December 1941

December 1941 SURVEY OF CURRENT BUSINESS 19

Capital Expenditures in Selected Manufactur-

ing Industries
By Lowell J. Chawner

APITAL expenditures in manufacturing industries discussed in an earlier article.1 Estimates of these

C in the United States since the first World War
have exhibited wide differences among the separate
expenditures are shown in figure 11. Since they are in
current dollars, they exhibit wider fluctuations than
industry groups. These differences in capital outlays actually occurred in the physical additions to productive
are conspicuous in the long-time trends and in the facilities.
fluctuations over periods of several years. They are Few additions were made to manufacturing capital
not appreciable, however, in the timing of the short- facilities in 1914, the expenditures for this purpose hav-
run movements, which in many industries exhibit the ing declined substantially from those of 4 or 5 years
characteristic fluctuations of general business condi- earlier. In 1915 the prospects for a long war added
tions. greatly to the requirements for war material, particu-
Technological changes, both in the development of larly explosives, artillery, and shells. Largely initiated
new products and in methods of fabrication, appear to Figure 11.—Estimated Capital Expenditures for Plant and
be especially significant influences in determining the Equipment for All Manufacturing Industries
volume of capital outlays in individual industries. As BILLIONS OF DOLLARS
5
far as capital expenditures are concerned, the incidence
of these changes is not general but is upon particular
industries, processes, and enterprises.
The following article contains estimates of the annual
capital expenditures for productive facilities in each of
six separate groups of manufacturing industries since
the first World War, together with some comments upon
the major influences which appear to have been respon-
sible for the fluctuations in these expenditures over
that period. The industry groups considered here are
food and kindred products; textiles and related prod-
ucts; lumber and lumber products; pulp, paper, and
allied products; printing, publishing, and allied indus- 1915 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 "34 '35 '36 '37 "38 '39 '40 '41
CD 41-532
tries; and stone, clay, and glass products. I Source: U. S. Department of Commerce.
A second article scheduled to appear in an early
issue of the Survey will present estimates of the capital by orders from abroad, substantial expenditures (in
expenditures in six other groups of manufacturing indus- terms of the prices prevailing at that time) were made
tries: blast furnace and steel works products, automo- for manufacturing facilities in the United States in 1915
biles, airplanes, petroleum products, rubber products, and 1916, particularly in the iron and steel industries.
and leather and leather products. The entrance of the United States into the war in the
Heretofore, measures of capital expenditures in in- spring of 1917 made necessary a rapid expansion in plant
dividual groups of manufacturing industries have been and equipment for the production of guns, and ammuni-
available only for the year 1939. For that year all tion, chemicals (powder, synthetic dyes, and basic ma-
manufacturing establishments were requested to report terials, such as nitrates), and naval and merchant
their capital expenditures as a part of the regular Census ships. Plants for the fabrication of many of these prod-
of Manufactures. ucts were practically nonexistent in the United States
Data for a few important industrial groups, such as and in other cases had fallen into disrepair as a result
chemicals, nonferrous metals, finished iron and steel of inactivity. The tonnage of ships constructed in the
products, and machinery are not presented because year ended in June 1915, for example, was lower than
suitable primary statistics have not been developed it had been in any year since 1898.
thus far for estimating the capital expenditures in these Following the armistice in November 1918, there was
industries except for the 1939 data reported to the a brief decline in the rate of manufacturing capital ex-
Bureau of the Census. pansion. However, a number of factors set the stage
Review of Capital Expenditures, All Industries, 1915-41. for a high rate of capital outlays during the immediate
» Survey of Current Business, March 1941, "Capital Expenditures for Manufac-
The movement of aggregate capital expenditures for turing Plant and Equipment," p. 9. References to estimates of expenditures for other
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manufacturing facilities
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from 1915 through 1940 was producers' goods are given there.

