TABLE 37.-Amount and percentage distribution of outstanding mortgage loans on nonfarm 1- to 4-family dwellings by type of mortgage, 1929–39 Total. 7, 200 7, 400 7,500 7,000 21, 664 21, 953 21, 404 19, 961 18, 486 18, 157 17, 818 17, 462 17, 501 17, 721 18, 420 1 Does not include trust department of commercial banks. 2 Includes trust department of commercial banks, fiduciaries, real-estate, bond companies, title and mortgage companies, philanthropic and educational institutions, fraternal organizations, construction companies, The RFC Mortgage Company, etc. Source: Figures secured from the Federal Home Loan Bank Board. In 1939, therefore, financial institutions-the savings and loan associations, insurance companies, mutual savings banks, and commercial banks-owned about 55 percent of this class of urban mortgage debt, while individuals and others owned 35 percent, and the remainder, roughly 10 percent, was held by the Home Owners' Loan Corporation. The portion held by individuals alone is not ascertainable, but a Department of Commerce study on urban housing estimated that individuals held about 20 percent of first mortgage loans outstanding on owner-occupied residential properties on January 1, 1934.46 In addition to mortgages on homes, the urban mortgage debt total includes mortgage debt secured by office, commercial, apartment, hotel, and other urban property which is owned by individuals and unincorporated enterprises, and the debts of those real estate mortgage corporations not included in the industrial classification. There is no information available on the ownership of this class of urban mortgage debt.47 Corporate debt.-The Department of Commerce study conducted by Donald C. Horton shows the holdings of the funded debt of railways, public utilities, and industrial corporations by various investor groups for 1932 and 1933. In the case of railway debt, which totaled 9.4 billion dollars in 1932, about 27 percent of the amount outstanding was held by insurance companies, 20 percent by banks, 4 percent by public welfare foundations and educational institutions, 12 percent by individual trust accounts, and some 7 to 8 percent by railways other than the issuing company. The 30 percent unaccounted for was presumed to represent in large part direct investments by individuals, and foreign 46 U. S. Department of Commerce, Bureau of Foreign and Domestic Commerce, Financial Survey of Urban Housing, 1937, p. xix. 47 Sternberg, loc. cit., p. 14. holdings.48 If the portion held in trust accounts is combined with the share attributed to individual holdings, roughly 42 percent of the railway funded debt was owned by individuals, directly or indirectly, and about 58 percent by institutional lenders. Of the total outstanding public utility funded debt, which aggregated 15.1 billion dollars in 1932,49 about 18 percent was held in personal trust accounts, 14 percent by life insurance companies, 10 percent by banks, 3 percent by public welfare and educational institutions, and 3 percent by utilities other than the issuing company. Over one-half the total is left unaccounted for, but "doubtless a large part of the remainder is held by individual investors." 50 Approximately 20 percent of the debt was thus held by institutions, including utilities other than the issuing company, and 80 percent in personal trust accounts and by individuals. Because of lack of reliable data, Horton did not make similar estimates on the distribution of ownership of industrial funded debt.51 However, he made rough approximations on the basis of existing information which indicated that, of the outstanding debt in 1933, some $1,350,000,000 of industrial mortgages were "held largely by financial institutions," while the remainder in industrial bonds and notes was distributed as follows: Insurance companies, $420,000,000; banks, $950,000,000; trust institutions, $900,000,000; public welfare foundations, $200,000,000; and other industrial corporations, $900,000,000. This accounts for little more than half the total industrial debt, so that "a large part of the total debt is held by individuals and agencies not discussed above." 52 Long-term private debt.-The concentration of debt-holdings by life insurance companies is shown in table 38. TABLE 38.-Percentage of total long-term debts of various classes held by 26 life insurance companies Source: Hearings before the Temporary National Economic Committee, Part 28, exhibit 2259, p. 15493. Some idea of the extent of concentration in ownership of private long-term debt within the various groups discussed may also be obtained from information on interest receipts from debt holdings by individuals and corporations. The tables presented here are compiled 18 "No data are included for bonds held by religious institutions, charitable organizations, and the large group of miscellaneous investors such as fraternal organizations and learned societies. It is improbable that these groups held a large part of the remaining 30 percent not accounted for." (Horton, op. cit., p. 53.) 49 Estimate was based on consolidated balance sheets, so that the aggregate is inflated to some extent. See Sternberg, loc. cit., footnote, p. 10. 50 Horton, op. cit., p. 76. 51 Ibid., p. 110. 52 The aggregate. estimated to be about $9,260,000.000, is probably somewhat exaggerated, since it is based on consolidated returns filed with the Bureau of Internal Revenue. (Ibid., pp. 104-105.) from individual and corporation income tax returns, and from estate tax returns filed for decedents as presented in the Statistics of Income for 1937. The data presented in table 39 show a pronounced degree of concentration of ownership of taxable interest income by corporations, since the amount of interest increases with the size of the asset class, while the number of corporations in each class diminishes. Fifty-five percent of the reporting corporations showed assets under $50,000, but they received only six-tenths of 1 percent of the total taxable interest. On the other hand, corporations with assets over $100,000,000, representing but one-tenth of 1 percent of the number reporting, received over 50 percent of the total interest income. Moreover, the largest 10 percent of the corporations-those in the asset TABLE 39.