National Income in America and the United Kingdom

MR. KUZNETS' Report for the National Bureau of Economic Research' gives an authoritative estimate of the National Income of the United States and its movement from 1919 to 1938. His definition for his major totals is National Income is the net value of the services individuals and their property contribute to the production of economic goods; or the value of the commodities and services produced by the country's economic system minus the costs of the commodities (raw materials and capital equipment) and of services of enterprises consumed in the production process. It may also be described as the sum of all payments by enterprises to individuals and of the savings of enterprises after all costs and disbursements sustained in the production process have been deducted . This is broadly the same definition as that adopted by English writers, though there is room for much variation in detailed interpretation, which affects significantly direct comparisons between the two countries in any one year; but for comparison of the movements over a series of years, when the delimitations chosen are rigidly adhered to in each country, any discrepancies in exclusion or inclusion of special categories become relatively unimportant. In some treatments of income in the United States the changes in the value of capital, as indicated by stock exchange prices, have been included in changes of money income, and when this is done the picture of the movements in depression and boom is very materially altered. We are not, however, faced with this difficulty in Kuznets' study, and the statistics in the adjoined Table that show the movements up and down in the period I926-i938 may be used with reasonable confidence. On the other hand, we ought not to make direct comparisons such as, in 1938 income per head was $500 in U.S. and L9o in U.K., without minute attention to definition; still less should we affirm that at the current rate of exchange (LI = $4.9) income per head in U.K. was 88 per cent. of that in U.S.