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FEDERAL RESERVE B A N K OF R I C H M O N D J A N U A R Y 1961 fifth district 1960 1960 began on a high level. Businessmen envi sioned a prosperous year and planned accordingly. January statistics made glowing forecasts seem rea sonable. District nonfarm employment registered a good gain over December and the advance in manhours was even better. Both series were near their record highs set just prior to the 1959 steel strike. The aura of optimism, thus reinforced, survived a February decline and a sharp setback in March. These were clearly linked to spells of bad weather. Nevertheless, the 5% drop in manufacturing manhours between January and March stirred up a few misgivings. These doubts were quickly forgotten, however, when April re-established near-record levels in non farm jobs and manufacturing activity. Retail sales reached a new peak and new car registrations were the highest since 1955. Nonresidential contract awards soared. Residential awards showed signs of life and the lumber business perked up. Toward the end of April, District business seemed well on its way to new highs. The picture changed again in May. Although man-hours went up another notch, the rise in em ployment was negligible. Retail trade dipped almost to the very low March level. Manufacturers’ orders had been slow7 for several months, but seasonal irreg ularities such as large backlogs booked during the fall and winter seemed to explain this. Nearly half way through the year, when orders still lagged, back logs steadily diminished, and inventories continued to rise, the alternatives were clear. Either renewed spending would revive growth, or the peak had already been reached. No revival came. Consumer buying remained fairly strong, but was fitful and inconsistent for the rest of the year. Employment edged steadily down ward. Declines in manufacturing and other lines were only partially offset by more jobs in govern ment, services, and financial enterprises. During the final months of 1960 Fifth District business gave ground slowly, its retreat marked by a few' bright Digitized for 2 FRASER spots to rekindle glimmers of hope. The net result was a year of generally high activity which ended in a decline instead of fulfilling its early promise of further growth. The year w'as a generally favorable one for Fifth District farmers in spite of numerous difficulties. A cold, wet March delayed field prepa ration and planting. After more adverse weather, some cotton acreage had to be replanted. Summer hail storms, dry spells, and a hurricane provided fur ther setbacks in certain localities. Nevertheless, 1960 turned out to be a very good growing year, and har vest weather was favorable. Tobacco and peanut crops were much larger than those of 1959, and brought higher prices. Per acre yields of flue-cured tobacco set a new high, as did yields and production AG RICULTURE of corn and soybeans. Cotton yields and prices, on the other hand, tended to be lower. On balance, crop values in 1960 were about 10c/c greater than in 1959. Livestock producers as a group fared just about as well as in the previous year. slightly as quantities rose. a lower volume. unchanged. Beef prices fell Higher hog prices offset Dairy farm income was virtually Broiler and egg producers gained. As a result, gross sales of District farmers were greater than in 1959, but gains in net income were held down by rising costs. The bituminous coal industry has few good reasons for remembering 1960. Employment figures, adjusted for normal seasonal variation, de clined relentlessly month by month from February on. Monthly average employment during the year fell M IN IN G below comparable figures for 1959, 1958, and 1957 by 4c/o , 13%!, and 24%, respectively. Production, on the other hand, remained fairly stable during 1960. It finished the year about 1% below 1959 out put, but more than 20% below the amount produced in 1957, coal’s most recent good year. C O N S T R U C T IO N Throughout the year construction activity was a strong factor in the Fifth District economy. Moreover, the consistently good gross volume of contract awards indicates that total de mand for new construction weakened little if any in the course of the year. Average monthly employ ment in the building trades was about 1% greater in 1960 than in 1959, and 6% higher than in 1958. During the season of peak employment, from June through September, the number of construction workers on the job this year about equaled previous record levels. Not all parts of the construction business were equally prosperous, however. For half of the year residential building remained on a par with 1959’s Coal’s failure to improve during 1960 was mainly the result of the low output of steel. Foreign ship ments in 1960 bettered the poor 1959 record, but record pace. were well below the 1958 level, and less than half the particularly in Virginia and the Carolinas. Related 1957 volume. industries, especially lumber, were hard hit. O n the Residual fuel oil and surplus natural The second half brought a rather sharp decline accompanied by reports of many unsold new houses and rising vacancy rates in rental properties, gas continued to provide stiff competition for coal in other hand, new houses in a few areas sold very well, some market areas. and new apartment house projects reported excellent W ork also progressed on new hydroelectric power facilities which will soon provide advance rentals. still more competition for coal. 1960 was the District’s second best year for residen In