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 December 1941

20 SURVEY OF CURRENT BUSINESS December 1941

post-war years, 1919 and 1920. Among these was a two decades. However, it is unlikely that the fluctua-
need for facilities delayed by the war (especially those tions in gross outlays for manufacturing facilities were
resulting from the discovery of new products and tech- sufficiently large in themselves to dominate the fluctua-
nological processes) and a corporation income tax favor- tions in general economic activity.
able to the readjustment of manufacturing plants to Today, the United States is in the midst of the
peacetime purposes. greatest expansion of productive facilities in its his-
Also, an active consumer demand, together with high tory.2 A large proportion of these are for the produc-
profits arising from more rapid advances in finished tion of arms, armament, or other products required by
commodity prices than in total manufacturing costs the military services in the United States or in friendly
tended to encourage capital outlays by many concerns. nations which we are endeavoring to supply. In fact,
Although expenditures on productive facilities were sub- for the year 1941 more than four-fifths of our total
stantial in nearly all industries, they were particularly capital outlays for manufacturing are required for
large in automobile manufacturing, rubber working, these purposes.
leather working, lumber and lumber products, and tex- Capital Expenditures by Industries.
tiles. During the 23 years since the first World War,
It is evident from the estimates shown in figure 11 capital expenditures in the various manufacturing in-
that the capital expenditures for manufacturing plant dustries have experienced marked differences, both in
and equipment during the two decades following 1920 their fluctuations and long-time trends. One of the
exhibit the characteristic short-run fluctuations in gen- 12 industry groups for which separate estimates have
eral business conditions over this period. Thus, the been made, experienced its largest capital outlays in
aggregate of such expenditures was relatively high in 1919: 3 reached a peak in 1920, 1 in 1925, 2 in 1928,
1920, 1923, 1926, 1929, and 1937; and it was relatively 2 in 1937, 1 in 1940, and 2 in 1941. Every group, with
low in 1921, 1924, 1927, 1932, and 1938. the single exception of petroleum refining, experienced
As will be noted in the subsequent discussion short- its lowest capital expenditure in 1932 or 1933.
run business fluctuations affect capital expenditures in Plant additions in most industries immediately in-
nearly all invididual industries, particularly the timing fluenced by the defense program, such as nonferrous
of such expenditures. However, other factors, partic- metals, shipbuilding, airplane motors and parts, and
larly changes in products and in methods of fabrication, chemicals (including explosives) are clearly larger in
and unusual changes in demand for particular products, 1941 than in any previous year, although detailed esti-
are the more basic underlying conditions which deter- mates are not available for all of these industry groups
mine the volume of capital expenditures over longer in all years. These and other differences in capital
periods of several years. expenditures among the various industry groups may
It should be observed conversely that capital ex- be observed by a comparison of the accompanying
penditures usually serve as important media through charts (figs. 12-17).
which corporate or individual savings reenter the in- The industry groups presented in table 1 follow rather
come stream and thus create a continuing demand for closely the classifications used by the Bureau of the
commodities and services. Expenditures for con- Census over most of this period. In some cases they
sumers' durable goods, such as houses and automo- are too comprehensive to be entirely satisfactory for
biles; for public works; and for inventory accumula- purposes of analyzing fluctuations in capital expendi-
tion operate in much the same manner. An expansion tures, but in this regard are subject to the limitations
in the total of such expenditures relative to savings of the available primary statistics used in their compila-
tends to increase general economic activity and a con- tion.
traction operates to bring about decline. The consolidation of stone, clay, and glass industries
The expansion and contraction of gross outlays for into a single group, for example, yields data on capital
manufacturing facilities thus undoubtedly contributed 2
See the article, The New Defense Facilities, Survey of Current Business, p. 10,
to the general economic fluctuations during the past November 1941.
Table 1.—Capital Expenditures for Plant and Equipment in Selected Groups of Manufacturing Industries, 1919-40 l
[Millions of dollars]

Industry group 1919 1920 1921 1922 1923 1924 1925 1920 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940-'

