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MONTHLY
IN
THIS
ISSUE
— FEDERAL RESERV E BANK of CLEVELAND —
Synthetics Thrust A h e a d ..................... 2
s 4 fin c l t $ 5 4
Population Growth as a Demand Factor
4
Sterilization of Foods and Other Products
8
Use of man-made fibers has surpassed that of silk and wool but
fa r behind cotton.
is
still
LBS. PER C APITA
Source: Textile Organon
I See page 21
Synthetics Thrust Ahead
a n d f i b e r as nature provides them
are probably among the most complex
chemical compounds known to science.
Though they generally defy complete syn
thesis, some acceptable substitutes have been
developed over the years. They have made
significant inroads on the use of the natural
products, either through direct displacement
or through the capture of new markets.
Prominent among such synthetics are mar
garine, vegetable shortening, and the array
of man-made fibers represented by rayon,
nylon, orlon, glass fiber and others. All three
groups are in direct competition with tradi
tional agricultural products. Similar devel
opments which impinge directly on agricul
ture, but which are not discussed here, in
clude the foray of detergents against soap.
Also, the field of synthetics, broadly defined,
would of course include synthetic rubber and
the plastics group.
Regardless of the economic effects upon
producers of the choice between the natural
or the synthetic product, it is the consumer
who eventually determines the relative suc
cess of the one or the other. Once quality is
reasonably duplicated in a synthetic, price
becomes the main factor governing the out
come of the inter-commodity competition.
F
ood
Natural and Synthetic Fibers
Man-made fibers, perhaps the most com
pletely synthesized of the new products
under discussion here, have risen from ob
scurity to a command of more than one-fifth
of the total fiber market (in tonnage) in
little over two decades.
Silk was the first natural fiber to feel the
competition from synthetics, because of the
wide price advantage of the early synthetics
and their marked similarity to the natural
product. A gradually declining silk con
sumption, further limited by rising prices
and a virtual stoppage of imports during the
World War II period, has brought per capita
2
use of silk to less than one-tenth pound per
year. Silk, which at its peak enjoyed a con
sumption of slightly less than one pound per
capita, is the only fiber to have been almost
completely replaced by the synthetics.
Wool, like silk, is also at a price dis
advantage compared with the man-made
fibers. Certain wool characteristics which
have not been readily duplicated, however,
have so far forestalled major displacement
by the “ test-tube” fibers. Despite quite sub
stantial fluctuations, per-capita wool con
sumption is now about the same as, or
slightly above, its average over the past three
decades. Synthetic fibers as a group sur
passed wool in the volume of consumption,
however, as long ago as the late 1930’s.
Wool use has roughly paralleled popula
tion growth over the years, as indicated, but
it has not kept pace with the gain in total
fiber consumption. Consequently wool's pro
portionate standing has dropped to a low
point of about 7 percent of total fiber con
sumption. This compares with an average
relative standing of nearly 10 percent over
the past three decades.
The sharp growth in man-made fiber con
sumption, thus, has not forced an actual
reduction in wool outlets. The data suggest
strongly, however, that expansion of wool
outlets has been hampered. The question
which remains unanswered is how high wool
consumption might be today were it not for
a competitively priced synthetic which has
undoubtedly been substituted in many in
stances. Although this poses a serious prob
lem to wool interests, it no doubt spells
better living at lower costs to consumers.
A somewhat similar market problem exists
for cotton. Although cotton consumption has
fluctuated sharply with economic conditions
and weather, it has kept pace with and per
haps gained a bit on population growth, but
it has lost ground in its proportionate share
of the total fiber consumption.
Cotton appears to have relative advantages
and disadvantages over wool in its defense
against synthetics. The relative advantage is
in price. Only a small price margin sepa
rates cotton from the man-made fibers as
indicated in an accompanying chart. The
relative disadvantage to cotton lies in the
greater opportunity for substitution of manmade fabrics in the case of cotton than in
the case of wool.
A reversal of price position worthy of note
occurred between cotton and the man-made
fibers at the close of World War II, as shown
by yam prices in the chart. Although the
margin remains narrow, the synthetics rep
resented are now selling at the lower price
instead of cotton. Cotton producers and the
cotton industry may well hope that this
margin does not become substantially wider.
Although cotton still remains “ king” with
respect to the volume of consumption, buy
ing habits of the consumer often become
fickle when a bargain is at stake.
Butter and Margarine
Even more striking than the fiber-market
rivalry is the sharp rate of replacement of
Man-made fibers have a price advantage over
com petitive natural libers.
butter by margarine. Butter consumption
per capita has been reduced one-half from
the levels prevailing prior to World War II.
Margarine consumption, in contrast, has
almost tripled, and has replaced nearly
three-fourths of the loss in butter market.
