 
of a base period or base year what happened to employment, produc- 
tion, consumer effort commanded, consumer funds absorbed, pay 
rolls, and dividends and interest. In these charts the careful reader 
has no doubt already been impressed by the repeated emergence of 
patterns of relationship, patterns that may be of considerable meaning 
for the socially effective functioning of the American system of private 
enterprise. 

At least four such can be distinguished and are shown in chart 38. 
The first, that shown in section A of the chart, may be called the 
pattern of full employment. It is one in which production increases 
steadily; employment also increases but at a relatively lower rate, 
while consumer effort rises at a still slower rate or shows a gradual 
tendency downward. An industry conforming to this pattern such 
as the knit-goods industry is one which is steadily offering consumers 
more and more goods in exchange for less and less effort and, by trans- 
mitting to consumers aU the improvements that technology has made 
possible, tends steadily to increase the product per worker at the 
same time that the amount of employment increases. Such a per- 
formance means full employment and larger per capita production at 
steadily decreasing prices. 

A variant of this pattern in an industry on the decline or in a period 
of depression is that in which production, employment, and consumer 
effort commanded all remain constant or go down but consumer effort 
commanded goes down faster than production, while employment goes 
down less rapidly or only pari passu with production. Such an indus- 
try is pursuing a dynamic price policy. It is lowering its prices, 
thereby not only increasing, or lessening the decrease in, the demand 
for its products but also eliminating the high-cost inefficient producers. 

The pattern shown in section B, on the other hand, might be called 
the pattern of unemployment. It is one in which the amount of 
consumer effort commanded rises steadily in relation to production 
while employment declines, not only relatively but absolutely. In 
such an industry, for example, the telephone 'industry, the curves 
may go in opposite directions, production up, employment down, 
while the amount of consumer effort commanded may rise not only 
relatively but in an absolute sense. Such an industry is obviously 
enjoying prices that sustain themselves higher than prices generally. 
Relative to experience in other industries such an industry is keeping 
production better adjusted to consumption, in that particular indus- 
try. But it causes maladjustments in the economy. It throws 

109 



110 



OONCENTRATION OF ECONOMIC POWER 



additional thousands into the army of idle men. It aggravates the 
national ur employment problem. . 

In section C of the chart is shown a pattern of behavior that pro- 
motes vigorous consumer buying. It is one in which the pay-roll 
dollar becomes a steadily increasing percentage of the consumer dollar. 
Industries with this pattern, e. g., the service industries, gradually 



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increase the share of their disbursements going to labor. This con- 
tributes to the maintenance of a mass market and of mass purchasing 
power. 

On the other hand, dividends and interest payments stay in line 
with or become a smaller proportion of consumer funds absorbed. In 
depression they may even go considerably below pay rolls. Such an 
industry does not aggravate the problem of idle money piling up io 



OONOEJNTRATION OF ECX>I^'-'*IIC POWER m 

the banks. So far as internal expansion is concerned it probably has 
little if any responsibility for "excessive" plant capacity, "excessive" 
in that it can produce more goods at present prices than consumers 
can or will buy at those prices. Such an industry contributes slightly 
if at all to problems of disproportionate investment, disproportionate 
savings, or maladjustments in the share of the total income stream 
saved as opposed to that spent on consumption goods. 

The industries in which the pattern shown in section D is present 
cannot thus be absolved from responsibility. For in pattern D and 
variants thereof the flow of funds going into pay rolls dwindles relative 
to that collected from. consumers' pocketbooks. Laborers do not get 
back in pay envelopes what they pay out in the market place. 

By this is not meatit the simple though overwhelming fact that the 
great majority of wage-earner families cannot balance their budgets, 
that their expenditures exceed their incomes. For although there 
were 23,350,000 such families and single individuals with incomes less 
than $1,250 a vear who "went into the hole" by $1,553,000,000 in 
1935-36 ^ and although they comprised 61 percent of all families and 
individuals, they did not constrict the market by such deficit spending. 
They expanded it. 

On the contrary , what is here meant is that in industries in which 
pattern D obtains the size of the flow of funds which the laborers get 
in that indi^stry, decreases relative to the size of the^flow of funds which 
that industry collects from the p«. Mic lor its product. 

Fulty to understand the significance of this pattern of behavior espe- 
cially when it characterizes so many industries an<l segments of the 
economy requires a brief excursion into economic fundamentals. 

Fjyr a long time scientific economic literature has giv^n careful atten- 
tion to the circular flow of goods &\:d money. J^rom Adam Smith to 
the present day, emphasis has been placed on measuring these streams, 
on keeping them in adjustment, on studyinp' alterations in volume, 
velocity, interaction, and sources of disturbance. 

At any given time and price level the two streams, in the absence of 
disturbances, are, of course, equal, because as Jean Baptiste Say 
pointed out nearly a century ago goods fundamentally exchange for 
goods. By action of prices total supply equals total demand, that is, 
people use the money which they secure in selling a good or service to 
buy another good or service. Money is the medium whereby all the 
goods are at bottom bartered for each other. 

Economic literature, therefore, has little sympathy with theories of 
so-called overproduction or underconsumption or, in fact, any analyses 
ignoring the truism that prices tend to equaUze the total amount sup- 
phed with the total amount demanded. General overproduction can- 
not exist. 

But there are various developments often referred to as overpro- 
duction that can exist. For example, there may be disproportionate 
production ; that is, production of a particular type of goods in excess 
of that which can be sold at the going price. There can also be dis- 
proportionate expansion; that is, a particular industry may be 
equipped to produce more than the market will absorb not only at 
the going price but sometimes at any price. Railroads have become 
streaks of rust in the wilderness. 

> See National Resources Committee, Consumer Ezper-^itures in tbe United States (Washington, D. C, 
1939), p. 53. 



2J,2 CONCENTRATION OF ECONOMIC POWER 

jFurthermore, tb ere can be general overinvestment; that is, too 
large a proportion of the community's income may go at times into 
the production and purchase of machinery and capital equipment and 
too little of ix into the production and purchase of its output. More- 
over, at c)?rtain times goods are produced in such volume that a gen- 
eral red'iction in prices is required to enable consumers to take all of 
them oit the market. Stated in another way, an inadequate pressure 
of piitchasing power develops; that is, consumers do not come into 
the market in sufficient numbers or with sufficient buying power to 
kef?p industry reasonably fully employed. While the needs of con- 
sumers are almost limitless, the factor that counts in the market place 
is not their needs but th^ir pocketbooks. 

Until a compairatively recent date most analyses dealing witji the 
problem of underproduction neglected a vitally important point. 
They usually proceeded on Adam Smith's assumption that the com- 
munity was made up of individual producers who owned the businesses 
which they operated. The argument assumed that modern business 
was no different from that which existed in the nineteenth century 
and that which still exists on the farm. The farmer, as is well known, 
continues to turn out goods, although he may not be obtaining what 
he regards as a reasonable return for his effort. For him the situa- 
tion is either produce or starve. If the whole economy were composed 
of farmers or of individual producers similarly constrained as indi- 
viduals to produce or starve, there might be fluctuating prices but 
on the whole the problem of lack of markets and of unemployment 
would be as small as it was throughout the course of history until 
the middle of the nineteenth century. 

It is to Prof. Wesley Mitchell that we are particularly indebted for 
an explanation of the essential differences. In a notable book en- 
titled "Business Cycles: The Problem and Its Setting," he points 
out that — 

Until a large part of a population is living by getting and spending money in- 
comes, * * * organizing in business enterprises with relatively few employers 
and many employees, the economic fluctuations which occur do not have the 
characteristics of business cycles (p. 75). 

After making an extensive analysis of business cycles in various 
countries he concludes — 

there is evidence that business cycles are most pronounced in those industries which 
are dominated by full-fledged business enterprises (p. 182). 

This has been amplified by a notable English economist as follows: 

In those countries and in those lines of production most subject to recurrent 
periods of business depression the great majority of producers do not ac a litetat 
matter of fact make goods and exchange them for other goods. The great majority 
of those engaged in production, work for or lend their capital to some biisiness 
undertaking; receive wages, salaries, profits, dividends, interest, rent, etc., in 
return; and use the purchasing power so obtained to buy the goods thus made. 
In place of the individual producer, the position now is that both in hie selling 
and in his buying relationships the individual has to deal with a more or less 
impersonal undertaking of the limited company or corporation type.^ 

In other words, the striking difference between the facts of 1940 
and the facts of 1840 or 1776 (the year in which Adam SnJth wrote 
his Wealth of Nations) is that production in modern times is organ- 
ized in the hands of collective units such as the corporation, limited 

» p. W. Martin, The Problem of Maintainir Purchasing Power (London, 1931), p. 14. [Italics in original. 



CHART 39 



THE FLOW OF GOODS IN THE UNITED STATES 



* 



(FIGURES IN BILLIONS OF DOLLARS) 



f::»S888SSiS»!S?JS^^ 




source: Twentieth Century Fund. DOES DISTRIBUTION COST TOO MUCH' (New York: 1939). reproduction of muster chart 
contained in pocket on inside cover 

.'50147—40— No. 7 (Face p. 113) 



CONCENTRATION OF ECONOMIC POWER 2J3 

liability company, or business undertaking. As was noted above, 
the individual farmer keeps on working no matter what the price of 
his product but the business undertaking ceases production and indeed 
cannot continue for long unless as a general rule the price it receives 
for its product is sufficient to cover total money disbursements. In 
short, the governing factor in the present-day business world is, not 
so much ability to produce as ability to sell. A business enterprise 
to keep going must show a profit. Thus it is important to know 
whether the stream of purchasing power being used to buy all varieties 
of finished goods is likely to be sufficient to provide a market at 
remunerative prices for the stream of goods in general being offered 
for sale. For unless it is, business suffers losses and ultimately 
production stops. 

The modern process of exchange, as shown in simplest terms in 
section E of chart 38, is therefore a double one. From business under- 
takings — wages, dividends, and the like are paid to private individuals 
for whom these business disbursements become purchasing power 
which they pour into the market, business continuing the process 
by absorbing such flows from the market in exchange for goods. 
But a reverse flow from business undertakings takes place on the 
goods side. Goods going to the market are carried away by private 
individuals who in turn bring to the business corporation the services 
of labor and capital. The whole process is self -regenerating. 

The diagram obviously shows only the main workings of the 
machinery of production and sale. There are numerous other trans- 
actio.is taking place, for example, between one business corporation 
and another or between private individuals and other private indi- 
viduals or between private individuals and businesses. But the 
fundamentals do not vary. There are also transactions between the 
Government and business in collecting taxes, raising loans, and the 
like. Likewise "there are questions of foreign trade. But the essence 
of the modern propess of production is that shown in the diagram. 
It insists upon the central part played by the business corporation 
in the modern industrial state. It deals with all finished goods, 
including capital equipment and it stresses the fact that so far as 
the modeixi business corporation is concerned it makes little difference 
whether prices are high or low. They must be remunerative. 

A more complete picture of the flow of goods in the economy is 
given in chart 39, which has been taken directly from a study on 
distribution by the Twentieth Century Fund. The chart does not 
show the reverse flow of money from consumers through various 
business and industrial intermediaries to laborers and owners. Accord- 
ing to the experts who prepared this chart : ' 

The flow of goods chart shows the movement of commodities from their origin 
as raw materials (and imports) to their destination as finished products, and 
measures their increasing vahjes at various stages throughout the entire process. 

The dollar value of the goods produced or distributed by each industry or branch 
of trade (e. g., agriculture, manufacturing, retail trade, etc.) is measured by the 
heights of the various colored rectangles, while the distribution of these goods is 
shown by colored bands of varying widths moving out to the right from each 
rectangle. Similarly, the bands moving into each rectangle from the left show the 
source and value of goods purchased by each branch of industry. The bands 
describing an arc from the right side to the left side of the same rectangle measure 

3 Prepared by the Twentieth Century Fund. Based on "Does Distribution Cost Too Much?" Twentieth 
Century Fund (New York, 1939). 



JJ4: OONCIENTRATION OF ECX>NOMIC POWER 

the amount of "recirculation" or sale of goode to, or their use within, the same 
industry or branch of trade. 

Taking the rectangle representing agriculture as an illustration, its height 
shows the value ($12,400,000,000) of agricultural products entering the distri- 
bution system in relation to the value of goods from other primary sources and in 
various stages of manufacture or distribution. The bands moving from the right 
of the rectangle measure the distribution of the $12,400,000,000 worth of ag- 
-■-^ultural commodities: $7,700,000,000 moving to intermediary trade, $1,600,- 

•0,000 to manufacturing industries, $1,500,000,000 used in agriculture itself, 
■J00,000,000 sold direct to consumers, and $400,000,000 going to retait 
trade. Each of these bands increases in width before entering the next rec- 
tangle to measure estimated costs of transportation — thus the $7,700,000,000 
worth of agricultural goods sold to intermediary trade is valued at $8,600,000,- 
000 on reaching its destination. 

In mucii the same manner, the bands flowing from the right of the rectangle 
marked "manufacturing industries" .show that $31,800,000,000 of the $69,600,000- 
000, total value of manufactured products are s0l(l to ijitermediary dealers, 
$20,800,000,000 to other manufacturers, $6,400,000,000 to retailers, and lesser 
amounts direct to final consumers and ultimate buyers of various types. In 
intermediary trade, goods valued at $69,300,000,000 are taken largely by retail 
trade ($27,400,000,000), by manufacturers ($16,400,000,000), and by other 
intermediary dealers ($15,900,000,000), with smaller amounts sold direct to term- 
inal and other buvers. The bulk of commodities sold by retail trade go direct 
to final consumers ($44,400,000,000 out of $49,200,000,000). The remainder 
finds its w^y to agriculture, to manufacturing, and intermediary trade or is re-;' 
sold. to other retail dealers. It should be noted that in all of these transactions 
transportation costs account for the increased value at the point of destination. 

The chart is based on figures for the year 1929 and measures only the flow of 
movable tangible commodities from the point of origin to the point of final sale . 
as commodities, and does not include the range of economic activitj'^ involving 
the purchase and sale of services such as transactions in real estate and construc- 
tion, finance, insurance, light and power, and other commercial, professional, and 
personal services. Although the total dollar volume of transactions in recent 
years has been at lower levels than the volume in 1929, the relationships between 
the diff"erent branches of trade and production and between the volume of goods 
flowing through different channels probably remain appro.ximately as pictured. 

The sketchy analysis given above is not designed to be a substitute 
for the analysis which Mr. P. W. Martin has made with great thorough- 
ness in his book entitled "The Problem of Maintaining Purchasing 
Power: A Study of Industrial Depression and Recovery." Those 
who seek a convincing demonstration of each particular point in this 
summary should consult that valuable treatise. Suffice it to say that 
Dr. Martin there establishes the fact that business depressions of 
the type experienced in the mpdern industrial state are not found where 
a primitive form of economic organization exists. Whereas individual 
producers continue^.to turn out goods, no matter what the price 
because otherwise they starve, business corporations cannot continue 
producing for long unless they are successful in disposing of their goods 
at prices covering the total money costs incurred in the process of 
production. By ignoring the device of the business corporation one 
ignores the fundamental condition of continued business activity, 
namely, sale at remunerative prices. 

Thus the important problem in the modem economy is to make 
sure that the flow of income coming on the buying side of the market 
is sufficient to purchase at prices covering total money expenses of 
production the flow of all finished goods of all descriptions, including 
capital equipment, coming upon the selling side of the market. The 
two flows do not maintain themselves automatically. Adjustment 
must be made for disturbing forces. 

Reductions in the money volume of commodity stocks voluntarily 
held by industry — for example, reductions in the quantity of money 



CONCENTRATION OF ECONOMIC POWER 'jjg 

^ and credit in circulation, additions to consumer hoardings in the com- 
munity, and additions to industry's working capital or cash balances- 
forces such as tTiese bring about a corresponding deficiency iu the 
stream of purchasing power. On the other hand, reductions in 
working capital — that is, in cash holdings of business enterprises,, 
additions to the money volume of commodity stocks voluntarily 
held, additions to the total quantity of money in circulation, and 
reductions in consumer hoardings— all tend to bring about a relative 
increase in.the flow of piu-chasing power,* 

The disturbances of major importance are twofold in character 
those operating periodically in the ups and downs of business and 
those which operate persistently over a period of decades to raise or 
lower the whole level around which cychcal fluctuations take place. 
It is the latter type that is vital to the maintenance of a high level of 
employment. And it is the forces causing inadequate pressure of 
purchasing power in the market which share responsibility for levels 
of reduced activity. 

Thus any change in the distribution of income which tends to change 
the amount of spending for consumers' goods as opposed to the amount 
of saving and spending for capital goods may bring imbalance in the 
economy. Consequently, insofar as industry over a period of years 
pays out more and more to that very small percentage of the com- 
munity who owns its stocks and bonds in significant quantities and 
pays out less and less to that overwhelming mass who purchase the 
products which industry produces, industry automatically restricts its 
own market. 

Industry, in short, makes a profit in two ways, one by increasing 
production, the other by "adjusting production to consumption," In 
agriculture, service enterprises, and the like, each individual producer 
can improve his position, so long as he keeps operating, only by increas- 
ing his production, for prices are out of his control. But in a vast 
range of industry, particularly where due to the small number of 
producers, the chances of successfully exercising control are favorable, 
production is curtailed even though prices remain relatively high or 
unchanged. The greater the concentration of power, the more avail- 
able this alternative of maximizing profits or minimizing losses by 
"keeping production adjusted to consumption." Industries of the 
first type generally have performance records characterized by patterns 
A (full employment) and C (v^orous consumer buying). Industries 
of the second type generally show up with performance records 
characterized by patterns B (idle men) and D (idle money). With 
this point in mind, please turn back to the charts, one by one, and 
make a careful study of each of them. 

The result leads irresistibly to the conclusion that there are two 
intermingled though distinct systems of business operating in the 
economy, the one competitive, free, individualistic, the other monopo- 
listic, controlled, collectivistic. Some industries have himdreds of 
producers and sellers while in others there has developed a concentra- 
tion of economic power and authority, a growth of large organizations 
of such proportions that less than a half dozen firms produce nearly 
all of the output, or at least more than one-half the output. In these 
industries the traditional American system of free competitive enter- 

* For a demonstration of these propositions see P. W. Martin, The Problem of Maintaining Purchasinir 
ower (London, 1931), especially pt. II. 



2jg (CONCENTRATION OF ECONOMIC POWER 

prise no longer exists. Instead there is monopoly, or oligopoly, or 
monopolistic competition, h^ jhort, concentration of economic power 
into a few hands. 

The difference between these two systems should be clearly realized. 
The competitive American enterprise system is a process of micon- 
scious, voluntary cooperation where free prices keep consumption 
equal to production ; the monopolistic system is a process of conscious, 
com,pulsory cooperation. 

The free competitive American enterprise system seeks maximum 
production, exchange, and consumption of goods and services freely 
chosen by individuals. The corporate bureaucracy system seeks 
maximum power and permanence of their authority and only that 
production, exchange, " and consumption of goods and services as is 
necessary to minimize risks and maximize profits. It not only 
restricts production in bad times. As Prof. Sumner SHchter, of the 
Harvard Graduate School of Business Administration, states: "It is 
not, however, merely in times of depression that industry fails to 
produce to capacity. Under existing economic arrangements, most 
enterprises must normally restrict output in order to maintain sol- 
vency." ® 

The free competitive American enterprise system seeks to meet the 
costs, sacrifices, and risks involved in its objectives by the maximum 
utilization of natural resources and the fullest development of indi- 
vidual human qualities and capacities. The system of bureaucratic 
oligopoly seeks to meet the costs and sacrifices involved in its objec- 
tives by withholding resources from production,^ by rationing natural 
resources — e. g., proration schemes in the oil industry, and by mass 
standardization of human beings to fit automatic processes and power- 
driven machinery. 

In no economic system can there be a concentration of rewards, 
such as the distribution of corporate earnings or of individual incomes 
shows to exist in the United States, without an equal concentration of 
risk and loss. Quasi-monopolistic authoritarian organizations con- 
tinuously support efforts to minimize these costs and risks, or conceal 
and distribute them over the whole population by tariffs, subsidies, 
and enforced uniformity of prices. In the traditional American 
enterprise system, the expectation or possibility of rewards or profit 
is the energy that animates the competitive, experimental, and risk- 
taking effort to utilize resources and develop human capacities. And 
the certainty of individual loss serves to distribute the benefits most 
widely with a minimum of risk to the whole economy. But in that 
range of enterprise dominated by large aggregates, although prices 
may behave uniformly and be set with certainty, risks and losses are 
shoved over on laborers, consumers, farmers, and the public. The 
tendency of monopolies and corporate bureaucracies to destroy com- 
petition emphasizes one characteristic or arrangement of the American 
people which is of supreme importance for the preservation of free 
competitive enterprise. This is the subjection of monopoly ,' oligo- 
poly, and all concentrations of economic power to the control and 
service of the people. A monopoly or organization with concentrated 
economic power tends inherently and inevitably to subject its laborers, 

» Sumner SHchter, Modern Economic Society (New York, 1928), p. 5. [Italics in original.] 
• On this point Profe'- 5or Slichter states, p. 7: "Indeed industry • • • appears normally to produce 
far below its capacity.' 



CONCENTRATION OF ECONOMIC POWER U7 

its consumers, and the public to its service, its control, and its manage- 
ment. 

No enterprise society can exist or prosper which doiBS not establish 
and constantly perfect arrangements and institutions and ideals 
which make these industrial and financial empires completely sub- 
ordinate to the inherent ' resources and capacities of the people. 
It must prevent exploitation of the people by such corporate bureau- 
crats .intoxicated with their economic power. It cannot let matters 
take their course. If democracy is to survive it must be vigilant, 
strong, forceful, and constantly able to defend itself agsfihst concen- 
trated economic power. For when the rulers of industrial empires 
control the state, the inevitable result is fascism and destruction of 
liberty. In this regard, the concluding paragraph of Professor 
Slichter's chapter on Large business units is particularly pertinent.^ 
Remember that these words were published in 1928 at the very apogee 
of the new era : 

Finally, and most important of all, large business units, more than any feature 
of our economic arrangements, create the problem of the relationship between 
industry and the state. The history of government shows that whenever powerful 
extra political organizations arise, the relationship which shall exist between them 
and the state becomes a major political issue. It was so in the Middle Ages when 
the power of the Papacy made the relationship between the church and the state 
perhaps the supreme political problem. Today the development of huge business 
enterprises has made the relationships between industry and the state the political 
issue of the age. It occupies much the same position in modern political life as 
did the problem of the church and the state in the Middle Ages. 

' Chapter VII of Modem Economic Society, p. 147. [Italics in original.] 



CHAPTER VIII 

A BUREAU OF INDUSTRIAL ECONOMICS 

The importance of keeping a continuous record of the social per- 
formance of individual businesses, of industries, groups of industries, 
and segments of the economy requii'es no emphasis. As President 
Roosevelt stated in his message advocating the creation of the Tem- 
porary National Economic Committee : 

* * * a realistic system of business regulation has to reach more than 
consciously immoral acts. The community is interested in economic results. 
It must be protected from economic as well as moral wrongs. We must find 
practical controls over blind economic forces as well as over blindly selfish men. 

Government can deal and should deal with blindly selfish men. But that is a 
comparatively small part — the easier part — of our problem. The larger, more 
important, and more difficult part of our problem is to deal with men who are not 
selfish and who are good citizens, but who cannot see the social and economic 
consequences of their actions in a modern, conomically interdependent com- 
munity. They fail to grasp the significance of some of our most vital social and 
economic problems because they see them only in the light of their own personal 
experience nd not in perspective with the experience of other men and other 
industries. They therefore fail to see these problems for the Nation as a whole.* 

But if the objectives of the antitrust laws are to be fulfilled, if the 
beneficial results of competition are to be preserved and multiplied, 
there must be an agency working in close cooperation with the admin- 
istrative organizations responsible for the enforcement of the antitrust 
laws, which does see such problems "for the Nation as a whole." 

Traditionally, of course, the enforcement of the antitrust laws has 
rested in large part on a legalistic basis, the doctrine of conspiracy. 
The question upon which evidence was sought and presented and upon 
which the case was adjudged was the legal question, did a meeting of 
minds occur among the executives of business enterprises hitherto 
independent, such that prices or production or sales territories were 
agreed upon, such that restraint of trade was bvought about. The 
important fact always was the meeting of minds. To that end file 
searches were made, correspondence was carefully compared and 
pieced together, and witnesses examined under oath. 

If a meeting of minds had occurred and the activity came under 
the interstate-commerce clause, then the main defense left to the 
industry was that the restraint of trade was "reasonable." Yet to 
this concept. of reasonable restraint of trade there never was given 
precise economic meaning. Indeed, in one curious instance the Court 
itself argued that a policy of price stabilization which had been rigidly 
enforced for years did not constitute unreasonable restraint of trade on 
the ground that by stabilizing the price the businessmen in that 
industry had stabilized the industry. The United States Steel 
Corporation won a 5 to 4 decision in a case before the Supreme- Court 
in 1920 even though the evidence had shown that the price of steel 

• SlrenKthening and Enforcement of Antitrust Laws, S. Doc. No. 173, 76th Cong., 3d sess. (Washington, 

1938) p. 7. 

119 

256147 — 40 — No 7 9 



J 20 OONOENTRATICW^ OF ECONOMIC POWER 

rails had remained unchanged for many years while the industry itself 
had gone through violent fluctuations. When an economic fallacy of 
such magnitude is raised to the dimity of a judicial doctrine, methods 
of dealing with concentration oT economic power are -reduced to 
insignificance. 

Obviously from the point of view of public welfare what the authors 
of the Sherman Antitrust Act sought to secure was the benefits 
of competition and these benefits of competition, let it be remembered, 
are maximum employment, maximum production at lowest possible 
costs and prices, which in turn insures maximum consumption, that 
is, maximum real income, the highest possible standard of hving. 

The real question is clearly not the legal one, was there a meeting of 
minds resulting in restraint of trade? The real question is, how has 
this com.pany or industry behaved? What social performance tests 
has it failed to meet? If the industry in question be one in which 
production is not only steady but tends steadily to increase, in which 
employment is not only regular but likewise tends to increase, in which 
pay rolls on the whole increase, and in which prices to the public are 
being continually lowered as fast as technological improvements and 
scientific management can reduce costs, obviously that industry has 
an excellent record in terms of social performance. Aside from con- 
siderations of power and the exercise of such power it makes no 
difference whether there is a monopolist in that industry or two giant 
concerns or a few large concerns, or many concerns. The number of 
concerns is of distinctly minor importance. Nor does it matter 
whether or not the managers get together once a day or twice a week 
or only on occasions of merriment. Nor is the fact of moment whether 
they do or do not discuss prices, production and sales, if the social 
performance of the industry is excellent. From the economic point 
of view the only thing that matters fundamentally is how does the 
industry perform, "By their works ye shall know them." 

It is that test which has been applied in the preceding chapters. 
The statistics have been unsatisfactory and inadequate. The figures 
have been given only on a national basis. They have not been broken 
down by regions, nor by States, nor metropolitan districts, nor by 
branches of industry, nor by companies and plants. 

Information of this nature, while sometimes presented ad hoc in the 
trial briefs of opposing lawyers in antitrust cases, should be continu- 
ously .assembled and evaluated -by some economic arm of the Govern- 
ment. Such an economic intelligence agency would need not only to 
make analyses such as those in this study, but would require support- 
ing data of various kinds necessary to the full economic evaluation of 
good or poor industrial performance. 

In case of an antitrust prosecution such an agency should be re- 
quired to present a study (in which the analyses above constitute only 
rudimenWry segments) giving the antitrust enforcement agency, the 
parties at interest, and the courts an accurate, objective social audit 
of the industry. Thus the social performance of the industry, or of 
the company or companies hailed before the grand jury or before the 
bar could be documented. Such an agency should not only present 
and analyze figures on employment, production, dividends, interest, 
sales, pay rolls, and consumer funds absorbed or value added by manu- 
facture, but the range of its information should include a knowledge 



OONOENTRATION OF ECONOMIC POWER J21 

of the CQmpany's financial structure, its history and experience, and 
above all a record of its management. 

Tlie scope of the operations of such an economic intelligence agency 
was suggested by President Roosevelt in the message already quoted. 
In the list of seven items specifically enumerated to "be embraced ini 
the proposed study" was — 

Bureau of Industrial Economics. — Creation of a Bureau of Industrial Economics 
which should be endowed with adequate powers to supplement and supervise the 
collection of industrial statistics by trade associations. Such a bureau should 
perform for businessmen functions similar to those nerformed for the farmers by 
the Bureau of Agricultural f]conomics. 

It should disseminate current statistical and other information regarding market 
conditions and be in a position to warn against the dangers of temporary over- 
production and excessive inventories as well as against the dangers of shortages 
and bottleneck conditions and to encourage the maintenance of orderly markets. 
It should study trade fluctuations, credit facilities, and other conditions which 
affect the welfare of the average businessman. It should be able to help small 
businessmen to keep themselves as well informed about trade conditions as their 
big competitors. 2 

The scope of the President's proposal obviously goes somewhat 
beyond that necessary to intelligent enforcement of legislation on 
competition. Such a bureau would have much other usefulness. 

But a primary function might well be to serve as the source of 
objective economic information in cases arising under the antitrust 
laws. At the present time, needless to say, the litigants in the case, 
and particularly the defendant, at such times and insofar as the 
economic facts seem to afford alternating counter argument to present 
fragments of such information in their briefs. But these are charac- 
teristically one-sided, usually distort the data in all that variety of 
ways commonly characterizing adversary proceedmgs, and frec^uently 
overwhelm the judges with masces of economic fact and statistics 
that are not homogeneous, not comparable, and in reality, not even 
significant. 

Rarely, especially where large corporations are brought to book, 
has the agency in the Government involved in suits under the anti- 
trust laws been able to match in luxury and volume of presentation 
the economic and financial briefs of the company. Funds for'^the 
enforcement of the antitrust law have been exceedingly low even in 
administrpjtions which seriously undertook the job of reasonable en- 
forcement. Often no appropriation at all has been made for the 
Economic Section, even of the Federal Trade Commission. 

Moreover, access to the necessary facts has been difficult, if not 
impossible. Except for certain censuses, usually at 5- or 10-year 
intervals, business as a whole has never been required to report 
production, employment, pay rolls, sales,, and the like. Such infor- 
mation has been obtained in a purely voluntary way usually from the 
larger concerns, or it has been collected as a byproduct of administra- 
tion as, for example, the variety of financial information such as 
information on profits, total assets, and the like, obtained from the 
reports of the Bureau of Internal Revenue, which in turn obtains them 
from companies making tax returns. But net income for tax purposes, 
for example, is an altogether different, item in many instances from 
the net income which a corporation will report to a banking syndicate; 
who is being urged to underwrite securities or buy its bonds, yet most 

> Ibid, p. 9. 



122 (CONCENTRATION OF ECONOMIC POWER 

of the figures which have been contained in the preceding chapters 
have been such byproducts of administrative convenience. 

Despite all these difficulties there has been an increasing tendency 
in recent years for various concerns when bro ight under the purview 
of the Antitrust Division in the Department of Justice to seek to 
make a presentation of bodies of economic data. A notable recent 
instance has been that of the potash industry. It went to the Depart- 
ment of Commerce and indeed to the Director of Studies of the Tem- 
porary National Economic Committee, Dr. Willard Thorp. Dr. 
Thorp and his experts devised a questionnaire which sought in detail 
the kind of information necessary to evaluate the social performance 
of the industry. In particular, the facts were obtained on prices not 
only at the seaboard but at various internal points in the country, 
prices of the different kinds of potarh. Detailed figures were also 
secured on employment, pay rolls, and production, together with a 
penetrating analysis of the financial structure of the industry. On 
the basis of the answers to this questionnaire a small staff at the 
DepiirtTviGnt of Commerce made a report which recommended a 
change in the pricing structure whereby the price of potash instead of 
being quoted at the seaboard was quoted f. o. b. producing plant New 
Mexico and California. This resulted in lowering the price of potash 
to a large area in the interior. The industry unanimously adopted 
this report and upon giving assurance to the Department of Justice of 
adherence a consent decree was issued. But in the past the enforce- 
ment of such a decree has been left to chance or in fact not even been 
looked into. Complaints of nonenforcement have been numerous, 
especially in the case of a consent decree obcained by the meat-packing 
industry in the early twenties. However, if now in the potash indus- 
try an administrative agency were required to keep a record of price, 
production, employment, etc., if thereby the fact of social performance 
were periodically verified, clearly the purposes of the authors of the 
Sherman Act will have been achieved even though there are but three 
firms in the potash industry who, fronr^^e very nature of the case, 
cannot help on occasion getting together ^nd working cooperatively 
either overtly or sub rosa on prices and sales. 

What is being suggested above is that the procedure of social 
audit be regularized. An economic scaffolding of the character pro- 
vided ad hoc by the Commerce Department in the potash case should 
be a regular part of the framework of enforcement of the antitrust laws. 
The measurements which have been given of the various industries 
above constitute but a first rough approximation to the task and 
technique which would need to be followed by such an economic 
intelligence service. 

A NATIONAL COMMISSION ON ECONOMIC POLICY * 

The standards of social performance set up in this study in reality 
constitute criteria for national economic policy in a democratic service 
economy. They form a useful touchstone for proposed and existing 
legislation and afford a pragmatic test of governmental operations, a 
test not now applied by a single agency either inside or outside 
government. 

A supreme tribunal on economic policy has long been advocated by 
businessmen, economists, and legislators. Evefti as recently as 1936 



CONCENTRATION OF ECONOMIC POWER 123 

there was recommended in a Senate committee print entitled "Dis- 
cussion of National Economic Council or National Council," published 
by the Senate Committee on Manufactures, that there be established— 

a council of about nine members, with an adequate staff, to serve in an advisory 
capacity to Congress, to the President, and possibly on occasion to the people, on 
our national problems; p-nd to afford in such an advisory capacity the benefits of 
weU-informed, detached, disinterested, nonpolitical advice. 

This full-time council, it is said, appointed in such a way as to 
make it nonpartisan and as far removed from political pressure as 
possible, should be — 

comparable in ability- and standing to the Supreme Court in the legal field, free 
from the pressure of legislative Oi adnJuistrative duties, able to stand back and 
get better perspective on our national problems and better able to perforna two 
functions: (1) To pick out the key points in the national situation that need 
consideration; and (2) to concentrate on such points and give them the necessary 
study and attention. 

The pamphlet enumerates three advantages which might be ex- 
pected to accrue from establishing such a council. First is that of 
evolving a consistent and integrated national policy by which to test 
not only current attempts at legislation but also various enactments 
alread}^ in full operation. "One of the functions of such a council," 
the pamphlet states, "would be to endeavor to keep the development 
of social, economic, and political principles abreast of the movement 
of industry, help us take the maximum practicable advantage of our 
material and specialized acliievements and avoid the tremendous 
waste of recent years," These wastes are briefly estimated in the 
terms of the failure of the economic system, not only to operate to 
the hmit of the potential plenty set by our abundance of capital 
equipment, natural resources and human skills, but even to operate, 
as has been shown by the Brookings study on America's Capacity to 
Produce, at a rate wliich in periods of prosperity utUizes existing 
plant capacity to the fidl. The gain here in sight is summarized as 
that of "turning into human benefit and human happiness this 
splendid heritage of progress." 

A second advantage discussed is that of reducing factionalism and 
class antagonism. 