spite of a weaker second half, 3 tial construction, less than 7% below the peak year, 1959, in value of contracts awarded. Private nonresidential building began the year in a strong position as a result of a wave of new awards late in 1959. The wave broke, however, and non residential awards finished 1960 at a level 9°/c below that of 1959, an even greater drop than occurred in the residential field. Since these larger jobs require more time to complete than residential projects, the shrinking value of new contracts for business prop erty did not cause any appreciable decline in actual building during 1960. Public works and utility construction contrasted sharply with the private sector. Contract awards in this category had remained at moderate levels during 1959. Then during the first three months of 1960 the pace of new orders nearly doubled. The heavy volume continued intermittently throughout the year, finally reaching a total value about 80% greater than in 1959. A t the beginning of the year District manufacturing employment, seasonally ad justed, was above the level of late 1959. Whereas total nonfarm employment reached a peak in May before beginning to contract, employment in manu facturing increased gradually through July. This upward swing was not great— less than 1% over seven months. The first decline, nearly 2% from July to August, dropped manufacturing employment back below the January level. The total decline ex ceeded 3% by the end of the year. Weekly hours of work began to fall even while employment continued to rise. As a result the year's high point in seasonally adjusted man-hours came in May, two months ahead of the employment peak. M A N U F A C T U R IN G of the year, when most other manufacturers were cutting back. Among the District’s nondurable goods industries, food and tobacco producers showed the greatest di vergence from the general trend. The food industry, doing well at the start of the year, declined unevenly For the group most sensitive to business changes, through August, then moved up again. the makers of durable goods, the busiest month of factories found the demand for their products strong, the year was April. and presently increasing about 5% per year. Patterns of activity in the District’s principal cate Cigarette The proportion of filter brands exceeded 50°/o in 1959 gories of durable manufactures were by no means and increased to 52% in 1960. uniform. W hile April was the high month for the stable market, cigarette manufacturers are not greatly group, only the metals industries and lumber reached influenced by current changes in economic conditions. their peaks then. Assured of a fairly Furniture manufacturing attained In contrast, the District’s largest manufacturing its high for the year (seasonally adjusted) in May. industry, textiles, shows a keen sensitivity to current The stone, clay, and glass industries continued to conditions. gain through the month of July. backlogs in many years. The District’s ship The year began with the largest textile The flow of orders had yards began the year in a decline, but several large pretty well come to a halt by the close of 1959, but orders for construction and renovation were received before it did, a good portion of anticipated mill output during the summer. for 1960 had been spoken for. New car assemblies also picked up during the second half of the year. Thus trans Thus there was little concern at first when week after week passed with portation equipment manufacturers had the distinc very few new orders for cotton textiles. tion of stepping up the pace through the late months facturers of textile end-products were busy, and con- M anu been in process since May, the industry’s peak month for the year. From August on, cutbacks became more pronounced. During the later months hand-to-mouth purchasing and minimum inventory policies were the rule from retailers clear back to the mills. As the year ended, the industry looked to fashion-conscious consumers to put the bounce back into the textile business. For the District furniture industry, 1960 was marked by frequent shifts in market conditions, keen competition, and much variation in the fortunes of individual firms. Orders came in rapidly during January and February, dipped abruptly in March and April, but revived again unevenly during the period from May through August. The lull that fol lowed lasted until the fall market brought a moderate revival of buyer interest. After starting out ahead, the furniture industry wound up 1960 about on a par with 1959, its best year. RETAIL TRADE The uneven record of retail sales during 1960 was one of the year’s most interesting phenomena, and one of the most difficult to interpret, 'fhe only spenders who lost their enthusiasm occa sionally during the year were private citizens. Busi ness spending for new plant and equipment in the District continued on a high level. Federal govern ment expenditures in the D. C. area and elsewhere sinners were buying their output, irregularly but in increased. Local government outlays continued their good average volume. Dull markets week after week, however, became expansion. dull markets month after month. rectly caused by economic conditions. Occasional flurries of orders seemed to presage a new wave of forward buying, but they were short-lived. Prices backed gradually down from the high levels reached late in 1959. The spells of consumer indifference were not di Employment and wages were at record highs until practically the middle of the year. In retrospect 1960 appears to have been a year