Dr. THORP. In this chart, the service division broken down; service, finance, Government, and miscellaneous, which comprises items not included elsewhere. (The chart referred to was marked "Exhibit No. 83" and appears on p. 148. The statistical data on which this chart is based are included in the appendix on p. 245.) Senator KING. That chart shows the line for the Government continuing to rise. Dr. THORP. That's right. The line for the Government started rising at the very beginning of the chart and has moved up very appreciably. It represents on this chart for 1937 somewhat over $10,000,000,000 in total national income. Senator KING. Income? Dr. THORP. In the total national income. This is thinking of the Government as an agency which pays wages and salaries and employs people, and therefore is a producer of part of the national income. Senator KING. Would that include States and counties? Dr. THORP. That includes States, county governments, local governments. Now, in order to get more clearly the comparison, this chart, which shows the sources of national income, gives the comparison between 1919-21 and the 1936-37 distribution. (The chart referred to was marked "Exhibit No. 84" and appears on p. 149.) Dr. THORP. You can see that agriculture has declined in importance from 14 percent to 9 percent as of the recent period. Manufacturing has declined slightly; transportation has declined a bit; in fact, the outstanding increase is this expansion for government from 8 to 15.2 percent. These changes which take place, of course, are changes which require adjustments of one kind or another. Obviously such an important thing as the decline in agriculture is of major significance from the point of view of the balance in our national economy. Senator KING. Dr. Thorp, before we meet tomorrow I wish you would examine again that line showing the Government income, as you call it, because my recollection is that it greatly exceeds $10,000,000,000. We collected $6,200,000,000 on the tax bill for last year and we had a deficit of four billions. Our national expenditures were six plus four billions, approximately; then the States, counties, and political subdivisions ran almost parallel, if they did not exceed the Federal. Dr. THORP. There are certain reasons why you can't take the total. You may recall when Dr. Lubin was talking about national income yesterday the question was asked, and I think he explained, that you had to take the net. You had to deduct the cost of any materials, such things that were purchased, so that you wouldn't get double counting. I suppose the major explanation of that difference is the fact that local governments in the construction of highways, and so forth, acquire materials which may be perhaps located in some other industry. The second thing is that relief payments are not included as part of the national income estimates. Senator KING. There would be two or three billion dollars there. Dr. THORP. Direct relief, I mean. Work relief is included; supposedly those people are producing something. Direct relief is not included. Senator KING. It occurred to me that if you were indicating the income of all government, Federal, State, and political subdivisions, you ought to include all that had been expended by it, but you say that is included by reason of the fact that some of the expenditures were for materials, and they might be included in some other category. THE IMPACT OF INVENTION Dr. THORP. That is correct. Now I wish to indicate briefly certain types of situations which play on the business community and disturb it or make necessary readjustments here and there. A basic one is changes in technology, and for the purpose of indicating that I have a chart on applications and patents. The top line represents applications for patents filed with the United States Patent Office, the bottom line, patents issued. You can see that as time has gone on the applications for patents have increased. They were very large during the twenties and the patents issued have steadily increased. (The chart referred to was marked "Exhibit No. 85" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 245.) EXHIBIT No. 85 APPLICATIONS AND PATENTS 1836 TO 1937 1836 40 45 30 55 65 70 75 80 85 190 95 1900 '05 '10 15 20 25 30 35 1937 Dr. THORP. Of course there always is some lag because there is a delay of several years, usually, between the time when applications are filed and the time when patents can be finally issued. This continual impact of technical change has, of course, the power of building new industries and destroying old industries and changing processes. Much of it comes out of business itself, which has done the work, and yet its reaction is back on business, and perhaps on other parts of the business community. It creates problems of capital investment and problems of survival which are extremely important. Here is another thing which Dr. Lubin talked about yesterday, "the increasing importance of durable goods." " 1 (The chart referred to was marked "Exhibit No. 86" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 246.) Dr. THORP. That has not only importance from the point of view of the consumer but from the point of view of the producer, from the point of view of the businessman. It is goods of this sort, for instance, which give rise to the whole problem of installment selling. Installment selling is essentially related to durable goods. It is mostly a matter of automobiles. At least 62 percent of installment Supra, pp. 27 and 28. 124491-39-pt. 1-11 |