FOR
INDIANA
FARMERS
INFORMATION
Volume 1, No. 4
Lafayette, Indiana
October, 1947
Prepared by members of the Agricultural Staff of Purdue University
THE GENERAL ECONOMIC SITUATION
By
R.  H.  BAUMAN, Agricultural Economics
1910       1915
ISCAUL.
'YEARS!
L/IS
THE    NATION   CONTINUES
IN A POSTWAR INFLATIONARY period. Large exports,
heavy private and corporate investment and unsatisfied demands for most
consumer and durable
goods are the major economic forces contributing
to the unprecedented
high level of business ac
tivity. how long this sit
uation will last is impos
sible to predict definitely
Present indications are
that prices will continue
near present levels for at
least the first half of
1948. There ake too many
uncertainties at the present time to hazard a definite prediction for the
latter half of the year.
Prices for most Indiana
farm products, allowing
for seasonal variations,
are expected to continue
near present levels for
at least the first half of 1948. the coming year
should be another profitablb year for farmers.
Sizable economic adjustments are inevitable but
at this time it is impossible to predict when they
will occur. When these adjustments occur, the
price declines are not expected to be of depression
magnitude. They will be more in the nature of a
realignment of costs and prices. farm prices are
expected to fall more than non-farm prices, placing
farmers in a much less favorable position than at
the present time but well above prewar.
Business Activity At A High Level
•he nation continues in a postwar business boom. Meas-
MERCHANDISE   TRADE   (Recorded*)
Exports increased sharply in the first half of 1947.
Imports rose less.
BILLIONS OF DOLLARS BILLIONS OF DOLLARS
20
1925       1930       1935
 CALENDAR  YEARS	
'INCLUDES LEND LEASE;  EXCLUDES SURPLUS PROPERTT SALES
AND CIVILIAN SUPPLIES EURMSMEO   TO OCCUPIED   AREAS
SOURCE:  DEPARTMENT CF COMMERCE
12 3 4 12 14
1946     1947
OUARTERLY DATA
AT ANNUAL RATE
During the first half of 1947 there was a large increase
in United States exports without any significant increase in
imports. In the second quarter of 1947 the value of exports
was greater than at any time during the war, including goods
shipped under lend lease.	
ured in terms of the usual economic "yardsticks" such as volume of production, payrolls,
employment and national income, business is operating at
a terrific pace.
The current unprecedented
high level of business activity
is chiefly the result of the following three, more or less temporary, economic forces:
First, during the first half of
1947 we exported goods and
services at the annual rate of
20.7 billion dollars and received in return only 8 billion
dollars. This net export balance of 12.7 billion dollars,
larger than our whole construction industry, cannot continue indefinitely. Foreign
countries have been using up
their dollar reserves and credit balances and the purchasing power of many of them is
nearing the bottom of the
barrel.
The so-called "dollar shortage" fundamentally is caused
by the inadequate production of goods in other countries.
While we in this country are turning out more goods than
ever before, other countries have not yet been able to get
their war torn economics in gear. Consequently, they have
turned to the United States for almost all types of food and
maerials. Their productivity has been low and postwar reconstruction exceedingly slow.
The import restrictions recently adopted by most European
countries, Australia, Mexico and several South American
countries clearly point to the end of the export boom unless
further loans and grants are made to them. Although sub-
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