Full text of Annual Report of the Federal Reserve Bank of Boston : Annual Report, 1956 : Research Shapes New England's Economy

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Annual Report
FEDERAL RESERVE BANK OF BOSTON

Research Shapes New England’s Economy




To the member banks of the Federal Reserve

# • >9

Bank of Boston

It is a pleasure to send you the 1956 Annual Report o f the Federal Reserve Bank
o f Boston.
Again this year we are continuing our practice o f reporting in some detail on a
m ajor phase o f the New England economy.
Under the title Research Shapes the New England Econom y, we have surveyed some
of the outstanding research contributions to New England growth made in the fields of
industry, agriculture, forestry and medicine.
In 1956, New England business generally sustained or surpassed the new performance
records established in 1955. We believe that much of the region’s econom ic resiliency and
vigor derive from the expanding use of research and development as a tool for progress.
The report also includes summaries on the Bank’s operations. For the steadily
increasing efficiency o f these operations, I extend my own thanks and those o f our directors
to our officers and staff.
Our thanks go also to the bankers and business leaders o f New England for
continuing their generous cooperation.

President
January 10, 1957




I- /
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elow the golden-domed State House and the old houses and brick side­
walks on Boston’s Beacon Hill gleams the broad reach o f the Charles River Basin.
Along its shores lie what a competent observer has called “ probably the greatest
concentration of scientific, engineering and research talent in the world.”
This talent comprises the men and women who make up the huge family
that staffs what is known locally as Research Row. Fronting on the Charles in
Boston and Cambridge are Harvard and Boston Universities, Massachusetts Institute
o f Technology, the Museum of Science, research and teaching hospitals, the country’s
oldest and largest firm of professional industrial research consultants, and numerous
industries pre-eminently concerned with scientific research as the prime ingredient
o f their products.

Research Shapes New England’s




Although Research Row is situated in the heart of New England — 30 per cent
o f New England’ s people live within 30 miles of Beacon Hill — its interests range
far beyond the region or even the nation. In a broad sense Research Row focuses its
attention on all mankind — and not only on mankind but mainly on the future of
mankind. Here along the Charles the experiences of the past in almost every field
o f human knowledge are re-examined and re-appraised. Here the experiences o f the
present are recorded and analyzed. And here the past and the present are synthesized
and transformed, first into new ideas which will help the man of tomorrow better to
understand and adjust to the world he has created, and second, into new things that will
more nearly help him meet his needs and desires.
Many of the thousands of investigations always underway in Research Row are
o f the kind that relate directly to our daily lives— such as finding cures for hitherto
incurable diseases, working out means o f increasing highway safety, developing new,
more accurate techniques for forecasting the weather, examining the comparative
merits of sales and graduated income taxes, or even just concocting a new flavor
in chewing gum. Some would be more esoteric: investigating the electrical content of
tornadoes or devising more efficient broadcast frequency-deviation monitors. And if
certain o f the research projects o f the Row seem utterly remote from the practicalities
o f the day, it must be remembered that it was a short simple mathematical equation
which stated the original terms for releasing the energy o f the atom.
The studies being conducted in Research Row are o f as much consequence to
the nation and the world as to New England, and this is eminently in the New England

tradition. For generations, the Yankees have been exporting ideas and trained man­
power as well as the physical products of their research and development work.
Research Row is not only a vast enterprise in itself — or rather a whole series of
enterprises — it is also the symbol and the epitome of a regional resource o f steadily
increasing importance.
Except for its forests New England has always been a land without significant
industrial raw materials or mineral fuels. In spite o f the difficulties of having to haul
both o f these from relatively remote areas, New Englanders have built their region
into one of the country’ s most highly developed and diversified manufacturing areas.
They have accomplished this largely through their ability to conceive and implement
new ideas — ideas for marketable new products, for ways o f improving old products
and for new ways of making things.
Since Colonial days the essential
ingredients o f New England’ s eco­
nomic progress have been a demon­
strated need or opportunity, inquiring
minds, technical resourcefulness, and
men and women with an abiding will­
ingness to do a day’ s work. Or one
might say that New England has
thrived on the Yankee’ s aptitude for
research and development and his increasing willingness to give it time and money.
The region’ s now dominant industries are research-oriented and tend continually
to draw into their orbits individuals with scientific and technical training. One o f
the characteristics o f a research-based economy is the ease with which large existing
industries give birth to small ones. Some o f New England’ s most successful young
enterprises are the result o f engineer-businessmen splitting off from a parent company
in order to manufacture new products developed through research.
The following pages attempt to describe briefly how research shaped and is
continually reshaping the New England economy. The story begins with industry since
manufacturing is the principal source o f income for all the New England states and
thus provides a broad firm base for the growing service industries. The sections on
agriculture and forestry are succeeded by one on medical research because the region’ s
fundamental resource is its people and their continuing good health. The story closes
with a description o f the useful work done in the field o f economic research by
numerous agencies over the last two decades.
In these pages Research Row is held up as a symbol of a New England-wide
activity. Despite its size and prominence, the Row must never be permitted to obscure
the fact that research and development work o f great importance is always being
carried out in every New England state by both private and public agencies. And
although documentation o f this essay has involved the use of the names o f many firms,
agencies and organizations, such use does not imply that greater merit attaches to
the names used than to the host o f others which space precluded mentioning.

Economy







ust after Christmas in 1956 the Navy announced that the Nautilus,
the world’ s first atomic-powered submarine, would return to her Groton, Connecticut,
birthplace to be refueled for the first time — two years and 50,000 miles after
beginning her service. Since her launching, a second sub, the Sea W olf, had slid down
the ways and New England shipwrights had begun work on four more atomic subs, one
of them a radar-picket boat and the largest submarine ever built.
Earlier in 1956 the Atomic Energy Commission had authorized the construction
o f New England’ s first atomic-powered commercial generating station, and at year’ s
end the site o f the $35 million, 134,000-kilowatt plant was being cleared. Also in
December, the directors o f New England Electric System announced plans for a still
larger atomic electric power unit to cost upward o f $50 million.
During the year, work had progressed smoothly on the $2 million nuclear
reactor being built at Massachusetts Institute of Technology as a center for medical
and biological research, and in November a similar research reactor was approved
for the Watertown Arsenal — where the first atomic cannon was largely designed and
built. In Cambridge, Harvard University and MIT continued work on the plans o f the
$6.5 million “ atom smasher” which they are jointly to build and operate.

In the summer o f 1956, the Nuclear Products Division o f Metals and Controls
Corporation celebrated its fifth year o f fabricating fuel elements for nuclear reactors
by moving into its new million-dollar plant in Attleboro, Massachusetts. In its
precision work with uranium, zirconium, thorium and niobium, however, this
youthful veteran would soon be meeting new competition. In historic Concord,
Nuclear Metals, Inc., had bought land for a new million-dollar atomic fuel plant.
And in December, the just-forming Sylvania-Corning Nuclear Corporation made
public its plan to construct in Andover, north
of Boston, a $4.5 million atomic center where
it would do research and produce fuel elements
and components for reactors.
In Windsor Locks on the Connecticut River,
Combustion Engineering, Inc., announced in
August the establishment of a new laboratory in
which it would build a $10 million prototype
reactor plant for powering small submarines.
Farther down the River, at Middletown, hun­
dreds o f scientists and technicians will soon be working in the $10 million nuclear
airplane engine laboratory operated by Pratt & Whitney Aircraft, and in Quincy, Mas­
sachusetts, Bethlehem Shipbuilding was getting ready to build the world’s first atompowered battlewagon and also had a design contract for an atomic merchant vessel.
Out on Route 128, the circumferential expressway which swings an 83-mile arc
around Greater Boston, the postwar-born Tracerlab was putting the finishing touches
on its new $1.8 million building and preparing to consolidate under a single roof its

Industrial

I

Research







nuclear instrument manufacturing operations which have been scattered through six
buildings in downtown Boston and one in Kentucky.
These examples of new developments taking place in New England in the field
of atomic energy highlight the degree to which New England industrialists and in­
dustrial and educational research organizations are moving forward into the youngest,
most complex and perhaps the most exciting o f the sciences.

