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FEDERAL RESERVE BANK OF RICHMOND MONTHLY REVIEW The American Textile Industry State Revenues Research In A Triangle: Part II The Fifth D istrict SEPTEMBER 1969 THE AMERICAN TEXTILE INDUSTRY T he rapid rise of cotton mills in the South in the period of 1870 to 1890 signaled the establishment o f textiles as a dominant industry in the region. 45% of the value added in the textile industry. N orth Carolina, by m ost important measures, is first in the nation in textile production. In 1966, Despite the destabilizing effect of intermittent periods N orth Carolina had 2 7 % of the production workers, of prosperity and depression in the industry, it has and accounted for 2 5 % industry. provided an im portant thrust over the past century to the South’ s econom y, and has had a significant influence upon its culture. Northern textile men argued in the early days that the southern climate was unsuitable for spinning and that competent labor and managerial talent could never be found. But of the value added in the T he textile industry accounts for 2 1 % of the manufacturing payrolls in the Fifth District, 3 7 % o f those in North Carolina, and 4 6 % of those in South Carolina. O f production w orkers in manu southern mill towns grew , and a unique textile econom y emerged. Since the industry’s emergence facturing in the Fifth District, 2 9 % are in textiles. In North Carolina that percentage is 44, and in South Carolina, 51. O f total value added by manu in the South, the agricultural basis of its origin has facturing in the Fifth District, 19% is in textiles. diminished in im portance, and the closely related in In N orth Carolina the percentage is 32, and in South Carolina, 43. dustries, apparels, chemicals, and textile machinery, have developed, providing econom ic stimulus o f al most equal im portance to the area. T od ay, most m ajor segments of the textile in dustry— both cotton and synthetic w eaving mills, THE INDUSTRY'S PROBLEMS T here are a number o f problem s and characteristics which are unique to textile manufacturing in the pally located in the Southeast. Others, such as w ool weaving and finishing, narrow fabric mills, and United States. T he A m erican textile industry has historically been sensitive to changes in wage levels, changes in tariffs and regulations governing the knitting mills, are more evenly spread over both the im port of textile products, and changes in G overn yarn and thread mills, and carpet mills— are princi ment price policies on cotton. T he com petitive nature Southeast and the N ew England states. of the industry explains the acute concern with input costs and has been an important factor in the in TEXTILES AND THE FIFTH DISTRICT EC O N O M Y The historical significance o f the textile industry to the Fifth District— particularly N orth and South Carolina— remains a fact today despite important changes which have occurred in recent years, both in the District econom y and in the textile industry. T he im portance of the Fifth District to the textile industry is even m ore striking. T he textile industry occupies a unique place in the dustry’s m igration to the low -w age, lightly unionized development of the Fifth District econom y. From the period immediately follow ing the Civil W a r to unionization effort has been slight. A n interesting aspect of the industry has been the end of W o rld W a r II, in large areas of the D is trict, industrialization was chiefly a matter o f grow th its transition over the years from an industry characterized by a large number of small, prim arily in textile production. fam ily-owned firms to a somewhat smaller number Even after the industrial d i southeastern states. T he textile industry has experienced m ore than the usual amount of difficulty in the labor relations field. V iolen ce and bloodshed were not uncom m on in the 1920’s when labor unions first began m ajor efforts to organize textile w orkers in what were then prim arily com pany towns. Success o f the versification of District states in recent years, the of larger firms that are m ore highly diversified, m ore industry remains the District’s most important manu capital facturing activity. sophisticated. In fact, much of the diversifica tion represents the grow th dustries. of textile M oreover, the southward related intensive, and much m ore technologically W ith some notable exceptions, the in ownership of most firm s is now widely distributed. movement of O ver the 40-year period from 1923 to 1963, there the textile industry in the postwar period has in was a 14% decline in the number o f operating manu creased the degree of concentration of the industry facturing establishments and a 3 5 % decline in the in Fifth District states. number o f production workers. T he year 1963 is In 1966, the latest date for which data are avail used in this com parison because it is the most recent able, the five states of the Fifth D istrict