Dr. LUBIN. Yes. In 1937 it is estimated to be 67 percent for labor. The next group, the entrepreneurial group, includes, as I have said, businessmen, farmers, and so forth. This group got 12 billion in 1929, including agriculture. In 1937 they got about 10.4 billion. The people who received dividends and interest received about 11.3 billion in 1929, and last year they got about 9.6 billion. The balance, you will note, is relief and payments to veterans. The significant thing is that the amount going to labor decreased from 51.5 to 46.7 billions; businessmen and farmers, from 12 to 10.4; dividends and interest, 11.3 to 9.6, which is less than a sixth of the total; and the amount paid out in direct relief, of course, growing larger over the later years, although you note there was an item of relief-private and otherwise in the earlier years.

Senator KING. I didn't quite understand your statement as to the percentage received in wages and salaries for 1935. Did you give that? Dr. LUBIN. No; it was 66.5 percent. In 1929 labor got 51.5 billion dollars; in 1938, October, the rate was about 44 billion a year.

Senator KING. In percentage, would not wages and salaries reach 74 percent of the total income?

Dr. LUBIN. In 1937 it was 67.4 percent and that is the highest year, according to our figures.

Senator KING. The figures which I have here were 70 percent, 70.2. Dr. LUBIN. Senator, the latest figures on the percentage distribution of income payments, compiled and published by the United States Department of Commerce, are as follows:

1 Net savings of business concerns, sometimes positive and sometimes negative, are not included in this total. They affect primarily the value of the equity of stockholders and entrepreneurs.

Includes pay roll and maintenance of Civilian Conservation Corps enrollees and pay rolis of Civil Works Administration, Federal Emergency Relief Administration, and the Federal Works Program projects, plus administrative pay rolls outside of Washington, D. C., for all except the Federal Works program. Area office employees and pay rolls under the Federal Works Program are included with the regular Government employment and pay-roll figures.

Includes also net balance of international flow of property incomes.

Senator KING. I wonder if, in determining the percentages, you used the figures of Dr. King, Kaznuts, and others. I have them here.

Dr. LUBIN. Our figures come from the United States Department of Commerce.

The CHAIRMAN. Dr. Lubin, may I ask whether you would prefer to go through without interruption in the development of your statements and then submit to questioning later?

Dr. LUBIN. Frankly, it makes no difference. If there is anything that ought to be clarified at a given moment, I would prefer to do so. It makes no difference to me.

Senator BORAH. I suspect it would be better clarified if you would go ahead and make your statement. Of course, questions can be asked afterward.

It seems to me there ought to be a continuity of statement from his viewpoint.

The CHAIRMAN. If there is no objection, we will permit Dr. Lubin to proceed without interruption unless it should be for some really serious questions.

Dr. LUBIN. With the decline in national income, with the change in amount of goods that have been available to our people, has come a very definite shift in certain parts of our economy. This chart which shows national income by type of industry gives us a very good picture of the relative importance of the industries that produce goods and services.

(The chart referred to was marked "Exhibit No. 15" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 200.)

124491-39-pt. 1-3

Dr. LUBIN. You will notice that in 1919 about half of the value of things produced in the United States were produced by factories, farms, and other organizations that produced physical goods. About half of the value was contributed by the so-called service industries of the country, the retail distributor, wholesale distributor, and things of that sort.

By 1929, this part contributed by the producers of physical goods had fallen to 42 percent, and the noncommodity-producing groups had increased their proportion of the output to 58 percent. By 1932, the value contributed to our national economy by the commodityproducing industries had fallen to 29 percent of the total; whereas, the value of the things produced in the so-called service industries constituted over 70 percent of the total. In other words, the latter have become proportionately greater contributors to the national income of the country.

One thing should be borne in mind. When you have a depression, factories curtail their output faster than other businesses. People still use electricity; they still use gas, and the result is you get a situation where proportionately these industries become much more important.

On the other hand, there is also a price factor there that must be borne in mind. Public-utility rates don't go down as quickly as other prices. A lot of other service prices do not go down as quickly as commodity prices, and the result is that the total value of the products of the noncommodity-producing industries becomes greater relatively to the total.

Now I would like to compare on this chart the production of our industries, on a total and a per-capita basis.

(The chart referred to was marked "Exhibit No. 16" and appears on p. 25. The statistical data on which this chart is based are included in the appendix on p. 200.)

PRODUCTION OF COMMODITIES IN PROSPERITY AND DEPRESSION

Dr. LUBIN. Our industries, mining, manufacturing, and so forththis is industrial production only and omits agriculture our industries produced a relatively small proportion of the total income in 1936 as compared to the year 1899; yet there was a very marked increase in the growth of manufacturing and mining in that interval of time. As a matter of fact, the increase in the total goods produced by our industries was from about 100 in 1899 to 167 in 1910, whereas the per capita output of our industries increased from 100 to 135. In other words, the output of our factories and mines was growing at a rate much faster than our population, with the result that in 1910 every consumer in this country was using about 35 percent more goods than in 1899. In other words, the amount of goods available to the individuals of this country was 35 percent greater, at least in terms of products of mines and factories, than it had been in 1899. The answer of course is that industry was growing at a much more rapid rate than population with the result that you had gotten to the point where each person had more goods.

In 1929 our manufacturing industries were producing approximately three times as much as they had been in 1899, and despite the increase in our population, the per capita production also increased. The result was that twice as much goods were being produced for each

person in the year 1929 as had been produced for each consumer in

1899.

In 1932, however, our total production fell back to 171, which put us back to just about where we had been in 1914. In per capita terms the amount of production fell from 197 in 1929 to 102 in 1932,

so that in terms of the products of our factories and our mines, the average citizen in this country had about as much available as he did in 1899. In other words, we were set back exactly 33 years in terms of the production of our mines and factories and the goods produced that were available to each of our people. We reached 167 last

(1) PRELIMINARY

1919

1920 1921 1922 1923 1924

1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938

FEDERAL RESERVE BOARD

10

20

year and at the present time we are down to about 128, which puts us back at the level of about 1905 on a per capita basis.

In this chart on the physical volume of industrial production I have attempted to repeat the preceding chart, but in more simple form in order that you may see more clearly the tremendous declines that have taken place during the last 20 years.

(The chart referred to was marked "Exhibit No. 17" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 201.)