A great national council of the kind contemplated would probably prove to be 
an educational and balancing influence in our national life, counteracting tenden- 
cies to demagogism and the eflfects of pressure groups. There would be an inevi- 
table seeping down of knowledge and vision from such an organization through 
all ranks of the Nation. * * * Thereby the knowledge and results of our 
research and other organizations, our universities, and the minds of our people 
could be run into a central pool, examined, correlated, and more efficiently utilized. 

The third advantage stressed by the Senate committee print is 
that of keeping— 

our economic system working as automatically and efficiently as possible. It 
seems entirely possible that it may require a higher order of skiU and genius to 
keep our economic system satisfactorily working in a high degree automatically 
than to step in and try to operate it, as it were, by hand; just as an automatic 
machine represents greater skill and thought than one intended for hand opera- 
tion. * * * Xhe only primary and satisfactory way to avoid unnecessary 
regimentation or an unnecessary amount of governmental interference in the form 
of planned economy is to bend our efforts to the positive and constructive task 
of making our economic mechanism work as smoothly and evenly and auto- 
matically as possible. 



2^4 CONCENTRATION OF ECONOMIC PJWER 

The concrete tasK of such a National Commission on Economic 
Pohcy would be at least threefold. It would need a Bureau of 
Industrial Economics to keep a continuous systematized record of the 
way in which the whole economy is operating. That ;would not only 
mean getting and digesting the conglomerate of statistics which are 
now available as byproducts of administration in various executive 
departments of the Federal and State governments, but it would also 
involv^e keeping up-to-date records of the operation of the two or 
three hundred largest Am.erican corporations. Concerning these 
it slioidd assemble not only the financial information now. avail- 
able in their annual reports and occasional profit and loss state- 
ments, but it should know w^hat they sell, at what price they sell 
it, who their directors are, with what other corporations they have 
affiliations, and above all what contacts these corporations have 
with government, what government contracts or other favors they 
have received, etc. Without such information it will be impos- 
sible to coordinate industrial policy and national policy in a man- 
ner that will generate maximum cooperation from, and stimulus to, 
business enterprise. 

A second task of such a National Commission on Economic Policy 
might well be that of giving, either on motion of Congress or on its 
own motion, its considered written opinion upon economic measures 
of current importance. After reports have been hand^:l down and 
received public acceptance, a body of economic principles or precedents 
will have been formulated with reference to which governmental 
operations and legislation can be evaluated and oriented. There 
might then be less hasty improvisation and ad hoc legislation, less of 
mutual paralysis, and more of articulation and integration for maxi- 
mum achievement of well-distributed large real income and full 
employfnent. 

A third task of such a National Commission on Economic Policy 
might be to serve as a source of information to Congress. To be 
sure, the Library of Congress was established for this purpose. 
Congress gets a good deal of information from various executive 
departments. But frequently, if not usually, the questions asked do 
not wholly come under the province of any one Government depart- 
ment. Moreover the information and even the reports from the 
executive departments, particularly when furnished in order to secure 
appropriations, are sometimes not completely objective, if only in 
that they rarely understate the responsibilities and the achievements 
of the department concerned. 

Thus can be brought to bear upon legislation the touchstone of a 
consistent body of economic principles; that is, a national econornic 
policy. Legislation at the present time sofnetimes envisages par- 
ticular points of view, the desires of pressure groups or the- adminis- 
trative needs of particular Government departments, rather than the 
general interest or the collective efficiency of government as a whole. 
Yet it is increasingly obvious that the central problem in a democracy 
in modern times is that of coordination and timely action according 
to a well-conceived long-range program operating in many areas 
toward a common objective — the objective of common welfare. 



APPENDIX A 
SOME METHODOLOGICAL CONSIDERATIONS 

THE BASIC SERIES 

The basic statistical series used to measure the performance of 
business are indexes showing annual changes from 1919 to 1938 in 
production, employment, pay rolls, divid-ends and interest, and con- 
sumer funds absorbed. From these certain derivative series are com- 
puted, notably one measuring changes in consumer effort commanded 
by the output of an industry or a segment of the economy. 

The indexes of production^ represent physical volumes of output, 
the concrete quantum annually of goods and services which the indi- 
vidual corporation, industry, or group of industries made available to 
consumers. Naturally, for some industrial segments measures of 
physical output either are not available or indeed cannot be computed. 
Thus production series for trade, finance, service, and government are 
not to be had. While the services which they render to consumers are 
highly useful and to no small degree indispensable, they do not produce 
goods measurable in terms of physical units. 

The index of employment measures annual changes in the number 
of laborers who found an outlet for their talents and abilities, part 
time or whole time, in the industry or segment in question. Com- 
parisorl of the movements in the production index of an industry with 
that of employment reveals in a rough way changes in productivity 
in the industry. ^ Insofar as possible the employment indexes have 
been restricted to wage earners only. However, in many cases the 
nature of the data made it necessary to include salaried workers as 
well. The coverage of each index is noted on the tables for the various 
industries. Particular attention should be given to the figures for 
agriculture where the employment series represents not only all hired 
workers but unpaid family workers and the working farm operators 
as well. 

The indexes of pay rolls measure annual changes in the dollars which 
labor has been paid for its efforts. Such an index reflects not only 
changes in wage rates but also changes in the volume of employment 
and time worked. Thus a rise in the pay-roll index may be due to 
higher wage rates, a longer working week, or more regular employment 
throughout the year, an increase in the number of employees, or any 
combination of these factors. Here, too, the coverage of the index 
has been confined to wage earners wherever possible. For a specific 
industry the indexes of employment and pay roll cover the same group 
of workers. 



' The revised indexes recently published by the Federal Reserve Board (see Federal Reserve Bulletin, 
vol. 2fi, No. 8. August 1940) came out too late to be utilized in this study. All production figures (or indi- 
vidual industries refer to the old unrevised series. 

» This has be^n done by a variety of analysts, notably Dr. Spurgeon Bell, in Productivity, Wages, and 
National Income (Brookings Institution, 1940), and Mr. David Weintraub in a series of studies published 
by the National Resefiroh Project, Works Progress Administration, Washington, D. C. 

125 



126 CONCENTRATION OF ECONOMIC POWER 

The dividends-and-interest series in most cases ^ represents the net 
amounts of such payments originating in an industry. In other 
words, dividends and interest received by an industry have been 
deducted from dividends and interest paid. A word of warning should 
be given regarding all of the indexes of dividends and interest which 
are based on figures from income-tax returns to the United States 
Bureau of Internal Revenue. Due to changes in the law regarding 
the filing of consolidated income-tax returns the index numbers begin- 
ning with 1934 are not strictly comparable with those for earlier years. 
For that reason some of the charts show the dividend-and-interest 
lines ^ broken between 1933 and 1934. The nature of the changes and 
their possible effects on the comparability of the series are discussed 
below.^ 

By consumer funds absorbed is meant the net dollar cost to the 
consumer of the industry in question— net, that is, after payments 
have been made for raw materials and the like. The concept is about 
the same as that which Prof. Frederick C. Mills calls "the fabricational 
margin," or the "aggregate purchasing power of all agents of fabrica- 
tion"; i. e., those whose rewards are received from the differential 
between costs of materials to manufacturers and the selling price of 
''manufactured goods.^ 

In other words, the series for consumer funds absorbed represents 
an attempt to measure what an industry takes from consumers in 
return for the product it makes available to them after deductions 
have been made for what it passes on to other industries for raw 
material and supplies. It is believed to show changes in the doUar 
value of the industry's net product. Consumer funds absorbed are 
thus closely related to the volume of production and the price of 
the product. But the series does not fluctuate directly with them. 
For example, if an industry's output and prices remain unchanged, but 
its raw material costs rise, the index of consumer funds absorbed 
will fall. There is less left to the industry to distribute in payrolls 
dividends and interest, and salaries. 

Unfortunately the hmitations of the available data have made it 
impossible to be entirely consistent in the use of statistical series to 
represent consumer funds absorbed. For all manufacturing and for 
individual manufacturing industries the Census of Manufactures, 
figures on "value added by manufacture" have been used. For the 
major industrial groupings estimates of "income produced" as com- 
puted by the National Income Division of the Department of Com- 
merce have been used. ^ The cautions and qualifications to be observed 
in using these estimates will be taken up later.' 

Closely related to the series for consumer funds absorbed are those 
showing consumer effort commanded. In fact, the latter indexes are 
derived from the former by means of Carl Snyder's index of the 
general price level. In other words, the indexes of consumer funds 
absorbed for each industry or segment have been divided by Snyder's 
index of the general price level, and the resultant series represent the 
indexes of consumer effort commanded. Snyder's index of the gen- 

' Excertions are noted in the Individual tablas. 

« Dividends and interest for agriculture, steam railroads, telephone ad telegraph, and government have 
been based on sources other than the Bureau of Internal Revenue. 
» See this appendix, pp. 128-131. 

• See F. C. Mills. Prices in Recession and Recovery, pp. 72-74. 
' See pp. 131-133 below. 



CONCENTRATION OF ECONOMIC POWER 127 

eral price level, which is published currently in Montty Review of 
Credit and Business Conditions of the Federal Reserve Bank of 
New York, comprises factors reflecting changes in wholesale prices of 
commodities, wages, cost of living, and rents. The index for the 
20-year period covered in this monograph is as follows, on a 1927 base: 



1919 


._. 101 


1920 


... 113 


1921 


.__ 95 


1922 


.__ 92 


1923 


... 96 


1924 


._. 97 


1925 


.__ 99 


1926 


.__ 100 


1927 


.__ 100 


1928 


.__ 103 



1929 


... 105 


1930 


.__ 98 


1931 


.._ 88 


1932 


.__ 77 


1933 


._- 75 


1934 


... 80 


1935 


.__ 85 


1936 


.__ 90 


1937 


... 94 


1938 


._- 90 



COMPARABILITY OF THE SERIES 

In general, the six series for a given industry are comparable. In 
a few instances, the production indexes cover a smaller segment of 
the industry than the other series, but such differences are noted on 
the tables. 

There is a fundamental difference, however, between the industrial 
classification for the dividends and interest figures and that for the 
other series. The basic data for dividends and interest have been 
compiled by the United States Bureau of Internal Revenue from 
income-tax returns of corporations. The underlying data for nearly 
all of the other series have come directly or indirectly from census 
sources, such as the Census of Manufactures, Census of Mines and 
Quarries, and Census of Electrical Industries. The Bureau of Internal 
Revenue and the Bureau of the Census hav different units for 
classifying the returns by industries. 

The Bureau of Internal Revenue's unit is a corporation,* while the 
Census of Manufactures imit is an establishment. A single corpora- 
tion may be composed of several establishments with diversified 
industrial activities. The Bureau of Internal Revenue classifies its 
returns on the basis of the predominant business of each corporation. 
The Census of Manufactures, on the other hand, classifies each estab- 
lishment on the basis of its product or group of products of chief value. 
Unfortunately, there is no way of evaluating the magnitude of the 
differences which result from this difference in units of classification. 

Moreover, the nature of the data collected by the Census of Manu- 
factures gives rise to some degree of inconsistency within a single 
series. The years primarily affected are 1919 and 1933. The 1919 
census was the last one which included data for establishments with 
products valued at less than $5,000.' Therefore, the figures for 1919 
are to some extent overstatements in comparison with the other 
vears. On the other hand, the 1933 census understates the volume of 
business in that year because the limited field force canvassing the 
industries was not able to make complete coverage. The census has 

• See p. 128 in this appendix for discussion of consolidated returns and their effect on the indostrial da* 
siflcation. 

• The lumber and timber products industry was handled differently. See p. 166. 



128 OONOENTRATION OF EC?ONOMIC POWER 

estimated that for manufacturing as a whole less than 1 percent of the 
wage earners were in estabUshments not included in the census 
although in some industries the percentage was higher. It rarely- 
exceeded 3 percent of the wage earners and in the great majority of 
industries did not exceed 1.5 percent.^" 

THE BASE PERIOD 

Wherever possible the average for the years 1923-25, inclusive, has 
been used as the base period. In that period the economy experienced 
2 years of prosperity and one of unusually mild depression. The 
period has been widely used as a base with which to compare the 
hectic years of boom and bust that followed. 

In a considerable number of industries, however, not all the figm^es 
are available back that far. For instance, the Bureau of Internal 
Revenue did not begin tabulating the figures on dividends and interest 
for minor industrial divisions until 1926 and for some industries until 
1927. For those sections, that is, for the majority of the subdivisions 
of manufacturing and mining, 1927 was used as a base year, merely 
because it was the earliest year for which all series were obtainable. 
In every chart, however, some of the series go back at least as far as 
1923, so it is possible to get a rough idea of the changes in the industry 
since that time even though it was not possible to use 1923-25 as a base 
in all cases. 

THE DIVIDENDS AND INTEREST FIGURES 

As was stated above, considerable difficulty was experienced in 
secm-ing satisfactory figures of dividends and interest payments. The 
basic data with few exceptions " have been compiled by the Bureau of 
Internal Revenue from income-tax returns of corporations. These 
figures have been adjusted and extrapolated in various ways by the 
National Bureau of Economic Research and the Department of 
Commerce and it is the resulting series which have been used in the 
present study for the major industrial classifications. For individual 
industries, the Bureau of Internal Revenue figures are presented 
without adjustinent. No attempt has been made to extend the data 
for these individual industries back of 1926 or beyond 1936. The 
figures for minor industrial divisions have not been published by the 
Bureau but are compiled in a "source book" maintained by the 
Income Tax Unit of the Statistical Section of the Bureau. These 
data were made available through tlie courtesy of Guy T. Helvering, 
Commissioner of Internal Revenue. 

The primary adjustments made were those necessary to ehminate 
intercorporate dividend and interest payments. The National Bu- 
reau describes its estimates of dividend and interest payments as 
f oUbws : 

Dividend payments as measured here cover disbursements to individuals, and 
thus exclude the intercorporate dividend flow; interest payments cover interest 
on long-term debt alone, upon the assumption that all short-term interest is paid 
to other business enterprises and that short-term interest paid to individuals by 
banks represents an indirect flow of long-term interest. The only allowance for all 
industries for intercorporate long-term interest payments is interest on Govern- 
ment securities. '^ 

'• See Biennial Census of Manufactures 1933, pp. 3-4. 

" Agriculture, telephone and telegrapb, steam^ailroads, and government. 

'» r non Kuznets, National Income and Capital Formation, l91»-35 (New York, 1937). p. 23. 



CONCENTRATION OF ECONOMIC POWER 129 

The Department of Commerce has made similar assumptions in its 
estimates; 

The figures of dividend and interest payments include only payments to indi- 
viduate or aggregates of individuals. A break-down of dividend and interest pay- 
ments between those which flow to individuals or aggregates of individuals and 
those which flow to other business enterprises cannot be obtained from available 
source material. It is necessary, therefore, to resort to indirect methods, and the 

* estimates are arrived at by deducting dividend and interest receipts of corpora- 
tions from dividend and interest payments by corporations. * * ♦ 

Estimates of interest included in the income figures are confined to interest on 
long-term obligations. Interest on short-term obligations is regarded as payment 
to other business enterprises, primarily banks, for an intangible raw material, 
namely, the use of credit. It is an interindustrial payment, and as such is 
eliminated in arriving at a net unduplicated national income figure. The corpo- 
rate sample is used to derive average interest rates, which are applied to corporate 
funded debt and mortgage figures taken from Statistics of Income. It is assumed 

'that there are no funded debt or mortgage obligations of unincorporated business 
enterprises. This assumption is not entirely substantiated in fact, but the result- 
ing error is undoubtedly smaU. Interest received by corporations, which is de- 
ducted froria interest paid by corporations to arrive at net interest originating in 
corporations, is taken from Statistics of Income and is confined to tax-exempt 
interest received by corporations. Interest received on tax-exempt obligations is 
the only item shown separately in the Statistics of Income for long-term interest 
received, and is used as total long-term interest received on the assumption that 
long-term debt holdings of corporations are confined to Government obligations. 
It is apparent that this is a questionable assumption, and studies to determine 
necessary, corrections are contemplated." 

In the case of individual industries for which neither the National 
Bureau nor Department of Commerce show series, complete reliance 
has been placed on the figm-es of the Bureau of Internal Revenue. 
Dividends and interest received have been deducted from dividends 
and interest paid. This does not duphcate precisely the adjustments 
made by the National Bureau and Department of Commerce, but it 
approximates their methodology as nearly as is possible with the in- 
formation at hand. 

As was noted earlier, practically aU " of the dividends and interest 
series have this fault in common: the figures for 1934 and subse- 
quent years are not comparable with those for 1933 and earlier years. 
The reason is to be found in the fact that under the Revenue Act of 
1934 the privilege of filing consoUdated returns, except by railroads, 
was discontinued. Prior to this time an affiliated group of corpora- 
tions was allowed to file a single consohdated return. Beginning with 
1934, each subsidiary or affiliate ffied a separate return. 

This change in the law has had two marked effects on the compar- 
abihty of the statistics. In the first place, many items increased in 
size because "intercompany eliminations" were made in the consol- 
idated returns. For example, dividends and interest received by all 
corporations rose correspondingly with dividends and interest paid by 
aU corporations. However, the method followed of deducting divi- 
dends and interest received from dividends and interest paid mini- 
mizes the discrepancy arising from this source. 

A more important source of discrepancy is that due to the resultant 
shifts of the corporate population among the various industrial 
categories. The consohdated returns submitted for 1933 and earlier 
years were classified on the basis of the predominant industrial 
activity of the consohdated gro'up. Since 1934, however, the returns 

» Robert R. Nathan, Income In the United States, 1929-37, Department of Commerce (Washington, 
1938), pp. 8 and U. 
» The exceptions are agriculture, telephone and telegraph, steam railroads, and Government. 



130 



OONOENTRATION OF ECONOMIC POWER 



have been classified according to the predominant activity of each 
subsidiary or affiliate, which in many instances was different from that 
of the consolidated group. 

The magnitude of the shifts varies from one industrial classification 
to another. The Bureau of Internal Revenue has published separate 
tabulations for 1934 for the 24,458 corporations which filed consoli- 
dated returns in 1933. These returns for 1934 were classified on two 
bases: (a) The business classifications of the corporations in 1933, 
and (6) the business classifications of the same corporations in 1934. 
From these figures the change in "net" dividends and interest- have 
been computed for all corporations ^* (those which did not file consoli- 
dated returns in 1933 as well as those which did) on the basis of the 
1933 and 1934 business classifications. The results which are shown 
in table A below give some basis for evaluating the extent of the 
changes in industrial classification as they affect dividends and interest. 



Table A. — Comparison of "neV dividends and interest in all industries in 1934- 
on basis of 1934 o,nd 1933 industrial classification 

[Dollar items in thousands] 



Industry 



All returns, 
1934 basis i 



(1) 



Consolidated returns 



1934 basis 2 
(2) 



1933 basis 3 
(3) 



All 1934 

returns, 

1933 basis 

(l)-(2) + (3) 



(4) 



Ratio of 
1934 basis 
to 1933 
basis for 
all returns 
(l)-(4) 

(5) 



Aggregate 

Agriculture and related industries. 
Mining and quarrying 



Total manufacturing- 



$2, 738, 501 
36, 837 
241. 706 



$1, 980, 600 

12,297 

139, 494 



$1,980,600 

9,985 

60, 372 



$2,738,501 
34, 525 
162, 584 



1.000 
1.067 
1.487 



1, 376, 327 



571, 195 



644, 770 



1, 449. 902 



.949 



Food and kindred products 

Liquors and beverages 

Tobacco products 

Textiles and their products 

Leather and its manufactures 

Rubber products 

Forest products 

Paper, pulp, and products 

Printing, publishing, etc.. 

Chemicals and allied products 

Stone, clay, and glass products 

Metal and its products 

Manufacturing not elsewhere classified. 



Construction 

Transportation and other public utilities. . 

Trade 

Service 

Finance 

Nature of business not given 

1933 industrial activity not available 



251, 807 
29,068 
87,237 

112, 175 
23.233 
8,165 
46,925 
52,442 
76, 786 

187, 299 
47, 511 

418,000 
35, 679 



111, 788 

2,982 

871 

20, 620 

4,398 

4,476 

15, 591 

17, 135 

17, 795 

57,694 

13,360 

285,559 

18, 933 



72,951 

3,244 

712 

19, 1 17 

5,226 

15,0^ 

17,158 

18, 936 

17, 573 

190,848 

14,656 

250,019 

19,271 



212, 970 
29,330 
87,078 

110, 702 
24,061 
18,717 
48,492 
54,243 
76,564 

320, 453 
48,807 

382,460 
36, 017 



1. U2 
.991 

1.002 

1.013 
.966 
.436 
.968 
.967 

1.003 
.584 
.973 

1.093 
.991 



20,861 

2, 112, 356 

392, 285 

209,607 

-1,652,790 

1,311 



4,583 

1, 403, 987 

130, 335 

60,929 

-342,819 

690 



2,948 

1, 292, 547 

74, 593 

42, 836 

-148, 136 



687 



19,226 

2,000,916 

336, 543 

191,514 

-1,458,107 

1,408 



1.085 
1.056 
1.166 
1.094 
1.134 



' U. S. Bureau of Internal Revenue, Statistics of Income for 1934, pt. 2. table 2. Dividends and interest 
received have been deducted from dividends and interest paid. 

' The same, table 10, showing "net" dividends and interest paid in 1934 by 24,458 corporations classified 
on 1934 ba.sis of principal business of subsidiary. 

' The same, table 13, showing what would have been reported if these 24,458 corporations had been classi- 
fied on 1933 basis of principal business of the consolidation. 

The most marked industrial shifts occurred in the mining and 
quarrying, rubber products, and chemicals and allied groups. The 
dividends and interest index for the first would shpw a sharp rise in 

" The method followed in table A assumes that the indu."5trial classification of all of the corporations which 
did not file consolidated returns in 1933 wa.s the same in 1934 as in 1933. This is not strictly true, but prob- 
ably does not aflect the validity of the comparison. 



CONCENTRATION OF ECONOMIC POWER 



131 



1934 over 1933 merely as a result of the changes in the basis of classifi- 
cation. In the latter two, the indexes would show a decline. The 
discrepancies are less pronounced in food and kindred products, trade, 
and finance, but are nevertheless significantly large. 

Unfortunately, the industrial groupings in this table are broader 
than have been used elsewhere in this study. It is hkely that the 
discrepancies are even more extreme for some of the smaller industrial 
subdivisions. The Bureau of Internal Revenue has made special 
tabulations for the Department of Commerce, which give slightly 
more detail for "net" dividends only. Several subdivisions of mining 
and quarrying have been selected from this tabulation and are shown 
in table B.i« 

All of the mining subdivisions except anthracite coal show marked 
differences in dividends as a result of the changed bases for classifica- 
tion, particularly oil and gas and bituminous coal. Unfortunately, no 
other series representing dividends and interest for these industries 
are available. In interpreting the charts for these industries, there- 
fore, the fact is repeatedly stressed that part of the rise or fall in 
dividends and interest since 1934 is the result of changes in the method 
of compihng the statistics. 

Table B. — Comparison of "net" dividends in selected industries in 1934 on basis of 
19S4 o,nd 1933 industrial classification 





"Net" dividends 
(thousands)' 


Rato of 

1934 b«is 

to 19'o'? 


Industry 


1934 basis 
(1) 


1933 basis « 
(2) 


basis 
a)-(2) 

(3) 


Mining ft.nr\ qiiarrying 


$190. 386 


$114, 761 


1.659 






Anthracite coal 


2,678 
28,124 
31, 594 
30,656 
97, 332 


2,671 
15,411 
39, 914 
25,603 
31, 164 


1.003 


Bituminous coal 


1.825 


Metal mining 


.792 


Nonmetal 


1.197 


Oil and gas '. 


3.123 







' Special tabulations made for the Department of Commerce by the U. S. Bureau of Internal Revenue; 
dividends received have been deducted from dividends paid. 

» This column was estimated by following the procedure indicated in the computation of column (4) 
table A. 

THE CONSUMER FUNDS ABSORBED FIGURES 

The dire lack of uniform statistical data has necessitated the use of 
two types of series to represent consumer funds absorbed: "Income 
produced" and "value added by manufacture." For the subdivision^ 
of mining and quarrying, i.e., coal mining, metal mining, and oil and 
gas producing, neither of these series was available.'-' In place of 
series for consumer funds absorbed on the charts for these industries, 
therefore, indexes of "value of products" are shown. Similarly in- 
dexes of "net sales" were used in the case of individual corporations. 
Estimates of "income produced" have been used for aU of the major 
industrial groupings except manufacturing, and for the subdivisions 
of transportation and other public utilities. For all manufacturing 

w These figures have been made available through the courtesy of Mr. Robert R. Nathan, Chief of the 
National Income Division. Department of Commerce. 

'" "Income produced" estimates were available beginning in 1929, but they could not be related to the 
base period. 



132 OONOENTRATION OF ECONOMIC POWjcxi 

and the subdivisions of manufacturing, the indexes have been based 
on "value added by manufacture." 

"Incpme produced" is a concept developed in connection with esti- 
mates of national income, and as has been noted above, does not con- 
form exactly with the concept of consmner funds absorbed. For 
"national income produced," as defined by the Department of Com- 
merce, is a — 

measure of the net value of all commodities produced and all services rendered in 
the country in each year. This total can be described as representinjg the gross 
value of all goods and services produced, minus the value of all raw materials and 
capital equipment consumed in the processes of production (i.e., depreciation and 
obsolescence) . It may also be designated as the value of goods and services cqd- 
Bumed plus the value of additions to the national wealth during the year. '* 

The principal objection to using "income produced" as a measure of 
consumer funds absorbed arises not from differences in concept but 
from the way it has to be computed. "Income produced" is derived 
by adding positive business savings to, or deducting negative business 
savings from, income paid out. "Income paid out" is the summation 
of wages, salaries, and other labor income, dividends, interest, entre- 
preneurial withdrawals and net rents and royalties. "Business 
savings" is the questionable item because it includes such things as 
write-ups of assets or inventories which result from accounting prac- 
tices rather than actual changes in the economic structure of an 
industry. The Department of Commerce is well aware of the shortr 
comings of their estimates in this respect, but the limitations of the 
basic statistical data prevent the elimination of these accounting 
items. '* 

"Income produced," of course, includes dividends and interest. 
These series are therefore affected by the industrial shifts in dividends 
and interest resulting from the changes in the income-tax law in 1934. 
However, the disparities are less significant in the "income produced" 
series than in dividends and interest because the other payments 
included in "income produced" exert a steadjdng influence. The 
estimate of "income produced" for 1934 iu all industries is based on the 
1934 industrial classification of dividends and interest. Strictly 
speaking, therefore, beginning in 1934 the figures for consumer funds 
absorbed, which are based on "income produced, '^ are not completely 
comparable with those for 1933 and earlier years. 

"Value added by manufactm*e," which is the second type of series 
used to represent consmner funds absorbed, is the increment created 
by the manufacturing processes. It measures the net addition to 
the value of commodities already in existence, i. e., raw materials, 
semimanufactured materials, and fuel. ' The Census of Manufactures 
calculates this value by deducting the cost of materials, containers, 
fuel, and purchased electric energy used from the value of products.^ 

It is apparent from these brief descriptions of "income produced" 
and "value added" that the methods of calculation used give some- 
what different results. "Income produced" is obtained by adding • 
specified items and "value added" by deducting certain costs. "In- 
come produced" for all manufacturing industries combined is there- 
fore smalle r than "value added by ihanufacture" as shown by the 

" Robert R. Nathan, op. cit., p. 3. 

'• For further discussion on this point see Nathan, Op. cit., pp. 4-8. 

*• In 1937 the census began deductinf; cost of contract work, also, to arrive at "value added," but except 
In a few industries in which cost of contract work could be deducted for the entire period, it has been included 
In order to make the "value added" figures consistent throughout the period. The exceptions are noted 
In appendix B on the respective tables for the indtistries affected. 



CONCENTRATION OF ECONOMIC POWER 133 

census for it excludes a number of costs such as taxes,- rent, insurance, 
and telephone, which are included in "value added." 

"Value added by i^nanufacture" not only differs from "income 
produced," but it is available only for manufacturing industries and 
for census years. Hence the "income produced" figures of the 
Department of Commerce and National Buifeau of Economic Research 
have been used except for manufacturing and its subdivisions because 
they afford the most consistent and complete estimates available for 
all the major industrial segments. Since the data are presented as 
index numbers rather than the actual amounts of consumer funds 
absorbed, it is believed that the "income produced" figures are repre- 
sentative of the trend in consumer funds absorbed since 1919. Ob- 
viously, insofar as the discrepancy did not vary from year to year, the 
indexes are not affected. 

THE INDtJSTRIES SELECTED TOR STUDY 

The tables presented in appendix B, like the charts and discussion 
in the text, can be divided into three broad classifications: Those 
giving the basic data for individual industries, those giving data for 
major economic segments or groups of industries, and those giving 
the figures for individual companies and for all corporations. Two 
considerations have been paramount in the selection and grouping 
of industries and companies. In the first place, both , the major 
industrial groups and the individual industries and companies have 
been selected for study because of their size and importance in the 
national economy. In the second place, obviously the only statiptics 
usable are those which afford reasonably comparable series. The 
study was severely limited in its scope by the dearth of statistical 
information. 

Thus a large range of industries, especially of large corporations, 
had to be omitted. In the latter instance only 3 out of 200 or more 
are considered. But vitally important iadustries, such as the rayon 
industry and the manufacture and distribution of ^as, have also 
been excluded because of numerous vital gaps iu the statistical data. 
Similarly, while considerable prelimiuary work was done on the 
rubber tires and tubes and silk and rayon goods industries, the former 
was not included for presentation because the dividends and interest 
series was highly unreliable, and the latter was left out because 
changes in the census classification affected the comparability of the 
data beyond possibility of satisfactory adjustment. 

Moreovei-j some industries are presented in combinations which 
have been governed by the form of the statistics rather than by the 
similarity of their economic behavior. Thus the combination of 
baking and confectionery is a marriage of statistical convenience. 
The dividends and interest series was available only for the two 
together. Hence the other series, while available for each of them, 
were combined, despite the fact that analytical convenience and 
economic considerations make preferable a discussion of the baking 
industry by itself. 

For the major industrial groups the classification follows in the 
main that adopted by the National Income Division of the Depart- 
ment of Commerce. The scope of each group is shown in the foot- 
notes to the respective tables gjven in appendix B.^^ 

" For greater detail consult XJ. S. Department of Commerce, -N«i«nn«i ixuvtmA is tli» 
1929-35 



APPENDIX B 



STATISTICAL TABLES 

Data basic to charts in the text showing employment, produc- 
tion, pay rolls, dividends and interest, consumer funds absorbed and 
consumer eflPort commanded are given for the following industries, 
industry groups, or companies : 



I, Baking and Confection- XXIII-A. 

ery. 
II. Knit Goods. 

III. Canning and Preserving. 

IV. Agricultural Imple- XXIV. 

ments. XXV. 

V. Petroleum Refining. XXVI. 

VI. Automobile. 

VII. Boot and Shoe. XXVII. 

VIII. Slaughtering and Meat XXVIII. 

Packing. XXIX. 

IX. Cotton Goods. XXX. 

X. Woolen and Worsted XXXI. 

Goods. XXXII. 

XI. Chemical. 

XII. Electrip. Light and XXXIII. 

Power. 

XIII. Iron and Steel. 

XIV. Paper and Pulp. XXXIV. 
XV. !i"lour and Other Grain XXXV. 

Mill Products. 
XVI. Oil and Gas Producing. XXXVI. 

XVII. Furniture. 

XVIII. Metal Mining. XXXVII. 

XIX. Tobacco. 
XX. Coal Mining. 
XXI. Lumber and Timber XXXVII-A. 

Products. 
XXII. Steam Railroads. 
XXIII. Agriculture. 



Employment and Labor 
Income of Family 
Workers and Hired 
Workers. 

All Manufacturing. 

Mining. 

Transportation and 
Other Public UtiUties. 

Construction. 

Government. 

Finance. 

Service. 

Trade. 

General Motors Corpo- 
ration. 

United States Steel Cor- 
poration and Subsid- 
iaries. 

Bell System. 

Telephone and Tele- 
graph. 

Interest, Taxes, and 
Cash Dividends. 

Employment, Produc- 
tion, and National 
Dividend. 

National Income, Labor 
Income,^ and Divi-. 
dends and Interest. 

135 



256147 — 40— Ko. 7 10 



136 



OO^X7ENTRATION OF ECONOMIC POWER 



Table I. — Social performance of the baking and confectionery industry, 1921-S8 

[1927=100] 



Year 


Employ- 
ment ' 


Produc- 
tion > 


Consumer 
effort com- 
manded 3 


Consumer 
funds ab- 
sorbed * 


Pay rolls ' 


Dividends 

and 
interest * 




235,158 

(') 

(') 

(') 

(') 

96.1 

95.4 

95.2 

98.1 

100.0 

103.7 

112.3 

108.3 

99.5 

93.6 

98.9 

111.9 

114.9 

118.6 

124.6 

121.5 






• $875, 019 
(') 
(') 

72.1 
(J) 

81.4 
(J) 

88.4 
C) 

100.0 
(') 

110.5 
(') 

94.2 
(') 

67.4 
(') 

76.7 
(') 

94.0 
(') 
(') 


« $293, 206 
C) 
(') 
(J) 

(') - 

92.0 

94.1 

93.7 

97.6 

100.0 

103.5 

112.9 

109.8 

95.8 

80.2 

78.5 

93.4 

98.3 

103.9 

115.3 

113.4 

(') 


« $75, 285 


X919 


(') 
(■) 
(') 
(') 
(') 
(') 
89.6 
98.3 
100.0 
102.0 
105.8 
104.7 
94.3 
85.7 
84.4 
93.2 
98.7 
104.2 
108.0 
(') 
(') 


(') 
(J) 

75.9 
(') 

84.8 
(') 

89.3 
(') 
100.0 

105. 2 
(') 

107.0 
(') 

89.9 
(') 

90.2 
(') 
100.0 

(') 
(') 


(') 


1930 


(') 


1921 .. 


O 


1922 


(') 


1923 


(') 


1924 . — 


(•) 


1925 


(') 


1926 -- 


88.2 


1927 


100.0 


1928 


106.8 


1929 .. 


100.9 


1930 


112.4 


1931 


90.0 


1932 


75.2 


1933 


56.6 


1934 


78.3 


1935 • 


72.3 


1936 - - 


85.4 


1937 


(') 




(') 


1939 


O 







1 U. 8. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. The indexes 
for "Baking" and "Confectionery" have been combined by using weights based on the average number of 
wage earners and average weekly pay rolls in the respective industries in 1923-25. 

' Inde.tes for "Bread and other bakery products" and "Confectionery" shown in the National Reserch 
Project, Production, Employment, and Productivity in 59 Manufacturing Industries, Part 2, pp. 18 and 58, 
have been combined by using weights based on the respective value of products in these Industries in 1923 
and 1925. The indexes were extended through 1937 by means of Census of Manufactures data. 

3 Index of consumer funds absorbed divided by Snyder's index of the general price level. 

* Value added by manufacture, as computed by the Census of Manufactures for "Bread and other bakery 
products" and "Confectionery." 

5 Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the 
U. S. Bureau of Internal Revenue. 

' Thousands of dollars. 

' Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 
Table II. — Social performance of the knit goods industry, 1919-38 ' 

[1927=100] 



137 



Year 


Employ- 
ment • 


Produc- 
tion » 


Consumer 
effort com- 
manded * 


Consumer 
funds ab- 
sorbed » 


Pay rolls « 


Dividends 

and 
interest • 


Amnunt 1p hasfi ynar 


190,283 
90.7 
(«) 

86.1 

(«) 

102.0 

91.2 

98.1 

98.4 

100.0 

101.7 

109.6 

100.2 

93.5 

91.5 

99.6 

106.9 

114.6 

118.4 

120. 4 

107.6 

(») 






' $381. 360 

72.8 
(») 

69.4 
(?) 