contained manufacturing census year for which data are avail 4 7 % of the production workers, and accounted for able. 2 Value added figures are not available as far back as 1923, but between the census years 1958 and 1963, value added increased 2 6 % while the number of establishments and production w orkers continued to decline. Im p o rts Im p o rts o f tex tile s have been tr o u b le some to A m erican textile producers due to low wages abroad and the development of a large and e f ficient productive capacity in many foreign countries. The industry has repeatedly sought protection under peril-point, disruption of markets, and national se curity arguments. T h e United States negotiated the L on g -T erm Arrangem ent on trade in cotton textiles, through the General A greem ent on T ariffs and Trade for a five-year period, beginning in O ctober 1962. In 1967, the Arrangem ent ( L T A ) was extended to September 30, 1970. U nder the L T A , provisions were made for a m ore orderly rate of grow th o f im ports of cotton textiles. T he L T A was an attempt to satisfy textile men w ho were fearful o f the effect of unchecked im ports upon the dom estic industry, but at the same time to remain consistent with this country’s overall policy of trade liberalization during the past decade. T extile spokesmen have not been completely satisfied with the result, however, and today are pressing for additional im port controls. Diligent efforts have been made to expand exports through the E xp orters’ T extile A dvisory Committee, made up of textile executives w ho advise the G ov ernment on program s for expanding exports. These efforts have failed to narrow the gap between im ports tobacco, 3.7 for chemicals and allied products, 11.7 for lumber and w ood products, and 12.1 for paper and paper products. A substantial increase in demand due to military procurem ent of textile goods has intensified the im port problem since 1965. D uring that period the industry’s capacity to meet total dom estic demand has been severely limited. T here is some evidence that a very close positive relationship exists between im ports and the demand for domestically produced textiles, as well as between im ports and the generally rising level of aggregate demand in recent years.1 During the peak years o f textile production, begin ning with 1965, the productive capacity o f the in dustry was not increased rapidly enough to meet the rising military com ponent of demand and the in crease in civilian demand due to general econom ic prosperity. Thus im ports have had the effect, to some degree, o f preventing sharp price increases. Prices of textiles and apparels indeed remained relatively stable from the K orean W a r until 1968. O n e - and T w o -P r ic e C o tto n A p ro b le m related to im ports is that of cotton prices. D uring the period from 1956 through 1963, the dom estic in dustry was required to pay a higher price for U . S. cotton than foreign purchasers paid. T he tw o-price system resulted from surplus cotton production, and took the form of a subsidy on foreign sales o f raw cotton. Im ports of raw cotton were already severely restricted. T he tw o-price system gave an added ad and exports, which in 1968 showed a net im port balance of $528 million. T he im port problem stems from both unfinished vantage to foreign manufacturers of cotton textile or semi-finished textile mill products and apparel and related products manufactured abroad. O f course, the dom estic textile industry itself is a large substantial shift by the dom estic industry to synthetic fibers and blends. A one-price cotton system was restored in 1964. T he immediate effect was to low er the price of raw cotton to dom estic textile p ro goods, and was widely regarded as a factor co n tributing to the rise in im ports of textiles, and to a user of im ported grey g ood s and other unfinished mill products. Recently, Japan, Korea, Taiwan, and H on g K on g have supplied from 6 0 % to tw o-thirds of the cotton, w ool, and man-made fiber textile p ro d producers. ucts im ported by the United States. Other nations such as W est Germany, M exico, and Brazil have T h e T e x tile C y c le ducers by about one-fourth, source of com petitive eliminating a m ajor disadvantage with foreign C y c lica l flu ctu a tio n s in the developed efficient textile industries, and are in output of textile mill products were a distinguishing creasing their sales in the U . S. as well as their characteristic of the industry for many years. participation in w orld textile trade generally. textile cycles represented a com plex set o f destabiliz These It is difficult to determine the effect that im ported ing influences to which the industry was susceptible, textile good s have had upon the domestic industry. and created serious problem s for textile management. In 1966, the value of im ported textile mill products Research on the nature o f the cycles, com pleted in was 4 .8 % of the value of shipments of the domestic 1958, revealed that they were evident in textile ou t industry; in 1963, the percentage was 4.7. put data, in fairly regular tw o-year durations, over In the case of apparel and related products, the percentage was 3.2 in 1966, and 2.3 in 1963. F or com parison, these ratios in 1966 were 3.1 for food, beverages, and 1 W allace, W illiam H., N aylor, Thomas H., and Sasser, W . Earl. “ A n E conom etric Model o f the Textile Industry in the U nited States,” R eview o f E conom ics and Statistics, 50 (February, 1968). 