The National Balance Sheet of the United States, 1953-1980 9780226301570

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The National National Balance Balance Sheet Sheet The of the the United United States, States, of 1953-1980

A National Bureau of Economic Research Monograph

The The National National Balance Sheet Sheet Balance of of the the United States, States, United 1953-1980 1953-1980 Raymond W. W. Goldsmith Goldsmith Raymond

The of Chicago The University University of Chicago Press Press

Chicago Chicago and and London London

Raymond Raymond W. W. Goldsmith, Goldsmith, Emeritus Emeritus Professor Professor of of Economics Economics at at Yale Yale works including University, is University, is the the author author of of numerous numerous works including Financial FinanciallnterIntermediariesininthe the American Economy since 1900; The National of mediaries American Economy since 1900; The National WealthWealth of the Postwar Period; Study of Saving in thein United the United UnitedStates Statesininthethe Postwar Period; Study of Saving the United States; thethe National Balance SheetSheet of theofUnited States.States. States;and andStudies Studiesinin National Balance the United He Institutional Investors Corporate Stock: A A He is is the the editor editor of of Institutional Investorsand and Corporate Stock: Background BackgroundStudy. Study.

This study study is is aa part part of of the the Measurement Measurement of of Economic Economic and and Social Social This Performance project project which which has has been been aided aided by by aa National Science Performance National Science Foundation grant grant (NSF (NSF SOC SOC 74-21391) 74-21391) Foundation

The University University of of Chicago Chicago Press, Press, Chicago Chicago 60637 The 60637 The The University University of of Chicago Chicago Press, Press, Ltd., Ltd., London London © 1982 1982 by by The The University University of of Chicago Chicago © All rights rights reserved. reserved. Published Published 1982 All 1982 Printed in in the the United United States States of of America America Printed 89 88 88 87 87 86 86 85 85 84 84 83 83 55 44 33 22 11 89

Library Library of of Congress Congress Cataloging Cataloging in in Publication Publication Data Data Goldsmith, Goldsmith, Raymond Raymond William, William, 19041904The balance sheet The national national balance sheet of of the the United United States, States, 1953-1980. 1953-1980.

(National Bureau Bureau of of Economic Economic Research Research monograph) monograph) (National Bibliography: p. Bibliography: p. Includes Includes index. index. 1. National income—United States-Accounting. States—Accounting. 1. National income-United I. Title. Title. II. II. Series. I. Series. 82-2746 HC110.I5G63 339.373 82-2746 HCllO.I5G63 339.373 ISBN ISBN 0-226-30152-4 0-226-30152-4 AACR2 AACR2

National Bureau of Economic Research National Bureau of Economic Research Officers Eli Eli Shapiro, Shapiro, chairman chairman Franklin A. Lindsay, vice-chairman vice-chairman Martin Martin Feldstein, Feldstein, president president

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Franklin A. A. Lindsay RoyE. Roy E. Moor Geoffrey Geoffrey H. H. Moore Moore Michael H. H. Moskow James O'Leary James J. J. O'Leary Peter Peter G. G. Peterson Peterson Robert Robert V. V. Roosa Roosa

Richard N. N. Rosett Rosett Bert Seidman Seidman Eli Shapiro Shapiro Stephen Stephen Stamas Stamas Lazare Lazare Teper Teper Donald Donald S. S. Wasserman Wasserman Marina Marina v.N. v.N. Whitman Whitman

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Directors Directors by by Appointment Appointment of of Other Other Organizations Organizations Carl AssoAmericanEconomic Economic AssoCarlF. F. Christ, Christ, American ciation ciation Robert Committeefor forEcoEcoRobert C. C. Holland, Holland, Committee nomic Development nomicDevelopment Stephan Stephan F. F. Kaliski, Kaliski, Canadian CanadianEconomics Economics Association Association Albert NationalAssociaAssociaAlbert G. G. Matamoros, Matamoros, National tion tionof ofBusiness BusinessEconomists Economists Douglass Douglass C. C. North, North, Economic EconomicHistory History Association Association

Rudolph AmericanFederaFederaRudolph A. A. Oswald, Oswald, American tion ofof tionofofLabor Laborand andCongress Congress Industrial IndustrialOrganizations Organizations Joel AssociaJoel Popkin, Popkin, American AmericanStatistical Statistical Association tion G. AmericanAgricultural Agricultural G. Edward EdwardSchuh, Schuh,American Economics EconomicsAssociation Association James James C. C. Van Van Home, Home,American AmericanFinance Finance Association Association Charles CharlesA. A. Walworth, Walworth,American AmericanInstitute Institute of Accountants ofCertified CertifiedPublic Public Accountants

Directors Directors Emeriti Emeriti Arthur Arthur Bums Burns EmilioG. G. Collado Collado Emilio SolomonFabricant Fabricant Solomon FrankFetter Fetter Frank

Thomas ThomasD. D.Flynn Flynn Gottfried Gottfried Haberler Haberler Albert AlbertJ.J. Hettinger, Hettinger, Jr. Jr. George GeorgeB. B.Roberts Roberts

Murray MurrayShields Shields Boris BorisShishkin Shishkin Willard WillardL.L.Thorp Thorp Theodore Theodore O. O. Yntema Yntema

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Contents Contents

List List of of Tables Tables Preface Preface

Introduction Introduction

1. Secular Secular Overview Overview 1. 1.1. 1.1. Trends Trends in in the the Distribution Distribution of of National National Assets Assets in in Current Current Prices Prices 1.2. between Broad 1.2. Differences Differences between Broad and and Narrow Narrow Concepts Concepts of of Assets Assets 1.3. in the Balance Sheet 1.3. Changes Changes in the National National Balance Sheet in in Constant Constant Prices Prices 1.4. of Assets Assets 1.4. Sectoral Sectoral Distribution Distribution of 1.5. of 1.5. Decomposition Decomposition of of Rates Rates of of Growth Growth of National Assets National Assets 1.6. National Balance 1.6. National Balance Sheet Sheet Ratios Ratios 1.6.1. Capital/Output Capital/Output Ratios Ratios 1.6.1. 1.6.2. 1.6.2. Other Other Balance Balance Sheet Sheet Ratios Ratios

xi xi xiii xiii

11

44 10 10 11 11 12 12 16 16 16 16 20 20 20 20 21 21

2. the 1953-75 2. Summary Summary of of Findings Findings for for the 1953-75 Period Period

23 23

3. and 3. Problems Problems of of Constructing Constructing National National and Sectoral Balance Sheets Sectoral Balance Sheets 3.1. 3.1. Sectoring Sectoring 3.2. 3.2. Categories Categories of of Assets Assets and and Liabilities Liabilities 3.3. 3.3. Valuation Valuation 3.4. Prices) 3.4. Deflation Deflation (Reduction (Reduction to to Constant Constant Prices) 3.5. 3.5. Consolidation Consolidation 3.6. Sources 3.6. Sources

29 29 29 29 .31 31 32 32 34 34 38 38 38 38

vii vii

viii viii

Contents

4. The National Balance Sheet of the the United United States States for for 1975 1975 4.1. The Overall Balance Sheet 4.1.1. Sectoral Distribution 4.1.2. Main Assets and Liabilities 4.2. 4.2. The The Structure Structure of of Sectoral Sectoral Balance Balance Sheets Sheets 4.3. 4.3. Distribution Distribution of of Assets Assets and and Liabilities Liabilities among among Sectors Sectors 4.4. 4.4. The The Financial Financial Interrelations Interrelations Ratio Ratio

49 49 55 55

5. 5. Trends Trends and and Fluctuations Fluctuations in in the the National National Balance Balance Sheet, Sheet, 1953-75 1953-75 5.1. 5.1. The The National National Balance Balance Sheet Sheet 5.1.1. 5.1.1. Annual Annual Fluctuations Fluctuations 5.1.2. Rates Rates of of Growth Growth 5.1.2. 5.1.2.1. 5.1.2.1. Types Types of of Assets Assets and and Liabilities Liabilities 5.1.2.2. 5.1.2.2. Different Different Sectors Sectors 5.1.3. 5.1.3. Structure Structure of of Assets Assets and and Liabilities Liabilities 5.1.4. 5.1.4. Sectoral Sectoral Distribution Distribution of of Assets Assets 5.2. Revaluations Revaluations 5.2. 5.3. 5.3. A A Comparison Comparison of of Three Three Estimates Estimates

57 57 58 58 58 58 59 59 59 59 66 66 72 72 75 75 93 93 101 101

6. 6. Trends Trends and and Fluctuations Fluctuations in in Sectoral Sectoral Balance Balance Sheets, Sheets, 1953-75 1953-75 6.1. 6.1. Sectoral Sectoral Distribution Distribution of of Assets, Assets, Liabilities, Liabilities, Equities, Equities, and and Net Net Worth Worth 6.2. 6.2. Two Two Financial Financial Ratios Ratios 6.3. 6.3. The The Balance Balance Sheet Sheet of of All All Nonfinancial Nonfinancial Sectors Sectors 6.4. 6.4. Households Households 6.4.1. 6.4.1. Trends Trends and and Cyclical Cyclical Movements Movements of of Total Total Assets Assets 6.4.2. 6.4.2. Structural Structural Changes Changes 6.4.3. 6.4.3. Rates Rates of of Growth Growth of of Assets Assets and and Liabilities Liabilities 6.4.4. Liquidity Liquidity 6.4.4. 6.4.5. 6.4.5. Leverage Leverage Ratio Ratio 6.4.6. 6.4.6. Subsectors Subsectors of of the the Household Household Sector Sector 6.4.6.1. 6.4.6.1. Top Top 11 Percent Percent of of Wealthholders Wealthholders 6.4.6.2. 6.4.6.2. Households Households of of Different Different Size Size of of Wealth Wealth .6.4.6.3. 6.4.6.3. Households Households of of Different Different Income Income 6.4.6.4. 6.4.6.4. Households Households of of Different Different Age Age 6.4.6.5. 6.4.6.5. Male Male and and Female Female Wealthholders Wealthholders 6.4.6.6. 6.4.6.6. The The Influence Influence of of Children Children

41 41 41 41 41 41 42 44 44

104 104 104 104 107 107 109 109 116 116 116 116 119 119 123 123 128 128 130 130 132 132 132 132

134 134 136 136 139 139 139 139 142 142

ix ix

Contents

6.4.6.7. The The Influence Influence of of Schooling Schooling 6.4.6.7. 6.4.6.8. The Influence of Race 6.4.6.9. 6.4.6.9. Regional Regional Differences Differences 6.5. Nonprofit Organizations Nonprofit 6.6. Farm Enterprises 6.6.1. The Sector as a Whole 6.6.2. Differences of Differences among size Classes of Farms 6.6.3. 6.6.3. Regional Regional Differences Differences 6.7. Nonfinancial Nonfarm Nonfarm Unincorporated 6.7. Nonfinancial Unincorporated Business Enterprises 6.8. Nonfinancial Corporations 6.8.1. The Sector as a Whole 6.8.2. 6.8.2. Main Main Subsectors Subsectors 6.8.3. 6.8.3. Two Two Financial Financial Ratios Ratios 6.9. 6.9. Federal Federal Government Government 6.10. 6.10. State State and and Local Local Governments Governments 6.11. Rest Rest of of the the World World 6.11. 6.12. Financial Institutions 7. Assets Broader Definitions Definitions of of National National Assets 7. Broader

7.1. 7.1. 7.2. 7.3. 7.4. 7.5. 7.5. 7.6. 7.7. 7.8.

Standing Standing Timber Timber Fish and Game Collectors' Items National Monuments Subsoil Assets Assets Subsoil Research and Development Expenditures Patents, Copyrights, and Goodwill Unfunded Unfunded Liabilities of Pension and Retirement Funds 7.9. Human Human Capital Capital 7.9. 7.10. An Estimate of Extended National Assets Assets National

8. 8. Developments Developments in in 1976-80 1976-80 8.1. Movements of National Assets 8.2. Changes in Distribution among Components: Overview 8.3. Reproducible Tangible Assets 8.4. Financial Assets 8.5. National Balance Sheet Sheet Ratios Ratios 8.5. National Balance

References References Index

143 143 143 143 146 146 151 151 153 155 160 160 161 161 167 167 171 171 171 171 177 186 186 187 187 187 188 189 189 190 190

190 192 192 193 193 195 195 196

196 198 199 205 205 211 211 215

Tables Note: All Note: All tables tables are are in in current current prices prices except except tables tables 44 and and 23, 23, which which are are in in constant constant (1972) (1972) prices, prices, and and tables tables 3,15,17,18,21,26,48,52,62,68, 3,15,17,18,21,26,48,52,62,68, 76, 78, 78, 80, 80, 83, 83, and and 88, 88, which which show show both both current current and and constant constant price price 76, figures. figures.

1. Structure and Growth of National Balance Sheet, 1900, 1929,1953, 1929, 1953, and 1980: Narrow Concept 6 2. Structure and Growth of National Balance Sheet, 1900, 1929, 1953, 1900,1929,1953, and 1980: 1980: Broad Concept 8 3. Growth Rates of Main Components of National Assets, 190180 14 4. Distribution and Growth of Reproducible Tangible Assets, 1900-80; 19~0; Constant (1929 or 1972) Prices 15 5. Sectoral Distribution of National Assets, 1900, 1929, 1953, 1975, and 1900,1929,1953,1975, 1979: Narrow Concept 17 6. Decomposition of Rate of Growth of National Assets, (Narrow 18 Concept), Concept), 1901-80 1901-80 18 7. 21 7. Capital/Output Capital/Output Ratios, Ratios, 1900, 1900, 1929, 1929, 1953, 1953, and and 1980 1980 21 8. 8. Additional Additional National National Balance Balance Sheet Sheet Ratios, Ratios, 1900, 1900, 1929, 1929, 1953, 1953, and and 1980 22 1980 22 9. 36 9. Asset Asset Price Price Indices, Indices, 195HO 1953-80 36 10. 10. Prices Prices of of Main Main Components Components of of Assets: Assets: Rate Rate of of Increase Increase and and Share Share in in Total National Assets 39 Total National Assets 39 11. 11. Main Main Assets Assets and and Liabilities Liabilities in in the the National National Balance Balance Sheet, Sheet, 1975 43 1975 43 12. 45 12. Structure Structure of of Sectoral Sectoral Balance Balance Sheets, Sheets, 1975 1975 45 13. 49 13. Sectoral Sectoral Balance Balance Sheet Sheet Ratios, Ratios, 1975 1975 49 14. 14. Distribution Distribution of of Individual Individual Assets Assets and and Liabilities Liabilities among among Sectors, Sectors, 1975 50 1975 50 15. 15. National National Assets, Assets, 1953-75 1953-75 60 60 16. 62 16. National National Balance Balance Sheet Sheet Ratios, Ratios, 1953-75 1953-75 62 17. 17. Growth Growth Rates Rates of of Assets Assets and and Liabilities Liabilities of of All All Sectors, Sectors, 1954-75 1954-75 64 64 18. 67 18. Rates Rates of of Growth Growth of of Assets Assets of of Main Main Sectors, Sectors, 1954-75 1954-75 67 xi xi

xii

Tables

19. Rates of Growth of Assets of Financial Subsectors, 1954-75 68 20. Relation of National and Sectoral Assets to Gross National Product, 1953-75 71 71 21. Sectoral Growth Rates: Numbers Increasing or Decreasing Each Year, 1955-75 72 22. Annual Changes in Sectoral Assets in Current Prices, 1954-75 73 23. Annual Changes in Sectoral Assets in Constant (1972) Prices, 195475 74 24. Structure of National Balance Sheet, 1953, 1953, 1964, and 1975 76 25. Sectoral Distribution of Assets, Liabilities, Equities, and Net Worth, 1953, 1964, and 1975 78 26. Sectoral Distribution of National Assets in Current and Constant (1972) Prices, 1953, 1953, 1964, and 1975 80 27. Annual Sectoral Distribution of National Assets, 1953-75 82 28. Annual Sectoral Distribution of Tangible Assets, 1953-75 83 29. Annual Sectoral Distribution of Financial Assets, 1953-75 84 30. Changes in Sectoral Distribution of Assets, Liabilities, and Net Worth between 1953 and 1975 86 31. Structure of Sectoral Balance Sheets, 1953 88 32. Distribution of Individual Assets, Liabilities, and Net Worth among Sectors, 1953 90 33. Size of Changes in Sectoral Distribution of Assets, Liabilities, and Net Worth between 1953 and 1975 92 34. Changes in National Assets and National Saving, 1954-75 94 35. Sectoral Distribution of Revaluations, 1954-75 96 36. Share of Revaluations in Increase in Net Worth, 1954-75 97 37. Net Revaluations and Net Worth, 1946-75 98 38. Net Revaluations by Type of Asset and Liability and Sector, 194675 99 39. Share of Gross Revaluations in Net Worth Changes by Sector, 1901-53 101 40. Three Estimates of Assets of Domestic Private Sectors, 1953 and 1974 102 41. National Wealth and Sectoral Net Worth, 1953, 1953, 1964, and 1975 106 42. The Share of Financial Assets in Total Sectoral Assets, 195375 108 43. The Sectoral Liabilities/Financial Assets Ratio, 1953, 1953, 1964, and 1975 109 44. Distribution of National Assets between Financial and Nonfinancial Nonfinancial Sectors, 1953-75 110 45. Assets of All Nonfinancial Sectors, 1953-75 111 46. Rates of Growth of Assets and Liabilities of Financial and Nonfinancial Sectors, 1954-75 112

xiii xiii

Tables

47. Structure of Balance Sheet of All Nonfinancial Sectors, 1953, 1964, and 1975 114 48. Assets of Household Sector, 1953-75 118 49. Structure of Household Assets and Liabilities, 1953, 1953, 1964, and 1975 120 50. Main Components of Balance Sheets of Households, 195375 122 51. Proportion of Years in which Share of Given Asset, Liability, or Net Worth in Total Assets of Households or Relation to Personal Disposable Income Increased, 1954--75 1954-75 124 52. Rates of Growth of Household Assets, Liabilities, and Net Worth, 1954--75 1954-75 126 53. Liquidity of Household Sector, 1953-75 129 54. Leverage Ratio of Household Sector, 1953-75 131 55. Balance Sheet Structure of Top 1 Percent holders: Selected Percent of ofWealth Wealthholders: Selected Dates, 1953-75 133 56. Asset Structure of Households of Different 135 Different Wealth, 1962 57. Structure of Household Balance Sheet by Wealth of Unit, 1962 137 58. Structure of Household Balance Sheet by Income of Unit, 1962 138 59. Structure of Household Balance Sheet by Age of Head, 1962 140 60. Structure of Assets and Liabilities of Male and Female Top Wealth141 holders, 1953, 1953, 1962, and 1972 61. Portfolio Structure of Households of Different Different Composition, Schooling, Race, and Region, 1962 144 62. Assets of Nonprofit Nonprofit Organizations, 1953-75 147 63. Structure of Balance Sheet of Nonprofit Nonprofit Organizations, 1953, 1953, 1964, and 1975 148 64. Assets of Farm Enterprises, 1953-75 149 65. Structure of Balance Sheet of Farm Enterprises, 1953, 1953, 1964, and 1975 150 66. Balance Sheet Structure of Farms of Different Different Size, 1975 152 67. Structure of Balance Sheet of Farm Enterprises by Region, 1969 154 68. Assets of Nonfarm Nonfarm Nonfinancial Unincorporated Business Enterprises, 1953-75 157 69. Structure of Balance Sheet of Nonfarm Nonfinancial Nonfinancial Unincorporated Business Enterprises, 1953, 1953, 1964, and 1975 158 70. Structure of Balance Sheet of Nonfinancial Nonfinancial Nonagricultural Partnerships, 1973 159 71. Assets of Nonfinancial 162 Nonfinancial Corporations, 1953-75 72. Structure of Balance Sheet of Nonfinancial Corporations, 1953, 1964, and 1975 163

xiv xiv

Tables Tables

73. Balance Sheet Structure of Nonfinancial Nonagricultural Corporations, 1974 164 74. Balance Sheet Structure of Manufacturing Manufacturing Corporations, 1974 166 75. Relation of Market Value of Stock of Nonfinancial Nonfinancial Corporations to Their Equity and Their Tangible Assets, 1953-75 168 76. Assets of Federal Government, 195~75 1953-75 169 77. 1964, and 77. Structure Structure of of Balance Balance Sheet Sheet of of Federal Federal Government, Government, 1953, 1953,1964, and 1975 170 1975 170 78. 172 78. Assets Assets of of State State and and Local Local Governments, Governments, 195~75 1953-75 172 79. 1953, 79. Structure Structure of of Balance Balance Sheet Sheet of of State State and and Local Local Governments, Governments, 1953, 1964, and and 1975 1975 173 1964, 173 80. Foreign Foreign Assets Assets of of American American Sectors, Sectors, 195~75 1953-75 174 80. 174 81. 195~75 81. American American Assets Assets of of Rest-of-the-World Rest-of-the-World Sector, Sector, 1953-75 175 82. 1964, 82. Structure Structure of of Balance Balance Sheet Sheet of of Rest-of-the-World Rest-of-the-World Sector, Sector, 1953, 1953,1964, and 1975 1975 176 176 and 83. 178 83. Assets Assets of of Financial Financial Institutions, Institutions, 195~75 1953-75 178 84. of 84. Growth, Growth, Distribution, Distribution, and and Relation Relation to to Gross Gross National National Product Product of Balance Sheet Sheet Components Components of of all all Financial Financial Institutions; Institutions; 1953, 1953,1964, Balance 1964, and 1975 1975 180 and 180 85. 85. Assets Assets of of Financial Financial Institutions: Institutions: Rate Rate of of Growth, Growth, Distribution, Distribution, and and Relation 182 Relation to to Gross Gross National National Product, Product, 195~75 1953-75 182 86. 1964, and 193 86. Extended Extended Concept Concept of of National National Assets, Assets, 1953, 1953,1964, and 1975 1975 193 87. 87. Sectoral Sectoral Distribution Distribution of of National National Assets, Assets, 1953, 1953, 1964, 1964, and and 1975: Standard and and Extended Extended Concepts Concepts 194 Standard 194 88. Main Components National Assets, 197 88. Main Components of of National Assets, 1975-80 1975-80 197 89. 89. Distribution Distribution and and Rate Rate of of Growth Growth of of National National Assets, Assets, 1953 1953 and and 1975197580 200 80 200 90. 90. The The Structure Structure of of the Stock Stock and and Rate Rate of of Growth Growth of of Reproducible Reproducible Assets, 1953 1953 and and 1975-80 1975-80 202 202 Assets, 91. 91. Sectoral Sectoral Distribution Distribution and and Growth Growth Rates Rates of of Financial Financial Assets, Assets, 1953 1953 and 204 and 1975-80 1975-80 204 92. Distribution Distribution and and Growth Growth Rates Rates of of Financial Financial Assets Assets of of Financial Financial 92. Institutions, 1953 1953 and and 1975-80 1975-80 206 Institutions, 206 93. 208 93. National National Balance Balance Sheet Sheet Ratios, Ratios, 1953 1953 and and 1975-80 1975-80 208

Preface Preface

After decades decades of of neglect, neglect, during during which which the the estimates estimates of ofmy my AA Study Study of of After Saving in the United States for seven benchmark years between 1900 and Saving in the United States for seven benchmark years between 1900 and of Studies Studies in 1945, published published in in 1955-56, and and of in the the National NationalBalance BalanceSheet Sheet of the United States by R. W. Goldsmith, R. E. Lipsey, and States by R. W. Goldsmith, R. E. Lipsey, andM. M.MendelMendelof the to 1958 and and son, published published in in 1963, which which provided provided annual annual data data for for 1945 to son, for the the same same benchmark benchmark years, were the the only only ones ones in in the the field, field, there there is is for of estimates of national balance sheets of the United now a plethora now plethora of estimates of national balance sheets of the United of States. Apart Apart from from the the present present study, which which furnishes furnishes annual annual estimates estimates of national and sectoral balance sheets for each year from 1953 to 1975, and national and sectoral balance for each year from 1975, and estimates for for 1900, 1929, and and 1980, there are the the as yet yet unpublished unpublished estimates of Richard Richard and Nancy Nancy Ruggles ("The ("The Integration Integration of of National estimates of estimates Income Accounts and and Balance Sheets for for the United United States, 1947-78," July 1979; updated updated October October 1981); of Robert Eisner ("Capital Gains and Income: Real Changes in the Value of of Capital in the United United States, of Balance Balance Sheets 1946-1975," July 1977); and the various editions of Sheetsfor for the the U.S. Economy Economy of of the Flow-of-Funds Flow-of-Funds staff staff of of the Federal Reserve Board, which cover cover the period period from from 1947 on an annual basis but but are are limited limited to to the the of the economy; and there is a project project of of the Center Center for private sectors of of SRI International International which will provide Economic Policy Research of of sectors, but for a more recent quarterly estimates for a larger number quarterly of of a project project on the period only. The present study was conceived as part of of economic and social performance directed by Richard measurement measurement of performance Ruggles and was completed early in 1978--apart from some revisions and 1978—apart of updating in chapter 8, and the addition of of additions, a limited amount of chapter 1 early in 1981-before the Ruggles and Federal Reserve Board early in 1981—before the Ruggles and Federal Reserve Board estimates as well as the 1981 1981 revisions revisions of of the the Bureau Bureau of of Economic Economic AnalyAnalysis estimates became available. This, as well as the other studies, except the SRI International project, is essentially based on two bodies of data: xv XV

xvi xvi

I»reface Preface

first, first, the estimates of the components of reproducible tangible assets prepared by members of the Bureau of Economic Analysis of the Department of Commerce, particularly John Musgrave, published in various oj Current Business (e.g., April 1976, September issues of the Survey of Current Business 1979, March 1980, and February 1981), and, second, for financial financial assets and and liabilities, liabilities, the statistics statistics of of the the Federal Federal Reserve Reserve Board, Board, published, published, Flow-oj-Funds in e.g., United States, Statesy1945 1945toto1975. 1975.ItItisisonly onlythe the e.g., in in Flow-of-Funds in the the United estimates estimates of of the the values of of land land and and of of consumer consumer semidurables, semidurables, of of househouseholds' equity in holds' equity in farm farm and and other unincorporated business enterprises, the the balance nonprofit institutions of balance sheets sheets of of nonprofit institutions as as well as as of of aa few few groups groups of financial rough estimates that are financial institutions, institutions, and and the the rough estimates of of chapter chapter 77 that are original with this however, differs the others in original with this study. study. This This study, study, however, differs from from the others in that it beyond presentation presentation of the basic that it goes goes beyond of the basic statistical statistical data data in in current current prices provides estimates estimates in constant prices for land prices and and provides in constant prices also also for land and and for for assets,some somedata datafor forsubsectors subsectorsof ofhouseholds householdsand andenterprises, enterprises, financial assets, financial and aa limited limited amount amount of of analysis analysis and and interpretation. interpretation. and The mass of data data is is presented as far far as as possible in the form of of ratios— presented as possible in the form ratios-The mass of the shares shares of of the different assets assets and and liabilities liabilities and and of of the the different different sectors sectors the the different in the annual or period rates rates of of growth growth in in current or in the relevant relevant totals; totals; annual or period current or constant prices; to gross gross national national product product and and wealth wealth and and as as index index constant prices; ratios ratios to numbers, rather than in in absolute absolute (dollar) (dollar) values, values, because ratios are are numbers, rather than because ratios, regarded as as more more informative informative and and easier easier to to absorb. absorb. However, However, enough enough regarded are included included to to permit the intensive intensive user absolutefigures absolute figures are permit the user to to reconstruct reconstruct in in almost all cases the missing absolute figures and to work with them. almost all cases the missing absolute figures and to work with them. am indebted, indebted, for for providing providing some some unpublished unpublished material material and and answering answering II am many questions, to the flow-of-funds section of the Federal Reserve many questions, to the flow-of-funds section of the Federal Reserve Board (Mr. Steve Taylor and Mrs. Helen Tice) and to the Bureau Board (Mr. Steve Taylor and Mrs. Helen Tice) and to the Bureau of of Economic Analysis Analysis of of the the Department Department of of Commerce Commerce (Mr. (Mr. John John MusEconomic Musgrave); and and for for assistance, assistance, particularly particularly in in setting setting up computer operaoperagrave); up the the computer tions, to Miss Judy Notovitz. Professor C. S. Binkley of the Yale School tions, to Miss Judy Notovitz. Professor C. S. Binkley of the Yale School of Forestry Forestry kindly kindly prepared estimate of of the of standing standing timber timber of prepared the the estimate the value value of used in chapter 7. Financial assistance by NSF grant SOC 74-21391 is used in chapter 7. Financial assistance by NSF grant SOC 74-21391 is gratefully acknowledged. acknowledged. gratefully am also also indebted indebted to to the the members members of of the the staff staff reading reading committee committee of of the the II am National Bureau Bureau of of Economic Economic Research Research (Mf. (Mr. Solomon Solomon Fabricant, Fabricant, Mr. Mr. National John direcJohn Kendrick, Kendrick, and and Mrs. Mrs. Helen Helen Tice) Tice) and and to to the the members members of of the the directors' tors' reading reading committee committee (identities (identities unknown unknown to to me), me), although although II have have not not been able able to to accept accept all all their their suggestions. suggestions. been New Haven, Connecticut January 1982

R. W. Goldsmith

Introduction

National and sectoral balance sheets have three functions. The first is to serve as an integral part of a system of national accounts, as a source of of macroeconomic analysis, background information, and policy formulaformulafinancial tion. The second is to provide a basis for the analysis of the financial superstructure. The third is to provide a means of analyzing the relations between real and financial assets. A A complete complete system system of of national national accounts accounts consists consists of of two two parallel parallel parts, parts, flows over one financial flows one dealing dealing with with real real and and financial over a period period of of time time and and the the other financial instruments instruments at at aa point point other with with stocks stocks of of tangible tangible assets assets and and of offinancial flows are of of time. time. Flows Flows and and stock stock are are linked linked by by the the fact fact that that flows are equal equal to to differences between stocks, differences between stocks, and and that that stocks stocks are are equal equal to to cumulated cumulated past past flows, flows, ininboth bothcases casesififallowance allowanceisismade madefor forvaluation valuationchanges. changes.Because Because of this this relationship relationship it it is is desirable desirable to to follow follow the the same same principles in sectorsectorprinciples in of ing, in in itemization itemization (distinction (distinction of of types types of of assets assets and and liabilities), liabilities), in in imiming, putations, and and in in valuation valuation for for both both flows and stock. stock. putations, flows and Sectorized Sectorized national national balance balance sheets sheets are are essential essential for for the the analysis analysis of of the the financial financial superstructure. superstructure. They Theypermit permit the thecalculation calculationof ofratios ratiosand andother other measures which which can can help help us us understand understand financial structure or or developdevelopmeasures financial structure ment. Such Such measures measures refer, for example, example, to to the the structure structure of of financial ment. refer, for financial assets and and liabilities liabilities of of the the difference difference sectors; sectors; the the distribution distribution of of the the assets various types types of of assets assets and and liabilities liabilities among among the the different different sectors; sectors; the the various relation between assets and and liabilities liabilities as as an an indicator indicator of of the the burden relation between assets burden of of debt; the the degree degree of of liquidity liquidity and and variant variant definitions definitions of of liquid liquid assets; assets; the the debt; share of of financial institutions in in financial assets and and the the liabilities liabilities outoutshare financial institutions financial assets standing, in in the the aggregate aggregate and and individually; individually; the the rate rate of of change change in in current current standing, or constant over aa shorter shorter or value of of the the or constant prices, prices, over or longer longer interval, interval, of of the the value different categories categories of of financial assets and and liabilities; liabilities; the the leverage leverage ratio, ratio, different financial assets which is is an an indicator indicator of of the the effect effect of of price price changes changes on on net net worth; worth; the the which 1

2

Introduction

contribution contribution of of saving saving and and valuation valuation changes changes to to the the change change in in the the value value of of assets. On another level, information about the stocks of financial assets. On another level, information about the stocks of financial assets assets needed for and and liabilities liabilities is is often often needed for the the construction construction of of econometric econometric models models of the financial superstructure and of general models of the financial superstructure and of general models of of the the economy. economy. Sectoral balance sheets permit the Sectoral and and national national balance sheets permit the comparison comparison of of the the of tangible assets and of financial assets, either for one point of stocks stocks of tangible assets and of financial assets, either for one point of by the time interval. When When divided divided by the appropriate appropriate time or or for for aa shorter shorter or or longer longer interval. while product estimates, scope, while product estimates, they they yield yield capitaVoutput capital/output ratios ratios of of varying varying scope, financial and financial interrelations the the quotient quotient of of financial and tangible tangible assets assets is is the the financial interrelations ratio, and ratio of ratio, and the the ratio of the the market market value value and and the the cost cost of of reproduction reproduction of of the the different categories categories of of tangible tangible assets, assets, or or the the ratio ratio of of the the market market value value of of different corporate stock, stock, to to net net worth worth at at replacement replacement cost cost of of tangible tangible assets, assets, corporate provide important indicators indicators of of business business cycle cycle developments. developments. The The estiestiprovide important mates of of tangible tangible assets assets also also constitute constitute imputs imputs into into the the calculation calculation of of mates production functions. functions. National and sectoral sectoral balance balance sheets sheets have have finally finally production National and become of growing growing importance importance in in monetary monetary analysis analysis as as monetary monetary theory theory become of has increasingly adopted adopted the the portfolio approach. This This bare enumeration has increasingly portfolio approach. bare enumeration years ago ago (Goldsmith (Goldsmith may suffice suffice here, here, as as II have have dealt, dealt, more more than than aa dozen dozen years may 1967), in in more more detail detail with the uses of national national balance balance sheets sheets and and some some of of 1967), with the uses of raise. The The test, test, in in any any the conceptual conceptual and and statistical statistical problems problems which which they they raise. the case, is is whether whether the the analysis analysis of of national national and and sectoral sectoral balance balance sheets sheets yields yields case, results which cannot, or or cannot cannot as as easily easily and and effectively, effectively, be be obtained obtained results which cannot, from flow magnitudes alone. alone. from flow magnitudes The study study starts starts in in chapter chapter 11 with with aa secular secular overview overview of of the the period period The between 1900 and and 1980, 1980, which which permits permits aa comparison comparison of of the the essential essential between 1900 features of of the the national national balance balance sheet sheet in in the the first half of of this this century century with first half with features those of of the the 1953-75 1953-75 period the bulk of the the study study deals. deals. The The those period with with which which the bulk of Afteraabrief brief findingsrelating relatingtotothat thatperiod periodare aresummarized summarizedininchapter chapter2.2.After findings review in in chapter chapter 33 of of conceptual conceptual and and measurement measurement problems, problems, chapter chapter review discusses the the national national balance balance sheet sheet of of 1975, 1975, showing showing how how it it comcom44 discusses bines the balance sheets of of the the nine nine sectors sectors being distinguished and and the the being distinguished bines the balance sheets assets, liabilities, liabilities, equities, equities, and and different types types of of tangible tangible assets, assets,financial financial assets, different net worth. Chapter Chapter 55 presents presents and and tries tries to explain the the changes changes in in the the net worth. to explain national sheet and and its its sectoral sectoral and and instrumental instrumental structure structure benational balance balance sheet between 1953 and and 1975, 1975, stressing stressing the the differences differences between between the the less less inflationinflationtween 1953 ary first half and and the the more more inflationary inflationary second second half half of of the the period, and period, and ary first half looking for for evidence evidence of of the the influence influence of of business cycles on on balance balance sheet sheet business cycles looking structures. Chapter Chapter 66 reviews reviews structural structural and, and, to to aa lesser lesser extent, extent, cyclical cyclical structures. sectors and and changes in in the the balance balance sheets sheets of of all all nonfinancial andfinancial nonfinancial and financial sectors changes of the the nine nine individual individual sectors. sectors. This This review review is is supplemented supplemented by the preof by the presentation of of balance sheets for for subsectors subsectors of of the the household household and and of of the the balance sheets sentation three business business sectors sectors for for aa few few benchmark benchmark dates dates within within the the 1953-75 1953-75 three period. Chapter 77 indicates indicates how how the the use of aa broader broader concept concept of of wealth, wealth, period. Chapter use of

3

Introduction Introduction

making allowance in particular for subsoil assets, unfunded unfunded pension liabilities, and human capital, would affect affect the national balance sheet. The study closes with a brief discussion in in chapter chapter 88of ofchanges changesininthe themain main features of the national balance sheet in the 1976--80 1976-80 period.