90.1 
(«) 

89.2 
(•) 

100.0 
(') 

112.6 
(») 

75.8 
(•) 

66.3 
(') 

76.3 
(") 

86.7 
(«) 
(») 


' $188, 163 
66.5 
(?) 

70.2 
(?) 
89.5 
79.2 
89.7 
93.5 
100.0 
101.1 
112.1 
94.5 
79.5 
66.5 
70.2. 
86.0 
97.2 
100.7 
104.8 
92.9 


'$22,906 

(«) 

(') 

(?) 

(') 

(») 

(«) 

(?) 
92.8 
100.0 
99.6 
107.6 
86.7 
50.8 
31.7 
31.6 
42.4 
47.9 
75.0 

(») 

(') 

(«) 


1919 -- 


71.4 
(«) 

76.5 
(«) 

93.0 
(«) 

96.8 
(«) 

100.0 
(?) 

117.4 
(«) 

108.7 
(') 

115.8 
(«) 

129.3 
(«) 

130.9 
(») 
(') 


72.1 
(«) 

73.1 
(?) 

93.9 
(') 

90.1 
(?) 
100.0 

(?) 

107.1 
(») 

86.1 
(«) 

87.1 
(') 

89.8 
(«) 

92.2 
(?) 
(») 


1920 


1921 


1922 


1923 - 


1924 _ 

1925 --. 


1926 


1927 


1928 :.. 


1929. 


1930 


1931 


1932 


1933. 


1934 


1935 


1936 


1937. 


1938 


1939.. 





1 Changes in the classification of establishments placed by the Census of Manufactures in the knittgoods 
industry has necessitated numerous adjustments in order to secure comparable figures throughout the 
period. The production index computed by the National Research Project was altered slightly in 1933 and 
1935 because of revisions in census data, and an estimate was made for 1937. The index for knit goods is 
composed of indexes for 4 subgroups of products: Hosiery, knitted underwear, knitted outerwear, and knit 
cloth. Unfortunately, census changes made it impossible to continue the index for knit cloth after 1931 
and for the same reason there were no figures for knitted underwear in 1937 comparable with earlier years. 
For the census years 192C-37, therefore, an index was constructed for hosiery and outerwear, following the 
method devised by the National Research Project and the 2 indexes compared for the overlapping years 
1929-35. Our index was adjusted downward by the ratio of the National Research Project index for all 
4 products to the new index for Jiosiery and outerwear in 1931 , the last year for which data were available for 
aU 4 products. 

Similarly with respect to data on employment and pay rolls the Bureau of Labor Statistics published 
composite indexes for knit goods from 1923 until 1937, discontinuing them when they adjusted their indexes 
to the 1937 Census of Manufactures. They continued, however, to publish indexes for the 4 subgroups: 
Hosiery, underwear, outerwear, and knit cloth. Thus it was possible to combine these by using the same 
weights the Bureau of Labor Statistics used for earlier years. The census altered the hosiery classification 
in 1935 and consequently the indexes of employment and pay rolls in the knit-goods industry for 1935 and 
1937 are not completely comparable with those for earlier years. The change in classification invcrfved trans- 
ferring dyers and finishers of hosiery knitted by others from the dyeing and finishing textiles industry to the 
hosiery industry. 

The series showing consular funds absorbed computed from the figures for "Value added by manufac- 
ture" has likewise been affected in 1935 and 1937 by the addition of dyers and finishers of hosiery. There is 
an additional source of inconsistency in the figure for 1937. Contract work is of considerable importance in 
this industry. The cost of contract work has throughout been subtracted from value added by manufacture. 
But the '937 figures for contract work are not strictly comparable with those for earlier years because the cost 
of commission knitting and interplant transfer charges were excluded from the, census figures. The amount, 
however, is relatively small. 

» U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years 
except 1919 and 1921, which were estimated from Census of Manufactures data. 

' Figures for 1919-31 from National Research Project, Production, Employment, and Productivity In 59 
ManufacturiHg Industries, Part 2, p. 107. The method devised by the National Research Project has been 
used to continue the index through 1937; revisions of census data account for differences between the figures 
presented here and those computed by the National Research Project for 1933 and 1935. 

< Index of consumer funds absorbed divided by Snyder's index of the general price level. 

• Value added by manufacture as computed by the Census of Manufactures. Cost of contract work has 
been excluded throughout the period. 

' Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the U. 8. 
Bureau of Internal Revenue. 

' Thousands of dollars. 

) Comparable data not available. 



138 OONCENTRATION OF ECONOMIC POWER 

Table III. — Social performance of the canning and -preserving industry, 1919-38 ' 

[1927=100] 



Year 


Employ- 
ment* 


Produc- 
tion' 


Consumer 
effort com- 
manded * 


Consumer 
funds ab- 
sorbed • 


Pay roils » 


Dividends 

and 
interest • 




93, 574 
96.1 

(•) 
63.8 

(«) 
87.2 
77.6 
103.0 

m 

100.0 

120.2 
123.9 
94.7 
76.9 
100.6 
128.3 
138.4 
146.9 
165.8 
136.3 






' $239, 357 
90.1 
(») 
59.4 

m 

98.6 
(«) 

105.4 
(«) 

100.0 

(») 

132.0 
(') 

85.6 
W 

77.7 
(») 

109.4 
(«) 

133.7 
(') 
(') 


' $70, 415 
94.4 
(») 
69.8 

m 

90.0 
79.9 
106.1 
(») 

100.0 

(«) 

119.0 

113.6 

84.2 

59.8 

70.7 

91.9 

109.3 

111.0 

144.0 

113.6 


' $31, 250 


1919 - - 


78.2 

50.4 
(>) 

86.0 

83.8 
106.0 
113.9 
100.0 
119.6 
121.7 
129.0 
102.7 

76.0 
105.4 
111.3 
140.6 

156.3 

m 


89.2 
(») 

62.5 
(«) 
102.7 

106.5 

100.0 
(') 

125.7 
(') 
97.3 

m 

103.6 
123.7 
142.2 

m 
(») 


1920 - - 


(') 


1921 -..>.^ 


(») 


1922 ..;,- 


(«) 


1923 

1924 


(«) 


1925 


(') 


1926 - 


(•) 


1927 - 


100.0 


1928 


91.3 


1929 


107.8 


1930 - - 


134.0 


1931 


103.3 


1932 


87.0 


1933 - 


60.2 


1934 


80.9 


1935 


108.2 


1936 


149.7 


1937 


(') 


1938 


(') 




(«) 







> The industry is highly seasonal. Thus the amount of employment tends to remain high when com- 
pared with production and pay rolls which reflect part-time operations. See Biennial Census of Manu- 
factures, 1935, p. 77. 

' U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years except 
1919 and 1921 which have been computed from the Census of ^f anufactures. 

« Figures for 1919-35 from National Research Project, Production, Employment, and Productivity in 59 
Manufacturing Industries, Part 2, p. 28. The index was extended through 1937 by means of Census of 
Manufactures data on production. 

• Index of consumer funds absorbed divided by Snyder's index of the general price level. 

• Value added by manufacture as computed by the Census of Manufactures. 

• Excludes intercorr)orate dividend and interest payments. Compiled from unpublished data of the 
V. 8. Bureau of Internal Revenue. 

' Thousands of dollars. 

I Comparable data not available. 



CON<:rENTRATION OF ECONOMIC POWER I39 

■> 

Table IV. — Social performance of the agricultural implements industry, 1920-58 * 

[1927=100] 



Year 


Employ- 
ment* 


Produc- 
tion' 


Consumer 
effort com- 
manded ' 


Consumer 
funds ab- 
sorbed ' 


Pay rolls ' 


Dividends 

and 
interest • 


Amnnnt In hftSfi yftnr 


51,700 

(«) 

•) 

(') 

(») 

94.9 

74.8 

88.7 

101.5 

100.0 

113.7 

125.3 

99.2 

56.7 

31.4 

• 37.3 

62.2 

102.4 

122.9 

150.1 

109.2 






' $215, 657 
(«) 
(«) 

51.8 
(?) 

68.1 
(«) 

79.2 
(») 

100.0 
(?) 

141.1 
(») 

46.7 
(«) 

16.7 
(«) 

70.4 
(') 

130.0 
(«) 
(») 


' $75, 400 

(«) 

(«) 

(«) 

(') 

90.6 

70.3 

85.7 

102.0 

100.0 

115.6 

126.9 

88.7 

42.8 

19.3 

24.7 

44.5 

85.4 

111.4 

161.7 

109.2 


' $23, 716 
(«) 
(') 


1919 - 1 


(•) 

119.9 

51.9 

47.1 

69.8 

62.7 

78.5 

96.0 

100.0 

104.0 

128.7 

103.9 

35.5 

(«) 

10.8 

(») 

75.2 

113.1 

137.5 

109.9 

(«) 


(') 
(«) 

64.6 
(') 

70.9 
(?) 

80.0 
(?) 

•100.0 
(») 

134.4 
(») 

61.9 
(•) 

22.3 
(•) 

. 82.8 
(«) 

138.3 
(') 
(?) 


1920 . 


1921 


1922 


1923 - 


1:1 

^'V.6 


1924 


1925 


1926 


19^7 


100.0 


1928 


79 3 


1929 


134.4 


1930 


132.0 


1931 


76 6 


1932 


68.0 


1933 . 


27 8 


1934 


28.1 


1935 


218 


1936 


112.7 


1937 


(') 


1938 


(») 


1939 


(») 







• Tractors are included in this table. This made necessary^ kinds of adjustments. In the first place, the 
Index of agricultural implement production of the National Research Project does not include tractors. 
Consequently the National Research Project index was related to value of products in 1929, excluding trac- 
tors. To this was added the weighted aggregate value of wheel, tracklaying, and garden tractors produced 
in each year. The average unit value in 1929 for each type of tractor was used to compute the weight in 
•each instance. Since all of the value figures were obtained by weighting production of various types of 
implements by their unit values in 1929, the value figures could be conver ed into an index of production 
merely by relating them to a base year, which in this case was 1927. Th production figures for tractors 
•were obtained from Bureau of the Census reports on Manufacture and Sal -, of Farm Equipment and Re- 
lated Products for the respective years. 

In the second place, the series for consimier funds absorbed also had to be adjusted because the Census 
of Manufactures did not classify tractors with agricultural implements prior to 1931. "Value of products" 
for tractors for the p>eriod prior to J931 had to be obtained from the annual reports, Manufacture and Sede 
of Farm Equipment and Related Products. The^e were then converted to "value added" figures by apply- 
ing the weighted average of the ratio of "value added" to "value of products" for tractors as reported by the 
Census of Manufactures in 1931 and 1933. This estimated series of "value added" for tractors was added 
to the Census of Manufactures figures for "value added" for agricultural implements, excluding tractors. 
The resulting series for 1919-31 was adjusted to conform with census figures for 1931-37 by means of the ratio 
of census to estimated "value added" in 1931, the year in which the 2 series overlapped. 

' U. S. Bureau of Labor Statistics Indexes of employTnent and pay rolls for wage earners. 

» For 1920-36 the index of production for agricultural implements, excluding tractors, computed by the 
National Research Project, Production, Emplojmient, and Productivity in 59 Manufacturing Industries, 
Part 2, p. 4, has been adjusted by means of census data to include tractors. The series has been extended 
through 1938 by means of Bureau of the Census, Manufacture and Sale of Farm Equipment and Related 
Products, 193S, pp. 3-6. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

' Value added by manufacture as computed by the Census of Manufactures. The figures prior to 1931 
have been adjusted to Include tractors, which prior to that time were includiid with "Engines, turbines 
tractors, etc." 

• Excludes intercorporate dividend and interest payments. Compiled froia unpublished data of th« 
U. 8. Bureau of Internal Revenue. 

' Thousands of dollars. 

* Comparable data not avaUable. 



140 



OONCENTRATION OF ECONOMIC POWER 



Table V. — Social performance of the petroleum refining industry, 1919-38 

[1927 = 100] 



Year 


Employ- 
ment ' 


Produc- 
tion « 


Consumer 
effort com- 
manded 3 


Consumer 
funds ab- 
sorbed * 


Pay rolls i 


Dividends 

and 
interest • 




71, 234 
82.7 

88.7 

93.7 
87.4 
91.8 
100.8 
100.0 
95.3 
113.2 
113.6 
96.6 
89.8 
96.9 
109.0 
108.6 
110.8 
116.7 
110.0 






« $389, 651 
98.7 
(') 

88.6 
(') 

94.6 
(') 

125.0 
(') 
100.0 

(') 

132.8 
O 

80.5 
O 

80.6 
(■) 

92.5 
« 

125.6 
C) 
(') 


'$113,717 
78.9 
(') 

90.0 

(') 

91.4 

84.6 

92.1 

100.7 

100.0 

96.8 

115.5 

116.5 

94.5 

78.2 

79.0 

91.0 

96.4 

102.9 

123.5 

121.6 

(') 


•$184,142 


1919 


40.0 

47.0 

47.0 

54.0 

63.0 

73.0 

85.0 

93.0 

100.0 

112.0 

124.0 

118.0 

114.0 

103.0 

107.0 

112.0 

121.0 

135.0 

150.0 

147.0 


97.7 

93.3 

98.6 
(') 

126.3 
(') 

100.0 

(') 

126.4 
(') 

91.5 
(') 

107.5 
(') 

108.8 
(') 

133.6 
(') 
(') 


(') 


1920 


(') 


1921 


(') 


1922 


V) 


1923 


(') 


1924„ 


C) 


1925„ 


V) 


1926 - 


108.4 


1927 


. 100.0 


1928 - 


155.1 


1929.. 


152.6 


1930 


195.8 


1931 


163.6 


1932 . . -. 


82.3 


1933 


88.1 


1934 


(') 


1935.. 


(') 


1936 


114.6 


1937 


(') 


1938 




(') 







' U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years except 
1919 and 1921 which were estimated from Census of Manufactures data. 

' Federal Reserve Board index of production. 

' Index of consumer funds absorbed divided by Snyder's index of the general price level. 

< Value added by manufacture as computed by the Census of Manufactures. 

' Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the 
U. S. Bureau of Internal Revenue. 

• Thousands of dollars. 

' Comparable data not available. 

Note.— Due to a change in the method of reporting fuel consumed in 1929, the census estimated that the 
amounts shown for value added by manufacture in other years were understated between 15 and 20 percent 
as compared with 1929. The amount of value added by manufacture, as shown by the census in 1929, has, 
therefore, been reduced by 15 percent in order to make it more comparable '^th other years. (See Oensu» 
of Manufactures, 1931, p. ^71.) 



CONCENTRATION OP ECONOMIC POWER 



141 



Table VI. — Social performance of the automobile industry, 1919-S8 * 

[1927 = 100] 



Year 


Employ- 
ment » 


Produc- 
tion > 


Consumer 
effort com- 
manded « 


Constmier 
funds ab- 
sorbed » 


Pay rolls • 


Dividends 

and 
interest • 


Amount in base year 


269, 399 
92.9 
(«) 

57.6 
(«) 
109.5 
101.8 
115.1 
114.0 
100.0 
117.6 
121.1 
87.4 
77.3 
65.8 
65.9 
93.1 
105.0 
109.9 
129.8 
76.6 






'$1,469,136 
77.6 

51.6 
(») 

99.7 
(«) 

119.2 
(«) 
100.0 

(«) 

136.3 

(8) 

64.8 
(?) 

44.1 
(») 

76.6 

102.8 

(») 
(«) 


'$612,955 
80.1 

(8) ? 

52.0 
W 
107.8 
97.1 
116.6 
112.3 
100.0 
122.1 
119.6 
70.4 
57.2 
41.6 
41.1 
69.1 
89.0 
102.2 
123.4 
68.8 


'$233,629 
(?) 


1919 


49.2 

55.7 

39.7 

62.6 

98.9 

88.6 

109.7 

116.0 

100.0 

127.7 

153.8 

100.2 

73.2 

46.2 

62.9 

86.6 

119.5 

131.2 

141.0 

74.0 


76.8 
(«) 

54.3 
(') 

103.9 
(«) 

120.4 
(«) 
100.0 

{') 

129.8 
(«) 

73.6 
(«) 

58.8 
(') 

90.1 
(«) 

109.4 
(') 
(«) 


1920 


(?) 


1921 " 


(») 


1922 '... 


(') 


1923 , 


(') 


1924 


(') 


1925 


(') 


1926 - 


97.5 


1927 


100.0 


1928 


121.4 


1929 


100.1 


1930 


98.8 


1931... . 


74.2 


1932 


30.7 


1933 


30.4 


1934. 


37.6 


1935 


41.7 


1936 

1937 


120.3 

(') 


1938 


(') 


1939.... 


(«) 







' Motor vehicles and motor-vehicle bodies and parts, not including motorcycles. The Bureau of Labor 
Statistics adjusted its figures on employment and pay rolls to the census trend through 1933, but did not 
thereafter because the automobile firms reporting to the Bureau cover broader activities than are represented 
by the census totals. The adjustment was made here so that the employment and pay rolls series would 
correspond more closely with the data on consumer funds absorbed and the figures on production both of 
which have been derived from census figures. 

' U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for 1923-33, in- 
clusive. Beginning in 1934 the figures are appreciably lower than those published by the Bureau of Labor 
Statistics because they have been adjusted to conform to the trend shown by the figures of the Census of 
Manufactures. The indexes for 1919 and 1921 are based on the Census of Manufactures. 

' Figures for 1919-36 from National Research project, Production. Employment and Productivity in 59 
Manufacturing Industries, Part. 2, p. 144. The series was extended through 1938 by means of the Federal 
Reserve Board index of production. 

* Index of ronsumer funds absorbed divided by Snyder's index of the general price level. 

• Value added by manufacture as computed by the Census of Manufactures. 

' Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the 
U. S. Bureau of Internal Revenue. 
' Thousands of dollars. 
I Comparable data not available. 



142 OOISrOENTRATION OF ECONOMIC POWER 

Table VII. — Social performance of the boot and 8hoe industry, 1919-88 * 

[1927=100] 



Yeai 


Employ- 
ment' 


Produc- 
tion* 


Consumer 
effort com- 
manded « 


Consumer 
funds ab- 
sorbed • 


Pay rolls • 


Dividends 

and 
interest * 




203, 110 
103.9 
(«) 

90.3 
CO 
110.9 
101.2 
101.8 
100.0 
100.0 
97.0 
101.2 
94.4 
89.2 
.88.4 
93.9 
99.4 
99.6 
100.7 
106.1 
100.1 






» $450. 161 

97.7 
(•) 

86.4 
(') 

105.0 
(») 

98.6 
(•) 

100.0 
(«) 

100.2 
(•) 

70.3 
(•) 

59.3 
(') 

69.0 
(«) 

78.4 

8 


'$225,090 
93.6 
(•) 

91.1 
(•) 

111.2 
98.5 

100.3 
99.3 

100.0 
94.3 
98.8 
80.9 
72.5 
60.2 
63.1 
75.3 
76.5 
76.2 
85.0 
75.5 


'$20,037 


1919 


91.6 
86.0 
78.0 
88.5 
95.2 
86.3 
87.6 
91.4 
100.0 
99.8 
104.0 
86.4 
87.3 
86.4 
97.8 
99.4 
107.1 
116.5 
114.4 
113.7 
(«) 


96.7 
(') 

90.9 
(») 

109.4 
(») 

99.6 
(') 

100.0 
(•) 

95.4 
(«) 

79.9 
(?) 

79.1 
(«) 

82.0 
(.) 

83.4 
(«) 
W 


(•) 


1920 


(') 


1921 


(') 


1922 


(') 


1923 


(») 


1924 


(') 


1925 --. 


(') 


1926 


117.8 


1927 


100.0 


1928 - 


17u.2 


1929 


146.7 


1930 


157.9 


1931 


118.3 


1932 


86. S 


1933 ... . 


75.5 


1934... 


80.9 


1935 


86.7 


1936 


98.0 


1937 


\'^ 




1939- ..y 


(') 







' Boots and shoes other than rubber. 

' U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years 
except 1919 and 1921 which have been computed from the Census of Manufactures. 

» Figures for 1919-36 from National Research Project, Production, Employment, and Productivity in 
69 Manufacturing Industries, Part 2, p. 13. The index has been extended through 1938 by means of the 
Census of Manufactures and monthly production data compiled by the Bureau of the Census. 

* Index of consumer funds absorbed divided by Snyder's mdex of the general price level. 

• Value added by manufacture as computed by the Census of Manufactures. 

« Excludes intercorporate dividend and interest payments. Compiled from unpublished data of^the U. 3. 
Bureau of Internal Revenue. 
' Thousands of dollars. 
' Comparable data not available. 



CONCENTRATION OP ECONOMIC POWER 



143 



Table VIII. — Social performance of the slaughtering and meat packing industry, 

1919-88 

[1927=100] 



Year 


Employ- 
ment » 


Produc- 
tion' 


Consumer 
effort com- 
manded » 


Consumer 
funds ab- 
sorbed « 


Pay rolls > 


Dlvir-ends 

and 
interest ' 


Amount in base year 


119, 095 
120.6 
118.4 
115.2 
112.6 
111.4 
106.7 
101.1 
99.1 
100.0 
100.9 
102.9 
98.0 
89.5 
85.7 
95.0 
115.7 
97.9 
104.7 
107.0 
103.9 






• $393, 475 
117.8 
(') 

84.6 
(') 

104.1 
(') 

108.0 
(J) 

100.0 
(0 

117.0 
(') 
86.8 

73.1 
(') 

84.2 
(') 

102.2 
(') 
(J) 


• $161, 584 
1Q8.5 
126.0 
105.7 
100.2 
•103. 7 
101.0 
98.6 
98.9 
100.0 
101.2 
102.6 
97.4 
83.1 
66.4 
69.5 
94.9 
84.4 
92.3 
105.5 
105.5 
O 


* $43, 045 


1919 -- 


99.0 
88.0 
86.0 
95.0 
110.0 
112.0 
101.0 
99.0 
100.0 
103.0 
101.0 
97.0 
98.0 
96.0 
104.0 
118.0 
82.0 
99.0 
90.0 
95.0 


116.6 
(') 

89.1 
O 

108.4 
(0 

109.1 
(') 

100.0 
(') 

111.4 
(') 

98.6 

(') ■ 

97.5 

99.1 
O 

108.7 
(') 
(J) 


S 


1920- 


Itf21 


(') 


1922 


(') 


1923 


(0 


1924 


(') 


1925 


(') 


1926 


83.8 


1927 


100.0 


1928 


69.6 


1929 


117.7 


1930 - 


83.0 


1931 


52.7 


1932 


8.1 


1933 


27.4 


1934. 


53.9 


1935 


46.7 


1936 


62.7 


1937 


(') 


1938 


(') 


1939 


(') 







I U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. 

' Federal Reserve Board index of production. It was used in preference to that of the National Research 
Project because the latter seems not to.have included animals slaughtered for Government account, a factor 
of considerable importance especially in 1934. 

» Index of consumer funds absorbed divided by Snyder's index of the general price level. 

• Value added by manufacture, as computed by the Census of Manufactures. 

• Excludes intercorporate dividend and interest payments. Compiled -from unpublished data of the 
U. S. Bureau of Internal Revenue. 

• Thousands of dollars. 

' Comparable data not available 



144 



OONCIENTRATION OF ECONOMIC POWER 



Table IX. — Social performance of the cotton-goods industry, 1919-38 • 

[1927 = 100] 



Year 


Employ- 
ment > 


Produc- 
tion 3 


Consumer 
effort com- 
manded * 


Consumer 
funds ab- 
sorbed » 


Pay rolls > 


Dividends 

and 
interest • 




467, 596 
92.1 
92.3 
88.0 
88.7 

100.9 
87.4 
95.3 
96.3 

100.0 
90.3 
90.8 
76.3 
70.4 
63.4 
81.2 
84.4 
78.9 
83.9 
90.3 
77.1 






7 $687, 099 
122.8 
(«) 

82.4 
(») 

108.0 
(«) 

91.6 
(») 
100.0 

m 

89.9 
(') 

57.2 
(«) 

54.9 
(») 

53.9 

m 

79.4 

(«) 
(«) 


•$380,910 
91.2 

116.1 
84.2 
81.9 

104.2 
86.7 
93.0 
93.2 

100.0 
83.6 
85.2 
65.7 
57.7 
41.5 
57.0 
64.5 
62.3 
70.1 
82.3 
63.3 


'$47,017 


1919 . - 


81.2 
80.4 
74.6 
86.6 
94.9 
80.6 
92.8 
94.7 
100.0 
89.6 
95.3 
70.8 
70.0 
64.6 
81.1 
69.9 
73.1 
91.1 
94.8 
75.6 


121.6 

(») 

86.7 
(«) 
112.5 
(») 

92.5 
(«) 
100.0 

(«) 

85.6 
(») 

65.0 
(«) 

73.2 
(«) 

63.4 

m 

84.5 

(«) 

(9) 


1920 --- 


(S) 


1921 .. 


(') 


1922 - 


(') 


1923 - 


(') 


1924 


m 


1925 


w 


1926 


115.5 


1927 -- 


100.0 


1928 .- 


104.5 


1929 -- 


103.2 


1930 


84.2 


1931 


54.0 


1932 - 


35.9 


1933.. 


36.9 


1934 - 


58.5 


1935 


40.9 


1936 


55.8 


1937... 


(«) 


1938 . 


(') 


1939. - 


(«) 



1 Since 1935 the Census of Manufactures has included what it formerly classified as the "cotton goods" 
industry in the related-industry group "cotton manufactures." It also broke down "cotton goods" into 
"cotton woven goods (over 12 inches in width)" and "cotton yarn and thread." Certain parts of the in- 
dustry were shifted to a new classification "dyeing and finishing cotton, rayon and silk." 

On the other hand, goods composed of cotton and rayon or silk were all transferred to cotton in 1935 and 
1937 whereas in former censuses some of the mixed fabrics were tabulated in the silk and rayon goods industry 
if those fibers formed the chief value of the material. There is no way of determining to what extent these 
are compensating shifts. The combined figures for the "cotton woven goods (over 12 inches in width)" and 
"cotton yarn and thread" industries for 1935 and 1937 are, according to the census, "roughly, but not exactly, 
comparable with the 'cotton-goods' industry figures for 1933 and earlier years * * *" In this study 
the 2 subdivisions of the former "cotton-goods" industry have been combined. 

The National Research Project index of production, based on the production of certain types of cotton 
woven goods and yarns selected by them from the items classified by the Census of IManufactures under the 
cotton goods industry, has been used in preference to the index of the Federal Reserve Board which is based 
on all cotton consumed. The former conforms more closely with the coverage of the indexes for employ- 
ment, pay rolls, and consumer funds absorbed, all based on census data. The National Research Project 
used the index of the Federal Reserve Board to interpolate for intercensal years. It was therefore used to 
extrapolate the National Research index through 1938. 

2 U. S. Bureau of Labor Statisties indexes of employment and pay rolls for wage earners. Despite the 
shifts in census classification noted below, the Bureau found that no adjustment was necessary in these 
indexes. 

•Figures for 1919-36 from National Research Project, Production, Employment, and Productivijy in 
59 Manufacturing Industries, Fart 2, p. 64. The series was extended through 1938 by means of the Federal 
Reserve Board index of cotton consumption. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

5 Value added by manufacture as computed by the Census of Manufactures. Cost of contract work 
has been excluded throughout the period. 

« Excludes intercorporate dividends and interest payments. Compiled from unpublished data of tha 
U. S. Bureau of Internal Revenue. 

' Thousands of dollars. 

• Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 



145 



Table X. — Social performance of the woolen and worsted^goods industry, 1919-38 ^ 

[1927 = 100] 



Year 


Employ- 
ment > 


Produc- 
tion 3 


Consumer 
effort com- 
manded < 


Consumer 
funds ab- 
sorbed ' 


Pay rolls ' 


Dividends 

and 
. interest • 




154, 361 
108.0 
(«) 
105.2 

126.1 
112.9 
107. 
97.0 
100.0 
95.8 
95.3 
77.5 
77.4 
64.6 
82.4 
77.9 
104.3 
101.6 
100.2 
81.0 






' $315, 870 

126.6 
(«) 

112.6 
(«) 

139.2 
(*) 

106.8 

:*) 

100.0 

(«) 

102.7 
(«) 

68.9 
(») 

62.8 
(') 

83.7 
(») 

91.2 
(«) 
(•) 


' $173, 822 
96.7 

100.6 
(•) 
128.8 
115.2 
110.2 
99.2 
100.0 
93.5 
94.6 
71.4 
67.7 
45.9 
58.7 
58.0 
84.4 
82.1 
88.8 
66.6 


'$17,942 


1919 ... - 


96.8 
85.8 
94.7 
101.2 
122,4 
102.1 
105.9 
98.9 
100.0 
94.8 
95.5 
70.3 
77.2 
64.0 
82.6 
69.1 
109.1 
106.4 
101.1 
75.2 


125.3 

(*) 

118.5 
(») 

145.0 
(') 

107.9 
(«) 

100.0 

(«) 

97 9 
(«) 

78.3 
(») 

83.7 
(») 

98.5 
(«) 

97.0 

(») 


1920 


(8)C 


1921 


(!) 


1922 


(') 


1923 


W 


1924 . .... . 


(') 


1925 . . - 


(8) 


1926 - 


145.5 


1927 


100.0 


1928 


90.4 


1929 

1930 


80.7 
60.5 


1931 


41.4 


1932 


22.6 


1933 


24.7 


1934 


43.5 


1935.. 


33.3 


1936 _- 

1937 


74.4 


1938 


(8) 


1939 


(*) 







' Because of changes in the Census of Manufactures classification of this industry in 1935 the figures for 
1935 and 1937 based on census data are not completely comparable with those for earlier years. Prior to 1935 
the census classification "woolen goods and worsted goods" was used. This was changed to "wool and hair 
manufactures" in 1935. The principal changes were the transfer of woven felts and the dyeing and finishing 
of woolen and worsted goods to the woolen and worsted-goods industry and the addition of haircloth. 

Due to these changes in the census figures the Bureau of Labor Statistics adjusted its indexes of employ- 
ment and pay rolls to movements of selected census data on the assumption that such movements would 
agree closely with those of the former census series. But the Bureau did not find the changes in the compo- 
sition of the census totals between 1933 and 1935 "sufficiently significant to vitiate comparisons of the 1933 
and 1935 totals." The indexes in 1937 are slightly lower than the census totals. 

'U.S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years except 
1919 and 1921 which were estimated from figures given in the Census of Manufactures. 

3 Figures for 1919-35 from National Research Project, Production, Employment, and Productivity in 59 
Manufacturing Industries, Part 2, p. 229. The index has been extrapolated through 1938 by means of the 
Federal Reserve Board index of wool machinery activity. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

' Value added by manufacture as computed by the Census of Manufactures. 

•Excludes intercorporate dividend and interest payments. Compiled from unpublished data of th« 
U.S. Bureau of Internal Revenue. 

' Thousands of dollars. 

' Comparable data not available. 



146 



CK)NOENTRATION OF ECONOMIC POWER 



Table XI. — Social performance of the chemical industry, 1919-S8 * 

[1927 = 100] 



Year 


Employ- 
ment > 


Produc- 
tion 2 


Consumer 
effort com- 
manded < 


Consumer 
funds ab- 
sorbed ' 


Pay rolls » 


Dividends 

and 
interest • 




65, 559 

(») 

(«) 

(«) 

(') 

(«) 

(») 

104.2 
(») 

100. 

118.1 
108.1 
92.5 
82.6 
100.7 
125.6 
125.3 
134.9 
150.5 
125.4 






' $314, 213 
(«) 

(') 
(') 

91.6 
(») 
100.0 

w . 

131.2 

(«) 

101.6 
(») 

88.6 
(«) 

117.8 
(«) 

165.6 
(«) 


'$83,223 

(?) 
(?) 
(') 
(») 
(«) 

100.4 

(?) . 

100.0 

(•) 

120.2 
103.8 
84.4 
64.7 
75.0 
96.6 
102.0 
117.3 
148.8 
124.4 


•' $74, 727 


1919 - - - 


65.6 

80.9 

51.3 

69.9 

88.1 

78.7 

87.8 

97.5 

100.0 

109.4 

133.7 

115.9 

104.1 

89.4 

106.4 

114.7 

125.5 

141.7 

163.4 


(«) 
(») 
(«) 
(') 
(') 
(«) 
92.4 

100.0 

125.0 
(?) 

115.3 
(«) 

118.1 

138.2 

176.0 
(«) 
(«) 


1920 - 


(') 


1921 - 


(«) 


1922 


(») 


1923 


(«) 


1924 . 


(«) 


1925. 


(') 


1926 


(') 


1927 


100.0 


1928 


110.6 


1929 


102.5 


1930 


137.6 


1931 


99.6 


W32 


91.7 


1933. 


60.2 


1934 


63.7 


1935. 


141.6 


1936 . 


135.0 


1937 


(•) 


1938 


(») 


1939 


(•) 







> Includes acids, compounds, coal-tar products, plastics, and compressed and liquefied gases, which are 
Included in the Census of Manufactures under "Chemical, not elsewhere classified" and "Compressed and 
liquefied gases." ■-" 

Figures for employment, pay rolls, and consumer funds absorbed cannot be presented for years prior to 
1925 because of changes in classification of the chemical industry by the Census of Manufactures. 

As was indicated on p. 130 above, the dividends and interest series for the Chemicals and Allied Products 
industry was one of those most seriously affected by the change in industrial classification made by the 
Bureau of Internal Revenue in 1934. The amount of discrepaacy is hard to assess. 

' Census of Manufactures figures for wage earners and wages for census years; interpolations for intercensal 
years have been made by using the Bureau of Labor Statistics indexes for the subgroup "chemicals." 

' Figures for 1919-36 from National Research Project, Production, Employment, and Productivity in 59 
Manufacturing Industries, Part 2, p. 43. The index has been extended through 1937 by means of Census of 
Manufactures data. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 
» Value added by manufacture as computed by the Census of Manufactures. 

• Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the U. S. 
Bureau of Internal Revenue for "chemicals proper, acids, compounds, etc." 

' Thousands of dollars. 

' Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 



147 



Table XII. — Social performance of the electric light and power industry, 1919-38 * 

[1923-25 = 100] 



Year 


Employ- 
ment ' - 


Produc- 
tion s 


Consumer 
eSort com- 
manded * 


Consumer 
funds ab- 
sorbed ' 


Pay rolls « 


Dividends 

and 
interest ' 


Amount in base years - - . 

1919 . 


189, 300 
57.1 
62.9 
65.2 
71.9 
93.8 
101.4 
104.8 
118.6 
124.0 
132.4 
143.6 
147.9 
137.2 
119.2 
113.1 
120.3 
121.8 
128.4 
135.1 
129 2 






' $727, 700 
44.7 
52.5 
56.4 
69.1 
87.3 
100.3 
112.4 
129.8 
141.8 
165.6 
189.6 
196.7 
184.3 
150.9 
134.7 
126.7 
133.8 
143.4 
154.3 
146.8 

f (8) 


' $286, 600 
48.8 
61.7 
64.6 
67.7 
88.0 
103.9 
108.2 
124.0 
128.3 
139. 8 
150.9 
151.1 
134.3 
105.8 
9.5.5 
103.4 
108.0 
125.6 
152.3 
150.5 


'$363,900 
40.3 


70.7 
66.5 
78.1 
91.9 
98.1 
110.0 
122.7 
132.9 
146.6 
164.0 
161.4 
154.8 
139.6 
143.7 
153.9 
167.4 
191.7 
207. r 
195.1 
(?) 


