industries. Thus, the establishments classified in an industry do not, as a rule, manufacture the total output of the primary products normally belonging to the industry, as in many cases some of these are made as secondary products by establishments in other industries.

The treatment of each establishment as a unit and its assignment to some one industry sometimes results in overrating the importance of certain industries and underrating that of others, because of the fact that where primary products of an industry are made in considerable quantities as secondary products in other industries, the statistics for the industry in which they are primary products do not include data for personnel, wages, cost of materials, etc., that are factors in the secondary production of these commodities in the other industries. In the case of every industry, the value of the secondary products not normally belonging to it, and that of commodities normally belonging to it but made as secondary products by establishments engaged primarily in other lines of manufacture, offset one another to a greater or to a lesser extent; and in most cases the total value of products reported for an industry does not differ greatly from the value of the total output, in all industries, of the classes of products covered by the industry designation.

9. Changes in the scope of the Census of Manufactures between 1929 and 1939.—It should be noted that seven industries, namely, "Car and general construction and repairs, electric-railroad repair shops," "Car and general construction and repairs, steam-railroad repair shops," "Coffee and spice, roasting and grinding," "Flax and hemp, dressed," "Gas, manufactured, illuminating and heating," "Motion pictures, not including projection in theaters," and "Peanuts, walnuts, and other nuts, processed or shelled," which were inIcluded in the Census of Manufactures for 1929 have since been omitted. The motion-picture industry, however, has been canvassed separately since 1929 but the data have not been included in the totals for manufacturing industries. The "Flax and hemp, dressed" industry was abandoned as a manufacturing industry after the 1929 census. Data for "Coffee and spice, roasting and grinding" and for "Peanuts, walnuts, and other nuts, processed or shelled" were not collected after the 1931 census. The industries "Gas, manufactured" and "Railroad repair shops" (both electric and steam) were not covered by the Census of Manufactures after 1935. The manufactured-gas industry was dropped because it was not practicable to obtain figures that did not include data for the distribution and the mixing of gas. Railroad repair shops were omitted because they are no longer classified as manufacturing establishments. However, the number and value of new cars and of locomotives built in these shops are included in the production figures for "Electric and

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steam railroad cars" and in those for "Locomotives built," respectively.

10. The questionnaires.-In preparation for the 1939 census, the questionnaires were revised, as for previous censuses, to incorporate practical recommendations made by manufacturers and other interested persons and to harmonize them so far as possible with questionnaires used in making certain monthly and quarterly canvasses. The principal change in the standard inquiries was in that relating to personnel, which was expanded to provide a break-down by sex and separate data for the employees of manufacturing plants who were engaged in distribution, construction, and other nonmanufacturing activities. A new inquiry, covering capital expenditures for plant and equipment in 1939, was added to the questionnaire.

11. Persons engaged-general classification. In the 1939 census each manufacturer was asked to report the total number of employees receiving pay at any time within the normal pay-roll period ended nearest October 14, 1939, whereas in earlier censuses the pay-roll figures represented, in general, only employees engaged, directly or indirectly, in the manufacturing activities of the establishment. The employees reported for 1939 were classified, by sex, as salaried officers of corporations, manufacturing employees, distribution employees, construction employees, and all other employees. Thus salaried officers of corporations were not allocated to any one of these four employment groups. Manufacturing employees were further classified, by sex, as (1) managers, superintendents, and other supervisory employees, and responsible professional and technical employees; (2) clerks, stenographers, and other clerical employees; and (3) wage earners.

The comparability of the salaried-personnel figures for 1939 with those for earlier years is affected to an indeterminable extent by several factors. The 1937 questionnaire called for data on "Salaried officers of the corporation whose duties are concerned wholly or chiefly with manufacturing," whereas for 1939 and for other census years the item simply read "Salaried officers of the corporation." Furthermore, some manufacturers undoubtedly included data for the personnel of their central-administrative offices in the figures given in individual plant reports, although such central-office personnel was not to be reported except for those census years for which a special administrativeoffice questionnaire was used for reporting them. A third factor affecting the comparability of the figures is the specific segregation, for 1939, of nonmanufacturing employees. At earlier censuses manufacturers were instructed to report their personnel employed in production activities and in the power plant and such auxiliary activities as maintenance, shipping, warehousing, etc., at the same location. For the food, apparel, and printing and publishing industries, where

distribution constitutes an important part of the activities of the establishments, the 1939 figures for salaried personnel engaged primarily in connection with manufacturing indicate marked decreases as compared with the corresponding figures for earlier years, these decreases not being in harmony with changes in numbers of wage earners. It must be assumed that some of the personnel reported for earlier years as engaged in production activities or in activities connected with production were reported for 1939 as distribution or other nonmanufacturing employees. It is not known to what extent this factor affects the comparability of the figures.