3 the long period from 1919 to 1956.2 to be applicable to all important textile output, and w ere apparently industry. O f particular interest was T hey appeared com ponents of unique to the the consistency which have tended to bring about the demise o f the cycle. These changes have not eliminated all the problem s peculiar to this industry, but their effect apparently has been to cause greater short-run sta o f the cycle in the face of a relatively stable end bility in the industry’s level o f operations. W h ile it is not possible upon exam ining empirical data alone use demand. T he textile cycle now seems to be a thing o f the past. It is important, however, in an analysis of the industry since it apparently was a significant factor in the industry’s early instability. Its disap pearance in fact reflects a number of fundamental changes which have occurred in the nature o f the textile industry in the past 10 to 15 years. T here were a number of reasons for the existence of the textile cycle. T he nature of the product was a relatively hom ogeneous and standardized cloth. T here were large numbers o f buyers and sellers. It was a matter of relative ease, com pared to most to state unequivocally that basic structural changes have occurred, it is at least true that recent data on textile production do not evince so clear a tendency tow ard the characteristic cycle that existed earlier. Observable changes which have taken place in the structure of the industry, the nature o f the inputs, and in technology, are the type which w ould be e x pected to lessen cyclical sensitivity. T hou gh it is difficult to associate dates with these changes, the changes constitute im portant differences between the industry today and that of the 1950’s and earlier. manufacturing operations, to change the nature of T he importance of the function o f the independent converter has been substantially reduced through the the output by shifting loom s and spindles from the process production o f one type of product to another. operations. T his trend, as well as the emergence of larger firm s, has been noticeable in the past tw o The fabrics in their various end uses were highly com petitive, particularly in garment production. There there was the additional destabilizing influence o f the industry in the earlier years. These attributes characterize an industry which is highly competitive, and therefore very sensitive to destabilizing in fluences generally. T o com pound the problem s already mentioned, which were inherent in the nature o f the industry, there was the additional destablizing influence o f the converter. T he role of the converter was to buy the output o f textile plants, and generally, to resell to producers of garments or other finished products. H e typically placed large orders in anticipation of price rises or held back on orders in anticipation of of vertical integration textile industry accounts for less than 8 % o f the in dustry sales. T extile producers are now concerned with the production of m ore finished items and m ore distinctive fabrics. P roduct differentiation has had the effect of introducing a higher degree o f m on op o listic com petition am ong textile producers. A nother significant change in the industry has END USE OF TEXTILE MILL PRODUCTS BY TYPE OF USE, AS PER CENT OF TOTAL Per Cent T he presence and persistence of the textile cycle tended to have undesirable effects upon firm s in the industry, and was associated with the relatively high It thus had detri mental effects upon localities in which the firms were located. BASIC C H A N C ES IN THE INDUSTRY T here have been significant changes in some basic characteristics of the textile industry in recent years 2 Stanback, Thomas M., J r. “ The Textile Cycle: Characteristics and C ontributing F actors,” The Southern E conom ic Journal, 25 (O cto ber, 1958). 