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This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Annual Report of the Directors of Research Volume Author/Editor: Edwin F. Gay and Wesley C. Mitchell
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This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Annual Report of the Directors of Research Volume Author/Editor: Edwin F. Gay and Wesley C. Mitchell Volume Publisher: NBER Volume ISBN: Volume URL: Conference Date: Publication Date: Feburary 2, 1925 Chapter Title: Annual Report of the Directors of Research Chapter Author(s): Edwin F. Gay and Wesley C. Mitchell Chapter URL: Chapter pages in book: (p. 1-10) RTIUNA1 UR[AU UF EUMIC RLSIJtRCII 2o57 / Library Annual Report of the Directors of Research, February 2, * * * * The year 1924, despite the paucity of publications to which the Treasurer's report has referred, has been one of active 'ork and progress by the National Bureau of Economic Research. The result of the concentration of moat of the available resources of the Bureau upon the unemployment studies requested by Secretary Hoover, valuable and timely as was the effort, was a setback to other current work. This work, however, was promptly and energetically reaund, and its fruits will be seen by the Directors and published during the first six months of It will be oonvenient to survey the projects on which the Bureau is engaged in the order in which they have appeared on the Bureau's program. The first research undertaken, with the authorization of the Directors, was the study of national. income. The second was the investigation of the business cycle, of which the report on employment Loused a preliminary section. Other studies originating in the study of business cycles have been acquiring a more or less independent status of their own. The third project was that part of the economic aspect of migration which was initiated by the National Research Council and continued with the financial support of the Social Science Research Council. The fourth on our list is a proposal for the analysis of the price structure reoonmiended by the Executive Coninittee to the Board of Directors as the next major field of research which the Bureau should enter. I Income in the United States. Steady progress has been made on the careful revision and bringing down to date of the estimates contained in the previ:ua piblicatiorof the Bureau. This revision has been made under the djrection.of Dr. Wiliford I. King. and its chief features and results will be presented by him in the introduction to the forthcoming volume on Distribution of Income by States. This continuation of the study made for the Bureau by Dr. Oswald W. Knauth has been prepared by Mr. Maurice Leven, utilizing the Bureau's basic and revised estimates of national incoe Mr. Leven has made an estinate of the total and per-capita income carefully adjusted for every State, with special tables showing the incomes of farmers, wage earners, persons of large means, and othe r raatter relevant to the ç*irchasing pover and economic condition of the different parts of the country. The demand from a wide variety of business interests to make practical appli-' cation of this scientific research will be met by piblication in the first half. of 1925, provided approval is given by the Directors. Dr. King has also prepared a study of Transportation Trends, which nay be regarded as an interesting by-product of his investigation of national incoii. In this volume, which will be accompanied by a vimber of v&luible tables and charts, Dr. King surveys in graphic fashion the deve1opint of American rail.- roads, trolleys, shipping, automobiles, telegraphs,and telephones, not omitting horse transportation. He deals v,ith the oomparatie efficiency of the services rendered and with the financial returns obtained. This study will be submitted to the Directors early in The study of the national income will clearly be one of the chief con.- tinuing responsibilities of the Bureau. The first repitation of the Bureau gained in this field practically necessitates the periodical extension and revision of our estimates. Dr. King is now engaged in completing the study of the distribution of individual incomes of gainfil1yioccupied persons in the year 1921, which includes not only the analysis of the distribution of the earnings of employees, but also the distribution of property income, It is also necessary that the income data should be revised on the basis of new methods of compitation to cover the years 1909 to 1918, inclusive. The principal gaps are in the fields of mining, manufacturing, mercantile, and unclassified industriss. b fill these caps will take the greater part of Dr. King's Urne for the first six months of 1925, and the rm cent publication of the 1922 income returns calls for the extension of the Bureau's tabu.letions to inclade this additional material. ii. rk on Business Cycles. As reported to the Annual Meeting a year ago, Mr. Mitchell is preparing a treatise upon Business Cycles. He reports that his progress has been much facilitated by the zw arrangement for the administrative vrk of the Iireau. far three rather long chapters have been written the mariscript covers some So 300 typed pages and much material for la.er chapters has been collected and digested. The scope of the report thich may be expected is indicated by the following condensed table of contents. as the rk progresses. Part I The Problem and Its Setting (Chapters 1-4) Of course this scheme is xbject to medificauon i The Problem of Busimess Cycles and Its Lany Solutions ii The krney Economy iii Business Cycles as Revealed by Buairss Annals iv Business Cycles as Revealed by Statistics Part II The Rhythm of Business Activity (Chapters 5-9) v Prosperity vi Recessions - vii Depressions viii Revivals ix Summary and Supplements Part III Business Cycles as a Social Problem (Chapters 10-22) x The Problem of Business Forecasting xi Economic Coats and the Problem of Control xii Thisiness Cycles in Economic History and Economic Theory June LIr. Uitchell hopes to revise somewhat the first By the first of three chapters, and to write the fourth chapter on the statistical study of cycles, After that date he plans to give all his time to the tork until the 4 middle of next February. L make this possib]e he has applied for a leave