12. Wage earners and wages.-Wage earners in manufacturing plants are, generally speaking, those who perform manual work, using tools, operating machines, handling materials and products, and caring for the plant and its equipment. They comprise both time and piece workers. Working foremen and "gang and straw bosses" are treated as wage earners, but foremen whose duties are primarily supervisory are classified as salaried employees.

The 1939 questionnaire called for the number of wage earners engaged in manufacturing receiving pay at any time within the normal pay-roll period ended nearest October 14, 1939, by sex, and also asked for the number receiving pay at any time within the normal pay-roll period ended nearest the fifteenth of each month. Thus, although the 1939 questionnaire provided for reporting all employees of manufacturing establishments, it did not provide for reporting separately the wage earners engaged in distribution, construction, and other nonmanufacturing work.

The averages for the year for industries and for States have been calculated by dividing the sums of the figures for the several months by 12. The averages for industry groups and for geographic divisions have usually been calculated by the same method, but in some cases these are simply the totals of the averages for the individual industries or for the States. For this reason, slight differences will be found in comparing the averages for industries and groups and those for divisions in different tables, but these differences are in no case of any statistical importance. The wage-earner averages in tables showing industry figures by States do not always add to the State totals, and the calculated averages do not, of course, add exactly to the United States totals in all cases.

The average for the year exceeds somewhat the number that would have been required for the work performed if all had been continuously employed through the year, because of the fact that it is impracticable to take into account the extent to which some or all of the wage earners may have been on part-time or for some other reason may not actually have worked on a full-time basis during the entire week covered by the entry for a given month. Moreover, in cases in which

a plant was in operation during only a part of the month, the number of wage earners reported for the week selected would almost certainly be above the average for the month. The quotient obtained by dividing the amount of wages (the total amount paid to wage earners during the year) by the average number of wage earners cannot, therefore, be accepted as representing the average wage received by full-time wage earners. In making comparisons between the figures for 1939 and those for earlier years, the likelihood that the proportion of part-time employment varied from year to year should be taken into account.

13. Cost of materials, etc.-The questionnaire called for data on the cost of materials, supplies, and containers for products, the cost of fuel, and the cost of purchased electric energy "actually used during the year." Consequently the figures for the cost of materials, etc., and of fuel represent the actual consumption of these items in the production of the commodities reported as the year's output, not the purchases that may have been made within the year. The cost of materials does not include the cost of parts and replacements for machinery and equipment used in the plant, nor that of construction materials, etc., charged to capital accounts. In the cases of some industries it represents chiefly raw materials, such as crude rubber; in others it is the cost of semimanufactured materials, such as tanned leather or, for an assembly plant, motorvehicle parts. Furthermore, certain commodities, such as textiles, flour, and wire, which in some cases are sold to individual consumers as finished products, in other cases are used as materials for further manufacture. The cost of fuel does not cover that used as material in manufacturing processes-for example, coal in the production of coke--which is included with other materials.

14. Contract work. The term "contract work"which does not imply the existence of a formal contract is applied to work done outside the establishment reporting, on materials supplied by it, for the production of some or all of the commodities reported as the products of the establishment. It may be done by another manufacturing establishment or by persons working in their homes. Payments made for such work appear in the census reports as "Cost of contract work"; receipts for such work done for others are included in the total value of products.

The largest amount of contract work is reported by the clothing industries, and the printing and publishing industries rank second in this respect. In many industries, however, contract work is so small in amount as to be negligible, sometimes being merely incidental and not a normal or a necessary part of the industry's activities.

The cost of contract work is subtracted, together with the cost of materials, fuels, etc., from the value of products in computing the value added by manufacture.

