-3- 



The improvement in prices ^ especially in conjunction with 



increased production, was made possible by the great increase in incomes 

 of large fractions of the population and was materially aided by 

 government purchases for lend-lease purposes. In November, 19^0 > the 

 Federal Reserve Board's index of industrial production was 13^ per 

 cent of the 1935-39 average; in November, 19^1, the index stood at l66, 

 a gain of 32 points, or about 2^^, The percentage increase in factory 

 pay rolls was almost twice as much as the increase in industrial pro- 

 duction. This was the result of higher wage rates and increased 

 employment, part of which was overtime at li to 2 times the regular 

 hourly rate of pay. 



Real estate values, both of farm land and city residential 

 property, have increased during the year. Bond prices are practically 

 the same as a yesir ago but stock prices have declined drastically. 

 In fact indexes of industrial stock prices declined Monday to a new 

 low since the heavy sell-off in the spring of 193^ • Railroad and 

 utility stocks are depressed because of increasing costs without compen— 

 sating Increases in revenue plus heavy corporate income taxes. Industrial 

 stocks have been depressed by heavy taxation and the anticipation of 

 yet heavier taxes. 



Greneral outlook for 19^2 . The year 19^2 will witness more 

 and more governmental controls over the entire economy including agri- 

 culture. Price control is practically certain and scarce commodities 

 will be allocated where most needed for war purposes. Taxes will be 

 substantially increased. Pressure will be used to encourage or enforce 

 savings and the purchase of government bonds. Speculation will be 

 curbed. Although some further moderate price rises appear likely no 

 great inflationary rise in prices is probable during 19^2. 



If weather conditions permit average or better yields in 19^2, 

 farm income is expected to be at a high level. Prices will be favorable 