11

Secular Secular Overview Overview

The summary of thefindings findings of the study consists of two parts. The first, presented in this chapter, is centered on a set of tables which provide information information on the structure of the national balance sheets for 1900 and 1929 to give historical perspective, as well as for 1980 to to bring bring the the picture picture as far up to date as as possible. possible. The The second second part, part, which which constitutes constitutes chapter chapter 2, 2, is limited to the years 1953-75 with which chapters 3-7 deal, but covers this period in greater detail and on an annual basis. Similarly detailed balanced sheets for additional benchmarks between 1900 and 1953 (1912, 1922, 1933, 1939, and 1945) and for each year between 1945 and 1958 can be found in an earlier study (Goldsmith, Lipsey, and Mendelson 1963, 1963, vol. 2). The corresponding basic statistics are available on an annual basis for the years following 1975, for reproducible tangible assets in the Survey Survey of of Current CurrentBusiness Business(Musgrave (Musgrave1976, 1976, 1979,1980,1981), and forfinancial financial assets in the Federal Reserve Board's flow-of-funds flow-of-funds accounts. accounts.These Theseare aresummarized summarizedininchapter chapter8.8. Three concepts of national assets are used in this study. The narrowest concept, illustrated by table 1, is limited to land, nonmilitary structures and equipment, consumer durables, and inventories. The broader concept, illustrated by table 2, includes in addition consumer semidurables, military structures, equipment and inventories, standing timber, subsoil assets, collectors' items, capitalized research and development expendiunfunded pension claims, the difference tures, unfunded difference between the adjusted adjusted book and the market value of corporate stock, and households' equity in unincorporated farm and nonfarm nonfarm business enterprises and in bankadministered personal trust funds, the last three because these enterprises and funds are treated as separate sectors. An intermediate concept, cept, used used throughout throughout chapters chapters 3-6, 3-6, does does not not include include standing standing timber, timber, subsoil research and subsoil assets, assets, colllectors' colllectors' items, items, research and development development expendiexpenditures, unfunded the stock tures, unfunded pension pension claims, claims, and and the stock valuation valuation difference. difference. 44

5

Secular Overview

The additional items included in the broader concept are of very different different character. character. Four Four of of them-military them—military structures, structures, equipment, equipment, and and inventories; inventories; standing standing timber; timber; subsoil subsoil assets; assets; and and collectors' collectors' items-repreitems—represent sent tangible tangible assets assets which which conceptually conceptually should should be be included included in in national national wealth and and hence hence in in national national balance balance sheets sheets but but which which are are usually usually omitted omitted wealth because of of the the difficulty difficulty of of measurement measurement and and the the necessarily necessarily very very large large because margin of of error error in in the the estimates. estimates. Capitalized Capitalized expenditure expenditure on on basic basic and and margin applied research research may may be be regarded regarded as as aa type type of of reproducible reproducible asset asset embodembodapplied ied in in tangible tangible assets, assets, particularly particularly equipment, equipment, and and thus thus contributing contributing to to ied output. The The inclusion inclusion of of two two others-equities others—equities in in unincorporated unincorporated business business output. and in in personal personal trust trust funds-depends funds—depends on on whether whether or or not not farm farm and and nonnonand farm unincorporated unincorporated business business enterprises enterprises and and personal personal trust trust funds funds adadfarm ministered by by banks banks and and trust trust companies companies are are regarded regarded as as separate separate sectors sectors ministered or are are consolidated consolidated with with the the household household sector. sector. Inclusion Inclusion ofthe of the unfunded unfunded or liabilities of of social social security security and and other other pension pension funds funds is is determined determined by by the the liabilities degree to to which which they they are are viewed viewed by by creditors, creditors, households, households, and and debtors debtors as as degree part of of their their assets assets and and liabilities, liabilities, and and how how they they influence influence portfolio portfolio part policies and and consumption consumption and and investment investment decisions. decisions. policies The The question question naturally naturally arises arises which which of of these these three three concepts concepts is is preferpreferable. The The answer answer will will depend depend on on the the purposes purposes that that analysis analysis of of the the figures figures able. is to to serve; serve; on on the the span, span, the the frequency, frequency, and and the the up-to-dateness up-to-dateness of of the the is estimates; and and on on the the margin margin of of error error in in the the estimates estimates the the user user is is willing willing to to estimates; tolerate. On On the the last last two two criteria criteria the the broad broad concept concept ranks ranks last, last, but but itit tolerate. comes nearer nearer to to meeting meeting the the requirements requirements of of aa comprehensive comprehensive system system of of comes national account account than than the the narrow narrow and and intermediate intermediate concepts. concepts. In In the the national United States States the the narrow narrow concept concept has has the the advantage advantage that that the the official official United estimates of of reproducible reproducible tangible tangible and and financial financial assets, assets, though though not not of of estimates 1925and and 1946 1946on onrespectively respectively land, are are available available on on an an annual annual basis basis from from 1925 land, and that that the the narrow-as narrow—as well well as as the the intermediate-concept intermediate—concept isis being being kept kept and up to to date. date. The The intermediate intermediate concept concept has has been been adopted adopted in inchapters chapters 3-6 3-6 on on up an annual annual basis basis for for the the period period 1953-75 1953-75 because because itit isis regarded regarded as as concepconcepan tually preferable preferable to to the the narrow narrow one, one, even even though though itit can can be be applied applied before before tually 1953 for for only only aa few few benchmark benchmark years. years. 1953 To To put put the the changes changes in in the the structure structure of of the the national national balance balance sheet sheet of ofthe the United United States States between between 1953 1953and and1975, 1975,which whichconstitute constitutethe thesubject subjectofthis of this study study and and are are discussed discussed in in chapters chapters 3-6, 3-6, into into historical historical perspective, perspective, comparable estimates estimates are are provided provided in in this this section section for for 1900 1900 and and 1929. 1929. A A comparable preliminary estimate estimate for for 1980 1980isisadded addedto tobring bringthe thepictures pictures as asmuch muchup upto to preliminary date as as possible. possible. The The choice choice of of the the benchmarks benchmarks of of 1900 1900 and and 1929 1929 was was date dictated by by the the availability availability of of estimates estimates of of national national balance balance sheets sheets in in an an dictated earlier study study (Goldsmith, (Goldsmith, Lipsey, Lipsey, and and Mendelson Mendelson 1963, 1963, 2:72ff.), 2:72ff.), but but isis earlier also justified justified by by the the fact fact that that 1900 1900 isis near near to to the the mid-1890s, mid-1890s, which which are are also often regarded regarded as asaawatershed watershedin inAmerican Americaneconomic economicdevelopment, development,while while often 1929 constitutes constitutes another another important important turning turning point point in in economic economic and and finanfinan1929

IV. IV. V. V.

III. III.

II.

4.5

1.1

20.4 10.0 10.4 40.4 11.8 11.0 1.7 1.7 4.2 4.1 0.1 4.8 4.7 0.1 2.1 4.1 60.8 1.0 1.0 38.2 6.3

1900 (1) (1) 13.4 4.0 9.4 33.9 11.2 6.4 3.5 3.9 3.8 0.1 3.9 3.8 0.1 0.7 4.3 47.3 0.5 52.2 6.5 2.2 5.6

1929 (2) 9.1 2.8 6.3 40.0 12.6 5.4 5.7 5.6 5.0 0.6 4.6 4.1 0.5 0.5 5.7 49.0 0.9 50.1 9.5 4.2 5.0

1953 (3)

Distribution (percent) Distribution

13.7 3.1 10.6 37.6 11.8 6.0 6.3 5.1 4.6 0.5 3.6 3.3 0.3 0.2 4.6 51.3 0.8 47.9 8.9 4.2 6.2

1980 (4) 4.88 3.08 6.06 5.79 6.21 4.46 9.11 5.61 5.58 8.95 5.69 5.66 6.94 2.59 6.61 5.95 4.19 7.57 6.50 9.00 7.24

1901 to 1929 (5)

Concept Structure Structure and and Growth Growth of of National National Balance Balance Sheet, Sheet, 1900, 1900, 1929, 1929, 1953, 1953, and and 1980: 1980: Narrow Narrow Concept

1. Agricultural 2. Other Reproducible tangible assets 1. Residential structures 2. Other private structures 3. Government structures 4. 4. Equipment Equipment a. Private b. b. Government Government 5. 5. Inventories Inventories a. a. Private Private b. Government b. Government 6. Livestock Livestock 6. 7. 7. Consumer Consumer durables durables Tangible Tangible assets assets Monetary Monetary metals metals Financial Financial assets assets 1. 1. Currency Currency and and deposits deposits 2. pension claims claims 2. Insurance Insurance and and pension 3. 4) 3. Loans Loans (excluding (excluding line line 4)

I. I. Land

Table Table 11

10.4Q 10.4D. 5.05 4.61 23.25 0.61 5.47 4.45 6.74 4.17 6.23 7.09 3.77

2.61 2.82 2.52 5.00 4.79 3.52 6.41 5.93 5.62

1930 to 1953 (6)

Rate of growtha3 (percent per year)

10.13 8.81 10.61 8.20 8.22 8.93 8.78 8.05 8.10 7.55 7.41 7.51 6.43 5.77 7.61 8.63 8.14 8.28 8.10 8.48 9.38

1954 to 1980 (7)

2.9 2.9 2.1 2.1 4.2 4.2 9.6 9.6 1.4 1.4 2.2 2.2 2.0 2.0 4.0 4.0 7.4 7.4 0.7 0.7 1.6 1.6 0.9 0.9 100.0 100.0 99.1 99.1

3.9 3.9 1.7 1.7 5.3 5.3 1.8 1.8 1.9 1.9 4.3 4.3 2.9 2.9 4.5 4.5 16.3 16.3 0.9 0.9 1.8 1.8 0.9 0.9

100.0 100.0 99.1 99.1

3.9 3.9 0.6 0.6 4.7 4.7 0.8 0.8 1.4 1.4 3.6 3.6 3.9 3.9 3.7 3.7 7.6 7.6 0.6 0.6 0.7 0.7 2.9 2.9

100.0 100.0 97.8 97.8

100.0 100.0 97.9 97.9

2.4 1.9 1.9

4.8 4.8 1.4 1.4 6.7 6.7 4.6 1.5 2.3 2.3 2.4 3.2 3.2 6.9 6.9 0.9 0.9

6.76 6.76 6.80 6.80

10.31 2.59 2.59

6.50 6.50 10.08 10.08 6.85 6.85 9.39 7.61 7.11 5.33 7.15 7.15 9.25 9.25 11.90 11.90

4.28 4.28 4.28 4.28

3.36 4.08 4.08

2.89 2.89 5.35 3.33 3.33 11.70 3.11 1.46 2.64 3.76 3.76 0.90 0.90 2.93 2.93

8.46 8.46 8.41 8.41

10.21 11.54 11.54

10.61 10.61 6.78 10.74 10.74 5.58 8.87 8.59 9.23 7.59 7.59 8.09 8.09 9.81

Col. Col. 22 Line Line II Line Line II II Lines Lines IV, IV, V V Line Line VI VI Col. Col. 33 Lines Lines I, I, II II Line Line IV IV Line V Col. Col. 44

Sources: Sources: Col. Col. 11

As 2. As for for col. col. 2. Derived pp. 40 Derived from from International International Monetary Monetary Fund Fund 1980, 1980, pp. 40 ff. ff. Federal 1949-1978, Dec. 1979. Flow of of Funds FundsAccounts, Accounts, 1949-1978, Dec. 1979. Federal Reserve Reserve Board, Board, Flow Preliminary 3. Preliminary estimates, estimates, mostly mostly obtained obtained by by extrapolation extrapolation of of 1975-79 1975-79 data data in in same same sources sources as as for for cols. cols. 22 and and 3.

As for for col. col. 1. As 1. 1980). Printout from Department Department of of Commerce, Commerce, Bureau Bureau of of Economic EconomicAnalysis Analysis(figures (figuresare arealmost almostidentical identicalwith withthose thoseofofMusgrave Musgrave1979, 1979,1980). Printout from As 1. As for for col. col. 1. Historical HistoricalStatistics, Statistics,p. p.868. 868.

Goldsmith, financial institutions institutions and and stockholdings stockholdings among among Goldsmith, Lipsey, Lipsey, and and Mendelson Mendelson 1963, 1963, 2:72 2:72 ff., ff., eliminating eliminating deposit deposit holdings holdings among amongfinancial nonfinancial figures comparable comparable with with those those in in cols. cols. 2-4. 2-4. nonfinancial corporations corporations to to make makefigures

·Calculated, 18, 19,41,47,52,84,85,89,90, and ofof increase between thethe values ofthe year preceding Calculated, as as in intables tables2,3,4,6, 2,3,4,6,18,19,41,47,52,84,85,89,90, and92, 92,asasthe thegeometric geometricaverage averageratio ratio increase between values of the year preceding the first year year of of the the period period indicated indicated and and the the last last year year of of the the period. period. thefirst

a. financial institutions a. By Byfinancial institutions b. Other b. Other 4. Mortgages 4. Mortgages 5. 5. Federal Federal government government securities securities 6. 6. State State and and local local government government securities securities 7. bonds 7. Corporate Corporate and and foreign foreign bonds 8. credit 8. Trade Trade credit 9. Other Other claims 9. claims 10. stock 10. Corporate Corporate stock 11. 11. Direct Direct foreign foreign investments investments VI. VI. Foreign Foreign assets assets and and liabilities liabilities 1. 1. Assets Assets 2. Liabilities Liabilities 2. VII. National assets assets VII. National 1. Gross 1. Gross 2. Net 2. Net

1929 1929 (2) 13.1 3.4 3.4 8.2 8.2 1.5 1.5 32.6 32.6 9.6 9.6 5.0 5.0 3.4 3.4 3.1 3.1 0.3 0.3 0.7 0.7 0.5 0.5 0.2 0.2 3.4 3.4 3.2 3.2 0.2 0.2 0.1 0.1 0.1 0.1 3.3 3.3 3.3 3.3 0.0 0.0 0.6 0.6

1900 1900 (1) 17.0 7.5 7.5 7.9 7.9 1.6 1.6 34.2 34.2 9.0 9.0 8.3 8.3 1.4 1.4 1.3 1.3 0.1 0.1 1.8 1.8 2.0 2.0 0.6 0.6 3.7 3.7 3.6 3.6 0.1 0.1 0.1 0.1 0.0 0.0 3.7 3.7 3.6 3.6 0.1 0.1 0.1 0.1

1.6 1.6

7.1 1.8 1.8 4.0 4.0 1.3 1.3 31.1 31.1 8.0 8.0 3.4 3.4 4.0 4.0 3.5 3.5 0.5 0.5 1.3 1.3 1.0 1.0 0.3 0.3 4.7 4.7 3.2 3.2 1.5 1.5 0.4 0.4 1.1 1.1 3.7 3.7 2.6 2.6 1.1 1.1 0.3 0.3 0.8 0.8 0.3 0.3

1953 1953 (3)

Distribution (percent)

10.7 2.0 2.0 6.9 6.9 1.8 1.8 29.3 29.3 7.6 7.6 3.9 3.9 4.3 4.3 4.0 4.0 0.3 0.3 0.9 0.9 0.7 0.7 0.2 0.2 3.8 3.8 3.1 3.1 0.8 0.8 0.3 0.3 0.5 0.5 3.1 3.1 2.1 2.1 0.9 0.9 0.2 0.2 0.7 0.7 0.2 0.2

1980 1980 (4)

2.59 2.59

5.69 5.69 5.66 5.66 6.94 6.94 6.94 6.94

4.97 3.08 3.08 6.06 6.06 5.71 5.71 5.74 5.74 6.21 6.21 4.46 4.46 9.20 9.20 9.11 9.11 10.26 10.26 2.42 2.42 2.42 2.42 2.42 2.42 5.73 5.73 5.58 5.58 8.95 8.95 6.67 6.67

1901 1901 to to 1929 1929 (5)

Structure Concept Structure and and Growth Growth of of National National Balance Balance Sheet, Sheet, 1900, 1900, 1929, 1929, 1953, 1953, and and 1980: 1980: Broad Broad Concept

1. Agricultural 2. 2. Other Other 3. 3. Subsoil Subsoil assets assets II. II. Reproducible Reproducible tangible tangible assets assets 1. 1. Residential Residential structures structures 2. Other Other private structures 2. private structures 3. 3. Government Government structures structures a. Civilian Civilian a. b. Military b. Military 4. 4. Standing Standing timber timber a. Private Private a. b. Government Government b. 5. Equipment Equipment 5. a. a. Private Private b. b. Government Government (1) Civilian Civilian (1) (2) Military Military (2) 6. Inventories Inventories 6. a. Private Private a. b. Government b. Government (1) Civilian Civilian (1) (2) (2) Military Military 7. Livestock Livestock 7.

I. Land

Table Table 22

2.98 2.82 2.82 2.52 2.52 5.14 5.14 5.45 5.45 4.79 4.79 3.52 3.52 6.35 6.35 6.21 6.21 7.43 7.43 8.54 8.54 8.54 8.54 8.54 8.54 7.01 7.01 5.62 5.62 14.11 14.11 10.40 10.40 16.50 16.50 6.10 6.10 4.61 4.61 18.60 18.60 23.25 23.25 17.05 17.05 2.21 2.21

1930 1930 to to 1953 1953 (6)

Rate Rate of of growth growth (percent (percent per per year) year)

10.07 8.81 8.81 10.61 10.61 9.77 9.77 8.15 8.15 8.22 8.22 8.93 8.93 8.67 8.67 8.96 8.96 5.71 5.71 6.86 6.86 6.86 6.86 6.88 6.88 7.56 7.56 8.10 8.10 6.07 6.07 7.55 7.55 5.44 5.44 7.50 7.50 7.51 7.51 7.46 7.46 6.43 6.43 7.84 7.84 5.77 5.77

1954 1954 to to 1980 1980 (7)

3.4 2.9 0.5 3.6 0.6 1.0 2.7 3.0 2.8 5.8 2.5 0.5 15.0 1.6 100.0 97.9 0.5 2.1

51.2 0.7 48.1 4.8 0.8

3.1 1.6 0.0

3.7 1.6 0.3 0.0 45.7 0.5 53.8 5.6 1.9 0.1 4.9 3.5 1.4 4.6 1.6 1.7 3.8 2.5 3.9 14.2 -3.0 -3.0 0.8 8.2 3.0 100.0 99.2 1.7 0.8 1.6 1.6

2.1 4.5 2.5 0.6 4.5 0.7 100.0 98.6 1.6 1.4

1.1 1.1

3.0 0.7 0.2 1.7 40.0 0.5 59.5 5.7 2.7 20.8 4.0 3.1 0.9 4.4 3.0 1.0 1.5

2.6 4.7 2.6 0.4 7.4 1.0 100.0 99.4 1.0 0.6

3.6 1.1 0.1 0.8 38.1 0.6 61.3 6.1 2.7 18.4 3.2 1.8 1.3 2.7 6.1 0.9 1.4 5.47 4.10 1.20 7.01 6.74 6.23 6.02 7.09 31.40 3.77 2.89 5.35 3.33 11.70 3.11 1.46 2.07 3.80 0.90 2.93 5.21 1.10 5.66 5.67 3.36 4.08

6.61 6.03 9.79 5.09 4.19 6.33 6.50 9.00 7.24 6.50 10.08 6.85 9.39 7.61 7.11 5.33 7.15 9.25 7.43 3.74 8.26 5.91 5.96 10.31 2.59

7.61 6.23 12.00 11.60 8.63 8.14 8.28 8.10 8.48 8.90 9.38 10.61 6.78 10.36 5.58 8.87 8.59 9.23 7.59 8.19 8.25 9.81 6.39 6.96 8.40 8.37 8.46 8.41

Cols.1-4 11-10, 11-11, V-3, Cols. 1-4 As for table 1 with with the the exception exception oflines of lines 1-3, 1-3, 11-4, II-4,11-10,11-11, V-3, and and V-12, V-12, the the sources sources of of which which are are indicated indicated in in the the discussion discussion of of chapter chapter 7; 7; lines 11-3b II-3b and 11-5b II-5b (2), which are from Musgrave 1980, or roughly estimated in col. 1; II-6b, which was supplied by Musgrave; and V-14 and V-15, derived from Goldsmith, Lipsey, and Mendelson 1963, 2:72ff., or, for 1980, roughly estimated.

Sources:

8. Consumer durables 9. Consumer semidurables 10. Collectors' items 11. Research and development III. Tangible assets IV. Monetary metals V. Financial assets 1. Currency and deposits 2. Insurance and pension funds, funded 3. Insurance and pension funds, unfunded 4. Loans (excluding 5) a. By financial institutions b. Others 5. Mortgages 6. Federal government securities 7. State and local government securities 8. Corporate and foreign bonds 9. Trade credit 10. Other claims 11. Corporate stock 12. Stock valuation adjustment 13. Direct foreign investment 14. Equity in unincorporated business 15. Equity in personal trust funds National {f Gross Gross VI.. National \ Net assets Foreign assets assets {f Assets Assets VII.. Foreign and liabilities } Liabilities

10

Secular Overview

cial history, the two benchmarks bracketing the upward phase of a long (Kondratieff) (Kondratieff) upswing. Table 1 shows the structure of the national balance sheet of the United States for four benchmark dates between 1900 and 1980 in current prices using the narrow concept of national us to assets, assets, and and thus thus permits permits us to follow follow changes changes in in the the composition composition of of the the balance sheet the last provides the the same balance sheet over over the last eight eight decades. decades. Table Table 22 provides same information the broad concept of of national national assets. in the the aggreaggreinformation for for the broad concept assets. Since Since in gate the relatively relatively small gate liabilities liabilities are are equal equal to to claims claims except except for for the small net net foreign balance, balance, while tangible assets assets are are equal equal to to net the two foreign while tangible net worth, worth, the two tables also also reflect structure of of the other side side of of the the national national balance balance the other tables reflect the the structure sheet. Changes in the the distribution of national among components components sheet. Changes in distribution of national assets assets among are the the result of differences differences in in the of growth growth between between benchmark benchmark the rates rates of are result of dates. Columns Columns 55 to to 77of oftables tables11and and22therefore thereforeshow showthese theserates ratesfor forboth both dates. the narrow narrow and and the the broad broad definitions definitions of of national assets. Changes Changes in in the the national assets. the current value of of the components of of the the national balance sheet sheet may be the components national balance may be current value of regarded as as the the combination combination of of changes changes in in the the "quantity" "quantity" and and the the price price of regarded these components, components, and and the the current current values values may may be be expressed expressed in in terms terms of these of constant prices. prices. The The result of these calculations are are shown shown in in table table 3, constant result of these calculations 3, though because of conceptual and statistical differences only for for the the three three though because of conceptual and statistical differences only main components of of national assets—land, reproducible reproducible tangible tangible assets, assets, national assets-land, main components for eight eight components components of of reproducible reproducible and financial assets—and in in table table 44 for and financial assets-and assets. assets. the Distribution 1.1. 1.1. Trends Trends in in the Distribution or of National National Assets Assets in in Current Current Prices Prices The the structure the United The changes changes in in the structure of of the the national national balance balance sheet sheet of of the United States first, in in the the shares the three three main main components of States are are evident, evident, first, shares of of the components of national assets, national assets, which which are are of of different different economic economic character. character. The share share of of land land decreased, decreased, using the broad broad concept concept of of national national assets assets using the The 2, sharply sharply from from 17 17 percent percent in in 1900 1900to to77percent percentinin1953, 1953,continuing continuing of table table 2, of the observed during century (Gold(Goldthe downward downward movement movement observed during the the nineteenth nineteenth century smith, forthcoming), forthcoming), but but then then recovered slowly but steadily to to fully fully 10 10 smith, recovered slowly but steadily percent in 1980. Most of the decline was accounted for by agricultural percent in 1980. Most of the decline was accounted for by agricultural land whose whose share share has has remained remained slightly slightly below of the national the national land below 22 percent percent of 8 percent assets during the last three decades compared to one of nearly assets during the last three decades compared to one of nearly 8 percent in 1900. The share of other land has moved irregularly and slightly in 1900. The share of other land has moved irregularly and slightly downward since the turn of the century, held up by a large expansion of downward since the tum of the century, held up by a large expansion of urban land and, and, in in the the later later part part of of the the period, period, very very substantial substantial price price urban land increases. The value value of of subsoil subsoil assets assets declined comparison to national declined in in comparison to national increases. The assets until the 1960s but rose sharply in the second half of the 1970s assets until the 1960s but rose sharply in the second half of the 1970s reflecting increases in the price of oil, gas, and coal, with the result that reflecting increases in the price of oil, gas, and coal, with the result that their share in 1980 was slightly higher than it had been at the turn of the their share in 1980 was slightly higher than it had been at the tum of the century. century. Reproducible tangible assets have on the average Reproducible tangible assets have on the average accounted accounted for for slightly than 30 slightly more more than 30 percent percent of of national national assets, assets, declining declining slowly slowly from from 34 34

11 11

Differences Differences between Broad and Narrow Concepts of Assets

to 29 percent. If attention is concentrated on differences of differences in the share of the various components in the value of all reproducible tangible assets between 1900 and 1980, the outstanding change is the increasing importance tance of of government government structures structures and and equipment, equipment, whose whose share share rose rose from from less less than than 55 to to nearly nearly 20 20 percent, percent, only only one-fifth one-fifth of of the the increase increase being being attributable items. This This increase increase was was offset offset primarily primarily by byreducreducattributable to to military military items. tions tions in in the the share share of of private private nonresidential nonresidential structures structures from from about about oneonefourth fourth to to one-eighth, one-eighth, and and secondarily secondarily by by declines declines in in the the shares shares of of timber, timber, inventories, inventories, livestock, livestock, and and consumer consumer semidurables. semidurables. Residential Residential strucstructures, tures, the the largest largest single single component, component, accounted accounted for for about about one-fourth one-fourth of of all all reproducible reproducible capital capital throughout throughout the the period. period. financial assets Through Through most most of of the the period period financial assets increased increased more more rapidly rapidly than than tangible tangible assets assets so so that that their their share share in in total total national national assets assets rose rose from from 1900to tothree-fifths three-fifths or orslightly slightlymore morein inthe thepostwar postwarperiod. period.The The one-half in in 1900 one-half sharp difference difference in in the the structure structure of of financial financial assets assets between between the the two two sharp allfinancial assets halves of of the the period period was was due due to to the the large large proportion proportion of of all financial assets halves accounted for for during during the the second second half half by by unfunded unfunded pension pension claims. claims. Apart Apart accounted from them, them, the the main main differences differences between between 1900 1900 and and 1980 1980 were were the the doudoufrom bling of of the the share share of of currency currency and and deposits deposits and and of of funded funded insurance insurance and and bling pension claims claims from from 11 11 to to 22 22 percent; percent; the the increase increase in in the the share share of of mortmortpension gages from from 77 to to 11 11 percent percent and and that that of of government government securities securities from from 33 to to gages fully 10 10percent; percent; and and the the declines declines in in the the share share of of corporate corporate bonds bonds from from 77 fully to less less than than 44 percent, percent, and and that that of of the the household household sector's sector's equity equity in in to 12 percent. The share of unincorporated business enterprises from 30 to unincorporated business enterprises from 30 to 12 percent. The share of 1980 and in 1900—fully corporate stock happened to be about the same in corporate stock happened to be about the same in 1980 and in 1900-fully one-tenth on on the the basis basis of of market market prices, prices, but but about about one-sixth one-sixth ifif allowance allowance one-tenth is made for the excess of adjusted book over market value—though is made for the excess of adjusted book over market value-though itit showed wide wide fluctuations fluctuations in in the the intervening intervening eight eight decades. decades. showed

1.2. Differences Differences between between Broad Broad and and Narrow Narrow Concepts Concepts of of Assets Assets 1.2. The Thedifferences differences in inthe thestructure structure of ofthe thenational nationalbalance balancesheet sheetaccording according to to either either the the narrow narrow or or the the broad broad concept, concept, i.e., i.e., between between tables tables 11and and 2, 2, arise arise primarily primarily from from the the inclusion inclusion in in the the latter, latter, but but not not in in the the former, former, of of two financial financial assets: assets: household's household's equity equity in in unincorporated unincorporated farm farm and and two nonagricultural enterprises enterprises and and their their unfunded unfunded pension pension claims. claims. These These nonagricultural differences are are large large in in both both halves halves of of the the eighty-year eighty-year period, period, but but their their differences effect isis mitigated mitigated by by the the fact fact that that the the one one (equity (equity in in unincorporated unincorporated effect businesses) isislarge largethough though declining decliningin inthe thefirst firsthalf half of ofthe the period, period, while while businesses) the other other (unfunded (unfunded pension pension claims) claims)isisvery verylarge largebut butfairly fairly stable stable ininthe the the postwar period, period, but but negligible negligible before before the the 1930s. 1930s. postwar The The share share of of land land declines declines by byabout about one-third one-third under under both both the the narrow narrow onlyslightly slightlyless lesspronounced pronouncedininthe the andthe thebroad broadconcepts, concepts,and andthe thefall fallisisonly and case.IfIfthe thenarrow, narrow,and andconventional, conventional,concept conceptof ofnational nationalassets assetsisis formercase. former table1,1,the theshare shareofofreproducible reproducibletangible tangibleassets assetsisisvirtually virtuallythe the used,asasinintable used,

12

Secular Overview

same same in in 1980 1980 as as in in 1900, 1900, while while it it declines declines by by about about two-fifths two-fifths under under the the broad definition of of national national assets, assets, but but the the lowest lowest point point is is reached reached in in both both broad definition cases in in the the mid-1960s. mid-1960s. The The distribution distribution among among the the various various types types of of cases reproducible assets assets is is very very similar similar under under both both concepts. concepts. reproducible Because of of the the elimination elimination of of households' households' unfunded pension claims claims unfunded pension Because and their their equity equity in in unincorporated unincorporated business business and and in in personal trust funds funds and personal trust and of of the the stock stock valuation valuation adjustment, adjustment, which which account account for for 20 20 percent percent of of and 30 percent percent in in total financial assets broadly broadly defined defined in in 1900 1900 and and for for nearly nearly 30 total financial assets 1980, the the shares shares of of all all other otherfinancial concept financial assets assets are are under under the the narrow narrow concept 1980, considerably higher higher than than under under the the broad broad concept, concept, and and more more so so in in 1980 considerably 1980 than in in 1900, 1900, but but their their relative relative sizes sizes are are the the same same in in both cases. The The than both cases. differences in in the the structure structure of of national national assets assets under under the the two two concepts concepts are are differences summarized below below (percent (percent of of total total assets). assets). summarized Level Level

I. I. Land Land 1. Narrow Narrow concept concept 1. 2. 2. Broad Broad concept concept II. II. Reproducible Reproducible tangible tangible assets assets 1. 1. Narrow Narrow concept concept 2. Broad concept III. Financial Financial assets III. assetsa3 1. Narrow concept 1. Narrow concept 2. Broad Broad concept concept 2.

Change Change Relative Relative

1900 1900

1980 1980

Absolute Absolute

20.4 20.4 17.0 17.0

13.7 13.7 10.7 10.7

-6.7 -6.7 -6.3

-32.8 -37.1 -37.1

40.4 40.4 34.2 34.2

37.6 37.6 29.3 29.3

-2.8 -4.9

-6.9 -14.3 -14.3

39.2 39.2 48.8 48.8

48.7 48.7 60.0 60.0

+ 8.5 +8.5 +10.7 + 10.7

+ 24.2 +24.2 + 21.9 +21.9

alncluding including monetary monetary metals. metals.

1.3 Prices 1.3 Changes Changes in in the the National National Balance Balance Sheet Sheet in in Constant Constant Prices The The changes changes in in the the structure structure of of national national assets, assets, as as well well as as the the growth growth rates rates shown shown in in tables tables 11 and and2, 2, are areall allbased basedon onvalues valuesin incurrent current prices pricesand and thus in the the price price levels levels of of the the different different thus are are the the combined combined results results of of changes changes in components components and and in in their their quantities. quantities. One One would, would, therefore, therefore, for for purposes purposes of in of analysis analysis want want to to separate separate these these two two factors, factors, i.e., i.e., to to show show estimates estimates in constant constant prices, prices, as as proxies proxies for for quantity quantity measures measures that that are are impossible impossible to to obtain obtain and and are are conceptually conceptually not not additive. additive. The The available available statistical statistical data, data, as as of well well as as theoretical theoretical considerations, considerations, however, however, permit permit the the derivation derivation of price indices, indices, and and hence hence of of estimates estimates in in constant constant prices only for for reproprice prices only reproducible tangible tangible assets assets under under the the narrow narrow concept. concept. Even Even these these are are affected affected ducible by by aa larger larger margin margin of of uncertainty uncertainty than than the the estimates estimates in in current current prices prices because of of the the many many well-known well-known statistical statistical and and conceptual conceptual problems, problems, because particularly the the doubt doubt that that the the price price indices indices used used make make sufficient sufficient allowallowparticularly

13

Changes in National Balance Sheet in Constant Prices

ance ance for for quality quality improvements improvements resulting in in overstatement overstatement of of price rises rises prices, and and consequently consequently understatement understatement of of rates rates of of growth growth in in constant constant prices, i.e., financial assets i.e., in in "quantities." "quantities." In In the the case case of of financial assets probably the only available available and and to to some some degree degree meaningful meaningful index index is is that that of of the the general general price price national product level by the level represented represented by the implicit implicit deflator deflator of of gross gross national product or or possibly of of consumer consumer expenditures. expenditures. This This leads leads to to an an expression expression of of all all possibly components of offinancial financial assets assets in in terms terms of of the the purchasing purchasing power power of of money money components of the base year of the the indices, indices, and and hence hence does does not alter the the relative shares of the base year of not alter relative shares of growth growth rates of the the various various components. components. In In the case of of land, land, three three of rates of the case approaches may considered. The The estimates estimates in in current current prices may be be approaches may be be considered. prices may expressed, like like financial assets, in in terms terms of of the purchasing the base base period's period's purchasing expressed, financial assets, power. current value value of of land land in base period period may be used for all Or the the current in the the base may be used for all power. Or dates on on the the argument argument that "quantity" of of land land is is by by definition definition unthat the the "quantity" undates changing, though allowance may for changes changes in in the the share share of of the the changing, though allowance may be be made made for different types of land. land. A A third approach, the deflation of of the the value of the the third approach, the deflation value of different types of different types types of of land land by by the the use of land land price price indices indices is is more in line line with with use of more in different the procedures applied to to reproducible assets, but but is is difficult difficult to to the procedures applied reproducible tangible tangible assets, implement statistically, statistically, except except for for agricultural agricultural land. land. In In the the case case of of land land implement underlying residential residential and and other other structures, structures, aa fourth fourth possible possible approach approach is is underlying to the the to apply apply the land/structure ratios derived from from current current price to the land/structure ratios derived pricefigures figures to constant price estimates of of structures. structures. constant price estimates In order order to to permit permit at at least picture of of the the secular secular changes changes in in the the In least aa rough rough picture national balance sheets in in constant constant prices prices table table 33 shows shows the the rates of national balance sheets rates of growth of of the the three three main components of of the sheet using growth main components the national national balance balance sheet using specific deflation deflation for for reproducible reproducible tangible tangible assets assets and and the the national national prodprodspecific resulting rates for uct deflator for for land land and andfinancial uct deflator financial assets. assets. The The resulting rates of of growth growth for total national national assets assets for for the the entire entire period are only only half as large large as as those those total period are half as expressed in in current current prices, and the difference is is largest largest for for the the postwar postwar expressed prices, and the difference period. Since Since the the deflators deflators for for reproducible tangible assets assets do do not not greatly greatly period. reproducible tangible differ from from the the national product deflator, deflator, which which is is applied applied to to about about differ national product three-fifths of national assets, the the distributions distributions of of national national assets assets among among national assets, three-fifths of the three main components—land, reproducible reproducible tangible tangible assets, assets, and and the three main components-land, financial assets-are assets—are quite quite similar. similar. financial The The changes changes in in the the distribution distribution of of the the stock stock of of reproducible reproducible tangible tangible assets in in constant constant prices and the the divergences divergences in in the the underlying rates of of assets prices and underlying rates growth, shown shown in in table table 44 differ differ somewhat somewhat from from those those in in current current prices. growth, prices. These differences differences reflect reflect those those in in the the relative relative prices of the the various various compocompoThese prices of nents. In particular, the generally generally less less rapid in the the prices prices of of equipparticular, the rapid rise rise in equipnents. In ment compared compared to to those those of of structures structures results results in in the the share share of of equipment equipment ment and consumer consumer durables durables in in total total reproducible reproducible assets assets increasing increasing more more and rapidly in constant constant than than in in current current prices. prices. Thus Thus the the share share of of structures structures rapidly in declined 1900 and and 1980 1980 by percent of of reproducible assets in reproducible assets in declined between between 1900 by 11 percent current prices 11 percent in constant constant prices, share of percent in prices, while while the the share of current prices but but by by 11

I. I. Land Land 1. Narrow Narrow definition definition 1. 2. 2. Broad Broad definition definition II. Reproducible Reproducible tangible tangible assets assets II. 1. 1. Narrow Narrow definition definition 2. Broad Broad definition definition 2. III. assets"3 III. Financial Financial assets 1. Narrow Narrow definition definition 1. 2. Broad Broad definition definition 2. IV. National National assets assets IV. 1. 1-1 M + 11-1 IM + III-I III-1 1. 2. 1-2 1-2 + 11-1 II-l + III-2 III-2 2. 3. 1-2 1-2 + 11-2 II-2 + III-2 III-2 3.

1.45 1.45 2.71 2.71

3.09 3.09 3.38 3.38 6.46 6.46 6.65 6.65 6.67 6.67 8.46 8.46 8.43 8.43 8.40 8.40

6.43 6.43 5.94 5.94 5.91 5.91

4.28 4.28 5.54 5.54 5.66 5.66

1.55 1.55 3.61 3.61

4.77 4.77 3.56 3.56 6.74 6.74 6.95 6.95

8.28 8.28 8.28 8.28

7.52 7.52 6.30 6.30

4.13 4.13 6.24 6.24

1.68 1.68

3.36 3.36

6.36 6.36 6.46 6.46

5.00 5.00 5.45 5.45

5.79 5.79 5.74 5.74

1930 1930 to to 1953 1953 (6) 0.07 0.D7 0.43 0.43

8.20 8.20 8.15 8.15

2.61 2.61 2.98 2.98

1901 1901 to to 1929 1929 (5)

2.69 2.69 2.80 2.80 2.80 2.80 3.47 3.47 3.67 3.67 3.02 3.02 3.34 3.34

3.60 3.60 3.71 3.71 3.71 3.71 3.89 3.89 3.84 3.84

1901 1901 to to 1980 1980 (8) 5.48 5.48 5.42 5.42

1954 1954 to to 1980 1980 (7) (?)

Constant Prices Prices Constant

2.17 2.17 2.26 2.26

1901 1901 to to 1980 1980 (4) 5.93 5.93 6.05 6.05

1954 1954 to to 1980 1980 (3) 10.13 10.13 10.07 10.07

1930 1930 to to 1953 1953 (2)

4.88 4.88 4.97 4.97

1901 1901 to to 1929 1929 (1) (1)

Current Prices Prices Current

Growth Growth Rates Rates of of Main Main Components Components of of National National Assets, Assets, 1901-80 1901-80 (percent (percent per per year) year)

including monetary monetary metals. "Including metals. Sources: Absolute figures underlying Sources: Absolute figures underlying tables tables 11 and and 22 for for current current prices; table table 44 for for constant constant prices.