(The remaining one-fourth indicates a gen
eral decline in the use of fats in diets.) In
terms of total pounds, the decline from 1940
to 1953 in the annual use of butter is two
to three times as large as the much-discussed
current stockpile of butter.
The success of the margarine industry in
the “ synthesis of butter” is suggested by
Hazel K. Stiebeling, Chief, Bureau of Human
Nutrition and Home Economics of the U. S.
Department of Agriculture. “ Research has
failed thus far to demonstrate any nutri
tional superiority of butter over margarine
fortified with Vitamin A when eaten as part
of ordinary mixed diets. Even if some nutri
tional advantage might be shown with labo
ratory animals on experimental diets, it does
not follow that results would carry over to
humans whose diets contain a wide variety
of fats and other foods. In other words,
there is no nutritional basis at present for
promoting greater use of butter than of
fortified margarine.”
Loss of butter sales to margarine does not
constitute a complete loss for agriculture.
Farm-produced oil seeds, principally soy
beans and cottonseed, are the primary com
ponents of margarine. On balance, though,
the farmer’s share of the consumer’s marga
rine dollar amounts to roughly 30 percent
as compared to his 67 percent share of the
butter dollar. Converted to cents per pound
this means that every pound of butter re
placed by margarine involves a net loss of
income to agriculture amounting to more
than 40 cents. A loss of income to dairymen
in excess of 50 cents is offset in small part
by the gain of less than a dime received by
soybean and cottonseed producers. (Addi
tional, but indirect, losses to agriculture in
volved in a declining market for butter arise
from reduced markets for the grass and sup
plementary feeds required to produce each
pound of butter.)
('Continued on Page 6)
Population Growth as a Demand Factor
The population of the United States has been in
creasing at record rates since the end of World
W ar II . . .
. . . because of the rapid rise in births. The num
ber of deaths have held relatively stable, in the
face of a steadily growing population, as death
rates were reduced.
T h e re c o rd r a t e
next few years, particularly for housing and
other major consumer durable goods related
to new family formation.
These two views are not contradictory, but
complement each other. The rapid rates of
population growth currently being experi
enced provide some basis for an optimistic
appraisal of the long-term outlook while the
declining trend in family formation is the
clue for a more cautious approach to the
near-term. The accompanying charts illus
trate the major components of population
change, and show why family formation is
expected to decline. A graphic summary of
the uneven geographic distribution of popu
lation growth is also given. (For sources,
see note on page 6.)
of population growth in
the United States since the end of World
War II has been cited by many economists
and businessmen as a prime sustaining force
to current high levels of business activity.
They suggest that it also augurs well for
the future when the very large number of
babies bom in recent years come of an age
to work and form families of their own.
At the same time, observers note the pres
ent declining trend in family formation, a
trend that is expected to continue through
the rest of this decade. This population fac
tor appears to portend smaller increases in
the total number of spending units during
the rest of the 1950s than in the years just
past. As a consequence, observers foresee
only moderate gains in demand during the
This distribution of the population in mid-1952
shows that the small baby crop of the 1930's Is
now coming of marriageable age . .
Internal migration has altered the impact of popuotlon growth on different areas of the country, as
shown by the changes that occurred between 194) •a nd 7953.
On balance, people m igrated out
of these three areas . . .
. . . going forge/,, to the Pacific
Coast and G reat >«^e* states . . .
. . . while the remaining areas just
about held their own.
NEW ENGLAND STATES
PACIFIC
. . . which Is one of the reasons marriages have
fallen off recently and are expected to decline
further during the rest of this decade.
B IR TH S LESS
D E A TH S
N ET
O U T -M I G R A T I O N
N E T IN C R E A S E
PERCENT CA I
WEST SOUTH CENTRAL STATES
M ILL IO N S
Immigration, once a major source of population
growth, has been relatively unimportant in recent
years.
OF
NET
P E R C E N T GA
PERSONS
EAST NORTH CENTRALSTATES
M I L L I O N S OF P E R S O N S
* i
»
I
1
4
S
IN C R E A S E
MIDDLE ATLANTIC STATES
i
This is the main reason fo r the decline anticipated
in new household form ation during the late 1950's.
N ET
OUT-MIGRATION
N ET
INCREASE
N E T IN C R E A S E
P E R C E N T GA
EAST SOUTH CENTRAL STATES
M ILL IO N S
OF
P E R C E N T <• A
PERSONS
MOUNTAIN STATES
M ILL IO N S
OF
Pt
R&ON5
»oo^«oooooo
MILLIONS
SOUTH ATLANTIC STATES
NEW
HOUSEHOLD
FORM ATION
§88
* NET
IN -M IG R A T IO N
N E T IN C R EA S E
N E T IN C R E A S E
P S ftC C M T CAIN
4
P ERC EN T & A II
5
SYNTHETICS
(Continued from Page S)
Margarine has replaced about three-fourths of the
butter-m arket losses since 1940.