in which industry was set to pro Backlogs were still large and the industry duce for the consumer a greater volume of goods than prosperous. But not all of the output which had been ever before, but the consumer felt his needs less keen ordered for delivery during the first half of 1960 was ly than in the past. being absorbed. most were slight modifications of items consumers Converters and dealers with a cur Some products were new, but rent need for gray goods began shopping around had seen before. among other special incentives, buyers broke existing rec their fellow firms. Growing inventories brought further downward pressure on prices. ords. Rising inventories and softening prices, familiar W hen motivated by seasonal or In between these sprees, however, many stores thought they had never had it so slow. red flags in the textile business, were much in evi The seasonally adjusted index of District depart dence as the usual vacation period, the week of July ment store sales reflects this pattern of consumer 4, approached. This time many mills took the Fourth behavior. of July as a holiday and scheduled vacations for a April (the best month in the history of the index), full week toward the end of July or in August. July, and October. Mills The buying flurries came in January, Christmas sales remained below were still in a strong forward order position, but the levels of the prior year. knew from experience the bitter consequences of high than offset the high ones and 1960 sales ended up inventories. Unpublicized curtailments of output had slightly below 1959’s record volume. The low months more 5 % ssffE sag Every day, m em ber ban ks send currency to the Federal Reserve Ban k in their District, pri m arily because com m ercial b an ks prefer to keep only e nough m oney on h an d to meet their norm al needs. These currency shipm ents contain all the principal types of "pocketbook m on ey" — Federal Reserve notes, silver certificates, an d United States notes. M o st of the large r denom i nations are bills issued by the Federal Reserve Banks; all those less than $5.00 are issued by the Treasury. M a n y of these bills are soiled, torn, or m utilated— the a v e ra g e life o f a $1.00 bill is abo u t fifteen months. The Reserve Ban ks rem ove this unfit m oney so that it does not g o back into circulation. I p m * JtP mMm Here a clerk at the Federal Reserve Ban k counts the m oney sent in by m em ber banks. Bills in poor condi tion are culled out a n d sorted a s to Treasury currency or Federal Reserve currency. The Federal Reserve Bank o f Richm ond an d its branches cancel about 600,000 pieces of currency every day; in 1959 the Richm ond ban k canceled 7 4 % of the $1.00 bills an d 5 4 % of the $5.00 bills received. The reason for this large proportion of unfit bills is that m an y b an ks keep their go o d used m oney, a n d send the Fed a gre at deal of unfit currency. B an k s w o u ld rather have g o o d used m oney than new bills, which are stiff and hard to handle. The Federal Reserve Ban ks are authorized to destroy unfit Treasury currency. These bills are put through a m achine which cancels them by punching several holes of a distinct sh ape through each bill. 1% - f The canceled Treasury currency is then sent to the Currency Verification an d Destruction D ivision of the Bank, w here it is counted a g a in an d burned. After the m oney has been reduced to ashes, these ashes are sifted an d a n y fragm ents foun d are burned a g a in an d com pletely destroyed. Federal Reserve notes are not destroyed by Federal Reserve Banks. By law , this function is perform ed by the Treasury. Before sh ip p in g the old currency to W ashin gto n, however, the Fed takes precautions a g a in st theft en route. M o n e y to be sh ip ped to W a sh in gto n is cut in h alf lengthw ise after h a v in g been canceled. The tw o h alves are sent to the Treasury in separate sh ip ments. The lower halves are shipped the d a y the m oney is cut; the upper h alves are sent only w hen w o rd is re ceived that the low er h alves have arrived. The Fiber Glass Industry: a bright picture One of the m o st v e rsa tile of new p ro d u cts, fib e r g la s s can c o m b in e m a n y o f the q u a lit ie s o f g l a s s w ith the fle x ib ilit y o f cloth. A new material considered capable of phenomenal growth may provide the basis for an important new industry in the Fifth District. The material is fiber glass, regarded as a “miracle product” in terms of performance and potential. Since many phases of fiber glass production use spinning and weaving techni ques similar to those used in the textile industry, the District’s supply of skilled textile labor may attract a major portion of the industry to this region. VERSATILITY: Fiber glass has been used in every thing from draperies to refrigerators and from fishing- A lt h o u g h m o st fib e r g l a s s b o a ts a re in the " s m a ll b o a t " c a t e g o ry , n u m b e rs o f lu x u r y cru ise rs like th is o n e a r e a ls o b e in g p ro d u ce d . rods to satellites, for it combines the strength and heat resistance of glass with the flexibility of cloth. glass that makes it useful. It will not burn, it is a nonconductor of electricity, was no process available for producing fine, uniform, and it transmits heat very slowly : a man in a fiber flexible threads at a low, competitive cost. glass suit can walk through a blazing oil fire and come out unscorched. It will not absorb moisture, For a long time there D uring W orld W ar I, however, both England and Germany needed