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TABLE 34.-Current yields of foreign government bonds, as of August 1947
Source: Monthly Bulletin of Statistics, Statistical Office of the United Nations, September 1947, pp. 117-118.
EFFECT OF THE WAR ON THE PUBLIC DEBT OF THE UNITED STATES
The public debt of the United States has been defined for the purposes of this report as (1) the gross debt of the Federal Government including guaranteed obligations not owned by the United States Treasury and (2) the net interest-bearing debt of State and local governments. (See table 35, footnotes 1 and 2.) Gross debt data for State and local governments comparable to the gross debt figures of the Federal Government are not available.
It should be noted that the total public debt in the United States includes Government securities owned by Federal agencies and trust funds, and by trust and investment funds of State and local governments. The holdings of these agencies and funds amounted to $40,800,000,000 on June 30, 1947. These holdings have not been deducted from the total public debt as they represent assets accumulated for specific purposes. Consequently, they should not be considered as an offset against the public debt in the sense that securities held in sinking funds are an offset. Securities held in sinking funds of State and local governments have been excluded from the net interest-bearing debt of State and local governments, and, therefore, are not included in the totals.
Size of the public debt
The total public debt of the United States-Federal, State, and local-increased by $209,400,000,000 from June 30, 1939, to June 30, 1947. The debt of the Federal Government increased $212,500,000,000 during this period, reflecting the cost of the war which was borne almost entirely by the Federal Government. However, the Federal debt reached a high of $279,800,000,000 on February 28, 1946, and by June 30, 1947, had been reduced $21,400,000,000 as a result of drawing down the general fund balance of the Treasury from wartime to peacetime levels and of a surplus of $754,000,000 for the fiscal year 1947.
TABLE 35.-Total public debt of the United States outstanding, classified by issuer, June 30, 1939-June 30, 1947
[Billions of dollars]
1 Gross debt, including guaranteed obligations not held by the United States Treasury; gross debt consists of interest-bearing debt, matured debt on which interest has ceased, and debt bearing no interest. Source: Treasury Bulletin, July 1947, p. 20: Daily statement of United States Treasury, July 1, 1947.
? Interest-bearing debt less amount of interest-bearing securities issued by Federal, State, and local governments held in sinking funds of States, localities, Territories, and possessions. (The small amount of securities held in sinking funds of Territories and possessions is included.) There is only a very small amount of non-interest-bearing debt of State and local governments outstanding. Source: Annual Report of the Secretary of the Treasury for the fiscal year ended June 30, 1947.
3 Including obligations of Federal, State, and local governments held by Federal agencies and trust funds and by trust and investment funds of States, localities, Territories and possessions.
4 Obligations of Federal, State, and local governments held by Federal agencies and trust funds and by trust and investment funds of States, localities, Territories and possessions. Does not include securities held in sinking funds. Source: Annual Report of the Secretary of the Treasury for the fiscal year ended June 30, 1947.
The debt of State and local governments, however, decreased 3.1 billion dollars from the end of June 1939 to the end of June 1947. The decrease in State and local debt resulted from increased revenues of these governmental units and from the postponement of State and local expenditures for some functions, such as public works.
Ownership of the public debt
Through an intensive sales effort and the use of savings bonds and other bank-restricted securities, it was possible to achieve a wide dis tribution of the Federal debt among various classes of investors. Table 36 shows the estimated ownership of all interest-bearing securities of Federal, State, and local governments in the United States.
The reduction effected in the Federal debt by drawing down the Treasury balance from wartime to peacetime levels, has been concentrated in bank-held debt. As a consequence, the proportion of the interest-bearing Federal debt in the hands of nonbank investors was 64 percent on June 30, 1947, compared with 60 percent on June 30, 1946, and on June 30, 1939.
Rate of interest on the public debt
Although the war resulted in a large increase in the debt of the Federal Government, this debt was financed at a decreasing rate of interest (table 37). The computed average rate of interest on the direct and guaranteed interest-bearing debt of the Federal Government was 2.107 percent on June 30, 1947, although all except a very small amount of the public debt outstanding was taxable. On June 30, 1939, the computed average rate of interest was 2.53 percent; at that time interest on all of the debt was exempt from the normal tax and a part of it from the surtax. The lowest computed average interest rate was 1.92 percent at the end of December 1944.
The recent increase in the average rate of interest on the public debt has resulted principally from a shift from short-term to longterm securities concurrent with the reduction in bank-held debt. Recent issues of Treasury bills, certificates of indebtedness, and Treasury notes have been sold at higher interest rates, although the rate on long-term Government bonds, except for savings bonds, has remained at 2.50 percent, as pointed out in the reply to item 14.
TABLE 36.—Estimated ownership of all interest-bearing securities issued by govern-mental units in the United States June 30, 1939–June 30, 1947
[Par value.1 Billions of dollars]
Figures are rounded and will not necessarily add to totals.
1 Figures represent par values with the following exceptions: (1) The holdings of commercial and mutual savings banks of State and local governments, Territories, and possessions are book values, (2) the holdings of these securities by individuals are residuals, and so deviate from par values in those cases where the figures for commercial and mutual savings banks are book values, (3) in the case of data which include United States savings bonds series A-D, E, and F, the figures for these bonds represent current redemption values.
