Savings in the Modern Economy

Savings in the Modern Economy: A Symposium

HARLAN M. SMITH
DOUGLAS ABBOTT
HUGH GAITSKELL
ALVIN H. HANSEN
E. A. GOLDENWEISER
SUMNER SLICHTER
H.CHRISTIAN SONNE
IRWIN FRIEND
LAWRENCE R. KLEIN
RAYMOND W. GOLDSMITH
J. K. GALBRAITH
WOODLIEF THOMAS
ROGER MURRAY
JAMES S. DUESENBERRY
DOROTHY BRADY
IMRIE DE VEGH
JAMES MORGAN
MARGARET G. REID
JAMES TOBIN
DAVID MC CORD WRIGHT
SIMON KUZNETS
JOHN LINTNER
EUGENE R. BLACK
E. M. BERNSTEIN
EMERSON A. ROSS
FELIPE PAZOS
B. R. SHENOY
GEORGE GARVY
WALTER W. HELLER
FRANCIS M. BODDY
CARL L. NELSON
Copyright Date: 1953
Edition: NED - New edition
Pages: 392
https://www.jstor.org/stable/10.5749/j.ctttt59d
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  • Book Info
    Savings in the Modern Economy
    Book Description:

    Savings in the Modern Economy was first published in 1953. Minnesota Archive Editions uses digital technology to make long-unavailable books once again accessible, and are published unaltered from the original University of Minnesota Press editions. How will savings affect the future economy of the United States and other parts of the world? Will savings continue to aid economy expansion or will they lead, sooner or later, to difficult problems? What are the motivations that cause people to save? How has the pattern of saving changed in recent times? What is the effect of retirement and pension funds? What is the role of savings in periods of inflation? In economy depression? How can savings foster economy progress in underdeveloped countries? To provide a scholarly yet thoroughly practical basis for answers to questions like these, a group of distinguished economists pool their thinking in this volume. The series of 28 papers bring to the problem varied backgrounds and different viewpoints. Professors, bankers, government officials, and industrialists, representing national and international organizations and business enterprises, contribute papers and related comments. There is not always agreement in the discussion, and no quick and easy solutions are offered, but the resulting analysis is realistic and timely, yet long-range in approach and value. The material covers four broad topics: savings and economic policy; savings concepts, data, and behavior; the savings problem in underdeveloped countries (with specific reference to the Far East and Latin America); and savings and inflation. The volume is based on papers given at a conference on Savings, Inflation, and Economy Progress held at the University of Minnesota through the cooperation of the university’s School of Business Administration and a number of sponsoring business firms.

    eISBN: 978-1-4529-3786-1
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. LIST OF SPONSORS
    (pp. v-vi)
  3. The Conference
    (pp. vii-x)
  4. The President’s Introduction
    (pp. xi-xiv)
    J. L. Morrill

    It would be a challenge, indeed, to attempt any appraisal of the importance of this symposium on savings, inflation, and economic progress. To do so would call for a degree of “economic literacy” which most certainly I do not possess.

    Let me, therefore, merely intimate what this symposium means to me as president of the University of Minnesota, as a representative of academic endeavor at the administrative level, and as a citizen of this state and nation.

    As its president I am gratefully sensible of the honor which accrues to the university in the publication of papers on problems of...

  5. Table of Contents
    (pp. xv-2)
  6. 1 The Savings Problem: A Survey
    (pp. 3-26)
    Harlan M. Smith

    Although saving is in the forefront of much economic policy discussion today, the savings problem is by no means new. The vital role of saving in economic progress, for instance, was well understood by the classical economists. Adam Smith inThe Wealth of Nationsin 1776 argued that national economic progress consists not in the accumulation of gold and silver but in the increasing productivity of a country’s people brought about largely by the accumulation of capital in the form of machinery and other productive equipment. The growth of producer’s capital equipment requires that some labor and other factors of...

  7. Part I. Savings and Economic Policy
    • 2 Savings, Investment, and Inflation: A Canadian View
      (pp. 29-36)
      Douglas Abbott

      Savings and their relation to income, prices, and production are of first-rate importance in both the short term and the long. We in Canada, like you in the United States, owe a great deal of our present productivity and prosperity to the high level of saving during past decades in North America and before that in Britain. The rapid settlement and development of this continent required a huge volume of savings and the intelligent and effective use of them. It also required a respect for obligations, moral as well as legal, incurred by those who put the savings to use....