a substitute for asbestos, a fire resists weathering, and is not subject to rust or rot. proof insulation. Furthermore, it is very strong— stronger than steel the manufacture of a crude type of fiber glass insula in many cases. tion. A one-inch rope of fiber glass can hoist 250,000 pounds. No wonder new uses for this England developed a process for However, it was still too expensive for wide spread commercial production. At the end of the extraordinary product are constantly appearing, like war, when asbestos again became plentiful, fiber glass rabbits out of a hat. production was abandoned. It was not until the 30's, when the depression hit Although glass fibers were the American glass industry and new markets were made in ancient times, they were not produced com desperately needed, that fiber glass production was mercially until recently. again attempted. A " Y O U N G " IND U STRY: Glass is not flexible unless W artime experiments had proved spun extremely thin— it is not as inherently flexible that glass fibers made an excellent, fireproof insula as steel, for example— and it is the flexibility of fiber tion ; the only problem was one of cost. After much 8 research and experimentation, a system was evolved in which molten glass was blown at high speed this glass-wool insulation board came from refrigera through a series of tiny holes, producing fibers flexi their product. ble enough for insulation. tor manufacturers, who found it an ideal material for By 1934, this process had In the late 30’s a method was found for producing been developed to the point where it was feasible to open a plant devoted entirely to the manufacture of a silk-like glass thread which could be woven into a fiber glass, and glass wool insulation went on the market for the first time. Scientists also found that these fibers made ex cellent air filters when coated with a glue-like sub thinner, smoother fabric than thread from glass wool. This new insulating fabric reduced the weight of much electrical equipment, but remained unsuitable for other purposes. A ir could easily pass between the glass fibers By 1939 fiber glass output was large enough to while the sticky covering caught and held the dust warrant the formation of a new company, completely stance. particles. devoted to fiber glass manufacturing. Two large glass companies joined forces to become the parent organization of this new corporation, and their fiber glass facilities were combined to form a new and separate unit. W A R T IM E ROLE The vital defense role played by fiber glass during W orld W ar I I hastened its rapid development still further. In munitions plants where a speck of dust could cause an explosion, in precision-equipment factories where a fleck of dirt could ruin a highly delicate mechanism, fiber glass Fiber g l a s s w ill n o t b u rn , a n d it tr a n s m its h e a t v e r y s lo w ly ; this m a k e s it e s p e c ia lly u se fu l fo r in s u la t io n a n d fir e -f ig h t in g e q u ip m e n t. F ib e r -g la ss re in fo rce d p lastic, u se d here a s a n a u to m o b ile head liner, p r o v id e s a m o st im p o rta n t m a rk e t f o r the fib e r g l a s s in d u stry . A year later, in 1935, the first thread spun from glass wool made its appearance. Woven into cloth, it was used in electrical insulation, since it resisted moisture and heat better than did cotton, silk, or rubber. The new fabric was not used in clothing, however, because it would not hold a dye, it would not “give” as clothing must, and it wrinkled badly. A few curtains were made of glass wool in the 30’s, but they wrere used in hotels and theatres where their fire-prevention qualities wrere im portant; they were not attractive enough to tempt the housewife. Meanwhile, the fiber glass industry expanded in other directions. It wras found that glass wool could be treated with a binding agent and then compressed, making a board that could often be installed more easily than ordinary glass wool. A large demand for 9 air filters provided safe, clean air— sometimes at the industry sources estimate consumption in 1970 at rate of thousands of cubic feet a minute. more than 700 million pounds. O n war ships and airplanes where the danger from fire was Fiber-glass reinforced plastics, which use about half acute, filler glass wrappings provided safe, fireproof of all glass textile fibers produced, are finding their insulation. way into hundreds of industries. In a million and one pieces of equip For example, fiber ment, from tiny electrical appliances to huge tanks glass boats are making heavy inroads in the small boat and gun carriers, fiber glass played an important market, jum ping from 20% of the total in 1958 to wartime role. an estimated 50% in 1960. It was during the war that one of the most effec Increased efficiency in production methods has been partly responsible for tive new uses for fiber glass was developed: that of this increase. combining the made in a time-consuming process that included the strength of the plastic material while allowing it to remain pliable and light. treatment of large “blankets” of fiber glass cloth with it with plastic. This reinforced W artime demand pushed fiber glass production to new heights. Although the industry is so new that statistical information is incomplete, figures are avail able from the companies themselves : In 1940 indus a resin binder. Prior to 1958 all fiber glass boats were Spray guns are now available which spray glass fibers, resin, and hardener into a mold all at one time, greatly cutting down the time and cost of