4 manufacturing decades, even though today the largest firm in the price declines. H e thus took advantage o f the textile cycle and had the effect of aggravating it. There was no organized futures market in textiles which would ordinarily tend to moderate cyclical activity. mortality rate of textile firms. of Source: Textile O rgano n been the introduction of new fibers. W ith few e x ceptions, end uses of textile mill products have changed relatively little. H ow ever, the change that has occurred in the type of raw material used has been significant (C harts 1 and 2 ) . T he inroads made by man-made fibers have lessened the potential impact of changes in the price o f cotton upon the A ccord in g to Department of Com m erce estimates, the net value o f plant and equipment in the textile in dustry in 1968 wras about $4 billion, with an esti mated $790 million being added to that by investment last year. textile industry, and have rem oved to a large degree T he textile industry w ould not be classified as a concentrated one. H ow ever, there has been an in crease in the degree o f concentration. Concentration the uncertainty surrounding cotton supply. H eavier reliance on the synthetic fibers has been a stabilizing ratios for the census years 1947 and 1954 indicate an increase from .243 to .265. These ratios are the factor. Larger varieties of the given types o f outputs percentages of the total value of shipments fo r the are, o f course, n ow available, and quality im prove industry accounted for by the largest fou r firms. A s such they are not perfect measures o f the change in the degree of concentration, and probably under ments have been made. T he change has been mainly a matter of substitution of inputs to produce sub stantially the same range of basic types o f outputs. state the actual increase in concentration which has L argely as a result o f the econom ic prosperity o f the 1960’s, as well as mill liquidations, excess ca pacity in the textile industry has been substantially diminished. Since the late fall of 1968, a slump in occurred. B y 1958, the ratio had increased to .288. Comparable figures for later years are not available, but there is evidence that the degree o f concentration is continuing to increase. Som e recent research has industry activity has occurred, associated with a d e revealed a significant correlation between the decline cline in military demand. H ow ever, this is probably a short-run phenom enon. A lso, since 1964, due to in employm ent in the textile industry and the increase in concentration.3 T o the extent that this relation the introduction of one-price cotton and other changes, the profitability of textile firms has in creased significantly. T he recent higher profits have led to greater investment, but this investment has gone prim arily into m odernization of plant and equipment rather than to increases in capacity as such. T here has been a tendency to spend heavily on research and development, and to invest in m ore capital intensive manufacturing processes in order to com pete with low er priced imported products. ship, which was based on the change from 1947 to 1954, remains valid, it might be expected that the continually declining textile em ploym ent would signify further increases in concentration. T here was, m oreover, an average decline in the number o f textile m anufacturing establishments o f 1.8% per year over the period 1954 to 1963, and for the same period an average decline in the number of firms of 1.6% per year. These declines were ac companied by an average increase of 3 .3 % per year in value added in textiles. Even though there are few er but larger establishments producing a greater output, the average size o f the nearly 7,000 which remain is still small. FIBER USAGE IN TEXTILE MILL PRODUCTS AS PER CENT OF TOTAL T he increase in concentration has been facilitated through better management skill in larger firms, as well as by the development of patents and the intro duction of new techniques of production. A s in most industries, breakthroughs along these lines are o f necessity limited to the larger firm s which can af ford them. A transition from fam ily ownership to Per Cent public ownership and control of a number o f textile firms has taken place. T he U .S . textile industry is a fundamentally im portant one, which in spite o f its severe problem s, has remained essentially responsive to basic co n sumer and industry needs. W h ile many o f its d if ficulties persist, many have been resolved, and its resiliency today is unquestionably im proved. W illiam H . W allace Source: Textile O rganon 3 Nelson, Ralph L. C oncentration in the M anufacturing Industries o f the United States. N ew H aven: Yale U niversity Press, 1963. 5 STATE ENUES TOTAL STATE REVENUES BY SOURCE FIFTH DISTRICT REVENUES FROM U. S. G O VERN M EN T BY PURPOSE UNITED STATES Fiscal Y e ars $ Billions $ Mill u < 1955 □ f~| □ Q 1960 1965 1966 TOTAL STATE REVENUES BY SOURCE 1967 [j □ ► □ □ □ □ Digitized for 1966 1967 O Public W elfare EH All O ther O n the national level the largest part of state revenue from the Federal Government in 1967 was for public wel fare, $4.4 billion. Highways were next with $4.0 billion, then education with $3.5 billion. In the District, however, highways received the largest amount, $333 million, down from $356 million in 1965. Education received $330 m il lion while public welfare receipts were nearly $100 million below those for highways. Over a third of highway revenue was accounted for by Virginia ($122 m illion). In 1967 North Carolina received $281 m illion of Fed eral funds to lead the District. V irginia was a close sec ond ($254 m illion), followed by W est V irginia and M ary land ($175 million each) and South Carolina ($143 m illion). North Carolina led the District states in Federal funds for education ($104 m illion) and public welfare ($76 m illion). 