Madison County Democrat. (London, Ohio) 19??-1958, 1951-05-04
THE YEN
TO SPEND
BY Charles Molony
(For James MarloWl


living in great big way.
It isn't just that they're buying
more or better quality goods than
ever before: Their yen to spend
apparently has intensified since
World War II.
This greater yen to spend, es-
tablished in a study of Commerce
Department economists, is inn
portant: 1t indicates a change in
a basic human habit.
1t has long been considered nat
ural that, when peoples incomes
rise, they'll spend a smaller pro-
portion of the bigger total on
consumer goods. leaving a larger
proportion for savings and invest
ments of various kinds.
It's logical, and its true = or
used to be in practice: living
expenses may cat up all the in
come of a poor man, but they take
a smaller and smaller proportion
as people get richer
Tax laws, the sales campaigns
Of goods merchants and of invest
ment merchants (stock brokers,
for example,) and a considerable
amount of government and busi-
ness economic planning have been
tailored to that pattern.
The pattern is still good, of
course, but it may require some
alterations to fit the new style
trend.
Everybody knows that the total
dollar volume of outlays on con-
sumner goods i'll general has been
going up steadily and sometimes
looming in recent years. An in
creasing population and swell
ing stream of personal incomes
furnish ready explanation.
II would also be true, in theory
that after adjustment to take
out the effect Of higher prices and
taxes and the increase in popula-
ton proportionately less should
be spent out of that higher in
come.
Commerce Department Econ
omist Louis Paradise and CO
workers have now come up with
an analysis showing that it has
been going the opposite way since
the war:
They caution that the postwar
period is too brief to draw the
conclusion that the consumption
pattern is on a permanently high
er plateau relative to income"
But their dated-back study
show, just the same, that since
1947 expenditures have fluctuated
about line considerable above
the prewar relative to personal
income"
That can be documented by TAX
ing the situation in three signifi-
cant periods:
1941, a prewar defense period"
of good business activity; second
quarter 1850, the last three pre-
Korea months and presumably
normal postward period; and
first quarter 1851, just ended.
After tax payments, Americans
on the average received an in
come of $500 each in 1871 and
tat annual rates. 1892 in sec
ond quarter 1850 and S1,410 in
first quarter 1851.
But the dollars buying power
was declining all that time. So
commerce analysts translated all
the figures into dollars with the
buying power q dollar had in
1889. They found it looked like
this:
The average income per Ameri-
can was equivalent to $652 in 1851.
1t has gone up since, but not SO
much as the unadjusted dollar
figures made it seem: To only
$761-a-year in second quarter
1850, and S765-a-year in the first
quarter of 1851.
Although the rises weren't SO
steep viewed that way, they
should have resulted in a lesser
proportion of consumption out
lays and a greater proportion of
savings to live up TO the theory
and match prewar experience.
In prewar 1871, however, SIT
of the average 1862 income was
saved tlife insurance payments or
mortgage reduction payments
count as savings) and S575 spent
SGT of it going into durable
goods like autos and appliances
and S508 going for nondurables
like food and clothing, plus
amusement and services.
In pre-Korea second quarter
1850, savings dropped to $50 al
though the income average rose
to S761. Spending came TO SOL,
with S96 laid out for durable
goods and S605 for nondurables,
amusements and services.
In first quarter 1850, although
the rush-buying wave had pretty
much passed and income was up
to S765, only $50 was saved. The
S716 spent was divided like this:
SIP for durables, S604 for non
durables, amusements and ser
vices.
In real terms, in 1871, Ameri-
cans on the average saved IL
per cent of their income; just be-