43.0 
45.3 
57.6 
72.7 
88.2 
101.3 
110.2 
127.3 
139.0 
157.7 
177.2 
194.8 
204.8 
191.0 
175.0 
154.5 
153.8 
155.9 
160.7 
159.6 
(') 


1920 - 


43.0 


1921 - -- 


48.6 


1922 


65.2 


1923 


83.4 


1924 . 


99.8 


1925 ... 


116.9 


1926 


130.2 


1927 .. 


146.7 


1928 -- 


172.5 


1929 - 


200.2 


1930 .-. 


228.0 


1931 


234.7 


1932 - 


213.2 


1933 .-. -.. 


196.2 


1934 


170.8 


1935 


172.2 


1936 --- . 


176.7 


1937 - 


181.3 




177.6 


1939 


(») 







1 Privately owned electric utilities only; municipal. Federal, and State owned electric utilities are in- 
cluded under "Government." All series except production are based on estimates of the National Bureau 
of Economic Research which cover the period 1919-35, inclusive. Estimates for the remaining years are 
rough approximations based on figures of the Department of Commerce for electric light and power and 
manufactured gas. In all other industries where indexes have been based on both sources, the Department 
of Commerce estimates have been used for the period beginning with 1929 and estimates for other years 
have been adjusted to conform with Commerce figures. The different procedure was adopted in this indus- 
try because it seemed preferable to show only the electric light and power industry, and the Department of 
Commerce does not show estimates for dividends and interest and income produced exclusive of manufac- 
tured gas. As will be explained below, the differences between the 2 sources for some series are sufficient to 
make the extrapolations extremely tentative. It is possible also that the data now available in the 1937 
census of the electric light and power industry would cause the National Bureau to revise some of its esti- 
mates for the years 1932 through 1937. 

The production figures are based on a revised series of electrical energy produced by privately owned elec- 
tric utilities. It was compiled by the Federal Power Commission and shown in their volume on Electric 
Power Statistics, 1938, p. 5. The series is comparable throughout the period. 

Both the Department of Commerce and National Bureau have estimated employment and pay rolls for 
the electric light and power industry from census data. They have used different methods of interpolating 
however, giving rise to minor differences in intercensal years. The National Bureau series have been ex- 
tended through 1938 by using census figures for 1937 and estimating for 1936 and 1938 on the basis of tha 
year-to-year changes in the Department of Commerce figures for these years. The employment and pay- 
roll data can thus be regarded as comparatively consistent throughout the period. 

In order to compare estimates of dividends and interest made by the National Bureau of Economic Re- 
search and by the Department of Commerce, the former's estimates for electric light and power and manu- 
factured gas were combined. While both used the figures of the Bureau of Internal Revenue, there exist 
marked differences in the estimates especially in some of the overlapping years, attributable in part to the 
fact that the National Bureau made adjustments based on census data while the Department of Com- 
merce did not use census material. But the 2 estimates are within 3 percent of each other in 1935 and the 
estimates for subsequent years have been made by applying the index (1935 = 100) of the Department of 
Commerce data, including manufactured gas, to the 1935 flgiu'e of the National Bureau for electric light and 

Eower alone. The Department of Commerce estimates for 1937 and 1938 are preliminary since they are 
ased on changes in the corporate sample rather than complete information later available in the Statistics 
of Income^ The resulting index must be regarded as subject to substantial corrections for the years 1936-38, 
inclusive. On the basis of the National Bureau estimates it would appear that the index of dividends and 
interest in 1934 would have been about 180, using the 1933 ix.dustrial classification, instead of 171 as shown 
in the table and chart. 

Figures for consumer funds absorbed are based primarily on income produced as estimated by the National 
Bureau. The extrapolations for 1936-38, inclusive, have been made by applying the index (1935=100) of 
the Commerce estimates, including manufactured gas, to the National Bureau estimates for electric light 
and power for 1935. The income produced series, it should be remembered, is affected by the discrepancies 
found in the dividends and interest series plus those in the 2 sets of estimates of business savings. On the 
other hand, since the 2 estimates of wages and salaries, which are also included in income produced, are 
comparatively close, these would tend to reduce the probable disparities in the index for 1936-38 which 
result from the method of extrapolation used here. Nevertheless, it ^houid be kept in mind that there is a 
possibility of considerable error in the estimates of consumer funds Absorbed for these years. 

' All employees and salaries and wages. The figures for 1919 to 1935, inclusive, are estimates of the National 
Bureau of Economic Research which have been extrapolated on the basis of the Census of [Electrical Indus- 
. tries for 1937 and estimates of the Department of Commerce. 

» Based on kilowatt-hours of electric energy produced by privately owned electric utilities as compiled,, 
by the Federal Power Commission. 

• Index of consumer funds absorbed divided by Snyder's index of the general price level. 
» Income produced. 

• Excludes intercorporate dividend and interest payments and short-term interest. 
' Thousands of dollars. 

• Comparable data not available. 



148 



OONOSNTRATION OF ECONOMIC POW^R 



Table XIII — Social performance of the iron and steel industry, 1919~S8 * 

[1927 = 100] 



Year 


Employ- 
ment 2 


Produc- 
tion 3 


Consumer 
eflort com- 
manded * 


Consumer 

funds 
absorbed ' 


Pay rolls > 


Dividends 

and 
interest ' 


Amount in base year 

1919 ■ 


389, 270 
107.1 
(}) 

65.4 
(«) 
109.2 
101.5 
102.8 
105.5 
.100.0 
100. 5 
107.8 
94.4 
71.5 
60.4 
74.2 
90.1 
96.2 
111.9 
129.0 
95.0 






' $1, 219, 534 
108.4 

(8) 

43.9 

(8) 

105.8 

(8) 

105.1 

(8) 

100.0 

(8) 

133.1 

(8) 

51.1 

(8) 

39.5 

(8) 

73.4 

(') 
133. 4 

(') 
(8) 


' $645, 534 
■ 110.3 
(«) 

54.9 
(') 
108.1 
99.8 
102.4 
106.5 
100.0 
104.0 
113.3 
90.7 
55.4 
28.3 
41.9 
56.9 
71.0 
96.2 
126.7 
71.3 


' $209, 166 


78.0 

96.8 

44.8 

78.6 

98.7 

82.7 

99.5 

106. 6 

100.0 

115.2 

126.6 

93.2 

60.9 

33.5 

55.3 

61.8 

81.1 

112.8 

121.0 

68.0 


107.3 
(») 

46.2 
(«) 

110.2 
(«) 

106.2 
(«) 

100.0 

(«) 

126.8 
(«) 

58.1 
(«) 

52.7 
(«) 

86.4 
(«) 

141.9 
(«) 
(«) 


1920 . 


(') 


1921.- 


(8) 


1922 


(8) 


1923 - 


(8) 


1924 


(i) 


1925 


(8) 


1926.. 1 


98.0 


1927 , 


100.0 


1928 


101.3 


1929 


122.6 


1930.... 


112.0 


1931. ..; 


72.6 


1932 


40.4 


1933 -. 


21.4 


1934 


48.0 


1935 


98.6 


1936 . 


59.2 


1937 - 1. 


(«) 


1938 -. 


(•) 


1939 


(8) 







1 Includes blast furnaces and steel works and rolling mills. Considerable difficulty was experienced in 
securing homogeneous dividends and interest figures. This series is based on the classification used by the 
Bureau of Internal Revenue called Iron and Steel — products of blast furnaces, rolling mills, foundries, etc., 
and represents net payments. 

In addition to these figures, there is a series "Total dividends paid" (i. e., cash dividends) compiled by the 
American Iron and Steel Institute. In the next table this series is compared with the cash dividends paid 
as compiled by the Bureau of Internal Revenue. 

Cash dividends paid by the iron and steel industry as compiled by the Bureau of Internal Revenue and tht 
American Iron and Steel Institute 





Amount (thousands of 
dollars) 


Indexes, 1927= inn 


Year 


Bureau of 
Internal 
Revenue 


American 
Iron and 

Steel 
Institute 


Bureau of 
Internal 
Revenue 


American 
Iron and 

Steel 
Institute 


1919 




$138, 720 
138, 343 
107,012 
103, 954 
121, 756 
130,082 
114, 618 
124, 590 
152, 220 
160, 438 
202, 193 
192, 004 
106, 573 
36, 218 
20,380 
23,130 
38, 926 
109, 240 
151, 145 
48, 952 




91.1 


1920 






90.9 


1921... 






70.3 


1922 . 






68.3 


1923 






80.0 


1924 






85.6 


1925 






75.3 


1926.. 


$180, 408 
180, 204 
197, 455 
253, 583 
339, 646 
138, 922 
62,654 
17, 504 
79,829 
194, 469 
103, 840 


100.1 
100.0 
109.6 
140.7 
133.0 

77.1 

34.8 
9.7 

44.3 
107.9 

57.6 


81.8 


1927 


100.0 


1928 


105.4 


1929 


132.8 


1930 


126.1 


1931. 


70.0 


1932 


23.8 


1933-. . 


13.4 


1934. 


15.2 


1935 


25.6 


1936 


71.8 


1937. 


99.3 


1938 






32.2 


1939.. 



















Notes. — There are marked differences. The figures of the Bureau of Internal Revenue are higher 
in every year except 1933 and 1936. For the period 1926-31, inclusive, they range from 18 to 44 per- 
cent higher. The variations are even greater in the subsequent years, the Bureau figures being 73 
percent above the total shown by the Iron and Steel Institute in 1932, 14 percent below in 1933, 245 
percent and 400 percent above in 1934 and 1935, and 5 percent below in 1936. 

Part of the discrepancy is undoubtedly due to the change in industrial classification made by the 
Bureau of Internal Revenue in 1934, a fact sufliciently noted on appendix A. The rise in 1934 and 



CONCENTRATION OF ECONOMIC POWER 



149 



Table 'XIY.— Social performance of the paper and pulp industry, 1919-38 

[1927=100] 



^ Year' 


Employ- 
ment ' 


Produc- 
tion 2 


Consumer 
effort com- 
manded 3 


Consumer 
funds ab- 
sorbed * 


Pay rolls ' 


Dividends 

and 
interest » 


A mmint in hn.<!fi ypar 


123, 360 
92.0 
106.3 
85.2 
88.7 
97.8 
95.2 
100.5 
103.5 
100.0 
98.6 
103.8 

100:3 

87.6 
80.1 
87.1 
100.7 
103.0 
104.5 
111.8 
102.1 






•$413,979 

77.4 
(') 

53.5 
(') 

80.6 
(') 

88.4 
(') 

100.0 
(') 

116.6 
(■) 

86.1 
(') 

72.9 
(') 

85.4 
V) 

117.0 
C) 
(■) 


« $162, 002 
83.7 
118.7 
79.9 
79.2 
93.4 
92.6 
98.9 
103.6 
100.0 
100.0 
106.8 
99.3 
7S.0 
58.3 
61.2 
74.2 
82.3 
90.8 
108.3 
95.3 


•$70,037 
(0 
(•) 
D 
(') 
(■) 
V) 

88.3 


1919. 


66.7 

76.4 

57.9 

74.4 

83.4 

81.2 

92.2 

98.9 

100.0 

104.0 

111.6 

103.0 

95.7 

81.2 

92.5 

92.9 

105.0 

116.9 

129.3 

114.1 


74.6 

r) 

60.2 
(') 

85.6 
(') 

90.0 
(■) 
100.0 

(') 

108.2 
(■) 

96.8 
(') 

98.1 
(') 

106.6 
(') 
129.1 


1920 


1921 


1922 


1923 . ^ 

1924 . 


1925 


1926 . -r- 


1927 - --.--... 

1928 - .\ 


100. 
116.3 


1929 

1930 


102.0 
94.9 


1931.... 


75.5 


1932 . . .... 


49 6 


1933 

1934...= 


61.0 
74.9 


1935 


88.7 


1936 


104 9 


1937 

1938 


(?) 


1939 .- 







' IT. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. 

' Figures for 1919-36 from National Research Project, Production, Employment, and Productivity in 
59 Manufacturing Industries, Part 2, p. 179. The index was extended through 1938 by means of series of 
paper and pulp produced, as published in the Survey of Current Business. 

3 Index of consumer funds absorbed divided by Snyder's index of th^ general price level. 

« Value added by manufacture, as computed by the Census of Manufactures. 

' Excludes intercorporate dividend and interest payments. Compiled from U. S. Bureau of Internal 
Revenue Statistics of Income for respective years. The series is more inclusive than the others in the table 
because it includes converted paper products as well as paper and pulp. But in the base year, 1927, the 
paper and pulp industry accounted for roughly 55 percent of the wage earners, 60 percent of the wages, and 
59 percent of the value added total shown in the census classification "Paper and allied products" which 
includes both paper and pulp and converted paper products. 

• Thousands of dollars. 

? Comparable data not available. 



1935, for example, is unquestionably due in part to this shift, for the figures of the Iron and Steel In- 
stitute show a more moderate increase. 

The figures of the Bureau of Internal Revenue have been used, despite their obvious shortcomings, 
because this is the only source which furnishes the data necessary to compute "net" dividend and 
interest payments. When dividends received and interest paid and received are taken into account, 
as is the case in the table and chart for this industry, the year-to-year fluctuations are less extreme 
than when only cash dividends paid are plotted. Nevertheless, the "net" dividends and interest 
series must be interpreted with caution because of the inconsistencies revealed in the comparison of 
casn dividend payments. 
'U.S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years except 
1919 and 1921 which have been computed from the Census of Manufactures. 

3 Figures for 1919-36 from National Research Project, Production, Employment and Productivity in 59 
Manufacturingjndnstries, Part 2, p. 99. The series was extended through 1938 by means of the Federal 
Reserve Boardindex of production for^iron and steel. 
< Index of consumer funds absorbed divided by Snyder's index of the general price level. 
« Value added by manufacture as computed by the Census of Manufactures. 

• Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the U, S 
Bureau of Internal Revenue. 
' Thousands of dollars. 
» Comparable data not available. 



150 



OONXENTRATION OF ECX>NOMIC POWER 



Table XV. — Social performance of the flour and other grain mill products industry^ 

1919-38 

[1927=100] 



Year 


Employ- 
ment ' 


Produc- 
tion » 


Consumer 
effort com- 
manded * 


Consumer 
funds ab- 
sorbed ♦ 


Pay rolls > 


Dividends 

and 
interest • 




29.982 
151.0 
136.1 
117.8 
119.6 
117.3 
111.5 
106.7 
102.7 
100.0 
95.6 
90.2 
82.7 
76.2 
73.5 
77.4 
88.4 
88.4 
86.6 
88.0 
86.5 






•$176,049 
143.9 
(') 

105.6 
C) 

92.4 
(J) 

98.1 
O 
100.0 

108.7 
(') 

77.8 
C) 

76.3 
C) 

77.8 
O 

75.9 
D 
(') 


• $37, 559 
135.1 
141.7 
113.9 
107.0 
111.0 
110.0 
105.8 
102.8 
100.0 
97.7 
93.4 
85.7 
72.7 
61.4 
60.1 
70.3 
72.1 
74.6 
80.3 
79.4 


« $27, 168 


1919 


111.8 
91.9 
97.4 
101.1 
101.9 
104.2 
100.0 
101.0 
lOb.O 
101.1 
100.8 
99.5 
93.9 
86.6 
82.2 
83.1 
82.6 
86.8 
85.3 
87.2 
C) 


142.5 
(') 

111.2 
V) 

96.2 
(') 

99.1 
(') 
100.0 

(') 

103.5 
O 

88.4 
D 

101.7 
(') 

91.5 
O 
80.7 

8 


(') 


1920 - 


(') 


1921 . 


fi 


1922 


1923 


(0 


1924 


1925 


(') 


1926 


95.0 


1927 - 


100.0 


1928 


127.3 


1929 


120.9 


1930 


74.9 


1831 


87.3 


1932 


65.9 


1933 


82.1 


1934 


82.0 


1935 


93.4 


1936 


34.3 


1937 


O 


19.18 


') 


1939 


V) 







• U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. 

> Figures for 1919-36 from National Research Project. Production, Employment, and Productivity in 
59 Manufacturing Industries, Part 2, p. 77. The index has been continued through 1938 by means of data 
of tfce Census of Manufactures and Wheat Studies of the Food Research Institute, following the methods 
used for the earlier years. 

' Index of consumer funds absorbed divided by Snyder's index of the general price level. 

• Value added by manufacture, as computed by the Census of Manufactures. 

' Excludes intercorporate dividends and interest payments. Compiled from unpublished data of th* 
U. S. Bureau of Internal Revenue. 

• Thousands of dollars. 

' Comparable datP not available. 



CONCENTRATION. OF ECONOMIC POWER 



151 



Table XVI. — Social performance of the oil and gas producing industry, 1919-38 

[1927=100] 



Year 


Employ- 
ment" 


Production 2 


Value of 
prodi^cts 3 


Pay rolls ' 


Dividends 
and interest « 


A mmmt in haw year 


131,000 
73.3 
88.1 
64.2 
81.2 
85.7 
79.0 
89.9 
112.8 
100.0 
80.4 
107. 3 
93.6 
64.7 
60.1 
70.0 
87.6 
84.4 
92.1 
98.2 
92.8 
(•) 




5 $1, 300. 298 

(") 

(«) 

(») 

75.4 

83.0 

86.8 

107.4 

120.9 

100.0 

91.9 

110.6 

93.6 

51.4 

59.9 

54.2 

77.8 

82.4 

101.4 

125.9 

115.4 

(•) 


5 $234, 000 
64.5 

106.3 
62.3 
74.4 
82.3 
75.6 
88.2 

111.3 

100.0 
81.7 

108.6 
95.8 
62.4 
49.2 
54.3 
69.7 
70.6 
71.8 
83.4 
81.2 
(•) 


> $113, 398 
(«) 
(») 
(•) 
(•) 
(») 
(«) 
(•) 

119 4 


1919 . - 


42.9 

49.7 

51.8 

61.1 

80.2 

79.2 

84.6 

86.0 

100.0 

100.8 

113.7 

102.8 

96.5 

89.0 

101.1 

102.8 

112.7 

124.6 

144.2 

136.7 

(•) 


1920 


1921 


1922 


1923 - 


1924 - 


1925 - ^. 


1926 - 


1927 


100 


1928 


73 7 


1029 - 


68 1 


1930 - -■- 


77 1 


1931 


46 3 


1932 .... 


46 3 


1933 -. 


45 2 


1934 


102 7 


1935. 


81 4 


1936 „ 

1937... - 


74.3 
(•) 
(•) 
(•) 


1938 


1939 





1 Employment series based on all employees and pay-roll series on salaries and wages. Estimates of the 
National Income Division', Department of Commerce, have been used for 1929-38 and for prior years their 
estimates have been extrapolated on the basis of the trend of estimates of the National Bureau of Economic 
Research. 

» Weighted aggregate of crude petroleum produced and natural gas marketed as reported by the TJ. 8. 
Bureau of Mines. The weights are based on the average value of products at wells in 1923, 1924, and 1925, 
which corresponds with the Federal Reserve Board's system of weights for other mineral industries. Note 
that only production is covered, not transportation, refining, or distribution. Manufactured gas is in- 
cluded under the utilities. Petroleum refining is given a separate place. 

3 Value of products at wells as compiled by the U. S. Bureau of Mines. No figures are available for "in- 
come produced" or "value added by manufacture," but value of products would seem adequate to the 
purpose in a raw material producing industry. 

< Excludes intercorporate dividend and interest payments. Compiled from impublished data of the 
Bureau of Internal Revenue. Comparability since 1934 has been seriously affected by change in classifica- 
tion, tending to exaggerate increases shown in 1934, 1935, and 1936. 

» Thousands of dollars. 

• Comparable data not available. 



256147— 40— No. 7- 



152 



CJONOENTRA-TION OF ECONOMIC POWER 



Table XVII. — Social performance of the furniture industry, 1919-S8 ' 

[1927=100] 



Year 


Employ- 
ment' 


Produc- 
tion 3 


Consumer 
eflort com- 
manded *.^ 


Consumer 
funds ab- 
sorbed » 


Pay rolls > 


Dividends 

and 
Interest • 




188, 143 
74.5 
(«) 

66.1 
(«) 
90.2 
88.4 
97.2 
101.4 
100.0 
98.1 
102.8 
81.8 
67.7 
52.8 
56.1 
59.4 
69.5 
79.8 
90.3 
73.1 






? $493, 106 
(«) 
(«) 

60.2 
(«) 

88.1 
(') 

98.1 
(«) 
100.0 

(») 

105.8 
(«) 

53.6 
(') 

31.5 
(') 

45.9 
(«) 

71.4 
(') 
(') 


' $238, 240 
60.1 
i}) 

60.5 
(') 
86.7 
86.2 
95.4 
101.4 
100.0 
96.2 
102.0 
72.2 
53.0 
30.9 
32.1 
37.7 
47.9 
60.5 
72.6 
55.3 


' $45, 643 


1919 - - 


59.8 

52.1 

48.9 

65.0 

74.5 

80.0 

92.1 

100.0 

100.0 

98.5 

108.5 

76.2 

58.4 

39.7 

42.1 

47.2 

61.3 

72.1 

80.6 

(«) 

(«) 


(«) 
(«) 

63.4 
(«) 

91.8 
(') 

99.1 

100.0 

100.8 
(«) 

60.9 
(«) 

42.0 
(«) 

54.0 
(«) 

76.0 
(') 
(') 


1920 


(*) 


1921 


(') 


1922 


M 


1923 


(') 


1924 


(«) 


1925 - - - -- 


(') 


1926 -.. 


93.5 


1927 


100.0 


1928 .-. 


125.9 


1929 


91.1 


1930 .- 


69. a 


1931 


46.1 


1932 ..- 


29.9 


1933 -- 


21.4 


1934 


29.3 


1935 - 


34.6 


1936 


60.3 


1937 


(') 


1938 


(') 


1939 -- 


(') 







1 The data for tbis industry are unusually fragmentary and have many shortcomings affecting their com- 
parability. All of the series except dividends and interest are affected by a change in classification in the 
Census of Manufactures made in 1929 when establishments engaged in the manufacture of sewing machine 
cases, cabinets, and tables were transferred to the furniture industry. 

The index of production is that published by the National Research Project, which computed it by divid- 
ing value of products by a price index. It therefore differs from the other production indexes presented in 
this study which are weighted aggregates of physical quantities of goods produced, a procedure which could 
not be followed here since there are no comprehensive figures available on units of various types of furniture 
manufactured. 

To represent the trend in dividend and interest payments for the furniture industry the classification 
which the Bureau of Internal Revenue calls "other wood products" has been used. This series is more 
inclusive than the others in the table since, in addition to furniture, it includes carriages and wagons, and 
miscellaneous wood products such as baskets, boxes, and novelties. In the base year, for example, furniture 
accounted for approximately 75 percent of the wage earners, wages, and value added by manufacture in the 
combined census classifications which correspond to the grouping of the Bureau of Internal Revenue. 

* U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners for all years 
except 1919 and 192l which were estimated from data of the Census of Manufactures. 

5 Figures for 1919-36 from National Research Project, Production, Employment, and Productivity in 69 
Manufacturing Industries, Part 2, p. 80. The index has been extended through 1937 by means of data in 
the Census of Manufactures. 

* Index of consumer funds absorbed, divided by Snyder's index of the general price level. 

* Value added by manufacture, as computed by the Census of Manufactures. 

* Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the 
TJ. S. Bureau of Internal Revenue. 

' Thousands of dollars. 

* Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 



153 



Table XVIII. — Social performance of the metal mining industry, 1919-38 

1927=100] 



Year 


Employ- 
ment ' 


Production 2 


Value of 
products s 


Pay rolls ' 


Dividends 
and interest *" 




125,500 

120.2 

117.5 

63.9 

84.4 

107.6 

105.5 

109.1 

108.3 

100.0 

96.6 

103.5 

92.3 

70.9 

46.2 

47.0 

58.9 

70.1 

90.0 

• 111.5 

83.6 




' $625, 627 
108.3 
124.2 
60.9 
78.3 
115.0 
102.1 
113.9 
115.8 
100.0 
105.8 
128.9 
80.7 
45.1 
21.4 
33.8 
46.1 
58.8 
85.0 
121.5 
76.8 


'$201,000 

119.0 

126.2 

69.2 

71.1 

100.9 

100.8 

104.2 

106.4 

100.0 

96.1 

105.4 

87.5 

54.7 

28.9 

28.3 

37.7 

49.2 

68.6 

98.4 

65.6 

(•) 


5 $95, 569 
(') 


1919 


86.5 

87.3 

49.8 

70.9 

97.3 

94.2 

100.7 

105.4 

100.0 

102.2 

112.1 

88.4 

59.8 

35.6 

39.4 

47.8 

61.2 

85.4 

110.0 

75.8 


1920 


(') 


1921 - 


(•) 


1922 - 


(») 


1923 


(') 


1924 --- 


(•) 


1925 


W 


1926 -- 


103.3 


1927 - 


100.0 


1928 


114.0 


1929 


216.9 


1930 - 


100.7 


1931. - 


46.5 


1932 


20.8 


1933 


23.3 


1934 


38.7 


1935 . - - 


48.9 




89.9 


1937 - 


(•) 




W 


1939 


(«) 







' Employment series based on all employees and pay-roll series on salaries and wages. Estimates of th» 
National Income Division, Department of Commerce, have been used for 1929-38 and for prior years their 
estimates have been extrapolated on the basis of the trend of estimates of the National Bureau of Economic 
Research. 

2 Weighted aggregate of indexes of production of copper, lead, zinc, gold, silver, and iron ore computed from 
data of the U. S. Bureau of Mines. The weights are based on the average value of products in 1923, 1924, and 
1925, which correspond with the Federal Reserve Board's system of weights for mineral industries. The 
series with their respective weights are: 

Copper: Smelter output from domestic ore •,._. ^-. 32. g 

Lead: Production of refined primary lead from domestic ore 13.9 

Zinc: Production of primary zinc from domestic ore 10.9 

Gold: Produced from mines in continental United States, Alaska, Puerto Rice, and the Philip- 
pines . 7.6 

Silver: Produced from mines in continental United States, Alaska, Puerto Rico, and the Philip- 
pines _; 7.4 

Iron ore: Production 27.4 

This is the same group of metals which the National Income Division of the Department of Commerce 
includes in its estimates for metal mining. 

' Value of products for metais listed above, as compiled by the U. S. Bureau of Mines. No series is avail- 
able for "income produced" or "value added by manufacture." To a large extent value of products in a raw- 
material producing industry gives a reasonably accurate indication of consumer funds absorbed. 

• Excludes intercorporate dividend and interest payments. • Compiled from unpublished data of the U. 8. 
Bureau of Internal Revenue, which also includes platinum and mercury. 

• Thousands of doUars. 

• Comparable data not available. 



154 OONGENTRATION OF ECONOMIC POWER 

Table XIX. — Social performance of the tobacco industry, 1919-38 • 

[1927=100] 



Year 


Employ- 
ment > 


Produc- 
tion 3 


Consumer 
effort com- 
manded < 


Consumer 
funds ab- 
sorbed 5 


Pay rolls » 


Dividends 

and 
interest • 


Amount in base year 


129.299 
121. 4 
119.2 
116.0 
113.3 
113.2 
105.8 
102.2 
97.3 
100.0 
97.1 
89.8 
83.8 
77.2 
70.2 
67.6 
72.9 
70.0 
70.7 
71.3 
69.8 






' $366, 932 

88.1 
(') 

50.3 
(«) 

59.8 
(') 

87.2 
(«) 

100.0 
W 

104.2 
(») 

100.9 
(') 

68.1 
(») 

77.5 
(«) 

88.8 
(«) 
(») 


' ,$105, 250 
117.9 
136.9 
114.8 
108.9 
114.4 
109.2 
106.0 
101.2 
100.0 
94.6 
89.9 
79.9 
66.0 
53.0 
48.5 
55.6 
56.6 
60.2 
66.9 
64.6 


' $64 78l 


1919 .__. 


69.0 

74.0 

72.0 

75.0 

81.0 

84.0 

89.0 

95.0 

100.0 

105.0 

114.0 

111.0 

104.0 

,94.0 

98.0 

108.0 

114.0 

129.0 

135.0 

135.0 


87.2 
(*) 

52.9 
(«) 

62.3 

(8) , 

88.1 
(») 
100.0 

(') 

99.2 
(») 

114.7 
(») 

90.8 
(') 

91.2 
(») 

94.5 
(') 
(') 


(8) 


1920 


(8) 


1921 


(8) 


1922 


(8) 


1923 


(«) 

99.9 


1924 


1925 


1926 --. 


1927 . 


100 


1928 


105 9 


1929 . 


133 4 


1930 


150.7 


1931 


155 5 


1932 


140.0 


1933 


128.7 


1934 


134.7 


1935 


127 3 


1936 - 


155 7 


1937 




1938 ..- 


1939 ,.. --- 


(') 







' The tobacco manufacturing industry is composed of 3 parts: Cigars, cigarettes, chewing and smoking 
lobacco, and snuff. It would be highly desirable in this study to treat the 3 parts as separate industries, 
but the form in which the statistics are presented makes this impossible. The main tabulation is therefore 
for tobacco manufacturers as a whole, though cigars and cigarettes have been studied separately insofar as the 
available data permit. 

The most striking feature in the break -down of the tobacco industry is the disproportionate importance of 
cigars and cigarettes in the measures of dividend payments and of employment and payrolls. Dividend 
payments for the 6 largest cigarette-manufacturing companies are available for the years 1934-37, inclusive, in 
Selected Information on Cigarette Manufacturers with Assets ov^r $10,000,000 Each Resristered under the 
Securities Exchange Act of 1934 at June 30, 1938, pp. 15 and 19. The dividend disbursements of these 6 com- 
panies have been compared with those for all corporations classified under "Tobacco products" by the 
Bureau of Internal Revenue. These 6 companies paid out 83.5 pecent of all cash dividends paid by the tobacco 
industry in 1934, 90.4 percent in 1935, 85.2 percent in 1936, and 93.4 percent in 1937. In other words, the line 
for dividends on the chart for "Tobacco" reflects primarily the dividend payments of the cigarette industry. 
Of course, these 6 cigarette companies also manufacture other tobacco products, but the major part of their 
output is cigarettes. 

The number of wage earners and total wages can be shown separately for cigars and cigarettes for census 
years beginning with 1927. In 1937 the cigarette industry employed 28 percent of the total wage earners in the 
tobacco industry and paid 34 percent of the total wages. The cigar industry employed almost 61 percent of 
the wage earners and paid 53 percent of the wages. Chewing and smoking tobacco and snuff accounted for 
the remainder. Thus it is evident that while the cigarette industry has by far the heavier weight in the 
dividends and interest series, the cig^r industry exerts the greatest influence on the employment and the 
pay-roll series. 

The production index for cigarettes has risen from 46 in 1919 to 169 in 1938. Cigar production, on the other 
hand, has decreased from 108 in 1919 to 75 in 1938. The trend for all 3 branches of the industry as combined in 
the Federal Reserve Beard index of production for tobacco has been upward — from 69 in 1919 to 135 in 1938. 

Employment in the cigarette industry showed a slight decline in the censuses of 1929 and 1931, but since 
then has been above the 1927 level. The index in 1937 was 21 percent above the 1927 level. The number of 
wage earners in cigars declined more than 40 percent between 1927 and 1933 and remained at about that level 
in 1935 and 1937. 

Pay rolls in the cigarette industry have fluctuated more than employment since 1927. The low was 76 per- 
cent (1927=100) in 1933. It has since risen to 133.5 in 1937. For cigars a low of 39 was reached in 1933. By 
1937 it had risen to about 50 percent of the 1927 level. 

• The Ln,dexes on the chart for the tobacco industry as a whole are thus made up of divergent trends. As a 
result, the index for dividends and interest reflects largely the payments of the cigarette industry. The 
trend in the production index also follows that for cigarettes in direction, though the inclusion of cigars and 
chewing and smoking tobacco and snuff narrows its amplitude. The employment and pay-roll indexes, en 
the other hand, reflect more markedly conditions in the cigar industry. They show a pronounced downward 
trend in nearly every year between 1919 and 1933, with a slight rise since 1933 which can be attributed largely 
to increases in the cigarette industry. 

' U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. 

' Federal Reserve Board index of production. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

' Value added by manufacture as computed by the Census of Manufactures. For years prior to i»al the 
amount of tax paid by tobacco manufacturers, as reported by the Bureau of Internal Revenue, was deducted 
from "vfilue added" in order to obtain comparable figure? for the entire period. 

• Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the U.S. 
Bureau of Internal Revenue. 

' Thousands of dollars. 
'Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER J 55 

Table XX. — Social performance of the coal mining industry, 1919-1938 ' 

(1927=100) 



Year 


Employ- 
ment ' 


Produc- 
tion 3 


Value of 
products * 


Pay rolls ' 


Dividends 

and 
interest ' 


Amount in base year. 


675,000 
109.4 
121.5 
94.0 
83.2 
110.3 
96.8 
94.0 
109.7 
100.0 
93.2 
94.5 
90.6 
83.1 
70.5 
71.2 
82.2 
82.4 
83.8 
84.6 
74.1 
(') 




« $1,450, 594 
105.2 
176.8 
113.9 
106.8 
139.4 
106.2 
95.7 
114.3 
100.0 
91.5 
92.3 
79.3 
61.0 
43.4 
45.0 
60.2 
59.9 
68.8 
73.2 
57.6 
(') 


« $1, 046, 000 
93.7 
130.8 
110.7 
91.8 
134.6 
109.5 
94.3 
112.4 
100.0 
88.2 
85.3 
74.3 
67.5 
40.2 
40.6 
54.2 
55.3 
62.1 
62.7 
49.5 
(') 


« $68, 100 

(') 

(') 

(') 
(') 
'') 

110 1 


1919 


95.0 
110.0 
89.0 
76.0 
111.0 
98.0 
94.0 
109.0 
100.0 
96.0 
100.0 
89.0 
74.0 
61.0 
64.0 
71.0 
70.0 
80.0 
80.0 
66.0 
(') 


1920 


1921 


1922 


1923 


1924 


1925 - 


1926 


1927 -. 


100 


1928 


79 5 


1929 


94 6 


1930 


86 6 


1931... 


68.5 
47. C 
33 7 


1932 


1933 


1934 


74 4 


1935 


48.7 
66.0 

(') 

(') 

<n 


1936 

1937 

1938. . 


1939. 





> Includes anthracite and bituminous coal mining. As was mentioned on p. 130, the dividend and 
interest series for bituminous coal mining was one of those severely affected by the change in industrial 
classification made by the Bureau of Internal Revenue in 1934. Part of the increase in dividends and 
interest between 1933 and 1934 may be due to this shift. 

2 Employment series based on all employees and pay-roll series on salaries and wages. Estimates of the 
National Income Division, Department of Commerce, have been used for 1929-38 and for prior years their 
estimates have been extrapolated on the basis of the trend of estimates of the National Bureau of Economic 
Research. 

' Weighted aggregate of Federal Reserve Board indexes of production for anthracite and bituminous coal. 

* Value of products as compiled by the U. S. Bureau of Mines. No figures are available for "Income 
produced" or "Value added by manufacture." 

« Excludes intercorporate dividend and interest payments. From 1928 on the figures were compiled from 
unpublished data of the U. S. Bureau of Internal Revenue. Those for 1926 and 1927 have been extrapolated 
by means of unpublished figures of the National Bureau of Economic Research. 