Table Table 3

I. Structures 1. Residential 2. Other private 3. Government II. Equipment 1. Private 2. Government III. Inventories Inventories15b 1. Private 2. Government IV. Consumer durables V. Reproducible tangible assets 1. Percent 2. $ bill, bill. of 1929 or 1972

A (2) 61.7 29.2 23.2 9.3 12.4 12.2 0.2 12.0 12.0 0.0 13.8 100.0 321 cc

1900 (1) (1) 60.3 27.5 26.8 6.0 11.0 10.9 0.1 15.0 15.0 0.0 13.7 100.0 123cc

71.0 35.6 23.6 11.8 10.1 9.8 0.3 9.7 9.5 0.2 9.1 100.0 1,005

B (3)

1929 1929

3.40 3.36

100.0 3,805 100.0 1,500

1.68

1.07 1.07 0.88 -0.14 -0.14 3.20 3.08 2.77 7.57 3.11 1.87 1.87 18.10 2.49

3.44 3.58 2.85 4.87 3.80 3.74 6.37 2.57 2.57 58.5 26.8 15.4 16.3 14.8 13.4 1.4 10.7 8.8 1.8 16.0

1979" 1979a (5)

1930 to 1953 (7)

1901 to 1929 (6)

3.65

3.45 3.28 3.67 3.56 3.86 3.89 3.00 2.48 3.16 1.08 5.13

1954 to to 1979 (8)

Rate of growth (percent per year)

61.3 29.4 15.3 16.6 14.1 12.6 1.5 13.5 10.0 3.5 11.1

1953 (4)

Distribution (percent)

Distribution and Growth of Reproducible Tangible Assets, 1900-1979: 1900-1979: Constant (1929 (1929 or 1972) 1972) Prices

Cols. 307. Cols. 1,2 1, 2 Goldsmith Goldsmith 1952, 1952, 307. Cols.3-5 Cols. 3-5 U.S. U.S. Department Department of of Commerce, Commerce, Bureau Bureau of of Economic Economic Analysis, Analysis, printout. printout.

Sources Sourcesof ofbasic basicdata: data:

a aThe The 1980 1980 distribution distribution isis virtually virtually identical identical with with that that of of 1979, 1979, and and the the total total (line (line V V 2) 2) isis only only 1.5 1.5 percent percent higher higher (Bureau (Bureau of of Economic Economic Analysis, Analysis, printout). printout). blncluding livestock. including livestock. c 1929. 'Dollars Dollars of of 1929.

Table 4

16

Secular Overview

equipment and consumer durables increased by 3 and 13 percentage points respectively. 1.4. Assets 1.4. Sectoral Sectoral Distribution Distribution of of Assets The have also The past past eight eight decades decades have also witnessed witnessed considerable considerable changes changes in in the the distribution of of national national assets, assets, which which reflect reflect differences differences in in sectoral sectoral rates rates distribution of growth. growth. These These can can be be followed followed in in table table 55 in in current current prices for the the of prices for narrow concept of of national national assets. assets. narrow concept Three Three changes changes stand stand out: out: the the tripling tripling of of the the share share of of the the government; government; the doubling doubling of of the the share share of offinancial the financial institutions; institutions; and and the the sharp sharp reduction reduction of the the share share of of unincorporated agriculture. These These of unincorporated business, business, primarily primarily agriculture. changes have have almost almost offset offset each each other other with the result that the the share share of of the the changes with the result that household sector sector was was close close to to two-fifths two-fifths in in 1980 1980 as as well well as as in in 1900. household 1900. The been modified, The main main trends trends have, have, however, however, occasionally occasionally been modified, and and such such modifications would be more visible if were made modifications would be more visible if the the calculations calculations were made for for aa larger In particular, particular, the the extraordinarily extraordinarily larger number number of of benchmark benchmark years.! years.1 In high 1929 reflects reflects the the then then very very high high level level high share share of of the the household household sector sector in in 1929 that of of the the federal federal government government in in 1953 1953 isisdue due in in part part of stock stock prices, of prices, while while that to its asset asset accumulation accumulation during Great Depression Depression and and World War II. II. to its during the the Great World War 1.5. National Assets Assets 1.5. Decomposition Decomposition of of Rates Rates of of Growth Growth of of National

For the the entire entire period period fully fully one-half one-half of of the the rate of growth growth in in current current For rate of prices of of 55 percent is attributable attributable to rise in in prices prices resulting resulting in in an prices percent is to the the rise an average rate of growth growth in in constant constant prices prices of of 3.0 3.0 percent percent per in the the average rate of per year year in aggregate and and of of 1. 1.77 per per head. This is is fractionally fractionally lower lower than the rate aggregate head. This than the rate of of growth of of real national product product per per head. head. growth real national The rate of national assets The decomposition decomposition of of the the growth growth rate of national assets and and of of their their three components for for the period as as aa whole whole as as well as for for the three three components the period well as the three is shown shown in in table table 6. 6. In In the the case case subperiods of of about about aa quarter quarter of of aa century century is subperiods of national assets, the the share share of of the the three three components components has has not varied of national assets, not varied greatly among among the three subperiods subperiods except except that that changes changes in in the the price price level level greatly the three and in in population accounted for for aa somewhat somewhat larger larger proportion of the the and population accounted proportion of growth of of national national assets assets in in current current prices in the the 1930--53 1930-53 period, period, with with the the growth prices in result that the the share share of of real real assets assets per per head was substantially substantially lower. lower. The The result that head was differences would would be be larger larger if if shorter shorter subperiods subperiods were used, in in particular particular differences were used, if the the inflationary inflationary periods of the the late late 1940s 1940s and and late late 1970s 1970s were were isolated. isolated. if periods of The differences differences between between the the three three components components are are also also moderate The moderate if if attention is is concentrated concentrated on on the period as as aa whole, are substantial substantial in attention the period whole, but but are in 1930-53 period. period. These These differences differences are are in inpart part explained explained some cells cells for for the the 1930--53 some 1. be derived 1922, 1933, 1939, and 1945 1. Similar Similar figures figures can can be derived for for 1912, 1912,1922,1933,1939, and for for each each year year from from 1945 to 1958 to 1958 from from estimates estimates in in Goldsmith, Goldsmith, Lipsey, Lipsey, and and Mendelson Mendelson 1963, 1963,vol. vol.2, 2,and andthose thosefor for the the 1953-75 period period are are shown shown in in table table 27. 195>-75 27.

1. 1. 2. 2. 3. 4. 5. 5. 6. 6. 7. 7. 8. 8.

Households· Households3 Unincorporated business Unincorporated business Nonfinancial corporations Federal Federal government government State State and and local local government government Financial Financial institutions institutions All All sectors, sectors, percent percent All bill. All sectors, sectors, $$ bill. 38.1 38.1 24.8 24.8 22.2 0.9 0.9 3.7 3.7 10.3 10.3 100.0 100.0 145 145

1900 1900 (1) 47.5 47.5 12.8 12.8 21.0 0.4 4.7 4.7 13.6 13.6 100.0 100.0 884 884

1929 1929 (2) 38.1 38.1 12.9 12.9 15.8 8.5 8.5 6.4 6.4 18.5 18.5 100.0 100.0 2,534 2,534

1953 1953 (3) 38.1 38.1 9.7 9.7 17.2 4.3 4.3 9.5 9.5 21.2 21.2 100.0 100.0 12,440 12,440

A A (4)

25.8 25.8

13.5 13.5

39.5 39.5 39.2 39.2

1979 1979 (6)

26.7 26.7

B B (5)

4.0 4.0 9.5 9.5 20.6 21.2 20.6 21.2 100.0 100.0 100.0 100.0 12,170 19,300 12,170 19,300

})

} J

1975 1975

Sectoral Distribution of National Assets, 1900, 1929, 1953, 1975, and 1979: 1979: Narrow Concept (percent)

"Includes includes nonprofit nonprofit institutions. institutions. Sources of Sources ofbasic basicdata: data: Cols. Cols. 1,2 1, 2 Goldsmith, Goldsmith, Lipsey, Lipsey, and and Mendelson Mendelson 1963, 1963, 2: 2: 72 72 ff. ff. Cols. 3,4 3, 4 Derived Derived from from printouts underlying table table 26. Cols. printouts underlying 26. Cols. Cols. 5, 5, 66 Derived, Derived, with with some some adjustments, adjustments, from from Bureau Bureau of of Economic Economic Analysis Analysis printout printout for for reproducible reproducible assets, assets, Federal Federal Reserve Reserve flow-of-funds flow-of-funds accounts accounts for for financial financial assets assets and and rough rough estimates estimates for for land. land.

Table Table 55

1. 1. 2. 2. 3. 3. 4. 4. 5. 5.

Table 6

Assets, Assets, current current prices prices Prices Prices Assets, Assets, constant constant prices prices Population Population Assets, Assets, constant constant prices prices per per head head 6.43 2.53 3.80 1.62 2.15 4.28 2.82 1.45 1.15 030 0.30

1953 (2) (2)

1929 (1) (1)

8.46 4.39 3.89 1.22 2.64

1980 (3) (3)

1954

to to

1930

to to

1901

to to

1901 to to 1929 (5) (5)

6.46 3.34 3.02 1.34 1.66

34 34

25 25

100 100 39 39 59 59

100 100 65 65 34 34 27 27 77

1930 to to 1953 (6) (6)

100 100 52 52 46 46 14 14 31 31

1954 to to 1980 (7) (7)

Distribution Distribution (percent) (percent)

I. I. National Assets

1901 to to 1980 (4) (4)

Growth Growth rate rate (percent (percent per per year) year)

Decomposition of Rate of Growth of National Assets (Narrow Concept), 1901-80

100 100 52 52 47 47 21 21 26 26

1901 to to 1980 (8) (8)

Assets, current current prices prices Assets, Prices Prices Assets, prices Assets, constant constant prices Population Population Assets, prices per Assets, constant constant prices per head head

Assets, current current prices prices Assets, Prices Prices Assets, Assets, constant constant prices prices Population Population Assets, constant constant prices prices per per head head Assets,

Assets, prices Assets, current current prices Prices Prices Assets, constant Assets, constant prices prices Population Population per head Assets, Assets, constant constant prices prices per head

1. 1. 2. 2. 3. 3. 4. 4. 5. 5.

1. 1. 2. 2. 3. 3. 4. 4. 5. 5.

1. 1. 2. 2. 3. 3. 4. 4. 5. 5.

7.52 7.52 2.65 2.65 4.79 4.79 1.62 1.62 3.12 3.12

5.79 5.79 2.35 2.35 3.36 3.36 1.62 1.62 1.71 1.71

4.88 4.88 2.65 2.65 2.17 2.17 1.62 1.62 0.54 0.54

4.13 2.54 1.55 1.55 1.15 1.15 0.40

5.08 3.34 1.68 1.68 1.15 1.15 0.52 0.52

2.61 2.61 2.54 0.07 0.07 1.15 1.15 -1.08 1.08

5.93 3.16 2.69 1.34 1.33

100 100 54 54 44 44 33 33 11 11

100 100 97 97 3 3 44 44 -41 -41

8.28 8.28 4.41 4.41 3.71 1.22 2.46

8.20 8.20 4.44 4.44 3.60 1.22 2.35

100 100 41 41 58 58 28 28 30 30

6.74 6.74 3.16 3.47 3.47 1.34 2.10 2.10

100 100 35 35 64 64 22 22 41 41

IV. IV. Financial Financial Assets Assets

6.36 3.46 2.80 1.34 1.34 1.44 1.44

100 100 62 62 38 38 28 28 10 10

100 100 66 66 33 33 23 23 10 10

III. III. Reproducible Reproducible Tangible Tangible Assets Assets

10.13 4.41 4.41 5.48 1.22 1.22 4.21 4.21

II. Land II. Land

100 100 53 53 45 45 15 15 30 30

100 100 54 54 44 44 15 15 29 29

100 100 44 44 54 54 12 12 42 42

100 100 47 47 51 51 20 20 31 31

100 100 54 54 44 44 21 21 23 23

100 100 53 53 45 45 23 23 22 22

20

Secular Overview

by the fact that the current values of land are reduced to constant prices by the national product deflator, so that they reflect differences differences between the price of land and of total output, rather than changes in the "quantity" of land, which cannot easily be measured. There There are, are, however, however, considerable considerable differences differences in in the the relation relation between between the the rates rates of of growth growth of of real real assets assets and and real real national national product product per per head. head. In In the first three the first three decades decades both both grew grew at at about about the the same same rate. rate. In In the the 1930--53 1930-53 period, however, however, real real assets assets increased increased much much less less rapidly rapidly than than real real prodprodperiod, uct, while while the the opposite opposite relation relation prevailed prevailed in in the the postwar period. Thus Thus the the uct, postwar period. relation, in in real real terms, terms, between between assets assets and and product product has has not not shown shown aa relation, secular trend, trend, though though it it has has exhibited exhibited substantial substantial offsetting offsetting movements movements secular was similar similar over the the period. period. That That the the relation relation between between assets assets and and product product was over in current current prices, the ratio ratio rising rising only only from from 7.1 7.1 in in 1900 1900 to to 8.0 8.0 in in 1980, 1980, is is in prices, the due to to the the fact fact that that the the secular secular trends trends in in the the prices prices of of tangible tangible assets assets do do not not due seem to to have have deviated deviated substantially substantially from from those those in in the the price of output. output. seem price of

1.6. 1.6.

National Balance National Balance Sheet Sheet Ratios Ratios

1.6.1. Capital-output Capital-output Ratios Ratios 1.6.1. National balance sheets sheets permit the calculation calculation of of asset/output asset/output ratios ratios of National balance permit the of different different scope, scope, those those relating relating the the value value of of the the stock stock of of tangible tangible assets assets to to that that of of national national product product being being generally generally known known as as capital/output capital/output ratios. ratios. These These provide provide an an indication, indication, though though not not aa perfect perfect one, one, if if only only because because they do do not not adjust adjust for for the the level level of of capacity capacity utilization, utilization, of of capital capital intensity intensity they shows these these ratios ratiosfor for the themost most important important compocompoor productivity. Table 77 shows or productivity. Table prices. nents nents of of assets assets on on the the basis basis of of current current prices. In In comparison comparison to to the the far-reaching far-reaching changes changes which which have have occurred occurred in in the the American American economy economy since since the the turn turn of of the the century, century, the the movements movements of of the the asset/output asset/output ratios ratios appear appear moderate, moderate, at at least least if if only only the the beginning beginning and and the the end end of of the the period period are are compared. compared. Thus Thus the the ratio ratio of of tangible tangible assets assets to to national between 1900 1980, national product product changed changed only only from from 4.5 4.5 to to 4.1 4.1 between 1900 and and 1980, and and there there was was no no change change at at all all for for reproducible reproducible assets. assets. Reflecting Reflecting the the reincreasing increasing importance importance of of governments governments and and households, households, the the ratio ratio of of reproducible business producible business type type assets assets declined declined substantially substantially between between 1900 1900 and and 1953, 1953, and and regained regained only only about about one-fourth one-fourth of of its its decline decline in in the the postwar postwar of period. An period. An explanation explanation of of this this movement movement would would require require aa breakdown breakdown of the of the business business sector. sector. It It is is obviously obviously related related to to the the declining declining share share of nonresidential financial assets nonresidential private private structures. structures. The The ratio ratio of of financial assets to to product product has, has, on on the the other other hand, hand, shown shown aa definite definite upward upward trend, trend, particularly particularly if if the the broad 1929, which which broad definition definition is is used, used, even even disregarding disregarding the the high high ratio ratio for for 1929, under under the the narrow narrow definition definition in in part part reflects reflects the the extraordinarily extraordinarily high high level level of stock stock prices. prices. As As aa result, result, the the hybrid hybrid ratio ratio of of total total national national assets assets to to of

21 Table 7

National National Balance Balance Sheet Sheet Ratios Ratios Capital/Output Capital/Output Ratios,· Ratios," 1900, 1900, 1929, 1929, 1953, 1953, and and 1980

I. I. Narrow Narrow definition definition of of assets assets 1. Land All Reproducible {J All 2. Reproducible Business15b 3. assets assets I Business 4. Financial Financial assets assets 5. National National assets assets oad definition definition of of assets assets II. Broad 1. Land Land All 2. Reproducible Reproducible {J All 3. assets 1 Business0c 4. Financial Financial assets assets 5. National National assets assets

1900 1900 (1)

1929 1929 (2)

1953 1953 (3)

1980 1980 (4)

1.50 1.50 2.97 2.97 1.65 1.65 2.89 2.89 7.37 7.37

1.22 1.22 3.10 3.10 1.34 1.34 4.82 4.82 9.13 9.13

0.60 0.60 2.65 2.65 0.96 0.96 3.38 3.38 6.63 6.63

1.10 1.10 3.01 3.01 1.11 1.11 3.91 3.91 8.02 8.02

1.65 1.65 3.32 3.32 1.79 4.75 4.75 9.70 9.70

1.37 1.37 3.41 3.41 1.39 5.69 5.69 10.48 10.48

0.74 0.74 3.24 3.24 1.18 6.45 6.45 10.43 10.43

1.33 1.33 3.63 3.63 1.44 7.46 7.46 12.42 12.42

a aDivisor p. p. 224; col.col. Divisor is is year-end year-end rate rate of of gross gross national national product product (cols. (cols.1-3: 1-3:Historical HistoricalStatistics, Statistics, 224; 4: 1981). 4: Economic EconomicReport Reportofofthe thePresident, President, 1981). b !>Private Private nonresidential nonresidential structures, structures, equipment, equipment, and and inventories. inventories. c cAs As for for 1, 1, plus plus standing standing timber timber and and capitalized capitalized research research and and development development expenditures. expenditures. Sources: Tables 2. Sources: Tables 11 and and 2.

national has shown upward trend, much more more propronational product product has shown an an upward trend, which which is is much nounced if broader rather rather than narrower concept assets is is used. used. nounced if the the broader than the the narrower concept of of assets 1.6.2. Other Balance 1.6.2. Other Balance Sheet Sheet Ratios Ratios financial Six ratios of Six other other balance balance sheet sheet ratios of interest interest for for economic economic or or financial both the the narrow analysis analysis are are shown shown in in table table 88 on on the the basis basis of of both narrow and and broad broad narrow, more more familiar, financoncepts concepts of of assets. assets. Under Under the the narrow, familiar, concept concept the the financial which measures measures the the relative relative size cial interrelations interrelations ratio, ratio, which size of of the the financial financial superstructure, between 1900 superstructure, increased increased sharply sharply between 1900 and and 1929 1929 under under the the ininrapid expansion financial intermediaries fluence fluence of of aa rapid expansion of of financial intermediaries and and rising rising stock stock prices, but has declined moderately, though not steadily, over the past half-century, and in 1980 was about one-sixth lower than in 1929. Using the ratio the broad the level the broad concept concept the level of of the ratio is is considerably considerably higher; higher; the the rise rise continues continues to to the the mid-1960s, mid-1960s, and and the the 1980 1980 ratio ratio is is still still one-fourth one-fourth above above that 1964. The The differences differences are are that of of 1929 1929 though though one-fifth one-fifth below below the the peak peak of of 1964. due due mainly mainly to to the the partly partly offsetting offsetting movements movements of of households' equities equities in in unincorporated business and their unfunded unfunded pension unincorporated business and their pension claims claims which which varied varied financial assets. considerably considerably from from those those of of other other financial assets. of The financial intermediation The financial intermediation ratio, ratio, an an indication indication of of the the importance importance of financial financialsuperstructure, superstructure,rose roseunder underboth both financial institutions institutionswithin withinthe thefinancial definitions, more and definitions, though though considerably considerably more and more more regularly regularly if if the the narrow narrow that case concept concept is is used. used. In In that case it it increased increased from from about about one-fourth one-fourth to to two-fifths, 1953, indicating indicating that that the the proportion proportion two-fifths, mostly mostly between between 1929 1929 and and 1953,

22

Secular Overview

Table 8

Additional National Balance Sheet Ratios, 1900, 1929, 1953, and 1980

1900 1900 (1) (1)

1929 1929 (2)

1953 1953 (3)

1980 1980 (4)

I. Narrow Concept I. Narrow Concept of of Assets Assets

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6.

a3

Financial ratio Financial interrelations interrelations ratio Financial Financial intermediation intermediation ratio ratiobb Debt Debt ratio ratio over over national national assets assets Debt Debt ratio ratio over over tangible tangible assets assets Liquidity ratioCc Liquidity ratio Foreign balance ratio ratiodd

0.65 0.65 0.26 0.26 0.33 0.33 0.49 0.49 0.13 0.13 -0.021

1.12 1.12 0.26 0.26 0.36 0.36 0.75 0.75 0.15 0.15 0.010 0.010

1.04 1.04 0.36 0.36 0.42 0.42 0.86 0.86 0.24 0.24 0.007 0.007

0.95 0.95 0.40 0.40 0.45 0.45 0.85 0.85 0.15 0.15 0.005 0.005

II. II. Broad Broad Concept Concept of of Assets Assets 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6.

a3

Financial interrelations ratio Financial intermediation intermediation ratio ratiobb Financial Debt Debt ratio ratio over over national national assets assets Debt Debt ratio ratio over over tangible tangible assets assets Liquidity ratio ratioCc Liquidity Foreign Foreign balance balance ratiodd

0.95 0.95 0.16 0.16 0.23 0.23 0.44 0.44 0.10 0.10 -0.016

1.19 1.19 0.22 0.22 0.31 0.31 0.68 0.68 0.13 0.13 0.009 0.009

1.62 1.62 0.19 0.19 0.45 0.45 1.18 1.18 0.15 0.15 0.004 0.004

1.49 1.49 0.21 0.21 0.47 0.47 1.16 1.16 0.09 0.09 0.003 0.003

a aFinancial Financial assets assets (including (including monetary monetary metals) metals) :: tangible tangible assets. assets. b Financial assets assets of of financial financial institutions institutions (excluding (excluding interfinancial interfinancial assets) assets) :: all all financial financial bpinancial assets. assets. c cGold, Gold, currency, currency, deposits, deposits, open-market open-market paper, paper, and and debt debt securities: securities : national national assets. assets. d dNet Net foreign foreign assets: assets : national national assets. assets. Sources: Tables Sources: Tables 11 and and 2. 2.

of financial assets which financial financial institutions of financial assets in in which institutions acted acted either either as as holder holder or or issuer advanced advanced from from about about one-half one-half to to four-fifths, four-fifths, aa reflection reflection of of the the issuer financial process. increasing increasing institutionalization institutionalization of of the the financial process. The ratio The ratio of of debts debts to to either either total total or or tangible tangible assets assets only only rose rose substansubstantially under both both concepts. tially and and mostly mostly before before the the 1950s 1950s under concepts. From From there there on, on, under the broad concept the the level level of of the the ratios ratios was was considerably considerably higher higher under the broad concept pension claims. because of because of the the large large values values assigned assigned to to unfunded unfunded pension claims. At At the the period, debts end end of of the the period, debts were were equal equal to to nearly nearly 50 50 percent percent of of national national assets assets percent respectively respectively of and and to to about about 85 85 and and 115 115 percent of national national wealth. wealth. The balance sheet, The liquidity liquidity of of the the national national balance sheet, for for which which no no conceptually conceptually or statistically statistically satisfactory satisfactory measure measure exists, exists, appears appears not not to to have have shown shown any or any trend over the period of the the concept trend over the period irrespective irrespective of concept used. used. This This is is the the result, result, between 1900 however, 1900 and and 1953--the 1953—the then then peak peak reflecting reflecting however, of of an an increase increase between wartime wartime increases increases in in currency, currency, deposit, deposit, and and Treasury Treasury securities-which securities—which was offset was offset during during the the following following quarter-century. quarter-century. The balance showed fluctuations, aa transformation The net net foreign foreign balance showed marked marked fluctuations, transformation under percent under the the narrow narrow concept concept of of assets assets from from aa net net debt debt ratio ratio of of over over 22 percent positive balance balance of of about about 11 of national national assets assets at at the the turn turn of of the the century century to to aa positive of 1960s followed followed by byaadecline decline to to one-half one-half that that percent from the the 1920s 1920s to to the the 1960s percent from magnitude at at the the end end of of the the period. period. magnitude

22

Summary of of Findings Findings for for Summary the 1953-75 1953-75 Period Period the

1. At Atthe theend endof of1975, 1975,national nationalassets, assets,i.e., i.e.,the thesum sumof ofthe theassets assetsof ofthe the 1. 85 million million economic economic units units in in the the United United States—households, States-households, nonnonover 85 over profit institutions, institutions, financial financial and and nonfinancial nonfinancial business business enterprises, enterprises, and and profit governments-amounted to to nearly nearly $14 $14 trillion trillion at at market market prices prices or or reregovernments—amounted or 8.5 8.5 times times the the gross gross national national product. product. This This total total placement costs, costs, or placement of land, land, reproducible reproducible tangible tangible assets assets including including conconincludes the the value value of includes equivalent to to sumerdurables dUfables and and semidurables, semidurables, and andfinancial financial assets. assets. ItItisisequivalent sumer per head head assets assets of of about about $65,000, $65,000, or or per per unit unit assets assets of of about about $160,000. $160,000. per ofthis this study, study, including including 2. By Byaa broader broaderdefinition, definition, not notused usedin inthe thebody bodyof 2. of the the value value of of subsoil subsoil assets, assets, the the value value of of standing standing rough estimates estimates of rough timber, research research and and development development expenditures, expenditures, and and unfunded unfunded pension pension timber, $18% trillion in 1975, fully liabilities, national national assets assets would would reach reach about about $18V2 liabilities, one-third above above the the conventional conventional total. total. one-third were the the sum sum of of $6.6 $6.6 trillion trillion tangible tangible assets assets 3. National National assets assets in in 1975 were 3. and $7.2 $7.2 trillion trillionfinancial financial assets, assets, yielding yielding aafinancial financial interrelations interrelations ratio ratio of of and almost 1.10 1.10 and and aa capital/output capitaVoutput ratio ratio of of slightly slightly above above 4. 4. Nearly Nearly oneonealmost of tangible tangible assets assets consisted consisted of of land; land; close close to one-half one-half of of structures; fourth of fourth of equipment; equipment; approximately approximately 7 percent of inventories; almost one-eighth one-eighth of almost of consumer consumer durables and semidurables. One-fourth and fully fully one-tenth one-tenth of and One-fourth of the financial financial assets were in the form form of of equities, divided divided about about equally equally of between corporate corporate stock stock and equity in farm farm and other other nonfinancial between unincorporated business enterprises; and three-fourths three-fourths were in the form unincorporated of claims. Among claims, deposits with financial financial institutions accounted of fully one-fifth; one-fifth; government government securities for one-seventh; corporate for fully bonds for fully one-twentieth; mortgages for one-seventh; insurance and pension reserves for slightly above one-tenth; trade credit for a little over one-twentieth; and all other types of claims for somewhat below onefifth. fifth. 23 23

24

Summary of Findings for the 1953-75 1955-75 Period

4. Measured by size of assets, households constituted the largest sector, with slightly above two-fifths two-fifths of national assets. The two government sectors accounted for one-eighth of national assets, divided in the ratio of about one to two between federal and state and local governments. The three nonfinancial business sectors held about one-fourth one-fourth of national assets, whereof whereof nearly two-thirds were held by nonfinancial corporations, one-sixth one-sixth by by agriculture, agriculture, and and one-fifth one-fifth by by other other unincorporated unincorporated enterenterprises. Financial assets. prises. Financial institutions institutions controlled controlled nearly nearly one-fifth one-fifth of of national national assets. The The two two remaining remaining sectors, sectors, nonprofit nonprofit institutions institutions and and the the rest rest of of the the world, percent of world, each each accounted accounted for for less less than than 22 percent of national national assets. assets. 5. 5. The The structure structure of of the the balance balance sheets sheets of of the the various various sectors sectors differs differs greatly in in the the ratio ratio of of tangible tangible to to financial assets as as well well as as in in the the types types of greatly financial assets of tangible or or financial assets held, held, and and in in the the ways ways the the assets assets are are financed. tangible financial assets financed. The The share share of of tangible tangible assets assets is is very very high, high, exceeding exceeding three-fourths, three-fourths, in in the the nonfinancial business and financial nonfinancial business and government government sectors; sectors; negligible negligible in in financial institutions; institutions; and and midway, midway, at at slightly slightly below below two-fifths, two-fifths, for for households. households. Most financial assets houseMost sectors' sectors' financial assets consist consist mostly mostly of of claims. claims. It It is is only only households, financial institutions subholds, nonprofit nonprofit organizations, organizations, and and financial institutions that that hold hold aa substantial financial assets stantial proportion proportion of of their their financial assets in in the the form form of of equities-fully equities—fully two-fifths, nearly nearly three-fifths, three-fifths, and and one-ninth one-ninth respectively. respectively. There There are are also also two-fifths, great differences differences in in the the debt debt ratio ratio of of various various sectors sectors indicative indicative of of different different great methods of of financing. While the the ratio ratio is is slightly slightly in in excess excess of of unity unity for for the the methods financing. While federal government government and and amounts amounts to to over over nine-tenths nine-tenths for forfinancial federal financial instituinstitutions, it it ranges ranges between between one-eighth one-eighth and and one-fifth one-fifth for for the the other other sectors sectors tions, except for for nonfinancial nonfinancial corporations, corporations, for for which which it it is is slightly slightly in in excess excess of of except two-fifths. two-fifths. 6. 6. The The distribution distribution of of the the various various assets assets and and liabilities liabilities among among the the nine nine sectors reflects reflects both both the the portfolio portfolio policies policies of of these these sectors sectors and and their their sectors relative size. size. For For instance, instance, though though households households are are by by far far the the largest largest relative sector, they they hold hold only only aa relatively relatively small small part part of of some some tangible tangible assets assets like like sector, equipment and and of of some some financial assets like like corporate corporate bonds bonds and and mortmortequipment financial assets gages. On On the the other other hand hand while while they they account account for for only only two-fifths two-fifths of gages. of national assets, assets, they they hold hold nearly nearly nine-tenths nine-tenths of of time time and and savings savings deposits, deposits, national nearly three-fifths three-fifths of of demand demand deposits, deposits, currency, currency, and and corporate corporate stock, stock, nearly (excluding intercorporate intercorporate holdings), holdings), and and all all insurance insurance and and pension pension (excluding equity. This This discrepancy discrepancy claims, trust trust funds, funds, and and unincorporated unincorporated business business equity. claims, is by by its its very very nature nature still still more more pronounced pronounced in in the the case case of offinancial is financial instituinstitutions. With less than one-fifth of national assets they hold more than tions. With less than one-fifth of national assets they hold more than four-fifths of of corporate corporate bonds, bonds, mortgages, mortgages, bank bank loans, loans, and and consumer consumer four-fifths securities. The The concentration concentration credit and and about about three-fifths three-fifths of of government government securities. credit of holdings in one or just a few sectors is even more pronounced among of holdings in one or just a few sectors is even more pronounced among liabilities. Of the seventeen types distinguished, nine have only one liabilities. Of the seventeen types distinguished, nine have only one issuing sector, and two more have only two or three. issuing sector, and two more have only two or three.

25

Summary of Findings for the 1953-75 Period

7. Between 1953 1953 and 1975 1975 the current value of national assets increased at an average annual rate of 7.4 percent. If, however, account is taken ofthe of the rise in price, the rate of growth is reduced to 3.6 percent. If If is is further reduced to 2.3 percent if if put put on aaper per head head basis. basis. Developments Developments in in the first, noninflationary, half differed considerably from from half of the period differed those in the second, inflationary, half. While the rate of growth of of national prices rose percent in national assets assets in in current current prices rose from from 6.3 6.3 percent in 1954--64 1954-64 to to 8.5 8.5 percent prices in percent in in 1965-75, 1965-75, the the rate rate declined declined in in constant constant prices in the the aggregate aggregate from percent and and on on aa per per head head basis basis from to 2.7 2.7 percent from 2.8 2.8 to to 1.7 1.7 percent. percent. from 4.5 4.5 to National assets National assets increased increased slightly slightly more more rapidly rapidly than than gross gross national national prodproduct in first half period, raising in the the first half of of the the period, raising the the ratio ratio from from 7.94 7.94 to to 8.60, 8.60, but but uct expanded rate as national product expanded at at the the same same rate as national product during during the the second second half. half. The capital/output capital/output ratio, on the the other other hand, hand, increased increased only only from.3.69 from 3.69 in in The ratio, on 1953 to to 3.76 3.76 in in 1964, 1964,but butrose rosemore morerapidly rapidlyin inthe thesecond secondhalf halfof ofthe theperiod period 1953 4.12 in in 1975. 1975. to 4.12 to 8. The The annual annual rates rates of of change change in in national national assets assets showed showed considerable considerable 8. year-to-year in current current and and in in constant constant prices. The year-to-year fluctuations, both in range in in current current prices prices was was between +3.2 and + +10.9 percent, and and that that in in range between + 3.2 and 10.9 percent, -3.7 and percent. All All annual changes constant prices prices between constant between -3.7 and +7.2 +7.2 percent. annual changes in current current prices, prices, while while in in constant constant prices three of of the were positive positive in were prices three the twenty-one values values were were negative negative (1969, (1969, 1973, 1973, and and 1974). 1974). The Therates rates of of twenty-one change were were low—below those of of the the preceding and the the following following yearyear— low-below those preceding and change in current current and and in in constant constant prices in five of the the six six cyclical cyclical trough trough both in both prices in five of years the period (1957,1960,1962,1966,1974), as as well well as as in in 1969, 1969, years during during the period (1957,1960,1962,1966,1974), of 1970. They were generally high, though not one year before the trough one year before the trough of 1970. They were generally high, though not at aa maximum, maximum, in in the the first year of of an an upswing, upswing, such such as as in in 1958, 1958, always at always first year 1961, 1963, 1963, 1967, 1967, 1971, 1971, and and 1975. 1975. 1961, 9. 7.4 9. Compared Compared to to an an average average rate rate of of growth growth in in current current prices prices of of 7.4 percent sectoral rates of of growth growth ranged ranged from 4.2 percent percent for percent sectoral rates from 4.2 for the the federal federal to 10.6 10.6 percent percent for for the the rest rest of of the the world world (foreign (foreign investments investments government to government in at rates rates of7.1 of 7.1 percent percent (house(housein U.S.A.). U.S.A.). The The three three largest largest sectors sectors grew grew at holds), 7.9 percent (nonfinancial corporations), corporations), and and 8.2 8.2 percent (finanholds), 7.9 percent (nonfinancial percent (finanIn current current prices prices the the rate rate of of growth growth in in the the second second half half of cial institutions). institutions). In cial of the was above that of for all all nine sectors, and and sharply sharply the period period was above that of the thefirst first half half for nine sectors, for the the three three business sectors. In In constant constant prices the position so for so business sectors. prices the position was was reversed, all all nine nine sectors sectors showing showing aa lower lower rate rate of of growth growth in in the the second second reversed, of the the period including aa negative negative rate for the the federal federal government. government. half period including rate for half of the period period as as aa whole whole assets assets increased increased more more rapidly rapidly than than gross gross For the For for six six of of the sectors, the exceptions being being the national national product product for the nine nine sectors, the exceptions the federal government government and and the the two two unincorporated sectors. A A very very federal unincorporated business business sectors. is shown shown for for the the two two halves halves of of the the period, the main main similar picture period, the similar picture is of the the ratio ratio of of household household assets assets to to national national exception being exception being aa reduction reduction of the second second half half of of the the period. period. product during the product during

26

Summary of Findings for the 1953-75 Period

10. As a result of the differences of differences in growth rates the distribution of national assets among the nine sectors changed, though not greatly. Thus the share of the household sector declined from 43.3 to to 40.9 40.9 percent; percent; that that of the three business sectors fell from 25.2 to 24.4 percent, nonfinancial nonfinancial unincorporated corporations corporations gaining gaining at at the the expense expense of of farm farm and and nonfarm nonfarm unincorporated business; business; that that of of the the two two government government sectors sectors declined declined from from 13.1 13.1 to to 12.4 12.4 percent, percent, the the federal federal government government losing losing sharply sharply (from (from 7.5 7.5 to to 3.9 3.9 percent), percent), while while state state and and local local governments governments gained gained (from (from 5.6 5.6 to to 8.5 8.5 percent); percent); and and that that of of financial institutions institutions advanced advanced substantially substantially from from 16.3 16.3 to to 19.1 19.1 percent. percent. In In some some of of the the sectors sectors most most of of the the changes changes occurred occurred during during the the first first part partof ofthe theperiod period(nonprofit (nonprofitorganizations, organizations,unincorporated unincorporatedbusiness, business, financial financial institutions); institutions); in in others others during during the the second second half half (nonfinancial (nonfinancial corporations, corporations, state state and and local local governments); governments); and and in in some some about about equally equally during during both both halves halves (federal (federal government, government, rest rest of of the the world). world). The' The househousehold was unique unique in in that that its its share share increased increased substantially substantially during during the' the hold sector sector was first part part of of the the period, period, but but declined declined during during the the second second part. part. first 11. There There were were more more substantial substantial differences differences among among the the rates rates of of growth growth 11. of the the tangible tangible and and financial components of of the the national national balance balance sheet. sheet. of financial components Total tangible tangible assets assets grew grew at at aa rate rate of of 7.6 7.6 percent percent in in current current prices prices Total compared to to one one of of 7.2 7.2 percent percent for for financial assets. This This was was due due to to aa financial assets. compared substantially more more rapid rapid rate rate of of growth growth of of tangible tangible assets assets in in the the second second substantially half of of the the period, period, while while during during the the first half financial assets had had grown grown first half financial assets half somewhat more more swiftly. swiftly. Among Among tangible tangible assets assets land land grew grew most most rapidly rapidly in in somewhat value at at an an average average rate rate of of 9.3 9.3 percent percent and and consumer consumer semidurables semidurables least least value rapidly at at 5.6 5.6 percent. percent. The The range range of of growth growth rates rates among among financial assets financial assets rapidly was considerably considerably wider, wider, partly partly because because the the national national balance balance sheet sheet distindistinwas guishes aa larger larger number number of of types types of of these these assets. assets. The The highest highest rates, rates, over over guishes 16 percent, percent, were were shown shown by by two two assets, assets, which whichwere wereof ofvery verysmall smallsize sizeat atthe the 16 beginning of of the the period, period, V.S. U.S. agency agency securities securities and and open-market open-market paper. paper. beginning Among important important financial assets growth growth rates rates were were high-above high—above 99 perperAmong financial assets cent—for time time and and savings savings deposits, deposits, state state and and local local government government secursecurcent-for ities, mortgages, mortgages, bank bank loans, loans, and and direct direct foreign foreign investments. investments. Rates Rates were were ities, 6 percent—for demand deposits and currency, U.S. governlow—below low-below 6 percent-for demand deposits and currency, V.S. government securities, securities, and and equity equity in in unincorporated unincorporated business business enterprises. enterprises. ment prices, were higher in the second than in the the first first Growth rates, in current Growth rates, in current prices, were higher in the second than in financial assets half of the period for all types of tangible assets and for all half of the period for all types of tangible assets and for all financial assets except corporate corporate stock, stock, mortgages, mortgages, consumer consumer debt, debt, and and trust trust funds. funds. In In except constant prices, on the other hand, the rate of growth was in most cases constant prices, on the other hand, the rate of growth was in most cases lower in in the the second second than than in in the the first half of of the the period, period, the the exceptions exceptions lower first half being equipment, consumer durables and semidurables, U.S. and V.S. U.S. being equipment, consumer durables and semidurables, V.S. and agency securities, equity in unincorporated business, and miscellaneous agency securities, equity in unincorporated business, and miscellaneous assets. financial assets. financial 12. 12. Changes Changes in in the the structure structure of of the the national national balance balance sheet sheet reflect reflect the the differences in in the the rate rate of of growth growth of of individual individual assets assets and and liabilities. liabilities. Thus Thus differences