Although the region’ s atomic progress seized the headlines in 1956, the news
about New England’ s constantly expanding electronics industries was also impressive.
Raytheon, the region’ s largest electronics firm and third largest manufacturing em­
ployer, wound up the year with a backlog o f military orders in excess of $245 million.
In November, Avco Manufacturing bought 100 acres in Wilmington, Massachusetts,
for construction o f a $15 million electronic and missile research center. At the
Lincoln Laboratory between Concord and Lexington, a team o f computer experts on
the payroll o f Massachusetts Institute o f Technology put the FSQ-7 — the largest,
fastest, most flexible electric brain ever created — into service as a coordinator and
interpreter of defense radar data. On the civilian front, Datamatic Corporation con­
tracted to produce for the First National Bank of Boston a $1.75 million computerdirected machine system to help the bank with its snowballing volume o f paper work.
On the shores of the Charles River near MIT in Cambridge, the fledgling Hycon
Eastern finished the planning and began assembling equipment for the complete nation­
wide communications system — telephone to television — which it will soon install
for the government of far-off Lybia.
Although problems o f the behavior and the harnessing o f the atom and the
electron preoccupied an ever-growing group of New Englanders in 1956, there were
significant developments in some o f New England’ s older industries. For example,
just before Christmas, the Great Northern Paper Company set what it believes is a
new world’ s speed record at its Millinocket plant deep in the Maine woods — produc­
tion of a 24-foot-wide sheet of newsprint at a speed o f 2,250 feet a minute. On
the shores of Boston Bay where Donald McKay launched in the 1850’ s the world’ s
fastest sailing ships, a new generation o f builders undertook construction o f the
country’s largest tanker — 100,000 tons. In Lynn, just above Boston, General Electric
had under development a helicopter motor which, pound for pound, is the most
powerful turbo-shaft engine yet announced. In East Hartford, Pratt & Whitney’ s
Connecticut Yankees were clocking 7,600-mile-an-hour winds in their new hypersonic
test tunnel and exploring the effects on planes o f crossing the “ thermal barrier.”
The New England industrial news items reported above cannot convey the rich
diversity and color and liveliness to be found in the region’s economic life in 1956.
But they have a characteristic in common, and it is one which more and more pervades
the New England industrial scene — they all involve, or are the result of, a high level
of scientific research and engineering ingenuity. Furthermore, they dramatize a
continuing change in the nature o f the area’ s manufacturing activities. And finally,

they point up New England’s need for and reliance on research and development as a
primary weapon o f competition in this technological age.
Although literary societies may debate the authenticity of the “ better mousetrap”
proverb attributed to Emerson, economists seem to agree that manufacturing success
in New England does not require lower costs so long as the producer turns out a
unique or superior product. They also agree that the producer who makes merely a
standard, “ run-of-the-mill” product may find that his costs add up to an important
competitive handicap.
New England’ s industrial history has repeatedly demonstrated the truth of both
these statements. And both of them must be the continuing concern not only of the
individual manufacturer but o f all the New England people as well.
Manufacturing is still the principal source of employment and income in each
o f the New England states despite the rising importance of the service industries. So
New England’ s economic good health depends very largely on the ability of the
region’ s manufacturers to maintain sales, employment and profits.
These manufacturers enjoy certain general advantages derived from tradition
and from an abundance of men, machines and money. On the other hand, their geo­
graphical situation has long confronted them with a handicap, and time and the
development of other regions have brought them further problems.
The heart of the matter is transportation costs— the cost of bringing into New
England from distant sources virtually all the region’ s industrial raw materials; the
cost o f bringing into New England the oil and coal which furnish most of the region’ s
industrial power; and the cost of delivering in and servicing national markets
relatively remote from the extreme northeastern corner of the country.
Some New England firms are successfully meeting these disadvantages by con­
centrating their manufacturing effort on products which are recognized as superior or
unique in concept, function, design and workmanship. If such a course is not always
feasible for some smaller or older firms, nevertheless it is safe to say that manu­
facturing success in New England is most likely to attend him who persistently
researches and intelligently develops new and better products and new and better ways
o f making and using old products.

The words “ research and development” are comparative newcomers to the
vocabulary of industry. But in their proper sense they are as old as New England
manufacturing itself — indeed they are older, for they are the very parents of Yankee
industry and therefore the grandparents of American industry.
It was the systematic research and development work done on textile making by
Samuel Slater o f Pawtucket around the 1790’ s which enabled New England to take
its first great step toward large-scale manufacturing. As one historian puts it: “ He
was the first in this country to set up a system of manufacture in which the successive
steps of the skilled artisan were broken down into such simple components that a
group of children could out-produce the finest craftsman.”







A second and even more important piece o f New England industrial research
and development took place in New Haven in 1798 when Eli Whitney invented the
system o f interchangeable parts, the basic principle o f mass production. In this method
o f manufacturing, which permitted an unskilled man to turn out a product as good
as one made by the most highly trained machinist, Whitney laid the foundations of the
whole edifice of modern industry. Almost as important as his theory were the metal­
working tools which Whitney designed and built to make the theory workable —
among them, the jig and the fixture, limit gages, and the milling machine.
Slater found for New England and the infant republic the short cut to quantity.
Whitney combined quality with quantity. Between them, these two researchers launched
New England, a land almost destitute o f manufacturing raw materials, into a way
o f life that soon made it the most highly industrialized region o f the Western Hemi­
sphere. And they also set the two basic patterns o f industry which still predominate in
New England — metalworking and textile manufacturing.
The research-minded Yankees who followed Slater and Whitney first transformed
the face o f New England and then provided the machinery for transforming the face
o f America. The heart o f this transformation was the machine tool — the machine for
making the machines which are vital to almost every phase of manufacturing. In
New England were born the jig and fixture and limit gage, the milling machine, the
copying lathe, the turret lathe, the automatic screw machine, and the cylindrical and
surface grinders, to name but a few.
Utilizing these basic devices fo r precision metalworking, New England quickly
made itself the machine shop o f the new nation. In addition to turning out machine
tools, New England manufacturers developed both for their own use and for sale a
great variety o f specialized machinery for making textiles, guns, shoes, ships, sewing
machines, farm and household equipment, an ever-widening range o f hardware, and
many of the necessities and luxuries demanded by a rapidly expanding population.

From those early days to these, New England has always been in the vanguard
o f American industrial research. To be sure, some decades have been more fruitful
than others in the development o f new products and new methods. It is true, too, that
there has always been considerable variation among individual firms and even among
entire industry groups in the amounts o f imagination, energy and money devoted to
research work.
Perhaps longevity and prosperity offer some measure of the vigor and effective­
ness o f a company’ s capacity for meeting change — certainly one o f the prime
objectives o f research. If so, then New England has a host o f names to be proud of,
including nearly a score o f internationally-known metalworking firms which are
more than a century old.
The predominance o f metalmen on the region’ s roster o f manufacturing cen­
tenarians points up a long-term trend in the New England economy which has been
accelerating sharply in recent years. Over the last quarter-century, the metal-based

industries have steadily expanded until collectively they are now the region’ s top
employer. Since 1939, they have more than doubled their employment, which stood
in November 1956 at 672,000, over four times the current regional employment in
textiles. It is estimated that the number of New England metalworking plants has
tripled since 1939, and value added by manufacture has increased still more.
A study made by the Bureau of Labor Statistics reports that the aircraft,
electrical machinery and instruments industries are the country’ s highest in terms of
research expenditures. They are also among the fastest-growing industries as shown by
percentage employment increases over the period 1947-1953, both in the nation and
in the region.
As this report is written, New England’ s three largest manufacturing employers
are: United Aircraft Corporation, General Electric Company and Raytheon Manu­
facturing Company, in that order. All of them work mainly in metal, and they are
the region’s three largest spenders on research and development.