15. Value of products. The amounts under this beading are the selling values, at the factory or plant, of all commodities produced (or, for some industries, receipts for work done) during the census year, whether sold, transferred to other plants (interplant transfers), or in stock, and consequently, under normal conditions, the total value of products covers the cost of production (including overhead expenses) and profits. It also covers selling expenses except in cases where separate sales departments are operated, in which cases the values at which the products are turned over to sales departments are reported.

The value of products is not a satisfactory measure of the importance of a given industry because only a part of this value is actually created within the industry. Another part, and often a much larger one, is contributed by the value of the materials used. The aggregates for cost of materials and value of products include large amounts of duplication due to the use of the products of some industries as materials by others. (See sec. 16, "Duplication in cost of materials and value of products.") In the case of establishments performing work under contract (see sec. 14, "Contract work," above), the amounts received for such work are reported in lieu of value of products.

Some manufacturers sell their products at prices which include freight and other delivery charges, but these transportation charges are deducted whenever possible.

Some establishments manufacture little or nothing for sale, but make partly finished products or containers and auxiliary articles for the use of other manufacturing establishments under the same ownership. For example, a blast furnace produces pig iron, which is used in the production of steel in plants under the same ownership. In such cases the "transfer value" assigned by the manufacturer is accepted as the value of the pig iron. This transfer value is usually based on market prices or on the cost of manufacture, but sometimes it is purely arbitrary.

16. Duplication in cost of materials and value of products. In making use of the statistics for cost of materials and value of products for groups of industries or for all industries taken as an aggregate, it must be remembered that they include a large amount of duplication due to the use of the products of some establishments as materials by others. This duplication occurs, as a rule, between different industries and is not found to any great extent in individual industries. A most outstanding exception, however, is found in the "Motor vehicles, motor-vehicle bodies, parts and accessories" industry, in which there is a large amount of duplication. The net value of all manufactured products, exclusive of such duplication, is estimated to have been approximately two-thirds of the gross value for 1929. No corresponding estimate has been made for subsequent years.

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17. Value added by manufacture. The value of products is not a satisfactory measure of the importance of a given industry, because only a part of this value is actually created within the industry, another, and sometimes much larger, part being contributed by the materials used. For some purposes the most satisfactory measure is the "value added by manufacture"that is, the increase in the total value of commodities in existence as represented by the difference between the cost of the materials, etc., consumed and the value of the products made from them. It is calculated by subtracting the cost of materials, supplies, containers, fuel, purchased electric energy, and contract work from the value of products.

This net addition to the value of commodities is almost free from the duplication that is a factor in the total value of products. It does, however, include a small amount of duplication due to the fact that certain establishments perform contract work on materials owned by other establishments either in the same or in affiliated industries. Such establishments report the amount received for contract work in lieu of value of products, and where they are classified in the same industry as the establishments that produce the finished commodities, this results in duplication in the total value of products and therefore in the total value added by manufacture. The amount of this duplication in the value added is insignificant except in a few industries, particularly the manufacture of clothing.

In comparing manufacturing industries with one another, the relation between the value of finished products and the cost of materials should be kept constantly in mind. The products of one industry may be valued at the same amount as those of another, but in one case, in which low-cost materials are used and much labor is expended on them, several times as much value may be added to the materials as in the other industry, where the materials are expensive and only a small amount of labor is required to process them. It is obvious that the industry that adds the greater amount of value is of the greater economic impor

tance.

For 1937, the value added by manufacture was calculated in the same manner as for 1939. For 1935, however, the cost of contract work was included in the subtracted figure for only those industries (or groups of closely related industries in the Textiles and Printing and Publishing fields) in which it represented 10 percent or more of the total for materials, fuel, etc., and for earlier years the cost of contract work was not subtracted from the value of products in computing the value added by manufacture for any industry.

18. Profits and production costs.-Profits cannot be calculated from the census statistics, for the reason that these statistics do not show total production costs, no data in regard to depreciation, interest, insurance, rent, taxes (except internal-revenue taxes for certain indus

tries), and other miscellaneous expense items having been collected.

19. Price changes. In comparing the figures for cost of materials, value of products, and value added by manufacture for different census years, price changes should be taken into account. To the extent to which this factor was influential, the figures fail to afford true indexes of the actual increase or decrease in manufacturing activities.

