Part II.-ECONOMIC REVIEW Taking the Nation at large, the outstanding features of the fiscal year were the high rate of production, consumption, and exports; high real wages; the absence of any consequential unemployment; continued growing efficiency in management and labor; continued expansion in application of scientific discovery in such fields as electric power and light, the gas engine, and radio. There were industrial patches where progress lagged, as in the New England textile industry, various sections of the agricultural industry, and the bituminous coal industry. Nevertheless, the standard of living of the country as a whole was the highest in our history, and therefore the highest in all history. Our greatest concern must be to maintain the present high level of production and savings without an orgy of speculation and ultimate collapse. Some of the more outstanding features of the economic progress of the year are more fully covered in the following paragraphs: INDUSTRY The general condition of manufacturing and trade during the past three years is indicated by the following tables: TABLE 1.-MAJOR ECONOMIC INDEXES A large volume of new construction and a further expansion of automobile production were the chief features of the industrial situation. Contracts let for commercial and industrial buildings showed an especially large increase during the first half of 1925. The total manufacturing output was also larger, and there was a slight increase in the number of factory employees. Production of minerals and forest products, on the other hand, was somewhat smaller than in 1923-24, although much larger than in other postwar years. Retail trade increased during 1924-25 and was larger than in any previous year on record. The expansion of mail-order sales amounted to 10 per cent, as a result of improved buying power among the farm population, caused by the fact that prices of farm products and foods advanced 9 and 7 per cent, respectively, as compared with decreases in the wholesale prices of most other commodities. As a result of higher food prices, the cost of living has shown a slight increase. CONSTRUCTION The greatest volume of construction operations on record, representing a total investment of more than $6,000,000,000, was carried out under the most noteworthy circumstances. Building-cost indexes declined perceptibly during the execution of this tremendous program. This was possible because the construction industry and building owners responded to the movement for stabilization organized by the industry with the cooperation of this department for the purpose of keeping the industry employed more actively throughout the year, instead of allowing it to operate at only a fraction of its capacity during most months. There was practically none of the obvious and gross inefficiency and waste which has usually accompanied building "booms" in the past, and the industry continues in a healthy condition ready to meet continuing demands upon it. Building activity was well distributed throughout the different regions of the country, and there was apparently an increased consumption of building materials on farms. Expenditures for construction activity find their way into a highly diversified group of industries. In this case a considerable part of the activity in scores of manufacturing industries, as well as in lumbering, metal mining, and railway transportation, was due to the high rate of construction of the past fiscal year. The imme diate demand for construction at a given time is extremely sensitive and liable to variation. Hence it is a matter of great concern that this industry, the greatest balance wheel in our economic system. should run in fine adjustment to our other economic needs. The construction accomplished was for the most part weil calculated to meet the permanent and growing needs of the Nation. There was no reminder of the extravagant additions to productive capacity of the boom year 1920, when industrial plants were enlarged out of all proportion to reasonable needs, and with bur little reference to effecting economies in production. In that year only 22 per cent of all construction was for residential purposes. while in the past fiscal year more than 46 per cent went into homes There was also a record-breaking expansion in public works and utility development. Although some instances may be claimed of expenditures not justified by current needs, the sum spent for construction for the most part represented not only a keeping pace with the needs of expanding population, but also a substantial bettering of the country's housing and commercial facilities. The additions to commercial and public plant and transportation all tend to raise living standards and promote elimination of waste in our commercial and industrial life. Our national savings are accumulating at an unparalleled rate, and it is especially desirable to have them invested now in domestic permanent capital improvements which contribute directly to the well-being of our people. For by such devotion of our savings we both encourage thrift and raise the standard of living. The housing shortage arising from the war has not yet beer substantially relieved for the lower income groups, and one of the great tasks ahead of the country is to organize this field so that new homes may be reasonably financed and owned preponderantly through the thrift of the individual families who occupy them. The better organization of the "second mortgage" onto a more reasonable basis is one of the outstanding factors. L Advances in prices of agricultural commodities, together with a large volume of production and marketing, caused the farm income to reach a greater total in the crop year 1924-25 than in any year since 1920-21. Price advances were very pronounced in the case of the various grains. Many weak spots continue, but the general situation is much improved. The prices of farm products as a whole have now practically reached the level of the general average for all commodities, the wholesale price of farm products being 53 per cent above pre-war, while the average of all commodities is 55 per cent above pre-war. September forecasts indicate that the aggregate output of all crops during the present year will be about 6 per cent smaller than last year, but this will probably not adversely affect farm communities since it has been just about offset by advances in agricultural prices. The wheat crop this year is about one-fifth smaller than last year, and the potato crop is the smallest since 1919, whereas production of corn, barley, and cotton has increased. Prices of all kinds of meat animals, dairy products, and potatoes on October 1, 1925, were substantially higher than a year earlier, but prices for all grains except wheat were lower. As a result of the successive rises in the prices of cotton, grains, and animal products during the past three years the agricultural industry has now reached a better adjustment with other industries than at any time since the war. TRANSPORTATION Greater traffic was handled during the fiscal year 1925 than ever before in our railroad history. Our railroad facilities proved equal to the heavy demand placed upon them, and this traffic was handled not only with practically no car shortage but also with greater speed than in previous years. The highly successful operation of our railroads during the last fiscal year reflects the greatest credit upon the efforts of the managers and employees, aided by the cooperation of the shippers and receivers of freight. The regional advisory boards, committees of shippers and receivers of merchandise which have now been formed throughout the United States, have been an impor tant factor in enabling the railroads to care for increasing traffic and at the same time reduce delays in loading and unloading freight. The steady increase in ratios of car and train loadings represents : great contribution to efficiency. Car shortage and delays of traffic in transit tend to increase commodity prices for the consumer and to reduce the income of the producers, and at the same time impair the carrying capacity of the railroads. Economic losses arising from these costs have been largely minimized. Extensions of terminals and the problem of rate adjustments are still before us. The problems of railroad consolidations are yet to be solved. Improvement in railroad finances and services is dependent upon the solution of these problems That transportation facilities shall keep pace with the demands upon them is necessary for our economic stability. The following tables show the essential items in our transportation situation as compared with the three previous fiscal years: TABLE III.-RAILROAD OPERATIONS ་ NOTE.-Certain of the above items relate only to Class I roads which, however, include about 18 per cent of the total. |