To get a broad picture of the amount and general characteristics of the industrial
research carried on in New England, the Federal Reserve Bank o f Boston recently
surveyed by questionnaire some 3,500 of the region’ s manufacturers. The returns
accounted for 22 per cent o f New England’s manufacturing employment and are
believed representative enough to make the findings valid for the region.
In 1955, New England manufacturers spent more than $330 million on research
and development. This huge amount— some $33 for every person in the six states —
is over two-and-a-half times the volume o f similar expenditures in 1950.
It is estimated that approximately two-thirds of the $330 million is spent by
private industries from their own operating incomes, and one-third is accounted for
by federal government spending through research and development contracts. Indus­
tries producing such defense materiel as aircraft engines, missiles and components,
communications equipment and nuclear materials and equipment are particularly
heavy in government contracts. O f course the results o f the research studies spon­
sored by both government and private enterprise are having, and will continue to
have, strong leverage on the sales of these research-minded manufacturers.
In the communications equipment industry, survey respondents indicated that
77 per cent of their 1955 sales were derived from products developed since 1945.
In the nonelectrical machinery, transportation equipment, instruments, chemical and
industrial electrical equipment industries, more than 45 per cent o f the respondents’
sales were in products new since 1945. In nondurables, new product sales ratios of
textile respondents were 20 per cent, and the shoe and leather industry followed
with a ratio of 19 per cent.
The six industries which allocate the largest amounts to research and develop­
ment programs account for more than 40 per cent of total value added by manufac­
turing in New England. Regional employment in these industries expanded by some
18 per cent between 1950 and 1955, and accounted for 85 per cent o f the total gain







in employment for all industries which recorded employment increases during
the period.
New England’ s industrial research laboratories are of several varieties and
it is not easy to draw a quick over-all picture of them. The most recent survey
(National Research Council, 1950) showed that the region had 311 industrial labora­
tories operated by individual concerns. This was 11 per cent of the national total in
an area which then had 9.7 per cent of total manufacturing employment. A break­
down of these 311 laboratories by industry group showed that nearly two-fifths of
them were in metalworking, including: nonelectrical machinery, 41; instruments, 2 8;
electrical equipment, 27; and communications equipment, 16.
Parenthetically, in a recent analysis of the industrial research spending of 191
large companies, Harvard found that 42 per cent of the research funds went toward
the creation of new products or processes, and 50 per cent went to improving existing
products or processes. Only eight per cent was “ uncommitted to specific problems.”
In addition to the 311 “ captive” laboratories described above, New England in
1950 was the home of 40 commercial consulting industrial laboratories, one of them
being the country’ s largest. Finally, some 50 New England colleges and universities,
including a number of the country’ s outstanding institutions, furnish technical training
and operate research laboratories.
In a study of 41,000 American scientists it was found that nearly 14 per cent
of their PhD’ s and more than 12 per cent of their bachelor’ s degrees had been awarded
by New England institutions.
Research Row on the banks of the Charles River in Massachusetts is the country’ s
most dramatic illustration of the whole research idea. Along with extensive laboratories
of the institutions enumerated on page two of this report, Research Row contains
a group of research-based manufacturing concerns whose products range almost
the whole spectrum of science.

In addition to exhibiting the successful marriage o f science and industry and their
lusty offspring, Research Row demonstrates in the firm o f Arthur D. Little, Inc., that
research has become a full-fledged industry in itself.
When Mr. Little and an associate announced in 1886 that they were available
to “ undertake . . . investigations for the improvement of processes and the perfection
of products” they established what is now the nation’ s oldest and largest firm of
technical consultants. They established, too, a new technique o f research and develop­
ment in which teams of scientists and engineers collaborate with industrial manage­
ment on a fee basis in working out problems o f almost any nature and magnitude.
Since its founding, ADL has grown into an integrated staff of 400 scientists and
engineers which is backstopped by an equal number of laboratory-office workers.
And the team technique has proved so successful that ADL was retained to organize,
staff and put into operation General Motors’ first centralized research department.
Another type of research activity which has proved helpful to New England

was pioneered by ADL in the field of national and regional economic analysis and
development. After foreign experience in this work, ADL undertook “ A Survey of
Industrial Opportunities in New England,” with the sponsorship of the Federal
Reserve Bank of Boston. That study, published in 1952, and a companion piece,
issued in 1956 with the title “ Diversification — An Opportunity for the New England
Textile Industry,” explored new avenues for further economic expansion.

New England’ s three-way combination of research facilities — the laboratories
of professional consultants, o f educational institutions and of individual firms —
has built up a large reservoir o f special talents and technical skills which is focused
constantly on the future. The personnel of these agencies are drawn together by
common interests and intermingle freely, with a corresponding cross-fertilization of
ideas. And each year this research-oriented community is made larger by new graduates
from colleges and professional schools.
New England’ s growing pool o f scientists and engineers and the atmosphere
which surrounds it is proving of unexpected assistance in the region’ s continuing
industrial development. The $15 million Avco research center mentioned earlier is
to be located in Wilmington because the firm was especially anxious to be near the
scientific facilities and personnel o f the educational institutions of Greater Boston.
RCA established its new laboratories in Waltham for much the same reason, and it
is said to have played an important part in the decision to build the $11 million
Quartermaster Corps’ research laboratory in Natick.
Still another interesting development in industrial New England is the increasing
number of young engineer-scientist-businessmen who establish plants to manufacture
products growing out o f their own research or that of their friends. Typical examples
are: Polaroid Corporation with its light-polarizing products and Land camera;
National Research Corporation with its high-vacuum work which, among other things,
led to the huge frozen juice industry; Tracerlab, Inc., with its nuclear instruments;
and High Voltage Engineering Corporation with its electrostatic generator.
New England industry was built on research and research is constantly trans­
forming it. The multi-storied factory by the millpond, in its day the most advanced
o f manufacturing structures, was the product of research — and it was more research
which made it obsolete. Because of the complexities of modern science, the old-time
Yankee inventor — Howe o f the sewing machine, Colt o f the revolver, Corliss of the
steam engine — has largely given way to the research team. Today’ s teams are con­
centrating more and more of their scientific and engineering work on the development
of products with a high content of skilled labor in relation to bulk and weight. And
more and more New England manufacturers are demonstrating their conviction that
research is vital to every business desiring to remain competitive and profitable.







o major region of the United States is entirely self-sufficient in its
production o f foodstuffs. Each region specializes in those products for which it is
most suited by virtue o f its climate, soil and other conditions, and exchanges its
specialties with other areas. Through this process of regional specialization and
through product improvement resulting from research, today’s farmers are bounti­
fully producing for a population 22 per cent greater — but with a farm labor force
20 per cent smaller— than in 1940.
New England participates in this regional specialization, for its production of
potatoes, poultry meat, and cranberries exceeds its consumption. The region is
largely self-sufficient in the production o f fluid milk. For all other food commodities
it is a net importer, although very sizeable quantities o f eggs, apples, cheese, skim
milk powder, meat, and greenhouse
and nursery products are produced
in the six-state area.
Receipts from farm marketings
returned about $750 million to New
England farmers in 1955. Poultry
and dairy products accounted for
about two-thirds o f the total, with
dairy income in 1955 at $255 mil­
lion and poultry at $231 million.
Potatoes, greenhouse and nursery products, tobacco, vegetable crops, and fruits
follow in that order.
Limited agricultural resources coupled with large and favorable near-by markets
characterize the area. For these reasons one of the principal objectives of research
has been to select the wisest uses of the available resources and to get maximum
efficiency in production and marketing.

A g ric u ltu ra l

Country’s First Farrrs Research Center
Agricultural research findings in New England have included hybrid corn, scores
of new vegetable varieties, and a whole series o f discoveries that have helped make
possible the development of a huge New England poultry industry.
Formal agricultural research in the United States had its birth here in New
England with the establishment of the first agricultural research center in America in
Middletown, Connecticut, in 1875. This station was later moved to New Haven.
In 1887 Congress authorized the setting up o f publicly supported agricultural
research stations at each of the state agricultural colleges. Thus organized agricul­
tural research was largely created and has been supported by public funds. Perhaps
even more important, it has been tied in closely with educational institutions able
widely to disseminate the information learned.
Today there are seven agricultural experiment stations in New England, includ­
ing the six that are located at the state agricultural colleges as well as the station at
New Haven, Connecticut. During the last fiscal year the expenditures by these seven

12







experiment stations totaled approximately $4 million and there were more than
1,150 people on their payrolls.
Over the years the findings o f these New England research centers have been
a tremendous force in shaping the New England agricultural economy. The develop­
ment o f the poultry industry is an outstanding example.
Not all o f the research findings that facilitated the growth of the poultry industry
were made in New England — but an impressive array of them were. Late in the
1800’ s, Rhode Island poultrymen had started the development of a new strain of
chickens. The Rhode Island State College of Agriculture recognized the potential value
of the strain and was a leader in refining and purifying the bloodlines to the point
where a new breed was established. The Rhode Island Red was the premier bird o f
her day and is still a highly popular breed.