• Thousands of dollars. 

' Comparable data not available. 



J 56 



OONHENTRATION OF ECONOMIC POWER 

"r products industry, 



Table XXI. — Social performance of the lumber and ti 

1919-38 1 

(1927=100) 





Employ- 
ment* 


Production ' 


Con- 
sumer 
effort 
com- 
manded * 


Con- 
sumer 
funds ab- 
sorbed « 


Pay 
rolls i 




Year 


Lumber 

and 
timber 
products 

only 


Lumber 

and 
timber, 

and 
planing- 

mill 
products 


Divi- 
dends 
and in- 
terest' 


Amount in base year 


610, 535 
111.2 

(') 
86.6 

' 117. 2 
113.2 
113.3 
110.9 
100.0 
97.1 
99.8 
76.7 
49.1 
37.0 
44.0 
52.8 
59.5 
69.3 
76.6 
64.7 
(») 








' $952, 394 

113.4 
(«) 

71.8 
(«) 

123.0 
(') 

117.4 
(?) 

100.0 

114.3 
(«) 

44.2 
(«) 

28.9 
(«) 

43.8 
(8) 

67.3 
(«) 
(') 


1 $539, 502 
107.8 
(») 
75.9 
(') 

113.0 
111.1 
111.9 
109.9 
100.0 
97.3 
99.7 
74.0 
39.8 
21.4 
25.9 
33.9 
41.9 
54.0 
63.6 
52.3 
(') 


' $83, 172 


1919 


100.2 

96.9 

80.0 

92.3 

107.1 

103.8 

110.1 

105.8 

100.0 

96.8 

104.4 

73.4 

46.6 

28.8 

39.9 

43.9 

55.5 

69.1 

69.7 

54.9 

(«) 


93.8 
(») 

84.5 
(') 

108.2 
(«) 

115.3 
(«) 
100.0 

(«) 

103.8 
(') 
47.6 

(8) 

37.0 
52.8 
69.8 
(?) 


(«) 
(») 

75.1 
(») 

132.5 
(') 

118.3 
(») 

100.0 

(«) 

114.3 
(») 

44.8 
(') 

42.1 

(8)- 

56.0 
(«) 
77.2 

(') 
(») 


W 


1920 


(') 


1921 




1922 


(?) 


1923 . 


(') 


1924 


(«) 


1925 


(*) 


1926 . 


122.0 


1927 


100.0 


1928 *.. 


91.7 


1929 


91.5 


1930 


67.7 


1931 


36.6 


1932 


27.6 


1933 


22.6 


1934 


40.4 


1935 . 


34.2 


1936 


47.4 


1937 


(') 


1938 


(') 


1939 


(') 







1 This industry comprises the activities classified by the C°nsus of Manufactures under "Lumber and 
timber products, not elsewhere classified" and "Planing-mil' iroducts." The 2 classifications were com- 
bined so as to have an industry group which would corresporiu as closely as possible with the category of 
the Bureau of Internal Revenue called "Sawmill and planiiig mill products." 

In securing a combined index of production 2 indexes of the National Resea. Project were used, 1 for 
lumber and timber products, which included logging camps, sawmills, and saw-plane mills, the other for 
planing-mill products. Since production of planing-mill products could not be estimated for intercensal 
years, production of lumber and timber products is shown in the table to indicate the movement of the 
index in intercensal years. It should be compared with the- weighted series which also includes planing- 
mill products. The respective values of product of the 2 industries in 1929 were used as weights in com- 
bining the indexes inasmuch as the respective values of products in 1929 were used as weights by the 
National Research Project. 

> Weighted aggregates of the U. S. Bureau of Labor Statistics indexes of employment and pay rolls for 
wage earners in "Lumber, sawmills" and "Lumber, millworfc." The average number of wage earners and 
average annual pay rolls in the Bureau of Labor Statistics base period, 1923-25, were used as weights. 
Figures for 1919 and 1921 have been estimated from Cen.sus of Manufactures. 

s The National Research Project computed separate indexes for lumber and timber products and planing- 
mill products. (See Production, Employment, and Productivity in 59 Manufacturing Industries, Part 2, 
pp. 126 and 186.) The former was extended through 1938 by means of estimates of total lumber production 
of the National Lumber Manufacturers' Association, and the latter through 1937 by means of Census of 
Manufactures data. The second production series is a weighted ag<;regate of the 2 indexes, using their 
respective values of products in 1929 as weights. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

» Value added by manufacture as computed by the Census of Manufactures. Cost of contract work has 
been excluded from "Lumber and timber products not elsewhere classified" throughout the period. 

« Excludes intercorporate dividend and interest payments. Compiled from unpublished data of the 
U.S. Bureau of Internal Revenue. 

' Thousands of dollars. 

» Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER J 57 

Table XXII. — Social performance of the steam railroad'industry, 1919-38 * 

[1923-25 = 100] 



Year 



Amount In base years - 

1919 .- 

1920 

1921 

1922 y. 

1923 

1924 .:.. 

1925.. 

1926.... 

1927 

1928 

1989 

1930 : 

1931 

1932 

1933 

1934 

1935 

1936 

193^ 

1938 

1939 



Employ- 
ment > 



1,539,800 
11U5 
117.9 
93.8 
89.7 
104.4 
98.0 
97.7 
99.8 
97.0 
92.2 
92.6 
82.0 
68.5 
55.8 
53.1 
55.5 
55.0 
59.8 
62.7 
51.8 



Produc- 
tion s 



106.3 

80.7 

86.2 

102.2 

96. 4 > 

101.3 

107.1 

103.1 

102.9 

105.4 

90.4 

73.0 

55.4 

58.1 

62.9 

65.8 

79.3 

84.7 

(') 

(') 



Consumer 
effort com- 
manded < 



86.1 
95.0 
86.6 
91.6 
102.0 
98.0 
100.0 
104.0 
99.6 
97.0 
98.9 
87.1 
75.1 
60.1 
62.7 
61.8 
63.2 
69.1 
59.4 
60.4. 



m 



Consumer 

funds 
absorbed • 



' $4, 383, 900 
89.5 
110.2 
86.8 
87.0 
101.0 
97.0 
102.0 
106.1 
101.6 
101.9 
105.8 
88.0 
67.6 
47.5 
48.3 
50.7 
55.0 
63.6 
66.6 
55.6 
(«) 



Pay rolls • 



$2, 376, 000 
104.2 
136.1 
96.1 
89.5 
104.6 
96.9 
98.4 
101.7 
99.3 
95.9 
98.7 
84.6 
66.1 
47.2 
44.5 
49.0 
53.4 
61.8 
66.8 
57.0 



Dividends 

and 
Interest • 



' $795, 700 
87.1 
87.7 
86.1 
89.8 
94.7 
100.8 
104.5 
108.7 
121.3 
112.4 
119.2 
119.8 
97.3 
73.5 
69.4 
72.0 
68.4 
67.1 
68.4 
54.9- 



' The figures for the Pullman Co. and for railway express services are included. With respect to the 
figures for dividends and interest the fact should be noted that both the National Bureau of Economic 
Eesearch and the Department of Commerce have computed series for both from financial data compiled 
by the Interstate Commerce Commission. Estimates for overlapping years from the 2 sources are practi- 
cally identical. Since the series is not based on figures from the Bureau of Internal Revenue, the index is 
comparable throughout the entire period. The methodology of the Department of Commerce is described 
In National Income in the United States, 1929-35, pp. 261-262. 

» Wage earners only. The Department of Commerce estimates were used for the years 1929 to 1938, 
inclusive. For years prior to 1929 the Department of Commerce estimates have been extrapolated on the 
basis of unpublished material of the National Bureau of Economic Research. Wages include gratuities. 

3 Weighted average of freight ton-miles and passenger-miles as shown in National Bureau of Economic 
Research Bulletin, 59. p. 24. 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

'Income produced. The Department of Commerce estimates were usedjior the years 1929 to 1938, inclu- 
sive. For years prior to 1929 the Department of Commerce estin'ates have been extrapolated on the basis 
of the trend of the estimates of the National Bureau of Econoriic Research shown in Simon Kuznets, 
National Income and Capital Formation, 1919-35. 

« Excludes intercorporate dividend and interest payments and short-term interest. 

* Thousands of dollars. 

' Copiparable data not available. 



158 OONCENTRATION OF ECONOMIC POWER 

Table XXlU.—Social performance of agriculture, 1919-38 ' 

[1923-25=100] ' 



Year 


Employ- 
ment 2 


Produc- 
tion ' 


Consumer 
effort rora- 
tuanded * 

1^ 


Consumer 

funds . 

absorbed ' 


Pay rolls ' 


Dividends 

and 
iiiterest • 


Amount in base years 

1919 


11,398,000 
97.4 
99.7 
100.1 
100.4 
99.9 
99.7 
100.4 
101.2 
98.7 
99.1 
99.0 
98.0 
97.9 
97.1 
96.7 
95.2 
98.0 
96.5 
95.0 
94.3 






'$7, 291, -000 
155.5 
123.9 
85.6 
80.1 
92.0 
100.9 
107.1 
100,4 
99.0 
100.2 
. 99.5 
77.1 
51.1 
35.0 
46.9 
62.4 
72.4 
81.9 
87.5 
74.5 


'$6,941,000 
1.59.0 
125.2 
«5.0 
79.1 
91.6 
101.0 
107.4 
100.4 
98.8 
100.1 
99.6 
76.2 
49.0 
32.4 
45.3 
61.7 
72.3 
82.4 
88.3 
74.9 


7 $350, 700 


91.0 

95.0 

86.0 

96.0 

/ 99.0 

101.0 

101.0 

106.0 

103.-0 

. 108.0 

105.0 

105. 

111.0 

104.0 

101.0 

98.0 

96.0 

99. 

114.0 

108.0 


149. 5 
106. 8 
87.3 
84.3. 
92.9 
101.9 
■ 105. 
98.4 
97. Q 
95.4 
93.0 
76.3 
56.8 
44.3 
60.9 
76.1 
83.2 
89.0 
91.1 
81.0 


85.2 


1920 -- 


96.4 


1921 


97.8 


1922 


100.0 


1923 — 


99.8 


1924 : 


99.8 


1925 


100.4 


1926 


100.4 


1927 . . - 


102.9 


1928 -- 


102.6 


1929 -- - 


9'8. 1 


1930 --- 


95.2 


1931 - 


94.1 


1932 - - 


86.7 


1933 


78.4 


1934 - 


76.1 


1936 --- 


72.7 


1936 - -- 


72.4 


1937 


70.4 


1938 " - 


66.1 


1939 - 


(») 







* The series on labor income differs markedly from pay-roll indexes for other industries, because it in- 
cludes returns to entrepreneurs. The supplementary table gives separate indexes for the income of farm 
operators and that of hired labor. Although the Department of Agriculture has released revised estimates 
of the cost of hired farm labor, these revisions have not been used due to the fact that the new estimates of 
farm expenditures necessary for revising the series of consumer funds absorbed have not yet been released 
by the Department of Agriculture. It was thought better to leave both series (labor income and consumer 
funds absorbed) unrevised so that they might be as nearly comparable as possible over the entire period. 

* Family workers and hired workers. Figures from "Farm Employment, 1909 to 1938," Monthly Labor 
Review, June 1939, p. 1243. Separate indexes are given in Table XXVII-A to indicate the difference in 
trends of employment of the two groups. 

■ Payrolls represent net income of farm operators, including business savings, and wages paid to hired farm 
labor, including cost of board and lodging and other prerequisites. The Department of Commerce estimates 
were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Department of Commerce has 
extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of Economic 
Research shown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

' Index of volume of agricultural production for sale and for consumption in the farm home, on crop-year 
basis. U. S. Bureau of Agricultural Economics, Agricultural Production in 1938 was 5 percent lower than 
in 1937 (mimeographed release, Mar. 8, 1939). 

* Index of consumer funds absorbed divided by Snyder's index of the general price level. 

' Income produced. Figures for 1929-1938 from Robert R. Nathan, "National Income in 1938 at 
$64,000,000,000," Survey of Current Business, June 1939. p. 11. For years prior to 1929 the Department of 
Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau 
of Economic Research. 

' The Department of Commerce estimates were used for the years 1929 to 1938, inclusive. For years 
prior to 1929 the Department of Commerce has extrapolated its estimates on the basis of the trend of the 
estimates of the National Bureau of Economic Research shown in Simon Kuznets, National Income and 
Capital Formation, 1919-35. 

' Thousands of dollars. 

> Comparable data not available: 



CONCENTRATION OF ECONOMIC POWER 



159 



Table XXIII-A. — Employment and labor income of family workers and hired 
workers in agriculture, 1919-38 

[1923-25=100] 





Employment > 


Labor income ' 


Year 


Family 
workers s 


Hired 
workers * 


Operators' 
net income » 


Wages of 
hired labor • 


ATPn^int- in hnsfi yfiafs 


8, 519, 000 
97.7 
99.5 
«9.9 

100.1 
99.7 
99.6 

100.7 
99.9 
97.4 
97.9 
97.5 
97.7 
99.4 

100.6 

100. 8 
99.9 

102.2 
99.8 
97.1 
96.4 
(?) 


2, 879, 000 
96.7 
100.1 
100.8 
101.3 
100.5 
99.8 
99.7 
105.1 
102.5 
102.7 
103.8 
99.0 
93.4 
86.8 
84.5 
81.5 
85.7 
86.6 
88.8 
87.8 


7 $5, 754, 000 
166.5 
121.9 
83.8 
77.2 
90.0 
101.5 
108.5 
99.3 
97.2 
98.6 
97.8 
'72.2 
44.3 
28.9 
45.6 
64.8 
76.1 
87.3 
92.7 
77.2 


' $1, 186, 000 


1919 - 


123.2 


1920. 


141.5 


1921. 


90.6 


1922 : 


88.2 


1923... 


99.7 


1924 .. 


98.2 


1925 


102.1 


1926.... .". 


105.9 


1927 


106.9 


1928 .. 


107.7 


1929 ... 


108.4 


1930 


95.8 


1931.. . 


71.7 


1932 .. .. 


49.4 


1933.. . 


43.8 


1934. 


47.2. 
54r0 


1935 : 


1936. 


58.3 


1937.... 


67.1 


1938. 


64.1 


1939. 


(') 







1 Data are originally from U. S. Works Progress Administration, National Research Project, Report No. 
A-8: Trends in Employment in Agricniture, 1909-36, and U. S. Department of Agriculture, Crops and 
Markets, January 1939. They have been reproduced in Monthly Labor Review, June 1939, p. 1245. 

2 The Department of Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior 
to 1929 the Department of Commerce has extrapolated its estimates on the basis of the trend of the estimates 
of the National Bureau of Economic Research shown in Simon Kuznets, National Income and Capital 
Formation, 1919-35. 

' Includes operating owners, tenants, and sharecroppers, together with working members of their famUies 
who are working without wages. 
< Includes hired laborers, managers, and foremen. 

• Includes business savings. 

• Total farm labor bill, including cost of board and lodging and other perquisites. It also incudes a neg- 
ligible amount of accident compensation. 

' Thousands of dollars. 

' Comparable data not available. 



IQQ CONCENTRATION OF ECONOMIC POWER 

Table XXIV. — Social performance of all manufacturing, 1919 -SP i ' 

[1923-25=100] 




' All manufacturing here includes the same fields of business as are covered by the Census of Manufac- 
tures, except that manufactured gas is included in electric light and power, railroad repair shops are covered 
in the transportation industry, motion pictures aro included under service enterprises, and shipbuilding is 
put into the cpnstruction industry. 

The series u6' for production is that of the unrevised Federal Reserve Board index which in recent years 
was somewhat .ow. When, for example, it is compared with that published in the Census of Manufactures, 
1937, Part I, p. 17, for census years, it is practically identical for the census years 1919 to igs.S, inclusive. In 1937, 
however, it is about 7 points lower than the census ind«x (108 as compared with 115, using 1923 as the base 
year). The higher figure appears more reasonable when compared with the movement of tHe employment 
index. In a revision published too late (August 1940) to be used here the Federal Reseive'Board verified 
this fact. 

O n the basis of the Department of Commerce estimates, the index of dividends and interest for 1934 would 
be somewhat higher— about 77 instead of 71 as shown on the table and chart— if the 1933 industrial classifica- 
tion of the Bureau of Internal Revenue had been used in 1934. 

The index of consumer funds absorbed in manufacturing is based on the Census of Manufactures series 
"Value added by manufacture." The index differs slightly from the pubhshed census figures because ad- 
justments have been made by deducting from the census totals the figures for motion pictures, manufactured 
gas, railroad repair shops, and shipbuilding. For 1935 and 1937 the cost of contract work had to be added 
to the published census figures. In computing this index the average of 1923 and 1925 was used as a base, 
since there was no figure available for 1924. 

The indexes of employment and pay rolls have been adjusted to conform to the Census of Manufactures 
for 1937. The indexes are given in the following publications of the U. S. Bureau of Labor Statistics; Re- 
vised Indexes of Factory Employment and Pay Rolls, 1919-33 (Bui. No. 610); Revised Undex Numbers of 
Factory EmplojTnent and Pay Rolls, mimeographed releases issued September 1938 and September 1939. 

• U. S. Bureau of Labor Statistics indexes of employment and pay rolls for wage earners. 
' Federal Reserve Board index of production, unrevised series. 

• Index of consumer funds absorbed divided by Snyder's index of the general price leveL 

• Value added by manufacture as computed by the Census of Manufactures. 

• Excludes intercorporate dividend and interest payments and shortrterm interest. The Department 
of Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Depart- 
ment of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National 
Bureau of Economic Research^hown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

' Thousands of dollars. 
, ' Comparable data not available; 



i 



CONCENTRATION OF ECONOMIC POWER 



161 



Table XXV. — Social performance of the mining industry, 1919-38 

[1923-25=100] 



Year 


Employ- 
ment ' 


Produc- 
. tion > 


Consumer 
effort com- 
manded ' 


Consumer 

funds 
absorbed * 


Pay rolls ' 


Dividends 

and 
interest • 


Amount in base yeirs 


982,000 
104.1 
115.3 
85.9 
84.4 
106.8 
96.8 
96.5 
109.7 
100.3 
92.3 
96.8 
90.4 
78.3 
65.1 
66.7 
78.7 
80.3 
85.0 
89.4 
77.1 






« $1, 855, 000 
91.1 

135.2 
70.7 
78.5 

107.8 
91.1 

101.1 

116.4 
93.2 
88.0 
96.4 
66.7 
37.0 
25.8 
28.8 
49.1 
51.4 
66.3 
77.0 
56.7 
C) 


« $1,615, 000 
82.7 

118.3 
86.0 
79.5 

114.7 
95.9 
89.5 

104.3 
91.7 
81.2 
83.4 
71.9 
51.4 
34.9 
35.8 
47.8 
50.6 
58.1 
64.3 
52.2 
(') 


« $285, 000 
77.2 


1919 


77.0 

89.0 

70.0 

74.0 

105.0 

96.0 

99.0 

108.0 

107. 

106.0 

115.0 

99.0 

84.0 

71.0 

82.0 

86.0 

91.0 

105.0 

115.0 

98.0 

(•) 


87.6 
116.6 
72.1 
82.6 
108.9 
92.0 
99.1 
114.1 
91.4 
83.8 
90.1 
66.0 
41.1 
32.7 
37.4 
59.9 
59.1 
72.1 
80.2 
61.6 
(') 


1920 


86.0 


1921 


81.8 


1922 


61.0 


1923 


92.1 


1924 


93. 5 


1925 


114.4 


1926 .^ 


132.4 


1922^ 


114.0 


ms. 


104.6 


1929 


144.1 


1930. 


101.6 


1931 


63.6 


1932.... 


41.6 


1933 


38.9 


1934 


82.0 


1935,... 


79.8 


1936 .. . 


90.6 


1937 


107.8 


1938..... 


77.7 


1939 


(') 







Wage earners and wages. The Department of Commerce estimates were used for the years 1929 to 1938, 
inchisive. For years prior to 1929 the Department of Commerce estimates of wage earners have been ex- 
trapolated on the basis of the trend of the estimates made by the National Resources Committee from un- 
published material of the National Bureau of Economic Research (published in Patterns of Resource Use, 
p. 149). The following industrial segments of the National Resources Committee tabulations for wage 
earners were combined: Petroleum, nonmetallic, bituminous coal, anthracite coal, iron ore, other metallic. 
For years prior to 1929 the Department of Commerce has extrapolated its estimates of wages on the basis 
of the trend of the estimates of the National Bureau of Economic Research shown in Simon Kuznets, 
National Income and Capital Formation, 1919-35. 

^ Federal Reserve Board index of production, which includes coal and metal mines, oil and natural gas 
wells, nonmetallic mines, and quarrying. 

' Index of consumer funds absorbed divided by Snyder's index of the general price level. 

' Income produced. Figures for 1929-38 from Robert R. Nathan, National Income in 1938 at $64,000,000,- 
000, Survey of Current Business, June 1939, p, 11. For years prior to 1929 the Department of Commerce 
has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of Economic 
Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory valuations 
and of depreciation and depletion charges were eliminated from the estimates of the National Bureau. As 
a result of these adjustments, the 2 sets of figures in 1929 were very nearly the same. Note that in the base 
period the sum of wages and dividends and interest exceeded the total consumer funds absorbed due to 
negative business savings in that year. 

» Excludes intercorporate dividend and interest payments and short-term interest. The Department of 
Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Department 
of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau 
of Economic Research shown in Simon Kuznets, National Income an<J Capital Formation, 1919-35. Sharp 
rise in 1934 is partly due to change in classification made by the Bureau of Internal Revenue. If made on 
the old basis, the index in 1934 would be about 53 instead of 82. 

' Thousands of dollars. 

' Comparable data not available. 



162 



OONOENTRATION OF ECONOMIC POWER 



Taple XXVI. — Social performance of transportation and other public utilities, 

1919-88 







[1923-25=100] 








Y6ar 


Employ- 
ment ' 


Produc- 
tion « 


Consumer 
effort com- 
manded ' 


Consumer 

funds 
absorbed < 


Pay rolls ' 


Dividends 

and 
interest • 


Amount in base years 

1919..... 


3, 651, 500 
99.1 
105.0 
89.4 
92.1 
101.4 
99.2 
99.4 
103. 5 
102.9 
102.0 
104.8 
99.1 
87.2 
75.4 
72 2 
7r.. 1 
75.8 
80.7 
84.9 
76.8 






'$8,036,000 
82.4 
101.6 
84.1 
85.7 
97.9 
97.8 
104.3 
108. 8 
107.2 
110.8 
117.1 
103.8 
86.9 
66.7 
64.5. 
68.7 
73.4 
83.1 
89.1 
79.1 


* $5, 755, 000 

89.6 

117.0 

93.6 

90.1 

100.4 

99.2 

100.4 

104.5 

103.5 

103.0 

106.6 

99.3 

84.9 

65.3 

59.6 

64.9 

70.3 

78.6 

86.4 

79.7 

C) 


^$1, 736, 000 


89.0 
96.7 
80.1 
86.5 
99.8 
97.4 
102.8 
109.8 
109 6 
111.7 
116.7 
105.6 
92.6 
76.3 
77.1 
82.4 
86.5 
99.1 
105.5 
(') 
(') 


79.2 
87.6 
85.8 
90.2 
98.9 
98.8 
102.3 
106.7 
105.1 
105.5 
109.4 
102.8 
96.6 
84.4 
83.8 
83.8 
84.4 
90.3 
92.8 
86.0 
(') 


75.5 


1920... 


75.0 


1921 


75.2 


1922... ... 


83.8 


1923 


91.9 


1924.... . 


99.9 


1925 


108.2 


1926 y 

1927 ..f 


112.6 
124.2 


1928 


127.6 


1929 


139 5 


1930 . .- 


149.7 


1931 


136.5 


1932. 


123.2 


1933 


109.0 


1934 


Ul.O 


1935 ,.. 


114.5 


1936 


109.3 


1937 


110.9 


1938 


101.2 


1939 . .. . • 


(?) 







' All employees; wages and salaries. The Department of Commerce estimates were used for the yQax^ 
1929 to 1938, inclusive. For years prior to 1929 the Department of Commerce estimates of all employees 
have been extrapolated on the basis of the trend of the estimates made by the National Resources Committee 
on the following: Telephone, telegraph; electric power, manufactured gas, railroads, shipping, street rail- 
ways, motor transportation, pipe lines, and air transport. Its estimates, based on unpublished material 
of the National Bureau of Economic Research, were published in Patterns of Resource Use, p. 149. For 
. years prior to 1929 the Department of Commerce has extrapolated its estimates of wages and salaries on the 
basis of the trend of the estimates of the National Bureau ofEconomic Research shown in Simon Kuznets, 
National Income and Capital Formation, 1919-35. 

2 Weighted average of indexes of physical volume of output for steam railroad transportation, street rail-, 
ways, telephones, and electric light and power, and gas shown in National Bureau of Economic Research 
Bulletin .59, p. 24. The weights were the average operating revenues for each industry for the years 1922, 
1927, and 1932, those for the electric light and power, street railways, and telephones being taken from the 
Census of Electrical Industries while that for steam railroads was taken from the publications of the Inter- 
state Commerce Commission. The weights for manufactured gas are the average value of products in 1921, 
1927, and 1931 as compiled by the Census of Manufactures. On the basis of these figures the following 
weights were computed: 

Electric light and power and manufactured gas, 22.4 

Steam railroad transportation 57.9 

.Street railways ^ ..1 9.2 

Telephones and telegraphs... /I 10. 5 

Telegraphs, pipe lines, and wate; , motor, and air transportation are not represented in the production index 
lor lack of data. 

3 Index of consumer funds absorbed divided by Snyder's index of the general price level. 

« Income produced. Figures for 1929-38 from Robert R. Nathan, National Incoriie in 1938 at $64,000,- 
000,000, Survey of Current Business, June 1939, p. 11. For years prior to 1929 the Department of Com- 
merce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of 
Economic Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory 
valuations and of depreciation and depletion charges were eliminated from the estimates of the National 
Bureau. As a result of these adjustments, the 2 sets of figures in 1929 were very nearly the same. 

' Excludes intercorporate dividend and interest payments and short-term interest. The Department 
of Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Depart- 
ment of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National 
Bureau of Economic Research shown in SimoiiL Kuznets, National Income and Capital Formation, 1919-35. 

' Thousands of dollars. 

' Comparable data not available. 



A 



CONCENTRATION OF ECONOMIC POWER 



163 



Table XXVII. — Social performance of the construction industry, 1919-38 * 

[1923-25=100] 



Year 


Einplo3r>^ 
ment ' 


Produc- 
tion* . 


Consumer 
effort com- 
manded * 


Consumer 

funds 
absorbed » 


Pay rolls « 


Dividends 

and 
interest • 


Amount ia base years 

1919 


1,610,000 
86.9 
86.6 
71.0 
87.9 
100.0 
100.3 
99.6 
108.7 
104. 1 
109.0 
109.8 
90.7 
64.3 
37.0 
29.1 
41.1 
43.0 
66.8 
68.5 
65.3 






'$3,449,000 

57.4 

75.4 

65. 5- 

70.5 

95.6 

99.8 

104.6 

107.6 

105.5 

110.4 

109.1 

85.7 

53.5 

24.0 

15.9 

23.5 

26.7 

47.4 

64.0 

51.0 

(•) 


' $2, 787, 000 
55.2 
78.7 
.,/.6 
63.6 
99.7 
100.4 
99.9 
113.6 
109.9 
114.9 
112.8 
88.9 
57.6 
28.3 
17.8 
25.4 
27.2 
46.9 
53.6 
49.6 


'$55 000 


63.0 

56.0 

62.0 

79.0 

89.0 

99.0 

112.0 

119.0 

117.0 

117.0 

114.0 

102.0 

81.0 

64.0 

33.0 

36.0 

41.0 

63.0 

69.0 

70.0 


65.2 
66.0 
66.6 
74.2 
96.6 
100.8 
102.6 
105.6 
103.4 
105.1 
102.0 
84.9 
59.4 
30.4 
20.6 
28.7 
30.7 
61.5 
56.2 
65.4 
(») 


38.2 


1920 


50.9 


1921 


80.0 


1922 - 


67.3 


1923 


86.5 


1924 - 


78.3 


1925 - 


134.5 


1926 . 


103.6 


1927 ..-- 


114.6 


1928. 


121.8 


1929 


147 3 


1930 


158.2 


1931 


101.8 


1932 


63 6 


1933 


54.5 


1934 ... 


40.0 


1935 


62.7 


1936 .. 


87.3 


1937 


129.1 




92.7 


1939 ~. 


(•) 







1 Construction covers the construction and alteration of buildings, roads, bridges, and other engineering 
structures, whether carried on under contract or by operators who build and sell. It excludes "force account" 
construction, i. e., operations undertaken by various industries with their owji employees. It also includes 
shipbuilding. Moreover, the production index shown on the table and chart is that of the Construction 
and Real Property Section of the Department of Commerce. It differs somewhat from that prepared by 
the National Bureau of Economic Research for the period 1919-34, inclusive. (See National Bureau 
of Economic Research Bulletin 59, p. 24.) Both have been computed by deflating dollar volume of con- 
struction by an index of construction costs. 

Comparison of indexes of volume of construction 

[1923-25=100] 



Year 


Construc- 
tion and 

Real 
Property 
Section 


National 
Bureau of 
Economic 
Research 


Year 


Construc- 
tion and 

Real 
Property 
Section 


National 
Bureau of 
Economic 
Research 


1919 


63.0 
55.0 
62.0 
79.0 
89.0 
99.0 
112.0 
119.0 
117.0 
117.0 


67.0 
61.0 
71.0 
91.0 
96.0 
98.0 
107.0 
108.0 
113.0 
121.0 


1929 .. L 


114.0 
102.0 
81.0 
64.0 
33.0 
36.0 
41.0 
63.0 
69.0 
70.0 


113 


1920 


1930 


94 


1921 


1931 . . 


71 


1922 


1 1932 . 


36 


1923 


1933 


31 


1924 


1934 - 


35 


192') 


1935 ^ 




1926 


1936 




1927 


1937 




1928 


1938 











2 All employees; wages and salaries. The Department of Commerce estimates were used for the years 1929 
to 1938. inclusive. For years prior to 1929 the Department of Commerce estimates concerning all employees 
have been extrapolated on the basis of the trend of the estimates made by the Nationnl Resources Com- 
mittee from unpublished material of the National Bureau of Economic Research. For years prior to 1929 
the Department of Commerce has extrapolated its estimates concerning wages and salaries on the basis of 
the trend of the estimates of th.e National Burea'u of Economic Research shown in Simon Kuznets, National 
Income and Capital Formation, 1919-3.1. 

' Index of physical, volume of new construction activity prepared by the Construction and Reil Property 
Section. Division of Economic Ra-^earch, Department of Commerce. This index was arrived at by deflating 
the volume of construction by a construction-costs index. Itdoe= not include shipbuilding and is therefore 
not strictly comparable with the other series for this industry. The greatest discrepancies are in the years 
1919-21, inclusive, when the volurue of shipbuilding was considerable. In subsequent years the exclusion 
of shipbuilding probably does not seriously affect the comparability of this index with the others presented 
here. 

< Index of consumer funds absorbed divided by Snyder's index of the gtnoral price level. 

• Income produced. Figures for 1929-38 from Robert R. Nathrm, National Income in 1938 at .$64 000.000,- 
000, Survey of Current Business, June 1939, p. 1!. For years prior to 1929 the Department of Commerce 
has extrapolated its estimates on the basis of the trend of the estimates of the Nationnl Bureau of Econoinic 
Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory valua- 
tions and of depreciation and depletion charges «ere eliminated from the estimates of the National Bureau. 
As a result of these adjustments, the 2 sets of figures in 1929 weje very nearly the tme. 

« Excludes intercorporate dividend and interest payments aud short-term interest. The Deprtment of 
Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Department 
of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau ■ 
of Economic Research shown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

' Thousands of dollars. 

■ Comparable data not available. 



164 



OONOENTRATION OF ECONOMIC POWER 
Table XXVIII. — Social performance of Government, 1919-38 ' 

[1923-25=100] 



Year 


Employ- 
ment ' 


Consumer 
funds ab- 
sorbed 3 


Pay rolls < 


Interest ' 




2, 883, 000 
126.6 
100.5 
99.1 
95.3 
97.0 
100.6 
102.4 
104.6 
106.9 
109.9 
112.6 
116.3 
117.0 
115.7 
113.0 
H6.3 
122.4 
129.7 
132.7 
135.5 


« $5, 298, 000 

88.3 

89.9 

93.2 

94.2 

97.2 

100.0 

102.8 

106.3 

110.5 

114.4 

119.2 

121.4 

121.8 

119.8 

111.7 

116.9 

124.2 

133.3 

139.6 

145.4- 


« $3, 853, 000 

96.9 

90.2 

91.5 

91.1 

94.9 

99.7 

105.4 

111.0 

117.1 

122.6 

128.2 

131.5 

131.1 

127.1 

113.8 

118.0 

128.5 

139.2 

144.3 

151.2 


'$1,211,000 


1919 


78. 1 


1920 - 


92.9 


1921 


95.2 


1922 - 


100.1 


1923 


101.4 


1924 . 


98. « 


1925 


99.0 


1926 


100.7 


1927 ".. 


99.7 


1928 -u 


99.5 


1929 


102.1 


1930 - 


100.5 


1931 . - 


102.2 


1932 


105.8 


1933 


112.6 


1934 


121.1 


1935 


116.2 


1936 . . ..» 


120.0 


1937 


128.5 


1938 


128.5 


1939 


(') 







I Oovernment covers the operations of Federal, State, city, county, and township units and minor civil 
■divisions, as well as public education and Government owned utilities. Work -relief activities are excluded. 

> All employees. The Department of Commerce estimates were used for the years 1929 to 1938. inclusive. 
For years' prior to 1929 the Department of Commerce estimates have been extrapolated on the basis of the 
trend of the estimates made by the National Resources Committee from unpublished material ^f the Na- 
tional Bureau of Economic Research. 

3 Income produced. Figures for 1929-38 from Bobert R. Nathan, "National Income in 1938 at $64,000,000,- 
000," Survey of Current Business, June 1939, p. 11. For years prior to 1929 the Department of Commerce 
has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of Economic 
Research. 

* Wages and salaries. For the years 1929 to 1938, inclusive, the estimates of the Department of Commerce 
were used. For years prior to 1929 the Department of Commerce ."ias extrapolated its estimates on the basis 
of the trend of the estimates of the National wureau of Economic Keseargh shown in Simon Kuznets, National 
Income and Capital Formation, 1919-35. 

' For the years 1929 to 1938, inclusive, the estimates of the Department of Commerce were used, being 
based on Daily Treasury Statements of the United States Treasury and publications of the Bureau of the 
Census on financial statistics of State and local governments. (See National Income in the United States, 
1929-35, pp. 282-283.) For years prior to 1929 the Department of Commerce has extrapolated its estimates 
on the basis of the trend of the estimates of the National Bureau of Economic Research shown in Simon 
Ku7.nets, National Income and Capital Formation, 1919-35, 

» Thousands of dollars. 

