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All three sectors suffered considerable setbacks as a result of the Great Depression, but all were recovering by the end of the 1930s.

Prior to World War II, these three sectors operated independently. Federal government bureaus would frequently contract with industrial laboratories for specific purposes, and industry provided some funding for university research. However, the federal government provided no financial support for research or instruction in universities. So the recommendation in Relation of the Federal Government to Research that the federal government provide limited funds for university research through a contract mechanism was considered radical by a handful of leading scientists, including the president of the National Academy of Sciences.

In 1940, the last full year before American entry into World War II, total U.S. expenditures for research and development were approximately $345 million, or $3.75 billion in constant, inflation-adjusted 2000 dollars. National Science Board, Science and Engineering Indicators—2000 , vol. 1 (Arlington, VA: National Science Foundation, 2000), 1-9, Table 1-3. Private industry accounted for 67.8 percent of these expenditures. The federal government was a distant second, at 19.4 percent, and universities and colleges accounted for 9 percent, with the remainder coming from other sources, including state governments and nonprofit institutions.

From 1940 through 1945, government expenditures increased by a factor of almost five, due to military outlays during World War II, outstripping all other sources (Figure 1). Government R&D continued to dominate total national expenditures into the mid-1980s, when industrial expenditures began to take the lead and the divergence between government and industrial R&D continued to widen.

Total U.S. national expenditures for R&D in 2007 were $340.4 billion, or $307.6 billion measured in constant, inflation-adjusted 2000 dollars, with industry accounting for approximately 72 percent, the federal government for 25 percent, and the balance from universities and colleges and other non-profit institutions. National Science Foundation, National Patterns of Research and Development 2007 (Washington, DC: National Science Foundation, 2007), Table 1. That is, the percentage of R&D investments by industry in 2007 was somewhat greater than in 1940, while the percentage of the federal government’s investments was approximately 46 percent greater. However, total national R&D expenditures, measured in constant dollars, were a factor of over eighty times greater in 2007 than in 1940. This sharp increase brought radical changes in the status of American science and technology enterprises after World War II.

Social science and government

Although the social sciences were relative newcomers both as scientific disciplines and as members of and/or advisors to government, by 1937 their methodologies and insights had already made considerable inroads. Relation of the Federal Government to Research pointed to several earlier commissions created by Congress that had made effective use of the social sciences. These included the Industrial Commission (June 1898), the Immigration Commission (February 1907), the National Monetary Commission (May 1908), the Industrial Relations Commission (August 1912), and the Joint Commission on Agricultural Inquiry (June 1921). One result of the work of the last commission was the 1922 establishment of the government's second major permanent social science bureau: the Bureau of Agricultural Economics in the Department of Agriculture, which at that time oversaw the federal government's most extensive scientific research system. The first such bureau—the Bureau of Census in the Department of the Interior—had been established in 1902.

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Source:  OpenStax, A history of federal science policy from the new deal to the present. OpenStax CNX. Jun 26, 2010 Download for free at http://cnx.org/content/col11210/1.2
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