oi absence front Colurbia University during the first half of the next academic year. Provided this leave is granted, he believes that the book can be nearly finished by the tlsie we hold our annual meeting in This theoretical treatise is based mainly upon the collection of at.tistica1. data relating to business conditions which is being made by x. Willard L. Thorp, assisted by Hr. Henry Villard and }rs. Thorp. Our ain in this work is to bring together all the reliable time series which throw light upen.y aaçet of business cycles in the United states and in other countries of coninorcial importance. A áonatderable part of this york has already been accosaplished, enough to warrant the belief that we shall have a statistical source book of the greatest value not only to statistical students of business cycles, but also to public officials, business men, journalists, publicists, historians and Yzt8. o the anries t. clwted 't,e new, ivir been constructed by Hr. Ttor atd n co tz keru; nny othors have been cced together from scattered sources not easily available; still othere have been t'ecast into forms which are more significant than the original data, and even the most familiar materials gain now value from being presented in one place by months for the full period which they cover. In every case the sources from which the data are obtained, the methods by ii*iich they a re compiled, and the special cautiors which should be observed in using them are recorded with care. Because of the usefulness of this unique body of data, we think that the whole coiiectioi shoitid be published, in exteriso. t to print a large voluino, or perhaps t; volume, of tabular matter is very expensive. while a considerable sale is anticipated, the National Bureau might be some tine in covering the publication cost. Perhaps some one or more of our frien, who appreciate the -.5 value of such materials, may care to finance this pblication for. Our expectation is that the work of collecting these data and phttit., them in form for the printer will be ccnpleted in the course of this year. To accomplish this result, together with the preparation of the numerous chax which 1r. Litcheli will need for his theoretical work, 11r. Thorp wilk reque more clerical aid than he has had so far. We may raise in this connection a question about the desirability oi modifying one of our standard practices in handling this bulky collection of data. To prepare twenty'.odd copies of the whole mass of materials for circulation anng the Directors would cost the National Thireau a conaiderablea sum; and th ask any Director to read over a thousand pages of figures would be unreasonable. We therefore submit to your judgment the question whether you iuld prefer in this case to have circulated, rt the whole manuscript, but a ca!tplete statement regarding the subject, source, form and period covered by every statistical series inc)uded in the collection. Such a summary would show with precision what the Staff has done, and would enable you as Directors to make your cutornary criticisms and suggestions for the improvement of the report mere easily than you could if you had to turn over hundreds of mimeographed sheets. One of the investigations which was originally suggested by the 3isiness Cycle study was an analysis of the fluctuations of trade union membership. Vblxnan's work on this subject has resulted in the most canpiete nd accurate investigation which has hitherto been made. Dr. His volume on the Gxowth and Extent of Trade Unionism in the United States sie 1880 was completed before the close of 1924 and published the last iek of that year. Dr. Wlnan's book has already been recognized as authoritative by all unbassed students in this field. hile this investigation was progressing, Dr. luan and his assistants viere also collecting statistics on wages, hours, employment and unemployment in the building trades for the period from 1890 to These figures peit a detailed study of wages for the country as a tho1e, and for inportant sections of the country; for all people working in the industry and for epeci fled occupations lthin the industry. A beginning has also been made in the collection of wage statistics for the iron and steel industry. The inter' pretation of the data in hand and the extension into other industries of simiiar studies is waiting final decision as to the scope of the stucky as a whole. In the past year, t' new studies of wages in the United States have been made by Paul Brieenden and by Paul Douglas. The fonuer is based upon the reports of the Census of Manufactures; the latter rests maii1y upon the reports of the U. S. Bureau of Labor Statistics. Dr. Vblman has been in close touch, with these vriters and has examird their manuscripts. needed and what Dr. 'binan will seek to supply is tiat is 1. A critical evaluation of past work, covering the method and statia tica]. raaterials to get light upon the leading characteristics of the wage series. in use. 2. Emphasis upon the siveraent of wages in specific industries, rather than upon studies of the wage moveuent as a. whole. By segregation of the problems of the particular industry, it should be possible to suggest improvements in the measures of eniploent and unemployment. is especially desirable, by procuring figures more frequent than a.nua]. data, to measure the aensitlvene3s of the wage market. It The careful nasurexnent of variations from established and published scales in particular industries will be most valuable for such results, If this procedure is approved, this critical and detailed analysis will be the work on thich Dr. Volmari will be engaged during 1925. -'7... A second outcome of the business cycle work, which will result in one of the most notable reports of the Bureau, and which will be ready for pu'-' lication presumably by Jine, 1925, is the investigation of Bond Yields and Interest Rates in the United States upon which Dr. Frederick R. Macaulay has been rking during the past year. Dr. }AacaulaT has co ipiled the most complete record of bond yields ever made for the United States His figures for bori yields are quite new and run back by months to will shows His re;ort when completed (1) the history of the fluctuations of interest rates and bond yields in the United States monthly back to January, (2) the relations between different types