III

few decades and the still higher average increase recorded for the wholeperiod following World War II. The small extent of these gains, in comparisonwith increases in wage rates, maintained the upward pressure on unitcosts and, therefore, on prices.The small improvement in productivity indicated for 1956 and 1957provides no basis for expecting the future long-term rate to fall below theaverage annual gain realized in recent decades. For one thing, productivitystatistics generally show irregular year-to-year changes. Moreover,uncertainties about the concept, difficulties of measurement, and shortcomingsof available information require a cautious interpretation of theyearly changes shown by available data (see Appendix E).But more positive reasons may be cited for confidence that the long-termrate of gain in productivity will be higher than the rates for 1956 and 1957. Amajor reason for confidence is the huge investment made during recent yearsin new plant and equipment. Circumstances favorable to the full realizationof the productivity potential of these facilities, namely, large gains in outputin the industries concerned, have not yet been experienced. And largeincreases in certain types of expenditures also raise the productivity potential,even though they may depress the current level of productivity. Althoughthe starting-up of new productive facilities, the expansion of researchand development projects, and the training of personnel in new techniquestend to raise employment immediately, their beneficial effect on the outputof goods and services is deferred.FINANCIAL DEVELOPMENTSThe major demands for credit in 1957 were reflected in the long-termcapital markets. State and local governments drew on these markets for$6.9 billion of funds, $ 1.4 billion more than in 1956 (Table 5). School constructionexpenditures accounted for more than 35 percent of the fundsborrowed. Added to these demands of State and local governments wereTABLE 5.—Security offerings, 1954-57[Millions of dollars]Security1954195519561957JState and municipal securities (principal amounts).6,9695,9775,4466,879Corporate securities (gross proceeds)ManufacturingMining .Electric, gas, and waterRailroadOther transportationCommunicationFinancial and real estate (excluding investment companies).Commercial and other9,5162,2685393,7134792997201,07642210,2402,9944152,4645483451,1321,89944310,9393,6474562,5293823421,4191,85630712,9974,2753293,9423444161,4721,8433771 Preliminary.NOTE.—Detail will not necessarily add to totals because of rounding.Source: Securities and Exchange Commission.