Liquidating dividend asp id
For the postwar transition, the emphasis on consumer demand financed by drawing down liquid assets accumulated during the war is inconsistent with the facts. Indeed, prior to the Federal Reserve-Treasury Accord of 1951, the monetary regime continued to feature the same Fed subordination to the Treasury that had begun at the outset of the war. reconversion after World War II relies on unacceptable GDP figures for the wartime economy and misinterprets the low level of unemployment during the war. Higgs, Private Profit and Regime Uncertainty. Hugh Rockoff has written about a new macroeconomic regime that he argues undergirded postwar prosperity, but his discussion applies not so much to the immediate postwar years as to the much longer postwar era. In any event, the regime certainty at issue here, essentially a political and property-rights phenomenon, differs from the new macroeconomic regime hypothesized by Rockoff.
The utter implausibility of such developments suggests that scholars have placed far too much weight on the metaphor of a wartime production miracle. One way to gauge the trend of an economys capacity to produce is to connect the outputs achieved in peak years of the business cycle by a constant-rate-of-growth line. 203-04, 211-15, and Private Profit, pp. The Orthodox Story To illustrate briefly the long-established view of the reconversion, I quote from the economic-history textbook by Gary M. During the war, people had accumulated large stores of financial assets, especially money and government bonds. Then, in 1946, the bottom fell out: real GDP dropped by 20.6 percent, by far the largest annual fall ever in U. economic history, exceeding even that of the worst year (1932) of the Great Contraction. Walton and Hugh Rockoff: It was widely expected that the Great Depression would return once the war was over. Real GDP continued to fall slightly, by 1.5 percent, in 1947 before finally beginning to recover in 1948. After all, it seemed as if enormous levels of government spending during the war were the only thing that had gotten the country out of the depression. Before one dismisses the apparent postwar economic collapse as a misleading statistical peculiarity, one ought to recognize that the same system of economic accounts that gives rise to that oddity also generates the evidence of the wartime prosperity (Figure 1), evidence that economists and historians alike have long credited. Many, perhaps most, economists agreed with this analysis. According to the official national product accounts, real GDP grew at astonishingly high ratesabout 20 percent annuallyin 1941, 1942, and 1943, and at the still remarkable rate of 8.4 percent in 1944. Many contemporary sources are cited in Higgs, Wartime Prosperity?