Other developments were needed and they were fast to follow. The invention
of the incubator was not a product of New England genius, but it was a major factor
in permitting expansion of the poultry industry. New England researchers swung
open the gates again when the Connecticut station at New Haven demonstrated that
birds could be raised in confinement without ever seeing sunlight if their feed was
properly reinforced with Vitamin D. This discovery, which incidentally cost less than
$1,000 in research funds, made poultry a source of year-round income.
Then the Massachusetts poultry geneticists started their long succession of
discoveries that helped to lick “ broodiness,” the mother instinct that kept hens sitting
on their eggs rather than busying themselves in producing more.
By the early 1920’s the poultry researchers at the University of New Hampshire,
working with poultry breeders in that state, had developed the New Hampshire breed,
the backbone o f today’ s tremendous broiler industry. In fact, it is claimed that the
first carload of broilers ever sent to New York City was shipped from Durham, where
they had been raised by students of the University.
As the industry began to develop, however, it met with one obstacle after another.
First was pullorum, the dread disease that wiped out young chicks. Connecticut
pathologists proved that it was carried from the mother hen through the egg to the
baby chick, and they evolved a blood test that located the disease in the hens. Here
the New Hampshire station and others joined the fight and assisted in setting up a field
method o f control that has resulted in almost complete elimination o f the disease.
By the 1930’ s the efficient teams o f poultry research men at the agricultural
experiment stations had proved their ability to meet problems as they arose. Since
that time they have made major contributions in the development of controls for such
diseases as coccidiosis, bronchitis, and “ crazy chick” disease, to mention only a few.
There were many discoveries that opened up new possibilities for efficiency—
for example, the development of the so-called high-energy rations by the station at
Storrs, Connecticut. This one discovery can be demonstrated to have reduced produc­
tion costs over $5 million in 1955 alone on the broilers raised in New England.

Today poultry is the major source of agricultural income in Maine, New
Hampshire, Massachusetts and Connecticut; and it is a sizeable income-producer in
Rhode Island and Vermont. For New England as a whole, income from poultry is only
moderately less than that from dairying, which is the region’ s leading source of agri­
cultural income. That the poultry industry should be so significant a factor in the
total agricultural economy never ceases to impress people who are uninformed as to
the ways in which good management can offset the disadvantage of being located at
the end o f the grain pipeline. Because New England is so far removed from the corn
belt and because grain constitutes so large a proportion of total costs in egg production,
the common reaction is one o f surprise that New England commercial egg farms can
retain local markets despite midwestern competition.
Without question premium local markets are a factor in the development of
egg production in the region as are also a favorable climate and a low mortality rate.
But the solid rock on which the industry rests is the high efficiency in egg production
resulting from the applications o f the latest research findings. One noted poultry
economist estimates that an increased production o f 10 eggs per hen annually is the
equivalent of an eight-dollar-per-ton saving in grain costs. Production of New Eng­
land’ s flocks is consistently above the national level; in fact, year after year the six
New England states have ranked within the high six or eight states in the nation for
production per bird.
This increased production does involve some modest added costs, but primarily
it arises from superior management. Not only does this higher production per bird
result in lower feed costs per egg but it also results in increased eggs per man hour.
Thus, poultry research, much of which was conducted in New England, has been
responsible for placing egg production on a sound economic basis. Much the same
may be said for the broiler industry where a low mortality, premium production, and
high efficiency in converting grain into broilers have enabled New England producers
to meet competition from other sources.

Some of the early fundamental agricultural research was of tremendous impor­
tance and without it modern farming would be severely handicapped. For instance,
the Rhode Island station discovered in the late 1800’ s that lack of lime in the soil
was a severely limiting factor in crop production on New England’ s mineral soils.
Since that time millions o f tons have been used to correct soil acidity.
Also about this time scientists at the Storrs station proved that legumes had the
ability to take nitrogen from the air. This basic discovery showed conclusively the
importance of legumes in hay and pasture seeding mixtures.
Other early findings included the discovery of many of the essential amino acids
by the station at New Haven and their place in both human and animal nutrition.
The gypsy moth was introduced into Massachusetts in 1869 by people who
thought that it had possibilities in the production of silk. It soon got loose and became
a tremendous menace to shade trees and ornamental shrubs. In the course of bringing







it under control* entomologists at the Massachusetts station discovered lead arsenate
as an insecticide — one of the most widely used insecticides in history.
The station at New Haven brought hybrid corn to the world in 1917. The
increased vigor from hybridization had been recognized earlier, but Dr. D. F. Jones
and his associates at New Haven developed a practical method of producing hybrid
seed. This discovery alone raised yields per acre by 15 per cent and is estimated
to have produced millions o f dollars in new wealth. In fact, this single piece o f
research has more than paid for the operation of all the nation’ s agricultural research
stations for all o f the years that they have been in existence.
As one might expect, the Maine station has been a leader in potato research.
It has turned out a steady succession o f discoveries vital to the health o f the Maine
potato industry, which produces over 15 per cent o f the total national crop. In coopera­
tion with the United States Department of Agriculture it has developed several
important potato varieties including the Katahdin, the most widely planted variety in
the Northeast today.
The early discovery of potato ring rot and the development o f control measures
are estimated to have saved $1.5 million annually, nearly three times the budget o f
the Maine Agricultural Experiment Station.
The work in potato marketing has also been of importance. Researchers at the
Maine station have played a major role in production procedures and marketing
tests for developing such potato products as potato chips, sticks, and more recently
potato flakes.
The Maine station has developed methods o f potato washing, the use of plastic
containers, and presently is testing both chemicals and irradiation as a means of sprout
inhibition. Recently it has developed potato pulp for livestock feed as a by-product
o f the potato-starch industry.
The New Hampshire Agricultural Experiment Station has done particularly
good work in recent years in developing vegetable and fruit varieties that are tailormade to fit the New England climate. These varieties have found wide use by both
home gardeners and the commercial truck gardeners. Since the 1930’s the New
Hampshire station has released a steady stream o f varieties such as New Hampshire
midget watermelons, Durham raspberries, Double-rich tomatoes and Bush Buttercup
squash.

Vermont has been one of the leaders in dairy production research. Researchers
in this state, which supplies 70 per cent o f the milk for the Boston market, have come
up with a string o f triumphs in increasing efficiency in the production o f milk.
Early in the 1940’ s, Vermont made the first broad application o f time and motion
studies to agriculture. Stimulated by the war-induced shortage o f labor, R. M. Carter
and J. A. Hitchcock devised labor-saving techniques for dairy barn chores — the
most time-consuming job on the farm. They demonstrated that the time required to
milk a typical dairy herd could be cut nearly in half by the application o f the known

principles of work simplification, and with very modest demands for capital improve­
ments. Later this work was expanded to include the harvesting of roughage.
Another outstanding achievement o f the Vermont station was in the conser­
vation of nutrients in farm manure. These nutrients were valued at upwards of
$4 million annually in Vermont alone, and at least one-fourth of this amount, mainly
nitrogen, was lost into the air and through leaching by water. The discovery o f using
superphosphate with the manure was widely accepted, and by 1952 had eliminated
at least one-half o f this hitherto million-dollar loss to Vermont farmers.