Food and kindred products 137 354 214 257 248 234 272 371 343 423 378 267 171 131 207 195 185 268 320 217 240 294
Textiles and related products 232 300 183 209 260 182 203 198 212 212 235 130 93 56 79 101 89 116 157 91 130 130
Lumber and lumber products 124 159 71 110 118 105 120 143 94 89 104 50 30 15 20 22 32 47 62 43 61
Pulp, paper, and allied products 101 158 89 63 102 93 85 92 116 129 137 110 54 28 29 40 66 98 183 70 86 92
Printing, publishing, and allied industries 85 113 85 107 124 114 130 129 114 102 119 81 52 30 27 41 54 75 82 57 58 64
Stone, clay, and glass products 95 168 115 130 198 157 181 234 202 283 241 120 76 38 28 43 65 99 99 68 68

1
Includes establishments engaged in manufacturing only as defined by the Census of Manufactures.
2 All 1940figuresare preliminary, based upon incomplete data.
Source: U. S. Department of Commerce, Bureau of Foreign and Domestic Commerce.
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December 1941 SURVEY OF CURRENT BUSINESS 21

expenditures which cannot be readily interpreted and enced by the unusual demand for wheat flour during
hence have limited usefulness in the analysis of such the first World War and immediate post-war years which
expenditures. Also, a single estimate for the textile, resulted from the curtailed grain production in Europe
apparel, and related industries group has been necessary and the special advantages which the United States had
since available statistics do not make possible the de- over the two other principal sources of supply, Australia
termination of separate estimates for cotton, woolen, and Argentina, because of its closer proximity to Europe
and silk textiles, and for apparel. in a period when shipping space was at a premium.
The estimates for the pulp and paper industry, and Many of the capital expenditures in flour milling were
the printing and publishing industries are somewhat also prompted by the desire to attain the greater effi-
more satisfactory in this regard. This is likewise true ciencies possible in the larger, highly mechanized mills.
of several of the series to be published in a subsequent
article, such as those for automobiles and rubber prod- Figure 12.—Estimated Capital Expenditures for Plant and
Equipment and Index of Production for Food and Kindred
ucts. However, in all cases the estimates have been Products
made in the greatest detail possible with available MILLIONS OF DOLLARS 1935-39 = 100
150
500
statistical materials.
It is beyond the scope of this article to give an CAPITAL EXPENDITURES
extended historical account of the technological and 400
(LEFT SCALE) /_
'- 125
economic developments affecting each of the industry /

groups for which estimates of capital expenditures are

shown in table 1. However, in the following para-
graphs a few comments are made upon the principal
changes in demand, new products, methods of fabrica-
tion, profitability, and other characteristics of the
300

200
\ /^PRODUCTION
VX A/
/ - 75
100

*•*• (RIGHT SCALE)

various industries which are believed to have a special
bearing upon the capital expenditures in these industries 100 - - 50
during the past two decades.
Food and Kindred Products.
0
Food processing in a factory rather than on a farm 1919 '20 '21 '22 '23 '24 '25 "26 '27 '28 '29 "30 '31 '32 '33 '34 '35 '36 '37 '38 "39 '40 '41
0.0. 41-54-1

