The Problem of Historical Statistics

Following is one of the head-notes from the Introduction to the first (1949) edition of "Historical Statistics of the United States 1789 – 1945.” Perhaps it could be helpful in understanding the significance and importance of having a vast reservoir of historical information. Actually, this came late (1949) in the sea change of information gathering that began with plans for a national Accounting System very early in the Great depression.

Copied directly from the 1949 edition.

The Problem of Historical Statistics

The statistics of the Nation are an important and even indispensable tool in the proper portrayal of the status of the United States in various subject fields at various periods in time. There are surprisingly few general fields in which existent figures cannot supplement or clarify the qualitative historical records—figures which were compiled year by year during the course of events, or were reconstructed later on the basis of existing statistical evidence.

The extent to which statistical data are cited or taken into account in historical writings is frequently dependent upon the ready availability of the needed data to the writers. An understandable lack of knowledge as to the existence of historical statistics in a given field, and the relative inaccessibility of the volumes in which they may be found, combine to prevent more widespread and effective use.

True, in some subject fields statistical time series are entirely lacking, particularly figures already arranged year by year. In many important fields, however, the past publications of the Nation, public and private, contain a wealth of data periodically compiled which reflect the fact that “a strong passion for statistics early developed itself in the life of our people….” (The phrase in quotes was cited as being from a speech by Francis A. Walker, superintendent of the Ninth and Tenth Censuses of the United States [1870 and 1880], delivered before the International Statistical Institute, Chicago, 1893.)

Sources of data. Among the numerous sources of historical statistics of the United States are the annual reports of the various Departments, Bureaus, and other agencies of the Federal Government, reports of special Federal commissions established from time to time, the volumes of the various censuses of the United States, printed debates of Congress, the published reports of Committees of Congress and the transcripts of hearings conducted by them on important legislative measures, the published reports and documents of State Governments, the statistical publications of private research foundations and organizations and of universities and colleges of the Nation, and the great mass of statistical and other volumes printed privately by other organizations and individuals.

Difficulty of accessibility. The accessibility of these great masses of historical data to those who wish to use them is another matter. As matters stand, Senators and Congressmen, public officials, economic, social, and political historians, research workers, teachers, students, journalists, and authors, to mention only a few groups, who wish to consult the historical statistics “available” in published form on a given subject are faced with three major difficulties:

First, the determination of the existence of the data and the identification of the exact public or private document or volume in which the data may be found. Frequently, this requires a knowledge of the responsibilities of government bureaus in years long past, and the scope, coverage, and formal description or title of their official reports. The exact material which is desired may already have been compiled, but it may well be buried in an obscure special report or in the published documents of an early Congress—publications which few libraries may have on their shelves.

Furthermore, the present staff of the Government Bureau now responsible for the given subject field may have only a meager knowledge of the detailed statistics contained in the early reports and published documents of their own and predecessor agencies.

Second, once an exact published source has been determined, the data may not be found already arranged in the form of a time series.

In some historical fields, such as banking, merchant vessel tonnage, and the fiscal affairs of government, current or fairly recent government documents carry extensive statistical summary tables which provide the more important data carried far back in time year by year. In other fields, the annual reports and other documents present figures only for the most recent year. Accordingly, historical tables must be constructed laboriously by reference to as many volumes as there years to be considered. This requires access to a collection of such volumes possessed by few libraries.

Even in Washington, D.C., at the seat of government, where the extensive collections of the Library of Congress may be supplemented by reference to Bureau and departmental libraries and records, the compilation of long-term time series by reference to individual annual reports is a laborious and time-consuming task.

Third, identification of changes in concept and coverage over a period of time is important since such changes may affect vitally the interpretation of the statistics for a span of years. Coupled with this is the need for definitions of terms employed in published historical tables, definitions which may be in a separate publication or may never have been published.