27

Summary of Findings for the 1953-75 Period

the division of national assets between tangible and financial financial assets changed but little, the share of tangible assets increasing from 46 to 48 percent. Within tangible assets, however, the share of land advanced sharply from 17 to to 24 24 percent. percent. Among Among financial financial assets assets the the shares shares of of time time and savings deposits, U.S. agency securities, mortgages, and bank loans increased substantially, i.e., by at least 1 percent of total assets, while those of U.S. those of demand demand deposits deposits and and currency, currency, gold gold and and foreign foreign exchange, exchange, U.S. government securities, and equity in unincorporated business declined significantly. 13. 13. As As aa result result of of the the differences differences in in the the rates rates of of growth growth of of assets assets of of the the various various sectors sectors and and of of the the changes changes in in their their portfolio portfolio structure, structure, there there were were substantial substantial changes changes in in the the way way in in which which the the several several types types of of assets assets and and liabilities 1953 and and liabilities are are distributed distributed among among the the nine nine sectors. sectors. Thus Thus between between 1953 1975 business in by 99 1975 the the share share of of farm farm business in the the total total value value of of land land declined declined by percent, while while the percent, the shares shares of of nonfinancial nonfinancial corporations corporations and and state state and and local local governments increased increased by about 44 percent each, and and that that of of households households governments by about percent each, rose by rose by fully fully 22 percent. percent. 14. Of Of the the important important ratios can be be derived derived from from the the national national ratios that that can 14. in its its broad broad version, version, which which includes includes balance sheet, the the capital/output capital/output ratio ratio in balance sheet, 1953 and and 1975 1975from from3.7 3.7 all tangible tangible assets assets in in the the numerator, rose between all numerator, rose between 1953 to 4.1; 4.1; in in its its narrower narrower version, in which which the is limited limited to to to version, in the numerator numerator is 3.1. reproducible tangible assets, assets, itit advanced advanced only only fractionally fractionally from from 3.0 3.0 to to 3.1. reproducible tangible The financial interrelations ratio (financial : tangible tangible assets) assets) showed showed an an The financial interrelations ratio (financial: irregular, slightly slightly downward downward trend trend from from 1.18 1.18 to to 1.09, 1.09, after after having having reached reached irregular, peak of of 1.36 1.36 in in 1965, 1965, if if the the equities equities of of households households in in unincorporated unincorporated aa peak farm and and nonfarm nonfarm enterprises enterprises and and in in personal trust funds funds are are included, included, farm personal trust but declined declined only only from from 0.94 0.94 to to 0.92, 0.92, after after aa peak peak of of 1.16, 1.16, if if they they are are but excluded, i.e., i.e., if if those those four four sectors sectors are are consolidated consolidated as as is is the the more more excluded, common procedure. procedure. The The financial intermediation ratio (assets of of financommon financial intermediation ratio (assets financial institutions: institutions : all all financial assets) advanced advanced substantially substantially and and fairly fairly cial financial assets) regularly from 0.30 0.30 in in 1953 1953 to to 0.36 0.36 in in 1975 1975 if if household household equities equities in in regularly from unincorporated enterprises and and personal trust funds funds are are included included among among unincorporated enterprises personal trust assets; and and proportionately somewhat less, less, viz., from 0.38 0.38 to to financial assets; financial proportionately somewhat viz., from 0.44 if if they they are are excluded, excluded, indicating indicating in in both substantial inin0.44 both versions versions aa substantial crease in in the the importance importance of offinancial crease financial institutions institutions in in the thefinancial financial structure. structure. The debt debt ratio trend slightly slightly in in excess excess of of one-third. one-third. The ratio remained remained without without trend 15. The The effects effects of of the inflation prevailing prevailing during during the the second second half half of of the the 15. the inflation period may may be be seen seen in in several several differences differences in in the sheet of period the national national balance balance sheet of the and second second halves halves without without claiming claiming exclusive exclusive causation. causation. ProbProbthe first first and ably the the most most important important effect effect is is the the acceleration acceleration of of the the growth growth of of ably national assets assets in in current current prices prices from from 6.3 6.3 to 8.5 percent and the the deceleradeceleranational to 8.5 percent and tion in in constant constant prices prices from from 4.5 4.5 to to 2.7 2.7 percent in the the aggregate aggregate and and from from tion percent in 3.2 to 1.4 percent on a per head basis, accompanied by a halt in the 3.2 to 1.4 percent on a per head basis, accompanied by a halt in the upward tendency of the ratio of national assets to national product. The upward tendency of the ratio of national assets to national product. The

28

Summary of Findings for for the the 1953-75 Period

decline financial to decline in in the the share share of offinancial to national assets assets by 55 percent percent of of national national assets assets in in the the second second half half of of the the period period following following an an increase increase by by 33 percent percent in in the the first half, half, as as well well as as aa fall fall of of the the financial interrelations interrelations ratio ratio from from 1.30 1.30 to to 1.08 1.08 in in the the second second half half of of the the period period compared compared to to an an increase increase from from 1.16 1.16 to to 1.30 1.30 in in the the first first half, half, may may also also be be attributed, attributed, at at least least in in part, part, to to the the inflation. inflation. Developments Developments of of this this type type may may be be expected expected in in any any inflation inflation where large large amounts amounts of of fixed face value value claims claims are are in in existence existence whose whose where fixed face value does does not not change change while while that that of of tangible tangible assets assets and and of of price-sensitive price-sensitive value the share share of of insurance insurance and and pension pension refinancial assets assets increases. increases. Thus Thus the financial reserves in national assets declined in the second half of the period after serves in national assets declined in the second half of the period after having increased increased in in the the first half. There There was., was, however, however, one one outstanding outstanding having first half. exception: The market value of corporate stock in current prices ininexception: The market value of corporate stock in current prices creased much much less less in in the the second second than than in in the the first first half half of of the the period, period, and and in in creased constant prices prices even even declined declined substantially; substantially; and and its its share share in in national national constant assets as as well well as as its its ratio ratio to to national national product product fell fell sharply sharply during during the the second second assets half of the period. half of the period. 16. 16. Inflation Inflation was was aa factor factor also also in in some some of of the the changes changes in in the the distribution distribution of national national assets assets among among sectors, sectors, tending tending to to increase increase the the share share of of sectors sectors of high proportion proportion of of tangible tangible assets assets and/or and/or aa high high debt/assets debt/assets ratio, ratio, with aa high with such as as nonfinancial nonfinancial corporations corporations and and state state and and local local governments; governments; but but itit such was more more than than offset offset by by other other factors factors in in the the case case of of other other sectors sectors such such as was as farm and and nonfarm nonfarm unincorporated unincorporated enterprises. enterprises. farm 17. 17. The The effect effect of of inflation inflation is is clearest clearest in in the the level level and and movement movement of of the the share of of revaluations revaluations that that reflect reflect assets-price assets-price movements movements in in the the change change in in share and net net worth. worth. Thus Thus revaluations revaluations are are estimated estimated to to have have total assets assets and total accounted for for nearly nearly one-half one-half of of the the total total increase increase in in national national assets assets in accounted in current prices prices for for the the entire entire period, rising from from aa share share of of fully fully two-fifths two-fifths current period, rising in the the first to one one of of one-half one-half in in the the second second half half of of the the period; period; and and for for less in first to less than two-thirds two-thirds of of changes changes in in net net worth worth of of all all sectors sectors in in the the 1954-64 1954-64 than period, but but for for four-fifths four-fifths in in the the more more il1flationary inflationary 1965-75 1965-75 span. span. They They period, were considerably higher for the government and business sectors than were considerably higher for the government and business sectors than for the household sector. for the household sector.

3

Problems of Constructing Constructing National and Sectoral Balance Sheets

The purpose of this study is the development of standardized and hence comparable balance sheets on an annual basis for the period 1953-75 units in 1953-75 for for all all economic economic units in the the United States States that can can be kept kept up up to to date by currently available. available.11 This date by statistics statistics currently This requires requires decisions, decisions, and and somesomethe many times compromises, times compromises, on on sectoring, sectoring, i.e., i.e., the the grouping grouping of of the many million million economic units units operating operating in in the United States; States; on on the the number number and and types types economic the United of assets assets and and liabilities liabilities to distinguished; on on the principles of of valuation valuation of to be be distinguished; the principles of assets, assets, liabilities, liabilities, and and net and on on the of combining combining the the of net worth; worth; and the methods methods of balance sheets sheets of of individual individual units. units. balance 3.1. Sectoring 3.1. Sectoring

The with only that of the flow-ofThe sectoring sectoring adopted, adopted, with only minor minor changes, changes, is is that of the flow-ofthe Federal Federal Reserve Board, which funds funds statistics statistics of of the Reserve Board, which distinguishes distinguishes over over two p. 34). 34). two dozen dozen sectors sectors (FRB (FRB 1975, 1975, p. a. a. Households Households b. Farm Farm business b. business c. c. Nonfarm Nonfarm noncorporate noncorporate business business d. nonfinancial business d. Corporate Corporate nonfinancial business e. e. State State and and local local governments governments f. f. U.S. U.S. government government g. the world g. Rest Rest of of the world h. Financial institutions institutions (nineteen (nineteen subsectors) subsectors) h. Financial The main difference from from the Federal Reserve Reserve system introducis the the introducThe main difference the Federal system is statistics tion of aa nonprofit institutions sector, sector, which which in in the theflow-of-funds nonprofit institutions flow-of-funds statistics tion of 1. 1. For the results results of of my my earlier earlier attempts attempts to to develop develop national national and and sectoral sectoral balance balance sheets sheets for the the United States cf. cf. Goldsmith Goldsmith 1955-56, 1955-56, vol. 3, part part 1; 1; Goldsmith, Goldsmith, Lipsey, Lipsey, and for United States vol. 3, and Mendelson 1963; and and Goldsmith Goldsmith 1973. 1973. Mendelson 1963;

29

30 30

Constructing Constructing National National and and Sectoral Sectoral Balance Balance Sheets Sheets

is included in the household sector; and the creation offive five new financial financial institutions institutions subsectors subsectors (individual (individual and and common common personal personal trust trust funds; funds; fraternal fraternal life life insurance; insurance; savings savings bank bank life life insurance; insurance; and and the the postal postal savsavings flow-of-funds in ings system) system) which which are are included included in in the theflow-of-funds in the the household household and and U.S. government government sectors. sectors. U.S. The The sectoral sectoral breakdown breakdown used used in in this this study study deviates deviates in in some some points points from from that recommended recommended by by the the United United Nations Nations statisticians statisticians (U.N. (U.N. Dept. Dept. of of that Economic and and Social Social Affairs Affairs 1977, 1977, p. p. 17), 17), mainly mainly because because the the necessary necessary Economic data are are not not available. available. Thus Thus public public enterprises enterprises are are not not separated separated from from data general government government as as would would be be desirable; desirable; and and the the balance balance sheets sheets of of farm farm general and nonfarm nonfarm unincorporated unincorporated enterprises enterprises do do not not include include the the owners' owners' and nonbusiness assets, assets, aa treatment treatment necessitated necessitated by by the the absence absence of of the the relrelnonbusiness evant data. data. The The balance balance sheet sheet of offinancial institutions is is not not broken broken down down financial institutions evant into four four subsectors, subsectors, but but the the figures figures are are available available for for aa much much larger larger into number of of them them in in the the flow-of-funds accounts, and and figures figures for for the the total total number flow-of-funds accounts, assets of of these these subsectors subsectors at at three three benchmark benchmark dates dates can can be be derived derived from from assets table 85. 85. Social Social security security funds funds are are not not shown shown separately, separately, which which isis not not aa table serious omission omission ifif their their actual actual assets assets are are considered, considered, but but isis serious serious if if the the serious funds' liabilities liabilities are are calculated calculated on on an an actuarial actuarial basis, basis, aa possibility possibility disdisfunds' 7.8. Finally, Finally, the the aggregative aggregativefigures for the the household household sector sector are are cussed in in 7.8. cussed figures for not broken broken down down into into subsectors, subsectors, but but 6.4.6 6.4.6 presents presents information information on on nine nine not breakdowns on on the the basis basis of of sample sample data. data. breakdowns Farm Farm and and nonfarm nonfarm nonfinancial nonfinancial unincorporated unincorporated business business enterprises enterprises are treated treated in in aa fashion fashion parallel parallel to to nonfinancial nonfinancial corporations, corporations, i.e., i.e., the the are difference between between the the market market value value of of their their assets assets and and the the book book value value of of difference their liabilities, liabilities, designated designated as as "equity," "equity," isis shown shown on on the the liabilities liabilities side, side, their and isis shown shown again, again, like like corporate corporate stock, stock, on on the the asset asset side side of of the the balance balance and This assumes assumes that that all all farm farm and and nonfarm nonfarm sheet of of the the household household sector. sector.22 This sheet nonfinancial unincorporated unincorporated business business enterprises enterprises are are fully fully owned owned by by nonfinancial domestic individuals, individuals, and and thus thus slightly slightly overstates overstates the the latters' latters' assets assets and and domestic understates that that of of other other owners. owners. In In contrast, contrast, the the difference difference between between understates "ultimate" sectors sectors (households, (households, nonprofit nonprofit assets and and liabilities liabilities of of the thefive assets five "ultimate" organizations, federal federal government, government, state state and and local local governments, governments, rest rest of of organizations, theworld), world),called called their their "net "net worth," worth," appears appearson onthe theliabilities liabilitiesside sideoftheir of their the balance sheets, sheets, but but does does not not become become part part of of any any sector's sector's assets. assets. balance In principle principle the the balance balance sheets sheets include include all all assets assets and and liabilities liabilities of of the the In units belonging belonging to to the the sector. sector. This, This, however, however, isis not not true true of of the the farm farm and and units sectors.Here Here the thebalance balancesheet sheetisislimited limited nonfarm noncorporate noncorporate business businesssectors. nonfarm to tangible tangible assets assets and and aa few few financial financial assets assets and and liabilities liabilities for for which which to estimates can can be be made. made. The The other other assets assets and and liabilities liabilities are are included included estimates 2.2. As Asexplained explainedbelow, below,the thevalue valueof ofthe theequity equityof ofnonfinancial nonfinancialcorporations corporationsand andfinancial financial institutionsinintheir theirbalance balancesheets sheetsdiffers differsfrom fromthat thatininthe thebalance balancesheets sheetsof ofthe theowners. owners.This This institutions not the the case casefor for unincorporated unincorporated business business enterprises. enterprises. isisnot

31 31

Categories of of Assets Assets and and Liabilities Liabilities Categories

without without identification identification in in the the balance balance sheet sheet of of the the household household sector, sector, which which embraces the personal accounts of the proprietors. The financial institutions The balance balance sheets sheets of of the the subgroups subgroups of offinancial institutions are are limited limited to financial assets tofinancial assets and and liabilities liabilities because because information information on on the the market market value value of of their their tangible tangible assets assets is is not not available. available. However, However, estimates estimates indicate indicate that that the financial institutions' the value value of of all allfinancial institutions' tangible tangible assets assets isis now nowof ofthe the order order of of only financial assets only 33 percent percent of of their their financial assets and and of of 11 percent percent of of all all tangible tangible assets assets in in the the national national balance balance sheet. sheet. The is exhaustive, exhaustive, i.e., i.e., intended intended to to cover cover every every economic economic unit unit The sectoring sectoring is operating in the the United United States. States. There There are, are, however, however, two two types types of of financial financial operating in institutions, viz, viz, closed-end closed-end investment investment companies companies and and small small business business institutions, investment companies, companies, which which are are omitted omitted for for lack lack of of information. information. Their Their investment financialassets assetsinin1975 1975were wereofofthe theorder orderofofonly only0.4 0.4percent percentofofthose thoseofofallall financial financialinstitutions, institutions,and andofofapproximately approximately0.2 0.2percent percentofofnational nationalassets. assets. financial 3.2. 3.2. Categories Categories of of Assets Assets and and Liabilities Liabilities In In order order to to facilitate facilitate comparison comparison among among sectors sectors and and over over time, time, all all assets and and liabilities, liabilities, equities equities and and net net worth, worth, have have been been arranged arranged in in about about assets financial assets five categories twenty assets and and liabilities liabilities and and in infive categories of of twenty categories categories of offinancial tangible assets. assets. There There is, is, of of course, course, no no sector sector which which shows shows entries entries for for all all tangible categories. categories. Indeed Indeed for for most most sectors sectors estimates estimates are are limited limited to to between between half half aa dozen dozen and and aa dozen dozen asset asset and and liability liability categQries. categories. The The categories categories of of assets assetsand and liabilities liabilitiesdistinguished distinguished here herecorrespond correspond to to those those used used for for tangible tangible assets assets in in the the statistics statistics of of the the Bureau Bureau of of Economic Economic Analysis Analysis of of the the Department Department of of Commerce Commerce and and for for financial financial assets assets and and liabilities liabilities in in the the fiow-of-funds flow-of-funds statistics statistics of of the the Federal Federal Reserve Reserve Board, Board, although although the the number number of of categories categories has has been been considerably considerably reduced reduced by by combining items.Financial Financial assets assetsand and equities equities combining related related or or relatively relatively small smallitems. include include the the new new categories categories of of equities equities ininunincorporated unincorporated business businessenterenterprises prises and and in in trust trust funds. funds. No madeininthe theannual annualestimates estimatesfor forthe thesubsoil subsoilreserves reservesof of Noallowance allowanceisismade oil oil and and gas, gas, metals metals and and minerals; minerals; for for standing standing timber; timber; for for unfunded unfunded liabilities liabilitiesof of pension pension funds; funds; for for research research and anddevelopment development expenditures; expenditures; and andfor for human humancapital. capital.Rough Roughestimates estimatesfor for these theseitems itemsinin1953 1953and and1975 1975 will, ordertotoindicate indicatetheir theirrelation relation will,however, however,be bepresented presentedininchapter chapter77ininorder to to the the categories categories covered covered by by the the statistics statistics of of this this study. study. The Theomission omissionof ofestimates estimatesfor for goodwill goodwilland andsimilar similaritems itemsisismotivated motivated not bydifficulties difficultiesofofdefiriition definitionand andfor for notonly onlyby bythe theabsence absenceof ofdata databut butalso alsoby conceptual conceptual reasons. reasons. ItIt conforms conforms toto the the treatment treatment inin the the fiow-of-funds flow-of-funds accounts accounts and and toto the the recommendations recommendations of of the the United United Nations. Nations. The thisstudy studyisisconsiderably considerablyless lessdetailed detailedthan thanthat that Theitemization itemizationused usedininthis suggested suggested by bythe the United United Nations Nations statisticians statisticians for for tangible tangible assets assets (U.N. (U.N. Economic and and Social Social Council Council 1978), 1978),this thisstudy study distinguishing distinguishing only onlyfive five Economic

32

Constructing National and Sectoral Balance Sheets

types compared to sixteen for the United Nations schedules. In particular, estimates for structures, equipment, and inventories are shown only as one aggregate for each type compared to five, five, three, and seven categories suggested by the United Nations. Such detail was not regarded regarded as as essential essential for for this this study, study, the the more more so so as as similar similar breakdowns breakdowns for for strucstructures tures and and equipment equipment are are available available in in the the Bureau Bureau of of Economic Economic Analysis Analysis estimates, estimates, whose whose totals totals are are used used here. here. Subsoil Subsoil assets assets are are not not included included in in the figures, but the main main set set of of estimates estimates because because of of lack lack of of comprehensive comprehensive figures, but the financial the available available data data are are discussed discussed in in chapter chapter 6. 6. In In the the case case of of financial instruments flow-of-funds statisinstruments this this study, study, following following the the more more detailed detailedflow-of-funds the United tics, distinguishes types compared the thirteen tics, distinguishes twenty twenty types compared to to the thirteen of of the United Nations Nations schedule. schedule.

3.3. Valuation Valuation 3.3. All All items items have have been been valued, valued, at at least least in in principle, principle, at at current current market market price; price; or or where where this this is is not not feasible, feasible, as as for for most most types types of of reproducible reproducible tangible tangible assets, assets, at at presumed presumed cost cost of of reproduction. reproduction. There There is, is, however, however, an an exception par value. exception in in that that all all claims claims and and liabilities liabilities are are entered entered at at par value. The The difference between par values is difference between par and and market market values is negligible negligible or or small small for for short-term claims claims and and liabilities, liabilities, but but can can and and has has occasionally occasionally become become short-term large for for medium medium and and long-term long-term claims. claims. The The difference difference is is evident evident in in the the large prices of of marketable marketable government government and and corporate corporate bonds, bonds, but but because because of prices of the accounting accounting conventions conventions will will be be reflected reflected only only rarely rarely or or only only to to an an the attenuated extent extent in in the the balance balance sheets sheets of of either either the the issuers issuers or or the the attenuated holders. It It is, is, however, however, arguable arguable that that to to the the extent extent that that the the estimates estimates are are holders. is preferable preferable intended to to reflect reflect values values relevant relevant to to the the issuer issuer or or holder holder par intended par is to market market value. value. to Entering fixed-interest-bearing securities Entering all all fixed-interest-bearing securities at at their their book book value, value, as as is is done in in the theflow-of-funds statistics and and accepted accepted here, here, leads leads to to overstating overstating done flow-of-funds statistics their market as interest interest rates rates rose rose and and prices prices fell fell throughout throughout most most of of their market value value as the period, period, and and sharply sharply so so during during the the second second half. half. However, However, market market the prices differing differing considerably considerably from from par par are are established established only only for for mediummediumprices and long-term long-term marketable marketable securities, securities, which which constitute constitute only only aa fraction fraction of and of all fixed-interest-bearing securities, excluding excluding not not only only short-term short-term secursecurall fixed-interest-bearing securities, ities but but also also mortgages, mortgages, other other long-term long-term loans, loans, and and privately privately placed placed ities securities. Hence Hence if if the the shift shift from from par par or or book to market market value value were were securities. book to applied only only to to mediummedium- and and long-term long-term fixed-interest-bearing securities fixed-interest-bearing securities applied traded on on aa stock stock exchange exchange or or in in an an active active over-the-counter over-the-counter market market the the traded adjustments would be moderate. If, however, the discrepancy were adjustments would be moderate. If, however, the discrepancy were extended by by analogy analogy to to all all mediummedium- and and long-term long-term claims, claims, whether whether extended claims), the the traded or or not not (possibly (possibly even even including including insurance insurance and and pension pension claims), traded overstatement would be substantial. A parallel adjustment would then overstatement would be substantial. A parallel adjustment would then view of of also have have to be made made on on the the liabilities liabilities side side of of the the balance balance sheet. sheet. In In view also to be

33

Valuation

the extreme difficulty difficulty of making the shift from par or book to market value of all medium- and long-term claims on an annual basis and separately rately for for each each sector, sector, and and in in view view of of the the conceptual conceptual problems problems involved, involved, the the adjustment adjustment has has not not been been made, made, and and the the valuation valuation at at par par or or book book as as shown flow-of-funds statistics shown in in the the flow-of-funds statistics has has been been maintained maintained throughout. throughout. On On an an annual annual basis basis the the ratio ratio of of market market to to par par value value for for government government bonds bonds has has fluctuated fluctuated during during the the 1953-75 1953-75 period period between between 0.82 0.82 and and 1.07, 1.07, and 0.99. At At the the three three and for for corporate corporate and and foreign foreign bonds bonds between between 0.72 0.72 and and 0.99. benchmark benchmark years years shown shown in in most most of of the the tables tables the the t"atio ratio was was 1.00 1.00 and and 0.95 0.95 for 1953; 0.97 0.97 and and for government government and and nongovernment nongovernment bonds bonds respectively respectively in in 1953; 0.92 in in 1964, 1964, and and 0.98 0.98 and and 0.84 0.84 in in 1975 1975 (Eisner (Eisner 1977, 1977, table table 59). 59). If If these these 0.92 ratios could could be be applied applied to to the the entirety entirety of of government government and and nongovernment nongovernment ratios securities outstanding, outstanding, they they would would indicate indicate aa total total discount discount from from par par securities $3 billion billion in in 1953, 1953, $20 $20 billion billion in in 1964, 1964, and and nearly nearly $70 $70 billion billion in in values of of $3 values 1975, equal equal to to 0.2, 0.2, 0.6, 0.6, and and 0.9 0.9 percent percent respectively respectively of of the the total total value value of of 1975, all financial financial assets. assets. Since Since these these discounts discounts are are applicable applicable in in full full only only to to all long-term obligations, obligations, the the appropriate appropriate correction correction would would be be considerably considerably long-term smaller than than the the above above calculation calculation indicates. indicates. It It therefore therefore would would not not be be smaller large enough, enough, even even in in years years such such as as 1959 1959 and and 1969 1969 when when itit was was at at its its large maximum, to to affect affect seriously seriously any any major major aspe~t aspect of of the the national national balance balance maximum, sheet, though though itit should should be be taken taken into into account account in in analyzing analyzing the the balance balance sheet, sheets of of the the government government and and corporate corporate sectors. sectors.33 sheets Another Another exception exception isisthe thevaluation valuationin inthe thebalance balanceof ofpayments paymentsstatistics statistics used here here of of direct direct foreign foreign investments investments at at book book value. value. Since Since these these used amounted in in 1975 1975 to to 1.02 1.02 percent percent of of the the national national total total on on the the assets assets side side amounted side, the the underestimate underestimate compared compared to to and to to 0.85 0.85 percent percent on on the the liabilities liabilities side, and their market market value, value, which which isis involved, involved, while while not not negligible negligible and and indeed indeed their essential in in the the assessment assessment of of the the role role of of the the rest-of-the-world rest-of-the-world sector sector and and essential of substantialfor for the thebalance balancesheet sheet of ofthe thenonfinancial nonfinancial corporate corporate sector, sector,isisof substantial minor importance importance within within the the national national balance balance sheet. sheet. minor A particularly particularly large large difference difference between between book book value, value, used used in in the the flowflowA affects the thegold goldstock stockin inthe the of-funds accounts, accounts, and and market market value, value,finally, of-funds finally, affects 1970s.If If the the gold gold stock stock isisvalued valued at at market market prices prices itit would would at at the the end end of of 1970s. 1975 have have had had aa value value of of $38.5 $38.5 billion billion instead instead of of that that shown shown of of $9.6 $9.6 1975 (excluding about about $2 $2 billion billion of of Special Special Drawing Drawing Rights Rights combined combined in in the the (excluding statistics with with gold), gold),which which isisbased based on on the the book book value value of of $42 $42per per ounce. ounce. statistics 1968,had hadinin1975 1975risen risentoto$29 $29 Thedifference, difference, which whichstarted started to todevelop developinin1968, The The effect effect on on absolute absolute and and relative relative figures figureswould, would, however, however, be be substantial substantial ifif an an 3.3. The adjustment for forchanges changesinininterest interestrates rateswere wereapplied appliedtotoall allmedium mediumand andlong-term long-termclaims, claims, adjustment whethermarketable marketableor ornot, not,on onboth boththe theasset assetand andthe theliabilities liabilitiesside sideofthe of thebalance balancesheet. sheet.ItItisis whether alsosubstantial, substantial,for forthe thebalance balancesheets sheetsfor forthe the197&-80 1978-80period periodwhen whenthe thedifference differencebetween between also parand andmarket marketvalues valueshad hadbecome becomevery verylarge large(cf. (cf.table table9,9,col. col.8). 8).In Inview viewof ofthe theconceptual conceptual par andstatistical statisticalproblems problemsof ofestimating estimatingmarket marketor orquasi-market quasi-marketvalues valuesfor forthese theseclaims claimsand and and thefact fact that that they they are are almost almost always alwaysignored ignoredininthe thepublished published balance balancesheets sheetsof offinancial financial the institutions no noadjustment adjustment has hasbeen beenmade. made. institutions

34

Constructing National and Sectoral Balance Sheets

billion, and was then equal to about 0.4 percent of national wealth and financial difference, financial assets, and to 0.2 percent of national assets. The difference, while unimportant within the national balance sheet, would substantially financial and affect affect the assets of monetary authorities and their share in financial national assets, increasing the former in 1975 from $125 billion to about $155 billion billion and and the the latter latter from from 1.7 1.7 to to 2.1 2.1and andfrom from0.9 0.9to to1.1 1.1respectively.4 respectively.4 It It thus thus appears appears that that the the adjustments adjustments to to market market value value move move in in opposite opposite directions-upward for directions—upward for direct foreign foreign investments and and for for gold; gold; downdownward ward for for bonds-and bonds—and that that the the net difference difference would be be small small compared compared to to the the national national totals totals for for financial or or all all assets. A A difficult difficult and and quantitatively quantitatively much much more more important important problem problem of of valuavaluation by insurance pension funds tion is is posed posed by insurance and and pension funds which which are are not not fully fully funded, funded, i.e., whose whose assets than their i.e., assets are are smaller smaller than their actuarial actuarial liabilities, liabilities, viz., viz., private private and particular the and state state and and local local employee employee pension pension funds, funds, and and in in particular the federal federal government's balgovernment's social social security security funds. funds. These These funds funds are are entered entered in in the the balbeneficiaries with with their ance ance sheets sheets of of the the funds funds and and the the beneficiaries their actual actual assets. assets. In In table however, their table 86 86 in in chapter chapter 7, 7, however, their unfunded unfunded liabilities liabilities are are shown, shown, though they they can can only only be be estimated estimated on on the the basis of assumptions assumptions that are to to basis of that are though wide range range considerable degree degree arbitrary, arbitrary, and and thus thus are are situated situated within within aa wide aa considerable of defensible defensible alternative, alternative,estimates. of estimates. balance sheet Generally Generally the the value value of of an an item item is is the the same same in in the the balance sheet of of the the holder and and in in that that of of the the issuer. issuer. The The main main exception exception is is corporate corporate stock. stock. holder Corporate stocks are are entered entered in the balance balance sheets sheets of of the owners at at Corporate stocks in the the owners market value, value, but in the the balance balance sheets sheets of of nonfinancial nonfinancial corporations corporations and and market but in financial institutions institutions as as the the difference difference between between the the replacement replacement cost cost or or financial market value value of of assets assets and and liabilities. liabilities. These These two two values values differ, differ, and and often often market quite substantially, substantially, as as will will appear appear in in table table 75. quite 75.

3.4. Deflation Deflation (Reduction (Reduction to to Constant Constant Prices) 3.4. Prices) In aa period period of of aa substantial substantial rise in the the price level, national balance In rise in price level, national balance sheets in current prices, though they remain the primary object of ininsheets in current prices, though they remain the primary object of terest, must for some purposes, particularly the calculations of real rates terest, must for some purposes, particularly the calculations of real rates of growth, growth, be be supplemented supplemented by by balance sheets expressed expressed in in constant constant of balance sheets prices. The need for such adjusted balance sheets is the more urgent the prices. The need for such adjusted balance sheets is the more urgent the prices. Table 9 shows larger the movements in absolute and relative asset larger the movements in absolute and relative asset prices. Table 9 shows indices for for eight eight types types of of asset asset prices, prices, together together with the implicit implicit national national indices with the product deflator which measures the price level of current output, permitproduct deflator which measures the price level of current output, permit5 ting an evaluation of asset price trends during the past quarter-century. ting an evaluation of asset price trends during the past quarter-century. S 4. with the the market the order $155 4. Even Even at at the the end end of of 1980, 1980, with market value value of of the the gold gold stock stock in in the order of of $155 billion to aa book book value value of than $10 billion, the the difference have been billion compared compared to of less less than $10 billion, difference would would have been financial and percent of national assets, assets, equal equal to to only only about about 1.4 1.4 percent percent of of financial and to to about about 0.7 0.7 percent of national monetary authorities about 80 though the assets though it it would would have have increased increased the assets of of monetary authorities by by about 80 percent. percent. 5. would be used as 5. The The results results would be very very similar similar if if the the consumer consumer price price index index had had been been used as the the deflator. deflator.

35

Deflation Deflation (Reduction to Constant Prices)

It is immediately evident that the upward trend in prices, which characterizes the entire period, was much stronger in the second than in the first first half. Thus the national product deflator rose at an annual average rate of only 1.9 percent a year between 1953 1953 and and 1964 1964compared compared to to rates rates of 5.2 percent in the 1964-75 period and fully 7 percent in the four years 1976-79. Tangible assets prices, measured by the implicit national wealth deflator, deflator, i.e., i.e., the the ratio ratio of of the the value value of of national national wealth wealth in in current current and and in in constant (1972) prices, rose at a rate of only 1.4 percent a year in the first, first, but but one one of of 5.8 5.8 percent percent in in the the second second half half ofthe of the period. period. The The identity identity ofthe of the rates rates of of increase increase of of the the prices prices of of current current output output and and of of tangible tangible assets assets for for the the period period as as aa whole whole of of 3.6 3.6 percent percent and and the the relatively relatively small small differences differences 0.5 and 0.6 between between the the rates rates for for the the two two halves halves of of the the period period of of + +0.5 and --0.6 percent percent respectively respectively are are due due largely largely to to the the fact fact that that the the price price indices indices of of current current output output and and of of the the output output of of capital capital goods, goods, which which have have been been used used to to deflate deflate the the estimates estimates of of the the stock stock of of reproducible reproducible tangible tangible assets assets showed to44of of showed very very similar similar trends trends as as can can be be seen seen by by comparing comparing columns columns 11 to table table 9. 9. Thus Thus the the average average rate rate of of increase increase for for the the entire entire period period of of 1953 1953 through through 1975 1975 was was 3.1 3.1 percent percent for for total total national national product product and and 2.9 2.9 percent percent for for the the output output of of private private structures structures and and equipment equipment and and 3.5 3.5 percent percent for for all all reproducible tangible tangible assets. assets. The The picture picture might might be be somewhat somewhat different, different, reproducible particularly in in the the case case of of annual annual fluctuations, fluctuations, if if indices indices of of the the market market particularly prices of of the the different different types types of of tangible tangible assets assets were were available, available, but but these these prices fraction of of the the total, total, given given the the absence absence of of would conceptually conceptually cover cover only only aa fraction would competitive second-hand second-hand markets markets for for many many of of them. them. Land Land prices, prices, for for competitive islimited limited to tofarm farm land, land,which which accounts accounts which direct direct statistical statistical information information is which for only only about about one-fourth one-fourth of of the the total, total, do do not not seem seem to to have have deviated deviated for sharply from from those those of of reproducible reproducible tangible tangible assets assets except except during during the the sharply 1970s. The The weight weight of of land land in in an an index index of of all all tangible tangible assets, assets, moreover, moreover, is is 1970s. only in the order of one-fifth. only in the order of one-fifth. In financial assets assets the the majority, majority, viz., viz., all all short-term short-term and and most most In the the case case of offinancial medium-term medium-term claims, claims, are are not not subject subject to to significant significant changes changes in in current current prices. prices. Long-term Long-term claims claims are, are, but but the the changes, changes, if if measured measured by by the the ratio ratio between between the the market market and and par par value value of of claims, claims, the the latter latter usually usually being being identical with with or or very very close close to to book book value, value, have have been been moderate. moderate. They They identical percent for for the the twenty-two twenty-two years years of of the the period period (six (sixin in the the first first averaged 99 percent averaged and thirteen thirteen in in the the second second half), half), though though exceeding exceeding 10 10 percent percent in in eight eight and years (seven (seven of of them them in in the the second second half half of of the the period), period), and and reached reached aa years maximum of of 22 22 percent percent in in 1969, 1969, but but were were only only 77 percent percent lower lower in in 1975 1975 maximum than they had been in 1953. Price changes have, of course, been much than they had been in 1953. Price changes have, of course, been much more pronounced pronounced for for corporate corporate stock. stock. Thus Thus an an index index of of stock stock prices prices rose rose more 11.5 percent between 1953 and 1964, but by only 0.5 at an average rate of at an average rate of 11.5 percent between 1953 and 1964, but by only 0.5 years, and by 6 percent for the period as percent in the following eleven percent in the following eleven years, and by 6 percent for the period as aa whole. The The implicit implicit price price of of households' households' equity equity in in unincorporated unincorporated farm farm whole. and nonfarm business enterprises, derived as the ratio of their current and nonfarm business enterprises, derived as the ratio of their current

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967

a *c „ wCO

cd

Private fixed capital formation a (2) "a o

0\Tt-MCOO\00\00\\OOH»00(Sh

Gross national producta (1) o

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O N O N O N O N O N O N O N O N O N O N O N O N O N

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

82.6 86.8 91.5 96.0 100.0 105.7 114.9 125.6 132.1 139.8 150.1 162.8 177.5

82.1 86.9 91.1 95.7 100.0 105.5 116.7 131.9 139.2 149.7 163.7 179.1 194.5

83.8 89.1 93.1 97.8 102.5 112.7 127.3 135.3 143.7 155.4 171.0 190.1 210.6

81.8 88.3 92.0 97.0 103.6 116.3 130.0 139.1

77.0 80.1 83.2 89.0 100.0 129.6 143.3 161.5 189.0 207.6 227.8 268.0 90.4 90.0 76.2 90.0 100.0 98.4 75.9 78.9 93.4 89.9 87.9 94.4 108.8

86.7 77.8 83.6 89.1 90.4 85.2 87.7 91.9 100.4 96.5 87.6 74.3 62.0 64.6 54.2 57.6 67.2 100.0 173.0 287.6 216.1 207.6 254.2 348.2 788.9 908.3 V O C N V O C N O O V O r H V O f S J f N J O N C n ) IO

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1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1.178 1.229 1.229 1.191 1.137 1.206 1.217 1.215 1.286 1.255 1.305

A (1)

Financial interrelations ratio'

0.935 0.989 0.988 0.967 0.921 0.984 1.001 1.004 1.072 1.045 1.094

(2)

w

B

0.597 0.592 0.587 0.585 0.597 0.587 0.590 0.604 0.604 0.629 0.632

Ul Ol Ul U U Ul Ul V© 00 V© 00 00 V© VO O si si Ui sj tO NJ

0.354 0.348 0.343 0.337 0.339 0.332 0.335 0.341 0.338 0.350 0.352 0.218 0.213 0.210 0.211 0.213 0.210 0.206 0.203 0.200 0.200 0.196 0.428 0.439 0.447 0.452 0.448 0.458 0.459 0.456 0.462 0.450 0.452 !fe» 4 ^

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Net worth ratio d (6)

4*>

Equity ratioC (5)

!fc> 4 ^

Debt Debt ratio (4)

4*.

