JULY 15, 1954
HYDE PARK, Wednesday—A reader has sent me an extract from an analysis in the New England Letter written by an economist connected with the First National Bank of Boston. Here is a quotation which may interest you.
"Our marketing system has been in a state of flux because of the impact of many factors. There has been a revolutionary redistribution of income in this country in the past quarter of a century.
"In 1929, for instance, the net income after taxes of those in the income group under $5,000 a year constituted a third of total disposable income, while in 1953 it amounted to around two-thirds. The top tenth of the nation's families in 1929 were getting 46 percent of all personal income before taxes, but by 1950 the share had dropped to 29 percent.
"What has happened is that a large proportion of the people who used to be in the bottom brackets have graduated into the middle class. The narrowing of the gap between the lower and the upper income groups has been brought about by a combination of factors, including progressive taxes, high level of employment, marked increase in the number of women workers, sharp increase in wage rates, and extension of welfare programs.
"The leveling down process has also been at work on a regional basis. Industrialization and improvement in agriculture have brought the Southeast, Northwest and Southwest into a stronger economic position, while the rest of the country has lost ground relatively. In the Northeast, for instance, the share of total income payments has declined from 36.4 percent in 1939 to 29.7 percent in 1952. On the other hand, the South gained from 20.6 percent to 23.8 percent, and the Pacific Coast rose from 9.4 percent to 11.9 percent."
If these figures are correct, there has been a very great change since 1929, the year of the stock-market crash—which was the first financial result of the bad conditions in our farming areas which had spread at last even to our industrial centers. When you realize that one-tenth of the nation's families were getting 46 percent of all personal income before taxes in 1929 and that the distribution gradually accomplished by 1950 meant that the families in this same category were getting only 29 percent, you see the magnitude of the change.
In this little quotation, so drily stated, is really hidden the bloodless revolution which has occurred and which I believe has enormously strengthened our country. We have fewer people at the top with very great wealth, but we also have fewer people at the bottom who are barely existing and we have a tremendous broadening of the middle group.
It is this middle group which distinguishes us from communist countries and from the type of capitalist countries that exist in certain areas of the world. In a rather different way we are approaching the situation that prevails in the Scandinavian countries, which have long been areas where a majority of the people lived comfortably. It is interesting to note that the marked increase of women workers has brought about some of this change, but other factors play a more important part.
I think this little report is something to be very proud of and I am sure the situation it recognizes contributes to our security as a nation.