QUESTIONS of manpower requirements and economies in labor use have long been close to the heart of economic theory and national policy. The evidence lies in a large and increasing number of productivity studies, ranging from an over-all view of the economy, its total output, and capacity to the most detailed, operational time-and-motion studies. Writers to date have ranged mainly over the fields of manufacturing and extractive industries, where a relative ease of quantification and measurement has facilitated the obtaining of fruitful results. Until recently, however, little work has been done in the service industries because the unit of output is conceptually as well as practically difficult to define and standardize.' The present inquiry will attempt to fill part of this gap for the economy's financial sector, focusing in detail on commercial banking which accounts for roughly one-fifth of the labor force of the financial sector. How great have been the manpower requirements of banking over recent decades? Have they changed for any reason? How is the use of labor in banking related to changes in banking services rendered to the economy? How do employment trends in banking compare with those in the economy as a whole? Inquiries into the use of manpower in commercial banks share not only the usual difficulties in studies of this kind, such as measuring properly, but raise even more difficult questions concerning concepts of output. In deference to the paucity of precedents and the tentative character of many definitions here adopted, this paper will deliberately avoid the use of such normative terms as efficiency or productivity, except in the broadest sense and with possibly a few exceptions where important banking operations can be identified and measured with some accuracy.2 The main purpose of this study is to throw some light on the nature of labor-using bank operations and the response of labor input to growth and technical changes in the industry.

THE treatment of institutions remains one of the most unsatisfactory areas in national income accounting. Standing at the end of a long process of evolution in both concepts and methods, the recognized experts in the field are still compelled to admit that their procedures, best exemplified today by those of the United States Department of Commerce, remain open to much basic criticism.' This paper proposes to reformulate the current treatment of bank income, including a reopening of the discussion of financial intermediaries in their role as contributors to the national income and product. It is believed that the methodology suggested here is simpler, more in accord with reality, theoretically sounder, and of greater analytical value in deriving series of bank income and, ultimately, of productivity estimates. In the beginning of this study, the concepts proposed and those now in use by the Department of Commerce will be described.2 As a second step, the two opposing methods will be examined for their underlying rationale and philosophy. Third, technical procedures will be compared by means of simplified accounting models. Fourth, a number of refinements and qualifications both of principle and technique will be introduced, which are important in facilitating the passage from didactic framework to the final statistical series of income and product originating in banking. These series, if they are to be useful, must be capable of being integrated into the total national accounts. How this can be done will be demonstrated at various points along the way. I