or in the household kitchen has been well established Source: Capital Expenditures for all years and Estimated Production for 1941,
U. S. Department of Commerce; Production for 1919-40, Board of Governors of the
for nearly three-quarters of a century in the United Federal Reserve System.
States. Nevertheless, the extent to which foods are
thus prepared for final consumption has continued to The expansion in flour-milling facilities in 1919 and
increase very substantially in recent years. 1920 thus occurred partly in response to abnormal con-
Census statistics disclose no conspicuous change ditions. Together with the declining consumption of
(actually a very small decline is indicated) in the rela- wheat flour per capita in the United States, this expan-
tive proportion which the physical production in food sion left flour millers with productive capacity in excess
manufacturing establishments has been of the total of that necessary at any time during the past two
production in all manufacturing since the year 1899, decades.
but the "value added" in food processing does appear The particularly large capital outlays during the
to have increased relative to the total for all manufac- years from 1926 through 1929 reflect changes in the
turing.3 Also in food processing, mechanization has packaging of foods for the retail market and the exten-
increased rapidly during the past two decades. At sive modernization of food-processing facilities. The
present the portion of the manufacturing effort (meas- expenditures for this purpose of approximately 420
ured by the value added) which is attributable to the million dollars in 1928 was larger than in any other
use of capital facilities in food processing is larger than year during the period covered b}^ these estimates.
that in textiles and apparel, leather and leather prod- Many products, such as sugar, cereals, and baker prod-
ucts, automobiles, and several other industry groups. ucts of various kinds, formerly sold in bulk, were
The fluctuations in the capital outlays made in the increasingly prepared for marketing in packaged form.
food and kindred products industries (see fig. 12) are New processes, such as the quick freezing of fruits,
attributable in a number of cases to special conditions vegetables, and other fresh foods, were introduced
which can be identified. In 1919 and 1920 the rela- during this period. The canning of fruits and vegeta-
tively high capital expenditures were due principally to bles and the use of refrigeration and air conditioning in
additions to flour mills and other grain mills, and to a food-processing plants also expanded greatly.
somewhat lesser extent to expansion in confectionery Considerable centralization of food processing into
and ice-cream plants. The former were greatly influ- larger, more efficient plants and a consolidation of many
3
See "The Output of Manufacturing Industries, 1899-1937," p. 74; Solomon Fab-
concerns into large processing and distributing corpora-
ricant;
Digitized for FRASER National Bureau of Economic Research, 1940. tions occurred during these years. These changes,
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 December 1941

22 SUEVEY OF CURRENT BUSINESS December 1941

together with some increase in the total demand for United States. As a result of these improvements,
food products during the 1920's, are believed to be together with multiple-shift operation, the cotton
largely responsible for the very large capital expendi- actually processed per average active spindle has more
tures in the latter part of that decade. than doubled since 1919.4
The rise in capital outlays in the food manufacturing Keen competition in the textile industries has resulted
industry in 1933 and 1934 is attributable very largely in considerable adoption of this improved machinery
to extensive expenditures upon breweries and distilleries. during the past 20 years. Expenditures upon new
For purposes of industrial classification, following the buildings, however, have been very small since 1929
Census Bureau practices, brewing and distilling of with the sole exception of new structures for the manu-
alcoholic liquors, as well as the processing and bottling facturing of fabrics from synthetic fibers.
of nonalcoholic beverages, are included in the food and Nearly all branches of the textile and apparel in-
kindred products groups of industries. dustries experienced heavy demand, received high
In 1936 and 1937 the recovery in general business prices, and had excellent profit records in 1919 and early
was accompanied by sizable capital expenditures for 1920.5 These conditions led to very large capital out-
baking machinery, bottling machinery of various kinds,
canning plants (especially for fruit and vegetable Figure 13.—Estimated Capital Expenditures for Plant and
juices), and plants for the processing of salad dressings Equipment and Index of Production for Textiles and
Related Products
and similar products.
MILLIONS OF DOLLARS 1935-39 = 100
New products, increasing mechanization, plant mod- 500 175
ernization, and other technical changes in the food
industiies clearly have been major factors influencing
the capital expenditures in this industry during the 400 - :-
past two decades. Also, the greatly increased employ-
ment of women in gainful pursuits outside of the home,
which began during the World War, undoubtedly
300 -

A
A

/
CAPITAL EXPENDITURES
(LEFT SCALE)
/~ - 125
PRODUCT/ON. J
stimulated the demand for prepared foods and thus for (RIGHT SCALE) >^/*#
..•••• /
the facilities required in their fabrication. Notwith-
standing the major influence upon capital expenditures
200
/*
\/
of changes in products or process or of advances to
new high levels of production, it should be observed 100
\ /
\
/v /
'••• / /

that outlays for these purposes frequently are delayed

until, in the judgement of individual enterprisers, 0 1 I 1 1 ! 1 ! i ] I 1 1 I 1 ! 1 50
economic conditions warrant the expenditures. 1919 '20 "21 '22 '23 '24 '35 '36 '37 '38 '39 '40 '41