2 Includes partnerships and personal trust accounts.
3 Includes savings and loan associations, dealers and brokers, and investments of foreign balances in this country.
4 Comprises trust, sinking, and investment funds of State and local governments, territories, and possessions.
Source: Annual Report of the Secretary of the Treasury for the fiscal year ended June 30, 1947.
AVERAGE INTEREST RATE FOR UNITED STATES GOVERNMENT BORROWING
The computed average interest rate on the outstanding direct and guaranteed public debt of the United States on June 30, 1947, was 2.107 percent.
At the present time there are four issues of securities continuously on sale by the Government. These are series E, F, and G savings bonds and Treasury savings notes, series C. Series E savings bonds yield 2.9 percent, if held 10 years to maturity; series F and G savings. bonds yield 2.53 percent and 2.50 percent, respectively, if held 12 years to maturity; series C savings notes yield 1.07 percent, if held 3 years to maturity.
The rate of interest paid on other securities issued by the United States varies with the term and maturity of the issue. Ninety-day Treasury bills are offered weekly. The issue dated December 4, 1947, sold at an average discount rate of 0.944 percent. The issue of Treasury notes, dated December 1, 1947, is a 1%-percent, 13-month security. From September 29 through October 8, 1947, the Treasury Department offered a 21⁄2-percent Treasury bond, investment series A-1965, at 100 to institutional investors holding savings, insurance, and pension funds, and commercial banks holding savings deposits.
TABLE 37.-Yields on United States Government securities June 30, 1939–June 30,
1 Average discount rate on last issue of Treasury bills sold prior to June 30.
2 Monthly average yield on Treasury bonds having 15 or more years to earliest call date. Yields for 1939, 1940, and 1941 are for partially tax-exempt bonds; for 1942 and subsequent years, the yields are for taxable bonds.
3 Computed average annual interest rate on total direct and guaranteed interest-bearing debt outstanding on June 30.
Dow-Jones twenty 20-year municipal bonds. Yields for 1939 and 1940 are for the last Saturday in June and for 1941-47 are for the last Friday in June.
Source: Discount rates on Treasury bills from Annual Reports of the Secretary of the Treasury; yields on long-term Treasury bonds and computed average rates of interest from the Treasury Bulletin; and municipal bond yields from the Dow-Jones averages, published by Barron's Financial Weekly.
TABLE 38.-Total Government receipts in United States, 1939 and 1946
Other receipts 2.
Total Federal receipts..
State and local: 3
Other receipts 2.
[Millions of dollars]
Total State and local receipts..--
Total Federal, State and local receipts..
1 For fiscal years ending June 30.
2A separate classification of receipts from Government enterprises is not available. 3 For calendar years.
Source: Federal Government: Annual Report of the Secretary of the Treasury for the fiscal years ended June 30, 1939 and June 30, 1946. State and local: National Income, Supplement to Survey of Current Business, July 1947.
CHAPTER V. BALANCE OF PAYMENTS OF THE UNITED
In this chapter material concerning balance of payments or aspects thereof, has been assembled. The data are in reply to two questions contained in Senate Resolution 103, namely:
Item 9. So far as possible, the total value of American goods exported and services performed for foreigners, excluding reexports and financial and security transfers, annually from 1914 to 1946; together with the corresponding items supplied by foreigners to the United States in the same period.
Item 15. An estimate year by year of the probable expenditure of foreign countries for American goods and services as a result of the loans, credits, grants, and other forms of financial aid, contracted with this country publicly or privately since VE-day.
A discussion of item 9 and a presentation of data on United States exports and imports in the years 1914, 1932, 1939, and 1946 appear in section A. Section B covers a discussion of item 15 and supplies. data relative to private United States lending abroad, and section C gives certain supplemental data regarding postwar lending by foreign countries.
A. BALANCE OF PAYMENTS OF THE UNITED STATES
Table 39, which follows, shows, as item I A, total goods exported and services performed for foreigners in the respective years or periods, while item II A represents the corresponding items supplied by foreigners to the United States. More specifically, goods and services include all exports or imports of movable goods and so-called invisible items. The latter include shipping, travel, insurance, rents and royalties, property income (interest, dividends, and profits) and others. Exports are credits (or receipts) since in each case the country is giving up an asset; contrariwise, imports (payments) are debits because the country is acquiring an asset.
Items I B and C, II B and C, and IV represent the financial and security transfers which served to finance the net surplus of exports or imports of goods and services. Items I B and II B cover unilateral transfers, or gifts, contributions, and other transfers of value not involving a quid pro quo in the form of goods, services, gold, or capital assets. Under this heading are included not only cash gifts, such as immigrant remittances, but also the value of gifts in kind, such as UNRRA or lend-lease shipments. Thus unilateral transfer debits (or payments) reflect the value of all gifts, contributions, and similar items to foreign countries, whether in cash or other capital claims, or in the form of goods or services.
Items I C and II C, long-term capital movements, represent shifts in capital claims of indefinite maturity or of a maturity of more than one year. They include not only securities (stocks, bonds, mortgages, etc.) but real property (farms, branch factories, and real estate). Real property purchased by the Government for its own use, how