production. New techniques like this are necessary if supply is try sales were valued at about $6.6 million; by 1944 to keep pace with increased demand. they had jumped to $58 million. Sales declined after of fiber glass boats reaches 600,000 by 1965 as some the war until 1949, but picked up again as peacetime estimates indicate, 43 million pounds of glass fiber production moved into high gear. would be used— the amount that went into the entire From $80 million in 1950, sales jumped to $290 million in 1959. If production plastics industry in 1958. In 1949 an antitrust action was brought against This anticipated growth is sparking a series of ex the one company producing fiber glass in this coun pansion plans; programs involving a total investment try. result of a consent decree, four other of $90 million were in progress last year, consisting companies were licensed to manufacture the product. mainly of two new textile fiber plants, one in Aiken, Since then, only one other new company has entered South Carolina, and the other in Shelby, North Caro the field, probably because capital investment per lina. plant runs high. The Shelby plant, the larger of the two, has a capaci As the The production process requires intricate and expensive machinery. G R O W T H : PRESENT A N D FUTURE Both of these plants began operations recentlv. ty of 35 to 40 million pounds and employs about 1200 Glass fiber pro duction today is divided into two general categories : people. If the glass textile fiber industry grows at the rate predicted, nine additional plants the size of the Shelby operation will be required by 1970. glass wool, used for insulation and air filters, and glass textile fibers, used for fabrics or yarn and for plastic reinforcing. Demand for glass wool has re OTHER USES The above estimates are based on in creased demand in present markets, but there may well be additional uses. One possibility is the auto cently been relatively stable, while glass textile fibers mobile industry— potentially a very important custo represent the growing mer. segment of the industry. It is thought that fiber-glass reinforced plastic Though fibers presently account for only 39% of would be a highly satisfactory material for automobile total sales, the industry expects this figure to jum p parts because of its lightness and strength, but so far to 48% by 1963. the relatively long production time required for re Consumption of glass textile fibers has grown at an average annual rate of 22% since 1950 and many authorities expect this rapid pace to continue. W hile inforced plastic makes mass production impossible. Automotive use of fiber-glass reinforced plastic is thus limited to a few special products such as molded headliners for automobile roofs. A breakthrough in 147 million pounds were produced in 1959, capacity in production methods might provide a new market for 1961 will probably reach 318 million pounds, and the fiber glass industry. 10 WHAT’S AHEAD IN FARMING Unless more effective programs arc developed, fanners will be faced ztnth a continuing income squeeze in the next 5 years. W ith average weather, annual farm production will continue to exceed avail able outlets at 1959 prices, ivhicli would mean that stocks of surplus products would become even larger. As economists gathered at the U. S. Department of Agriculture’s recent Outlook Conference heard these words from a top U S D A economist, they per haps found it frustrating that the end of the struggle with the “farm problem” was not in sight. W ith just a trace of battle fatigue, they again applied them selves to the challenge posed by the nation’s current victory over hunger— at once both a major social blessing and an economic headache. The challenge is how to cope with the effects of a continuing technological revolution in farm ing: In the last two decades, gains in productivity of farm labor were so substantial that farm output increased more than 50% while man-hours used were reduced nearly 50%. As this indicates, innovations which increased output or reduced costs often involved sub stitution of other production inputs for labor. D ur ing this period, farm employment was reduced by 3.6 million. Farmers increased their use of pur chased production inputs by 44%, and the average value of total production assets used per farm rose to $42,000. SUPPLY IN C R E A SE S But the application of dis covered technology is not completed, and the flow of new developments is not expected to cease. Thus, the Conference heard that further farm adjustments can be expected. U S D A economists estimate that if recent trends continue until 1965 the number of farms will be reduced by 400,000 to 3.3 million and employment on farms will drop by 15% to 6.3 m il lion workers, with farm workers then representing only 6.5% of the labor force. During the same period, they expect farmers’ purchases of feeds, pes ticides, fertilizer, and machinery to rise by about 10% to 20%. As productivity is raised, they estimate that total production may grow by about 8% . D E M A N D IN C R E A S E S Economic and social forces outside of agriculture also affect the farm outlook, partly through their influence on demand for farm products. U S D A analysts expect the population of the United States to increase by almost 10% during the next five years, with total domestic demand for farm products rising in roughly the same proportion. In addition, people are likely to continue to eat fewer starchy foods as they perform less physical labor and attain still higher real incomes. Thus, U S D A econ omists