1 Comparable data not available. 






CONCENTRATION OF ECONOMIC POWER 



165 



Table XXIX. — Social perforrnance of finance, 1919-38 ' 

[1923-25=100] 



Year 


Employ- 
ment 2 


Consumer 
funds ab- 
sorbed 3 


Pay rolls « 


Dividends 
and interest' 




969, 000 

84.5 

90.3 

91.5 

88.2 

94.5 

101.2 

104.4 

113.4 

121.3 

128.5 

136.8 

133.1 

124. 2 

118.6 

113.1 

114.4 

113.5 

115.6 

117.5 

116.3 


« $6, 704, 000 

74.0 

78.4 

78.6 

85.6 

93.0 

101.0 

106.1 

110.6 

117.0 

128.4 

131.9 

116.9 

95.5 

76.7 

67.9 

73.4 

79.5 

90.2 

98.1 

91.2 


« $1, 720, 000 

71.7 

83.4 

85.0 

84.8 

93.5 

101.7 

104.8 

115.5 

125.6 

135.8 

146.9 

140.6 

124.8 

110.6 

99.1 

102.6 

104.4 

111.9 

118.3 

114.0 


'$1,581,000 


1919 .— .., 

1920 . 


60.6 
66 9 


1021 . 

1922 


68.1 
75 8 


1923 


90 1 


1924 


97 3 


1925 .. 


112 5 


1926 


122 2 


1927— 


138.3 


1928 - - ..- 


153 4 


1929 


170 1 


1930 

1931 


171.7 
167 1 


1932 


140 5 


1933- - 


114 6 


1934 


116 9 


1935 - 


111 7 


1936 


107 7 


1937 


106 3 


1938. 


103 9 


1939 


(') 





' With respect to the figures on employment, the series published by the Department of Commerce is 
more inclusive than that of the National Resources Committee which formed the basis of the estimates for 
years prior to 1929. The former includes employment in brokerage and building and loans associations 
in the category of 'finance" whereas the National Resources Committee put them in the "miscellaneous" 
classification. Bat the trends of the 2 series are similar in overlapping years. Moreover, the estimates are 
at best approximate so that the refinement of adjustment for coverage was considered unwarranted. Note 
that the total of consumer funds absorbed is more than double the sum of pay rolls and dividends and inter- 
est, a margin of excess much larger than in any of the other industrial groups. This is due in considerable 
part to the fact that finance includes banking, insurance, and real estate. In the real-estate business large 
amounts of net rents and royalties are received. 

' All employees. The Department of Commerce estimates were used for the years 1929 to 1938, inclusive. 
For years prior to 1929 the Department of Commerce estimates have been extrapolated on the basis of the 
trend of the estimates made by the National Resources Committee from unpublished material of the National 
Bureau of Economic Research. 

3 Income produced. Figures for 1929-38 from Robert R. Nathan, ".National Income in 1938 at $64,000,- 
000,000," Survey of Current Business. June 1939, p. 11. For years prior to 1939 the Department of Commerce 
has extrapolated its estimates on the basis o'f the trend of the estimates of the National Bureau of Economic 
Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory valuations 
and of depreciation and depletion charges were eliminated from the estimate;! of the National Bureau. As 
a result of these adjustments, the 2 sets of figures in 1929 were very nearly the same. 

< Wages and salaries. The Department of Commerce estimates were used for the years 1929 to 1938, 
Inclusive. For years prior to 1929 the Department of Commerce has extrapolated its estimates on the basis 
of the trend of the estimates of the National Bureau of Economic Research shown in Simon Kuznets, Na- 
tional Income and Capital Formation, li)19-35. 

' Excludes intercorporate dividend and interest payments and short-term interest. The Department of 
Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Department 
of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau 
of Economic Research shown in Simon Kuznets, National Income and Capital Formation, 1919-36. 

• Thousands of dollars. 

' Comparable data not available. 



Jgg OONOENTRATION OF ECONOMIC POWER 

Table X^X. — Social performance of service, 1919-38 ' 

[1923-25=100] 



Year 


Employ- 
ment ' 


Consumer 
funds ab- 
sorbed ' 


Pay rolls ♦ 


Dividends 
and interest' 




4,713,000 
83.3 
84.3 
85.8 
90.2 
96.7 
100.2 
. 103.2 
109.1 
113.0 
116.1 
122.7 
117.7 
108.6 
97.9 
94=4 
103.9 
109.7 
116.9 
122.6 
115. .1 
(') 


9 $7, 714, 000 
72.2 
79.0 
71.8 
86.4, 
93.2 
98.8 
108.0 
114.5 
112.5 
120.1 
126.4 
114.7 
96.5 
73.0 
69.6 
80.8 
88.7 
99.3 
111.3 
106.3 
V) 


9 $4, 869, 000 
59.6 
70.7 
67.9 
85.6 
90.9 
98.9 
110.2 
114.6 
117.3 
125.3 
133.4 
123.9 
106.8 
85.1 
75.6 
85.2 
92.7 
102.5 
114.2 
107.3 


• $189, 000 
40.7 


1919 : 


1920 . : 


85.7 


1921 


75.7 


1922 - - 


65.1 


1923 


86.8 


1924 - 


93.7 


1925 - - 


120.1 


1926 ; 


138. 1 


1927 - 


152.4 


1928 - 


155.0 


1929 - - 


184.1 


1930 - - 


192. 6 


1931 . .- 1-.- -. 


149.7 


1932 .- 


104.2 


1933 


63.5 


1934 - 


75.7 


1935 


82.0 


1936 - --- --- 


113.2 


1937 -- 


117.5 


1938 


92.6 


1939 


(') 







> "Service" coyers a veide variety of activities including professional, personal, domestic, business, and 
miscpllaneoiis services, and recreation and amusement. 

2 Ail employees. The Department of Commerce estimates were iised for the years 1929 to 1938, inclusive. 
For years prior to 1929 the Department of Commerce estimates have been extrapolated on the basis of the 
trend of the estimates made by the National Resources Committee from unpublished material of the Na- 
tional Bureau of Economic Research. 

3 Income produced. Figures for 1929-38 from Robert R. Nathan, "National Income in 1938 at $64,000,- 
000,000," Survey of Cuircnt Business, June 1939, p. 11. For years prior to 1929 the Department of Com- 
merre has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of 
Economic Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory 
valuation- and of 'lepreciation and depletion charges were eliminated from the estimates of the National 
Bureau, as a rr^ult of these adjustments, the 2 sets of figures for 1929 Were very nearly the sarhe. 

* Wages and salaries. The Department of Commerce estimates were used for the years 1929 to 1938, 
inclusive. For years prior to 1929 the Department of Commerce has extrapolated its estimates on the basis 
of the trend of the estimates of the National Bureau of Economic Research shown in Simon Kuznets, 
National Income and Capital Formation, 1919-35. 

' Excludes intercorporate dividend and interest payments and short-term interest. The Department 
of Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Depart- 
ment of Cornmcrce has extrapolated its estimates on the basis of the trend of the estimates of the National 
Bureau of Eeono/nic Research shown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

9 Thousands of dollars. 

' Comparable data not available. 



i 



CONCENTRATION OF ECONOMIC POWER 
Table XXXI. — Social performan'ce of "ade, 1919-38^ 

[1923-25 = 100] ~ 



167 



Year 


Employ- 
ment * 


Consumer 
funds ab- 
sorbed * 


Pay rolls ♦ 


Dividends 
and inter^t * 


Amount in base years 


4, 662, 000 
86.5 
93.9 
86.1 
90.8 
96.8 
100.2 
102.9 
106.0 
109.1 
109.8 
115.1 
110.0 
99.3 
87.9 
87.0 
90.3 
90.7 
94.4 
99.1 
94.5 
V) 


6 $10, 483, 000 
109.6 
93.6 
66.8 
88.2 
99.9 
97.2 
102.9 
104.6 
101.6 
106.3 
107.7 
89.7 
72.4 
51.3 
57.4 
67.1 
72.3 
80.7 
87.6 
83.6 


8 $7, 094, 000 
82.2 
91.6 
78.2 
85.8 
96.4 
98.4 
105.2 
111.7 
109.1 
111.9 
118.6 
112.7 
98.3 
76.3 
67.5 
74.7 
77.7 
82.8 
91.2 
88.1 


•$429,000 
101 6 


1919 


1920 --- 


99 3 


1921 . 


84 4 


1922 


80 


1923 


01 6 


1924 - .-. 


98 4 


1925 -.'. 


110 3 


1926.V.— -- - 


116 1 


1927 


123 3 


1928 . . 


127 


1929. 


145 6 


1930 ';. 


131.7 


1931 ; 

1932. .\ 


104.7 
62 7 


1933 


52 4 


1934 ■- 


' 86 7 


1935.^ 


~ 111 


1936.. , 


165.3 


1937... .:.... 

1938 


164.1 
■ 124.6 


1939. - 


(') 







> "Trade" comprises wholesale and retail trade as classified in the Census of Distribution in 1929 except 
that restaurants are not included here but are placed under "service." 

' All employees. The Department of Commerce estimates were used for the years 1929 to 1938, inclusive. 
For years prior to 1929 the Department of Commerce estimates have been extrapolated on the basis of the 
trend of the estimates made by the National Resources Committee from unpublished material of the 
National Bureau of Economic Research. 

3 Income produced. Figures for 1929-38 from Robert ,R. Nathan, "National laCome in 1938 at $64,000,- 
600,000," Survey of Current Business, June 1939, p. 11. For years prior t(»1929 the Department of Commerce 
has extrapolated its estimates on the basis of the trend of the estimates of the National Bureau of Econontic 
Research. In order to make the 2 sets of estimates comparable, special adjustments of inventory valuation 
and of depreciation and depletion charges were eliminated from the estimates of the National Bureau. As 
a result of these adjustments the 2 sets of figures in 1929 were very nearly the same. 

* Wages and salaries. The Department of Commerce estimates were used for the years 1929 to 1938, 
■inclusive. For years prior to 1929 the Department of Commerce has extrapolated its estimates on the basis 
of the trend of the estimates of the National Bureau of Economic Research shown in Simon Kuznets, 
National Income and Capital Formation, 1919-35. 

' E.xcludes intercorporate dividend and interest payments and short-term interest. The Department 
of Commerce estimates were used for the years 1929 to 1938, inclusive. For years prior to 1929 the Depart- 
ment of Commerce has extrapolated its estimates on the basis of the trend of the estimates of the National 
Bureau of Economic£esearch shown in Simon Kuznets, National Income and Capital Formation, 1919-35. 

« Thousands of dollars. 

' Comparable data not available. 



256147-— 40— No. 7- 



-12 



268 OONOENTRATION OF ECON MIC POWER 

Table XXXII. — Social performance of General Motors Corporation, 1.9t.Q-38^ 

[1923-25 = 100] 



Year 


Employ- 
ment ' 


Produc- 
tion 3 


Consumer 
efTort com- 
manded < 


Net sales' 


Pay rolls » 


Dividends' 


Amount i n base years 


82,728 

103.9 

97,4 

55.6 

79.0 

110.3 

89.0 

100.7 

156.6 

212.3 

252.6 

282.0 

209.0 

190.5 

140.4 

166.5 

231.1 

255.9 

278.7 

316.7 

228. 5 

(') 






' $666, 880 

. 76.4 

85.1 

45.6 

69.5 

104.7 

85.2 

110.2 

158.7 

193.3 

222.2 

229.8 

150.8 

124.2 

66.1 

87.5 

129.4 

173.3 

215.8 

240. S 

160.0 


' $128, 505 
81.2 


' $44, 513 


1919 , 


52.9 

53.0 

29.0 

61.7 

107.8 

79.2 

112.8 

166.7 

210.9 

244.4 

256.3 

158.4 

145.1 

76.0 

117.3 

167.3 

231.6 

275.0 

285.7 

176.5 


73.5 
73.4 
46.5 
73.2 

105.8 
86.1 
108.0 
155.6 
189.5 
211.6 
214.8 
149.3 
138.0 
83.7 
113.6 
157.8 
199.2 
234.6 
250.9 
173.9 


48.4 


1920 .-' 


52.8 


1921 .. 


51.4 
74.0 
107.6 
86.0 
106.4 
171.9 
235.7 
284.3 
303.1 
217. 4 
184.0 
111.5 
133.2 
204.8 
255.0 
298.9 
368.3 
234.1 
(«) 


60.2 


1922 


37.3 


1923 


71.1 


1924 - 


72.6 


1925 - -- 


156.3 


1926 -- 


250.6 


1927 


323.4 


1928 


392.6 


1929 1 


373.1 


1930 


314.6 


1931 


314.2 


1932. - 


142.0 


1933 --- 


141.5 


1934 


165.4 


1935 


237.4 


1936 :— . 


454. C 


1937 


381.3 


1938 


165. Z 


1939.. 


(») 







• The basic data for this corporation have been taken from Federal Trade Commission, Report on Motor 
Vehicle Industry (76th Cong., 1st sess., H. Doc. No. 468), published in 1939. The series has been con- 
tinued through 19.38 from the report on the corporation published in Moody's Industrials for 1939. 

The dividends series represents cash dividends on preferred and common stock of General Motors Cor- 
poration and consolidated subsidiaries. A complete series on interest expense was not available, but the 
inclusion of this item would have a negligible effect on the index, since interest expense ranged from only 
$542,000 to $2,464,000 per year in the period 1927-37, inclusive. Likewise it was not possible to dedact divi- 
dends and interest received, since figures on "income from outside investments" were available for only 
1927-37, inclusive. This item was more sizable, ranging from $8,145,000 in 1927 to $30,338,000 in 1935. 

Since no figures were available on cost of raw materials, etc., which would permit the computation of a 
series corresponding to consumer funds absorbed, the figures on net sales were utilized. This series repre- 
sents the net sales by General Motors Corporation and consolidated subsidiaries of motorcars, accessories, 
parts, and numerous other products. Intercompany sales have been eliminated in arriving at net sales. 

The production index is based on total sales of passenger and commercial cars to dealers, including Cana- 
dian sales, overseas shipments, and production by foreign subsidiaries. It is therefore less inclusive than 
the sales and dividend series which include amounts derived from the sales of accessories, refrigeration 
equipment, and numerous other products of General Motors. 

' The pay rolls for 1921 and subsequent years include salaries and wages. Neither the number of em- 
ployees nor the pay rolls include certain subsidiaries such as Adam Opel, A. Q., Vauxhall Motors, Ltd., 
Yellow Truck & Coach Co., and Fisher Body Corporation, prior to acquisition of the minority interest as of 
June 30, 1926. Based on figures in Federal Trade Commission, Report on Motor Vehicle Industry, pp. 
54.5-546. Beginning with 1920, employment figures are based on averages for the year. Figures on pay 
rolls include appreciation fund distributions of $4,647,025 in 1935 and .$9,165,554 in 1936. 

' Total sales of passenger and commercial cars to dealers, including Canadian sales, overseas shipments, 
and production by foreign subsidiaries. Based on figures in report on General Motors Corporation in 
Moody's Industrials for various years. 

• Index of net sales divided by Snyder's index of the general price level. 

• Based on figures in Federal Trade Commission, op. cit., p. 431. 

« Cash dividends paid, based on figures in Federal Trade Commission, op. cit., p. 431. 
' Thousands of dollars. 

• Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 



169 



Table XXXIII. — Social performance of UniUd States Steel Corporation and 

subsidiaries, 1919-38 ' 

[1923-2^=100] 



Year 



Amount in base years.. .. 

1919 ---- 

1920...- ~. 

1921. :: 

1922.. :. .'. 

1923. 

1924......'. 

1925 

1926... 

1927 

1928 .^. 

1929 1.- 

1«30.. .- 

1931 

1932 

1933. 

1934 

1935 

1936. 

1937 

1938 

1939. 



Employ- 
ment > 



252, 457 
(») 

105.9 
75.9 
85.1 

103.3 
97.7 
99.0 

100.3 
91.7 
87.8 
89.1 
83.6 
80.7 
62.6 
68.4 
75.2 
77.2 
88.1 

103. 5 
80.0 



Ingot 
produc- 
tion 3 



92.6 
103.8 
.59.0 
86.6 
109.5 
88.7 
101.8 
109.4 
99.6 
108.3 
117.8 
90.1 
54.3 
26.5 
43.3 
46.6 
59.9 
91.0 
99.8 
50.6 
(') 



Consumer 
effort com- 
manded * 



105.4 

110.3 
73.2 
84.1 

109.0 
91.8 
99.1 

105.3 
93.1 
95.0 

100.9 
82.2 
60.4 
36.1 
48.3 
51.0 
61.7 
85.0 

105.8 
65.6 
(') 



Sales and 
other rev- 
enues » 



$1,012,702 
109. 6 
128.0 
71.7 
79.9 
108.0 
90.9 
101. 1 
107.4 
95.0 
99.8 
108.0 
83.0 
64.4 
28.5 
37.2 
41.8 
53.7 
78.2 
101.6 
60.4 



Pay rolls « 



■ .$456, 234 
105.1 
127.5 
73.0 
70.7 
102.9 
97.0 
100.1 
102.4 
94.4 
90.7 
92.1 
85.8 
58.5 
29.4 
35.8 
46.1 
55.1 
74.3 
97.1 
61.8 



Dividends 

and 
interest « , 



o 



86,160 
93.7 
92.8 
91.8 
91.7 
95.7 
102.3 
102.0 
101.6 
117.3 
117.0 
120.7 
105.9 
78.6 
30.2 
14.4 
14.2 
14.1 
64.2 
84.0 
38.0 



1 Most of the data were prepared by the United States Steel Corporation and submitted in hearings before 
the.Temporary National Economic Committee as exhibit 1409. Note that the sales and other revenues are 
used to represent the fund s absorbed from consumers inasmuch as data on cost of ra<? materials, etc., were 
not available. 

In the absence of a general index of steel production, the figures on ingots are used, the analysis here in that 
regard following the example of the United States Steel Corporation in its comparisons of production and 
employment. The corporation an^ its subsidiaries engage in a wide variety of activities such as mining, 
transportation, and the manufacture of cement, in addition to the production of steel. The production 
series, therefore, is less inclusive than the other series, but it is used in the absence of a reliable index covering 
the output of all goods ar d services of the corporation. 

2 Employment figures are based on average number of employees in the service of all companies during 
each year, compiled from reports on the United States Steel Corporation in Moody's Industrials for 
various years. Pay roHs represent total wages and salaries paid to all employees of all companies and 
include a relatively srnall amount of construction pay roll, which it was not possible to exclude in early 
years. Based on data submitted by the United States Steel Corporation to the Temporary National Eco- 
nomic Committee, exhibit 1409, A-10. 

' Includes production of castings. Based on data presented before the Temporary National Economic 
Committee, exhibit 1409, D-3. 

< Index of sales and other revenues divided by Snyder's index of the general price level. 

' Sales and other revenues represent the total amount available for the payment of all expenses and other 
obligations. - In eliminating intercompany business, amounts ■applicable to transportation companies were 
partially estimated. Based on data submitted by the United States Steel Corporation to the Temporary 
National Economic Committee, exhibit 1409, A-10. - 

' Interest and cash dividend payments to investors. ""Interest includes bond premium and discount. No ■ 
deductions have been maoe of dividends and interest received, due to lack of data. Based on data sub- 
mitted by the United 6tate<5 Steel Corporation to the Temporary National Economic Committee, exhibit 
1409, A-10. 

' Thousands of dollars. 

' Comparable data not available. 



^YQ CONCENTRATION OF E(X)NOMIC POWER 

Table XXXIV.— iSoctai performance of the Bell System, 1919-38 

[1923-25=100] 





Employ- 
ment 1 


Production > 


Consumer 
effort com- 
manded » 


Operating 
revenues • 


Pay rolls ' 


Dividends 

and 
interest » 




Weighted 


Unweighted 


Amount in base 


281,580 
74.5 
82.1 
79.6 
86.3 
96.6 
99.3 
104.1 
106.8 
109.7 
118.7 
129.3 
116.2 
104.7 
94.6 
88.2 
88.4 
86.9 
92.1 
97.9 
93.9 
O 








• $687, 640 
56.4 
66.6 
73.7 
81.2 
90.6 
98.6 
110.7 
122.8 
133.3 
145.9 
162.2 
167.5 
161.8 
141.7 
130.0 
130.8 
138.0 
148.6 
157.0 
167. 2 
(0 


« $360, 238 
55.3 
73.2 
76.3 
82.5 
92.7 
101.3 
106.0 
113.4 
119.3 
129.5 
146.2 
148.4 
134.2 
115.0 
98.9 
103.2 
107.5 
115.8 
132. 2 
135.7 
(') 


• ;i24, 499 


1919 


69.5 

73.8 

79.1 

87.4 

94,5 

99.7 

106.0 

113.1 

119.0 

126.4 

136.5 

134.2 

128.7 

115.4 

107.2 

110.6 

113.9 

124.2 

130.6 

131.0 

O 


66.6 
72.4 
76.5 
83.7 
93.4 
100.0 
106.5 
114.3 
120.5 
128.9 
140.1 
142.6 
141 7 
133.3 
125.0 
128.4 
133.4 
143.7 
162.2 
164.6 
0) 


64.2 
57.4 
75.2 
85.6 
91.5 
99.6 
108.5 
120.4 
130.7 
139.0 
161.6 
165.8 
179.8 
179.4 
168.8 
159.6 
158.6 
161.4 
163.6 
170.0 
(0 


54.2 


1920 - -- 


57.6 


1921 


68.0 


1922 


78.8 


1923 


88.5 


1924 


99.7 


1926 - ...... 

1926 


111.8 
120.4 


1927 


130.8 


1928 


137.3 


1929 


154.1 


1930 


179.0 


1931 


197.3 


1932 


192.9 


1933 


190.8 


1934 


193.4 


1935 


189.2 


1936 


188.3 


1937. 


181.3 


1938 


179.6 


1939. 


(') 







• Employment series based on all employees and pay-roll series on salaries and wages. Employees of 
Western Electric Co., Inc., are not included. Based on figures from American Telephone & Telegraph Co . 
Comptroller's Annual Report 1936, Part I, Bell System, Statement No. 54, and the same for 1938, Statement 
No. 48. Beginning with 1933 occasional employees and those on leave of absence without pay for periods 
longer than 1 month are not included. Furthermore, for the years 1936, 1937, and 1938 the published figures 
for the Bell System have been raised to include The Southern New England Telephone Co. and The Cincin- 
nati & Suburban Bell Telephone Co. in order to make the series comparable. Data for these companies 
were supplied by the Federal Communications Commission. 

> Weighted average of exchange and toll messages of the Bell System as computed by the National Bureau 
of Economic Research and published in its Bulletin No. 59. The unweighted figure is based on average daily 
conversations as reported in Federal Communications Commission, Special Investigation, Docket No. 1,- 
Report on American Telephone & Telegraph Co., Corporate and Financial History, vol. I, p. 115. 

' Index of operating revenues divided by Snyder's index of the general price level. 

• Federal Communications Commission, Special Investigation, vol. I, p. luQ. 

• Dividends paid to the public after intercompany dividends have been eliminated, and interest paid but 
making no allowance for interest received due to lack of data. Figures for dividends from Federal Communi- 
cations Commission, Special Investigation, vol. I, p. 109. Figurer for interest from Annual Report of the 
American Telephone & Telegraph Co., for respective years. 

• Thousands of dollars. 

' Comparable data not available. 



CONCENTRATION OF ECONOMIC POWER 



171 



Table XXXV. — Social performance of the telephone and tclrgrnphindustry, 1919-38 

[1923-25=100] 



Year 


, Employ- 
ment ' 


Produc- 
tion > 


Consumer 
effort com- 
manded ' 


Consumer 
funds ab- 
sorbed < 


Pay rolls ' 


Dividends 

and 
interest ' 


Amount in base years . - - 


419,000 
83.5 
89.5 
85.5 
89.5 
97.0 
99.4 
103.6 
106.2 
107.6 
111.9 
124.8 
122.5 
107.4 
96.0 
90.0 
90.0 
88.8 
90.9 
97.4 
91.1 
V) 






« $716, 100 
60.7 
75.0 
77.5 
84.2 
92.7 
98.7 
108.8 
117. 1 
122.5 
131.5 
146.0 
141.2 
126.7 
100.9 
89.2 
94.9 
100.9 
107.2 
114.0 
112.3 


« $504, 200 
61.3 
80.8 
80.3 
85.1 
94.1 
100.7 
105.3 
113.3 
116.9 
124.9 
140.2 
142.0 
127.2 
105.8 
91.4 
97.0 
100.5 
106.5 
119.6 
120.7 
(') 


» $127 000 


1919 

1920 -- 


69.5 
73.8 
79.1 
87.4 
94.5 
99.7 
106.0 
113.1 
119.0 
126.4 
136.5 
134.2 
128.7 
115.4 
107.2 
110.6 
113.9 
124.2 
130.5 
131.0 
(•) 


58.4 
64.7 
79.1 
88.6 
93.6 
99.7 
106.7 
114.8 
120.1 
125. 2 . 
136.4 
139.8 
140.8 
127.7 
115.8 
115.7 
116.0 
116.5 
118.7 
122.1 
(') 


63.2 
65.8 


1921 


74.2 


1922 . - 


78 3 


1923 .- 


88.7 


1924... 

1925 

1926 


98.1 
113.2 
120.9 


1927 ._ 

1928 


131.1 
132.0 


1929 


143.3 


1930 .-^- 

1931 . - 


162.0 
178.3 


1932 


189. 4 


1933 

1934 


189. 6 
189.4 


1935 


188.0 


1936.r. 


176.0 


1937 


■ 172. 9 


1938 


158.7 


1939 -. 


(') 







1 Employment <!eries based on all employees and pay-roll series on salaries and wages. Figures for 1929-38 
are from the National Income Division, Department of Commerce, and those for prior years have been 
obtained by extrapolating the Department of Commerce estimates on the basis of the trend of estimates of the 
National Bureau of Economic Research. 

' Index of production for telephones onlj' shown in National Bureau of Economic Research Bulletin 59, 
p. 24. Since comparable production data for the telegraph industry were not available prior to 1926, it was 
decided to present the series for telephones only in order to use 1923-25 as the base period. The inclusion of 
telegraph messages would make the trend less steep. However, experimentation with the period since 1926 
indicates that the inclusion of telegrapli messages does not alter the production index materially because 
telephones accounted on the average for about 85 percent of the total operating revenues for the communica 
tions industry over the period 1922-32. 

3 Index of consumer funds absorbed divided by Snyder's index of the general price level. 

* Income produced. The figures for consumer funds absorbed are based on estimates for 1929-38 of the 
Department of Commerce on "income produced." These have been extrapolated for the earlier years on 
the basis of the series of the National Bureau. Although the dividends-and-interest series from the two 
sources differed noticeably in some years, the trends of the 2 series of "income pfoduced" we're sufl3ciently 
alike to justify this method of extrapolation. 

' Excludes intercorporate dividend and interest payments. Estimates of the National Bureau of Eco- 
nomic Research have been used for the period 1919-35 and figures for subsequent years have been extrapo- 
lated by means of Department of Commerce estimates. The reason for using the series on dividends and on 
interest of the National Bureau of Economic Research is that it corresponds more closely with the trend 
shown by figures submitted by the telephone industry than docs the series used by the Department of 
Commerce which is based on data taken from the Statistics of Income. Since the figures of the National 
Bureau do not extend beyond 1935, they were extrapolated on the basis of the estimates of the Department of 
Commerce. The 2 series are in sufficiently close agreement in 1934 and 1935 to make the extrapolation valid. 
The figures for 1936-38, however, must be regarded as tentative. Since the series of the National Bureau of 
Economic Research is not based on data taken from the Bureau of Internal Revenue, it is not aflected by 
the change in industrial classification in 1934. It is reasonably homogeneous throughout the period. 

• Thousands of dollars. 

' Comparable data not available. 



172 



OONOBNTRATION OF ECONOMIC POWER 



Table XXXVI. — Interest, taxes, and cash dividends of all corporations, 1921-37^ 

[In millions] 



Year 



1921 
1922 
1923 
1924 
1925 
1026 
1927 
1928 
1929 



Interest 
paid 



$3,141 
3,069 
3,278 
3,445 
3,617 
3,989 
4,375 

~ 4, 681 
4,925 



Taxes 
paid » 



$2, 175 
2,302 
2,572 
2,552 
2,994 
3,108 
3,145 
3,387 
3,415 



Cash 

dividends 

paid 3 



« $2, 687 
2,634 
3,299 
3,424 
4,014 
4,439 
4,765 
5,157 
5,763 



Year 



1930 
1931 
1932 
1933 
1934 
1935 
1936 
1937 



Interest 
paid 



$4,861 
4,492 
4.043 
3,511 
3,422 
3,261 
3,081 
3,003 



Taxes 
paid ' 



$3, 009 
2,630 
2,373 
2.547 
2,758 
3,363 
4,149 
4,942 



Cash 

dividends 

paid ' 



$5,631 
4,182 
2,626 
2,102 
2.672 
2, 927 
4,702 
4,832 



' Compiled from the U. S. Bureau of Internal Revenue, Statistics of Income and published in National 
City Bank of New York, Economic Conditions, Qovernmental Finance, United States Securities, April 
1935, p. 61. and January 1939, p. 9. Interest and dividends paid from 1933-36 compiled directly from 
Statistics of Income. 

• Includes Federal normal income tax, surtax on undistributed profits, and excess-profits tax for 1936, 
and State, loOl, and other taxes for 1935. 

' Excludes intercorporate dividends. 

* Partly estimated. 

Table XXXVII. — Employment, production, and national income, 1919-39 





Number 
employed ' 


Indexes, 1923-25 = 100 


Year 


Employ- 
ment 


Industrial 
produc- 
tion ' 


Agricul- 
tural pro- 
duction 5 


National 

income in 

constant 

prices « 


1919 - 


42, 029, 000 
41, 339, 000 
37,691,000 
40, 049, 000 
43, Oil, 000 
42,515.000 
44, 192, 000 
45, 498, 000 
45, 319, 000 
46, 057, 000 
47,925,000 
45, 216, 000 
41,551,000 
37, 704, 000 
38, 086, 000 
41,002.000 
42, 357, 000 
44, 783, 000 
46, 639, 000 
43, 600, 000 
45,314,000 


97.2 
95.6 
87.2 
92.6 
99.5 
98.3 
102.2 
105.2 
104.8 
106.5 
110.8 
104.6 
96.1 
87.2 
88.1 
94.8 
98.0 
103.6 
107.9 
100.8 
104.8 


82.8 
86.2 
66.7 
83.9 
101.1 
94.3 
104.6 
110.3 
109.2 
113.8 
126.4 
104.6 
86.2 
66.7 
79.3 
86.2 


90.9 
96.4 
87.0 
95.3 
98.5 
100.4 
101.1 
105.7 
102.8 
108.2 
104.8 
104.7 
110.7 
103.4 
100.6 
97.1 


70.5 


1920 


63.8 


1921 


75.2 


1922 


87.9 


1923 


97.9 


1924. 


100.2 


1926 - 


101.8 


1926 


108.6 


1927 


111.9 


1928 ...^ 

1929 


116.2 
123.1 


1930 


114.4 


1931 


106.6 


1932 


89.4 


1933 — 


92.9 


1934 -... 


98.0 


1936 


100.0 1 96.0 
1J- 4 98.4 
120 9 j 112. 
101. I 107.9 
124 1 111.1 


99.9 


1936 


113.8 


1937 


117.1 


1938 ^ 


114.3 


1939 — 


126.7 











' National Industrial Conference Board, Economic Record, Mar. 20, 1940, p. 78. 

» Computed from Federal Reserve Bulletin, vol. 26, No. 8, Aug. 1940, p. 764. Base shifted to 1923-25. 

' Hearings before the Temporary National Economic Committee, Part 1, exhibit No. 20, p. 204. 

< Ibid., exhibit No. 6, p. 195. 



G0NO3NTRATI0N OF ECONOMIC POWER 



173 



Table XXXVII-A.- 



-National income, labor income, and dividends and interest 
in all industries, 1919-39 i 



Year 


National income ' 


Labor income ' 


Dividends and interes* * 


Millions 


Index • 


Millions 


Index ' 


Millions 


Index » 


1919 


$68,605 
69, 457 
61, 452 
59,720 
69,400 
69, 221 
74,154 
76, 345 
75, 153 
79,100 
82,885 
68,901 
64,310 
40,074 
42, 430 
50,347 
55. 870 
65, 165 
71,172 
63,610 
69, 378 


96.7 

97.9 

72.5 

84.2 

97.8 

97.6 

104.6 

107.6 

106.0 

111.5 

U&.'9 

97.1 

76.6 

66.5 

59.8 

71.0 

78.8 

91.9 

100.3 

89.7 

97.8 


$37, 548 
44,217 
35, 166 
37, 370 
43,619 
43, 591 
45, 695 
48,408 
48, 526 
49, 958 
52, 776 
47, 919 
40,303 
31,394 
28,946 
32, 814 
35, 893 
40, 021 
44,809 
41,037 
43,703 


84.8 

99.8 

79.4 

84.4 

98.5 

98.4 

103.1 

109.3 

109.5 

112.8 

119.1 

108.2 

91.0 

70.9 

65.3 

74.1 

81.0 

90.3 

101.1 

92.6 

98.6 


$5,907 
6,592 
6,443 
6,646 
7,707 
7,878 
8,737 
9,277 
9,852 
10,485 
11,851 
11,715 
10,270 
8,393 
7,351 
7,937 
8,055 
9,721 
9,794 
8,258 
8,956 


72.9 


1920. 


81.3 


1921 


79.5 


1922 


82.0 


1923 ,- 


95.1 


1924 


97.2 


1925 .. 


107.8 


1926 - . 


114.4 


1927 - 


121.5 


1928 


129.3 


1929 


146.2 


1930 


144.5 


1931 


126.7 


1932 


103.5 


1933 


90.7 


1934 


97.9 


1935. 


99.4 


1936 


119.9 




120.8 


1938. - 

1939 .. 


101.9 
110.5 







> See Appendix D reproducing Robert R. Nathan, "National Income at nearly 70 Billion Dollars," 
-Stirvey of Current Business, June 1940, pp. 2-3; and Simon Kuznets, National Income in 1939, and Capital 
Formation, 1919-35, National Bureau of Economic Research, 1938. Department of Commerce estimates 
were used for the years 1929-39, inclusive. For years prior to 1929, Department of Commerce estimates 
were extrapolated on the basis of the trend of the estimates of the National Bureau of Economic Research. 
In order to make the 2 sets of estimates comparable, savings of Government, imputed rent, and special 
adjustments of inventory valuations and of depreciation and depletion charges were eliminated from Na- 
tional Bureau estimates. As a result of these adjustments, the 2 sets of figures in 1929 were very nearly 
"he same. 

'Total national income produced. Excludes work-relief wages and Social Security contributions of 
employers. 

' Includes salaries, wages, and other c mpensation but excludes work-relief wages and Social Security 
contributions of employers. 

< C^h dividend and interest payments, including payments to oth^r corporations, and short-term interest. 

•1923-25=100. 



APPENDIX C 

METHOD OF COMPUTING COMPOSITE RATINGS 

Separate industries and groups of industries were rated on the 
basis of long-time trends, measuring economic behavior in several 
ways over that period of years for which data were available. Thus 
comparisons w^re avoided based on the arbitrary and unreliable 
selection of particular years. But the arbitrary selection of a type 
of trend could not be avoided. Rather than fit different trends it 
was -thought best to use one type thro.ughout, the simplest one, the 
straight line. This is not used to show growth nor should it be 
regarded as the only type warranted by the underlying economic 
developments. It is simply used as a method of finding average an- 
nual increment, positive or negative. Thus the average annual incre- 
ment or coeflficient of regression was computed by the familiar formula, 

b=:^-j) where 6= average increment; a; = deviation from point of 

origin or median year; and ?/= index value for the given y^ar.^ 

In rating industry groups, both by five and eight criteria, the same 
time period, 1919-38, was used for each measure of behavior. The 
annual increments of production, employment, pay rolls, consumer 
funds absorbed, consumer effort commanded, and dividends and 
interest were computed. To determine the extent to which employr 
ment tended to outstrip production, the average annual production 
increment was subtracted from the average annual employment incre- 
nrent. Similar methods were employed to determine whether or 
not production outstripped consumer effort commanded (a rough 
measure of relative price behavior) ; whether or not pay rolls had 
increased more rapidly than consumer funds absorbed; whether or 
not pay rolls had outstripped dividends and interest; and whether 
or not consumer funds ' absorbed had increased more rapidly than 
dividends and interest. A minus increment value indicates behavior 
in the reverse direction to that described above. 