Financial ncial interation mediation ratio tiob (3)

4*> ! ^

National tio Balance ana Sheet Ratios, 1953-75 (National Assets sset* = 1.(0)

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1-t

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Table 16

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as as as as u\ u\ w to H o \o oo

W N ) N ) t O t O N ) M M t O K ) M O W i O O M M O W ^ O t O N J v J

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p p o o p o o p o o p •-* to to to to to to to to to to ^ © O O O O i - ^ t - ^ i - ^ h ^ i - ^ i - ^ O N O O U > 0 \ O U > h - ^ O U > 0 0

p p o o p o o p o o p

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P

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a ST-

0.0052 0.0045 0.0039 0.0045 0.0056 0.0052 0.0046 0.0051 0.0051 0.0060 0.0057

Foreign Forei balance balan ratio (7)

o o o o o o o o o o o

88888888888

U l O \ U i U \ ^ U i U l ^ . W ^ U t s J O H M O N t O O N U l V O U l N )

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o'

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0.199 0.194 0.183 0.175 0.175 0.171 0.169 0.169 0.166 0.171 0.169

Liquidity ratio· (8)

ppppppppppp

O N S J O \ O \ O \ V ) V J V J 0 0 ^ V O

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3.69 3.67 3.71 3.83 4.07 3.96 3.93 4.03 3.88 3.86 3.79

p 2 o

Capital output ratiof (9)

w w w w

U> U> U ) 4^ U) U)

£* p

p

OOi-^U>tOtOtOU>U>WU>OJ

0.645 0.640 0.653 0.645 0.638 0.651 0.666 0.677 0.688 0.711 0.723 0.712

0.358 0.357 0.364 0.358 0.354 0.358 0.363 0.365 0.367 0.372 0.374 0.370

0.195 0.192 0.193 0.190 0.187 0.190 0.189 0.188 0.186 0.192 0.197 0.198 0.447 0.451 0.443 0.452 0.459 0.452 0.448 0.447 0.447 0.436 0.429 0.432

0.0066 0.0070 0.0074 0.0068 0.0063 0.0059 0.0057 0.0039 0.0026 0.0033 0.0044 0.0047

0.171 0.167 0.167 0.166 0.162 0.159 0.164 0.167 0.166 0.167 0.169 0.171

3.76 3.64 3.65 3.67 3.68 3.82 3.87 3.79 3.72 3.91 4.22 4.12 B

o

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O O O O O O O O O O O O OQ

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aFinancial assets including (col. 1) or excluding (col. 2) equities in unincorporated enterprises and personal trust funds divided by gross national product. "Twice share of financial institutions in total financial assets. CEquity of three business sectors plus net foreign investment. dNet worth of households, nonprofit organizations, governments, and net foreign balance. eGold, currency, deposits, bonds, and open market paper. ~ational wealth : gross national product.

gfg|i ?

P P ! - * • - * J-* K-* |-> •-> h-* K-* J-* J-* V O V O O ^ ^ O O ^ ^ ^ H - ^ H ^ N ) M O W M O \ O O P O I O O I M

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p p o o p p p p o o o p

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1.114 1.158 1.100 1.156 1.117 1.084 1.069 1.110 1.134 1.002 0.911 0.923

l-t

1.321 1.363 1.306 1.354 1.372 1.271 1.252 1.295 1.320 1.183 1.063 1.094

o

4^4^U)U)U)WU)U)U)U)U)U) 09

1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

EL

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3£

•a c

C ft *

a 3 3 o ?

S £2 o 6 O B* 3B

3 o

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W

li

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3

2 a H, 3 K'S 3 £ 3

^ ^

^ 3 B- ^

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16. 17. 17. 18. 18. 19. 19. 20. 20. 21. 21.

Table 17

Land Land Structures Structures Consumer durables durables Consumer Equipment Equipment Inventories Inventories Tangible assets assets Tangible Demand and currency Demand deposits deposits and currency Time and savings deposits Gold Gold and and foreign foreign exchange exchange U.S. U.S. government government securities securities U.S. U.S. agency agency securities securities State State and and local local government government securities securities Corporate Corporate and and foreign foreign bonds bonds Corporate Corporate stock stock Mortgages Mortgages Bank Bank loans loans n.e.c. Other Other loans loans Consumer credit credit Consumer Open-market Open-market paper paper Trade credit credit Insurance Insurance and and pension pension reserves reserves

1965 1965 to to 1975 1975 (2) (2) 9.60 9.60 10.10 10.10 9.38 9.38 8.31 8.31 8.03 8.03 9.48 9.48 5.05 5.05 10.78 -2.65 4.95 21.04 21.04 8.63 8.63 9.70 9.70 2.93 2.93 9.11 9.11 10.78 10.12 10.12 8.52 8.52 17.56 17.56 8.92 7.47 7.47

1954 1954 to to 1964 1964 (1) 9.02 9.02 5.52 5.52 4.67 4.67 4.50 4.50 3.31 3.31 5.70 5.70 2.44 2.44 10.39 -3.05 -3.05 1.07 11.62 11.62 9.42 9.42 7.11 7.11 11.99 11.99 10.62 10.62 9.18 7.46 7.46 8.91 8.91 14.69 14.69 6.81 7.27 7.27

Current prices Current prices

Growth Rates of Assets Assets and Liabilities of All Sectors, 1954-75 (percent per year)

9.31 9.31 7.79 7.79 7.00 7.00 6.39 6.39 5.64 5.64 7.57 7.57 3.74 3.74 10.58 -2.84 -2.84 2.99 16.24 16.24 9.02 9.02 8.40 8.40 7.36 7.36 9.86 9.86 9.98 8.78 8.78 8.71 8.71 16.11 16.11 7.86 7.86 7.37 7.37

1954 1954 to to 1975 1975 (3) (3) 7.67 7.67 3.89 3.89 3.92 3.92 2.24 2.24 2.21 2.21 4.22 4.22 0.46 0.46 8.25 -4.93 -4.93 -0.89 9.45 9.45 7.30 7.30 5.04 5.04 9.82 9.82 8.47 8.47 7.06 7.06 5.38 5.38 6.80 6.80 12.48 12.48 4.75 5.19 5.19

1954 1954 to to 1964 1964 (4) (4) 3.17 3.17 3.38 3.38 6.13 6.13 3.49 3.49 2.67 2.67 3.50 3.50 -0.33 -0.33 5.11 -7.62 -7.62 -0.42 14.84 14.84 3.06 3.06 4.08 4.08 -2.34 3.52 3.52 5.11 5.11 4.48 4.48 2.95 2.95 11.54 11.54 3.35 1.97 1.97

1965 1965 to to 1975 1975 (5) (5)

Constant Constant prices prices

5.40 5.40 3.63 3.63 5.02 5.02 2.86 2.86 2.44 2.44 3.86 3.86 0.07 0.07 6.67 -6.28 -6.28 -0.65 12.12 12.12 5.16 5.16 4.56 4.56 3.56 3.56 5.97 5.97 6.08 4.93 4.93 4.86 4.86 12.01 12.01 4.04 3.57 3.57

1954 1954 to to 1975 1975 (6) (6)

22. 22. 23. 23. 24. 24. 25. 25. 26. 26. 27. 27. 28. 28. 29. 29. 30. 30. 31. 31. 32. 33. 34. 34. 35. 35. 36. 37. 38. 38. 39. 39. 40. 40. 41. 41. 42. 42. 43. 43. 44. 44. 45. 45. 46. 46. 47. 47. 48. 48. 49. 49. 50. 50. 51. 51.

Direct Direct foreign foreign investment Farm Farm business business equity equity Unincorporated equity Unincorporated nonfarm nonfarm equity Common Common trust trust funds funds Individual trust funds funds Individual trust Other financial financial assets Other assets Total financial assets Totalfinancial assets Total Total assets assets currency Demand Demand deposits deposits and and currency Time Time and and saving saving deposits deposits U.S. government securities U.S. U.S. agency agency securities securities State State and and local local government government securities securities Corporate and and foreign bonds Mortgages Bank Bank loans n.e.c. n.e.c. Other Other loans loans Consumer credit Consumer credit Open-market paper Open-market paper Trade Trade debt Insurance Insurance and and pension pension reserves reserves Other Other liabilities liabilities Liabilities Liabilities Direct Direct foreign foreign investment investment Common trust funds funds Common trust Individual Individual trust trust funds funds Business equities Business equities Equities Equities Net worth Liabilities, worth Liabilities, equities, equities, and and net net worth 8.96 8.96 3.06 3.06 3.47 3.47 15.70 15.70 9.17 9.17 4.37 4.37 6.81 6.81 6.31 6.31 2.47 2.47 10.39 10.39 1.15 11.62 11.62 9.42 9.42 7.11 7.11 10.62 9.18 9.18 7.82 7.82 8.91 8.91 14.69 14.69 7.09 7.09 7.27 7.27 4.17 4.17 6.43 6.43 9.54 9.54 15.70 15.70 9.17 9.17 4.70 4.70 5.22 5.22 6.74 6.74 6.31 6.31 9.33 8.56 8.33 10.70 3.60 8.84 8.84 7.63 7.63 8.47 8.47 5.50 5.50 10.78 4.97 21.04 8.32 8.32 9.70 9.70 9.11 9.11 10.78 10.32 8.52 17.56 8.81 7.47 9.46 8.78 8.78 9.27 9.27 10.70 3.60 8.98 8.61 8.61 8.14 8.14 8.47 8.47 9.14 5.77 5.87 13.17 6.35 6.58 7.22 7.22 7.38 7.38 3.98 3.98 10.58 3.04 16.24 8.87 8.40 8.40 9.86 9.86 9.98 9.98 9.06 9.06 8.71 8.71 16.11 7.94 7.37 7.37 6.79 6.79 7.60 7.60 9.41 9.41 13.17 6.35 6.82 6.90 6.90 7.43 7.43 7.38 7.38

6.85 1.06 1.47 1.47 13.44 7.06 7.06 2.35 2.35 4.74 4.74 4.51 4.51 0.49 0.49 8.25 8.25 -0.80 -0.80 9.45 9.45 7.30 7.30 5.04 5.04 8.47 8.47 7.06 7.06 5.73 5.73 6.80 6.80 12.48 5.02 5.02 5.19 2.16 2.16 4.18 4.18 7.42 7.42 13.44 13.44 7.06 7.06 2.68 2.68 3.18 3.18 5.40 5.40 4.51 4.51 3.74 3.01 2.74 2.74 5.04 5.04 -1.70 -1.70 3.27 2.12 2.74 2.74 0.10 0.10 5.11 5.11 -0.41 -0.41 14.84 14.84 2.77 2.77 4.08 4.08 3.52 3.52 5.11 5.11 4.67 4.67 2.96 2.96 11.54 11.54 3.23 3.23 1.97 1.97 3.86 3.86 3.35 3.35 3.68 3.68 5.04 5.04 -1.70 -1.70 3.41 3.06 2.12 2.12 2.74 2.74 5.28 2.03 2.12 9.16 2.59 2.81 2.81 3.42 3.42 3.62 3.62 0.30 0.30 6.67 6.67 -0.61 -0.61 12.12 5.02 4.56 5.97 6.08 6.08 5.20 5.20 4.86 12.01 4.12 3.57 3.57 3.01 3.01 3.77 3.77 5.53 5.53 9.16 9.16 2.59 2.59 3.04 3.04 3.12 3.12 3.74 3.74 3.62 3.62

66

Trends and Fluctuations in in the National Balance Sheet, 1953-75

corporate stock, trade credit, and insurance and pension reserves within 1 percent of the average. The difference difference between the first half of the period and the second is clearly clearly reflected reflected in in the the growth growth rates rates of of the the various various assets. assets. While While the the growth growth rate rate of of total total national national assets assets in in current current prices prices increased increased from from 6.3 6.3 to to 8.5 8.5 percent, percent, the the rate rate based based on on constant constant price price estimates estimates declined declined sharply sharply from 4.5 4.5 to to 2.7 2.7 percent. percent. These These movements movements were were shared shared by by most most compofrom components, nents, about about three-fourths three-fourths of of the the growth growth rates rates in in current current prices prices rising rising from the thefirst to the the second second half half of of the the period, period, while while over over two-thirds two-thirds of of the the from first to rates in constant prices showed the opposite movement. rates in constant prices showed the opposite movement. The change change between between the the two two halves halves of of the the period period was was much much more more The pronounced, pronounced, on on the the basis basis of of current current prices, prices, for for tangible tangible assets assets with with an an increase of of 3.8 3.8 percent percent than than for for financial assets with with aa change change of of 0.8 0.8 increase financial assets percent, reflecting reflecting the the fact fact that that the the prices prices of of tangibles tangibles rose rose rapidly rapidly in in the the percent, second half of the period, while among financial assets the most imporsecond half of the period, while among financial assets the most important asset asset subject subject to to price price fluctuations, fluctuations, corporate corporate stock, stock, advanced advanced only only aa tant little. On the basis of constant prices the rate of growth fell for both little. On the basis of constant prices the rate of growth fell for both assets, but but the the decline decline was was considerably considerably smaller smaller for for tangible and andfinancial tangible financial assets, the former, former, with with 0.7 0.7 percent, percent, than than for for the the latter, latter, for for which which it it averaged averaged 2.6 2.6 the percent. percent. Among financial assets the growth Amongfinancial assets the the sharpest sharpest decline decline in in the growth rate rate between between thefirst and the the second second half half ofthe of the period period occurred occurred in in corporate corporate stock, stock, the the the first and average rate rate of of growth growth in in current current prices prices falling falling from from nearly nearly 12 12 to to less less than than average percent. The The rate rate of of growth growth also also declined declined for for state state and and local local government government 33 percent. securities, mortgages, mortgages, consumer consumer credit, credit, and and trust trust funds. funds. Increases Increases in in the the securities, rate of of growth growth lagged lagged behind behind the the average average for for time time and and savings savings deposits, deposits, rate bank loans, loans, insurance insurance and and pension pension reserves, reserves, and and direct direct foreign foreign investinvestbank ment. In In aa few few cases, cases, however, however, the the rate rate of of growth growth in in the the second second part part ofthe of the ment. period exceeded exceeded that that of of the the first part, viz., viz., U.S. U.S. agency agency securities securities and and period first part, equity in unincorporated business. equity in unincorporated business.

5.1.2.2. Different Different Sectors Sectors 5.1.2.2. The growth growth of of the the assets assets of of the the nine nine main main sectors sectors and and of of the the nineteen nineteen The financial subsectors subsectors differed differed considerably considerably from from the the national national averages averages of of financial 7.4 percent percent in in current current and"3.6 and 3.6 percent percent in in constant constant (1972) (1972) prices. prices. This This is 7.4 is evident from from tables tables 18 18 and and 19. 19. Among Among the the main main sectors sectors the the average average rate rate evident of growth growth in in current current prices prices ranged ranged from from 4.2 4.2 percent percent for for the the U.S. U.S. governgovernof ment to to 10.6 10.6 percent percent for for the the rest rest of of the the world world (foreign (foreign investments investments in in ment U.S.A.). Three Three other other sectors sectors (state (state and and local local governments, governments, nonprofit nonprofit U.S.A.). institutions, and and financial institutions) grew grew more more rapidly rapidly than than national national institutions, financial institutions) assets, while while two two others others (farm (farm and and nonfarm nonfarm unincorporated unincorporated business) business) assets, lagged substantially substantially behind behind the the national national average. average. Households, Households, the the largest largest lagged sector, kept kept fairly fairly close close to to the the average. average. sector,

1. 1. 2. 2. 3. 3. 4. 5. 5. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11.

Table Table 18

Households Households Nonprofit Nonprofit institutions institutions Farm Farm business business Nonfarm nonfinancial noncorporate business Nonfinancial corporate corporate business business U.S. U.S. government State State and and local governments governments Rest Rest of of the the world world All All nonfinancial nonfinancial sectors sectors Financial Financial institutions institutions All All sectors sectors

(percent per year)

6.62 6.62 8.14 8.14 3.73 3.73 3.96 5.87 5.87 3.60 3.60 7.58 7.58 9.07 9.07 6.04 6.04 7.59 7.59 6.31 6.31

1954 1954 to to 1964 1964 (1) (1)

Rates Rates of of Growth Growth of of Assets Assets of of Main Main Sectors, Sectors, 1954-75 1954-75

10.00 4.84 4.84 11.35 11.35 12.06 12.06 8.40 8.40 8.77 8.77 8.47 8.47

7.61 7.61 8.55 8.55 8.39 8.39 8.49 8.49

1965 1965 to to 1975 1975 (2) (2)

Current Current prices

7.11 7.11 8.34 8.34 6.04 6.04 6.20 6.20 7.92 7.92 4.22 4.22 9.45 9.45 10.56 10.56 7.21 7.21 8.18 8.18 7.38 7.38

1954 1954 to to 1975 1975 (3) (3) 4.85 4.85 6.53 6.53 2.48 2.48 2.66 2.66 4.17 4.17 1.74 1.74 5.94 5.94 6.96 6.96 4.30 4.30 5.52 5.52 4.51 4.51

1954 1954 to to 1964 1964 (4) (4)

2.24 2.24 1.77 1.77 2.33 2.33 2.23 2.23 3.84 3.84 -0.86 -0.86 4.38 4.38 6.32 6.32 2.63 2.63 3.18 3.18 2.74 2.74

1%5 1965 to to 1975 1975 (5) (5)

3.53 3.53 4.13 4.13 2.41 2.41 2.45 2.45 4.01 4.01 0.43 0.43 5.15 5.15 6.64 6.64 3.46 3.46 4.34 4.34 3.62 3.62

1954 1954 to to 1975 1975 (6) (6)

Constant Constant (1972) (1972) prices prices

Monetary Monetary authorities authorities Commercial banking Mutual savings banks Savings Savings and and loan loan associations associations Credit Credit unions unions Federally Federally sponsored sponsored credit credit agencies agencies Life insurance companies Fratemallife Fraternal life insurance insurance companies companies Savings Savings bank bank life life insurance insurance Private Private pension pension funds funds State State and and local local employee employee pension pension funds funds Other insurance companies Open-end Open-end investment investment companies companies Finance and mortgage companies Security Security brokers brokers and and dealers dealers Bank-administered trusts Bank-administered trusts and and estates estates Postal Postal savings savings All All subsectors subsectors

1954 1954 to to 1975 1975 (3) 3.8g 3.89ec 7.62 6.98 12.19 12.19 14.32 14.32 16.86 16.86 6.07 4.51 4.51 6.97 6.97 12.23 12.48 12.48 7.55 11.12 11.12 9.37 6.22 6.22 6.63 6.63 -18.17 -18.17 8.08 8.08ec

1965 1965 to to 1975 1975 (2) 6.69 6.69bb 9.76 7.36 9.86 9.86 12.69 12.69 19.87 19.87 6.16 5.33 5.33 6.22 6.22 7.93 7.93 11.94 11.94 7.54 3.43 3.43 8.60 5.17 3.88 3.88 -21.66 -21.66 8.5g 8.59ec

1954 1954 to to 1964 1964 (1) 1.17 1.17 5.53 6.61 14.57 14.57 15.97 15.97 13.93 13.93 5.98 3.70 3.70 7.72 7.72 16.71 16.71 13.02 13.02 7.56 19.38 19.38 10.16 7.28 7.28 9.45 9.45 -14.52 -14.52 7.57 7.57

Current prices

Rates of Growth of AssetsAssets8 of Financial Subsectors, 1954-75 (percent per year)

-0.79 -0.79 3.48 4.54 12.35 12.35 13.71 13.71 11.73 11.73 3.93 1.70 1.70 5.70 5.70 14.45 14.45 10.84 10.84 5.47 17.07 17.07 8.03 5.20 5.20 7.33 7.33 -14.98 -14.98 5.52 5.52

1954 1954 to to 1964 1964 (4) 1.23 1.23 4.15 1.86 4.23 4.23 6.92 6.92 13.73 13.73 0.73 -0.03 -0.03 0.94 0.94 2.41 2.41 6.21 6.21 2.04 2.04 -1.87 3.04 -0.21 -1.44 -1.44 -27.62 -27.62 3.18 3.18

1965 1965 to to 1975 1975 (5)

0.22 0.22 3.81 3.19 8.21 8.21 10.26 10.26 12.73 12.73 2.32 0.83 0.83 3.29 3.29 8.26 8.26 8.50 8.50 3.74 3.74 7.18 7.18 5.50 2.46 2.46 2.85 2.85 -21.55 -21.55 4.34 4.34

1954 1954 to to 1975 (6)

Constant (1972) prices

a aExcluding Excluding small small amounts amounts of of tangible tangible assets. assets. b bRates col. 33 if valued at book value. value. Rates would would be be 8.73 8.73 percent percent in in col. col. 22 and and 4.41 4.41 percent percent in in col. if gold gold were were valued at market market price price instead instead of of book c "If 3. If gold gold is is valued valued at at market market price price 8.70 8.70 percent percent in in col. col. 22 and and 8.13 8.13 percent percent in in col. col. 3.

1. 1. 2. 3. 4. 4. 5. 5. 6. 6. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 13. 13. 14. 15. 15. 16. 16. 17. 17. 18. 18.

Table 19

69

The National Balance Sheet

Divergences from the averages of 8.2 percent in current and 4.3 percent in constant prices are much larger amongfinancial financial institutions. They 18 percent for postal savings to + 17 range in current prices from -—18 +17 percent for federally sponsored credit agencies. Though the large types of institutions kept closer closer to to the the average, average, differences differences were were very very substantial substantial among among them them too. too. Thus Thus private and and state state and and local local pension pension funds funds and and savings 12 percent, percent, while while savings and and loan loan associations associations grew grew at at an an average average rate rate of of 12 the the average average growth growth rate rate of of mutual mutual savings savings banks and and life life insurance insurance companies was fully fully 11 and and22percent percentrespectively respectivelybelow belowthe thesector sectoraverage average companies was of percent, and of 88 percent, and that that of of monetary monetary authorities authorities with with less less than than 44 percent percent lagged percent behind banks, the lagged by by more more than than 44 percent behind it. it. Commercial Commercial banks, the largest largest In constant subsector, percent below, subsector, were were close close to, to, but but 0.6 0.6 percent below, the the average. average. In constant prices all are lower, but the prices all the the growth growth rates rates are lower, but the ranking ranking and and relationships relationships among prices. among sectors sectors and and subsectors subsectors are are the the same same as as in in current current prices. On the the basis basis of of current current prices prices growth growth rates rates were were higher higher in in the the second second On inflationary half half of of the all sectors, sectors, but difference between between the period period in in all but the the difference inflationary the two two periods While the the growth growth rate rate for for all all sectors sectors of of the the second second the periods varied. varied. While percent above above that that of of the thefirst half, the the difference difference half of of the the period period was was 22 percent first half, half percent for for the the three three business business sectors, sectors, in in part part reflecting reflecting was in in excess excess of of 44 percent was as much much sharp increases increases in in the the prices prices of of land land and and structures, structures, and and by almost as by almost sharp percent for state state and and local governments; but but it it was was only only of of the the order order of of 11 percent for local governments; above the the rate rate of of the the first half for for households households and and financial institutions, first half financial institutions, above influenced by by the the relatively of stock stock prices. prices. influenced relatively poor poor performance performance of Differences financial institutions, institutions, although although the the Differences were were even even larger larger among amongfinancial average rate of growth growth during during the the second second half of the the period with 8.8 8.8 half of period with average rate of percent was only only aa little little over over 11 percent than in in the period. percent was percent higher higher than the first first period. Indeed the average rate of growth growth of of the the second second half half of of the the period period was was Indeed the average rate of below that first part part for for some some important important institutions, institutions, such such as as savings savings below that of of the thefirst and associations, pension pension funds, investment comand loan loan associations, funds, open-end open-end investment comand mortgage companies, all all of of which which had grown very panies, andfinance had grown very panies, and finance and mortgage companies, 10 percent percent during during the the first first part part of of the the period. period. rapidly at rates rates in in excess excess of of 10 rapidly at The most most important important groups groups which which greatly greatly accelerated accelerated growth growth during during the the The second part of the the period period were were monetary commercial bankbankmonetary authorities, authorities, commercial second part of ing, and and federally federally sponsored sponsored credit credit agencies, agencies, the the first two being closely ing, first two being closely linked to to the the process process of of increasing increasing inflation. inflation. linked Contrary to to the the picture current prices prices the the rate rate of of growth growth of of assets assets was was Contrary picture in in current lower in the the second second than than in in the thefirst of the the period period in in all all main sectors if if lower in first half half of main sectors constant prices are used. Compared to to an an average average decline decline of of nearly nearly 22 constant prices are used. Compared percent—2.7 against 4.5 4.5 percent—it amounted to to 2.5 2.5 percent in the the two two percent-2.7 against percent-it amounted percent in largest sectors, sectors, households households and and financial institutions. Although Although its its assets assets largest financial institutions. declined only at the average average rate, rate, the the U.S. U.S. government government was was the the only declined only at the only sector to to show show aa negative negative rate rate of of growth growth in in the the second second half half of of the the period. period. sector On the the other other hand hand the the decline decline was small—less than than one-half one-half of of 11 perperOn was small-less cent—for the the three three business business sectors. sectors. cent-for

70

Trends and Fluctuations in the National Balance Sheet, 1953-75

The onlyfinancial financial institutions to show a higher rate of growth of assets in constant prices in the second than in the first part of the period were monetary authorities, commercial banks, and federally sponsored credit agencies, was agencies, though though the the increase increase was was small small for for banks. banks. The The decline decline was particularly marked, among large institutions, for saving and loan assoparticularly marked, among large institutions, for saving and loan associations, was large large enough enough ciations, life life insurance insurance companies companies and and pension pension funds. funds. It It was of growth in the case to result in a negative average rate to result in a negative average rate of growth in the case of of open-end open-end investment bank adminisadminisinvestment companies, companies, security security brokers brokers and and dealers, dealers, and and bank tered tered trusts. trusts. To To see see whether whether the the assets assets of of the the different different sectors sectors have have grown grown more more or or less been expressed in less rapidly rapidly than than the the economy economy as as aa whole, whole, they they have have been expressed in table 20 as as aa percentage of gross gross national national product. For the as aa product. For the period period as table 20 percentage of whole, when when the the ratio ratio of of national national assets assets to to gross gross national national product product rose rose whole, of the the from 7.94 7.94 to to 8.55, 8.55, all all of of the the increase increase occurring occurring in in the thefirst first five five years years of from period, that that of of unincorporated unincorporated business business declined declined from from 0.89 0.89 to to 0.75 0.75 and and period, U.S. government government fell fell from from 0.60 0.60 to to 0.33. 0.33. The The ratio ratio increased increased for for that ofthe of the U.S. that households. The The increases increases the other other six six sectors, sectors, though though insignificantly insignificantly for for households. the were largest largest in in absolute absolute terms terms for for nonfinancial nonfinancial corporations, corporations, state state and and were institutions, but in relative relative terms terms for for the the local governments, governments, and andfinancial local financial institutions, but in small sectors sectors of of nonprofit nonprofit organizations organizations and and rest rest of of the the world. world. While While most most small sectors showed showed fairly fairly regular regular trends, trends, the the movement movement was was irregular irregular for for sectors some of of them. them. The The household household sector, sector, in in particular, particular, registered registered an an increase increase some 1961from from3.43 3.43toto4.01 4.01and andaadecline declinethereafter thereaftertoto3.50 3.50 between 1953 1953 and and 1961 between in 1975, 1975, the the movements movements being being influenced influenced by by those those in in stock stock prices. prices. The The in ratio of offinancial financial institutions' institutions' assets assets to to gross gross national national product product scored scored most most ratio part of of the the period, period, rising rising from from 1.29 1.29 in in 1953 1953 to to of its its advance advance during during the thefirst of first part 1.60 in in 1964, 1964, and and ended ended the the period at 1.64 1.64 after after having having reached reached aa peak peak at at 1.60 period at 1.72 in in 1972. 1.72 1972. An of An idea idea of of the the synchronization synchronization of of the the annual annual changes changes in in the the rate rate of growth of the of the as well as in growth of the assets assets of the nine nine sectors, sectors, in in current current as well as in constant constant prices, 21, which which is is based based on on tables tables 22 22 and and 23. 23. In In the the prices, is is provided provided by by table table 21, average average year year the the rate rate of of growth growth of of assets assets in in current current prices prices increases increases for for about five sectors and and declines declines for for about about four four sectors. sectors. The The relation relation is five sectors is about reversed in in constant constant prices: prices: about about four four sectors sectors increase increase their their rate rate of reversed of (1961, growth, while while about about five decrease it. it. There There are are only only two two years years (1961, growth, five decrease 1964) in in which which all all nine nine ratios ratios increase increase or or decrease. decrease. Even Even years years with with seven seven 1964) or eight eight ratios ratios in in the the same same direction direction are are not not prevalent—five in current current or prevalent-five in prices (1957, 1960, 1960, 1965, 1965, 1968, 1968, 1972); 1972); twelve twelve in in constant constant prices prices (1956, prices (1957, (1956, 1958, 1960, 1960, 1961, 1961, 1963, 1963, 1966, 1966, 1968, 1968, 1969, 1969, 1971, 1971, 1972, 1972, 1973, 1973, 1974); 1974); and and 1958, only four four on on both both bases bases (1960,1951,1968,1972). (1960,1951,1968,1972). There There does does not not seem seem to to only be close connection connection between between the the degree degree of of sectoral sectoral synchronization synchronization of of be aa close growth rates rates and and the the business business cycle, cycle, but but the the connection connection that that does does exist exist is growth is ratios. Even Even in in constant constant more pronounced pronounced for for constant constant than than current current price price ratios. more

i

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Table 20

e o

S a*

18

OH

1

'V 8 M

< u CO

V3

2 a

l-M 4J s ^

£ .S

cC

o,

aB

sis 110.8 108.8 112.5 116.0 121.6 118.0 118.2 120.3 116.2 115.9 114.7 114.6 112.7 114.8 116.3 116.9 122.2 124.5 122.9 120.4 125.3 137.8 133.0

*o

49.3 9.3 48.0 8.0 47.1 47.6 7.6 49.2 48.0 46.1 46.7 44.3 43.8 42.4 41.8 39.8 39.5 39.4 39.6 41.2 41.6 40.5 39.7 41.1 43.3 41.6

o

39.9 38.7 36.9 36.6 38.0 38.6 36.7 36.7 35.3 34.9 33.8 32.9 32.0 31.6 31.1 30.3 30.2 29.8 29.3 29.5 32.8 33.3 33.5 59.5 59.4 60.0 59.6 60.0 57.4 56.4 56.6 54.1 52.7 50.3 48.5 45.2 43.6 42.4 41.3 41.3 39.7 37.3 34.4 33.7 34.5 33.2

44.6 44.4 45.9 48.3 51.5 51.0 51.3 53.7 53.0 54.0 54.3 55.1 54.2 55.2 56.1 56.7 59.7 63.4 63.9 63.7 68.1 75.4 73.1

U

11.5 12.2 13.0 13.4 13.7 13.7 14.0 14.4 14.6 14.1 14.6 15.0 14.8 14.5 14.7 14.7 15.2 15.7 15.9 15.7 15.4 15.5 15.1

I

CorpoCor rate (5)

GO 5

343.3 358.8 364.8 368.9 374.5 390.3 390.5 398.2 401.4 384.6 388.2 384.0 381.3 365.4 382.2 391.3 379.0 373.3 373.9 371.3 353.1 346.3 349.9

vs es Z

3 JD "cO

Uninco Unincororated porated (4)

State and local governments (7) 129.1 133.2 134.0 133.4 136.8 140.0 141.0 147.4 150.4 151.9 155.9 159.5 158.0 154.9 159.9 161.4 159.0 162.5 168.1 171.6 167.6 165.3 163.5

v£Jsovdr>r^t>^r^o6cx5o6o6o6o6r^o6o6oNC^Or^T-4fNif>i

6.0 6.6 6.8 7.0 7.0 7.3 7.8 8.2 8.4 8.0 8.4 8.7 8.1 7.7 8.3 8.6 9.0 9.1 10.6 11.4 11.3 12.3 12.4

Financial institutions (9)

Rest of the world (8) >rncsiOT~(oooor->-ocNT-(Ti-aNa\vOTi-r>'«o-r>.T-H co o o o . . C N C N t > O C N Q v o r » 0 0 vo ON CN r^ oo co »o Q\ rt M f^ IO . . _ _ lO "/I VO iO Tf VO lO r>oooooooooooooooooooooo — 00 — OO — —0000 00 OO 00 OO 00 00

3

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o

00 00 «o o \ o o c N c o c N O N r > v o r > o o c o O N C N v - > o \ ^ - c o o o o 00 o ONoovdvdcx5o6vdvd»OTtcnfNfNrHrHCJ cocococococococococococococococo

«

u ^ c ^ p ^ r > - r > p ^ v q ^ v q p o o w ^ t > r > r v j r ^ a \ r ^ ^

^ o o o o o \ i n n ^ r j T f \ o N q ^ ^ t N f o q f n o \ r O H ^ c >

rtur)sovor>-ONONONOoooooooovoooaNr>r>.f>r^»0'^'rj-

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72 72

Trends and Fluctuations in the National Balance Sheet, 1953-75

Table 21 21

Sectoral Growth Rates: Eacb Rates: Numbers Increasing or or DeclInIng Declining Each Year, 1955-75

Current prices

1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 Total Total

Constant prices

Up (1) (1)

Down Down (2) (2)

Unchanged Up (4) (3) (3) (4)

55 33 11 77 55 11 99 44 66 44 88 44 66 77 4 4 33 66 88 55 33 44 103 103

33 66 88 22 44 77 00 55 33 55 11 55 33 11 55 66 22 11 44 66 55 82 82

11 00 00 00 00 11 00 00 00 00 00 00 00 11 0 0 00 11 00 00 00 00 44

33 11 33 77 44 11 88 33 88 00 44 11 55 22 11 66 77 7 7 22 11 66 80 80

Down Down (5) (5)

Unchanged Un (6) (6)

66 88 55 22 55 88 11 66 11 99 44 7 7 44 77 88 33 22 22 77 88 33 106 106

00 00 11 00 00 00 00 00 00 00 11 11 00 00 00 00 00 00 00 00 0 0 33

prices synchronization is pronounced in only three of the six cyclical troughs (1960, 1974). troughs (1960, 1966, 1966, and and 1974).

5.1.3. Structure Structure of of Assets Assets and and Liabilities Liabilities 5.1.3. in the the rates rates of of growth growth and and year-to-year year-to-year changes changes of of the the The differences differences in The of assets assets and and liabilities liabilities are are reflected reflected in in the the changes changes in various categories categories of in various the structure of of the the national national balance balance sheet sheet and and in in the the ratios ratios of of assets assets and and the structure liabilities to to national national product product and and national national wealth, wealth, shown shown in in table table 24. liabilities 24. The The most most important important structural structural ratio, ratio, the the share share of of tangible tangible assets assets in in total total national two percentage percentage points points higher, higher, at at nearly nearly 48 48 national assets, assets, was was less less than than two percent, percent, in in 1975 1975 than than it it had had been been at at the the beginning beginning of of the the period, period, irrespecirrespecwhether the is tive tive of of whether the balance balance sheet sheet in in current current or or in in constant constant (1972) (1972) prices prices is used. is the the result result of of aa decline decline from from 46 46 to to 43 43 percent percent during during used. This, This, however, however, is the the first part of the the period period and and aa somewhat somewhat larger larger advance advance during during the the first part of of second second half. half. Some Some of of these these shifts shifts reflect reflect the the fact fact that that the the prices prices of reproducible tangible tangible assets assets increased increased less less than than the the general general price price level level reproducible thefirst part of of the the period period but but more more during during the the second second half, half, while while during the during first part

+10.0 +9.6 +6.9 +2.6 +11.8 +6.2 +3.1 +9.0 + 1.0 +8.0 +5.2 +9.6 +2.6 +11.8 +11.8 +2.7 +4.3 +9.4 +10.8 +4.7 +4.3 +12.5

+9.5 +15.2 +9.4 +3.4 +6.7 +9.4 +5.7 +6.8 +2.5 + 11.1 +8.9 +9.2 +4.7 +8.9 +9.0 +9.8 +9.6 +10.0 +10.2 +8.2 +6.7 +8.5

+2.8 +2.7 +4.6 +5.0 +9.0 +0.5 +1.6 +3.8 +4.1 +4.0 +3.3 +6.9 +6.1 +5.3 +6.2 +5.5 +4.5 +7.6 +12.3 +22.2 +8.1 +11.8

Farm (4)

Other (5) +2.2 +6.0 +6.7 +4.3 +4.6 +2.2 +2.2 +2.5 +4.1 +4.0 +4.6 +5.1 +6.3 +6.5 +9.5 +10.6 +6.8 +6.4 +9.4 +13.8 +12.2 +7.0

a

+3.5 +11.6 +8.9 +6.0 +4.1 +6.3 +3.0 +4.4 +5.0 +5.8 +6.4 +8.5 +8.9 +8.3 +9.8 +10.9 +7.8 +7.8 +9.2 +14.6 +17.0 +7.4

Nonfinancial corporations (6) a as

+5.1 +9.3 +4.9 +1.9 +2.7 +4.1 +1.4 +3.5 +2.7 +2.0 +2.6 +2.8 +3.4 +3.8 +6.3 +6.2 +1.8 +2.5 +2.9 +8.0 +8.7 +7.2

Federal government (7)

State and and local governgove ments (8)

C/3

CO

H

CO

+4.3 +11.2 +11.7 +7.6 +6.2 +7.1 +5.4 +7.0 +7.2 +7.7 +7.8 +8.6 +9.2 +8.6 +10.3 +11.5 +12.6 +10.1 +11.1 +17.8 +17.6 +8.0

Rest of the world (9)

+13.6 +12.0 +10.7 +0.0 +9.7 +14.7 +5.1 +12.2 +0.0 +13.0 +9.6 +3.5 +1.7 +13.3 +14.7 +10.3 +7.0 +27.2 +21.4 +8.5 +14.9 +12.4

Sources: Tables 15, 48, 62, 64, 68, 71, 76, 78, 81, and 83; percentages are derived from figures rounded to nearest billion dollars.