In many cases New England research stations have pooled their efforts. One of
the signal pieces of regional research is the development o f the formula which deter­
mines the price of fluid milk for the Boston market. This formula is acknowledged
by farmers, milk handlers and consumers alike to have been an especially effective
tool in the setting o f prices that accurately reflect supply and demand. Through its
mechanism, farmers have developed a method of sharing equally the surplus pro­
duction that inevitably results from time to time in an industry where forces of
nature quickly change output and where demand fluctuates from day to day. This is
only one example o f an increasing volume of agricultural research that is conducted
on a regional basis.
Obviously not all o f the agricultural research has been done at the state univer­
sities. Many commercial concerns operate their own research farms and they have
made highly significant discoveries in such fields as feed formulations, field and
vegetable crop variety testing, and poultry breeding. But the great bulk of the agricul­
tural research in New England continues to be done by the state universities where
consumers and producers alike share the costs.
Thus, research has played a major role both in shaping the New England agri­
cultural economy and in strengthening the region’ s various agricultural enterprises.
The results o f this research have been, and will continue to be, a notable raising
of the standard o f living of farm families. But equally important, the efficiencies
introduced into agriculture through research have meant a constantly improving diet
for a growing number of consumers.







ince those Colonial days when New England’ s straightest and tallest
white pines were marked with a broad arrow and designated as masts and spars for
the King’ s Navy, the region’ s forests have constituted perhaps its most important single
natural resource. Even today about three-quarters of all New England carries some
kind o f forest cover, and the region’ s extensive lumber, pulp and paper, and furniture
industries all use wood as their basic raw material. Research to maintain or improve
New England forests therefore has a multiple impact onJthe region’ s economy.
This point is easily illustrated: The value of the timber cut each year in this
region is roughly $30 million; the wood cut from this timber and delivered at road­
side is worth more than $75 million; and this same material delivered at manufacturing
plants throughout the New England states probably has a market value which is well
in excess o f $100 million.

But these figures still do not adequately represent the value o f our forest resource
because they do not include those of the important manufacturing industries utilizing
wood for their raw material. For example, New England’ s paper and allied products,
lumber and timber products, and wooden furniture industries employ about 115,000
workers and pay annual wages o f about $400 million. The value added by manu­
facture for these three classifications was approximately $700 million in 1954.
In the long run, it is safe to say that forest
research is many times more important to the
New England economy as a whole than it is to the
owners o f our forest land.
Much o f the forestry research in New Eng­
land is carried on in the regional research cen­
ters and field laboratories o f the United States
Forest Service. Second in importance are the
university experiment stations supported not only
with state and private funds but with federal
funds as well. Finally, some of the large users of forestry products have worked on
cooperative projects with public research agencies or have initiated their own
experiments in forestry practice.
According to a survey recently completed by this Bank, 20 state and federal
agencies and private organizations reported expenditures of approximately $1 million
during 1956 for research connected with New England forestry. O f that total, 51
per cent was provided by the federal government, 39 per cent by private organizations
(principally in the form of university endowments and foundation grants), and the
remaining 10 per cent by state agencies. The $1 million spent this year for New
England forestry research is almost double the figure for 1946.
In addition, new product and process research and development expenditures by
New England’ s paper and allied products industries are currently running about $6
million annually.

Forestry







The most common species o f trees in northern Maine and in the higher eleva­
tions in northern New Hampshire and Vermont are spruce and balsam fir. O f course,
hardwoods are intermixed with these, but spruce and fir are dominant.
One o f the experimental forests serving this spruce-fir region is the Penobscot
Forest located near Bangor, Maine. This 3,800-acre tract is managed by the United
States Forest Service in cooperation with a number of paper companies which pur­
chased the land in 1950 and turned it over to the Forest Service under a 99-year lease.
Nine hundred acres of this forest are devoted to tests o f different levels of
management treatment, ranging from practices which foster the maximum possible
growth to complete liquidation cuttings in which all merchantable trees are cut and
no thought is given to future returns. These studies are designed to find out how
the various levels of management affect the quality and quantity of tree growth and
how these treatments influence forest production costs.

Many of the forest experiment stations in New England have devoted con­
siderable effort to developing techniques for maintaining the white pine which
since 1900 has been steadily losing out to the more vigorous hardwoods. The pioneer
work in this field was done at the Harvard Forest at Petersham, Massachusetts, and
the Yale Forest near Keene, New Hampshire. More recently, the forestry department
of the University o f Maine has established a series of white pine experimental plots
which will test the whole gamut of forest cutting techniques.
The work at each of these forests shows that natural enemies o f the pine —
wind, fire, insects and disease — are perhaps even more difficult to control than hard­
wood competition. In 1947, most of the Massabesic Forest in Maine was destroyed
by fire, and the 1938 and subsequent hurricanes destroyed much of the old-growth
pine stands at the Harvard and Yale forests. Experiments conducted at these univer­
sity forests demonstrate conclusively that forest managers must anticipate destructive
winds in the future and give more serious consideration to the risks o f leaving the*
larger pines standing in the forests. They also suggest the wisdom o f more access
roads to permit the quick recovery of blowdown trees before they deteriorate.
Some of the experimental forests are research testing various poisons which have
been prepared to kill competing hardwoods. For example, researchers at the Massabesic
Forest have conducted extensive experiments with tractor-mounted mist blowers and
with helicopter spraying to spread chemicals which kill hardwood but do not affect
white pine if applied in small concentrations. Foresters hope that before long it will
be economically feasible to control inferior hardwoods on thousands of acres of
land in New England which are well stocked with suppressed white pine seedlings.
Until relatively recently, most research efforts were devoted to white pine and
spruce-fir. Hardwoods received little attention because they were not as commercially
important as these other species. However, high quality hardwood saw logs are now
very valuable and the new technology of hardwood pulping is opening up markets
for the smaller hardwood trees.

A 1953 survey made by this Bank showed that New England’ s pulp mills are
using constantly increasing quantities of heavy hardwood as raw material, and another
survey made in 1956 showed that the nonintegrated paper and paperboard mills in
southern New England were purchasing ever larger amounts o f hardwood pulp.
Furthermore, new hardwood pulping processes have already stimulated industrial
expansion at several locations in northern New England.
These are fortunate developments for New England where twice as much hard­
wood as softwood is grown, and where only 24 per cent of the hardwood growth is
cut, but where the annual cut of softwood exceeds the annual growth.
A number o f experiment stations are now working on methods for improving
the growth rates o f the more valuable species of hardwoods such as yellow birch,
paper birch and hard maple. Some are attempting to develop vegetative propagation
techniques for sugar maple trees. This work is particularly valuable to the maple
sugar industry for it would permit landowners to plant trees which could be counted
on to have sap with a high sugar content.
One o f the most valuable services of the United States Forest Service is its
systematic inventory o f the forest resources of each state and region in the United
States. The resulting data shows the forest growth in each state, the volume of sawtimber, the cubic volume of standing timber., growth rates, the species composition
of the forests, the ownership o f forest land, and the volume of timber being cut each
year. This information is invaluable to those interested in industrial development
and to industries planning expansion in New England and in all regions.

In another field, the Sears Roebuck Foundation is cooperating with several other
agencies and institutions in sponsoring a study o f the costs and returns o f forest
ownership o f 50 small woodland owners in New Hampshire. As a result o f this study,
it is expected that foresters will be able to give small landowners more competent
advice in the years ahead.
Many other types o f forest research are important. For example, soils research
is being conducted at many New England universities. Knowledge in this field is
greatly needed in order to judge the inherent productivity o f different types of forest
land. Even more important in the long run is the basic tree physiology research work
being conducted at Harvard and Yale under grants from the Maria Moors Cabot
Foundation and the Hartford Foundation. This type o f basic research will be useful
to forest researchers the world over because far too little is known about the life
processes o f trees.
All this research effort is contributing to the basic fund of knowledge about
forests which will be so necessary in the future when New England’ s wood-using
industries will need much larger quantities o f raw material.







oston is now generally conceded to be the medical research center of
the world. And because of the quality and quantity of research carried on in the
hospitals, medical schools and laboratories of other communities in the region, New
England has become an outstanding contributor to the advancement o f modern medical
science.
Through basic research and skillful practice, New England institutions are
playing leading roles in reducing infant mortality, in restoring crippled limbs to
normal use and sight to the blind and hearing to the deaf, in curing sick minds as
well as sick bodies, and in providing a general increase in life expectancy.
Within the region’ s relatively small geographic area are located six medical
schools, two dental schools, a school of public health, more than 400 hospitals, and
a number o f laboratories working in medical and allied fields. Proximity and a
common interest have stimulated close collaboration among institutions, and as a
result of this working together there have been great advances in the understanding,
care and treatment of the human body. The reputation for excellence in teaching and
research facilities in New England attracts students from all over the world.