Source: Capital Expenditures for all years and Estimated Production for 1941,
Textiles and Related Products. U. S. Department of Commerce; Production for 1919-40, Board of Governors of the
Federal Reserve System.
Spinning and weaving have experienced approxi-
mately two centuries of active technological change. lays at that time, particularly in 1920, The capital
This process, as well as the migration of the textile expenditures of 300 million dollars for the textile and
industries, has continued up to the present time. related products industries in that year are the largest
During the 19207s several important developments on record. (See fig. 13.) Late in 1920, the general
occurred which resulted in substantial capital outlays price decline was followed by a reduction in capital
by textile manufacturers in the United States. The outlays which extended through the following year.
major change of this character in the cotton textile The recovery in capital expenditures in 1923 was
branch was the rapid increase of facilities in the South- due principally to the expansion of cotton spinning
eastern States, a movement which had been going on and weaving in the Southeastern States, and to some
for many years but which was particularly active expansion in the woolen and worsted mills in New
immediately following the World War. The post-war England. Some expansion of capital facilities in the
decade also experienced an active growth in plants for cotton spinning and weaving industry in the Southern
the manufacture of full-fashioned hosiery and, in the States continued until about 1930. The New England
latter part of the decade, an expansion of facilities for States, however, have experienced a steady reduction
the processing of rayon fabrics. of such facilities since 1923.
Moreover, throughout the past two decades, improve- Although the physical output of textiles and apparel
ments have gradually been made in the speed and re-
* See "Cotton from Raw Material to Firnished Product", The Cotton Textile
liability of operation of spindles and looms in all of Institute, 1940.
the textile industries. For example, the cotton proc- « See Ralph C. Epstein, "Industrial Profits in the United States," National Bureau
of Economic Research, 1934; also Leland Rex Robinson, "Corporate Earnings on
essed per spindle-hour has increased since 1919 by Share and Borrowed Capital in Percentages of Gross Income (1918-40)," Journal of
approximately 50 percent for the entire industry in the the American Statistical Association, June 1941, pp. 253-264.

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December 1941 SUEVEY OF CURRENT BUSINESS 23

of various types has been well maintained and in the decade from 1901 to 1910, which was a period of very
aggregate has a slightly rising trend over the past two substantial construction activity. Railroad construc-
decades, total capital expenditures in this industry tion, which at one time required large quantities of
show a pronounced downward trend over the same lumber, also has declined over the past 40 years. The
period (see fig. 13). In the absence of any major relative importance in the uses of lumber of all types in
advance in demand or technology, capital expenditures 1939 (based upon the number of board feet) has been
would be expected to remain below the levels attained estimated as follows: Construction, 68 percent; boxes
during the early part of the 1920 decade. Today, and crates, 12 percent; railroad structures and rolling
however, many textile research specialists believe stock, 7 percent; furniture, automobiles, and other
important developments are in prospect which may have industrial uses for further fabrication, 9 percent; and
a significant influence upon the textile industries in the exports, 4 percent.
readjustment following the present war. During the past two decades, capital outlays in the
The most striking textile development during the lumber and lumber products industries show both a
past two decades has not been in spinning, weaving, and declining trend and wide fluctuations. They were
converting, or in the cutting trades, but in the develop-
Figure 14.—Estimated Capital Expenditures for Plant and
ment of new fibers; notably rayon and nylon. For Equipment and Index of Production for Lumber and
purposes of industrial classification, the manufacture of Lumber Products
these and other synthetic fibers is usually included with MILLIONS OF DOLLARS
2 00
1935-39 = 100