1960 1965 1966 1967 Tax Total Intergovernm ental Insurance Trust Total current charges and misc. (Including liquor store revenue) 60 40 W .V A .* Education H igh w ays 1965 Fiscal Y e a r 1967 80 1955 VA. 1960 DISTRIBUTION OF REVENUES FROM U. S. G OVERN M EN T BY PURPOSE „ r . Per Cent S .C . 400 1955 100 N .C . 600 0 Fiscal Y e ar 1967 MD. ► 200 PRINCIPAL COMPONENTS OF STATE TAXES U .S . 800 Fiscal Years $ Billions Total revenues for the Fifth District states also tripled from 1955 to 1967 with taxes comprising the major source of revenue. Taxes as a per cent of total revenue, however, declined about 5% from 1955 to 1967. As a per cent of total revenues, intergovern mental revenue increased about 8%, while insurance trust revenue stayed the same and current charges dropped slightly. 2 G e n eral Sales and G ross Receipts Q Selective Sales and G ross Receipts Q License |~1 Individual and Corpo rate Net Income □ FRASER All Other * W . V a . has no Corpo rate Net Income Tax 1,000 FIFTH DISTRICT Tax Total Intergovernm ental Insurance Trust Total current charges and misc. (Including liquor store revenue) Per Cent Federal aid to all state governments totaled $13.6 billion in 1967, up from $2.8 billion in 1955. Over that period allo cations to District states for education rose from 12% to 32% of the District’s total receipts from the Federal Govern ment. As on the national level, the bulk of the District increase occurred very recently with the ratio rising from only 17% in 1965. District highway receipts rose from 21% of the total in 1955 to 46% in 1965, but with a hiatus in the growth of allotments across the country the District suffered reduced flows and the District ratio fell to 32% in 1967. Grants for public welfare fell from 48% to 23% of the District total despite increased outlays over the 12-year period. In both the District and the nation the large part of the decline was registered before 1960. Total state revenues for the United States more than tripled from 1955 to 1967. Taxes comprised the largest source of revenue but as a per cent of total revenues taxes declined almost 7% dur ing this period. Intergovernmental receipts, which are dominated by Federal grants, increased around 8% for the same period. I n surance trust revenue and total current charges as per cents of total revenues remained virtually unchanged over the period. State tax receipts in the U. S. totaled nearly $32 billion in 1967, an 8.7% increase over the previous year. Selective sales taxes yielded about $9.7 billion. The largest single selective tax was on motor fuels and provided $4.8 billion, followed by tobacco taxes, $1.6 billion, and taxes on alcoholic beverages, $1.0 billion. General sales taxes accounted for $8.9 billion even though eight states did not have such a tax. Income taxes, totaling over $7.1 billion, in most states were largely comprised of individual income taxes. Fourteen states, however, had no individual taxes and 12 states collected no corporate income taxes. 20 0 D oroth y E. F errell U .S . □ □ MD. Education H igh w ays N .C . S .C . □ □ VA. W .V A . Public W elfare All O ther Source: U. S. Departm ent of Com m erce DUKE UNIVERSITY RESEARCH IN DURHAM A TRIANGLE: PART II NORTH CAROLINA STATE UNIVERSITY RALEIGH RESEARCH O R G A N IZA TIO N S IN THE RESEARCH TRIANGLE PARK Research Triangle Institute Federal Governm ent Research O rg an izatio n s National Institute of Environmental Health Sciences of the U. S. Public Health Service National Air Pollution Control Administration of the U. S. Public Health Service National Center for Health Statistics of the U. S. Public Health Service Forestry Sciences Laboratory of the U. S. Forest Service Textile-Oriented Research Laboratories Chemstrand Research Center, Incorporated, Monsanto Com pany Beaunit Corporation Hercules, Incorporated A merican Association of Textile Chemists and Colorists Com puter Research and M anufacturing O rg anizations In last m onth’s issue, P a rt I of this article offered a general outline o f the history, structure, and success of the R esearch Triangle. This concluding portion will deal specifically with the 18 research organisations in the R esearch Triangle Park. T he accom panying table reveals the w ide diversity of the organizations and the relatively equal balance betw een public and private interests. The Research Triangle Institute R T I is u niqu e am ong the organizations in the Park in that, unlike the other research establishments, it provides a full range of research services, making it a research center within a research center. T he Institute provides re search services to