estimate demand increases at 15% for meat, 14% for poultry, and 17% for fruits and vegetables, but at only 2% for cereals and potatoes. These shifts will probably be reflected in changes in the composition of farm output. The nonfarm economy is also important as the potential employer of labor no longer needed in agri culture. U S D A economists estimate that about 250,000 male farm youth will join the labor force 11 during each of the next five years, but that each year only 25,000 of these will be able to become operators of farms with annual gross sales of $5,000 or more. If most of the remainder are to be able to find jobs in the nonfarm sector, this part of the economy must continue to grow. Indeed, declines in business activ ity now affect farm families more through reduction of nonfarm employment opportunities than through reduction in demand for farm output, since consumer spending for most farm products is well-maintained during mild business recessions. Other powerful factors also have a hand in determining the farm outlook. Still quite beyond man’s control, the weather plays a major role in crop production. Economists pre paring outlook statements usually assume that future weather will be about the same as the average of past years. If it actually turns out to be much dif ferent from normal, projections based on this assump tion are likely to be off the mark. W EATHER IS C A P R IC IO U S F A R M P R O G R A M S M A Y BE C H A N G E D At the other extreme, completely under man’s direction, the gov ernment farm programs also influence the agricul tural outlook. Outlook statements can be prepared under the assumption that present government pro grams will be continued, or they can be projections of the results under alternative programs or no gov ernment program at all. Upon extending current de mand and productivity trends, and assuming normal weather and continuation of present government price support and farm export programs, U S D A economists find that total farm production will con tinue to exceed use by nearly 5% annually. Under these conditions the unconsumed surplus, consisting primarily of wheat, corn, and sorghum, would be ac cumulated by the government in its price support operations. The economists investigated two possible ways of avoiding further accumulation of surplus stocks: reducing crop acreage or increasing livestock produc tion. Under the first method, they estimate that acreage of wheat and feed grains would have to be reduced by 20 to 30 million acres by 1965. About five million of these acres could probably go into in creased cotton and soybean production; the rest would have to remain idle. On the other hand, if livestock production were to be increased enough to use all of the prospective grain surplus, U S D A economists estimate that the annual supply of meat available per person would rise from 158 pounds in 1959 to 181 pounds bv 1965. They conclude that this large supply would almost cer U S D A P R O JEC T IO N S 12 tainly depress meat prices below the average cost of production. IN C O M E PROSPECTS U N IM P R O V E D General dis satisfaction with the outlook revealed by these pro jections stems not only from the prospect of further accumulation of surplus stocks, with attendant gov ernment storage costs and subsequent disposal prob lems, but also from the prospect of continuation of recent farm income experience. W ith total net farm income fairly stable since 1954, monetary returns to labor and capital in farming have remained consider ably below the average in nonfarm industries. This disparity has supplied much of the motive for greater efficiency of production, increased size of operations, and movement of labor out of agriculture— trends that tend to improve farm incomes and benefit con sumers. However, since millions of farmers have been making these adjustments under income pres sure, the resulting economic and social upheaval has been a major national problem. Faced with these prospects, m an’s efforts to alter the projected course of events focus on a convenient point of control— the government farm programs. This was evident at the last session of the Outlook Conference, which was devoted to a discussion of alternative policies designed to reduce surpluses and increase farm incomes without lessening the rate of increase in productivity. Current reports indicate that the land price boom may at last have been halted by the reality of relatively low returns in farming. If so, this is of major concern to present and prospec tive farmers, since real estate represents about 63r/c of farmers’ total assets of $199 billion. Thus, even a small land price decline such as occurred in 1960 caused most of the $4.5 billion drop in the value of farmers’ assets during the year. LA N D PRICE RISE HALTED According to U S D A econo mists, the outlook for 1961 closely resembles the longer-term prospects. Potential crop output will be high, and total livestock production will be greater than in 1960. As a result, meat and poultry prices may weaken during the year. Realized net farm income is expected to remain at the level of the past two years. O U T LO O K FOR 1961 PHOTO C o v e r — O w e n s - C o r n in g lo n ia l S t u d io s C o r n in g C R E D IT S F ib e r g la s 8. P ittsb u r g h F ib e r g la s C o rp . 9. C o rp . P la te 6. and 7. Co Co. - O w e n s- O w e n s - C o r n in g C o r p . - P ittsb u r g h P la te G la s s C o . C o o p e r a tiv e . G la s s F ib e r g la s 11. S o u th e rn S ta te s
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