    • 3 Savings and the World Economy: A British View
      (pp. 37-46)
      Hugh Gaitskell

      The first lecture I ever delivered was on the subject of saving and economic progress. It was delivered in one of the British coalfields to a small class of miners, most of whom were unemployed. Looking back I am surprised at my audacity. For I gave them none of the modern skepticism and anxiety about saving—but the full classical doctrine, inherited from the nineteenth century, in which the part played by thrift in economic progress is both clear and crucial. They must have thought the subject most inappropriate, but I believe it provoked thought and argument. I must have...

    • 4 Savings in the Expanding United States Economy
      (pp. 47-63)
      Alvin H. Hansen and E. A. Goldenweiser

      As we look over what has been happening in the United States in recent years it is quite clear that we have been going through a really remarkable period. We have been witnessing a miracle of production such as nobody dreamed of ten or twelve years ago. With respect to the crisis facing our country today, facing all the democratic countries, we are learning that the structure of the American economy is peculiarly well fitted for just exactly this kind of situation.

      It is well fitted because it has two almost unique characteristics—at least unique in the light of...

    • 5 Inflation and Savings: The Long View
      (pp. 64-72)
      Sumner Slichter

      It is one of the great paradoxes of life that we often get excited about a problem just when the problem begins to give way in importance to some other one. And I think that may be true of inflation today. During the last year or two the danger of inflation has been discussed more frequently than ever. The danger is not over, and the long-run movement of prices will probably be slowly upward. Nevertheless, just as the talk about the danger of inflation reaches a peak, the actual danger is subsiding. Powerful deflationary influences or anti-inflationary influences are now...

    • 6 The Role of Savings in Long-Run Economic Policy
      (pp. 73-82)
      H.Christian Sonne

      Primitive saving has been going on for thousands of years and, in a sense, is part of nature. It may have taken the form, at first, of storing supplies, of hoarding commodities; and later, of using such accumulated wealth to further one’s own activities or for transfer into precious metals. This form of saving I callprotective saving. As a safeguard against insecurity, or merely as a leftover from a previous primitive state of economic organization, it is found everywhere, but especially in Asia and parts of Europe.

      With the advent of the mercantile system, which through evolution led to...

  8. Part II. Savings Concepts, Data, and Behavior
    • 7 The Concept and Measurement of Savings
      (pp. 85-103)
      Irwin Friend

      This paper will be confined to a discussion of concepts and measurement of individuals saving. Neither the corporate nor the government sectors will be considered explicitly. The historical savings behavior of individuals, and the factors affecting this behavior, will be discussed only incidentally since these subjects are being treated in other papers. However, some attention will be paid to recent developments in the rate of saving which have raised many questions.

      The aggregate volume of saving for individuals during any period is defined as the difference between their current income and their current expenses, the latter including personal tax payments...

    • 8 Savings Concepts and Data: The Needs of Economic Analysis and Policy
      (pp. 104-132)
      Lawrence R. Klein

      Arguments about definitions are thoroughly unrewarding if the disputants’ goals are to determine “correct” or “true” definitions. Useful discussions about alternative definitions can, however, center around the objective of determining whether one definition is more fruitful or more revealing than another. In the present context I am interested in choosing those savings concepts or definitions which lead to a better understanding of economic processes and better predictions of business-cycle movements.

      In the pure theory of individual behavior, saving is represented essentially as the consumption of future commodities. Any funds allocable to current consumption which are not so allocated become available...

    • 9 Trends and Structural Changes in Savings in the Twentieth Century
      (pp. 133-155)
      Raymond W. Goldsmith

      Since most of this paper represents a condensation of some of the considerations and findings treated more extensively and a little more adequately elsewhere, a further summary is not without dangers.¹ For the sake of those who are inclined to read while they run, the risks of oversimplification and lack of sufficient qualification have nevertheless been taken.

      1. Over the last fifty years the volume of saving in the United States has shown an upward secular trend at a rate of approximately 1¾ percent a year if the figures are adjusted for changes in the price level and in population.² This...

    • 10 War, Cold War, and Savings
      (pp. 156-168)
      J. K. Galbraith

      The theory of consumer behavior, the underlying rationale of personal saving, brings the economist fairly close to that frontier beyond which a priori judgments cannot be made subject to empirical measurement. Under wartime conditions, or when a substantial part of a country’s resources are being diverted to armaments, or when the catastrophic possibility of actual war plays a part, however remote, in human calculations, the problem becomes even more difficult. Very few of the factors influencing saving in wartime, or under the conditions of partial mobilization, or under the varying psychological tension to which we have been subjected during the...