the chemical industries. Consequently, capital expend-

itures for this purpose are not included in the totals
shown in figure 13, but in view of their close relationship !5O
• ^PRODUCTION
to the textile industries a brief discussion of this \f (RIGHT SCALE)
expansion is given in the following paragraph. * A
100
Few industrial processes have experienced a more 100

rapid growth than rayon fiber manufacturing. In

1919, approximately 8 million pounds of rayon filament
yarn were produced in the United States. The cor-
responding figure in 1930 was 127 million pounds.
During the intervening years, more than 150 million
1919 '20'21 '22 ' 2 3 ' 2 4 ' 2 5 ' 2 6 ' 2 7 '28'29 '30'31 '32*33 '34 " 3 5 ' 3 6 ' 3 7 ' 3 8 ' 3 9 ' 4 0 '41
dollars appears to have been spent upon new plant and
equipment for the fabrication of this fiber. This Source: Capital Expenditures for all years and Estimated Production for 1919-22
and 1941, U. S. Department of Commerce; Production for 1923-40, Board of Gov-
expansion was particularly rapid from 1925 to 1929. ernors of the Federal Reserve System.
In 1940, the total production of rayon of all types had
largest in 1920, approximating 160 million dollars, and
reached 390 million pounds of filament yarn and 80
in 1926 were slightly more than 140 million. The sharp
million pounds of staple fiber (a more recent develop-
ment). decline following 1926 which was only slightly inter-
rupted in 1929, is conspicuous.
Thus, in a period of approximately two decades, In 1919, lumber production was only slightly more
rayon has grown from a practically unknown material than it had been during the preceding year and less than
to one of our major textile fibers. It is important to in any other year since 1908, and it declined still further
observe, however, that the rapid practical expansion of
in 1920. Prices, however, were high and profits un-
rayon fabrication was preceded by many years of
usually large for this industry. This situation appears
experimentation in search of a synthetic textile fiber,
to be largely responsible for the peak capital expendi-
the earliest patent for the fabrication of a cellulose fiber
tures in the lumber and lumber products industry in
using methods similar to those now followed having
1920.
been awarded in France in 1874.
The demand for lumber and lumber products during
Lumber and Lumber Products. the years from 1923 to 1929 was substantially above
The lumber and lumber products industries are the the long-time, declining trend. This was due very
only major group of manufacturing industries experi- largely to the residential building boom and to the sub-
encing a declining trend in output since 1899.6 Two stantial volume of other types of construction through-
principal factors tend to account for this: First, in- out the entire period from 1923 to 1929. Approxi-
creases in the use of competing materials, especially mately three-fourths of the lumber production during
steel, concrete, clay products, and paperboard; second, this period was used in construction, particularly in
a declining trend in the activity of some of the proc- residential building, which is the principal use for soft-
esses which use this material. wood types of lumber.
Considerably fewer residential units appear to have Capital expenditures in the lumber and lumber prod-
been built during the last decade than during the ucts industries were maintained moderately well during
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8
Fabricant, op. cit. the 1920 decade, though they experienced a slight de-
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 December 1941