A ready “solution” of the first two difficulties by location of a previously compiled time series may prove deceptive. As a general rule, historical tables in government documents represent compilations of figures with a minimum of text and tabular notes. Definitions, where given, are usually for the current year; qualifications of data, particularly warnings as to changes in concepts and collection methods over the years, are often inadequate.

Grave risks are entailed in attempts to compile long-term time series of annual data by reference to successive issues of the Statistical Abstract of the United States. In each issue, many revised figures appear. Generally, these are for the immediately preceding year or years, but revisions in the more historical data are not uncommon. Statistics for the specific years for which data are shown in the most recent Statistical Abstract may be used with no greater precaution than is necessary when making use of any highly abbreviated presentation of historical statistics. However, the attempt to fill in data for omitted years by reference to earlier issues may well result in serious lack of comparability through time.

In view of the broad difficulties outlined above, it is apparent that no single reference volume can offer a complete solution to the problem of historical statistics, as such. At best, it can provide a selection of statistics in a number of broad subject fields and constitute a guide to the more basic and detailed sources of data—functions which comprise the objectives of Historical Statistics of the United States.

Objectives – Considerations of Our Current Dilemma in Regard to the Past

If there is any good to be found in the study of depressions, it is that economic depression can only occur after we have experienced better times from which to fall. In the normal course of our lives, economic conditions are usually quite good; normally the conditions are so good that we know a depression when we see one. There is now a glitch in our national economy; at the moment it has us wondering -- will we collapse into depression, or will we recover soon? Have we learned enough from past good times to right the ship? Or, perhaps more appropriately, have we learned enough from our earlier depressions so that we are able to correct our course?

Right now, so much of our learning (?) is focused on the Great Depression of the 1930s. There seems to be an ever-widening belief that only World War II enabled us to end the Great Depression. Must we gird for World War III to get us out of our current dilemma?

I think many, indeed the most vocal among us, have mis-learned the lessons of the Great Depression. And, I believe, we have failed to make the best use of the many lessons in economics available to us from the past. In particular, I believe we could have learned more than we have from Adam Smith of the late 18th century and from a host of his acolytes of the 19th century.

In the series of posts to follow I will attempt to portray our American economy as it emerged from its colonial beginnings into what most of us proudly believe to be the very greatest! I will reach back to Adam Smith whose inquiry into the nature and causes of the wealth of nations coincided (more or less) with the beginning of the Industrial Revolution in England and in Western Europe. In my mind, there was little to learn about depressions before that time. To have a depression, you must first have prosperity; and that prosperity must include the well being of everyone. May it be observed that the Industrial Revolution was first to bring about such prosperity for all; and thus we might mark that historical event as the genesis of depressions?

The end objective is to show that we do not need to fight World War III to return to prosperity; and that we really were having a pretty good recovery from the great Depression before WW II began. We should be so fortunate this time around. What we did in the 1930s was most impressive, and it was appreciated by a grateful nation.

Murray Rothbard was one of the more influential writers on the Great Depression; he would not agree with the assessment I gave above. Rothbard wrote this in 1963: "Most writers on the 1929 depression make the same grave mistake that plagues economic studies in general—the use of historical statistics to “test” the validity of economic theory."

Really now? We have the world's most extensive reservoir of empirical data; and we should not make use of it? Rothbard went one way; I will go another. When the Great Depression arrived, historical statistics were few and far between; and those that did exist were tucked away in remote library stacks or in file cabinets of public and private entities that had gathered the statistics in the first place. It was theory vs theory; there were no empirical proofs to be had. In the preface to his General Theory, Keynes wrote: "I cannot achieve my object of persuading economists to re-examine critically certain of their basic assumptions except by a highly abstract argument and also by much controversy." Why would Keynes make such a statement? The reality was that there was very little readily accessible historical data for use by writers on the subject of economics in Keynes' time. About all he, or anyone in his time, or earlier, could do was to offer his or her own theory.

My next post will present a statement from the Census Bureau that may help understand the problem. It was made in their preparing for publication the first edition of Historical Statistics of the United States.