    • 11 The Institutionalization of Savings: Trends and Implications
      (pp. 169-190)
      Woodlief Thomas

      Savings institutions, or institutional investors, have become of increasing importance in assembling the accumulated savings of the country and allocating them to various investment uses. The services they provide have no doubt had a considerable influence upon the development of the economy. This group of institutions includes life insurance companies, savings and commercial banks, savings and loan associations, trust companies, trust funds, investment trusts, pension funds, and endowments.

      These investors possess the common feature of having contractual, legal, and other obligations for the handling of funds belonging to others, although the nature of these obligations varies considerably. Their responsibilities, however,...

    • 12 The Effect of Retirement and Pension Funds on Saving
      (pp. 191-194)
      Roger Murray

      The principal disability in even a brief discussion of this topic is the lack of adequate data on the volume of retirement and pension funds. The estimates that we in Bankers Trust Company have made as to the rate of growth in industrial pension plans are familiar to many. Other surveys are now in process which ought to assist in revising or confirming these estimates. In the meantime, however, the rough magnitudes involved may be indicated by our figures for annual additions to insured and trusteed pension plans in the range of $1¾ billion to $2 billion. During 1951 and...

    • 13 Savings Behavior of Individuals
      (pp. 195-229)
      James S. Duesenberry, Dorothy Brady, Imrie de Vegh, James Morgan, Margaret G. Reid, James Tobin, David McCord Wright and Simon Kuznets

      It is typical of a certain stage of scientific development that the more we learn about a phenomenon the more we realize how much remains to be learned. That seems to be the situation in the field of personal savings. We have made a good deal of progress in the last few years but we now see in front of us a broader range of research tasks than we envisioned fifteen years ago. In preparing this paper, I wasted a good deal of time and effort seeking some way of looking at the problem which would somehow unify the rather...

    • 14 The Determinants of Corporate Savings
      (pp. 230-258)
      John Lintner

      No one today would seriously question that very substantial progress has been made over the last fifteen or twenty years in gaining a better understanding of the important role of private savings among the many factors determining levels of business activity and the progress and efficiency of the economy. Important new information has been obtained through budget studies, the Michigan-Federal Reserve Board surveys, and the pioneering work of Kuznets and Goldsmith on income and savings over long periods of time. The rapidly growing volume of available data has been refined and organized through work on integrated systems of national income...

  9. Part III. The Savings Problem in Underdeveloped Economies
    • 15 Savings and World Development
      (pp. 261-266)
      Eugene R. Black

      As head of an international institution, I have to try to forget my own nationality. Along with a lot of other people I’m trying to learn how to think like a citizen of the world. One of the best ways to get a feel for the problems of the world is to go out and take a look. In the last few years I have visited more than thirty countries. Just before I prepared this paper I returned from a nine-week trip around the world, in the course of which I spent some time in nine countries I had never...

    • 16 Financing Economic Growth in Underdeveloped Economies
      (pp. 267-306)
      E. M. Bernstein

      The process of economic development is exceptionally complex. It involves much more than the provision of mechanical equipment. It requires an attitude receptive to new fields and new methods of production, institutional arrangements that encourage enterprise and investment, and technical and managerial skills that make new methods of production effective. And it requires a healthy and well-trained labor force that can adapt itself to new methods of production. Such an environment conducive to economic development cannot be created at once. It is more likely to appear gradually in a few sectors of the economy. Opportunities for economic development will thus...

    • 17 Savings, Inflation, and Economic Development
      (pp. 307-322)
      Emerson A. Ross, Felipe Pazos and B. R. Shenoy

      In discussing briefly some aspects of foreign investment in economically underdeveloped countries, I should like to indicate the general magnitude of such investment in recent years and to emphasize the importance of using the outside resources, brought into a country through foreign investment, in such a way as to maximize their effect in producing economic development.

      Few people seem to realize how small foreign investment for economic development has been in recent years. Many have gained the impression (from the appropriations running in the billions of dollars a year for foreign assistance and from the estimates of United States long-term...

  10. Part IV. Savings and Inflation
    • 18 Savings and the Problem of Inflation in the United States
      (pp. 325-362)
      George Garvy

      Increasing savings is one of the most potent means of offsetting inflationary pressures. This becomes immediately clear if we look upon the saving process as the counterpart of physical investment. To the extent that savings are not invested directly, the saving process involves a transfer of claims on the current flow of goods and services between economic units and from one sector of the economy to another. By transferring purchasing power from economic units which spend less than their current income to those which spend more, the saving process contributes to re-establishing the balance between demand and supply.

      Normally, individuals...

  11. Index
    (pp. 363-370)