24 SURVEY OF CUREENT BUSINESS December 1941

clining trend. One factor responsible for the moder- larger than in any other year.
ately large capital outlays in the decade of the twenties This particular expansion in facilities was due pre-
was the substantial increase in lumber production in dominantly to the practical introduction on a large
the Rocky Mountain and Pacific States. In all other scale of methods for utilizing Southern yellow pine in
parts of the country, lumber production appears to have in the manufacture of sulfate (kraft) pulp and paper
experienced a declining trend. products. More recently processes have been de-
Considerable centralization and modernization of veloped for the manufacture of a new type of newsprint
lumber mills (which account for nearly half of the total from this pulp wood, and in 1939 a large Texas mill was
value added in the lumber and lumber products indus- constructed for this purpose.
tries) occurred from about 1900 to the World War Although the production of all types of paper and
period. Since then, relatively few changes, with the allied products has been at record levels for the past 3
possible exception of kiln drying and the preservative years and many plants are now operating close to full
treatment of lumber, have occurred which have influ- capacity, only a moderate expansion in facilities has
enced substantially the capital outlays in this branch taken place. In 1939 and 1940 this may have been
of the industry. influenced by a desire on the part of the concerns in
On the other hand, technological advance has been this industry to avoid excess capacity at low prices,
considerable in furniture manufacturing and plywood particularly in view of the prospective revival of large
production, and to some extent in the methods of using
lumber in construction—such as prefabrication, timber Figure 15.—Estimated Capital Expenditures for Plant and
Equipment and Index of Production for Pulp, Paper, and
connectors and the increased use of power saws. Fol- Allied Products
lowing the practical introduction of moisture-resistant MILLIONS OF DOLLARS
300
1935-39-=100
1150
resin glues in the manufacture of plywood in about 1935,
the fabrication of this product has increased rapidly and
substantial expenditures have been made for productive 200 125
facilities for its manufacture. The production of Doug-
las fir plywood, the principal type, increased to nearly
150 IOO
three times the 1929 volume in a period of 10 years.
Pulp, Paper, and Allied Products.
The production of pulp and paper products in the
United States has increased substantially and with only
one important interruption during the past two decades,
that of the years 1929-35. Particularly marked in- 50
creases have occurred in the production of paperboard.
Nearly 8 million short tons of paperboard of all types
I I I I
will be fabricated in 1941 compared with less than 2 1919 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 '41
0.0. 41-546
million tons in 1919. Source: Capital Expenditures for all years and Estimated Production for 1919-22
and 1911, U. S. Department of Commerce; Production for 1923-40, Board of Governors
The production of wrapping papers also has increased of the Federal Reserve System.
from less than 1 million tons in 1919 to 2.3 million tons
in 1941. Newsprint paper is the only major product pulp imports from Scandinavian countries after the war.
of this industry whose fabrication in this country has Today, difficulties in securing machinery and some
decreased since 1919, the largest part (about two-thirds) essential raw materials, prevent any major enlargement
of our domestic requirements in recent years having of facilities.
been supplied by imports from Canada. Printing, Publishing, and Allied Industries.
The heavy capital expenditures for pulp and paper The production of newspapers, periodicals, books, and
making facilities in 1920 occurred in a year of unusually similar printed products increased steadily from 1921
high net earnings for the concerns in this industry and to 1929. This fact tends to account for the sustained cap-
were undoubtedly influenced by that situation. A ital expenditures in this industry during the 1920 decade.
steady growth which more than doubled the production In the following decade, however, only 2 years, 1937
of all pulp, paper, and allied products from 1921 to and 1939, experienced a production in this industry
1929 (see fig. 15) resulted in sizable capital outlays in larger than that in 1929, and the production in each of
this industry throughout the period, particularly from these years was only very slightly larger than that in
1927 through 1929. 1929. Moreover, few technical developments appear to
Total output of pulp and paper products was in mod- have been made during this period which would tend
erately smaller volume for a few years after 1929, but it to stimulate capital outlays for the replacement of
had recovered its previous high by 1935 and continued existing printing machinery or other equipment. Most
its strong upward trend thereafter. In the following 2 types of printing machinery are very carefully made and
years very large outlays were made in this industry, have a long useful life.
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 December 1941