In the rating of individual industries, hmitations available data 
required the use of varying time periods for different types of behavior. 
Indexes of consimier funds absorbed were available for odd years 
only in the period 1919-37; for dividends and interest the period used 
was 1926-36. Increments of production, employment, and pay rolls 
for the years 1927-38 were computed and comparisons made over 
this time period. Increments for production, pay rolls, and consumer 
funds absorbed were computed for the period 1927-37; and pay rolls 
and dividends and interest for the years 1926-36, and comparison 
made on the basis. 

Two methods were used to arrive at a composite rating for each 
industry or industry group. By the first method, the industries or 

' See any textbook on statistics, e. g., Robert Emmet Chaddock, Principles and Methods of Statistics, 
pp. 320-325. 

175 



176 



OOlSrCENTRATION OF ECONOMIC POWER 



groups were given a numerical rank in accordance with the magnitude 
of the increment. These integers were cumulated to give the com- 
posite rating. The second method employed was to summate the 
increments algebraically, and rate the industries or groups accordingly. 

The accompanying table reveals the weaknesses in the use of par- 
ticular years to measure social behavior of industry. Taking 1927 
as 100, the employment index was divided by the production index in 
an ^attempt to determine the relative extent to which employment 
kept pace with production in different industries. 

Woolen and worsted goods ranked first in 1930 and fourteenth in 
1935'. Slaughtering and meat packing was rated second in 1929, 
seventeenth in 1934, and first in 1937. 

It was to avoid the tendency to emphasize sporadic behavior of 
individual industries that the method of measuring the slope of the 
secular trend line was devised. The latter method is less susceptible 
to error inherent in the selection of arbitrary years. 

Relation of employment to production — Industry ratings by years 1928-37 * 



Industry 



1928 


1929 


1930 


1931 


1932 


1933 


1934 


1935 


1936 


1937 


Total 


Eank 


3 


3 


1 


11 


11 


10 


10 


14 


10 


10 


83 


8 


14 


20 


20 


19 


19 


20 


20 


20 


20 


20 


192 


20 


7 


2 


10 


14 


15 


16 


17 


2 


4 


1 


88 


10 


19 


15 


12 


17 


17 


17 


18 


16 


18 


18 


167 


18 


10 


13 


11 


13 


12 


14.5 


12 


13 


14 


17 


130 


13 


5 


7 


5 


8 


6 


7 


6 


9 


7 


4 


64 


4 


»15 


12 


'16 


16 


».16 


18 


16 


15 


16 


16 


156 


17 


18 


18 


9 


3 


1 


2 


1 


3 


9 


6 


70 


6/7 


6 


9 


4 


4 


4 


3 


3 


7 


2 


3 


45 


2/3 


11 


16 


19 


18 


18 


14.5 


14 


10 


8 


8 


136 


15 


4 


8 


3 


10 


13 


9 


5 


8 


13 


11 


84 


9 


16 


17 


15 


15 


14 


13 


11 


11 


11 


14.5 


137 


16 


12 


4 


13 


12 


10 


12 


9 


12 


12 


12 


108 


12 


8 


6 


2 


9 


9 


11 


15 


15 


15 


13 


103 


11 


2 


1 


7 


7 


8 


5 


7 


6 


1 


2 


45 


2/3 


17 


19 


18 


6 


3 


8 


13 


18 


17 


14.5 


133 


14 


1 


5 


14 


1 


S2 


1 


32 


1 


3 


5 


35 


1 


13 


H 


6 


2 


5 


4 


4 


6 


6 


9 


68 


5 


20 


11 


17 


20 


20 


19 


19 


19 


19 


19 


183 


19 


9 


10 


8 


5 


7 


6 


8 


4 


6 


7 


70 


6/7 



Value or 
range of 
median 



Woolen and worsted goods 

Tobacco 

Slaughtering and meat packing. 

Petroleum refining 

Paper and pulp 

Lumber and timber products.. 

Knit goods 

Iron and steel 1 

Furniture . 

Flour and grain-mill products.. 

Cotton goods 

Chemicals 

Canning and preserving 

Boots and shoes. 

Baking and confectionery 

Automobiles 

Agricultural implements 

Metal mining 

Oil and gas producing 

Coal mining : 



10 

20 

7-10 

17 

13 

6-7 

16 

3-6 

4 

14 

8-9 

14-16 

12 

9-11 

5 

14-17 

2 

5-6 

19 

7 



• Ratios of employment to production were computed and then ranked numerically in order of magnitude 
1927 in each case being taken as the base year. In 1928, for example, employment held up best relative to 
production in the agricuUural implements industry, which is given a rating of 1. Note the fluctuation in 
ranking over the period 1928-1937 

' Imputed from average of otner years. 

NoTB.— Industries rated each year by dividing employment index by production index (1927=100). 



APPENDIX D 

NATIONAL INCOME AT NEARLY $70,000,000,000 IN 1939 

By Robert R. Nathan, Chief, National Income Division 
[Reprinted from Survey of Current Business, June 1940] 

National income in the United States in 1939 totaled nearly 
$70,000,000,000. Except for the $fl,200,000,000 total in 1937, the 
$69,400,000,000 value of goods and services produced in 1939 was 
above that of any year since the $82,900,000,000 peak recorded in 
1929. With increased output in all industrial groups, the net value 
of production rose $5,800,000,000 in 1939, or 9.1 percent, from the 
$63,600,000,000 aggregate in 1938. 

The large rise in 1939 resulted in considerable measure from the ac- 
celerated expansion in business activity which followed the outbreak 
of the war in September. As indicated by the index of income pay- 
ments published regularly in the Survey of Current Business, the flow 
of income during the first half of 1939 was only moderately above the 
rate prevailing in 1938. During this 6-month period, the national 
income was beijig produced at an annual rate not much in excess of 
$65,000,000,000. A definite rise began in the summer of 1939, and at 
the time of the outbreak of war early in September the nation j^I in- 
come rate closely approximated the average level for the year. 

Under the impetus of anticipated war demand and a resulting sharp 
expansion in inventories, production in many industries rose substan- 
t)ially in the final months of 1939. Prices also increased during the 
early weeks of the European conflict and generally were maintained 
throughout the closing months of the year. The enlarged output at 
higher prices raised the flow of national income by the year end to an 
annual rate in excess of $75,000,000,000. During the firfet 4 months 
of 1940, income contracted at approximately the same rate at which ib 
had expanded in the final months of 1939 ; the flow of income in April 
1940 had fallen to the 1939 average. 

INCOME IN FIXED PRICES PROBABLY AT NEW RECORD IN 1939 

The national income measured in prevailing prices reflects both 
changes i^ the quantity of goods and services produced and in the 
prices of these products. Changes in the dollar figures alone do not 
measure changes in the output of the Nation because of marked 
variations in the price level. 

The "real" national income in 1939 — that is, the dollar total ad- 
justed for price changes — was at least equal to and probably above the 
previous record of 1929. Existing price series are not adequate to con- 
vert the dollar income figures into real income with precision, but the 
margin extant after making adjustments with readily available price 
series indicates the probability of a new record level of production of 
,goods and services in the United States in 1939. Since the population 

177 



jYg CONCENTRATION OF ECONOMIC POWER 

of the United States in 1939 was approximately 10,000,000 larger than 
in 1929, however, there is little doubt that the per capita real income 
in 1939 continued well below that of 1929. The dollar national in- 
come in 1939 was 16.3 percent below the 1929 total, but prices, as re- 
flected in available price indexes, showed larger declines over the 
period. The cost of living of urban wage workers was 17.4 percent less 
than in 1929 and wholesale prices were down 19.1 percent. Neither 
the wholesale price index, which is a particulariy sensitive series, nor 
the cost-of-living index, which applies only to items included in the 
budget of urban wage workers, is satisfactory for adjusting the dollar 
income figures for price changes. However, these price data and 
available production statistics warrant the conclusions drawn above. 

Concepts and terminology. — The national income is designed to 
measure the aggregate output resulting from economic activities in 
the United States. In other words, it is an aggregate of the value of 
all food, clothing, shelter, services, and capital equipment which are 
created through the efforts of the individuals in the Nation. It is 
defined as the net value of all goods and services produced within a 
given period. The measure is net in the sense that the value of raw 
materials and of plant and equipment consumed in the process of pro- 
duction is deducted from the gross value of all goods and services pro- 
duced. The value of capital consumption is represented by deprecia- 
tion and depletion charges, which are deducted at a cost in arriving at 
the national income. 

The national income is measured by adding together the net value 
of products of all producing units, including corporations. Govern- 
ment agencies, partnerships, and individual enterprises. Each of 
these producing units utilizes personal services and capital provided 
by individuals who both contribute to the productive process and 
share in its output. For their efforts, individuals receive income in 
the form of wages; salaries, interest, dividends, entrepreneurial with- 
drawals, and net rents. When these distributive shares are less than 
the net value of product, business enterprises retain undistributed 
earnings or positive savings. If income disbursed exceeds income 
produced, the difference, which represents a draft upon net worth, is 
termed "negative savings." Income disbursed plus business savings 
equals the national income. Thus, the national income isameasure of 
the net value of goods and services produced and also of the claims 
over these goods and services. 

The concepts, terminology, and methods of measurement under- 
lying the estimates presented in this article are generally the same as 
those presented in previous publications of the Department of Com- 
merce. There have been moderate revisions in the estimates as new 
source material has become available. In the figures presented in 
this article, an appreciable increase in the estimates for the power and 
gas industry for all years has resulted from the inclusion of natural-gas 
activities for the first time in this study. The estimates of dividends 
and corporate savings for 1937 have been revised on the basis of cor- 
porate income-tax-return data from the Bureau of Internal Revenue. 
The 1938 and 1939 figures for these items are preliminary pending the 
publication of the income-tax data for these years. 



CONCENTRATION OF ECONOMIC POWER 



179 



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]^gQ OONOENTRATiaN OF ECONOMIC POWER 

Manufacturing up one-fourth in 1939. — The business decline in 
1938 and the subsequent recovery in 1939 were characterized by 
marked fluctuations in the output of the commodity-producing in- 
dustries, which include agriculture, mining, rnanufacturing, and con- 
struction work done under contract. These industries accounted for 
more than 80 percent of the income decline in 1938 and two-thirds of 
the recovery in 1939. Thus, the cyclical decline in business activity 
which began in the fall of 1937 and continued through the first half 
of 1938 was largely confined to those areas of the economy which pro- 
duce commodities, as contrasted with those creating services. The 
duictble-goods industries, in particular, revealed sharp declines, with 
the non-durable-goods industries falling to a lesser extent and the 
service industries showing only moderate curtailment. 

The same general pattern is shown for the 1939 expansion. Both 
manufacturing and construction increased by approximately one- 
fourth in 1939, with mining showing a gain of 15 percent and trans- 
portation a rise of 13 percent.. For all other industrial groups the 
gains varied from a fractional rise for Government to 7 percent in the 
communication industry. The expansion in regular Government 
activities was offset by the drop of nearly $300,000,000 in work-project 
wages. 

Despite the 25-percent rise in 1939, the net value of product of all 
manufacturing industries was one-fourth lower in 1939 than in 1929. 
The income of agriculture was also nearly one-fourth below that of 
1929, and mining continued more than one-third under the total of 
that year. After a moderate decline in 1938, construction increased 
in 1939 to the highest volume since 1930. Income produced in this 
industry declined more during the depression than that of any other 
industrial area, with the 1933 total being barely a sixth of the 1929 
aggregate. Recovery in construction was slow tlirough 1935 but 
thereafter it was rapid, with 1939 nearly 60 percent of the 1929 figure. 
Among public utilities, the power and gas industry revealed approxi- 
mately the same income produced in 1939 as in 1929, whereas the 
communication industry was one-sixth lower. Government's con- 
tribution to the national income in 1939, including the work program, 
was more than half again, as large as in 1929. Excluding work pro- 
grams, the value of services rendered by all Government agencies in 
1939 was one-fourth above the 1929 total. 

Income disbursed in larger amount in 1939. — As indicated earlier, the 
national income is determined by adding together the income paid 
out by all producing units plus their positive or negative business 
savings. The estimate of business savings, being a residual item, is 
subject to a considerable margin of error and must be used with 
caution. All of the limitations of financial-statement items resulting 
from accounting techniques not adapted to economic purposes, tend 
to be centered in the savings item. Also, in the field of agriculture 
the break-down of net income of farmers between the withdrawals of 
the farm operator and business savings of the farm enterprise is based 
largely on arbitrary assumptions pending further data now in the 
process of preparation by the Bureau of Agricultural Economics. 



CONCENTRATION OF ECONOMIC POWER 



181 






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182 



OONCENTRATION OP ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 2g3 

In 1938 the national income was nearly $1,500,000,000 below the 
total income disbursed, indicating that part of the income distributed 
came from the existing resources of business enterprises rather than 
exclusively from current production. For corporations, negative 
savings in 1938 are estimated at more than $2,000,000,000, which 
was in part offset by positive savings (primarily in agriculture) for 
noncorporate enterprises. Preliminary estimates based upo^ pub- 
lished statements of corporations reveal a sharp drop to about one- 
quarter billion dollars in negative corporate savings for 1939. For 
noncorporate enterprises, savings are estimated to be positive to the- 
extent of approximately $1,000,000,000 in 1939. Thus, while income 
disbursed in 1938 was nearljr $1,500,000,000 above the national in- 
come, in 1939 the national income exceeded income disbursed by 
about half that amount. Income distributed rose $3,600,000,000 
in 1939, as compared with a rise of $5,800,000,000 in the national 
income. 

Disbursements for the services of employees increased from $44,- 
300,000,000 in 1938 to $46,800,000,000 in 1939. Exclusive of work- 
project wages the increase was $2,800,000,000, or 6.5 percent. 
Work-project wages were nearly 13 percent lower in 1939 than in the 
preceding year. In those industj;ies in which salaries and wages 
could be segregated, the fluctuations in wages continued to exceed 
those in salaries. Salaries in these industries were only slightly 
higher in 1939 than in 1938, while wages in the same industries rose 
nearly 14 percent. In 1938, wages fell more than one-fifth, as com- 
pared with' a drop of less than one-tenth in salaries. With no major 
change in pay-roll tax rates. Social Security contributions of em- 
ployees in 1939 closely paralleled the rise in all wages and salaries. 

After the sharp decline of nearly 30 percent in 1938, dividend 
payments rose substantially in 1939, recovering more than half of 
the previous year's decline. Although the total of dividends paid in 
1939 was nearly double that of 1933, it was approximately 30 percent 
below the 1929 peak. Interest payments declined slightly in 1939, 
extending the downward trend wliich began in 1931. The 1939 total 
was about one-fifth less than the peak figure recorded in 1930. The 
fall in interest payments since 1930 has resulted from widespread 
mortgage and bond defaults and a large amount of refinancing at 
lower interest rates. 

Percentage distribution of income components. — With the exception 
of a rather substantial increase in dividends and a decline in entre- 
preneurial withdrawals and work-program wages, the component 
elements of income paid out in 1939 remained in much the same 
"relationship to total disbursements as that which prevailed in 1938. 
Compensation of employees accounted for 68.2 percent of the total 
income disbursed in 1939, fractionally above the 1938 proportion 
and the highest proportion for any of the years covered by the De- 
partment of Commerce estimates. Salaries and wages excluding 
work-project wages accounted for 62.8 percent of the 1939 income 
paid out. Work-project wages represented 2.7 percent of the total. 
Social Security contributions of employers, which are included in the 
income distributed since they accrue to the benefit of the employees, 
comprised sUghtly less than 2 percent of income paid out. 



256147 — 40— No. 7 13 



184 



OONOENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER Jgg 

Following a sharp decline to a new low of 12.7 percent in 1938, 
combined dividend and interest payments accounted for a slightly 
larger percentage of the total income paid out in 1939. However, 
the 13.1 percent of income paid out which took the form of dividends 
and interest was lower than in any other year studied except for 

1938. Dividends accounted for 6 percent of income disbursements 
in 1939, as compared with 5.2 percent in ] 938 and a high of 7.6 percent 
in 1930. Interest payments represented a new low in 1939 of only 
7.1 percent of total income disbursed. Rents continued to account 
for about 3 percent of total income disbursed in 1939. 

Employment and per capita earnings higher in 1939. — Table 4 shows 
that both the number of employees and their per capita income was 
higher in 1939 than in 1938. Average annual earnings per full-time 
worker in all industries increased from $1,284 in 1938 to $1,329 in 

1939. The average in 1939 was higher than in any year since 1931. 
It should be noted that average earnings per employee do not repre- 
sent the average earnings of all workers who were employed at any 
time during the year, but rather the average earnings per worker 
who appeared on pay rolls regularly. In a few instances it is possible 
to adjust for part-time work within pay periods; but, by and large, 
the number of workers used for deriving average annual earnings 
represents an average of the niunber working in each pay period. 
Therefore, full-time as used here me-ans regularly throughout the 
year, but not necessarily full-time within each week or m.onth. 



186 



OONOBNTRATION OF ECONOMIC POWER 



'"28 



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CONCENTRATION OF ECONOMIC POWER JgT' 

A comparison of changes in the per capita income of employees 
and in the Bureau of Labor Statistics index of cost of living of urban 
wage earners indicates a considerably higher real income per full- 
time worker in 1939 than in any previous year. It should be noted, 
however, that with a marked increase in unemployment in 1939 rela- 
tive to 1929, the employed workers probably are not, in many in- 
stances, engaged full' time: and, also, they must support other employ- 
able persons in their families without jobs. However, the figures do 
indicate higher rates of return in terms of goods and services for each 
fully employed worker. 

The figures in table 5 reveal trends from year to year in salaries 
and wages of workers for approximately 40 industrial categories. In 
this break-down it is interesting to note the marked divergencies 
among industries in pay-roll changes from year to year and from 
one phase of the business cycle to another. In 1939 wages declined 
in agriculture and remained practically unchanged in such areas as 
the mining industry'", the food and tobacco industry, the power and 
gas industry, and others. On the other hand, substantial increases 
(as large as 25 percent, or more) are shown for the metal and metal- 
products industry and the construction industry. Similarly, the 
declines from 1929 to the depression lows and the subsequent recoveries 
varied greatly among different major industrial groups and subgroups. 
Pay rolls in 1939 were higher than in 1929 in the food and tobacco, 
air transportation, electric light and power, gas, and professional- 
service industries, as well as in all of the categories of government. 



188 



CONCENTRATION OF ECONOMIC POWER 



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INDEX 



AGRICULTURAL t IMPLEMENTS INDUSTRY: 

Rating, composite: P*«« 

Criteria (3 and 7) : Cuniulative increment, cumulative rank 

ratings; comment and table 1 ; 43-51 

Rating, individual: 

Criteria (7); production, employment, pay rolls: Ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: Employment, consumer 
effort commanded, production, consumer funds absorbed, dividends 
and interest, pay rolls; index, 27= 100; comment, chart 4 and table 

4 - -.- 13-14,139 

AGRICULTURE: 

Family and hired workers 1919-38: employment and labor income; 

comment, and chart 23 A and table 23 A 55-56, 159 

Rating, individual and composite, 1919-38; comment and table 3 69-71 

Social behavior rating: Criteria (5); employment, pay rolls, and three 

ratios; comment and table 5 76-81 

Social performance of, 1919-38; employment, production, consumer 
effort commanded, pay rolls, dividends, and interest, consurner funds 
absorbed; index, 1923-25=100; comment, charts 23, 23A and table 

23 ,--- 53-56, 158 

AMERICAN TELEPHONE & TELEGRAPH CO. (See aiso' Telephone 
and Telegraph Industry) : 

Social performance of the Bell system, 1919-38; employment, produc- 
tion, operating revenues, pay rolls, dividends, and interest;. index, 

1923-25=100; comment, chart 34 and table 34 87-92, 170 

AUTOMOBILE INDUSTRY: 

General Motors Corporation. (See below this title ) 
Rating, composite: 

Criteria (3 and 7): cumulative increment, cqmulative rank 

ratings; comment and table 1 __. 43-51 

Rating, individual: 

Criteria (7) ; production, employment, pay rolls; ratio of employment 
to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio 

of pay rolls to dividends and interest ; table 1__^ -_ 44 

Social performance of the industry, 1919-38: Employment, consumer 
effort commanded, production, pay rolls, consumer funds absorbed, 
dividends ar>d interest; index, 1927= 100; comment, chart 6 and 

table 6 . 17-18, 141 

BAKING AND CONFECTIONERY INDUSTRY: 
Rating, composite: 
• Criteria (3 and 7) : cumulative increment, cumulative rank 

ratings; comment and table 1 . ._' •- 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1921-38: employment, consumer 
effort commanded, production, consumer funds absorbed, dividends 
and interest, pay rolls; index, 1927= 100; comment, chart 1 and 
table 1 -. ._ _.-. ._--- 8, 10, 136 

191 



192 INDEX 

F»ge 
BELL, SPURGEdN: Productivity, wages, and national income (1940); 

cited (n.) 60' 

BOOT AND SHOE INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) ; cumulative increment, cumulative rank ratings; 

comment and table 1 43-51 

Rating, individual: 

Criteria (7) : production, employment, pay rolls; ratio of em- 
ployment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 44- 

Social performance of the industry, 1919-38: employment, consumer 
funds commanded, production, pay rolls, consumer funds absorbed, 
dividends and interest; index, 1927=100; comment, chart 7 and 

table 7 17, 19, 142' 

BUREAU OF INDUSTRIAL ECONOMICS: Function of Bureau sug- 
gested by President Roosevelt, 1938 119-12-; 

BUSINESS PRIVATELY OWNED: Consolidated operating statement, 

1937; comment and table 6 98 

CANNING AND PRESERVING INDUSTRY: 
Rating, composite : 

Criteria (3 and 7) ; cumulative increment, cumulative rank rat- 
ings; comment and table 1 ^ 43-511 

Rating, individual: 

Criteria (7): production, employnient, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends^and interest ; table 1 44 

Social performance of the industry, 1919-38; employment, consumer 
effort commanded, production, consumer funds absorbed, dividends 
and interest, pay rolls; index, 1927=100; comment, chart 3 and 

table3 -.. 10, 12-13, 138 

CHAMBER OF COMMERCE OF THE UNITED STATES: Policies 

supported as in the public interest (1936) ; extract 2; 

CHEMICAL INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank ratings; 

comment and table 1 . 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of employ 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38; employment, consumer 
effort commanded, production, pay rolls, consumer funds absorl?ed, 
dividends and interest; index, 1927=100; comment, chart 11 and 

table 11 : 23,25, 146 

COAL MINING INDUSTRY: 

Characterization as a "sick industry"; oil and water power competition 

and effect of mechanization on employment 38' 

Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank ratings; 

comment and table 1 43-51 

Rating, individual: 

Criteria (7): production, employment, pay roUs; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: consumer funds absorbed, 
pay roUs, production, emplovment, dividends and interest; index, 

^ 1927= 100; comment, chart 20 and table 20 38-39, 155 

'CONFECTIONERY INDUSTRY: (^ee Baking and Confectionery In- 
dustry.) 
CONGRESS OP AMERICAN INDUSTRY, FORTY-FOURTH, 1939: 

Presidential address, December 8, H. W. Prentis, Jr.; cited and extract-. 1 



INDEX 



193 



CONSTRUCTION INDUSTRY: P«g* 

Comparison of indexes of volume of construction, 1919-34; 1923-2*5 = 
100; Department of Commerce and National Bureau of Economic 
Research indexes _'_' 163 

Rating, individual and composite, 1919-38; comment and table 3 69-71 

Social behavior rating: 

Criteria (3): employment, pay rolls, and three ratios; comment 

and table 5 , 76-81 

Social performance of, 1919-38: employment, consumer effort com- 
manded, production, pay rqlls, consumer funds absorbed, dividends 
and interest; index, 1923-25 =100;, comment, chart 27 and table 

27 _. 65-66,68, 163 

Statistics of industrv, inadequacy, comment on 32 

CONSUMER EFFORT COMMANDED: 
Agricultural Implements Industry: 

Index, 1921-37; 1927=100; comment, chart 4 and table 4_. 13-14, 139 
Agriculture: 

Index, 1919-38; 1923-25= 100; comment, chart 23 and table 23— 53- 

55, 158 
Automobile industry: 

Index, 1919-37; 1927=100; comment, chart 6 and table 6.. 17-18, 141 
Baking and confectionery industry: 

Index, 1921-38; 1927=100; chart 1, table 1 9, 136 

Boot and shoe industry: 

Index, 1919-37; 1927=100; chart 7 and table 7 19, 142 

Canning and preserving industry: 

Index, 191^37; 1927=100; chart 3 and table 3 .. 12, 138 

Chemical industry: 

Index, 1925-37; 1927=100; comment, chart 11 and table 11. 23, 25, 146 
Construction industry: 

Index, 1919-38; 1923-25=100; comment, chart 27 and table 27- 65-66, 

68, 163 
Cotton goods industry: 

Index, 1919-37; 1927=100; comment, chart 9 and table 9-. 20, 22, 144 
Electric light and power industry: 

Index, 191^38; 1923-25 = 100; comment, chart 12 and table 12_ 23, 

26-27,147 
Flour and other grain mill products: 

Index, 1919-37; 1927=100; comment, chart 15 and table 15 29,31, 150 

Function of as test for measurement of social performance of business. 3 

Furniture industry: 

Index, 1921-37; 1927=100; chart 17, table 17 34, 152 

Indexes, derivation of .-^ 126-127 

Iron and steel industry: 

Index, 1919-37; 1927=100; comment, chart 13 and table 13. 26-28, 148 
Knit goods industry: 

Index, 1919-37; 1927=100; chart 2, table 2 ...._. 11, 137 

Lumber and timber products: 

Index, 1921-37; 1927=100; comment, chart 21 and table 21__.- 38, 
^ 40-41, 156 

Manufacturing industries: 

Index, 1919-38; 1923-25=100; comment, chart 24 and table 24_ 55, 

57-60, IGO 
Mining activities: 

Index, 191^38; 1923-25=100; comment, chart 25 and table 25_ 60- 

62, 161 
Paper a.id pulp industry: 

Index, 1919-37; 1927= 100; comment, chart 14 and table 14_ 29-30, 149 
Petroleum refining industry: 

Index, 1919-37; 1927=100; comment, chart 5 and table 5___ 15-16, 140 
Railroads (steam) : 

Index, 1919-38; 1923-25= 100; chart 22, table 22 42, 157 

Slaughtering and meat packing industry: 

Index, 1919-37; 1927=100; comment, chart 8 and table 8--20-21, 143 
Telephone and telegraph industry : 

Index, 1919-38; 1923-25=100; comment, chart 35 and table 

35 _-.. . 87-92, 171 



J 94 INDEX 

CONSUMER EFFORT COMMANDED— Continued. Paet 

Tobacco industry: 

Index, 1919-37; 1927=100; comment, chart 19 and table 19. 35, 37, 154 
Transportation and other public utihties: 

Index, 1919-38; 1923-25=100; comnent, chart 26 and table 

26 62-65,162 

Woolen and worsted goods industry: 

Index, 1919-37; 1927=100; comment, chart 10 and table 10. 23-24, 145 
CONSUMER FUNDS ABSORBED: 
Agricultural implements industry: 

Index, 1921-37; 1927=100; chart 4 and table 4 14, 139 

Agriculture: 

Index, 1919-38; 1923-25=100; comment, chart 23 and table 

23 53-55, 158 

Automobile industry: 

Index, 1919-37; 1927=100; comment, chart 6 and table 6.. 17-18, 141 
Baking and confectionery industry: 

Index, 1921-37; 1927=100; chart 1, table 1 9, 136 

Boot and shoe industry: 

Index, 1919-37; 1927=100; chart 7 and table 7 19, 142 

Canning and preserving industry: 

Index, 1919-37; 1927=100; chart 3 and table 3 12, 138 

Chemical industry: 

Index, 1925-37; 1927=100; comment, chart 11 and table 11. 23, 25, 146 
Coal mining industry: 

Index, 1919-38; 1927=100; comment, chart 20 and table 20. 38-39, 155 
Construction industry: 

Index, 1919-38; 1923-25=100; comment, chart 27 and table 

27 65-66,68, 163 

Cotton goods industry: 

Index, 1919-37; 1927= 100; comment, chart 9 and table 9 20, 22, 144 

Defined; scope of series used in study 126 

Derivation and scope of series 131-133 

Elfectric light and power industry: 

Index, 1919-38; 1923-25=100; comment, chart 12 and table 

12 . 23, 26-27, 147 

Finance : 

Index, 1919-38; 1923/5=100; comment, chart 29 and table 

29 . 72-74, 165 

Flour and other grain mill products: 

Index, 1919-37; 1927=100; comment, chart 15 and table 15. 29, 31, 150 
Furniture industry: 

Index, 1921-37; 1927=100; chart 17, table 17 34, 152 

Function in dollar measurement of test of social audit of business 4 

Function of as test for measurement of social performance of business. 4 

Government: 

Index, 1919-38; 1923-25=100; comment, chart 28, and table 

28 71-72, 164 

Iron and steel industry: 

Index, 1919-37; 1927=100; comment, chart 13 and table 13. 26-28, 148 
Knit goods industry: 

Index, 1919-37; 1927=100; chart 2, table 2 11, 137 

Lumber and timber products: 

Index, 1919-37; 1927=100; chart 21 and table 21 40, 156 

Metal mining industrv: 

Index, 1919-38; 1927=100; chart 18, table 18 36, 153 

Manufacturing industries: 

Index, 1919-37; 1923-25=100; comment, chart 24 and table 

24 . 55, 57-60, 160 

Mining activities: 

Index, 1919-38; 1923-25=100; comment, chart 25 and table 

25 60-62, 161 

Oil and gas producing industry: 

Index, 1922-38; 1927=100; comment, chart 16 and table 16. 32-33, 151 
Paper and pulp industry: 

Index, 1911-5/ ; 1927=100; comment, chart 14 and table 14. 29-30, 149 
Petroleum refining industry: 

Index, 1919-37; 1927=100; comment, chart 5 and table 5-. 15-16, 140 



INDEX 195 

CONSUMER FUNDS ABSORBED— Continued. Pag* 

Railroads (steam) : 

Index, 1919-37; 1923-25=100; chart 22, table 22 .. 42, 157 

Service enterDrises i 

Index, 1919-38; 1923-25=100; comment, • chart 30 and table 

30 ^ 74-76, 116 

Slaughtering and meat packing industry: 

Index, 1919-37; 1927=100; comment, chart Sand 20-21, 143 

Telephone and telegraph industry: 

Index, 1919-38; 1923-25=100; comment, chart 35 and table 

35 . 87-92, 171 

Tobacco industry: 

Index, 1919-37; 1927=100; comment, chart 19 and table 19. __ 35,37, 

154 
Trade : 

Index, 1919-38; 1923-25=100; comment, chart 31 and table 31. 76, 167 
Transportation and other public utilities: 

Index, 1919-38; 1923-25= 100; comment, chart 26 and table 26_- 62- 

65, 162 
Woolen and worsted goods industry: 

Index, 1919-37; 1927=100; comment, chart 10 and table 10- 23-24, 145 
COST OF LIVING: 

Index, 1929-39; 1929= 100; comment and table 7 104-105 

COTTON GOODS INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) ; cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7); production, employment, pay roUs; ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38; employment, consumer 
eflFort commanded, production, pay rolls, consumer funds absorbed, 

dividends and interest; comment, chart 9 and table 9 20, 22, 144 

DANIELIAN, N. R.: A. T. & T., the story of industrial conquest (1939); 

cited (n.) 49, 90 

DIVIDENDS AND INTEREST: 

Agricultural implements industry: Index, 1926-36; 1927=100; com- 
ment, chart 4 and table 4 13-14, 139 

Agriculture: 

Index, 191&-38; 1923-25=100; comment, chart 23 and table 23 _ 53-55, 

158 
American Telephone and Telegraph Co., Bell system index, 1919-38; 

1923-25=100; comment, chart 34 and table 34 87-92, 170 

All corporations: 

Amount paid on account of dividends and of interest, 1921-37; 

doUars each year; comment, chart 36 and table 36 96i-98, 172 

Baking and confectionery industry: 

Index, 1926-36; 1927=100; chart 1, table 1 9,136 

Boot and shoe industry: 

Index, 1927-36; 1927=100; comment, chart 7 and table 7_ 17, 19-20, 142 
Chemical industry: 

Index, 1928-36; 1927=100; chart 11, table 11_.. 25,146 

Canning and preserving industry: 

Index, 1927-36; 1927=100; chart 3, table 3 .. 12, Ij^ 

Coal-mining industry: 

Index, 1927-36; 1927=100; chart 20, table 20 , 39,155 

Comparison of "net" dividends in selected industries in 1934 on 
basis of 1934 and 1933 industrial classification; comment and 

table B ^ , 131 

Comparison of "net" dividends and interest in all indusMes in 1934 
on basis of 1934 and 1933 industrial classification- comment and 

table A . ,---, 130 

Construction industry: 

Index, 1919-38; 1923-25=100; comment, chart 27, and table 

27... _ . ._ ..:.... 65-66,68,163 



■^QQ INDEX 

DIVIDENDS AND INTEEEST— Continued. Page 

Cotton goods industry: 

Index, 1926-36; 1927=100; comment, chart 9, and table 9-. 20, 22, 144 

Derivation and scope of indexes used in this study 128 

Economic system: 

Index, 1919-39; 1923-25=- 100; comment and chart 37; dollar 

amount and index; table 37A 101-106, 173 

Electric light and power industry: 

Index, 1919-38; 1923-2r=100; comment, chart 12, and table 

12 - — -- 23,26-27, 147 

Finance: 

Index, 1919-38; 1923-25 = 100; comment, chart 29, and table 

29 72-74, 165 

Flour and other grain mill products: 

Index, 1926-36; 1927 = 100; comment, chart 15, and table 

15 -- 29, 31, 150 

Function in dollar measurement of test of social audit of business 4, 49 

Function of as test for measurement of social performance of busi- 
ness 4 

Furniture industry: 

Index, 1926-36; 1927 = 100; chart 17, table 17 34, 152 

General Motors Corporation: 

Index, 1919-38; 1923-25=100; comment, chart 32, and table 

32 83-85, 168 

Indexes used in this study; scope 126 

Iron and steel industry: 

Index, 1926-36; 1927=100; comment, chart 13, and table 

13 - 26-28, 148 

K'nit goods industry: 

Index, 1926-36; 1927 = 100; chart 2, table 2 11, 137 

Lumber and timber products: 

Index, 1926-36; 1927=100; comment, chart 21, and table 

21 . 38,40-41, 156 

Manufacturing industries: 

Index, 1919-38; 1923-25 = 100; comment, chart 24, and table 

24 55,57-60, 160 

Metal mining industry: 

Index, 1926-36; 1927=100; comment, chart 18, and table 

18--. : - 35-36, 153 

Mining activities: 

Index, 1919-38; 1923-25=100; comment, chart 25, and table 

25 60-62, 161 

Oil and gas producing industry: 

Index, 1926-36; 1927=100; comment, chart 16, and table 

16- A 32-33, 151 

Paper and pulp industry : 