New England’s participation in the advancement of medical knowledge began
during the Revolutionary War when the need for trained doctors was acute and there
were no institutions for medical education in the region. At the urging of John Warren,
head of the Continental Army hospital in Boston, the Harvard Medical School was
founded in 1782 to help meet the needs of the new nation.
It soon became apparent that physicians trained at Harvard required hospital
facilities in which to treat their patients. In 1810, two doctors associated with the
Harvard Medical School circularized a letter to raise funds for the construction of a
hospital. Their efforts led to the opening in 1821
of the Massachusetts General Hospital.
Meanwhile, the Dartmouth Medical School had
been organized in 1797 and instruction had started
at the Yale School o f Medicine in 1813. The opening
o f the Boston University School o f Medicine, Tufts
University Medical School and the College of Medi­
cine at the University of Vermont followed.
New England’ s tradition for medical research
was established early and has grown steadily. One of
the region’ s foremost early medical contributions was the first public demonstration of
ether as an anesthetic in surgery performed in 1846 at the Massachusetts General
Hospital. Another early development at the same hospital was the description in
1886 o f appendicitis, an illness formerly diagnosed as typhus fever.
After the 1916 polio epidemic, orthopedic surgeons at the Children’ s Hospital
in Boston made many advances in correcting deformities left by the disease. And in
the twenties, the Children’ s initiated use of the Drinker respirator which had been

Medical







devised by a group at Harvard Medical School. Later, during another widespread polio
epidemic and the resulting insufficient supply of respirators, simplification and improve­
ment o f the machine was undertaken by a “ rather unique machine shop located above
a fish emporium in Harvard Square, Cambridge.” From the work done by the shop’ s
proprietor and his four young Harvard associates came the Emerson respirator, the
prototype o f the modern iron lung.
Another example of how New England medical science and industrial research
and production work together is the Cohn Blood Fractionator, originated under the
direction of the late Dr. Edwin J. Cohn at the Harvard Medical School and researchers
at Protein Foundation, Inc., and engineered and manufactured by Arthur D. Little,
Inc., of Cambridge. In a single closed sterile circuit the Fractionator takes blood from
a donor, separates it into its component parts and packages the resulting cellular
fractions in sterile containers ready for use or storage. This process minimizes the
handling of blood and enables new economy in its use since, rather than whole blood,
a patient may be given only the component needed to treat his specific ailment.
The long and impressive list of New England’ s contributions to medical research
includes the studies carried on at Massachusetts General Hospital by Dr. Fuller
Albright on diseases o f the endocrine organs, and the pioneer work of Dr. Joseph C.
Aub and the late Dr. Ira T. Nathanson on the effects of various hormones in the treat­
ment o f cancer.
It was at Boston’s Peter Bent Brigham Hospital that the late Dr. Harvey Cushing
developed his revolutionary techniques of brain surgery, and the hospital’ s Dr.
Samuel A. Levine and Dr. Dwight E. Harken, together with Dr. Robert Gross of the
Children’ s Medical Center, were pioneers in heart surgery. Research at the Brigham
led to the development o f an artificial kidney, permitting many people to be restored
to a normal life following temporary failure of the kidneys. And it was also at the
Brigham that a healthy kidney was first successfully transplanted from one identical
twin to another.

Three Nobel Prizes for the Region
The New England Center Hospital, a part of the New England Medical Center
with which Tufts University Medical School is associated, did much of the original
work in developing the means for counteracting antibodies which destroy the red
cells in certain types o f anemia.
Among other New England medical achievements was the development at the
Boston Dispensary o f the widely used Hinton Test for syphilis, and the first diagnosis
of blindness in premature babies in 1942 at the Massachusetts Eye and Ear Infirmary,
where the Howe Laboratory had been established in 1926 as the country’ s first privately
endowed eye research institution. A new method of diagnosing glaucoma is another
of the Laboratory’ s well-known accomplishments.
In recent years, researchers working in Boston hospitals have achieved world­
wide recognition by winning the coveted Nobel Prize in medicine. Dr. George R. Minot
and Dr. William P. Murphy received the award in 1934 for work which led to the

discovery o f liver therapy for pernicious anemia. In 1953, Dr. Fritz A. Lipmann
received the prize for his work on the energetics of cellular metabolism. In the follow ­
ing year, Dr. John F. Enders and his associates, Dr. Thomas H. Weller and Dr.
Frederick C. Robbins, were cited for their work in growing poliomyelitis virus in
tissue culture, making possible the development of the Salk polio vaccine.
The Yale University School of Medicine has carried on much basic research
in nutrition, including bodily requirements of protein components and vitamins.
Researchers at the school, which is associated with the Grace-New Haven Community
Hospital, have made outstanding studies o f several infectious diseases and contributed
to the treatment o f diabetes, nephritis and hyperthyroidism and work fundamental to
the development of the Salk polio vaccine.

Research Examines Entire Life
To measure the extent of medical and related research now being conducted
in New England, the Boston Reserve Bank, in the Fall o f 1956, surveyed over 400 of
the region’ s institutions in the medical and public health fields.
Of the 210 schools, laboratories and hospitals which participated in the survey,
62 were actively engaged in research and planned to spend close to $18 million for
this purpose in 1956. This represented more than a fourfold increase in the past 10
years and was 17 per cent more than was spent in 1955. It is believed that these
institutions account for the major share of research expenditures in the region.
In 1956, some 2,600 professionally-trained people, assisted by over 1,500 non­
professional workers, were engaged either full-time or part-time on research projects
in these 62 institutions. Although this total of nearly 4,200 researchers seems small
compared to the total number of persons in and associated with New England’ s
medical profession, their work in extending medical knowledge is of vital importance.
While many institutions devote substantial amounts of their own funds to medical
research, the federal government is the largest single source of such funds. The 62
institutions surveyed indicated that federal or state sources provided 46 per cent of
their 1956 research funds; private foundations supplied 27 per cent; the institutions’
own operating funds accounted for 12 per cent; and five per cent came from private
enterprise in the form of grants or for work done on contract. Other sources, such as
bequests, endowments and gifts from individuals were given for the remaining 10
per cent. This information clearly indicates the great reliance placed by the institu­
tions on outside support for funds to carry out their research projects.
The variety o f current research projects supported by such funds ranges the entire
life cycle o f the individual from pre-natal development through senility. Some are
seeking causes and cures for such specific diseases as the common cold, poliomyelitis
and cancer, but much work is also being done in the basic sciences in an effort to
reach a greater understanding of fundamental life processes.
The Children’ s Medical Center in Boston is unique in the world. With the already
affiliated Children’ s Hospital and Infants’ Hospital as a nucleus the Center was founded
in 1946 and now consists o f nine organizations devoted to the care o f children, and




2S




to teaching and research. One o f these is the Children’ s Cancer Research Foundation,
established in 1948 as the first institution in the world for research concerning the
nature, the treatment and, hopefully, the cure of cancer in children. Here in the
clinic o f this Foundation and in its attached research laboratories was made the first
breakthrough into the chemotherapy o f cancer incurable by other methods.

Several hundred research studies are underway at Massachusetts General Hospital
ranging all the way from the basic study o f the chemistry of cells to controlled studies
on patients in the hospital wards. Much of this research is done in collaboration with
the Harvard Medical School. The General’ s Huntington Laboratory is devoted to
cancer research, and at this hospital Dr. Paul Dudley White, medical consultant to
President Eisenhower, continues his investigations into the causes o f coronary heart
disease.
The Hitchcock Foundation, Hanover, New Hampshire, has a relatively young
research program and is associated with the Medical School at Dartmouth. The research
program at the University of Vermont College of Medicine has been greatly expanded
in the past decade with staff members investigating a number o f fields.
In addition to this definite concentration of research activity near teaching insti­
tutions, there is a worldwide aspect to the work of researchers at the Harvard University
School of Public Health. Supplementing the research carried on here at home, field
studies in population dynamics are underway in India, studies of intestinal diseases
are being made in Finland and Norway, a study of certain eye diseases is being made
in cooperation with the Arabian American Oil Company, and nutrition studies are
in progress in South America.
The Roscoe B. Jackson Memorial Laboratory at Bar Harbor, Maine, is especially
interested in cancer research and genetics, although work is also being done on tissue
transplantation, tumors, muscular dystrophy and immunology and blood grouping.
One of the laboratory’ s most important contributions to research has been the develop­
ment of a pure strain of mice for use in scientific experiments.
In the field of mental health, much research is underway in both private and
publicly supported institutions. Increased attention is being directed to problems
associated with aging and with chronic diseases. Cooperative research is being carried
on in some special fields. For example, at the Yale Center for Alcohol Studies medical
authorities pool their knowledge with that o f other scientists to learn more about
alcohol and problems related to alcoholism.
The medical researchers have been quick to adapt to their own work new develop­
ments in other fields. They are making extensive use o f electronic equipment and
through the nuclear sciences have opened up whole new fields of investigation. Studies
of the effects of radiation are underway at several New England institutions and
radioactive elements are being more and more widely used, particularly as tracers,
in medical research.
The application o f radioactive iodine to problems of the thyroid gland, studied