20. Inventory. For 1939, as for 1937, the values of inventories at the beginning and at the end of the year were called for under two heads, namely, (a) finished products (including goods produced by outside contractwork from materials supplied by the establishment reporting) and (b) materials, supplies, fuel, work in process, and all other inventories. For the larger establishments, particularly, separate figures for these two classes of inventories were obtained whenever possible. If no separation could be made, however, the total value of all inventories was tabulated either as finished-products inventory or as materials, supplies, etc., inventory, according to how inventories in the particular industry were generally reported. Since a number of manufacturers failed to give the separate inventory figures, the totals for all inventories are more nearly complete than are the figures for the two separate groups of inventory items.

It should be noted that only those inventories held at manufacturing plants are reported for the Census of Manufactures. Inventories owned by manufacturing concerns but held in warehouses separate from the manufacturing plants are not included. The tobacco industries offer a good example of industries where large inventories are held in warehouses not connected with any individual manufacturing plant.

Data on inventories were not collected for any of the industries in the Printing, Publishing, and Allied Industries group, nor were inventory data tabulated for contract shops in the textile industries. The value of the products of those industries for which inventory data were not collected or tabulated was not considered in determining the proportion of the total value of products represented by establishments for which satisfactory inventory data were reported. Establishments whose values of products amounted to 96.5 percent of the total value of products reported in the 1939 census either supplied inventory figures or stated that they had no stocks on hand.

21. Expenditures for plant and equipment. For 1939, for the first time in any census of manufactures, data were collected on capital expenditures for plant and equipment. Manufacturers were requested to report expenditures in 1939 for permanent additions and major alterations that were charged to fixed-asset accounts and were of the type for which depreciation accounts are ordinarily maintained. These expendi

tures were divided into three groups, namely, (1) those for new construction and major alterations of buildings and other fixed plants and structures, (2) those for new machinery and operating equipment, and (3) those for plant and equipment acquired in a "used" condition from other owners, and expenditures for land. Some manufacturers failed to distribute their total expenditures under this inquiry between (1), (2), and (3), and consequently the figures given in this report for total expenditures for plant and equipment are more nearly complete than are those for the three items under this total. The statistics are presented in such form as to show the relative number and size of manufacturing establishments that were increasing their investments in plants and equipment in 1939. The figures relate only to plants that were in operation in 1939, and do not cover idle plants and plants under construction that were not put into operation within that year. They do not, of course, include data for expenditures made by the owners of plants and equipment leased from others by the manufacturers reporting.

22. Power equipment. In the 1939 census, as in those for 1935 and 1929, data on the power equipment of manufacturing plants were collected. (Because of the incompleteness of the data for 1935, no statistics on power equipment were published for that year.) The inquiry for 1939 was more detailed than that for 1929 in that for the current census prime movers were classified not only as to type but also as to whether they were used for driving generators. This expansion of the inquiry permits a direct comparison between the horsepower capacity of prime movers driving generators and the kilowatt capacity of the generators driven by them. In order to be able to present information on the capacity of power equipment not ordinarily in use, data on the total horsepower rating of idle prime movers and on the kilowatt rating of idle generators were collected.

Some manufacturers operating two or more plants reported their entire power-plant equipment, including motors installed in their several plants, on a "master schedule." In these cases the data were not apportioned to the individual plant reports, but were assigned as a whole to the industry in which the major part of the manufacturer's business was classified.

The figures for the horsepower rating of motors driven by purchased energy have not been added to the total for the horsepower of prime movers, as was done in the 1929 census, to obtain an aggregate figure for horsepower.

23. Fuel and electric energy used. The quantities of the several kinds of fuel (coal, coke, fuel oil, and gas) used, and the quantity of electric energy purchased, by manufacturing establishments in 1939 were reported, together with the cost of each. In addition, each establishment that generated electric energy reported

the quantity produced and the amount sold. The cost figures were used for editing purposes but were not published in detail. Practically the same inquiry was carried on the 1937 schedule, except that no detailed cost figures were called for. The quantity and cost figures cover not only consumption for the production of power and heat but those for electric energy cover the use of energy for light and in electrochemical processes.

