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  Chapter Fourteen:
 
BUSINESS
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  Gross Domestic Product
  Business Cycles
  Business Revenues
  Trading Volume
  Dow Jones Average
  Stockholders
  Crude Oil
  Energy Consumption
  Patents
  Imports and Exports
  Foreign Investment

  

 

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BUSINESS

Business Revenues

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After 1939, business activity expanded enormously. The corporate share of business activity increased at the expense of proprietorships and partnerships.
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The sheer size and growth of American business is difficult to comprehend. In 1939, American businesses had revenues of $2 trillion (in constant 1999 dollars). By 1996, these revenues had increased ninefold to $18 trillion, while the population had only doubled. As the chart indicates, between 1939 and 1996, the business revenues of corporations increased nearly tenfold, while those of partnerships and proprietorships grew sevenfold and threefold, respectively. 

This remarkable growth in business revenues had three major components. Part of the increase represented a transfer of social activities to the business sector. Child care, for example, was almost completely noncommercial in 1939. By 1992, child care had become an $8 billion sector of private enterprise (see page 38). The largest component of the growth in business revenues, however, represented an increase in the quality and quantity of products and services. Most of the products available in 1939—automobiles, for example—were available at the end of the century, but in greater quantities and with much better quality. The final component of the increase in business revenues was the introduction of new products and services. Television shows, computer virus protection programs, and feng shui real estate consultations represented entirely new sources of business revenue. 

Between 1939 and 1996, the proportion of business revenue that went to corporations increased from 78 percent to 89 percent. At the same time, the share that went to proprietorships decreased from 14 percent to 5 percent, while the proportion that went to partnerships declined from 8 percent to 6 percent. 

The increase in the corporate share of business revenues was a natural outgrowth of the increasing size and scale of American business. As the overall economy expanded, many entrepreneurs with growing businesses that started as proprietorships or partnerships decided to incorporate. For growing businesses, incorporation often involved the sale of stock to the public, which allowed these entrepreneurs to raise capital for the business and receive cash for some share of the business.


Chapter 14 chart 3

Source Notes
Source Abbreviations

HS series V 5, V 8, and V 11; and SA 1999, table 862.

 

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