jointly by researchers at Massachusetts Institute o f Technology and Massachusetts
General Hospital, was one o f the first uses o f radioactive isotopes in medical history.
During World War II, as a result of this collaboration, radioactive iron was first
used for the study of the preservation o f blood. Work already has been started on a
new nuclear reactor at MIT for medical and biological research which will be used
in part as a center for research and treatment o f certain cancer conditions. It will
permit MIT to pioneer in atomic medical research and will make available for the
first time in New England many neutron-produced, short-lived isotopes for use in
research and medical treatment. The therapy room o f the reactor is to be available
to all medical organizations in the Boston area.
This discussion o f medical and related research in New England has been able
to consider only a few o f the many organizations and thousands o f projects which
contribute to the total research activity in the region. Nevertheless, it reveals the
importance placed on research by the region’ s institutions and the scope of this
activity. The fruits o f these studies are providing longer, healthier and more productive
lives for the region’ s and the nation’ s richest resource — their people.







ndustrial, agricultural, medical and other forms of research have as a
common objective the improvement o f conditions surrounding human life. By applying
research findings, New Englanders alter the physical aspects and the social and eco­
nomic customs of their towns, cities and states. At times the changes are clearly
beneficial; at others they create severe problems. With the increasing complexity and
interdependence o f economic life, community leaders show increasing appreciation
of the fact that community economic development may not safely be left to chance.
In the years following World War II, attention to the economic aspects of com­
munity and state growth intensified. Zoning laws and plans for community facilities
prepared by newly-activated planning boards set the course for community develop­
ment. Sometimes through municipal government action, but more frequently through

Economic Research
privately-financed committees or foundations, city after city conducted extensive
economic appraisals as preliminaries to economic development action. Such studies
frequently resulted in the establishment of permanent agencies to stimulate and guide
community growth.
At the state level, establishment or revitalization of agencies to help develop the
state’ s natural resources has been typical. State departments or commissions devoted
to promoting industrial development have been strengthened, often by increasing
economic research to provide factual groundwork for effective action. For example,
in 1953 the Massachusetts Department o f Commerce was established with separate
divisions on research, planning and development. In 1955, Maine expanded its activi­
ties by creating a Department for the Development of Industry and Commerce.
The regional economy has been subjected to extensive and continuing analysis
during the postwar years. A decade ago the Federal Reserve Bank o f Boston enlarged
its research staff and began its long and continuing series o f studies of the region.
Over the years, the Bank’ s resource economists studied forest utilization and manage­
ment, taxation and fire insurance, water and mineral resources and the region’ s grow­
ing stake in nuclear energy developments. The industrial economists studied the shoe,
textile, electronics and other industries, power costs, manufacturing location factors,
transportation facilities, industrial development techniques, development credit organi­
zations and others. The agricultural economists studied the growing broiler industry,
Maine’ s potato-based economy, agriculture in the Connecticut Valley, and means of
further developing farm income and credit. The financial economists studied income

and expenses o f commercial banks, trust department operations, institutional investors
in New England, New England’ s financial relations with the federal government,
and others.
Through research grants, the Reserve Bank supported and published studies
o f the Port o f Boston, the origin o f new manufacturing firms in New England, indus­
trial opportunities for New England manufacturers, textile diversification, sources and
marketing o f new ideas for new businesses, the fishing industry, the region’ s transporta­
tion systems, wood-waste utilization, investment in timberland and many others.
The Reserve Bank has also worked closely with other agencies studying New
England’ s economy. A committee o f seven New England economists appointed by the
President’ s Council of Economic Advisers relied heavily on the studies and staff of
the Bank in preparing its report on “ The New England Economy.” Reserve Bank
economists directed the research staff and conducted independent studies as part of
the work o f the 100-man Committee o f New England o f the National Planning Asso­
ciation, and they prepared the final text of the voluminous report on “ The Economic
State o f New England.”
Numerous college and university teachers and groups have prepared reports on
the region’ s economy. The New England Council maintains a current flow of informa­
tion about the region’ s developments in its own publications and through the press.
Study groups established by the New England Governors’ Conference have prepared
definitive reports on special subjects. For example, all major aspects o f the textile
industry were studied, and public transportation in New England is now being examined
in 10 reports currently being published as a result o f two years o f study by the
Governors’ Committee on Public Transportation.
It is frequently difficult to determine where economic research leaves off and the
development work that leads to new employment and income begins. Many agencies
incorporate both kinds o f activity. According to a survey conducted by the Reserve
Bank for a committee o f the New England Council, there are several hundred organiza­
tions that are concerned with economic development o f some geographic segment o f
New England. Ninety o f these, including the largest, employed the equivalent of 828
full-time persons and spent $8.8 million in 1955.
It is almost impossible to measure the specific results o f economic research and
development work in terms o f business decisions, improved laws, new manufacturing
employment and reduced waste o f resources. They are real, nevertheless. Research
on forest taxation was influential in shaping New Hampshire’ s present forest tax laws.
Research on financial problems of new businesses led to the creation o f state develop­
ment credit corporations in New England. Research on problems o f water resources
may pave the way for improved flood control legislation and protection, and research
on bus transportation may pave the way for changes in state regulation and taxation.
In these and in countless other ways, economic research continues to help shape the
New England economy.




Comparative Statement of Condition




D ecem ber 3 1 ,1 9 5 6

Gold Certificates .....................................................

$

D ecem ber 31,1 955

928,799,005.90

$1,016,398,408.20

...................................................................

29,465,410.00

24,368,335.00

Federal Reserve Notes of Other Federal Reserve
Banks

Other Cash ..............................................................

22,291,083.32

23,566,907.53

Loans and A d v a n ce s..............................................

1,800,000.00

1,360,000.00

Industrial Loans .....................................................

312,000.00

U. S. Government Securities................................

1,352,693,000.00

1,346,972,000.00

Uncollected Cash Items .......................................

525,926,663.26

485,279,750.95

Bank Premises .......................................................

5,361,085.39

5,641,950.89

Other Assets ............................................................

13,445,702.06

8,412,548.16

............................................

$2,880,093,949.93

$2,911,999,900.73

Federal Reserve Notes ..........................................

$1,623,169,295.00

$1,613,945,595.00

Member Bank Reserve A ccou n ts.....................

778,900,207.77

861,914,188.60

U. S. Treasurer-Collected Funds ...................

33,984,008.24

29,376,931.30

Foreign

.................................................................

17,464,000.00

23,160,000.00

O t h e r .....................................................................

6,196,648.22

6,114,582.62

.......................................

$ 836,544,864.23

$ 920,565,702.52

Deferred Availability Cash Items .....................

348,117,468.44

308,186,913.87

Other Liabilities .....................................................

661,566.66

658,997.73

...................................

$2,808,493,194.33

$2,843,357,209.12

$

$

T otal A

s se t s

Deposits:

T o t a l D e p o s it s

T otal

L ia b i l i t i e s

Capital Paid I n ........................................................

16,801,450.00

16,161,600.00

Surplus (Section 7 ) ................................................

43,947,826.20

41,666,629.28

Surplus (Section 13b) ..........................................

3,010,527.20

3,010,527.20

Reserves for Contingencies...................................

7,840,952.20

7,803,935.13

T o t a l C a p it a l A
T o t a l L ia b il it ie s
C a p it a l

A

c c o u n t s .....................

$

71,600,755.60

$

68,642,691.61

and

ccounts

$2,880,093,949.93

$2,911,999,900.73

Comparative Statement of Earnings and Expenses

Current Earnings:
Advances to Member B a n k s ............................................