+7.4 +9.3 +7.1 +3.6 +8.8 +5.9 +3.5 +7.6 +3.2 +7.3 +6.0 +8.6 +4.7 +9.9 +10.5 +5.6 +6.2 +9.6 +10.9 +8.9 +8.2 +10.3

§1

Nonprofit instiHouseholds tutions (2) (3)

(2

H

1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

p O O O O O ^ ^ y i O ^ ^ O O O N ^ W s l W U i O O W N l v O s )

1

o a.

a*

vo VO *0 VO vo VO VO

o

L^N>vovobNN>bNi/jvo^b\ou>N>b\LftvobobN^u>*-&»

All sectors (1)

po

©

^ £ S* ?

pop\popo«^)opo^^ooM[oo\o»vop\OJvoyivo

e

Nonfinancial noncorporate business

23

n

S21 JO N> to

Ui ON Oi O N O N U ) 4^ J^ OJ j-* p

h-> 00 to K ) -J ^

^9

w

btobo^^bob\LftUwMO\bM^toK)bNUivjbto

o 2: o

boMN)wb\l^^towM^wbMbobNlrtbbb\vibo

a*

Annual Changes in Sectoral Assets in Current Prices, 1954-75 (percent)

3.

Table 22

+

+ +

+

*

v©vO^OVOvO^OVOvOV©^0,OVOv©vo

5?

^

h-A

>—*

r

O ^ O O O O O O O N U U I ^ W O N - ^ O V O O M W

•^ aIII? a P ^ l O< 1O .&» ^ \ Kvo) 0 0 M ^ 0 0 W \ 0 L f t ^ 0 0 O ^ O W M O \ O 0 \ y i

to ffi

8

+ + + + + + + + + + + + ++ + + + + + + ++

TO hrj ^ II "6 6 a 3 &

o

t o ^ b b u b o w w b o ^ b o a s b ^ ^ ' ^ M ^ b v o w M

§

K. n>

0* 0

3 00

n> a

a

Cfl

» + + , + + , + + + , , ,

o

©bNbo^^bNl/>L^bNN>b\bo^^©^^tob\>

CD fD

'vo 3 Er

+ ++

0

O O K) Ui

+ , + ,

b s i b b \ ^ N ) 4 ^ 0 0 h i s J s J O - U W M W \ O W O N ) U i ^ ^ y i ^ N O W N j W s j u o ^ © © to ^

^ ?• a" 2. 21

+8.5 +8.5 +5.3 +3.6 +9.8 +6.8 +5.8 +10.3 +6.3 +9.8 +8.8 +9.3 +5.0 +10.3 +10.2 +4.5 +8.2 +13.0 +13.9 +7.5 +4.9 +10.2

Financial institutions (10) © § ^ B. a

p ^ ^ w w o o ^ p p y i j o o o j o ^ p y i O N j o w y i o o o o fovo^bbfouN)wbwbobowwbobobob\wlftlft

3

H

Table 23

8 S

§

8

1 S s

fc

O «3 -S '""^

a

S3: +1.7 +1.2 + 1.6 +2.0 +4.7 +1.9 +1.1 +3.3 +3.2 +3.8 +3.0 +4.5 +2.4 +1.8 -1.2 -2.1 -0.3 +3.0 +3.5 +7.4 +1.9 +4.9

J3

+1.8 +2.8 +2.0 +3.9 +2.8 +2.2 +1.2 +2.7 +2.9 +3.7 +3.5 +3.7 +3.8 +2.0 + 1.7 +3.3 +2.1 +2.5 +3.1 +2.5 +0.4 -0.2

o

+11.1 +11.3 +3.4 +2.2 +7.4 +7.9 +3.7 +8.8 +0.8 +8.9 +7.4 +5.5 +0.7 +4.5 +1.9 +1.8 +3.0 +4.7 +3.9 -3.2 -5.5 +2.9

h(S^qh»HnNooq>o^oo(SHfnqioto\a HHHrvirtHHffiffitfiffi^dHHcidtnrihHTr

+2.3 +7.2 +3.6 +3.4 +3.1 +4.9 +2.7 +2.8 +5.8 +5.1 +5.0 +6.0 +5.6 +4.6 +5.9 +3.5 +2.5 +3.1 +4.2 +4.3 +2.3 +0.3

6

3 73

v q O \ ^ C ^ C O O N ^ r H ^ O \ O N t ^ r H ^ ^ h . ( S , H q N O O ^

vdviriHhTr'fvivdN^^vdHvdindHTtyodnn

+8.6 +6.9 +3.7 +0.2 +9.8 +3.9 +2.4 +8.1 -0.4 +6.9 +3.9 +7.7 -0.1 +7.6 +5.7 -2.7 +0.2 +5.1 +6.0 -3.2 -5.8 +5.3

•

+6.3 +5.9 +2.8 +1.4 +7.2 +4.2 +2.8 +6.4 +2.0 +6.3 +4.6 +6.2 +1.5 +6.2 +5.3 -0.4 +1.4 +4.5 +6.0 -0.2 -3.5 +3.7

Other (5) oooooojooNNh-^^^^ooq^c^HioHio^oj

Farm (4)

State and local govemments (8)

+5.8 +5.4 +4.5 +4.9 +5.9 +6.7 +6.8 +6.6 +5.7 +6.7 +6.3 +6.3 +6.1 +5.9 +5.4 +3.8 +4.1 +3.6 +4.5 +3.6 +2.6 +2.2

+5.1 +4.0 -0.3 -0.3 +0.8 +2.6 +0.3 +1.5 +2.0 +2.2 +1.4 +0.9 +0.9 +1.1 +2.3 -0.9 +1.6 -6.4 -1.9 -3.5 -4.5 +1.0

2 £ _ •8 « 8o «2 o s-^

Federal govemment (7)

cs o o ^ _ 0 0 C3

d\o\o\d\o\d\o^o\o\^ON^o\o\^o\o\o\o\o\

1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

+ + + + + + + + + + + + + + + + + + + + ++

*

Households (2) cn^\q^H(>rsooooHqq^\qo\ioir)H(SfOfO(n

Nonfinancial noncorporate business C/5 ^

+ + I I + + + + + + + + + + + I + I

+ + + + + + + + + + + + + + + + + + + + +I

+ + + + + + + + + + + + + + I I I+ + + + +

+ + + + + + + + + + + + + + + + + + + I I +

odvd^6o\cn{Ncod^^r^6^in(s6invc5foioio + + + + + + + + I + + + I + + I + + + I 1 +

+ + + + + + + + + + + + + + + I + + + I 1+

Source: As for table 22; percentages are derived from figures rounded to nearest billion dollars.

08

«

z 0 AO

iriinioinininin'O^

ON

t O I D \ 0 v 0 V 0 \ 0 ^ ^ ^

N ^ ^ ' t o \ H n H t > . h

coi ^t Tf* Tf to i n >o «o in ^t »o ^ "o ^t i n

ON ON ON ON ON ON ON ON

;

SS

(

2.A a

q v o o H q

3

s

ON ON ON ON ON ON ON

0 0 0 N O r H < N C 0 ^ t » O

.

ON ON ON ON

"For absolute figures of all sectors cf. table 14.

13 ^

1.45 1.50 1.58 1.62 1.61 1.58 1.62 1.62 1.66 1.64 1.70 1.75 1.75 1.75 1.73 1.71 1.78 1.83 1.84 1.83 1.82 1.79 1.76

(U

&

Unincorporated (4)

State and local governments (7) O

Farm business (3)

U.S. government (6)

«

43.25 44.29 44.44 44.40 43.94 45.16 45.30 45.15 45.73 44.73 45.00 44.64 45.07 44.18 45.00 45.52 44.24 43.43 43.36 43.30 41.65 40.10 40.91

C O

Financial institutions (9) 16.26 16.45 16.33 16.06 16.05 16.20 16.36 16.71 17.14 17.67 18.07 18.55 18.67 18.73 18.83 18.78 18.56 18.91 19.49 20.01 19.77 19.14 19.12

Rest of the world (8) O O O O O O O O O O O r - H O O O

0.76 0.81 0.83 0.85 0.82 0.85 0.91 0.92 0.96 0.93 0.97 1.01 0.96 0.93 0.97 1.00 1.05 1.06 1.22 1.33 1.34 1.42 1.44

1) O •—v

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Nonprofit organizations (2)

Nonfarm nonfinancial business «>

Households (1)

(percent)

Annual Sectoral Distribution of National Assets, 1953-75a

•S 2 o ^

s

T3

O ' O ^ h h h 00 00 00

CO T f CO ^ t

ONco^-ir-TfTt»o(NvococoTr'^-r^o>T-(cs ~oo \f\ \n o ON \r* To o ~-J " O H ^ w N H h i ; ( N \ q o h > o o \ ^ r | NOvowSwSuSuSuSrfTtTtcoco^r^cN^oooNONOooooo

Farm (6)

State and local (10)

Government

b ,c

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Bb (4)

i ; v q H \ q ^ H q v q o o ^ v q v o c s o o \ O H ' t H q q i o \ o o o v d o 6 o \ o 6 v d o \ o \ o 6 Q O \ Q d N O N ^ 6 Q H H ^ r i ^ i/^w^*oioioir>iri»oNO>o^vONOvoNovovos©vovo»n»rNU-)

Ab (3) t^Ol^r-(rtrtCNOVOONTl-»ot^vocMVOONCN,«tU-)lOVOTl-

Nonfarm (7)

III Nonfinancial corporations (8)

ill o .2e o?^

Nonprofit institutions (5)

s2

Bb (2)

Households

S c

Ab (1)

All sectors"

cd A)

Unincorporated enterprises

The Share of Financial Assets in Total Sectoral Assets, 1953-75 (percent)

c 13 o

109 109

Balance Sheet Sheet of of All All Nonfinancial Nonfinancial Sectors Sectors Balance

Table 43 43 Table

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12.

The Sectoral Sectoral Liabilities/Financial LiabilitieslFinanciai Assets Assets Ratio, Ratio, 1953, 1953, 1964, 1964, and and The 1975 1975

All sectors: sectors: A ASa All All sectors: sectors: BBaS All a Households: A AS Households: aa Households: B B Households: Nonprofit institutions institutions Nonprofit Unincorporated farm farm enterprises enterprises Unincorporated Unincorporated nonfarm nonfarm enterprises enterprises Unincorporated Nonfinancial corporations corporations13b Nonfinancial U.S. government government U.S. State and and local local governments governments State Financial institutions institutions Financial Rest of of the the world world Rest

1953 1953 (1) (1)

1964 1964 (2) (2)

1975 1975 (3) (3)

0.67 0.67 0.84 0.84 0.13 0.13 0.21 0.21 0.32 0.32 1.64 1.64 0.95 0.95 1.25 1.25 5.36 5.36 1.61 1.61 0.93 0.93 1.68 1.68

0.64 0.64 0.75 0.75 0.18 0.18 0.26 0.26 0.42 0.42 4.12 4.12 1.44 1.44 1.33 1.33 4.62 4.62 2.20 2.20 0.91 0.91 1.65 1.65

0.75 0.75 0.89 0.89 0.21 0.21 0.33 0.33 0.65 0.65 5.87 5.87 2.54 2.54 1.57 1.57 4.50 4.50 1.73 1.73 0.95 0.95 1.33 1.33

a

"Cols. and 33 include, include, and and cols. cols. 22 and and 44 exclude, exclude, households' households' equity equity in in unincorporated unincorporated Cols. 11 and enterprises and and in in personal personal trust trust funds. funds. enterprises bUabilities exclude exclude corporate corporate stock; stock; assets assets exclude exclude intercorporate intercorporate stock stock holdings. holdings. liabilities

and pension pension reserves declined declined sharply sharply while that that of of mortgages ance and of most other other types expanded expanded modadvanced substantially substantially and and those of advanced erately. erately. of the ratios of of the various assets and liabilities to The movements of of table 47, are similar. national product, shown on the right-hand right-hand side of national 6.3. The The Balance Balance Sheet Sheet of of all all Nonfinancial Nonfinancial Sectors Sectors 6.3. The nonfinancial nonfinancial sectors sectors throughout throughout the the period period held held at at least least four-fifths The four-fifths of national national assets, assets, and and their their share, share, as as table table 44 44 shows, shows, declined declined slowly slowly but but of fairly regularly regularly from from nearly nearly 84 84 to to 80 80 percent percent in in 1972, 1972, recovering recovering to to 81 81 fairly percent at at the the end end of of the the period. period. While While their their share share in in tangible tangible assets assets kept kept percent percent, that that in infinancial assets declined declined from from 70 70 to to continuously 99 percent, financial assets continuously above above 99 64 intermediation. 64 percent, percent, an an indication indication of of more more intensive intensive financial financial intermediation. of all nonfinancial nonfinancial sectors sectors increased Between 1953 1953 and and 1975 1975 the the assets assets of Between increased by over over 360 360 percent percent in in current current prices, prices, but but only only by by 110 110 percent percent in in constant constant by or at at annual annual average average rates rates of of 7.2 7.2 and and 3.5 3.5 percent percent respectively. prices, or prices, respectively. Their that to to Their relation relation to to gross gross national national product product increased increased slightly slightly while while that national national wealth wealth declined declined by by nearly nearly one-tenth. one-tenth. Annual Annual changes changes can can be be followed followed in in table table 45. 45. They They are, are, as as might might be be expected, expected, much much more more proprothan nounced nounced in in the the absolute absolute figures, figures, particularly particularly those those in in current current prices, prices, than in in current increased in the of the in the the ratios. ratios. Assets Assets in current prices prices increased in every every year year of period, in constant constant price in only four but even even in price per per head head they they declined declined in only four period, but years (1969, 1970, 1970, 1973, 1973, and 1974) and significantly so only in years (1969; and 1974) and significantly so only in 1973-74. 1973-74.

2

45.8 44.7 44.7 45.5 46.6 45.2 45.0 45.0 43.6 44.2 43.2 42.9 42.1 43.1 42.2 41.8 43.7 44.0 43.2 42.7 45.3 47.9 47.2

37.9 38.8 39.0 38.4 37.3 38.6 38.7 38.3 39.3 38.2 38.8 38.5 39.2 38.1 39.0 39.4 37.7 37.1 37.3 37.3 34.9 32.9 33.7

> j V O \ O W W P s l ^ O M N ) U i O O W W W v J O W ^ O O O V O

NO NO NO NO NO NO NO NO NO NO NO

aFor absolute figures cf. tables 28 and 29.

8

& Si £

U l ^ W N J M O ^ O O O v l

a

K ) ^ w ^ k ) b ^ b o k ) M M \ o k ) N ) b s b b N ) b N ^ v i < i

CO

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

83.7 83.5 83.7 83.9 83.9 83.8 83.7 83.3 82.9 82.4 82.0 81.4 81.3 81.2 81.2 81.2 81.4 81.1 80.5 80.0 80.2 80.8 80.9

O O O O O I ^ I ^ ^ I ^ H ^ I ^ ^ ^ ^ ^ ( > J O J O J U ) U > U > U ) U >

OOOOOOOOOOOOOOOOOOOOOOOOCX)00000000000000000000

Total (3)

Financial (5) 16.1 16.3 16.2 15.9 15.9 16.0 16.2 16.6 17.0 17.5 17.9 18.4 18.5 18.5 18.6 18.5 18.2 18.5 19.1 19.6 19.3 18.6 18.6

Tangible (4) 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.4 0.4 0.4 0.5 0.5 0.5

ppppppppppppppppppppppp

Financial (2) b N b \ w b \ H W N ) l f l b \ ^ i / ^ \ o u b b \ t o b \ o ^ o t o w H

Tangible (1) N o b o w b l ^ M ^ t o i o l o w ^ b ^ ^ w v i b o N O N O v j O i ^

Financial institutions

16.2 16.4 16.3 16.0 16.1 16.2 16.4 16.8 17.2 17.7 18.1 18.6 18.7 18.7 18.9 18.8 18.5 18.9 19.5 20.0 19.8 19.1 19.1

Total (6) N O ^ N O O ^ O O O O O O O O O O O O O O O O ^ ^ O N O N O N O N O N O N O N O N ^ ^ b o o l n N o l ^ b o N o ^ ^ b N ^ ^ N > b o ^ k > ^ o u ) J ^ t o

Nonfinancial sectors

45.9 44.8 44.8 45.6 46.8 45.4 45.2 45.2 43.8 44.4 43.4 43.1 42.3 43.3 42.5 42.1 44.0 44.4 43.6 43.1 45.8 48.4 47.7

Tangible (7)

*

195~75

v l ^ 0 0 H 0 \ ^ O M U i W W H ^ ^ 0 0 t O W ^ 0 0 O \ 0 0 0 0 ^ )

(percent)

CO

D a

54.0 55.2 55.2 54.3 53.2 54.6 54.9 54.9 56.3 55.7 56.7 56.9 57.7 56.6 57.6 57.9 55.9 55.6 56.4 56.9 54.2 51.5 52.3

Financial (8)

All sectors

O S 1 N 1 W ' 0 \ 0 0 \ N ) W N ) W O ,

W U ) W ^ O ^ O N V O ^ O O \ 0 \ N I

Distribution of National Assets between Financial and Nonfinancial Sectors,

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

Total a (9)

o o o o o o o o o o o o o o o o o o o o o o o

Table 44

88888888888888888888888

I

Table 4S

•a

1

i

o 42

a 100.0 107.1 117.2 125.9 130.5 141.6 149.7 154.3 165.1 169.4 180.9 190.7 206.7 216.1 237.4 262.4 277.8 293.8 319.7 352.3 384.8 419.7 462.8

S

3,940 4,182 4,432 4,567 4,633 4,960 5,162 5,289 5,601 5,684 6,016 6,258 6,641 6,745 7,156 7,537 7,515 7,590 7,874 8,283 8,273 8,033 8,329

5 100.0 106.1 112.5 115.9 117.6 125.9 131.0 134.2 142.2 144.3 152.7 158.8 168.6 171.2 181.6 191.3 190.7 192.6 199.8 210.2 210.0 203.9 211.4 +7.1 +9.4 +7.4 +3.6 +8.6 +5.7 +3.1 +7.1 +2.6 +6.8 +5.4 +8.4 +4.6 +9.8 +10.6 +5.8 +5.8 +8.8 +10.2 +9.2 +9.0 +10.3

NO

+6.1 +6.0 +3.0 + 1.4 +7.1 +4.1 +2.5 +5.9 + 1.5 +5.8 +4.0 +6.1 +1.6 +6.1 +5.3 -0.3 +1.0 +3.7 +5.2 -0.1 -2.9 +3.7

(6)

National wealth (8) 1.80 1.84 1.85 1.82 1.77 1.83 1.84 1.82 1.87 1.83 1.87 1.86 1.89 1.84 1.88 1.90 1.83 1.80 1.83 1.85 1.74 1.65 1.68

Gross national product (7)

6.65 6.77 6.87 6.97 7.16 7.24 7.21 7.35 7.27 7.08 7.07 7.01 6.88 6.72 6.91 6.99 6.98 6.97 6.94 6.86 6.81 6.98 6.92

o § 6.6

^

2,409 2,581 2,824 3,033 3,143 3,412 3,606 3,716 3,978 4,080 4,357 4,593 4,979 5,207 5,718 6,322 6,691 7,077 7,701 8,488 9,271 10,110 11,149

5 (5)

1972

ON

(2)

Current

Ratio to

cd «

(1)

Current 1972 prices (3) (4)

Si

1972

Annual rate of change (percent)

1§

Current

A en

Index (1953 = 100.0) «3

. enTj-«oNor«-ooONQ^-(eNen'«j»o v o r - o o o N O i - H f N e n T i u-)u-N»n»oio»o»o^voNONONONO v O v O N O N O ^ ^ ^ ^ h « ^

ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

I

Amount ($ bill.)

Assets of All Nonfinancial Sectors, 1953-75

13

o3

t^ONO\O\O\O\0000O\O\

+ + + + + + + ++ + + + + + + I + + + I I +

2 g.

HTf^^vqt^Hrt\oooTtTt\q(»voooQooo(S(NOrf| t ^ o \ ^ r n o d ^ ^ ^ r i v o < o o 6 " ^ O N 6, i n i o o 6 d o \ o \ To '

+ + + + + + + + + + + + + +7

en" ^" Tf" ^

O 00 es en ^ rH

H ^t CO (f) fM

T t «0 »

of of of en" en" en" en en en ^ rf- Tt

O

T-H^ Tfr^

+ + + 7 + + 7
VO t-> «o o rt- en en en ON r-1 ON n-" rr uS uS »n «n vo~ NO" vo~ vo~ t^ t^ t^ t-^ r^ oo~ 00" 00" 00"

NOooor-enoNr-oocN^-Hr-r-ioorHOON r- ON O_ en »o ON (N o-_ en vo_ O_ r^ T ^ r ^ 1-^ 1-^

TJ-" »O U*T NO NO

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00" ON" O " *-f

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16. 17. 17. 18. 18. 19. 19. 20. 20. 21. 21.

Table Table 46 46

Land Land Structures Structures Consumer Consumer durables durables Equipment Equipment Inventories Inventories Tangible Tangible assets assets Demand Demand deposits deposits and and currency currency Time Time and and savings savings deposits deposits Gold Gold U.S. government government securities securities U.S. U.S. U.S. agency agency securities securities State State and and local local government government securities securities Corporate Corporate and and foreign foreign bonds bonds Corporate Corporate stock stock Mortgages Mortgages Bank Bank loans loans n.e.c. n.e.c. Other loans loans Other Consumer credit credit Consumer Open-market paper paper Open-market Trade Trade credit credit Insurance Insurance and and pension pension reserves reserves 19.74 19.74 19.35 19.35 19.01 19.01 15.29 15.29 19.27 19.27 3.85 3.85 14.66 14.66 -2.63 3.99 3.99 22.89 22.89 8.97 8.97 8.51 8.51 5.85 5.85 9.55 9.55 10.78 10.78 12.05 12.05 9.47 9.47 17.53 17.53 10.81 10.81

9.54 9.54 20.34 20.34 10.38 10.38 4.49 4.49 11.64 11.64 -3.05 0.83 0.83 7.36 7.36 9.34 9.34 7.28 7.28 15.09 15.09 11.43 11.43 9.18 9.18 11.59 11.59 10.22 10.22 10.98 10.98 8.51 8.51

1965 1965 to 1975 (2)

13.27 13.27 9.32 9.32

1954 1954 to to 1964 (1)

Financial institutions institutions Financial

14.18 14.18 17.79 17.79 14.74 14.74 4.17 4.17 13.14 13.14 -2.84 2.40 2.40 14.86 14.86 9.15 9.15 7.89 7.89 10.37 10.48 10.48 9.98 9.98 11.82 11.82 9.85 9.85 14.21 14.21 9.65 9.65

16.46 16.46 14.23 14.23

1954 1954 to to 1975 1975 (3)

Rates of of Growth Growth of of Assets Assets and and Liabilities Liabilities of of Financial Financial and and Nonfinancial Nonfinancial Sectors, Sectors, 1954-75 1954-75 (percent (percent per per year) year)

9.52 9.52 10.04 10.04 9.38 9.38 8.15 8.15 8.02 8.02 9.41 9.41 5.14 5.14 10.70 10.70 6.11 6.11 18.23 18.23 7.82 7.82 23.92 23.92 1.73 1.73 6.39 6.39 7.93 7.93 4.62 4.62 17.57 17.57 8.88 8.88 7.47 7.47

1.40· 1.40 23.42 23.42 9.61 9.61 3.65 3.65 11.14 7.15 7.15 4.79 4.79 5.60 5.60 17.27 17.27 6.78 6.78 7.27 7.27

1965 1965 to to 1975 1975 (5)

9.00 9.00 5.51 5.51 4.67 4.67 4.46 4.46 3.30 3.30 5.68 5.68 2.30 2.30 10.37 10.37

1954 1954 to 1964 (4)

Nonfinancial sectors sectors Nonfinancial

6.35 6.35 5.11 5.11 17.42 17.42 7.83 7.83 7.37 7.37

3.73 3.73 20.80 20.80 8.71 8.71 13.33 13.33 6.33 6.33 6.76 6.76

9.26 9.26 7.75 7.75 7.00 7.00 6.29 6.29 5.63 5.63 7.53 7.53 3.71 3.71 10.54 10.54

1954 1954 to to 1975 (6)

22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 31. 32. 32. 33. 33. 34. 34. 35. 36. 36. 37. 38. 38. 39. 40. 41. 42. 42. 43. 44. 45. 45. 46. 46. 47. 47. 48. 48. 49. 49. 50. 50.

Direct foreign investment Farm business equity Unincorporated nonfarm equity Unincorporated Common trust fund equity Individual trust fund equity Other financial assets Financial assets Total assets Demand deposits and and currency currency Time and savings savings deposits Time and deposits U.S. government U.S. government securities securities U.S. U.S. agency agency securities securities State State and and local local government government securities securities Corporate and foreign bonds Mortgages Mortgages Bank loans n.e.c. Other Other loans loans Consumer credit Open-market paper Trade debt Insurance and pension reserves Other liabilities Liabilities Direct Direct foreign foreign investments investments Common Common trust trust funds funds Individual Individual trust trust funds funds Business Business equities equities Equities Net worth 7.36 7.36 8.08 8.08 8.18 8.18 3.98 3.98 10.58 10.58 16.24 16.24 11.10 11.10 12.40 12.40 12.45 12.45 14.70 14.70 15.78 15.78

8.10 8.10 8.06 8.06 8.74 8.74 13.17 13.17 6.35 6.35 8.12 8.12 7.47 7.47

9.77 9.77 8.59 8.59 8.77 8.77 5.50 5.50 10.78 10.78 21.04 21.04 10.19 10.19 11.20 11.20 13.51 13.51 12.22 12.22 17.00 17.00 7.64 7.64 10.97 10.97 9.18 9.18 10.70 10.70 3.60 3.60 6.13 6.13 5.20 5.20

5.00 5.00 7.56 7.56 7.59 7.59 2.47 2.47 10.39 10.39 11.62 11.62 12.02 12.02 13.62 13.62 11.41 11.41 17.23 17.23 14.57 8.56 8.56 5.23 5.23 8.29 8.29 15.70 15.70 9.17 9.17 10.15 10.15 9.79 9.79

4.20 4.20 4.20 4.20 6.74 6.74

9.30 9.30 9.30 9.30 8.14 8.14

8.32 8.32 9.65 9.65 9.09 9.09 10.17 10.17 10.11 10.11 8.52 8.52 18.40 18.40 8.80 8.80 6.61 6.61 5.98 5.98 8.24 8.24 9.27 9.27

6.72 6.72 6.72 6.72 7.43 7.43

8.87 8.87 8.14 8.14 9.84 9.84 9.55 9.55 8.67 8.67 8.71 8.71 16.63 16.63 7.94 7.94 4.74 4.74 4.23 4.23 7.10 7.10 9.41 9.41

3.04 3.04

4.97 4.97

1.15 1.15 9.42 9.42 6.64 6.64 10.60 10.60 8.93 8.93 7.26 7.26 8.91 8.91 14.89 14.89 7.09 7.09 2.90 2.90 2.50 2.50 5.98 5.98 9.54 9.54

9.14 9.14 5.77 5.77 5.87 5.87 13.17 13.17 6.35 6.35 5.69 5.69 6.80 6.80 7.21 7.21

9.33 9.33 8.56 8.56 8.33 8.33 10.70 10.70 3.60 3.60 7.69 7.69 7.14 7.14 8.40 8.40

8.95 3.06 3.06 3.47 3.47 15.70 15.70 9.17 9.17 3.72 3.72 6.46 6.46 6.04 6.04

Table Table 47 47

1. 1. 2. 2. 3. 3. 4. 4. 5. 6. 6. 7. 8. 9. 9. 10. 11. 12. 12. 13. 14. 14. 15. 15. 16. 16. 17. 17. 18. 19. 19.

Land Land Structures Structures Consumer Consumer durables durables Equipment Equipment Inventories Tangible Tangible assets assets Demand deposits and currency Time and savings deposits U.S. U.S. government government securities securities U.S. agencies securities State and local government securities Corporate Corporate and and foreign foreign bonds bonds Corporate stock Mortgages Mortgages Other Other loans loans Consumer Consumer credit credit Open-market Open-market paper paper Trade credit Insurance Insurance and and pension pension reserves reserves

9.06 9.06 24.46 24.46 5.11 5.11 8.15 8.15 7.90 54.68 54.68 5.05 3.96 3.92 3.92 0.03 0.44 0.12 0.12 6.05 0.93 0.93 0.72 0.43 0.43 0.06 0.06 2.53 5.08 5.08

1953 1953 (1) (1) 12.27 12.27 23.14 23.14 4.43 4.43 6.91 6.91 5.93 5.93 52.67 52.67 3.40 3.40 6.15 6.15 2.40 2.40 0.14 0.14 0.63 0.63 0.10 0.10 10.14 10.14 1.05 1.05 0.64 0.64 0.41 0.41 0.17 0.17 2.73 2.73 5.77 5.77

1964 1964 (2) (2)

Distribution Distribution

13.75 13.75 27.30 27.30 4.89 4.89 6.74 6.74 5.70 5.70 58.38 58.38 2.43 2.43 7.75 7.75 1.90 1.90 0.37 0.37 0.60 0.60 0.42 0.42 5.05 5.05 0.85 0.85 0.61 0.61 0.28 0.28 0.42 0.42 2.86 2.86 5.24 5.24

1975 1975 (3)

Structure Structure of of Balance Balance Sheet Sheet of All All Nonfinancial Nonfinancial Sectors, 1953, 1964, and 1975 (percent) (percent)

60.24 60.24 162.62 162.62 33.98 33.98 54.21 54.21 52.55 52.55 363.60 363.60 33.56 33.56 26.32 26.32 26.07 26.07 0.18 0.18 2.93 2.93 0.81 0.81 40.21 40.21 6.20 6.20 4.82 4.82 2.85 2.85 0.38 0.38 16.79 16.79 33.79 33.79

1953 1953 (4) (4) 85.93 85.93 162.09 162.09 31.03 31.03 48.41 48.41 41.51 41.51 368.97 368.97 23.80 23.80 43.07 43.07 16.79 16.79 1.00 1.00 4.45 4.45 0.67 0.67 71.03 71.03 7.33 7.33 4.45 4.45 2.87 2.87 1.20 1.20 19.09 19.09 40.39 40.39

1964 1964 (5)

95.07 188.79 188.79 33.85 33.85 46.60 46.60 39.44 39.44 403.74 403.74 16.80 16.80 53.58 53.58 13.11 13.11 2.58 2.58 4.14 4.14 2.88 2.88 34.89 34.89 5.88 5.88 4.20 4.20 1.91 1.91 2.91 2.91 19.80 19.80 36.27 36.27

1975 1975 (6) (6)

Relation Relation to to gross gross national national product product

Direct foreign investment Farm business equity Unincorporated nonfarm equity Common trust funds Individual trust funds Other financial assets Total financial assets Total assets, percent Total assets, $ bill. U.S. government securities State and local government securities Corporate and foreign bonds Mortgages Bank loans n.e.c. Other loans Consumer credit Open-market paper Trade debt Insurance and pension reserves Other liabilities Total liabilities Equitiesa3 Net worth Liabilities, equities, and net worth

-Including Including corporate corporate stock stock and and direct direct foreign foreign investment. investment.

20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43.

0.85 5.43 6.31 0.05 1.58 1.79 45.31 100.00 2,409 9.39 1.43 2.08 4.19 1.29 1.06 1.30 0.06 2.25 1.41 1.62 26.08 22.87 51.05 100.00 1.15 3.97 4.80 0.13 2.17 1.40 47.33 100.00 4,593 5.59 2.02 2.21 6.66 1.74 1.20 1.75 0.17 2.50 1.01 1.12 25.96 19.24 54.80 100.00

1.26 4.03 4.77 0.16 1.32 1.31 41.62 100.00 11,149 3.92 2.01 2.51 7.14 2.12 1.42 1.77 0.42 2.61 0.84 0.87 25.63 21.06 53.31 100.00

8.04 27.78 33.65 0.89 15.19 9.83 331.53 700.50 39.14 14.17 15.50 46.62 12.16 8.38 12.24 1.20 17.53 7.09 7.82 181.85 134.75 383.91 700.50

5.67 36.11 41.86 0.32 10.47 11.90 301.23 664.83

62.43 9.53 13.82 27.86 8.59 7.02 8.66 0.38 14.93 9.36 10.79 173.37 152.00 339.46 664.83

27.12 13.88 17.36 49.38 14.67 9.83 12.24 2.91 18.03 5.83 6.02 177.27 145.58 368.72 691.57

8.73 27.90 32.99 1.10 9.12 9.03 287.83 691.57

116

Trends and Fluctuations in in Sectoral Balance Sheets, 1953-75

The rates of growth of the fifty fifty types of assets and liabilities shown in financial assets generally in the table 46 varied considerably, in the case offinancial same pattern discussed in chapter 5 for for national national assets. assets. Among Among important important financial wholewas wassubstantially substantially financial assets assetsthe thegrowth growthrate ratefor forthe theperiod periodasasaawhole above that for the nation, for U.S. government and agency securities, and corporate corporate and and foreign foreign bonds, bonds, and and lower lower for for mortgages, mortgages, other other loans, loans, and and corporate corporate stock, stock, indicating indicating an an increasing increasing degree degree of of institutionalization institutionalization in these these three three markets. markets. The The combined combined balance balance sheet sheet of of all all nonfinancial nonfinancial sectors, sectors, whose whose strucstructure ture is is shown shown in in table table 47, 47, covers covers aa very very large large number number of of heterogeneous heterogeneous units. units. It It is, is, therefore, therefore, to to be be expected expected that that changes changes in in the the balance balance sheet sheet structure pronounced as as the the changes changes in in the the balance balance structure over over time time are are not not very very pronounced sheets sheets of of the the underlying underlying sectors sectors partly partly offset offset each each other. other. Similarly Similarly changes changes in in the the share share of of individual individual assets assets and and liabilities liabilities tend tend rarely rarely in in the the same same direction direction year year after after year. year. Among Among assets assets the the share share of of tangibles tangibles increased increased slightly slightly over over the the period period first part as as aa whole. whole. This This was was the the result result of of aa small small decline decline in in the the first part of of the the period, in period, and and aa fairly fairly pronounced pronounced rise rise during during the the second second half half reflecting reflecting in part advances advances in in tangible tangible asset asset prices. prices. The The trend trend of of the the components components of of part structures, particuparticutangible assets, assets, however, however, differed. differed. While While the the share share of of structures, tangible larly of of land, land, increased, increased, that that of of equipment equipment and and inventories inventories declined declined larly substantially and and that that of of consumer consumer durables durables changed changed little. little. substantially The financial assets The most most pronounced pronounced changes changes among among financial assets were were the the sharp sharp increase in in the the share share of of corporate corporate stock stock in in the the first part of of the the period period and and first part increase the even even sharper sharper decline decline in in the the second second part, part, mainly mainly reflecting reflecting the the price price the movements of of stocks stocks held held by by households. households. Among Among other other securities securities the the movements U.S. government government securities securities was was cut cut in in half. half. Another Another substantial substantial share of of U.S. share change was was the the decline decline of of the the share share of of the the equity equity in in unincorporated unincorporated farm farm change and nonfarm nonfarm business business which which was was limited limited to to the the first part of of the the period. period. and first part The share share of of deposits deposits changed changed little, little, but but this this was was the the result result of of halving halving of of The the share share of of demand demand deposits deposits and and aa near near doubling doubling of of that that of of time time and and the savings deposits. savings deposits. Since Since nonfinancial nonfinancial sectors sectors account account for for four-fifths four-fifths of of national national assets, assets, the the trends fluctuations in trends and and annual annual fluctuations in their their assets assets and and liabilities liabilities are are similar similar to to those in in the the national national totals totals which which have have already already been been discussed discussed in in chapter chapter those 4. 4. They They can, can, however, however, be be followed followed separately separately in in table table 45 45 for for annual annual figures of ofassets assetsinincurrent currentand andconstant constantprices pricesand andchanges changesininthem, them,and and figures for their their relations relations to to national national product product and and assets; assets; and and in in table table 46 46 for for for average rates rates of of growth growth of of individual individual assets assets and and liabilities liabilities during during the the average 1954-75 period period and and its its two two halves. 1954-75 halves.