clients on a contract basis, with about 7 5 % of the contract volum e com ing from governm ent and the rest from industry. O ver the past ten years the Institute has com pleted, or is in the process of com pleting, 440 research projects. T he substantial amount o f technical research done at R T I draws heavily upon the facilities o f the three nearby universities and points up the vital sig International Business Machines Corporation nificance of these institutions to the Triangle. Technitrol, Incorporated physical facilities and libraries are within easy reach O ther Research O rg anizatio ns Becton, Dickinson and Com pany Richardson-Merrell, Incorporated Burroughs Wellcome & C om pany (USA) Incorporated Regional Education Laboratory for the Carolinas and Virginia Educational Testing Service North Carolina Science and Technology Research Center Triangle Universities Computation Center 8 T he o f the Institute, and the many recognized specialists in num erous fields are readily available for consulting services, either on an informal or fee basis. T he Institute is located in the center of the Park and employs a staff o f over 350 professional, tech nical, and support personnel. Sixty per cent o f the employees are professionally trained and represent m ore than 40 different degree fields. ganized into five m ajor research g ro u p s: R T I is o r operations research and econom ics, statistics research, chemistry and life sciences, polym er research, and engineering and environmental health. In practice, m ost projects raise questions and require skills that cut across the lines of several disciplines, and accordingly the groups are not functionally separate. Rather, in dividual research teams are usually multidisciplinary units. T he wide variety of research being done at R T I Health Sciences Center, the National A ir Pollution Center, and the Data P rocessing Laboratory of the National Center fo r Health Statistics show the emphasis placed on health-oriented research at the Park. T he medical schools and hospitals in the T r i angle area conveniently provide personnel and fa cilities to supplement this type o f research. scientists at the Institute have found that the rare T od a y the National Environm ental Health Ser vices Center is located in interim facilities near the Chinese Camptotheca tree may contain an alkaloid, Camptothecin, highly effective in inhibiting the center of the Park. A b ou t 200 em ployees are doing basic research in environmental health sciences. By is perhaps best illustrated by tw o examples. Recently, grow th of tumors in mice infected with lym phoid the m id-1970’s the new $25 million Center should leukemia. be well established on its permanent 500 acre site. O ver 1,000 employees will be w orking in what is Because Camptothecin is so difficult to extract from the plant and because it is so scarce, attempts are now being made to produce the sub stance synthetically. S o far no evidence has been envisioned to be a w orld center for the protection found to indicate that the substance would be e f fective in preventing or curing cancer in humans, and preservation o f m an’s health. H eadquarters for the National A ir Pollution A d ministration will be located in interim facilities which but continued testing may are now under construction. unlock the secrets o f Camptothecin and possibly uncover the prom ise of a cure for human cancer. A second p roject involves the intensive study of witchweed, a root parasite which attacks corn, sor ghum, sugar cane, and other crops in the Carolinas. B y 1971 about 9 0 % o f the administrative end of the pollution control p ro gram and 5 0 % o f the research will be centered in the new facility. 600 and will Em ployees will number around include physicists, epidemiologists, chemists, engineers, physiologists, plant pathologists, T he discovery of witchweed ten years ago led to biostatisticians, as well as economists. These special expensive quarantine and control program s since its potential hazard to domestic crops was estimated to range into hundreds of millions o f dollars. Scientists ists will be w orking to control air problem of great national concern. at R T I have succeeded in isolating the chemical which causes germination of the weed. T he success in isolating the germinating factor could possibly lead to a method of eliminating the pest. T he w ork may also provide a new opening for further studies of seed germination in general. The witchweed p roject exem plifies R T F s regional involvement. Subjects slated for increased attention at the In stitute are analyses of population trends, econom ic forecasting, civil defense, transportation, and traffic. Health-related research, however, will continue to be the area of greatest attention and grow th in all Institute divisions. Educational research will also be of particular interest this year. F or exam ple, R T I was given a $2 million contract to collect inform ation for a nationwide survey