Depressions -- Great and Small

Panics and depressions come calling now and then; it has been that way throughout the 19th and 20th centuries – we seem not to know how to stop them. Some were preceded by periods of wild speculation, or banking excesses, as was reportedly the case with the great panic of 1819. A visit to that time in history, via Google, found this introduction.

The Panic of 1819

“A panic is precipitated by wild speculation in western lands, followed by a sharp contraction in credit, led by the Second Bank of the United States. A six-year depression ensues. America's first serious panic occurs early in the year and is followed by a depression.

Many state banks collapse, and enormous amounts of Western real estate are foreclosed by the Bank of the United States. But there are more fundamental causes for the crisis, of which the credit collapse is only a consequence and a symptom. The swollen demand for the products of American farms and factories, resulting from scant supply of such goods at home and abroad during the war, is now satisfied: the market is declining. As prices fall, money becomes difficult to come by, but the habit of borrowing, formed in the expansive years, cannot be shaken. Those who insist on a return to specie-hard money, are seen as turning the clock back.” BIBLIOGRAPHY: “A Compilation of the Messages and Papers of the Presidents 1789-1897" By: James D. Richardson....A Representative from the State of Tennessee. Publisher: by Authority of Congress..1899. Ten Volumes total. Copyright: 1897 by James D. Richardson; New International Encyclopedia, Dodd, Mead and Co.-NY, Copyright: 1902-1905 21 Volumes; The Bicentennial Almanac, Thomas Nelson, Inc. publishers, New York. Copyright 1975.

Here is a picture of two centuries of people working on farms and elsewhere. Several generations of our ancestors are in this picture; so are the workers of today – but things have changed a lot during the two centuries displayed here. Where farms once provided jobs for more than a quarter of our population, farms now employ less than one percent.

 

Statistics for this chart are from three sources. Two of the sources are found in Historical Statistics of the United States, Colonial Times to 1970. For the 19th century, Series D167-181 provides data for: (1) total labor force and (2) employment by area of work; unemployment is calculated as a residual. For charting, linear interpolation fills in the blanks.

Beginning with the year 1900, and through the year 1928, Historical Statistics of the US provides annual data for (1) labor force, Series D1, (2) farm employment, Series D6 and (3) nonfarm employment, series D7. Unemployment data for 1900 and later are from: (1) 1900-1947, Series D8; (2) 1948-1970, Series D18; and (3) 1971-2008 from the BLS website.

Because of the easy access (by anyone with a computer and keyboard) to all NIPA (National Income and Product Accounts) data; and also because of the ease with which it can be transferred to our worksheets, I have taken all the employment data for years beginning with 1929 from that source. NIPA Tables 6.4A,B,C &D provides data for all full-time and part-time workers. NIPA Tables 6.74A,B,C&D provides data for all self-employed persons.

 

Note that in neither the 19th or 20th century, depressions did not result in marked declines in farm employment. For the 19th century, we might chalk that up to the interpolations between decennial years. However, the Great Depression shows massive job losses among nonfarm workers with no similar losses beyond the general decline in farm jobs. Depressions always hurt a lot of people. In the 19th century, the greatest hurt in the farm community probably was from reduced wages; people on farms and in the horse trade, had to remain on the job to shovel the animal by-products – and there was a lot of that. In the 20th century, with its greater reliance on nonfarm jobs, the greatest hurt was from the outright loss of jobs and the purchasing power the jobs had provided. But in either case, the loss in purchasing power in both sectors cost everyone dearly.

It was about the year 1880 that employment off the farm caught up with employment on farm. We were now about half and half – farmers and everyone else. Farm folks could always eat; the jobless in cities and towns did not have it so easy. That's where the Great Depression caught us; a half-century into the transition; country folks hurt a lot too, but the breadlines and soup kitchens in cities and towns were downright awful. Where farms once provided jobs for more than a quarter of our population, farms now employ less than one percent. The credit for that enormous gain in farm productivity does not all go to the farm community, though some certainly does; they had to learn to employ the contributions of others, and they were many.