6.4. 6.4. Households Households 6.4.1. 6.4.1. Trends Trends and and Cyclical Cyclical Movements Movements of of Total Total Assets Assets The The market market value value of of the the total total assets assets of of the the household household sector, sector, shown shown in in table table 48, 48, increased increased between between 1953 1953 and and 1975 1975 from from $1,244 $1,244 billion billion to to $5,640 $5,640

117 117

Households

year.!1 Since billion, or at an average annual rate of 7.1 percent per year. population grew at an average rate of 1.3 percent the increase in assets per head was 5.7 percent. If If account is taken of the substantial rise in prices, particularly during the second half of the period, by adjusting the figures figures for tangible assets by appropriate price indices and those for financial financial assets and liabilities by the gross national product deflator, the percent for average average rate rate of of growth growth is is reduced reduced to to 3.5 3.5 percent for aggregate aggregate and and to to 2.1 2.1 percent for per head assets. The rate of assets was was higher higher in in the the second second than than in in The rate of growth growth of of household household assets the first half period (7.6 percent in the first half of of the the period (7.6 percent percent against against 6.6 6.6 percent in current current prices), while the the opposite opposite relation prevailed if if the the effect effect of of price price changes changes prices), while relation prevailed are removed removed (2.2 (2.2 percent percent against against 4.9 4.9 percent). percent). The The decline decline is is proporproporare (1.2 percent percent against against 3.2 3.2 percent). percent). tionally even sharper sharper in in per head terms terms (1.2 tionallyeven per head Year-to-year movements movements in in the the growth growth rates, rates, both both in in current current and and Year-to-year constant prices, prices, are are considerable, considerable, and and reflect the business business cycle cycle to to the the constant reflect the extent that that the are low low in in most recession years years (1957, (1957, 1960, 1960, 1962, extent the ratios ratios are most recession 1962, 1966, 1969-instead 1969—instead of of the the recession recession year year 1970-and 1970—and 1974), 1974), both in 1966, both in current and and constant constant prices; and that are generally generally high at the the current prices; and that the the ratios ratios are high at beginning of aa recovery (1954, 1958, 1958, 1961, 1961, 1963, 1963, 1967, 1967, 1971, 1971, 1975). beginning of recovery (1954, 1975). Another way to to determine whether, and what extent, Another way determine whether, and to to what extent, the the combined combined balance sheet household sector is sensitive sensitive to to cyclical cyclical movements movements in in balance sheet of of the the household sector is business movement of the ratio business is is to to look look at at the the movement of the ratio of of household household assets assets to to personal disposable income, income, which which can can be be followed followed in in column column 77 of of table table personal disposable 48. This This ratio shows no no trend trend over over the the period. Like the the annual annual rates rates of 48. ratio shows period. Like of change, the the ratio ratio declines declines in in trough trough years years and and rises rises in in the the early early years change, years of of 1. particular difficulty the calculation of 1. A A particular difficulty in in the calculation of of household household assets assets arises arises in in the the case case of corporate and and foreign foreign bonds. The holdings of these these bonds bonds by by households are estimated estimated in corporate bonds. The holdings of households are in theflow-of-funds statistics, as as all all other other types types of of financial assets, by by subtracting subtracting from from the the financial assets, the flow-of-funds statistics, estimated amounts amounts outstanding outstanding the the reported reported holdings holdings of of other other sectors, sectors, primarily financial estimated primarily financial institutions. If If this this is is done, done, the estimated amounts amounts of of corporate corporate and and foreign foreign bonds the estimated bonds held held by by institutions. households are negative negative for for 1954-57 1954-57 and and 1961-67, 1961-67, an an obvious obvious impossibility; impossibility; and and are are exhouseholds are extremely low-less low—less than than one one billion dollars—in 1953 1953 and and 1958-60. 1958-60. These Thesefigures arein insharp sharp billion dollars-in figures are tremely contrast to to two two estimates estimates for for 1962 1962 of of $5.0 $5.0 billion billion each each derived derived from from aa sample sample survey survey contrast (Bossons 1973, 1973, p. p. 425; 425; Projector Projector and and Weiss Weiss 1966, 1966,p. p. 61), 61), the the more more so so as as sample sample surveys surveys of of (Bossons financial assets assetsgenerally generallyyield yieldfigures figureslower lowerthan thanthose thosederived derivedfrom frommacroeconomic macroeconomicdata. data. financial This anomaly anomaly does does not not show show up up in inflow-of-funds statistics as aspublished, published,because becausethey theyinclude include This flow-of-funds statistics nonprofit institutions institutions and and personal trust funds funds in in the the household household sector. sector. The The negative negative figures, figures, nonprofit personal trust however, appear appear immediately immediately when when the the estimated estimated holdings holdings ofthese of these two two sectors, sectors, the the second second however, of which which is is fairly fairly reliably reliably known, known, are are deducted deducted from from the theflow-of-funds figures for the the broadly broadly of flow-of-funds figures for defined household household sector. sector. The The obvious obvious underestimation underestimation of of the the household household sector's sector's holdings holdings defined of corporate corporate and and foreign foreign bonds may be due to to an an understatement of the the amounts amounts of of such such of bonds may be due understatement of bonds outstanding or or to to an an overstatement overstatement of of the the holdings of other other sectors. sectors. Since Since the the figures figures bonds outstanding holdings of for the the latter latter are are mostly mostly taken taken from from comprehensive comprehensive and and often often official official statistics statistics while the for while the estimates of of outstanding outstanding bonds bonds are are rather rather rough, rough, itit is ismore morelikely likelythat thatthe theunderestimation underestimationof of estimates the amount amount outstanding outstanding is is responsible. the obviously obviously biased character of the responsible. Notwithstanding Notwithstanding the biased character of the figures for the earlier part part of of the the period-they period—they may may understate the total total assets assets of understate the of the figures for the earlier households as much much as as one-fourth one-fourth of of one one percent in some some years—they are shown shown in in this households by by as percent in years-they are this study for for two two reasons. First there there are are no no data data on on which which to to base base aa correction; correction; second, second, any any study reasons. First correction would deviation from from flow-of-funds in other other sectors, sectors, correction would have have required required deviation flow-of-funds figures figures in particularly the nonfinancial corporate and and financial institutions sectors. sectors. particularly the nonfinancial corporate financial institutions

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 v© vo VO vO vo ON ON ON ON ON (7i ^ W N) M

vo vo VO vo VO VO VO

in ui ui y» ^ m in VO 00 vj 0\ LX *• W

1,244 1,368 1,500 1,604 1,645 1,839 1,953 2,014 2,195 2,216 2,393 2,518 2,759 2,830 3,165 3,537 3,634 3,790 4,147 4,593 4,808 5,013 5,640

(1)

Current

9

Amount ($ bill.)

100.0 108.6 116.0 120.3 120.6 132.4 137.6 140.8 152.2 151.6 162.0 168.3 181.2 180.9 194.7 205.7 200.2 200.6 210.9 223.6 216.3 203.8 214.6

100.0 110.0 120.6 128.9 132.2 147.8 157.0 161.9 176.4 178.1 192.4 202.4 221.8 227.5 254.4 284.3 292.1 304.7 333.4 369.2 386.5 403.0 453.4

2,003 2,175 2,324 2,410 2,415 2,652 2,756 2,821 3,049 3,036 3,245 3,371 3,629 3,624 3,900 4,121 4,010 4,018 4,224 4,478 4,333 4,083 4,299

(4)

(3)

(2)

1972

3

to

Current prices

ON

1972

vo

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+10.0 +9.6 +6.9 +2.6 +11.8 +6.2 +3.1 +9.0 +1.0 +8.0 +5.2 +9.6 +2.6 +11.8 +11.8 +2.7 +4.3 +9.4 +10.8 +4.7 +4.3 +12.5

(5)

Current

(6)

1972

+8.6 +6.9 +3.7 +0.2 +9.8 +3.9 +2.4 +8.1 -0.4 +6.9 +3.9 +7.7 -0.1 +7.6 +5.7 -2.7 +0.2 +5.1 +6.0 -3.2 -5.8 +5.3

5

Annual rate of change (percent)

O 3

^bobobNONtoooo^isibooNvooNO

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4.92 5.21 5.30 5.34 5.30 5.62 5.67 5.71 5.86 5.65 5.73 5.57 5.58 5.36 5.61 5.84 5.40 5.32 5.41 5.39 5.08 4.92 4.98

Personal income (7)

1 S

3

Wealth (8}

0.931 0.977 0.982 0.963 0.928 0.985 0.994 0.988 1.033 0.995 1.025 1.021 1.047 1.001 1.041 1.062 0.991 0.966 0.986 0.998 0.902 0.820 0.848

Ratio to

voOvovovovovovo* M K ) M M s j H U ^ W 0 0 ^ ^ 0 0 W t O > 4

Assets of Household Sector, 1953-75

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Table 48

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National o'

0.432 0.443 0.444 0.444 0.439 0.452 0.453 0.451 0.457 0.447 0.450 0.447 0.451 0.442 0.449 0.455 0.442 0.434 0.429 0.433 0.416 0.401 0.409

Assets (9}

o o o o o o o o

p p p p p p p p p p p p p < Z > p < Z } p p < Z D p ^ p '^ '^ '&> 'jt± '&> '&. j t ' ^ ^ ^ ! ^ 1&, !&> "^ !&> !&> !&. !&. !&> ^ ! ^ ! ^ Q O H U ) t O U ^ ^ ^ . M n ^ U ^ L A O ) ^ L A ( > ) f ^ ^

119 119

Households

recoveries, indicating that the cyclical movements in the assets of households, mainly under the influence of stock price fluctuations, fluctuations, are more pronounced than those in national product. 6.4.2. 6.4.2. Structural Structural Changes Changes The The largest largest change change in in the the structure structure of of the the combined combined balance balance sheet sheet of of households (tables (tables 49 49 and and 50) 50) is is the the sharp sharp decline decline of of the the share share of of corpocorpohouseholds 17 percent percent in in 1964 1964to to 99percent percentin in1975 1975(about (about 19 19percent percent rate stock stock from from 17 rate and 101h 10^2 percent percent ifif the the stocks stocks in in trust trust funds funds are are included)-both included)—both slightly slightly and below the the level level of of 1953---which 1953—which mainly mainly reflects reflects the the inability inability of of stock stock prices prices below to keep keep up up in in the the last last few few years years of of the the period period with with the the rise rise in in gross gross national national to product and and in in tangible tangible assets assets prices, prices, but but also also the the virtual virtual cessation cessation of of net net product purchases of of corporate corporate stock stock by by households. households. The The second, second, and and almost almost purchases equally large, large, change change is is the the increase increase in in the the share share of of time time and and savings savings equally percent in in 1953 1953totonearly nearly14 14percent percentofoftotal totalassets assetsinin deposits from from fully fully 77 percent deposits 1975, which which indicates indicates aa change change in in households' households' investment investment preferences, preferences, 1975, but may may also also reflect reflect an an increase increase in in the the share share in in total total income income of of those those but groups in in the the population population who who habitually habitually keep keep aa relatively relatively high high part part of of groups their assets assets in in the the form form of of time time and and savings savings deposits, deposits, i.e., i.e., people people in in the the their lower and and middle middle income income and and the the upper upper age age groups. groups. The The third third important important lower 20 to to change is is the the increase increase in in the the share share of of land land and and structures, structures, from from fully fully 20 change 26 percent, percent, more more than than one-half one-half of of the the increase increase accounted accounted for for by by land, land, 26 which is is strongly strongly affected affected by by the the sharp sharp rise rise in in the the prices. prices. The The fourth fourth which is the the decline decline in inthe the share share of of the theequity equityin inunincorporated unincorporated business business change is change from 23 23 to to 17 17 percent. percent. The The fifth fifth change change isis the the increase increase in in the the share share of of from liabilities from from less less than than 99 to to over over 13 13 percent percent of of assets, assets, an an increase· increase in in liabilities which practically practically all all forms forms of of household household debt debt participated. participated. A A few few other other which assets and and liabilities liabilities increased increased or or reduced reduced their their share share to to an an extent extent conconassets siderable in in relation relation to to their their 1953 1953 level level but but small small in in comparison comparison to to total total siderable U.S. government government and and agency agency secusecuhousehold assets. assets. Thus Thus the the share share of of U.S. household rities declined declined from from 4.7 4.7 to to 1.9 1.9 percent, percent, while while that that of of state state and and local local rities government securities securities increased increased from from 0.6 0.6 to to 1.0 1.0 percent, percent, and and the the share share of of government 5.1toto2.9 2.9percent. percent.For Fortwo twoother other currency and and demand demand deposits deposits fell fell from from 5.1 currency assets, with with aa combined combined share share of of one-fifth, one-fifth, finally, finally, the the 1953 1953 and and 1975 1975 assets, shares were were similar, similar, viz., viz., consumer consumer durables durables and and insurance insurance and and pension pension shares reserves. reserves. Household Household liabilities liabilities increased increased considerably considerably more more rapidly rapidly than than their their assets with with the the result result that that the the debt debt ratio ratio rose rose from from 88to to13 13percent, percent,mostly mostly assets in the the first first part part of of the the period, period, but but the the structure structure of of debt debt changed changed little. little. in byfar far most mostthe theimportant importantform form of ofdebt, debt, Home mortgages mortgages continued continued to to be be by Home their share share in in recorded recorded liabilities liabilities rising rising from from slightly slightly below below 60 60percent percent at at their 1975. The The share share of of the beginning beginning of of the the period period to to 64 64percent percent in in 1964 1964and and 1975. the consumer credit, credit, the the second second largest largest form form of of individuals' individuals' liabilities, liabilities, dedeconsumer 30 percent of the total in 1953 to 26 percent in 1964 and 1975. clined from clined from 30 percent of the total in 1953 to 26 percent in 1964 and 1975.

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 8. 8. 9. 9. 10. 10. 11. 11,

Table 49

Land Land Residential Residential structures structures Consumer durables durables Consumer Consumer Consumer semidurables semidurables Tangible Tangible assets assets Demand deposits deposits and and currency currency Demand Time and savings deposits U.S. government government securities securities U.S. U.S. U.S. agency agency securities securities State State and and local local government government securities securities Corporate and foreign bonds 5.22 15.06 15.06 9.90 9.90 3.55 3.55 33.73 33.73 5.02 5.02 7.22 4.65 4.65 0.01 0.59 0.59 0.04

1953 1953 (1) 7.86 14.62 14.62 8.08 8.08 2.51 2.51 33.07 33.07 2.93 2.93 10.33 2.72 2.72 0.19 0.19 0.92 0.92 -0.11

1964 1964 (2)

Distribution Distribution

Structure of Household Assets and Liabilities, 1953, 1964, and 1975 (percent)

8.76 17.11 17.11 9.67 9.67 2.59 2.59 38.13 38.13 2.90 2.90 13.69 1.73 1.73 0.16 1.02 1.02 0.58

1975 1975 (3) 25.67 74.10 74.10 48.70 48.70 17.45 17.45 165.92 165.92 24.70 24.70 35.51 35.51 22.87 22.87 0.04 2.89 2.89 0.20

1953 1953 (4)

43.83 81.48 81.48 45.05 45.05 14.00 14.00 184.36 184.36 16.35 16.35 57.59 15.16 15.16 1.05 1.05 5.14 5.14 -0.61

1964 1964 (5) (5)

43.58 43.58 85.10 85.10 48.13 48.13 12.90 12.90 189.71 189.71 14.45 14.45 68.08 8.61 8.61 0.79 0.79 5.07 5.07 2.87

1975 1975 (6) (6)

Relation to to personal personal Relation disposable disposable income income

12. 12. 13. 14. 15. 16. 16. 17. 17. 18. 18. 19. 20. 20. 21. 21. 22. 22. 23. 23. 24. 25. 25. 26. 26. 27. 27. 28. 28. 29. 29.

Mortgages Mortgages Open-market paper Corporate stock Insurance and pension reserves Other Other financial financial assets assets Farm Farm business business equity equity Unincorporated Unincorporated nonfarm nonfarm equity equity Common trust fund equity Individual Individual trust trust fund fund equity equity Financial Financial assets assets Total Total assets assets Mortgages Mortgages Bank loans n.e.c. Other Other loans loans Consumer Consumer credit credit Other Other liabilities liabilities Total Total liabilities liabilities Net worth Net worth

1.49 0.01 10.69 9.84 0.88 0.88 10.52 10.52 12.19 12.19 0.09 3.05 3.05 66.27 66.27 100.00 100.00 5.04 5.04 0.29 0.29 0.29 2.52 2.52 0.34 0.34 8.48 8.48 91.52 91.52 1.55 0.00 17.00 10.52 0.68 7.24 8.76 0.23 3.96 66.93 100.00 7.85 0.41 0.40 3.19 0.45 12.30 87.70

1.19 0.19 8.94 10.37 0.78 7.98 7.98 9.43 9.43 0.32 0.32 2.61 2.61 61.87 100.00 8.53 0.29 0.56 0.56 3.50 0.38 0.38 13.26 86.74

7.32 0.04 52.59 48.42 4.35 51.75 59.98 0.46 15.01 326.15 492.07 24.79 1.42 1.41 12.42 1.70 41.74 450.33

8.65 0.01 94.75 58.63 58.63 3.77 40.33 48.85 1.29 22.06 373.00 557.36 43.76 2.29 2.24 17.77 2.52 68.58 488.78

5.91 0.93 44.49 51.57 51.57 3.86 39.67 46.91 1.57 12.97 307.75 497.48 42.45 1.45 2.78 17.40 1.89 65.97 431.51

•8

4*

Table 50

M

1is

-

w

gal

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

O

PQ j 2

C/3

Tangible assets

a

g 13

i

to»n»nvovovor^i>t^t^r^r^t^r^r-t-r^t^r-t^oooooo

'5b |

E2£ 5.22 5.31 5.66 6.07 6.62 6.63 7.17 7.38 7.37 7.80 7.72 7.86 7.71 7.93 7.51 7.09 7.56 7.39 7.40 7.46 8.23 8.90 8.76

66.28 67.30 67.18 66.75 65.27 66.87 66.35 65.88 67.35 66.20 67.07 66.92 68.02 66.99 68.15 68.45 66.42 66.25 66.85 66.83 63.75 61.02 61.87

J d

33.72 32.70 32.82 33.25 34.73 33.13 33.65 34.12 32.65 33.80 32.93 33.08 31.98 33.01 31.85 31.55 33.58 33.75 33.15 33.17 36.25 38.98 38.13

H

Total (3)

o

o H

Land (2)

73 "S a a c

Total (1) o^uiuScnSr^vboooNOT-HCNmri-io _vov©voi>r^t^r^i>t>

alncluding currency and open-market paper. bGovernment, corporate and foreign fixed interest securities. C All liabilities except mortgages.

Table 53

E2 ONTtONCOVOrtOO^--irHONCS|OOfnCS|l^-CX300»OC>»ri^HOW^

cn»noN»r)»or^ooTtioONOO^Ocniocoooovot^coTfiooo

crt

1)

vd vd r^ r^

^ M h O \ i O O a n » 0 0 * a h t H \ O W ^ n n O \ O M O

Tt ^ ' r t Tt Tt Tt ^ t Tt t o i r i " *

o\ *-i co vo i > co

130 130

Trends Trends and and Fluctuations Fluctuations in in Sectoral Sectoral Balance Balance Sheets, Sheets, 195>-75 1953-75

0.86 financial institutions 0.86 to to 1.01. 1.01. Again Again deposits deposits with with financial institutions gained gained in in imporimportance, tance, their their ratio ratio to to personal personal disposable disposable income income rising rising from from 0.60 0.60 to to 0.84, 0.84, while while the the ratio ratio of of liquid liquid securities securities fell fell from from 0.26 0.26 to to 0.17. 0.17. Short-term be regarded Short-term debt, debt, which which may may be regarded as as an an offset offset to to liquid liquid assets, assets, showed upward trend, percent of showed an an upward trend, rising rising from from 3.4 3.4 to to 4.7 4.7 percent of total total assets assets and and from 17 17 to to 24 24percent percent of ofpersonal personaldisposable disposableincome, income,but but kept keptthroughout throughout from most of of the the period period close close to to fully fully 20 20 percent percent of of liquid liquid assets. assets. most The The annual annual movements movements of of the the liquid liquid asset asset ratio ratio conform conform to to the the business business cycle as they they show show mild mild peaks peaks in in all all trough trough years, years, except except cycle pattern pattern insofar insofar as 1970, but but no no regular movements during during upswings. 1970, regular movements upswings. 6.4.5. 6.4.5. Leverage Leverage Ratio Ratio Another important that can the combined can be be studied studied in in the combined Another important relationship relationship that balance sheet the household household sector that between of the sector is is that between price-sensitive price-sensitive balance sheet of assets, fixed value assets,fixed value assets assets and and debt debt which which together together determine determine the the leverage leverage price-sensitive assets ratio defined ratio of as the the ratio of price-sensitive assets to to net net worth worth (Gold(Goldratio defined as smith, 8). and Mendelson Mendelson 1963, 1963, vol. vol. 1, 1, chap. chap. 8). smith, Lipsey Lipsey and price-sensitive in The The share share of of price-sensitive in total total assets assets remained, remained, as as table table 54 54 shows, shows, of 67 throughout the within the 67 and and 73 73 percent percent with with throughout the period period within the narrow narrow range range of but aa slight no first part the first part of of the the period, period, but slight downward downward no trend trend during during the movement the second second half. half. This This relative relative stability, stability, however, however, was movement during during the the the result result of of offsetting offsetting movements movements of of the the different different types types of of price-sensitive price-sensitive assets. were by assets. Common Common stocks stocks were by far far the the most most volatile volatile component, component, their their share to 1972 1972 without without definite definite trend trend within within the the range range share keeping keeping from from 1954 1954 to of 14 to to 21 21 percent percentof oftotal totalassets, assets,but butthen thendeclining decliningsharply sharplyto to99percent percent of 14 at the end end of of the the period. period. The The share share of of tangible tangible assets, assets, the the larges larges compoat the nent, fluctuated before 1973 only between 32 32 and 35 35 percent, rising to close close to to two-fifths two-fifths at at the the end end of of the the period. period. The The value value of of the the equity equity in in farm farm and nonfarm unincorporated businesses, which reflects the changes in the value of the tangible assets of these two two sectors, showed a downward trend in the first half 23 to to 16 16 half of the period, during which it declined from 23 percent of total assets, a level it maintained during the second half. The share share of of the the relatively relatively small small equity equity in in trust trust funds funds showed showed movements movements which is similar to those those of of common common stocks, stocks, which is to to be be expected expected as as stocks stocks similar to constitute a large proportion of trust fund assets. In contrast to pricesensitive assets the ratio of liabilities to total assets showed an upward trend throughout the period, although at a very low level, level, which carried it percent of assets. from to nearly nearly 14 14 percent of assets. from less less than than 99 to In view of the relatively relatively small partly offsetting fluctuations in of the small and and partly offsetting fluctuations in the the In view not astonishing share share of of price-sensitive price-sensitive assets assets and and the the debt debt ratio ratio it it is is not astonishing that that 77 the without trend narrow range range of the leverage leverage ratio ratio remained remained without trend within within the the narrow of O. 0.77 and 0.81, the the relatively relatively low low values values reflecting reflecting the the modest modest debt debt ratio ratio ofthe of the and 0.81, household sector. sector. household

I

Table 54

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Leverage Ratio of Household Sector, 1953-75 (percent of total assets for cols. 1-6)

s

o o o o o o o o o o o o o o o o o o o o o o o

o6o6o\o\6aJ666HH'cJriNrJHrid(Ni(SfO(> o «°

i^ooo\qoqqvq^Hfno^ooo\ir)riioqootNOOi;

N ^ h ^ H ^ i o i o o \ o \ ( S N r j q q o ; h \ o o \ q \ o o o o \ cocococococococococo^^^^^cocococo^cofNCN

hno\oo^H^Ti;Hf o v o r ^ o o o N O r H r s i c n r f » o v o r ^ o£ o o£ N £ W H H fc (S C^ M (N ( S

gJi- >*~

«M

5

o

•a

Source of basic data: Bossons 1973, pp. 425-26.

I 0

46.8 2.5 9.4 2.5 12.0 0.0 2.4 0.0 0.0 0.1 1.3 0.1 0.0 1.1 12.6 0.0 0.4 5.8 0.4 2.5 0.0 100.0 257.3 154.6

S 22 to 100 (4)

60

I 3 ~S

Principal residence Other real estate Household goods Checking accounts Savings deposits Brokerage accounts Federal savings bonds Other federal securities State and local government securities Corporate and foreign bonds Traded stock Closely held stock Other stock Mortgages and notes Equity in life insurance Annuities Trust assets Noncorporate business assets Profit-sharing plans Retirement plans Estates in probate Total assets, percent Total assets, $ bill. Number of persons, mill.

30 to 60 (3) M O

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

8

15 to 30 (2)

Wealth ($ (00) 13

8

Below 15 (1)

Asset Structure of Households of Different Wealth, 1962 (percent of total assets)

5l£

f^

C ^ w S o O O O O T ^ r n o v O N O O r H O O f n r n O O O Q O N O O H - * V O H - * < I O \ O Os ^ Oi 4^ K ) O ^ to N ) 00 O N VO O 00 W W VO U» 00 U> O V© O O O N ^ lo H k) Ift b

a

S

Index (1953 = 100.0)

Ui v] 00 Q\

3.

vo II

a

8

100.0 111.1 123.6 127.8 130.6 140.3 151.4 156.9 170.8 172.2 187.5 201.4 212.5 213.9 223.6 227.8 231.9 238.9 250.0 259.7 251.4 237.5 244.4

(4)

1972

| O t O K ) N ) M t O N ) K ) t s ) K ) N ) N ) M H M M M H M M H M M ^ W O i U U i W W t O W M H O O O N j s J U ^ ^ W t O t O M p ^ ^ M ^ p p O M ^ W W W P v | t O p ( > M O p N j W M p

^ u ! ^ ^ b v o v o b o b \ v o ^ ^ L ^ i o o o v o ! ^ w b \ b o b N M b

(5)

+9.5 +15.2 +9.4 +3.4 +6.7 +9.4 +4.3 +9.6 +1.3 +11.1 +8.9 +9.2 +4.7 +8.9 +9.0 +9.8 +9.6 +10.0 +10.2 +8.2 +6.7 +8.5

9

Current

+ + i + + ++ + + + i +

VO CO M M v o ^ VO Os U ) v o U l VO N ) VO M W (J\ W i . ^j ' ^ * . k) Ift

f

Annual rate of change (percent)

o o p s o o p p v o v o v o o o ^ O i ' s i N ) k ) b b \ b o b ! o ^

> a

g

+11.1 +11.3 +3.4 +2.2 +7.4 +7.9 +3.7 +8.8 +0.8 +8.9 +7.4 +5.5 +0.7 +4.5 +1.9 +1.8 +3.0 +4.7 +3.9 -3.2 -5.5 +2.9

(6)

1972

+ i i +++++++++++++++++ i i

VO

W y i W W ^ W M M ^ O ^ ^ 0 0 O ( » W ^ v l t O W M M v o U k ) v o ^ b c o v o U ^ U ^ v o b o c o ^ v o ! ^ k ) ^ W M

wealth (8)

0.031 0.033 0.035 0.035 0.034 0.034 0.036 0.036 0.038 0.036 0.039 0.040 0.041 0.040 0.040 0.040 0.040 0.041 0.042 0.042 0.039 0.037 0.037

0.115 0.122 0.130 0.134 0.137 0.137 0.140 0.144 0.146 0.141 0.146 0.150 0.148 0.145 0.147 0.147 0.152 0.157 0.159 0.157 0.154 0.155 0.151 V 0 0 M » 0 \ 0 \ ^ ^ U i U ) W M

C

a c»

National

i-»

Ratio to

22 O

B °

3 1 B S> Gross national product (7)

o o o o o o o o o o o o o o o o o o o o o o o

o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o

W OJ W V J > J V 0 K ) K ) M O O

0.Q15 0.Q15 0.016 0.016 0.016 0.016 0.016 0.016 0.017 0.016 0.017 0.017 0.017 0.017 0.017 0.017 0.018 0.018 0.Q18 0.Q18 0.018 0.Q18 0.Q18

assets (9)

p o o p p o p p o p p o p p o p o o p p o o p o o o o o o o o o o o o o o o o o o o o o o o

0 0 0 0 0 0 0 0 0 0 0 0 0 0 S 1 S 1 S | N J N 1 S ) O \ N J 0 \ O V O \ 0 V 0 \ O V O I U

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16. 17. 17. 18. 18.

Table Table 63 63

Land Land Structures Structures Equipment Equipment Tangible assets assets Tangible Demand deposits deposits and and currency currency Demand U.S. government government securities securities U.S. State and and local local government government securities securities State Corporate and and foreign foreign bonds Corporate bonds Corporate stock stock Corporate Mortgages Mortgages Other financial financial assets assets Other Financial assets assets Financial Total assets, assets, percent percent Total Total assets, Total assets, $$ bill. bill. Mortgages Mortgages Trade debt debt Trade Liabilities Liabilities Net worth Net worth

1964 1964 (2) (2) 21.44 21.44 38.44 38.44 2.01 2.01 61.89 61.89 0.78 0.78 3.67 3.67 0.05 0.05 6.33 6.33 24.29 24.29 0.61 0.61 2.38 2.38 38.11 38.11 100.00 100.00 144.6 144.6 13.27 13.27 2.86 2.86 16.13 16.13 83.87 83.87

1953 1953 (1) (1) 17.54 17.54 42.62 42.62 1.71 1.71 61.87 61.87 0.51 0.51 9.19 9.19 0.03 0.03 5.20 5.20 21.80 21.80 0.35 0.35 1.05 1.05 38.13 38.13 100.00 100.00 41.6 41.6 9.41 9.41 2.83 2.83 12.24 12.24 87.76 87.76

Distribution Distribution

25.51 25.51 50.37 50.37 1.97 1.97 77.85 77.85 0.08 0.08 0.99 0.99 0.16 0.16 4.90 4.90 12.94 12.94 0.58 0.58 2.50 2.50 22.15 22.15 100.00 100.00 242.7 242.7 11.11 11.11 3.26 3.26 14.37 14.37 85.63 85.63

1975 1975 (3) (3)

Structure of of Balance Balance Sheet Sheet of Nonprofit Organizations, Organizations, 1953, 1953, 1964, 1964, and Structure of Nonprofit and 1975 1975 (percent) (percent)

3.22 3.22 5.77 5.77 0.30 0.30 9.29 9.29 0.12 0.12 0.55 0.55 0.Q1 0.01 0.95 0.95 3.64 3.64 0.09 0.09 0.36 0.36 5.72 5.72 15.01 15.01 1.99 1.99 0.43 0.43 2.42 2.42 12.59 12.59

1.08 1.08 0.33 0.33 1.41 1.41 10.08 10.08

1964 1964 (5) (5)

2.01 2.01 4.90 4.90 0.20 0.20 7.11 7.11 0.06 0.06 1.06 1.06 0.00 0.00 0.60 0.60 2.50 2.50 0.04 0.04 0.12 0.12 4.38 4.38 11.49 11.49

1953 1953 (4) (4)

Relation to to gross gross Relation national product product national

1.67 1.67 0.49 0.49 2.16 2.16 12.89 12.89

3.84 3.84 7.58 7.58 0.30 0.30 11.72 11.72 0.01 0.01 0.15 0.15 0.02 0.02 0.74 0.74 1.95 1.95 0.09 0.09 0.38 0.38 3.33 3.33 15.05 15.05

1975 1975 (6) (6)

239 243 246 250 255 267 272 275 284 293 304 313 327 335 341 337 330 329 339 351 377 384 403

144 148 152 159 167 182 183 186 193 201 209 216 231 245 258 274 289 302 325 365 446 482 539

II g.

(4) 100.0 101.7 102.9 104.6 106.7 111.7 113.8 115.1 118.8 122.6 127.2 131.0 136.8 140.2 142.7 141.0 138.1 137.7 141.8 146.9 157.7 160.7 168.6

100.0 102.8 105.6 110.4 116.0 126.4 127.1 129.2 134.0 139.6 145.1 150.0 160.4 170.1 179.2 190.3 200.7 209.7 225.7 253.5 309.7 334.7 374.3

prices

1972

(3)

Current

p -JUiOt-fitOOOv©

£

i

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

(2)

(1)

W 0 0 ^ 0 \ N ) O O ) N l U l ^ W M O O ^ 0 0 0 0 0 0 0 \ ^ y i ^ ^

8

3.

+2.8 +2.7 +4.6 +5.0 +9.0 +0.5 +1.6 +3.8 +4.1 +4.0 +3.3 +6.9 +6.1 +5.3 +6.2 +5.5 +4.5 +7.6 +12.3 +22.2 +8.1 +11.8

(5)

Current

11

boMiowb\^i/iowM^wbMbob\lftbbb\>>jbo'

o

1972

.399 .387 .369 .366 .380 .386 .367 .367 .353 .349 .338 .329 .320 .316 .311 .303 .302 .298 .293 .295 .328 .333 .335 +1.7 +1.2 +1.6 +2.0 +4.7 + 1.9 +1.1 +3.3 +3.2 +3.8 +3.0 +4.5 +2.4 +1.8 -1.2 -2.1 -0.3 +3.0 +3.5 +7.4 +1.9 +4.9

0.108 0.106 0.100 0.095 0.094 0.097 0.093 0.091 0.091 0.090 0.090 0.088 0.088 0.087 0.085 0.082 0.079 0.077 0.077 0.079 0.084 0.079 0.081

National wealth (8)

Ratio to Gross national product (7)

(6)

1972

bbotowMlo^bb\tosi

,1

Current

0 \ v l v J \ O 0 0 N l H O v l t O 0 0 O t O 0 \ 0 0 l - ' 0 0 N | v | ^ ^ O s l O

Annual rate of change (percent)

+ + + + + I I I+ + + + + + + + + + + + + +

Index (1953 = 100.0)

^3 £

W W K ) V 0 ^ ^ 0 O O H M N ) N ) W ^ U I 0 \ 0 \ 0 0 0 0 0 \ 0 M » ^

Amount ($ bill.)

U i W O O y i W O O t O W P O N O ^ O X ^ W v J v j a O O W O s I ^

opooppooppooopooppopppp obbbbbb

p i + i i + + + + +'+ + + + + + + + + + + + +

§•§•

SI

O O O O O O O O O O O O O ^ ^ h ^ X s i 00 s i N ] v j s i o o o o o o o o o o v o ^ o v o v o v o ^ o v o v o o o o H »0 ^ ^O s ) s j \ 0 t O U s ) O O O O O O M P W s ) ^ U > 0 0 \ 0 0

Assets of Farm Enterprises, 1953-75

0.050 0.048 0.045 0.044 0.045 0.045 0.042 0.042 0.040 0.041 0.039 0.038 0.038 0.038 0.037 0.035 0.035 0.035 0.034 0.034 0.039 0.039 0.039

assets (9)

ooooooooooooooooooooooo o o o o ob ob ob ob ob ob ob ob ob ob ob b b b b b b o b

Table 64

^ V O V O ^ ^ ^ l ^ U i s l O O O O O O ^ M O W t O U O l

-3

5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16.

1. 1. 2. 2. 3. 3. 4. 4.

Land Land Structures Structures Equipment Equipment Inventories Inventories a. of of which which livestock livestocka3 a. Tangible assets assets Tangible Demand deposits deposits and and currency currency Demand Other financial assets Other financial assets Financial Financial assets assets Total Total assets assets percent percent Total assets, assets, $$ bill. Total bill. Mortgages Mortgages Bank Bank loans loans n.e.c. n.e.c. Other Other loans loans Trade debt debt Trade Liabilities Liabilities Equity Equity

64.87 64.87 13.61 13.61 9.28 9.28 9.42 9.42 5.47 5.47 97.18 97.18 1.37 1.37 1.45 2.82 2.82 100.00 100.00 539 539 9.56 9.56 3.74 3.74 2.37 2.37 0.93 0.93 16.59 16.59 83.41 83.41

21.70 21.70 4.55 4.55 3.10 3.10 3.15 3.15 1.83 1.83 32.51 32.51 0.46 0.46 0.49 0.49 0.94 0.94 33.45 33.45

3.20 3.20 1.25 1.25 0.79 0.79 0.31 0.31 5.55 5.55 27.90 27.90

0.35 1.25 1.25 32.94 32.94 2.89 2.89 1.06 1.06 0.47 0.47 0.73 0.73 5.16 5.16 27.78 27.78 2.14 2.14 0.75 0.75 0.29 0.29 0.57 0.57 3.74 3.74 36.11 36.11

1974 1974 (6) _(6)

18.89 18.89 8.62 8.62 4.28 4.28 5.77 5.77 3.23 3.23 37.56 37.56 1.93 1.93 0.36 2.29 2.29 39.85 39.85

0.90

59.46 59.46 16.78 16.78 8.99 8.99 10.97 10.97 6.67 6.67 96.20 96.20 2.73 2.73 1.07 3.80 3.80 100.00 100.00 216 216 8.77 8.77 3.22 3.22 1.44 1.44 2.23 2.23 15.66 15.66 84.34 84.34

47.41 47.41 21.62 21.62 10.75 10.75 14.48 14.48 8.10 8.10 94.26 94.26 4.85 4.85 0.89 5.74 5.74 100.00 100.00 144 144 5.36 5.36 1.88 1.88 0.73 0.73 1.42 1.42 9.39 9.39 90.61 90.61

19.59 19.59 5.53 5.53 2.96 2.96 3.6 3.6 2.20 2.20 31.69 31.69

1964 1964 (5)

1953 1953 (4) (4)

1964 1964 (2) (2)

1953 1953 (1) (1)

1975 1975 (3)

Relation to to Relation gross gross national national product product

Distribution Distribution

Structure of Balance Sheet of Farm Enterprises, 1953, 1964, and 1975 (percent)

a aFor figures cf. Abstract, 1978, p. p. 698. For absolute absolute figures cf. Historical HistoricalStatistics, Statistics,p.p.480; 480;and andStatistical Statistical Abstract, 1978, 698.