Index, 1926-36; 1927-100; comment, chart 14, and table 14.- 29-30, 149 
Petroleum refining industry: 

Index, 1926-33; 1927=100; comment, chart 5 and table 5.- 15-16, 140 
Railroads, (steam) : 

Index, 1919-38; 1923-25 = 100; comment, chart 22 and table 

22 ^ 41-42, 157 

Service enterprises: 

Index, 1919-38; 1923-25=100; comment, chart 30 and table 

30 74-76,166 

Slaughtering and meat packing industry: 

Index, 1926-36; 1927=100; comment, chart 8 and table 8-- 20-21, 143 
Telephone and telegraph industry: 

Index, 1919-38; 1923-25=100; comment, chart 35 and table 

35 > 87-92, 171 

Tobacco industry: 

Index, 1926-36; 1927=100; comment, chart 19 and table 19- 35, 37, 154 
Trade: 

Index, 1919-38; 1923-25=100; comment, chart 31 and table 31. . 76, 167 
Transportation and other public utilities: 

Index, 1919-38; 1923-25=100; comment, chart 26 and table 
26 - 62-65, 162 



INDEX 197 

DIVIDENDS AND INTEREST— Continued. Paw 

TT. S. Steel Corporation and subsidiaries: 

Index, 1919-38; 1923-25=100; comment, chart 33 and table 

33- - - 85-87, 169 

Woolen and worsted goods industry: 

Index, 1926-36; 1927=100; comment, chart 10 and table 10_ 23-24, 145 
ECONOMIC SYSTEM: 

Goods flow chart from Twentieth Century Fund "Does distribution 

cost too much?" (1939) 113 

Patterns of social performance: Full employment, consumer buying, 

idle men, idle money, 1919-38; chart 38 _...-. 110 

Social performance of the economy, 1919-39: Production (agricultural 
and industrial) , national income, employment, labor income, divi- 
dend and interest payments; index, 1923-25 = 100; comment and 

chart 37 101-106 

ELECTRIC LIGHT AND POWER INDUSTRY: 
Rating, composite : 

Criteria (3 and 7) : cumulative incrisment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls: ratio of em- 
ployment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 - 44 

Social performance of the industry, 1919-38; employment, production, 
consumer effort commanded, pay rolls, dividends and interest, 
consumer funds absorbed; index, 1923-25=100; comment, chart 12 

and table 12 23,26-27, 147 

EMPLOYMENT: 

Agricultural implements in4ustry: 

Index, 1923-38; 1927=100.; chart 4 and table 4 14, 139 

Agriculture : 

Index, 1919-38; 1923-25=100; comment, charts 23, 23-A and 

tables 23, 23A_ . .-.._.. . 53-56, 158-59 

American Telephone and Telegraph Co., Bell system: 

Index, 1919-38; 1923-25=100; comment, chart 34 and table 

34 ..-_ -- ----... 87-92, 170 

Automobile industry: 

Index, 1919-38; 1927=100; chart 6 and table 6 i8, 141 

Baking and confectionery industry: 

Index, 1923-38; 1927=100; chart 1, table 1 ----- 9, 136 

Boot and Shoe industry: 

Index, 1919-38; 1927=100; comment, chart 7 and table 7-- 17, 19-20, 

142 
Canning and preserving industry: 

Index, 1919-38; 1927=100; chart 3 and table 3...------ 12,138 

Changes in employment between 1929 and 1939; total number of 
workers, number in agriculture, in nonagricultural industries; num- 
ber employees and total workers in manufacturing, construction, 
transportation, trade and finance, service enterprises, doniestic 

service; table 8 , - '-^'. 106 

Chemical industry: 

Index, 192§-38; 1927=100; comment, chart 11 and table 11^ 23, 25, 146 
Coal mining industry: 

Index, 1919-38; 1927=100; comment, cnart 20 and table 20. 38-39, 155 
Construction industry: 

Index 1919-38; 1923-25 = 100; comment, chart 27 and table 27 _ oo-m, 

163 
Electric light and power industry: 

Index, 1919-38; 1923-25= 100; comment, chart 12 and table 12_- 23, 

26-27, 147 
Finance : 

Index, 1919-38; 1923-25= 100; comment, chart 29 and table 29-- 72-74, 

165 
Flour and other grain mill products: 

Index, 1919-38; 1927=100; comment, chart 15 and table 15- 29, 31, 160 
"'unction in physical measurement of test of social audit of business. . 3, 5 



ig^ INDEX 

EMPLOYMENT— Continued, Ptge 

Function of as test in measuring social performance of business 3, 47 

Furniture industry: 

Index, 1919-38; 1927=100; chart 17, table 17 34, 152 

General Motors Corporation: 

Index, 1919-38; 1923-25= 100; comment, chart 32 and table 32. 83-85, 

168 
Government: 

Index, 1919-38; 1923-25 = 100; comment, chart 28 and table 28. 71-72, 

164 

Indexes of employment used in this study ; scope 125 

Iron and steel industry: 

Index, 1919-38; 1927= 100; comment, chart 13 and table 13- - 26-28, 148 
Knit goods industry: 

Index, 1919-38; 1927=100; chart 2, table 2 11, 137 

Lumber and timber products: 

Index, 1919-38; 1927=100; comment, chart 21 and table 21. 38, 40, 156 
Manufacturing industries: 

Index, 1919-38; 1923-25= 100; comment, chart 24 and table 24. . 55, 

57-60, 160 
Metal mining industry: 

Index, 1919-38; 1927=100; comment, chart 18, and table 18. 35-36, 153 
Mining activities: 

Index, 1919-38; 1923-25 = 100; comment, chart 25, and table 25_ 60- 

62, 161 
Number employed and index, 1923-25 = 100, 1919-39; chart 37 and 

table 37 .- . 102, 172 

Number of employees, 1929-39 and percentages of 1929; table 4 

(Nathan) . 186 

Oil and gas producing industry: 

Index, 1919-38; 1927=100; comment, chart 16, and table 16. 32-33, 151 
Paper and pulp industry: 

Index, 1919-38; 1927=100; comment, chart 14, and table 14. 29-30, 149 
Performance of 18 named industries and of 10 named industry groups, 
1938 and 1939, and total unemployed if each industry were repre- 
sentative of the economy; index, 1929 = 100; comment and table 9. 107 
Petroleum refining industry: 

Index, 1919-38; 1927=100; comment, chart 5, and table 5. 15-16, 140 
Production relation: 

Industry ratings bv years, 1928-37; comment and table 176 

Railroads, steam: 

Index, 1919-38; 1923-25 = 100; comment, chart 22, and table 22. 41- 

42, 157 
Service exterprises: 

Index, 1919-38; 1923-25 = 100; comment, chart 30, and table 30. 74- 

76, 166 
Slaughtering and meat packing industry: 

Index, 1919-38; 1927=100; chart 8 and table 8 . 21, 143 

Telephone and telegraph industry: 

Index, 1919-38; 1923-25 = 100; comment, chart 35, and table 35- 87- 

92, 171 
Tobacco industry. 

Index, 191^38; 1927= 100; comment, chart 19, ana taoie 19_ 35, 37, 154 

Index, 1919-38; 1923-25 = 100; comment, chart 31, and table31. 76, 167 
Transportation and other public utilities: 

Index, 1919-38; 1923-25 = 100; comment, chart 26, and table 26. 62- 

65, 162 
U. S. Steel Corporation and subsidiaries. 

Index, 1919-38; 1923-25 = 100; comment, chart 33, and table 33. 85- 

87, 169 
Woolen and worsted goods industry: 

Index, 1919-38; 1927=100; comment, chart 10, and table 10. 23-24, 145 
FABRICANT, SOLOMON: Profits, losses, and business assets, 1929-34 

(1935); cited (n.) . ,_ ..., ... 60 



INDEX 199 

FARM LABOR: Page 

Index, 1919-38: Employment of hired workers, family workers; farm 
operators' income, hired labors' incbme; 1923-25 = 100; comment, 

chart 23- A, and table 23-A 55-56, 159 

FARM MACHINERY INDUSTRY. (See Agricultural Implements 

Industry.) 
FEDERAL TRADE COMMISSION: Report on motor vehicle industry 

(1939); cited (n.) . _-.._ _.._ . . 168 

FINANCE: 

Social behavior rating: 

Criteria (5); employment, pay rolls and three ratios; comment 

and table 5 ___: 76-81 

Social performance of finance, 1919-38: Employment, pay rolls, con- 
sumer funds absorbed, dividends and interest; comment, chart 29 

and table 29-. _-__ .-__1__ 72-74, 165 

FLOUR AND OTHER GRAIN-MILL PRODUCTS: 
Rating, composite: 

Criteria (3 and 7): Cumulative increment, cumulative rank rat- 
ings; comment and table 1 . 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of employment 
to production, ratio of production to consumer effort com- ' 
manded, ratio of pay rolls to consumer funds absorbed, ratio 

of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: Employment, produc- 
tion, consumer eflFort commanded, pay rolls, dividends, and interest 
consumer funds absorbed; index, 1927=100; comment, chart 15 

•and table 15 .__.. - 29,31,150 

FLOW CHARTS: 
Goods: 

Twentieth Century Fund. Does distribution cost too much? 

(1939) .. .-..___.._. 113 

Purchasing power and goods: 

Patterns of social performance; chart 38, section E _._ 110 

FOREST PRODUCTS. (5ee Lumber and Timber Products.) 
FURNITURE INDUSTRY: 
Rating, composite: 

Criteria (3 and 7): cumulative increment, cumulative rank rat- 
ings; comment and table 1^ 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer eflFort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 .- 44 

Social performance of the industry, 1919-38: Employment, consumer 
eflFort commanded, production, pay rolls, consumer funds absorbed, 
dividends and interest; index, 1927=100; comment, chart 17 and 

table 17-- 32 34—45 152 

GAS-PRODUCYnG f NDIJSTRY^ ' '(See Oil and" Gas-Produeing Indus- 
try.) 
GENERAL MOTORS CORPORATION: 

Social performance of the Corporation, 191&-38; employment, net 
sales, production, dividends and inter ist, pay rolls; index, 1923-25 = 

100; comment, chart 32 and table 32 - - 83-85, 168 

GOVERNMENT: 

Social behavior rating: 

Criteria (5): Employment, pay rolls and 3 ratios; comment and 

table 5 76-81 

Social performance of Government, 1919-38; employment, interest, 
pay roUs, consumer funds absorbed; comment, chart 28 and table 

28 - : 71-72, 164 

HOUSING: Housing market and speculative builders practices.- 68 

INDUSTRIAL CLASSIFICATION: 

Internal Revenue Bureau's unit is a corporation. Census of Manufac- 
tures unit is an establishment . , ,- 127-128 



256147— 41— No. 7—14 



200 INDEX 

INTEREST: Pago 

Government payment: 

Index, 1019-38; 1923-25 = 100; comment, chart 28, and table2 8. 71-72, 

164 
INTEREST AND DIVIDENDS. {See Dividends and Interest.) 
IRON AND STEEL INDUSTRY: 

Dividends paid, amount of cash dividends paid and index 1927=100: 
Bureau of Internal Revenue (1926-36) and American Iron and Steel 

Institute (1919-38) figures; comment and table 148 

Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7) : production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio pay rolls to consumer funds absorbed, ratio 

of pay rolls to dividends and interest ; table 1 44 

Social performance of the industry, 1919-38: Employment, produc- 
tion, consumer effort commanded, pay rolls, consumer funds ab- 
sorbed, dividends and interest; index, 1927=100; comment, chart 

13 and table 13 26-28, 148 

KNIT GOODS INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7) : production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest ; table 1 44 

Social performance of the industry, 1919-38: Employment, consumer 
effort commanded, production, consumer funds absorbed, dividends 
and interest, payrolls; index 1927=100; comment, chart 2 and 

table 2 '- i 10-1 1, 137 

KREPS, THEODORE J.: Chemical phase of the industrial revolution 

(1935); cited (n.) 23 

Dividends, interest, profits, wages 1923-35; (1935), cited (n.) 4, 59, 64 

KREPS, THEODORE J. AND KATHRYN R. WRIGHT: Measure- 
ment of the social performance of business - Monograph No. 7. 

KUZNETS, SIMON: National income and capital formation, 1919-35 

(1937); cited (n.) 59, 128 

LABOR: 

Agricultural. {See Farm Labor.) 
LABOR INCOME: 
Economic system: 

Index, 1919-39; 1923-25=100; comment and chart 37; dollar 

amount and index; table 37A 101-106, 173 

Manufacture: 

Wages and salaries paid by all manufacturing corporations, 1929 
and 1937; dollars and percent total disbursements, percent 

change; table 5 96 

Per capita income of employees, 1929-39, and percentages of 1929; 

table 4 (Nathan) ^ 186 

Total compensation of employees, by industrial groups, dollar amount 

and percentages, 1929-39, 1929= 100; table 5 (Nathan) 188 

LUMBER AND TIMBER PRODUCTS: 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919^38; employment, consumer 
effort commanded, production, consumer funds absorbed, dividends 
and interest, pavrolls; index, 1927=100; comment, chart 21 and 
table 21 . . 38, 40-41, 156 



INDEX 201 

MANUFACTURING CORPORATIONS: Page 
Consolidated operating statement, 1929 and 1937: Dollars and per- 
cent ; percent change ; comment and table 5 1 95-96 

MANUFACTURING INDUSTRIES: 

Rating, individual and composite, 1919^38; comment. and table 3 69-71 

Social behavior rating criteria (5) : exnployment, pay rolls, and 3 

ratios; comment and table 5_ __r „ 76-81 

Social performance of, 1919-38: Employment, consumer eflFort com- 
manded, production, pay rolls, consumer funds absorbed, dividends 
and interest; index 1923/5 = 100; comment, chart 24, and table. _._ 55, 

57-60, 160 
■MECHANIZATION. (See Technological Change.) 
MARTIN, P. W. : Problem of maintaining purchasing power (1931); 

extract and cited (n.) : : ^. : 112, 114, 115 

METAL MINING INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : Cumulative increment, cumulative rank rat- 
ings; comment and table 1 ' - 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, ratio 

of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: employment, pay rolls, 
consumer funds absorbed, dividends and interest, production; 

index 1927^-100; comment, chart 18, and table 18 :_ 35-36, 153 

MILLS, PROF. FREDERICK C: Economic tendencies in, the United 

States (1932); cited_-.. _. ;. . 70 

Prices in recession and recovery (1936); cited . 65 

MINING INDUSTRIES: 

Coal mining. {See Coal Mining.) 
Metal mining. (See Metal Mining.) 

Rating, individual and composite, 1919-38; comment and table 3 69-71 

Social behavior rating: 

Criteria (5): Employment, pay rolls, and 3 ratios; comment and 

table 5 :.- '. . 76-81 

Social performance of all activities, 1919-38: employment, consumer 
eflFort commanded, production, consumer funds absorbed, pay rolls, 
dividends, and interest; index 1923/5=100; comment, chart 25, and 

table 25 ^--. ..- 60-62, 161 

MITCHELL, WESLEY C: Business cycles: the problem and its setting 

(1927); quoted . . . 112 

NATHAN, ROBERT R.: Income in the United States, 1929-37 (1938); 

extract -_ _- __' - 129 

National Income of nearly $70,566,000,000 in i939-ri"""_'rr"ir '177-189 
NATIONAL COMMISSION ON ECONOMIC POLICY: Proposals 

for and tasks of outlined .: .^ 123-124 

NATIONAL INCOME: 

Dollar volume and real national income produced and paid out, 

1929-39; index, 1929= 100; comment and table 7- - . - - - - 104-105 

Income paid out. by type of payment, 1929-39; dollar amount and 

percentages, 1929= 100; table 2 (Nathan). -_.- 181 

Industrial divisions break-down, 1929-39; dollar amount and percent- 
ages, 1929=100; table 1 (Nathan) ___._--- 179 

National income, dollar volume, 1919-39; table 37A and index, 

1923-25=100; chart 37 and table 37A 102,173 

National income in constant prices, 1919-39; index, 1923-25=100; 

comment, chart 37 and table 37-37 A . 101-106, 172 

National income of nearly $70,000,000,000 in 1939; by Robert R. 

Nathan .__ . . 177-189 

Owner-manager share in national income, 1929-39; dividends, interest, 
net rents and royalties, entrepreneurial withdrawals; dollar amount 

and percent; comment and table 10 ,--- 108 

Percentage distribution of income paid out by type of payment, 

1929-39; table 3 (Nathan) _-- 184 

NATIONAL INDUSTRIAL CONFERENCE BOARD: 

Economic Record, May 22, 1940; cited - .__-.._ 96, 98 

Studies in enterprise and social progress (1939); cited and extract.--- 1, 3 



; INDEX 

Page 
NATIONAL RESOURCES COMMITTEE: Consumer expenditures in 

the United States (1939); cited (n.) 111 

OIL AND GAS PRODUCING INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank ratings, 

comment and table 1 43-51 

Rating, individual: 

Criteria (7): Production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of- the industry, 1919-38; pay rolls, employment, 
consumer funds absorbed, production, dividends and interest; index, 

1927=100; comment, chart 16, and table 16 32-33, 151 

PAPER AND PULP INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank ratings; 

comment and table 1 43-51 

Rating, individual: 

Criteria (7): production, employment, payrolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio paj' rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: employment, production, 
consumer effort commanded; pay rolls, dividends, and interest, con- 
sumer funds absorbed; index, 1927=100; comment, chart 14, and 

table 14 - 29-30, 149 

PAY ROLLS: 

Agricultur.al implements industry: 

Index, 1923-38; 1927=100; comment, chart 4, and table 4-. 13-14,139 
Agriculture: 

Index, 1919-38; 1923-25=100; comment, chart 23, and table 23.- 53-55, 

158 
American Telephone and Telegraph Co., Bell system: 

Index, 1919-38; 1923-25=100; comment, chart 34, and table 34 __ 87-92, 

170 
Automobile industry: 

Index, 1919-38; 1927= 100; comment, chart 6, and table 6- . . 17-18, 141 
Baking and confectionery industry: 

Index, 1 923-38 ; 1927 =100; chart 1, table 1 9, 136 

Boot and shoe industry: 

Index, 1919-38, 1927= 100; comment chart 7, and table 7 17, 

19-20, 142 
Canning and preserving industry: 

Index, 1919-38; 1927= 100; chart 3 and table 3 . 12,138 

Chemical industry: 

Index, 1925-38; 1927=100; comment, chart 11, and table 11.. 23, 25, 146 
Coal-mining industry: 

Index, 1919-38; 1927= 100; comment, chart 20, and table 20. 38-39, 155 
Construction industry: 

Index, 1919-88; 1923/5=100; comment, chart 27, and table 

27 65-66,68, 163 

Cotton-goods industry: 

Index, 1919-38; 1927=100; comment, chart 9, and table 9___ 20-22, 144 
Electric light and power industry: 

Index, 1919-38; 1^23-25=100; comment, chart 12, and table 

12....... ....... 23, 26-27, 147 

Factory pay rolls: 

Index, 1919-38; 1923/5=100; compared with dividends, interest, 

and compensation of officers ; comment and table 2. 59 

Finance: 

Index, 1919-38; 1923/5=100; comment, chart 29, and table 

29 . : .. 72-74, 165 

Flour and other grain mill products: 

Index, 1919-38; 1927= 100; comment, chart 15, and table 15. 29, 31, 150 
I'u notion in dollar measurement of test of social audit of business 4 



INDEX 203 

PAY ROLLS— Continued. Page 
Function of as test for measurement of social performance of busi- 
ness 4, 46, 48 

Furniture industry: 

. Index, 1919-38; 1927=100; comment, chart 1.7, and table 17_ 34-35, 152 
General Motors Corporation: 

Index, 1919-38; 1923/5=100; comment, chart 32, and table 

32 83-85, 168 

Government: 

Index, 1919-38; 1923/5 = 100; comment, chart 28, and table 

28 71-72, 164 

Indexes of pay rolls used in this study; scope 125 

Iron and steel industry: 

Index, 1919-38; 1927= 100; comment, chart 13, and table 13. 26-28, 148 
Knit-goods industry: 

Index, 1919-38; 1927 = 100; chart 2, table 2.- 11,137 

Lumber and timber products: 

Index, 1919-38; 1927=100; comment; chart 21 and table 21 __ 38, 

40-41, 15 
Manufacturing industries: 

Index, 1919-38; 1923-25 = 100; comment, chart 24 and table 24 55, 

57-60, 160 
Metal mining industry: 

Index, 1919-38; 1927=100; comment, chart 18 and table 18.--_ 35-36, 

153 
Mining activities: 

Index, 1919-38; 1923-25 = 100; comment, chart 25, and table 

25 60-62, 161 

Oil and gas producing industrv: 

Index, 1919-38; 1927 = 100, comment, chart 16 and table 16 32-33, 

151 
Paper and pulp industry: 

Index, 1919-38; 1927=100; comment, chart 14 and table 14 29-30, 

149 
Petroleum refining industry: 

Index, 191&-38; 1927=100; comment, chart 5 and table 5-. 15-16, 140 

Index, 1919-38; 1923-25 = 100; cohiment, chart 22' and table 22. _ 41-42, 

157 
Service enterprises: 

Index, 1919-38; 1923-25=100; comment, chart 30 and table 30. 74- 

76, 166 
Slaughtering and meat packing industry: 

Index, 1919-38; 1927 = 100; comment, chart 8 and table 8. 20-21, 143 
Telephone and telegraph industry: 

Index, 1919-38; 1923-25= 100; comment, chart 35 and table 35- - 87- 

92, 171 
Tobacco industry: 

Index, 1919-38; 1927=100; comment, chart 19 and table 19. 35, 37, 154 

Index, 1919-38; 1923-25=100; comment, chart 31 and table 31. 76, 167 
Transportation and other public utilities: 

Index, 1919-38; 1923-25=100; comment, chart 26 and table 26. 62- 

65, 162 
U. S. Steel Corporation and subsidiaries: 

Index, 1919-38; 1923-25=100; comment, chart 33 and table 33. 85-87, 

169 
Woolen and worsted goods industry: 

Index, 1919-38; 1927=100; comment, chart 10 and table 10. 2^-24, 145 
PETROLEUM REFINING INDUSTRY: 

Classification by Internal Revenue Bureau cause of incomparability 

of dividends and interest data subsequent to 1934 15 

Rating, composite: ' 

Criteria (3 and 7): cumulative increment, cumulative rank 

ratings; cojnment and table^ . 43-fll 



204 INDEX 

PETROLEUM REFINING INDUSTRY— Continued. Page 

R ting, individual: 

Criteria (7): production, employment, payrolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 1919-38: Employment, consumer 
effort commanded, production, pay rolls, consumer funds absorbed, 
dividends and interest; index, 1927=100; comment, chart 5 and 

table 5 .--_ _..- 15-16, 140 

POTASH INDUSTRY: Economic data questionnaire, preparation of 122 

PRENTIS, H. W., Jr.: Presidential speech to Forty-fourth Congress of 

American Industry, December 8, 1939; cited and extract 1 

PRICES: 

Retail and wholesale prices, 1929-39; index, 1929 = 100; comment 

and table 7-_ — -.__ 104-105 

Wholesale: 

Trend January-March 1939: All commodities and producers' 
goods (building materials, capital equipment, human consump- 
tion); index 1929=100; chart 27A 67 

PRODUCTION: 
Agricultural: 

Index, 1919-39; 1923-25 = 100; chart 37 and table 37 102, 172 

Agricultural implement industry: 

Index, 1920-38; 1927 = 100; comment, chart 4 and tabl 4._ 13-14, 139 
Agriculture : 

Index, 1919-38; 1923-25 = 100; comment, chart 23 and table 23- 53- 

55, 158 
American Telephone and Telegraph uo.. Bell system: 

Index, 1919-38; 1923-25 = 100; comment, chart 34 and table 34. 87- 

92, 170 
Automobile industry: 

Index, 1919-38; 1927=100; comment, chart 6 ana table 6__ 17-18, 141 
Baking and confectionery industry: 

Index, 1925-38; 1927=100: chart 1, table 1 9, 136 

Boot and shoe industry: 

Index, 1919-38; 1927=100; chart 7 and table /.__ 19, 142 

Canning and preserving industry: 

Index, 1919-37; 1927=100; chart 3 and table 3 ^ 12,138 

Chemical industry: 

Index, 1919-37; 192^ = 100; comment, chart 11 and table 11. 23, 25, 146 
Coal mining industry: 

Index, 1919-38; 1927=100; chart 20, table 20 39, 155 

Construction industry: 

Index, 1919-38; 1923-25=100; comment, cbirt 27 and table 27. 65- 

66,68, 163 
Cotton goods industry: 

Index, 1919-38; 1927=100; comfnent, chart 9 and table 9.- 20, 22, 144 
Electric light and power industry: 

Index, 1920-38; 1923-25=100; comment, chart 12 and table 12. 23. 

26-27, 147 
Employment relation: 

Industry ratings, 20 named industries, 1928-37; comment and 

tables . . 176 

Flour and other grain mill products: 

Index, 191^38; 1927=100; comment, chart 15 and table 15. 29, 31, 150 
Function of as test in measuring social performance of business.. 3, 47 
Furniture industry: 

Index, 1919-37; 1927=100; chart 17, table 17 34, 152 

General Motors Corporation: 

Index, 1919-38; 1923-25=100: comment, chart 32 and table 

32 ... ._... .. 83-85,168 

Indexes of production used in this study; scope 125 

Industrial: 

Index, 1919-39; 1923-25 = 100; chart 37 and table 37 102, 172 

Iron and steel industry: 

Index, 1919-38; 1927=100; comment, chart 13 and table 13. 26-28, 148 
Knit goods industry: 

Index. 1919-37: 1927=1 fW: fihart 2 tfthlA 2 11.137 



INDEX 205 

PRODUCTION— Continued. Page 

Lumber and timber products: 

Index, 1919-37; 1927=100; comment, chart 21 and table 21. 38, 40, 16t> 
Manufacturing industries: 

Index, 1919-38; 1923-25=100; comment, chart 24 and table 

24 55,57-60, 160 

Metal mining industry: 

Index, 1919-38; 1927=100; comment, chart 18 and table 18. 35-36, 153 
Mining activities: 

Index, 1919-38; 1923-25=100; comment, chart 25 and table 

25 60-62, 161 

Oil and gas producing industry: 

Index, 1919-38; 1927=100; comment, chart 16 and table 16. 32-33, 151 
Paper and pulp industry: 

Index, 1919-38; 1927=100; comment, chart 14 and table 14. 29-30, 149- 
Petroleum refining industry: 

Index, 1919-38; 1927= 100; comment, chart 5 and table 5... 15-16, 140 
Railroads (steam): 

Index, 1919-38; 1923-25=100; comment, chart 22 and table 

22 <l-42, 157 

Slaughtering and meat packing industry: 

Index, 1919-38; 1927= 100; comment, chart 8 and table 8.-- 20-21, 143 
Telephone and telegraph industry: 

Index, 1919-38; 1923-25=100; comment, chart 35 and table 

35 87-92. 171 

Tobacco industry: 

Index, 1919-38; 1927=100; comment, chart 19 and table 19. 35, 37, 154 
Transportation and other public utilities: 

Index, 1919-38; 1923-25=100; comment, chart 26 and table 

26 62-65, 162 

U. S. Steel Corporation and subsidiaries: 

Index, 1919-38; 1923-25=100; comment, chart 33 and table 

33 85-87,169 

Woolen and worsted goods industry: 

Index, 1919-38; 1927=100; comment, chart 10 and table 10. 23-24, 145 
PUBLIC UTILITIES. {See Railroads; Telephone and Telegraph Indus- 
try; Transportation and other Public Utilities.) 
-PURCHASING POWER: Flow chart, ''Patterns of Social Performance," 

chart 38, section E 110 

RAILROADS (STEAM): 
Rating, composite: 

Criteria (3 and 7) : cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7): production, employment, pay rolls; ratio of em- 
ployment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, 

ratio of pay rolls to dividends and interest; table 1 44 

Social performance of the industry, 191^38: Employment, produc- 
tion, consumer effort commanded, pay rolls, consumer funds ab- 
sorbed, dividends and interest; index, 1923-25=100; comment 

chart 22 and table 22 41-43, 157 

RATINGS OF SOCIAL PERFORMANCE: 
Composite rating: 

Criteria (3 and 7) : cumulative increment, rating, cumulative 

rank, rating; each of 22 named industries; analysis and table 1. 43-51 

Method of computing composite ratings 175-176 

Individual rating: 

Criteria (7) : production, employment, pay rolls, ratio employ- 
ment, to production, ratio production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio 
of pay rolls to .dividends and interest; each of 22 named indus- 
tries ; analysis and table 1 43— 5J 

REFERENCES TO LITERATURE: 

Bell, Spurgeon: Productivity, wages and national income (1940); 

cited (n.) 60 

Chamber of Commerce of the United States: Policies supported aS in 

the public interest (1936) ; extract 2 



206 INDEX 

REFERENCES TO LITERATURE— Continued. Page 

Danielian, N. R.: A. T. & T., the story of industrial conquest (1939); 

cited (n.) 49,90 

Fabricant, Solomon: Profits, losses and business assets, 1929-34 

(1935); cited (n.) 60 

Federal Trade Commission: Report on motor vehicle industry (1939) ; 

cited (n.) 168 

Kreps, Theodore J.: Chemical phase of the industrial revolution 

(1935); cited (n.) 23 

Dividends, interest, profits, wages 1923-35; (1935) cited (N.) 4, 59, 64 

Kuznets, Simon: National income and capital formation, 1919-35 

(1937); cited (n.) 59, 128 

Martin, P. W.: Problem of maintaining purchasing power (1931); 

extract and cited (n.) — >r 112, 114, 115 

Mills, Prof. Frederick C.: Economic tendencies in the United States 

(1932); cited - 70 

Prices in recession and recovery (1936); cited 65 

Mitchell, Wesley C: Business cycles; the problem and its setting 

(1927); quoted - 112 

Nathan, Robert R.: Income in the United States, 1929-37 (1938); 

.extract 129 

National Industrial Conference Board: Economic Record, May 22, 

1940; cited ^ .__. 96,98 

Studies in enterprise and social progress (1939) ; cited and extract. 1, 3 
National Resources Committee: Consumer expenditures in the United 

States (1939); cited (n.) 111 

Prentis, H. W., Jr.: Presidential address to Forty-fourth Congress 

of American Industry, December 8, 1939; cited and extract 1 

Slichter Sumner: Modern economic society (1928); cited (n.).. 53, 101, 116 
Twentieth Century Fund: Does distribution cost too much? (1939); 

extract and chart 39 113 

SALES: 

Dollar volume of retail sales and of deflated sales, 1929-39; index 

1929=100; comment and table 7 104-105 

General Motors Corporation: 

Index, 1919-38; 1923-25-= 100; comment, chart 32 and table 32_ »3- 

85, 168 
U. S. Steel Corporation and subsidiaries: 

Index, 1919-38: 1923-25 = 100; comment, chart 33 and table 

33 85-87, 169 

SERVICE ENTERPRISES: 
Social behavior rating: 

Criteria (5): Employment, pay rolls, and three ratios; comment 

and table 5 76-81 

Social performance of commercialized service, 1919-38: Employment, 
pay rolls, dividends, and interest; consumer funds absorbed; index, 

1923-25=100; comment, chart 30 and table 30 74-76, 166 

SLAUGHTERING AND MEAT-PACKING INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : Cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7) : production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort 
commanded, ratio of pay rolls to consumer funds absorbed, ratio 

of pay roUs to dividends and interest ; table 1 44 

Social performance of the industry, 1919-38: Employment, consumer 
effort commanded, production, pay rolls, consumer funds absorbed, 

dividends and interest; comment, chart 8 and table 8 20-21, 143 

SLICHTER..SUMNER: Modern economic society (1928) ; cited (n.) 53, 

101, 116 
SNYDEk, CARL: Price level index, basis of consumer effort commanded 

serlas--. . 126-127 

SOCIAL PERFORMANCE PATTERNS: FuU employment, consumer 
buying, flow of purchasing power and of goods, idle men, idle money; 

comment and charts 38-39 . _ . . _ _ 109-117 

STEEL INDUSTRY. {See Iron and Steel Industry.) 



INDEX 207 

TAXES: 

All corporations: Page 

Amount paid' on account of taxes, 1921-37; dollars each year; 

comment, clhart 36 and table 36 . 96.-98, 172 

TECHNOLOGICAL CHANGE: 

EfiFect of mechanization on employment in coal-mining industry 38 

Effect on employment and pav rolls in steam-railroad industry.- 41 

TELEPHONE ANL TELEGRAPH INDUSTRY: 

American Telepuone and Telegraph Co. (See above, this title.) 
Social performauce of the industry, 1919-38; employment, production, 
consumer effort commanded, pay rolls, consumer funds absorbed, 
dividends and' interest; index, 1923-25 = 100; comment, chart 35 and 

table 35 87-92, 171 

THORP, WILLARD L. : Potash industry economic data questionnaire 

drawn up by Dr. Thorp 122 

TIMBER PRODUCTS. (<See Lumber and Timber Products.) 
TOBACCO INDUSTRY: 

Characteristics of industry: High tax levies in all countries, enormous 

technological change i 35 

Ratipg, composite: 

Criteria (3 and 7) : Cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

(Criteria (7) : Production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay roUs to consumer funds absorbed, ratio of 

pay rolls to dividends and interest ; table 1 44 

Social performance of the industry, 1919-38: employment, production, 
consumer effort commanded, pay rolls, cons umer funds absorbed, 
dividends and interest; index, 1927=100; comment, chart 19 and 

table 19 - ... 35,37, 154 

TRADE: 

Social-behavior rating: 

Criteria (5) : Employment, pay rolls and three ratios; comment and 

table 5 . 76-81 

Social performance of trade, 1919-38: consumer funds absorbed, pay 
rolls, dividends and interest, employment; index, 1923-25=100; 

comment and chart 31 and table 31 76, 167 

TRANSPORTATION AND OTHER PUBLIC UTILITIES: 

Rating, individual, and composite, 1919-38; comment and table 3 69-71 

Social-behavior rating: 

Criteria (5): Employment, pay roUs and three ratios; comment 

and table 5 ^. . 76-81 

Social performance, 1919-38: Employment,p roduction, consumer 
effort commanded, pay rolls, consumer funds absorbed, dividends 
and interest; index, 1923-25=100; comment, chart 26, and table 

26 62-65, 162 

TWENTIETH CENTURY TREND: Does distribution cost too much? 

(1939); extract and chart 39 113 

UNITED STATES STEEL CORPORATION: 

Social performance of the corporation and subsidiaries, 1919-38: sales, 
production, employment, dividends and interest, pay rolls; index, 

1923-25 = 100 ; comment, chart 33 and-*9ble 33 85-87, 169 

WOOLEN AND WORSTED GOODS INDUSTRY: 
Rating, composite: 

Criteria (3 and 7) : Cumulative increment, cumulative rank rat- 
ings; comment and table 1 43-51 

Rating, individual: 

Criteria (7) : Production, employment, pay rolls; ratio of employ- 
ment to production, ratio of production to consumer effort com- 
manded, ratio of pay rolls to consumer funds absorbed, ratio of 

pay rolls to dividends and interest; table l... 44 

Social performance of the industry, 1919-38; employment, consumer 
'•ffort commanded, production, pay rolls, consumer funds absorbed, 

dividends and interest; comment, chart 10 and tal)le 10 23-24, 145 

WRIGHT, KATHRYN R., joint author. (See Kreps, Theodore J.) 



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