24. Disclosure of data for individual establishments.The Bureau of the Census is prohibited by law from publishing any statistics that disclose data for individual establishments. For this reason it is necessary in some cases to withhold separate figures for an industry or for a State, and to include these figures in an "Other" item, despite the fact that the industry or the State concerned may be more important than are some of those for which separate figures are published. In general, separate figures are given for each industry and for each State represented by three or more establishments. In some cases, however, one or more establishments produce a very large proportion of the combined output of three or more in a particular industry or in a State, and in such cases the figures for the industry or for the State are not given separately but are included in those for "Other industries" or "Other States." Personnel figures are given, however, for all industries and for all States represented by three or more establishments (under separate ownership or control), even when the other figures are combined or withheld.

25. Industrial areas. The 97 counties in which, as measured by number of wage earners employed, more than half the manufacturing activities of the country are concentrated have been grouped, for manufacturescensus purposes, into 33 industrial areas, none of which had fewer than 40,000 factory wage earners when these areas were established for the 1929 census. The most practical method of establishing the boundaries of these areas has been adopted, namely, that of following county lines. Thus each area comprises, in addition to the city or cities within it, one or more entire counties, even though the industrial activities of the area may not be uniformly distributed throughout all parts of these counties.

The industrial area must not be confused with the "metropolitan district," as established for populationcensus purposes, which includes, together with the central city or cities, all the adjacent and contiguous civil divisions having at least 150 inhabitants per square mile.

The industrial areas were established to permit the presentation of statistics for regions of industrial concentration. It is obvious that the boundaries of a city do not enclose the entire area of which the city is the business and industrial center, and likewise that those concentrations of industry that overlap State boundaries

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are not adequately represented in the statistics for individual States. The industrial areas as constituted for census purposes are not subject to these limitations, and are given their proper places in the census statistics as coherent, integrated units of industrial activity.

26. Changes in figures for earlier years. It will be found that some of the tables in this report do not carry comparative figures for as many earlier years as did corresponding tables for prior censuses. This is due largely to the fact that it was impracticable to carry the adjustments required by the revision of classifications, outlined in sections 6 and 7 above, back through the figures for all census years. Furthermore, it will be found that some changes have been made in the comparative figures here published, resulting partly from the classification revisions but chiefly from the abandonment of certain industries, as explained in section 9. Important differences have been explained, but minor changes are merely indexed to the footnote "Revised."

27. Changes in industry groups, industry classifications, and titles: 1939.-The following list gives the changes in industry groups, titles, and classifications between 1937 and 1939 (see also Appendix E):

Group 1.-FOOD AND KINDRED PRODUCTS Baking powder, yeast, and other leavening compounds.Transferred from the Chemicals and Allied Products group. Beet sugar. Title changed from "Sugar, beet." Blended and prepared flour made from purchased flour.New industry, products of which are blended flour made from purchased flour (not formerly treated as a manufactured product) and prepared (self-rising) flour made from purchased flour (formerly classified as a product of the "Cereal preparations" industry).

(1) Bread and other bakery products (except biscuit, crackers, and pretzels); and (2) biscuit, crackers, and pretzels.-Formerly one industry under the industry title "Bread and other bakery products."

Candy and other confectionery products. Formerly designated as "Confectionery."

Cane sugar-except refineries.-Title changed from "Sugar manufacture, cane.'

Cane-sugar refining. Title changed from "Sugar refining,

cane."

(1) Canned and dried fruits and vegetables (including canned soups); (2) pickled fruits and vegetables and vegetable sauces and seasonings; (3) preserves, jams, jellies, and fruit butters; (4) quick-frozen foods; and (5) salad dressings.-New industries made up of establishments formerly classified in the abandoned industry title "Canned and dried fruits and vegetables; canned and bottled juices; preserves, jellies, fruit butters; pickles, and

sauces.

(1) Canned fish, crustacea, and mollusks; and (2) cured fish.Formerly one industry under the designation "Canned and cured fish, crabs, shrimps, oysters, and clams."

Cereal preparations.-Revised to exclude prepared (self-rising) flour, classified as a product of the "Flour and other grain-mill products" and "Blended and prepared flour made from purchased flour" industries. Corn grits for brewers' use, formerly classified as a product of this industry, have been transferred to the "Flour and other grain-mill products" industry.