Table 6S 65

151

Farm Enterprises

part of the fell fell from from 5.7 5.7 to to 2.8 2.8 percent percent of of total total assets, assets, mainly mainly in in the the first first part of the period.77 Farm Farm debt, debt, which which had had been been very very low low at at the the end end of of the the war, war, increased increased rapidly, percent at the rapidly, advancing advancing from from 99 percent percent of of assets assets in in 1953 1953 to to 17 17 percent at the end first half. half. All All forms forms of of debt debt except except end of of the the period, period, mostly mostly during during its itsfirst trade participated in nearly trade debt debt participated in this this movement, movement, mortgages mortgages constituting constituting nearly three-fifths liabilities. three-fifths of of total total liabilities. Total Total assets assets and and liabilities liabilities of of farm farm enterprises enterprises increased increased considerably considerably more at more slowly slowly than than national national product product in in contrast contrast to to most most other other sectors, sectors, at least first part part of of the the period. period. The The decline decline in in the the ratio ratio of of total total least during during the thefirst assets assets to to national national product product by by one-sixth one-sixth was was shared shared by by all all assets assets except except land financial assets. land and and miscellaneous miscellaneous financial assets. All All types types of of liabilities liabilities except except trade trade debt, debt, on on the the other other hand, hand, increased increased more more rapidly rapidly than than national national product. product. 6.6.2. Farms 6.6.2. Differences Differences among among Size Size Classes Classes of of Farms The the The only only regularly regularly available available breakdown breakdown of of the the balance balance sheet sheet of of the farm farm sector sector is is based basedon onfarms' farms'volume volumeof ofsales, sales,which whichisisclosely closelythough thoughnot not rigidly is rigidly connected connected with with farms' farms' total total assets. assets. This This breakdown, breakdown, which which is presented in shows presented in table table 66 66 for for 1975, 1975, distinguishes distinguishes seven seven sales sales classes. classes. It It shows that are that the the differences differences in in balance balance sheet sheet structure structure among among the the size size classes classes are moderate. moderate. Real classes, Real estate estate is is by by far far the the most most important important asset asset for for all all size size classes, accounting 70 percent percent of of total total assets assets and and ranging ranging accounting on on the the average average for for over over 70 only percent. If sepaonly between between 70 70 and and 74 74 percent. If farm farm residences residences were were shown shown separately, rately, their their share share would would almost almost certainly certainly decrease, decrease, and and probably probably substantially so, so, with with size size of of farm. farm. The The share share of of livestock livestock rises rises with substantially with farm size size from from not notmuch muchover over22percent percentofoftotal totalassets assetsfor forfarms farms increasing farm increasing with sales sales of of less less than than $2,500 $2,500 to to 6.5 6.5 percent for farms farms with with sales sales of of with percent for $100,000 and and over. over. Machinery Machinery and and motor motor vehicles vehicles account account for for about $100,000 about one-eighth of of total total assets assets in in all all size size classes classes below $100,000, but but only only for for one-eighth below $100,000, 8.5 percent for the the largest largest farms. farms. Household Household equipment equipment and and furnishings furnishings 8.5 percent for are relatively relatively more more important importantfor for small smallthan thanfor forlarge largefarms, farms,their theirshare shareinin are total assets assets decreasing decreasing from from 8.5 8.5 to to less less than than 22 percent. total percent. 7. of 7. Somewhat Somewhat different different results results are are obtained, obtained, particularly particularly in in the the 1970s, 1970s, if if the the estimates estimates of the the Department Department of of Agriculture Agriculture for for financial financial assets assets are are used; used;these theseallocate allocateto tofarm farmbusiness business time deposits, deposits, U.S. U.S. savings savings bonds, bonds, and and investment investment in in cooperatives, cooperatives, items items which which in in the time the Federal flow-of-funds statistics Federal Reserve Reserve Board's Board'sflow-of-funds statistics are are implicitly implicitly included included in in the the assets assets of of the the household sector. sector. As As aa result result the the share share of of financial financial assets assets in in total total assets assets of of agriculture agriculture is is household substantially higher higher (10.3 (10.3 percent percent in in1953, 1953,8.0 percentin in1964, 1964,and and5.3 5.3percent percentinin1975) 1975)than than substantially 8.0 percent in table table 65, 65, but series show show the the same same downward downward trend. trend. There There are are also also differences, differences, but both both series in which become substantial in in the the 1970s, 1970s, in in the the estimates estimates of of equipment equipment between between the the higher which become substantial higher figuresofofthe theDepartment DepartmentofofAgriculture Agricultureand andthose thoseofofthe theBureau BureauofofEconomic EconomicAnalysis Analysisofof figures the Department Department of of Commerce, Commerce, which which have have been used here here as as for for all all other other sectors. sectors. This the been used This difference in in 1975 1975 reaches reaches $15 $15 billion, billion, or or nearly nearly 33 percent percent of of the the total total assets assets of of agriculture, agriculture, difference but nearly 99 percent percent of of reproducible reproducible tangible tangible assets assets and and 30 30 percent percent of of equipment. equipment. but nearly

Total Total assets assets ($ ($ bill.) bill.) Average 000) Average assets assets per per farm farm ($ ($ 000) Number of farms farms (000) Number of (000) b Ratio. salesb Ratio of of assets assets to to sales

16. 16. 17. 17. 18. 18. 19. 19.

138.8 138.8 452 452 307 307 7.1 7.1

186.6 186.6 1,204 1,204 155 155 6.0 6.0

592.8a 592.8 213 213 2,778 2,778 13.5 13.5

a

72.6 72.6 4.9 4.9 12.0 12.0 4.7 4.7 1.8 1.8 96.0 96.0 1.8 1.8 0.4 0.4 1.8 1.8 4.0 4.0 100.0 100.0 9.6 9.6 5.5 5.5 15.1 15.1 84.9 84.9

72.9 72.9 6.5 6.5 8.5 8.5 3.4 3.4 1.7 1.7 93.0 93.0 3.2 3.2 0.5 0.5 3.4 3.4 7.1 7.1 100.0 100.0 12.0 12.0 11.7 11.7 23.7 23.7 76.3 76.3

40 to to 100 100 (3) (3)

72.4 72.4 5.0 5.0 11.0 11.0 3.6 3.6 2.7 2.7 94.7 94.7 2.6 2.6 0.7 0.7 2.0 2.0 5.3 5.3 100.0 100.0 8.6 8.6 6.7 6.7 15.3 15.3 84.7 84.7

100 100 and and over over (2) (2)

86.3 86.3 270 270 320 320 9.5 9.5

71.6 71.6 4.8 4.8 13.0 13.0 4.8 4.8 2.0 2.0 96.2 96.2 1.7 1.7 0.5 0.5 1.6 1.6 3.8 3.8 100.0 100.0 6.5 6.5 5.1 5.1 11.6 11.6 88.4 88.4

20 20 to to 40 40 (4) (4)

53.4 53.4 177 177 302 302 12.5 12.5

72.4 72.4 4.5 4.5 13.0 13.0 4.2 4.2 2.3 2.3 96.4 96.4 1.8 1.8 0.6 0.6 1.2 1.2 3.6 3.6 100.0 100.0 6.7 6.7 6.0 6.0 12.7 12.7 87.3 87.3

10 10 to to 20 20 (5) (5)

35.3 35.3 118 118 298 298 16.7 16.7

73.0 73.0 4.2 4.2 12.4 12.4 3.0 3.0 3.2 3.2 95.8 95.8 2.3 2.3 0.9 0.9 1.0 1.0 4.2 4.2 100.0 100.0 4.3 4.3 3.4 3.4 7.7 7.7 92.3 92.3

55 to to 10 10 (6) (6)

27.9 27.9 89 89 313 313 25.1 25.1

73.9 73.9 3.7 3.7 11.9 11.9 1.9 1.9 4.0 4.0 95.4 95.4 2.7 2.7 1.2 1.2 0.8 0.8 4.7 4.7 100.0 100.0 3.7 3.7 2.9 2.9 6.6 6.6 93.4 93.4

2.5 2.5 to to 55 (7) (7)

64.6 64.6 60 60 1,084 1,084 48.0 48.0

70.4 70.4 2.3 2.3 10.3 10.3 0.6 0.6 8.5 8.5 92.1 92.1 5.0 5.0 2.4 2.4 0.6 0.6 8.0 8.0 100.0 100.0 5.5 5.5 1.2 1.2 6.7 6.7 93.3 93.3

Less Less than than 2.5 2.5 (8) (8)

a aThis 64. This compares compares with with $539 $539 billion billion in in table table 64. b bAverage sales assumed to geometric upper-class boundary, boundary, except (twice lower boundary) and (one-half upper upper Average sales assumed equal equal to geometric mean mean of of lowerlower- and and upper-class except col. col. 22 (twice lower boundary) and col. col. 88 (one-half boundary). boundary). Source: of of thethe Farming Sector, 1977,1977, p. 47.p. 47. Source: U.S. U.S.Dept. Dept.ofofAgriculture, Agriculture,Balance BalanceSheet Sheet Farming Sector,

Real estate Livestock Livestock and and poultry poultry Machinery Machinery and and motor motor vehicles vehicles Crops Crops stored stored Household Household equipment equipment and and furnishings furnishings Physical Physical assets assets Deposits Deposits and and currency currency u.s. U.S. savings savings bonds bonds Investments Investments in in cooperatives cooperatives Financial Financial assets. assets Total Total assets assets Real Real estate estate debt debt Other Other debt debt Liabilities Liabilities Proprietors' Proprietors' equity equity

All All classes classes (1) 0)

Balance Balance Sheet Sheet Structure Structure of of Farms Farms of of DitTerent Different Size, Size, 1975 (percent (percent of of total assets) assets)

1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15.

Table Table 66 66

153

Farm Enterprises

Since financial assets, assets, it Since the the estimates estimates are are limited limited to to three three types types of offinancial it is is not not financial assets to farm possible to be positive about the relation of all financial size. size. Among Among the the three three types, types, the the share share of of deposits deposits and and currency currency lies lies between between 22 and and 33 percent percent of of total total assets assets for for most most size size classes classes except except for for the the smallest smallest class, class, where where it it reaches reaches 55 percent. percent. Similarly Similarly the the share share of of V.S. U.S. savings bonds bonds is is largest largest in in the the smallest smallest size size class classwith with2.4 2.4percent, percent, whereas whereas savings it ranges ranges from to 0.6 0.6 percent percent for for the the top top four four size size classes. classes. The The share share of it from 0.4 0.4 to of investments in in cooperatives, cooperatives, on on the the other other hand, hand, increases increases sharply sharply with investments with farm size size from from 0.6 0.6 percent to 3.4 3.4 percent percent of of total total assets. assets. farm percent to Contrary Contrary to to the the similarity similarity in in the the structure structure of of assets, assets, farms farms of of different different size size differ differ considerably considerably in in the the extent extent to to which which they they use use debt debt and and in in the the types of of debt debt they they use. use. Thus Thus the the debt/asset debt/asset ratio ratio which which averages averages 15 15 types percent for for all all farms, farms, increases increases from from less less than than 77 percent for farms farms with with percent percent for 24 percent percent for for farms farms with with sales sales of$IOO,OOO of $100,000 and and sales ofless of less than than $5,000 $5,000 to to 24 sales over. The The differences differences are are even even larger larger for for non-real non-real estate estate debt, debt, the the ratio ratio of of over. which rises rises from from 1.2 1.2 percent to nearly nearly 12 12 percent percent of of total total assets, assets, probably probably which percent to reflecting the the easier easier access access of of larger larger farms farms to to bank bank credit. credit. The The ratio ratio of of real real reflecting estate debt, debt, on on the the other other hand, increases only only irregularly irregularly from from 66 to to 12 estate hand, increases 12 percent. percent. balance sheets These These differences differences in in the the structure structure of of the the combined combined balance sheets have have not changed changed greatly greatly since since 1959 1959 when when the the estimates estimates first first became became available available not (see V.S. U.S. Dept. Dept. of of Agriculture Agriculture 1975), 1975), though though differences differences among among size size (see classes have have become become more more pronounced over the the sixteen-year sixteen-year span. span. classes pronounced over 6.6.3. 6.6.3. Regional Regional Differences Differences Agriculture Agriculture is is the the only only sector sector for for which which regional regional balance balance sheets sheets have have been 1969. been drawn drawn up up for for at at least least one one date date within within the the period, period, the the end end of of 1969. The structure of the balance sheets for the ten regions being distinguished are 67. The The differences, differences, of of course, course, reflect reflect not not only only regional regional are shown shown in in table table 67. influences balance sheet but also influences on on balance sheet structure structure but also other other factors factors such such as as differences differences in in the the size size distribution distribution of of farms, farms, average average assets assets per per farm farm ranging from $55,000 in the Appalachian region to $242,000 in the Pacific states. states. The differences differences among among regions regions while are substantial. substantial. Thus Thus The while not not radical radical are 58 percent percent of of total total assets assets in in the the Lake Lake the share share of of real real estate estate ranges ranges from from 58 the 78 percent percent in in the the Pacific Pacific states. states. Livestock Livestock accounts accounts for for as asmuch much as as states to to 78 states 11 percent percent of of total total assets assets in inthe the Mountain Mountain states, states, but but only onlyfor for 55percent percentinin 11 states. The The range is even even larger larger for for machinery: machinery: from from the Pacific Pacific and and Delta Delta states. the range is percent in in the the Pacific Pacific states states to to 17 17 percent percent in in the the Lake Lake states. states. The The 66 percent to 66percent, percent, are are shown shown for for crops crops relatively greatest greatest differences, differences, from from 11 to relatively stored. The The share share of of household household equipment, varying from from 2.4 to 5.4 5.4 equipment, varying 2.4 to stored. percent of of total total assets, assets, seems seems to to be be inversely inversely related related to to average average assets assets per per percent farm. As As the the balance sheets show show estimates estimates for for only only three three types types of farm. balance sheets of assets, one one must must be be careful careful in interpreting differences. For the the financial assets, financial in interpreting differences. For

Real Real estate estate Livestock Livestock and and poultry poultry Machinery and motor vehicles Crops stored Household Household equipment equipment and and furnishings Physical Physical assets assets Deposits Deposits and and currency currency U.S. U.S. savings savings bonds bonds Investment Investment in in cooperatives cooperatives Financial Financial assets assets Total assets assets Total Real Real estate estate debt debt Other debt debt Other Liabilities Liabilities Proprietors' Proprietors' equity equity Total bill) Total assets assets ($ ($ bill) Number of farms, (000) Assets ($000) Assets per per farm farm ($000) 3.8 93.4 93.4 3.9 3.9 0.9 0.9 1.9 1.9 6.7 6.7 100.0 100.0 10.4 10.4 11.1 11.1 21.5 21.5 78.5 78.5 26.7 26.7 288 288 93 93

3.9 3.2 90.8 90.8 92.3 92.3 4.4 4.4 3.8 3.8 1.2 1.5 1.2 3.3 3.3 2.6 2.6 7.6 9.2 9.2 7.6 100.0 100.0 100.0 100.0 10.1 9.1 10.1 9.1 8.0 9.5 9.5 8.0 18.1 18.6 18.6 18.1 81.9 81.9 81.4 81.4 311.2" 311.2a 18.0 18.0 2,725 173 2,725 173 114 104 114 104

Lake Lake states states (3) 57.6 57.6 9.0 9.0 17.4 5.6

NorthNortheast east (2) 61.4 61.4 8.0 8.0 13.5 4.0

67.1 67.1 7.5 7.5 11.0 11.0 3.5 3.5

U.S.A. U.S.A. (1)

3.0 92.8 92.8 3.7 3.7 1.1 2.4 2.4 7.2 7.2 100.0 100.0 7.8 7.8 9.1 9.1 16.9 16.9 83.1 83.1 72.7 72.7 613 613 119 119

66.7 66.7 6.9 6.9 11.2 5.0

Com Corn belt (4)

2.5 92.1 92.1 2.8 2.8 1.6 3.5 3.5 7.9 7.9 100.0 100.0 6.6 6.6 13.8 13.8 20.4 20.4 79.6 79.6 37.3 37.3 250 250 149 149

59.7 59.7 10.1 10.1 13.5 6.2

Northern plains (5)

Structure of Balance Sheet of of Farm Enterprises by Region, 1969 (percent of total assets)

5.4 88.2 88.2 6.8 6.8 1.6 3.5 3.5 11.9 11.9 100.0 100.0 7.9 7.9 7.2 7.2 15.1 15.1 84.9 84.9 25.1 25.1 453 453 55 55

61.1 61.1 6.2 6.2 12.8 2.7

Appalachia lachia (6)

4.6 93.7 93.7 3.8 3.8 0.8 1.7 1.7 6.3 6.3 100.0 100.0 10.6 10.6 7.4 7.4 18.0 18.0 82.0 82.0 19.0 19.0 215 215 88 88

72.4 72.4 5.9 5.9 9.7 1.1

SouthSoutheast east (7)

4.0 91.0 91.0 5.0 5.0 1.3 2.8 2.8 9.1 9.1 100.0 100.0 9.6 9.6 7.4 7.4 17.0 17.0 83.0 83.0 17.7 17.7 175 175 101 101

71.7 71.7 5.4 5.4 8.7 1.2

Delta states (8)

2.6 93.3 93.3 3.0 3.0 1.2 2.6 2.6 6.8 6.8 100.0 100.0 7.4 7.4 8.7 8.7 16.1 16.1 83.9 83.9 36.1 36.1 297 297 122 122

73.9 73.9 7.9 7.9 8.0 0.9

Southern Southern plains (9)

2.5 94.6 94.6 3.6 3.6 0.6 1.3 1.3 5.5 5.5 100.0 100.0 10.8 10.8 12.7 12.7 23.5 23.5 76.5 76.5 24.5 24.5 120 120 204 204

67.8 67.8 11.0 11.0 9.9 3.4

MounMountain tain (10)

a "This This compares compares with with $289 $289 billion billion in in table table 64. 64. Source Sheet of the Farming Sector, 1970, 1970, p. 24;p.Statistical Abstract, 1976, p.1976, 637. p. 637. Sourceof ofbasic basicdata: data:U.S. U.S.Dept DeptofofAgriculture, Agriculture,Balance Balance Sheet of the Farming Sector, 24; Statistical Abstract,

6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16. 17. 18. 18.

1. 1. 2. 2. 3. 4. 5. 5.

Table 67

2.4 92.3 92.3 3.0 3.0 1.4 3.2 3.2 7.6 7.6 100.0 100.0 13.5 13.5 8.0 8.0 21.5 21.5 78.5 78.5 34.1 34.1 141 141 242 242

78.0 78.0 4.8 4.8 6.1 1.0

Pacific (11)

155

Nonfinancial Nonfarm Unincorporated Business Enterprises Nonfinancial

aggregate aggregate of of the the three three types types the the share share in in total total assets assets ranges ranges from from 66 to to 12 12 percent, percent, the the poorest poorest region-Appalachia-showing region—Appalachia—showing the the highest highest share, share, owing owing mostly mostly to to relatively relatively large large holdings holdings of of currency currency and and deposits. deposits. ReRegional gional differences differences in in the the ratios ratios of of debt debt to to assets assets are are moderate, moderate, ranging ranging from from 15 15 percent percent for for Appalachia Appalachia to to 24 24percent percentininthe theMountain Mountainstates, states,and and seem to to be be related related to to average average assets assets per per farm farm in in the the region. region. This This would would be be seem in line line with with the the finding finding that that the the debt debt ratio ratio increases increases with with size size of of farm. farm. in

6.7. Nonfinancial Nonfinancial Nonfarm Nonfarm Unincorporated Unincorporated Business Business Enterprises Enterprises 6.7. Nonfarm nonfinancial nonfinancial unincorporated unincorporated businesses businesses lost lost in in importance, importance, Nonfarm as as table table 68 68 indicates, indicates, measured measured by by their their share share in in national national assets assets or ortheir their relation to to gross gross national national product, product, during during the the first first half half of of the the period, period, but but relation maintained their their position position during during the the second second half. half. The The structure structure of of their their maintained balance sheet, sheet, shown shown in in table table 69, 69, changed changed considerably. considerably. The The most most impor~ imporbalance tant changes changes were were the the increase increase in in the the share share of of tangible tangible assets, assets, which which tant always maintained maintained aa dominant dominant position, position, mostly mostly during during the the second second half half of of always the period; period; and and the the corresponding corresponding decline decline of of the the share share of of financial financial assets assets the from 16 16to to88percent, percent,particularly particularlythe theshares sharesof ofdemand demanddeposits depositsand andtrade trade from credit. Substantial Substantial changes changes also also occurred occurred within within tangible tangible assets, assets, the the share share credit. of structures structures and and land land increasing increasing and and that that of of equipment equipment and and particularly particularly of that of of inventories inventories declining. declining. Liabilities Liabilities increased increased from from 15 15 to to 21 21 percent percent that of the the period period and and primarily primarily in in of total total assets, assets, mostly mostly during during the the first first half half of of the form form of of mortgages, mortgages, while while trade trade debt debt declined declined sharply. sharply. As As aa result result the the the ratio of of financial financial assets assets to to liabilities liabilities declined declined precipitously precipitously from from 1.06 1.06inin ratio 1953 to to 0.39 0.39in in 1975, 1975, suggesting suggesting aa substantial substantial impairment impairment of of liquidity. liquidity. 1953 However, the the ratio ratio of of debts debts to to assets assets was wasstill stillas aslow lowasasone-fifth one-fifthatatthe theend end However, of the the period. period. of of partnerships partnerships reporting reporting to to the the Internal Internal The balance balance sheet sheet structure structure of The Revenue Service Service (excluding (excluding agriculture agriculture and and finance), finance), which which can can be be folfolRevenue lowed in in table table 70, 70, differs differs considerably considerably from from that that of ofthe the balance balance sheet sheet of of lowed nonfarm nonfinancial nonfinancial unincorporated unincorporated business business derived derived from from aggregative aggregative nonfarm statistics shown shown in intable table 69, 69, which which also also covers covers sole sole proprietorships. proprietorships. The The statistics main differences differences are are the the considerably considerably lower lower share share of oftangible tangible assets assetsin inthe the main case of of partnerships partnerships (77 (77 against against 92 92 percent); percent); the the consequently consequently much much case higher share share of of financial financial assets assets (about (about 20 20against against88percent); percent);and andthe thevery very higher much higher higher share share of of liabilities liabilities (86 (86 against against 21 21percent). percent). To To what what extent extent much thesedifferences differences are aredue dueto tothe theexclusion exclusionof ofsole soleproprietorships proprietorships from from the the these Internal Revenue Revenue Service Service statistics, statistics, which which are are dominated dominated by by real real estate estate Internal partnerships,to todifferences differences in invaluation, valuation,to toincomplete incompletecoverage coverageof offinanfinanpartnerships, cialassets assetsand and liabilities liabilities in inthe theflow-of-funds statistics,or orto toother other factors factors cial flow-of-funds statistics, impossible to tosay.8 say.8 itit isisimpossible Thefact fact that thattotal total assets assetsof ofunincorporated unincorporated nonfarm nonfarm nonfinancial nonfinancial enterprises enterprisesin in1973 1973 8.8. The with $559 $559billion billion as asestimated estimated here here compare comparewith withtotal total assets assetsof ofnonfinancial nonfinancial partnerships partnerships with

156

Trends and Fluctuations in Sectoral Balance Sheets, 1953-75

The balance sheet structure of unincorporated nonfarm nonfinancial nonfinancial businesses in the various industries differ, of course, substantially from that of the combined balance sheet of all firms firms of this type as is is the the case case of of nonfinancial corporations. This can be inferred from the balance sheets of of partnerships tabulated for over sixty different different branches by the Internal Revenue Service, which in the absence of tabulations of balance sheets of sole sole proprietorships proprietorships constitute constitute the the only only statistical statistical data data available. available. Such Such use use is is not without without danger danger since, since, measured by business business receipts, receipts, inventories, inventories, depreciation depreciation which which is is indicative indicative of of size size of of reproducible reproducible tangible tangible assets, and and payroll, payroll, sole sole proprietorships proprietorships are are twice twice as as large large as as partnerships partnerships and and differ differ from from them them in in average average size-their size—their average average business business receipts in in 1973 were only only one-fourth one-fourth as as large large as as those those of of partnerships-and partnerships—and in in distribudistribuwere tion among among industries. industries. Notwithstanding these limitations limitations the the balance balance tion Notwithstanding these sheets of of partnerships partnerships should should be able to to give give an an idea idea of of differences differences in in the the sheets be able balance sheet structure structure of of unincorporated unincorporated enterprises enterprises in in different different indusbalance sheet industries. tries. Table 70 70 shows shows the the balance balance sheet sheet structure structure of of partnerships in seven seven Table partnerships in major industries industries in in 1973, 1973, the the latest latest year year available available when when the the study study was major was undertaken. Differences Differences in in balance sheet structure structure among among the the seven seven undertaken. balance sheet industries are are very very pronounced. pronounced. Real Real estate estate firms, mainly operators, operators, industries firms, mainly account for for three-fourths three-fourths of of the the assets assets of of all all reporting reporting partnerships partnerships outoutaccount side of of agriculture agriculture and and finance, proportion much much higher higher than than in in the the case case side finance, aa proportion of proprietorships. Their balance sheet is is dominated dominated on on the the asset asset side side by of proprietorships. Their balance sheet by buildings and land land with with four-fifths, four-fifths, and and on on the the liability liability side side by by medium medium buildings and and long-term long-term debt debt with with over over three-fourths three-fourths of of total total assets. assets. Reported Reported and equity is is very very low low at at 77 percent percent of of total total assets, assets, but would be considerably but would be considerably equity higher, and and the ratio would would be be lower lower if real estate estate were were carried carried higher, the debt/asset debt/asset ratio if real at market market value. The remaining six industries industries still still show show considerable considerable at value. The remaining six differences in in balance sheet structure. structure. Thus Thus the the share share of of depreciable depreciable differences balance sheet assets ranges ranges from from 18 18 percent (construction) to to 57 57 percent percent (transporta(transportapercent (construction) assets tion); that that of of land-undoubtedly land—undoubtedly substantially substantially understated-from understated—from 44 perpertion); percent (services); (services); and and that that of of inventories inventories from from cent (manufacturing) (manufacturing) to to 99 percent cent less than than 22 percent percent (services) (services) to to 32 32 percent (trade). Total Total financial assets percent (trade). financial assets less account for for between 14 percent (transportation) and and about about 45 45 percent percent account between 14 percent (transportation) (construction). The The ratio ratio of of equity equity to to total total assets assets fluctuates 21 (construction). fluctuates between between 21 percent (construction) and 63 percent (mining), but would be substanpercent (construction) and 63 percent (mining), but would be substantially higher higher if if tangible tangible assets assets were were carried carried at at market market values. tially values.

reporting to to the the Internal Internal Revenue Revenue Service Service of of $146 $146billion billionpoints pointsto toaamuch muchlower loweroriginal originalcost cost reporting valuation valuation of of tangible tangible assets assets in in the the Internal Internal Revenue Revenue Service Service statistics. statistics.

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

V© V© V© V© V© V© V© Ux U\ U\ U\ U\ L/\ Lf\ VO 00 N 1 ON U * • W

Amount ($ bill.)

9

£

100.0 102.2 108.4 115.6 120.7 126.3 129.1 131.8 135.2 140.8 146.4 153.1 160.9 170.9 182.1 199.4 220.7 235.8 250.8 274.3 312.3 350.3 374.9

285 290 298 304 316 325 332 336 345 355 368 381 395 410 418 425 439 448 459 473 485 487 486

(3)

(2)

1972

Assets of Nonfarm Nonfinancial Unincorporated Business Enterprises, 1953-75

179 183 194 207 216 226 231 236 242 252 262 274 288 306 326 357 395 422 449 491 559 627 671

4 ^ W W W W K ) K ) N ) K ) K ) b O S ) t O N ) t O M M M

(1)

J^^SJM00a\O\ t o w y n x N ) P U i M O M v j o a o o o y o N )

5 N©

N > V O ^ i t O V O O \ W M M ^ ^ t O M ' O s l

vj N ) 0\ W MOO bo v© u> Ln

0 \ H N J ^ W N ) N J O ^ O O ^ O ^ 0 0

(2)

(4) 100.0 105.8 111.5 116.5 122.3 129.5 138.1 147.5 157.2 166.2 177.3 188.5 200.4 212.6 225.2 237.4 246.4 256.5 265.8 277.7 287.8 295.3 301.8

100.0 104.3 116.0 129.6 139.5 148.1 158.6 167.3 179.0 192.0 206.8 222.8 242.0 264.2 287.0 316.7 353.1 397.5 437.7 486.4 572.8 673.5 727.2

prices

1972

(3) ^ONUl^4^U)WOJN)bOtOtObOMt-^h-^Mh^H^Mh^t-k^ N ) v j N j o o w o y > M o o o \ ^ K ) o ^ > J O \ ^ ^ w w M o g NJ U) K) 0 \ 4 Q\ Lfl ' . . . . . ^ M yi N ! -si yt o\

1972

+4.3 +11.2 +11.7 +7.6 +6.2 +7.1 +5.4 +7.0 +7.2 +7.7 +7.8 +8.6 +9.2 +8.6 +10.3 +11.5 +12.6 +10.1 +11.1 +17.8 +17.6 +8.0

(5)

Current

bb\ooMMOs^wb\N)bvbo^k)b^I-'N)b\:siN)w

Current

bol^bo^bou»^^N>bN^lAL^k)^L^ML^L^a»L^boo

+5.8 +5.4 +4.5 +4.9 +5.9 +6.7 +6.8 +6.6 +5.7 +6.7 +6.3 +6.3 +6.1 +5.9 +5.4 +3.8 +4.1 +3.6 +4.5 +3.6 +2.6 +2.2

(6)

1972

Annual rate of change (percent)

+ + + + + + + + + + + + + + + + + + + + ++

Index (1953 = 100.0)

"tob\bsL^bNMbo4^^H^l^l^^^ONbo^^voL^^bo

Amount ($ bill.)

.446 .444 .459 .483 .515 .510 .513 .537 .530 .540 .543 .551 .542 .552 .561 .567 .597 .634 .639 .637 .681 .754 .731

Gross national product (7) W V l » W W W y O O M 3 \ m ^ ( / * . ^ W W M M M . .co u .. f ^ t - k ^ t - A < l V O - ^ - - J - - J t - ^ l s ) t O M ( > i O O < l U ) O U i Uu> > VNO O -S ON

Assets of State and Local Governments, 1953-75

0.121 0.121 0.123 0.126 0.127 0.129 0.131 0.133 0.137 0.140 0.144 0.146 0.149 0.151 0.153 0.154 0.156 0.164 0.169 0.171 0.174 0.178 0.177

0.056 0.055 0.056 0.058 0.060 0.059 0.060 0.061 0.060 0.063 0.063 0.064 0.064 0.067 0.066 0.066 0.070 0.074 0.074 0.074 0.080 0.087 0.085

assets (9)

National wealth (8)

Ratio to

o o o o o o o o o o o o o o o o o o o o o o o

Table 78

o o o o o o o o o o o o o o o o o o o •o Oo Oo Oo O U\ tA 8 8 8 8 p ' 0U\0 U\ O N J ON O* ^ W

(5)

+5.4 +5.1 +14.6 +10.6 +7.7 +5.4 +8.5 +9.4 +8.6 +7.9 +14.6 +8.5 +4.9 +9.3 +8.5 +6.3 +5.2 +8.5 +9.7 +13.6 +20.8 +13.8

(4)

100.0 104.8 106.5 117.7 127.4 133.9 140.3 150.0 162.9 171.0 183.9 206.5 217.7 222.6 232.3 241.9 245.2 245.2 253.2 266.1 280.6 303.2 325.8

(3)

(2)

62 65 66 73 79 83 87 93 101 106 114 128 135 138 144 150 152 152 157 165 174 188 202

37 39 41 47 52 56 59 64 70 76 82 94 102 107 117 127 135 142 154 169 192 232 264

prices

> 3 o cS3

100.0 105.4 110.8 127.0 140.5 151.4 159.5 173.0 189.2 205.4 221.6 254.1 275.7 289.2 316.2 343.2 364.9 383.8 416.2 456.8 518.9 627.0 713.5

O

Current

" t ^ -fr^ Vrf* V ^ #

1972

\ * \

prices

Index (1953 =100.0)

(1)

Current

W A

II

a

8

1972

M M H 9 \ ^ ^ O O O

Amount ($ bill.)

9

^"•J

s

s

I

IB' ©

i SO

^ b w v o ^ v i l f t b o b

Current prices

+4.8 +1.5 +10.6 +8.2 +5.1 +4.8 +6.9 +8.6 +5.0 +7.5 +12.3 +5.5 +2.2 +4.3 +4.2 +1.3 +0.0 +3.3 +5.1 +5.5 +8.0 +7.4

(6)

1972

0.028 0.028 0.027 0.028 0.029 0.030 0.030 0.031 0.033 0.034 0.035 0.038 0.039 0.038 0.038 0.038 0.037 0.036 0.037 0.037 0.036 0.038 0.044

0.102 0.102 0.100 0.107 0.118 0.118 0.118 0.127 0.129 0.132 0.133 0.143 0.140 0.139 0.141 0.140 0.141 0.140 0.139 0.136 0.141 0.160 0.164 0.013 0.013 0.012 0.013 0.014 0.014 0.014 0.014 0.015 0.015 0.Q15 0.017 0.017 0.017 0.017 0.016 0.016 0.016 0.016 0.016 0.017 0.019 0.019 I—*

»—k

I—^t-^t—*

>

o' o

assets (9)

I—*

National

t—k

S3 S3

3 n

wealth (8)

^

Gross national product (7)

I—»•

Ratio to

t—»•

Annual rate of change (percent)

I—k

Foreign Assets of American Sectors, 1953-75

i Ui 4^ K) i-k O Q H N) M L» M ~ 00 **• ON - M op s oi to q op ^ c 0c0pO \ \ oO \\ wW * . ^w p N v o y i * > M y i v o w v o W si O i o ^ b o K j b o ^ N > k > k > ^ ^ b N ^ i s ) o l ^ '» 4-»^ O L n^4 o bOo ^U\ o ©

3.

. H - ^ h - k | — k h - k l — k | - ^ l — * t - * t — ^ h - ^ l — k | — *

Table 80

Wt ^ W W M O \0

t O N ) ( O N W W K ) t O W N ) M M 0 0 Q \ U ) ^ ^ ^ U t O M O 0 0 N J N> O — - a W U i U H W S J s l O N W M t y\ u> o c o N ) b \ M N ) N i f o ^ w b \ ^ i ^ v o b

WOW\O00lft0\00VO*>00 ^ N I O O ^ O W ^ N J O ^ V I ^ 0 0 0 0 O \ ^ U t O W L f l W V O ^ O \ ^ O O \ ^ V i ^ s J O \ O \ H ^

3.

+ + + + + + + + + + + £ + + + + + + + i + +

^ o o y i y » w o M ^ ^ w y » w ^ y i o o p s ^ y i o o p H * . ^ b ^ M w b w w w w U w l A b b \ b b o M i o b \ O i b o

o o o o o o o o o o o o o o o o o o o o o o o

33

p p O p p p O O O p p p O p O O O p O p p © o b o o b o o o o b o o o o o b o b o o o o

W W W W W W W W W W W W W W W W W N ) N ) t O K ) N ) o o o \ > j > j a i > J o o a o o ^ o o ( j \ ^ W M O O ^ ) O O N j x o o

o o o o o o o o o o o o o o o o o o o o o o o > © © © © © © © © © © © © © © © © © © © © © ©

h

a

0.008 0.008 0.008 0.009 0.008 0.008 0.009 0.009 0.010 0.009 0.010 0.010 0.010 0.009 0.010 0.010 0.010 0.011 0.012 0.013 0.013 0.014 0.014

o'do

-1.3

+13.6 +12.0 +10.7 +0.0 +9.7 +14.7 +5.1 +12.2 +0.0 +13.0 +9.6 +3.5 +1.7 +13.3 +14.7 +10.3 +7.0 +27.2 +21.4 +8.5 +14.9 +12.4

+10.4 +8.2 +5.4 +2.1 +20.2 +16.0 +0.7 +3.6 +5.6

(5)

+13.5 +7.1 +6.7 -2.1 +10.6 +9.6 +5.3 +10.0 -1.5 +10.8 +8.3 +0.0

(6)

^ + + I + + + + I ^ + + 1^ + + + ™ ^ + + +

prices (4)

' _L _|_ *""' _|_ *-'_J_^"'_|__|__|_*-HrH*-^-J_tNJC^_l_

+ ++

+ ++

++

++

q ^ \ o ^ o i o r H N T f r > . y o o o o q r H h . ^ N v o \ o q ^ N o o ' w H a h d ^ r i o o i n ^ ' d d o o a o o r i ^ r H c n i o a l d t-ir^c^cN^mvot^-r^ONTHrHocMrfvovocMt^t^oo^H H H H H H H H H H ? H H M M N ' ^ ' N l N N W W m n ' < t

100.0 113.5 121.6 129.7 127.0 140.5 154.1 162.2 178.4 175.7 194.6 :HO.8 :Z10.8 208.1 229.7 248.6 262.2 267.6 321.6 373.0 375.7 389.2 410.8

Current 1972

S

prices Current

(3)

1972

fq"

^ ^ ^ ^ • • o t ^ o o o o c n i o v o r ^ o u - N O ^ r H c n ^ o o o

r^r-ONO\oooN^c>i

68

co ^- u-> vo t^ oo O N < • *2 cs co ^r »o »o o in »n m ' i SO NO NO VO NO ' ON ON ON ON ON ON ON i i ON ON O N ON ON i

£

78 86 92 117 142 154 177 199

22 25 28 31 31 34 39 41 46 46 52 57 59 60

r^u-joo^-HrHTfONrHvpvoc^r*>-ONQoooosocsr^cS'«tt^ON

1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

a

•a (1)

Current

prices

(2)

ON

100.0 113.6 127.3 140.9 140.9 154.5 177.3 186.4 209.1 209.1 236.4 259.1 268.2 272.7 309.1 354.5 390.9 418.2 531.8 645.5 700.0 804.5 904.5

q v q ^ o \ o \ ^ W T f H H T i ; H ( s r « ; H ^ ( j \ r j o o i n q i o > n

37 42 45 48 47 52 57 60 66 65 72 78 78 77 85 92 97 99 119 138 139 144 152

*2 II

Amount ($ bill.)

vooooomoocS'fOTfr-rHr-fnvoQ'-i^OTi-fnm^t VO^r-t-r^SoOOOOOOOOOOOt^OOOO^ONOrH^-HCvlfN O O O O O O O O O O O O O O O O O T - l r H r H r - H i - H

a

ON

Index (1953 = 100.0)

American Assets of Rest-of-the-World Sector, 1953-75 Table 81

00

fo o o o d d d o d o o ' o o o o o o o o o

^rH^^vo\ocoqio«5cnqfn^cNi^^c^qt^NONO ^

3

I

K

o

916 988 1,034 1,082 1,178 1,230 1,332 1,426 1,519 1,539 1,642 1,726 1,709 1,759 1,900 2,074 2,065 1,940 2,012

904

890

++

H H H H H H H H H H f v J M M N N f n W t n W T t ^ l O l ? )

s

s

« 0 v p CO W->

o ^F N r> vo

f»

TH

»ou-)m«i->u-i»o«ovovovovovovo

t

Tt

TT*

r^ oo

ON l > i n ON

CN

ON

3.8c 5.6 2.9 4.3 3.8 1.9

49.3 50.0 49.2 49.0 49.0 48.7

50.0 51.0 50.5 50.6 50.8 50.5

38.0 37.0 37.7 37.7 37.6 37.6

12.7 13.0 13.1 13.3 13.4 13.7

13.0 13.2 13.5 13.8 13.9 14.2

37.0 35.8 36.0 35.6 35.3 35.3 CO CO CO

r-* in* NO" in* in* in"

O

00

ON

ON

00 O

CO* CO

CN

co in*

NO

r ^ rf CO

t^'

^t vb CN « CO

ON

m NO r- oo ON o r- r- r- i— f - oo

ON

in

ON

CN*

CN

CN CO

ON

ON

CO

CO

O

ON

CO

00

ON

CN

CO* CO

CO*

Tf

rt* co* r-4

00

oi Tt

"* CN Tf

co* CN

rr f»

r-*^

O

U c

CO

ON

CO

B u