-Taxable interest received by all corporations1 submitting balance sheets, by asset classes, for the year 1937 1 Finance companies accounted for 87.0 percent of the taxable interest received by all corporations. Source: U. S. Treasury Department, Statistics of Income for 1937, Part II, pp. 80-81. classes above $500,000-received about 94 percent of the total interest income. The available information concerning ownership of private debt directly by individuals shows less concentration among the extremely wealthy classes. Interest receipts from bank deposits, notes,53 mortgages, and corporation bonds, as reported by individuals on income tax returns in 1937, are shown in table 40. This shows nearly 90 percent of the total number reporting taxable interest receipts had incomes below $5,000, and accounted for 50 percent of the interest received. The wealthiest individuals, with incomes over $100,000, who comprised about onetenth of 1 percent of the number reporting, accounted for 3.2 percent of the total interest received. The greatest degree of concentration seems to exist in the moderately wealthy group with incomes ranging from $5,000 to $100,000, composing 11.0 percent of the number and receiving 46.9 percent of the taxable interest reported.5 54 53 Interest on bank deposits and notes is included here only because there is no way to separate it from that on mortgages and corporation bonds. Although bank deposits are debts owed by the banks to their depositors, from the individual depositor's point of view they are savings. Notes are evidences of debt owned but are usually included in short-term debt. 54 The inclusion of bank deposits in this category probably accounts for the relative concentration of interest income received by the income class under $5,000. TABLE 40.-Taxable interest received by individuals from bank deposits, notes, mortgages, and corporation bonds, by net income classes, 1937 ! Includes taxable interest received on partially tax-exempt Government obligations. 2 Less than one-half of 1 percent. 3 The number of all returns over $100,000 constitutes about 1 percent of the total. Source: U. S. Treasury Department, Statistics of Income for 1937, Part. I, p. 13. Similarly, from estate tax returns it can be seen that the bulk of mortgages, notes, and cash 55 is owned by the estate classes under $500,000, as shown in table 41. These estates comprised 95 percent of the number reporting and they owned nearly 80 percent of the amount reported.5 56 Table 42 shows that estates under $100,000, constituting 64 percent of the total number of estates, owned 24.2 percent of the nonpublic funded debt. The 4,105 estates in the $100,000-$500,000 estate class, TABLE 41.—Distribution of ownership of mortgages, notes, and cash by individuals in various net estate classes, 19381 1 Based on estate tax returns filed during the calendar year 1938. It is impossible in these data to separate the holdings of mortgage indebtedness from holdings of notes and cash. A study of estate tax returns for the period 1923-33 revealed that "mortgages, notes, and cash constitute a much larger portion of total gross estate for the smaller-size classes than the large.' (W. L. Crum, The Distribution of Wealth, p. 19.) or 31 percent of the total, held the largest block of debt, their share amounting to almost one-half the total. Estates over $500,000 accounted for 4.9 percent of the number, and owned some 29 percent of this type of debt. It should be noted, however, that the average holdings tend to increase by size of estate.57 TABLE 42.-Distribution of ownership of nonpublic funded debt by individuals in various net estate classes, 1938 1 After authorized deductions for estate, inheritance, legacy, or succession taxes paid to any State or Source: Based on U. S. Treasury Department, Statistics of Income for 1937, Part I, pp. 54-61. Short-term private debt.-The only available data on short-term debts are Nugent's estimates of the amount of consumer debt held by major classes of creditors.58 In 1937 this consumer debt aggregated $8,326,000,000. Of this amount retail merchants owned $3,818,000,000 in the form of receivables. Service creditors, such as physicians, dentists, hospitals, and public utility companies, owned $557,000,000 of the debt. Intermediary financing agencies, or those agencies which purchase receivables from agencies which initiate credit sales, accounted for $2,173,000,000, while cash-lending agencies owned $1,778,000,000 of the total. OWNERSHIP OF REAL ESTATE The largest element in the total physical wealth of the United States is real estate, which is composed of land and the improvements built upon the land. The privately owned portion represents the holdings of individuals, unincorporated businesses, and corporate enterprises. The public and semipublic holdings include real estate owned by governmental bodies as well as private institutions of a semipublic character. According to a preliminary estimate for 1937, the aggregate value of all categories of real property was estimated to be $171,000,000,000, or about 53 percent of the estimated total national wealth of $322,000,000,000 for that year. The taxable or privately owned real property alone amounted to $145,000,000,000, while the tax-exempt, or public and semipublic property, was valued at about $26,000,000,000.59 57 Crum, op. cit., p. 20. See table entitled "Average Holdings per Return in Each Size Class, for the Years 1922-33." 58 Rolf Nugent, Consumer Credit and Economic Stability, Russell Sage Foundation, New York, 1939, p. 116. 50 National Industrial Conference Board, Studies in Enterprise and Social Progress, New York, 1939, pp. 59-61. |