designed to assess educa tional progress being made in the nation’s schools. T his unprecedented national study is sponsored by the Committee on A ssessing the P rogress o f E du cation. T he contract is the largest in R T I history and covers the first 17 months of the three-year study. F ed era l G o v e rn m e n t Research Organizations pollution— a T he National Center for Health Statistics has a permanent home in the Park and employs 140 people. Principal activities of the Center involve operations and research in processing inform ation on health, training of health statistics personnel, and the c o ordination of technical assistance to states. T he U . S. Department of A griculture's Forest Sciences Laboratory was one o f the P ark’s earliest inhabitants. Its opening in 1962 signaled a new dim ension in research on forest soils and diseases. T h e 45 employees at the Laboratory deal prim arily with research on the life processes of trees and as sociated organisms, so that the Forest Service can be prepared to solve the long-term basic problem s of forest production and protection. E ntom ology, the study of insects, is an area of prim e im portance. Textile-O riented Research Laboratories C on sidering N orth Carolina’s history as a state long associated with the textile industry, it is not sur prising to find that three of the cou ntry’s largest textile corporations have research organizations in the Park. T h e Chemstrand Research Center, es tablished in 1960, was the P ark’s first m ajor in T he U . S. Department o f Health, Education, and dustrial tenant. W elfare is the parent organization of three of the applied research arm of the M onsanto Company, one P ark’s largest tenants. of the w orld ’s largest manufacturers o f man-made T he National Environmental T he Center acts as the basic and 9 fibers. T he 400 Chemstrand em ployees deal with research and development of synthetic fibers, struc tural materials, and other products of interest to the M onsanto Company. Beaunit Fibers, an affiliate of Beaunit C orporation, is a research organization de voted to man-made fibers research. Beaunit has tw o buildings in the P a r k ; one houses executive and Service, a corporate affiliate of Educational Testing Service in Princeton, N ew Jersey, deals prim arily with educational research, test development, and consultation. T he N orth Carolina Science and T echn ology R e search Center is a state governm ent organization. administrative employees, while the other is occupied Created by the N orth Carolina General A ssem bly in 1963, the Center receives appropriations from the by research personnel. state to distribute as grants for scientific research T he principal activities of the third and newest textile-oriented lab, H ercules. in N orth Carolina. Incorporated, are research and development for fi bers, fiber sales, and technical sales service for fibers. T he headquarters and testing laboratories o f the tribution center for the findings of N A S A and other A m erican A ssociation of T extile Chemists and Colorists are also part of the Park’s textile-research comm unity. T his technical and scientific society is concerned with the chemistry of textiles. Its 9,000 members are located in 47 states and 50 countries, and 300 companies are affiliated as corporate members. Federal agencies It also serves as a regional dis involved research and T he Triangle Universities Computation Center, or T U C C , is one of the most interesting organizations in the Park. Established by the three schools, its pu r pose is to support the educational, research, and ad ministrative activities of the triangle universities through the use o f high-speed com m unications and T U C C is a nonprofit c o r Computer Research and nizations In tern a tion a l B usin ess M a ch in es C o r borne equally by the three universities. poration’ s $15 puter, I B M ’s S ystem /360 M odel 75, is connected by million O rga space exploration. data processing facilities. Manufacturing in product-developm ent and poration, and the costs of operating the facility are T he co m manufacturing installation houses 2,800 employees. direct lines to the schools. B y using either telephones IB M is the largest em ployer in the Park and main or teletype machines located at each of the three tains a staff of scientists and technicians w ho w ork campus com puter centers, operators can share the prim arily on data comm unications equipment and services of the giant com puter which can add one com ponents for I B M ’s 360 computer. Technitrol, million ten-digit figures in less than a second. T U C C the only other Park facility engaged in manufactur had one of the first installations of the M odel 75, ing, and it remains one of the largest and m ost extensive produces pulse transformers and com puter components. educational com puter centers in the country. Other Research Organizations F u rth er em ph asis will be placed on health-oriented research when three