December 1941 SURVEY OF CURRENT BUSINESS 25

absence of major technological or other changes, it is tries in this group. During the 1930 decade, the facili-
not surprising that capital expenditures in printing, ties in nearly all stone, clay, and glass industries have
publishing, and allied industries have been much smaller been adequate to meet production requirements with-
in recent years than during the 1920 decade. out further additions to plant and equipment. Also,
Stone, Clay, and Glass Products.
This group of industries includes establishments en- Figure 17.—Estimated Capital Expenditures for Plant and
Equipment and Index of Production for Stone, Clay, and
gaged in the fabrication of a wide variety of products Glass Products
such as flat glass, glassware, cement, structural clay MILLIONS OF DOLLARS I935-39°IOO
500 175
products, pottery, concrete and gypsum products, cut
stone, and miscellaneous nonmetallic mineral products.
Many different basic materials also enter into these 400 r :
150
products.
In view of the diversified character of this group, it is CAPITAL EXPENDITURES
j
not possible to attach any special significance to the 300 r (LEFT SCALE)
> - 125
fluctuations in the total capital expenditures for these / \
r \
PRODUCTION. .
(RIGHT SCALE) V . .••
industries apart from the reflection in the total of the
200 - 100
outstanding developments in some of the individual \ / \ /
industries.
The steadily maintained capital expenditures in this 100 75
group of industries from 1919 through 1929, subject \ / "
only to what appear to be cyclical interruptions in 1921,
1924, and 1927, were to a considerable extent concen- 0 ! ( ! 1 Vf' 1 1 1 1 1 1 1 50 i

1919 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35'36 '37 '38 '39 '40 '41
trated in cement, concrete products, structural clay DO. 41-542

products, and flat glass plants (see fig. 17). This U.Source: Capital Expenditures for all years and Estimated Production for 1941,
S. Department of Commerce; Production for 1919-40, Board of Governors of the
Federal Reserve System.
expansion reflected the unprecedented volume of build-
ing, highway, and other construction during this period, few technological developments have occurred to accel-
as well as the rapidly increasing demand for plate glass erate the replacement of existing facilities, although
in automobile manufacturing, particularly following the improvements in glass container and flat-glass machinery
introduction of safety glass. Construction activity
in recent years are important exceptions. However,
Figure 16.—Estimated Capital Expenditures for Plant and for the stone, clay, and glass industries as a group,
Equipment and Index of Production for Printing, Pub- outlays for plant and equipment during the 1930's
lishing, and Allied Industries
have been less than half of the average for the preceding
MILLIONS OF DOLLARS 1935-39= 100
>00 125 decade.
Summary.
. PRODUCTION
f (RIGHT SCALE) . y An examination of the fluctuations in capital expendi-
50 V tures in the major groups of manufacturing industries
leads to 2 observations which warrant special emphasis.
00 -- 75
First, although the capital outlays in nearly all of the
industries reflect to some extent the short-run fluctua-
tions in general business, they exhibit markedly dif-
5 0 "~ CAPITAL EXPENDITURES - 50 ferent behavior in their long-run trends and fluctuations.
(LEFT SCALE)
This characteristic will be more evident after an exam-
ination of data upon the capital expenditures for all of
0 ! 1 1 1 1 1 1 I 1 1 I 1 1 ! 1 1 1 1 1 ' ! 1
1919 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 "34 '35 '36 '37 '38 "39 '40 '41 the 12 manufacturing industries for which such esti-
Source: Capital Expenditures for all years and Estimated Production for 1919,
mates have been made, especially automobiles, blast
1921, and 1941, U. S. Department of Commerce; Production for 1923-40, Board of
Governors of the Federal Reserve System.
furnaces and steel works, leather and leather working,
and petroleum refining in addition to those treated in
declined slightly beginning in 1927 and fell off precipi- this article.
tously after 1930. During the following 4 or 5 years, In the second place, capital expenditures in manu-
the volume of construction probably was lower, after facturing industries occur principally as the result of
making allowances for price changes, than in any year changes—changes in products, technical processes, and
in the United States since 1904. advances to new high levels in the demand for existing
The capital outlays in the stone, clay, and glass products, and only to a limited extent as the result of
industries in 1928 and 1929 include heavy expenditures the replacement of plants and equipment arising solely
by several concerns engaged in flat-glass production, from well-sustained but fundamentally unchanging
together with sizable capital outlays in the other indus- operations.
428343—41 4
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