$

784,141.84

$

441,464.34

Foreign Loans on Gold ...................................................

4,145.09

Industrial Loans ................................................................

9,769.81

U. S. Government Securities — System Account . . . .

31,363,787.40

21,965,707.33

All O th e r ..............................................................................

16,991.63

14,094.45

Total Current E a rn in gs.....................................................

$32,178,835.77

$22,478,177.71

.....................................................................

8,368,632.39

7,926,272.10

Current Net Earnings .......................................................

$23,810,203.38

$14,551,905.61

Net Expenses

56,911.59

Additions to Current Net Earnings:
Profit on Sales of U. S. Government Securities (net) . .

$

All O th e r ..............................................................................
Total A d d itio n s ...................................................................

$

16,547.55
5,350.38

$

270.05

21,897.93

$

270.05

$

83.35

Deductions from Current Net Earnings:
Loss on Sales of U. S. Government Securities (net) . . .
Reserves for Contingencies..............................................

$

All Other ............................................................................

37,017.07

35,397.29

1,830.92

6,952.26

..............................................................

$

38,847.99

$

42,432.90

Net Deductions ...................................................................

$

16,950.06

$

42,162.85

Net Earnings before payments to U. S. Treasury . . . .

$23,793,253.32

$14,509,742.76

Paid U. S. Treasury (Interest on Federal Reserve Notes)

$20,531,028.23

$12,221,590.59

Dividends Paid ........................................................................

981,028.17

930,217.64

Transferred to Surplus (Section 7) ...................................

2,281,196.92

1,357,934.53

$23,793,253.32

$14,509,742.76

Total Deductions







The Total Assets o f the bank were $31.9 million lower at the end o f 1956 than 1955. The
principal change during the year was the decrease of $87.6 million in Gold Certificate holdings
which was largely offset by a sharp increase in Uncollected Cash Items and small increases in
most other assets.
Gold Certificate holdings declined principally because private business account transfers to
other districts more than offset a gain in Treasury transfers to this district.
Loans and Advances showed only a small increase at year-end. Member banks, however,
used the discount facility to a greater extent to meet temporary needs for reserve funds at various
times throughout the year.
U.S. Government Securities representing our allocation of System Open Market Account
increased $5.7 million — not significantly changed from a year ago. This reflected continuation
of the System’ s restrictive credit policy.
Check clearing activities set new records. The increase o f $40.6 million in Uncollected Cash
Items resulted from a larger volume, as well as from the difficult problems o f processing mail
at the end o f the year. The float at year-end was almost identical with a year ago.
On the liability side, Federal Reserve Notes rose $9.2 million to a new high. The rise
coupled with the increase in use o f notes of other Federal Reserve banks pushed the region’s cur­
rency supply above the record in 1955.
Member Bank Reserve Accounts declined $83 million, while U.S. Treasurer’ s account
increased $4.6 million.
Capital Paid In increased $640,000 and approximately $2.3 million was added to Surplus.
Net Earnings of $23.8 million were $9.3 million greater than in 1955. The increase was
due largely to higher average yield on the holdings o f U.S. Securities.
Net Expenses were $442,000 greater than last year.
After dividend payment o f $981,000 to member banks, 90 per cent or $20.5 million of
net earnings was transferred to the U.S. Treasurer in payment of interest charges on Federal
Reserve Notes levied under Section 16 o f the Federal Reserve Act.
The reduction in Gold Certificate holdings and the increase in Federal Reserve Notes out­
standing resulted in a decline of the bank’ s reserve ratio from 40.1 to 37.7 per cent.

Volume Figures for Years 1955 and 1956

Daily A verage

A nnual Total

Volume in P ieces or Units

Volume in Dollars
DO

Check Collections .....................

1,104,500

1,057,062

$67,582,937,064

$61,986,434,698

Coin Counted and Wrapped . .

3,697,588

3,429,608

85,723,150

78,140,400

Currency Sorted and Counted. .

1,057,922

983,381

1,726,561,866

1,599,667,011

4,039

3,980

352,700,143

361,214,937

ered .....................................

1,252

1,218

14,772,199,000

14,891,140,000

Coupons D etached................

1,575

1,342

32,860,139

24,765,056

Transfers o f F u n d s ..................

321

293

48,377,150,966

42,258,356,849

gations) ..............................

768

783

11,049,837,447

11,496,549,380

U. S. Savings B o n d s ............

41,198

41,304

856,557,601

819,319,186

U. S. Government Coupons Paid

1,818

1,975

111,369,731

117,028,632

2,747

2,485

1,495,292,882

1,213,550,968

258,984

281,492

91,270,000

101,299,000

Noncash Collections:
Notes, Drafts, and Coupons
(except U. S. Government)
Safekeeping o f Securities:
Pieces Received and Deliv­

Issues, Redemptions, and Ex­
changes :
U. S. Securities (Direct Obli­

Federal Taxes: Depositary Re­
ceipts and Direct Remit­
tances
Currency

................................
Verified

stroyed

and

De­

..............................







Federal Reserve Bank

J.

A . E r ic k s o n ,

First Vice President

E. 0 . La t h a m ,

D.
A

H.

A

Vice President

ngney,

nsgar

President

Vice President

R. Berge,

D a n a D . Sa w y e r ,

Vice President
Vice President and General Counsel

0 . A . S c h l a ik j e r ,

J.

Cashier

E. Low e,

E l l i o t S. B o a r d m a n ,

F.

Assistant Vice President

C . G il b o d y ,

Assistant Vice President

E. W . O ’N e il ,

Assistant Vice President

L. A . Z eh n er ,

Assistant Vice President

G eorge

H.

E l l is ,

P a r k e r B. W

il l is ,

allace

W

il l ia m

D ic k s o n ,
R . K in g ,

Ja m e s D . M

J.

Rock,

L aurence

Assistant Cashier

H.

W

atts,

Chief Examiner

Assistant Cashier
Assistant Cashier

St o n e ,

Charles E. T urner,

G. G.

Director o f Public Information

acD onald,

L o r in g C . N y e ,
Jo h n

Financial Economist

General Auditor

D . L. Str o n g ,
W

Director o f Research

Secretary and Assistant Counsel
Assistant Cashier

Assistant Cashier

of Boston

C.

R obert

Chairman of the Board and Federal Reserve Agent; Chairman
o f the Board and Treasurer, Sprague Electric Company, North Adams,
Massachusetts

Sprague,

R.

Ja m e s

Deputy Chairman o f the Board; President, Massachusetts
Institute of Technology, Cambridge, Massachusetts

K i l l i a n , J r .,

President and Treasurer, The Taft-Peirce Manufactur­
ing Company, Woonsocket, Rhode Island

F r e d e r i c k S. B l a c k a l l ,

H a r o l d I. C h a n d l e r ,

E llsw orth,

il t o n

P.

H ig g in s ,

H arvey

P.

H ood,

l iv e r

M

W

D.

il l ia m

H arry

E.

L loyd

Jo h n
W

D.

L.

President,

H.

P. Hood & Sons, Inc., Boston, Massachusetts

President, Second Bank-State Street Trust Company, Boston,
Massachusetts

Ir elan d ,

O F

Brace,

Ba x te r ,

allace

President, Riverside Trust Company, Hartford, Connecticut

President, Norton Company, Worcester, Massachusetts

U m phrey,

M E m B E iR

.,

President, The Keene National Bank, Keene, New Hampshire

B.

O

jr

President, Aroostook Potato Growers, Inc., Presque Isle, Maine

F E D E R A L.

A D V IS O R Y

C O U N C IL.

President, The First National Bank of Boston, Boston, Massachusetts

Partner, H. C. Baxter & Brothers, Brunswick, Maine

Vice President and Director o f Personnel and Public Rela­
tions, The Fuller Brush Company, Hartford, Connecticut

E. C a m p b e l l ,

E arl

P.

Stevenson,

Chairman o f the Board, Arthur D. Little, Inc., Cambridge,
Massachusetts

F red

C.

Tanner,

H a r o l d J. W

President and General Manager, Federal Products Corporation,
Providence, Rhode Island

President, Treasurer and General Manager, Bachmann Uxbridge
Worsted Corporation, Uxbridge, Massachusetts

alter,