The price spread between margarine and butter
during 7953 was over 2 1 /, times that of 1940.
The converse of the loss of income to agri
culture is the saving of over 40 cents per
pound to consumers. Fundamentally it is
the price differential which has brought about
the dislocation of the butter market. A grad
ual widening of the price margin between
the competitive products has been roughlyparalleled by a distinct narrowing of the
consumption margin. This pattern becomes
evident in the charts after 1934, and is par
ticularly pronounced following 1942.
While butter consumption declined as a
result of rising prices and a general weaken
ing in total demand for table spreads (butter
plus margarine) conditions were relatively
more favorable for the margarine industry.
The tremendous and growing price advan
tage enjoyed by margarine was further en
hanced by the removal of special taxes and
the lowering of bans on colored margarine.
Only two states, Wisconsin and Minnesota,
now prohibit the manufacture and sale of
colored margarine.
The degree of achievement in the dupli
cation of color, taste and nutritional value,
associated with the price differential in a
market where consumers are constantly seek
ing the greatest possible bargain in their
food budget, has led altogether to a rather
foreboding position for butter and butterfat
producers in this area of competition with
the synthetics.
SOURCE OF DATA FOR POPULATION CHARTS
(All U. S. Government Publications)
Statistical Abstract of the United States (1953 Edition)
’H istorical Statistics of the United States, 1789-1945
Current Population Reports (various series)
Monthly Vital Statistics Report (December 1953)
Rousing Statistics Handbook
6
Lard and Shortening
A decidedly different picture is posed for
lard than for the other natural products here
considered. As is evident from the charts,
lard has consistently undersold vegetable
shortening at retail over the years, and its
consumption has consistently exceeded that
of shortening, its synthetic competitor. Per
haps the most unusual condition in these
relationships is that lard, representing the
conversion of many pounds of feed, should
sell at a price below that of a product manu
factured for the most part directly from the
grain products. If lard were produced as an
independent product, however, a stiller com
petition from the synthetic product might
well prevail.
Lard, as a by-product of pork production,
is largely a function of this segment of the
meat business. Lard production varies di
rectly with hog slaughter, somewhat aside
from the complexities of supply and demand.
It is sold on a very competitive market at
whatever price can be had. Profit or loss is
in turn reflected back into the current buy
The consumption of lard has not been overtaken,
except tem porarily, by its synthetic rival.
Lard's price advantage
widened in reeenf years.
shortening
has
CONSUMPTION
LBS. PER CAPITA
LARD .
ing prices paid to producers for live hogs.
A weak demand and an unprofitable price
for lard may be followed by still greater
production and still lower prices, if the
demand for pork is sufficiently strong to
offset such losses.
In effect, it might be said that lard has
retained a strong competitive position over
shortening by virtue of a subsidy from the
meat portion of the hog. Lard prices of 1953
were actually lower than in 1925 and 1926
(among other prior years) while live hog
prices were about twice as high. To consider
producing pork today to sell for what was
then a relatively high price of $11-$12 would
border on the impossible in terms of today’s
cost structure. Yet this roughly approxi
mates what is being done with lard.
Some measure of consumer acceptance of
shortening in amounts even greater than lard
is indicated in the charts for the years 1935
through 1938. Due largely to drought-related
adjustments in com and hog production,
lard output was reduced and the average
price advantage was temporarily narrowed
to less than 41/k cents. Shortening consump
tion consequently jumped by 28 percent and
exceeded lard in each of these four years.
In 1925 and 1926 the price advantage of
lard over shortening narrowed to about 3
cents and per capita consumption dropped
by 14 percent. This loss was more than re
placed in poundage by a 37 percent jump
in the consumption of shortening.
It would appear by these comparisons that
the lard market depends strongly on main
taining a wide price margin under shorten
ing, regardless of relative profitability of
price. The alternative is replacement by the
man-made vegetable substitute.
The few synthetic products discussed
herein, while among the most significant, are
by no means the only ones of direct concern
to agriculture. New substitutes, such as syn
thetic ice cream, have been introduced to
the public as recently as the past year; others
are no doubt in process of development in
the laboratories; and still others have fallen
by the wayside for want of consumer accept
ance. Only a few gain a foothold, but these
can produce significant repercussions not
only in agriculture but in industry and
trade, in related fields of banking and in
vestment, and in the labor market.
NOTE ON DATA USED FOR CHARTS
Data for charts on fibers, including the chart on cover
page, are from Textile Organon, published by the Textile
Economics Bureau, Incorporated, Both consumption and
price for 1953 are estimates. Yarn prices used as repre
sentative are for specific types and grades of spun rayon,
viscose and acetate filament, combed cotton, and worsted
Bradford wool. The data on consumption are more com
prehensive. Data on raw silk consumption and price are
not shown in the charts for years following 1941, as percapita use became negligible.