of interest rates and bond yields, and (3) the relation of interest rates and bond yieldato other fundamental ecorxinic series, such as those measuring the general level of commodity prices, the volume of trade, the amount of new securities being issued, and a number of different aspects of the banking situation both in New York and in the rest of the United States. III. Human Migration. As a. part of the wide program of the investigation of the problems of human migration now under the auspices of the Social Science raaearch Council, the Bureau has made a study of migration in it8 relation to busihess activities in the United States and foreign countries. This rk has been in charge of Dr. Harry Jerome and, like the preceding twe irwestigitions, while hing an independent character of its own, links also with the Bureau study of the Business Cycleo The primary object of the first report, which will be ready for submission to the Directors within a few weeks, is the furnishing of facts upon which to base conclusions concerning the extent to which migration ameliorates or aggravates cyclical and seasonal fluctuations in production and employment. It examines the extent to which these fluctuations correspond in tinting and degree, particularly as measured by employment or unemployment, with the fluctt.ations in migration into the United States. It analyzes the variations in fluctuations which appear when migrants are classified by sex, occupation, race and country of origin, arid it gives some materials for answering the quest i:on as to whether fluctuations in migration are primarily determined by changes in the country of emigration or in 'the country of immigration. During the latter part of 1924', Dr. Jerome has been making the rreliminary studies for a further report u, on the probable influence of restricted gration upon the use of labor saving machinery. To this end, he is endeavoring by experimental attack, including interviews and factory visits, to discover: (1) The extent to which restriction lessens the additions to the various elements in the labor supply, particularly common labor. (2) The numbers of skilled, semi skilled, and unskilled workers in the several industries, particularly those which employ large numbers of immigrants, and the processes in which these various classes of workers are engaged. / (3) The relative extent to which the several industries are n mechanized, arid significant features of the history of the development of equipment to its present status. (4) The available informatig concerning the performance records and the operatir ex.eis. o5labor saving machinery, (5) Such other information as will throw light on the factors which further or retard mechanization. A c*wpaign of investigation which will emphasize particular industries will be carried on actively during the summer of 1925, with a Staff increased by the addition o1 trained aen from the colleges who are free for the summer months. It is needless to point out that this first attempt on any considerable scale to invesligle a h.lghly important but comp1icted problem is attended by numerous difficulties. The Bureau is confident, hoever, that the proceiure utilized is sound, and the investigation is being admirably handled by Dr. Jerome. 9 IV. Studies in the Structure arid horkins of the System oj After this survey of work already in progress, we come to the propoai for entry into a n field of investigation, that of prices. Since 1863, when W. Stanley Jevons published the first of his index number studies, the aim of most price investitions has been to measure the fluctuations in what is anlb).tiously called the general level of prices. 1e1ative1y little work has been done on the internal structure of thc price syste:'. We realize that this system is not a loose aggregation of the prices of unrelated commoditics, but a highly integrated organization containing groups of prices bound to each other in definite, though diverse, ways. We reaije, also, that the production of goods, the payment. of money incomes, and the conversion of money into real incomes, all depend upon the mainteriaxmce of orderly margins between the prices of different goods. Yet no adequate study has yet been made of the structure, variations and functioning of these crucially important relationships among the different parl1s of the price syslem. In cultivating this neglected fie].i, the iational Bureau would be doing work of fundamental iin portance, and work work logically developing from its Income and business cycle studies, tknt promises definite results. Dr. 4ills, of Columbia, who is deeply interested in this field and especially competent, will be available for the second half of the year, and we are making arrangements for having him devote all his time, with the ax ception of one graduale course to be given InColumbia, to this Investigation for tk National Bureau of cononiic Research. He Is submitted a fairly detailed outline memorandum indicating that the first topics to be studied will be price dispersion and price differentials, and that, in all probability, a report upon the first of these, topics mitay be' expected at the end of the first year's work. Since it will be necessary, in making this investigation, to 10 construct some ne monthly index nu.ibers both for price dispersion and price differentials, the queslion will be raised as Lo whelher it may not bc ad-. visable for t Bureau to eoritirue and iiake public regularly Lhese indices of prices. This 1Latter, however, can be discustd more advantageously after the work has proceeded, and the whole question of policy involved will be brought later before the Directors. The addition of Dr. Nji,s to the Staff, with this important attack upon a new field of activity for the Bureau, is ari outcome of the need felt for the Bureau's services, 'since, in part, it results from a public demand for this particular type of investip:tior:. While the aduition to our budget is not re1tive1y large, it of necessity cali& for certain increases in expendi-. tures. Your Directors of Research believe that the National Bureau can ronder no more valuable service titan that of making a constructive analysis of the Structure and Workings of the System of Prices. (Signed) Edwin P. Gay WesleyC. Mitchell Directors of Research
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