nationally recognized drug companies becom e m em bers o f the P ark’s research com m unity. R ichardson- M errell’s facilities are still in the early planning stages. Construction will start late this year on Becton, D ickinson and C om pany’s new research fa cilities. T he Com pany will conduct basic and ap plied research in the health sciences and biological safety and control activities. T he corporate head B efore T U C C became fully operational a plan was developed to extend its services to other N orth C aro lina colleges. T he N orth Carolina Computer Orienta tion P roject was organized to carry out this idea. T he p roject offers the 86 eligible institutions a oneyear trial period of com puter service without charge. Each participating college is furnished a M odel 33 Teletype terminal. A “ circuit rider” is also sent to the interested schools to give instruction and as sistance to their faculty members. quarters and pharmaceutical research laboratories Summary for a vivid picture of the diversity and productivity of Burroughs W ellcom e being built. and Com pany are now T he beautiful, ultram odern building T w o of the P ark’s tenants function as centers educational studies. The Regional research in the 20th century. T his com m unity of thought and investigation, linked with the three uni will house around 250 employees. of T h e 18 in stitu tion s in the P ark p ain t Education versities, has created a research com plex unique in both function and substance. A s form er G overnor Laboratory for the Carolinas and V irginia is a n on H odges says, “ T here is nothing quite like it anywhere profit private corporation whose principal activity else, in fact, in spirit, or in purpose.” is research in education. 10 The Educational Testing Carla R. G regory The Fifth District BAN KIN G DEVELOPM ENTS The pace of business activity in the Fifth District year, but the rate of decline in the first half o f 1969 continued to expand throughout the first half of 1969. Construction activity increased, employment was high, retail sales were quite strong, and most was exceptionally high. Furtherm ore, the unusually slow 3 .6 % rate of grow th in time deposits failed to manufacturing industries experienced heavy demand. Associated with this high level of business activity, growth in time deposits largely reflects the $34 m il lion loss of large certificates of deposit at Fifth D is Fifth District banks realized continued strong loan demand. In order to accom m odate this demand in trict weekly reporting banks. In spite of their limited deposit sources of funds the midst of monetary restraint, banks increased their borrow ings and liquidated a substantial amount of banks have, to a great extent, been able to ac com m odate the strong loan demand prevailing in the their investments. Total deposits at Fifth District member banks fell $156 million, or at an average annual rate of 2 % . of interbank transactions, grew by $470 million. The T his decline was due to a $296 million, or 7 .4 % , drop in demand deposits net of cash items in process of collection and demand balances due from banks. Such deposits normally drop in the first half o f the offset the decline in demand deposits. Fifth District. T he slow Loans adjusted, which are loans net bulk o f the advance, $435 million, was in nonfinancial loans. This increase, at an average annual rate of 10.9% , is seasonal or a little stronger. B usi ness loans showred exceptional strength, grow in g by $212 million, or at an annual rate o f 15.1% . C on sumer instalment and real estate loans also showed 11 great strength. Financial loans, an extrem ely volatile series, reinforced the increases shown in nonfinancial loans. Fifth District member banks were able to increase MEMBER BANK BORROW INGS FIFTH DISTRICT $ Millions the volume of their loans outstanding in the midst of declining deposits by liquidating 6 .5 % of their in vestments. W eekly reporting banks’ holdings of securities fell by $246 million, or 6 .9 % , contrary to typical seasonal increases. M ost of this decline, $152 million, came in over-one-year Governments, which fell at a 2 0 .2 % annual rate. Short-term municipal holdings dropped significantly while short-term G o v ernments and long-term municipals were virtually unchanged. Investments as a percentage o f Fifth District bank credit fell from 3 0 .9 % to 2 8 .5 % . T he 18 largest banks in the District were large Fifth District banks made frequent trips to the Federal R eserve discount w indow . Daily borrow ings net purchasers of Federal funds, particularly in M ay were predominantly in the $40 million to $100 million and June, even as rates soared. range, levels rarely reached in the past ten years. F or all Fifth D is trict member banks, sales to banks outside the D is B orrow ings reached a record high o f $138 million trict exceeded purchases by Fifth District banks in over the June 27-29 weekend. the period from M arch through June. 12 W yn n elle W ilson