All other chart data are from the Agricultural Marketing
Service of the U. S. Department of Agriculture.
7
Sterilization of Foods and Other Products
By CLYDE WILLIAMS,
President and Director, Battelle Memorial Institute
k J P E c iA L L Y p r o c e s s e d , packaged meat has been
stored at room temperature for three months and then
shipped by third-class mail to a consumer 1000 miles
away. Upon arrival, its condition was comparable to
that o f freshly packaged meat . . . .
Surgical catgut sutures have been treated so that
they are rendered germ-free without loss o f their
original tensile strength . . . .
Similarly, penicillin powder, tetanus antitoxin, and
certain other medicinals have been rid o f contaminat
ing organisms without significant loss in biological
potency.
These are but a few research findings that are
bringing closer to commercial significance a revolu
tionary technique for sterilizing foods, drugs, and
medical supplies. Historically, the sterilization of
such products has been accomplished by applying
extremes o f heat or cold to kill or inactivate the
microorganisms that cause spoilage and deterioration.
Now X-rays and other forms o f radiation may do
many o f the same jobs.
Extensive research during recent years has shown
that sterilization by radiation has these possible
advantages. First, any damage caused by the heating
o f heat-sensitive products may be eliminated, as the
radiation necessary for complete sterilization produces
only a negligible rise in the temperature o f a product.
Second, where easily penetrated container materials
such as plastics are used, the new technique can be
applied after packaging, thus avoiding recontamina
tion before packaging is completed. Third, radiation
sterilization may be used on a continuous productionline basis. This would be less time consuming, and.
conceivably, less costly than the usual batch process
ing required for existing methods o f sterilization.
Because o f these advantages, numerous possible
uses for radiation sterilization are suggested where
the application o f conventional methods is difficult,
costly, or impractical. Among the heat-sensitive drugs
and medical supplies that might benefit are anti
biotics, vaccines, vitamins, plasma, surgical dressings,
and sutures. Under study for this treatment in the
food field are cheese, packaged meats, fruit juices,
milk, beverages, and other miscellaneous perishable
food products.
Before radiation sterilization comes into wide
spread commercial use, a number o f problems must
be overcome. When applied to foods, for example,
irradiation can cause certain so-called “ side effects”
or changes in flavor, color, or texture. Other problems
concern the packaging, storage life, and possible
toxicity o f food items treated by radiation. Research
is in progress on all o f these problems and none are
considered insurmountable.
8
The problems involved in radiation sterilization
are shared, in varying degrees, by the three principal
methods o f irradiation now under study: X-rays,
high-voltage electrons or cathode rays, and radiation
from atomic fission products. O f the three methods,
only X-rays and cathode rays have been studied in
great detail from the production standpoint. Largevolume experiments on the use o f fission waste prod
ucts for sterilization have not been under way long
enough to evaluate them completely. Furthermore,
larger quantities o f fission waste products at low cost
will have to be made available before this method
can reach commercial significance.
Considerable information has been published in re
cent years on the use o f cathode rays for sterilizing
materials. The efficiency o f this equipment is rela
tively high compared to X-rays, as about 50 per cent
o f the electron-beam energy can be utilized. Steriliza
tion, therefore, can be achieved in a second or less.
Several catho de-ray units for processing materials are
available on the market today.
Although the average X-ray apparatus is relatively
inefficient in converting primary electrons into X-rays,
some investigators believe this disadvantage is offset
by the equipment’s advantages. It appears likely that
X-ray equipment can be designed to allow for varia
tions in the speed o f the production line and in the
sterilization dosage needed for different products.
Versatility in the application o f “ s o ft” X-rays has
been achieved. These usually comprise X-rays pro
duced at voltages ranging up to about 150 thousand
volts, as compared to high-voltage X-rays and cathode
rays that are in the multi-million-volt category.
Laboratory experiments indicate that soft X-rays
are suitable for sterilizing certain types o f foods,
drugs and medical supplies where only surface treat
ment, or penetration up to a few hundredths o f an
inch, is needed. When deeper penetration is required,
units operating above the usual soft X-ray range may
be used, or two soft X-ray units could be operated,
one above and one below the material being sterilized.
Regardless o f the method employed, biologists,
physicists, and electrical engineers, by pooling their
knowledge, are moving another step forward in solv
ing the age-old problem o f preserving foods, drugs,
and medical supplies. These scientists do not expect
that radiation sterilization will be a panacea for all
the sterilization problems o f industry. Research so
far, however, indicates many promising applications
where present methods are difficult, costly, or im
practical.
Editor’s Note— While the views expressed on this page are
not necessarily those of this bank, the Monthly Business R e
view is pleased to make this space available for the discussion
of significant developments in industrial research.
@FedFRASER