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Po 6 / f'*x 4 . I* 1 X NINTH DISTRICT Now I want to take a longer look at the district and Montana, one Which gives another perspective of economic developments. Let me start way back - almost 50 years ago to 1914 when the Federal Reserve System was established. At that time twelve Federal Reserve districts were established. Four were created to cover most of the area west of the Mississippi - Minneapolis, Kansas City, Dallas, and San Francisco. They were and are big districts in terms of geography, but they were the smaller districts in terms of population. Taken altogether they comprised two-thirds of the land area but contained less than one quarter (23.7 per cent) of the people of the United States. In terms of population they were about equal; the smallest of these four was the San Francisco district with 5.1 million people. Minneapolis had 100,000 more people in its district; Kansas City and Dallas had 5.7 and 5.8 million, respect ively. Now let us look at the picture in 1960. The land area, of course, is just about the same, (I am omitting the two new States from this comparison) as there ha\e been only minor changes in district lines. More than a quarter of the nation's people - to be exact 28.5 per cent - lived in the four districts. The nation's population doubled in these 46 years; that of the four western districts increased by more. among the four districts. But the striking thing is the relative changes The Minneapolis district increased its population by about 1,100,000 in the 46 years. The Kansas City and Dallas districts in creased by 4 million and 5.9 million people , respectively. And the gain in the San Francisco district was a tremendous 18 million. The net of this is that San Francisco, a bit smaller than Minneapolis in 1914, was almost four times as large in 1960. Neither the Kansas City nor the Dallas districts matched that record; in fact, neither gained quite as fast as the national average, but they grew far more than did the Minneapolis district. (Ninth District) Let me bring this picture into a little sharper focus. 30 years this district's population 1ms increased by 932,000. this gain has cone in the rapid growth of the past decade. In the last More than half But during this 30 years the net out-migration from this district totalled about 1.5 million people. Note that I said net; more than that have left but sense have come in. In other words, had this district been able to keep its people, its population today would be 7,800,000 instead of 6,300,000. Roughly speaking, one person in every five left the Ninth District between 1930 and I960. Montana's record over the past 30 years shows about the same trends as the district but not in so pronounced a form. The State's population grew * 135.000 in the period and its net out-migration was about 110,000. seven Montanans left the State in the three decades. One of every Cascade County would have 7.000 more people today than it has, had there been no out-migration. Missoula County would have 2,500 more. Neither county showed as big relative losses as did the State or the district. About one of each 12 Cascade County residents left and only one In 19 Missoula County residents. The 1.5 million people net who left this region in the last 30 years did so for a variety of reasons. The major reason for most of them leaving, however, was that there were more and better opportunities elsewhere. The early part of this period covered the very severe drouth years of the 1930’ s, and the whole period covers the era of great shifts in agricultural structure and a tremendous rise in farm productivity. Thus a lot of the migration reflects the strong movement of people from the farms to urban areas and all of the great farming sections show the effects of that movement. The Minneapolis district was not the only district to experience net out-migration In those three decades. But the fact remains that we suffered a relatively big loss of population during this period and we did so largely because opportunities in the nonfarm sector of the economy were not adequate to keep the farm migrants here. (Ninth District) Now this is a picture painted in harsh tonea when viewed from this perspective. Do other perspectives soften these tones appreciably? give you Just one other perspective. Let me If we look at personal income statistics over this same 30-year period, the picture looks less harsh. In 1960, total personal income in this district was exactly five times as large as in 1930. The increase in Montana was slightly greater, 5.1 times, and in the U. S. it was 5.4 times. Those figures are in terms of current dollars, however, and as everyone knows, prices have increased a lot since 1930 - about 80 per cent in fact. So if we adjust the income figures to exclude the effect of price changes, we find that about 45 per cent of the dollar gain melts away. In terms of purchasing power, total income in the district, nation, and Montana just about tripled in the 30-year period, with the district and Montana showing just about the same percentage gains and the nation showing a slightly larger Increase. And then if we make one final adjustment to bring these income figures down to a per capita basis we find that real per capita income in the district increased 2.4 times; in Montana 2.3 times, and in the U. S. just 2 times. In other words, both Montana and the district managed to increase income in real terms just about as fast as did the nation during the past three decades, and since national population rose faster than that of district or Montana, the income increases were shared by relatively fewer people here, thus producing a larger share for each on the average. To put this in still another way, pro ductivity per person seems to have increased somewhat faster, here than in the nation as a whole. The income perspective thus does soften the harsh tones seen from the population perspective, but there are still somber undertones apparent. In the first place district per capita Income, despite its greater proportionate gains, still runs below the national average because it started from a lower base. Per capita income in the U.S. in 1960 was more than $2,200. In Minnesota and - 4 - (Ninth District) Montana it ran a bit above $2,000} in the Dakotas it was about $1,800. Thus it is vital that bigger percentage gains continue to be scored in this region just to catch up with the nation as a whole. Second, the population loss from out-migration has had a tremendous effect on total income. If all of these people had stayed here and per capita income in 1960 had been what it was, total income in the district in 1960 would have been $3 billion or 24 per cent larger than it was. Even had per capita income grown only at the rate for the nation as a whole, the net loss of 1.5 million people would be taken to result in $2.5 billion less total income than we would have had. So all of this underlines two points. We want to continue to increase our productivity and our per capita income faster than the national average and we want to provide enough new jobs to keep our people from having to go elsewhere to seek opportunity. Here 1 want to call your attention to a most hopeful recent development In this area. The Upper Midwest Research and Development Council, of which I am a member and which includes some distinguished Montanans, among them Jack Corette of Montana Power who is Council Vice President for Montana, is sponsoring a major economic study designed to discern reasons for such economic trends as we have experienced, to prepare projections of likely future developments, and to give indications as to how we can employ our talents and our economic resources to better advantage. The study is being financed with a major grant from the Ford Foundation and by contributions from business throughout this region • the region is coincident with the Ninth Federal Reserve District. The study is also sponsored by the University of Minnesota with the Council office and the Research Director housed on that campus* I want to underline three important points about this project. First, It is the first time that a study to this end has been conducted on this sealee* 5 (Ninth District) a study of the economy of a whole region, which in this case embraces the four full States of Montana, the Dakotas, and Minnesota, and the northern portions of two other States, Wisconsin and Michigan, more than 400,000 square miles and more than 6 million people. Second, the study is now going through its research stage which, hopefully, will produce adequate information on which to base an action program. The research is being done by recognized scholars, some located at Minnesota but others based at colleges and universities throughout the region. Some of the work is being done at Montana State University and Montana State College. We expect the research to be objective and authoritative. A first study on agricultural developments is about ready to be issued; one on employment trends and one on population trends will be forthcoming shortly thereafter. All in all, we expect about 40 separate research studies and an overall report on the economy of this region. Third, important as objective and authoritative research is, it can do no more than to explain, forecast, and indicate possible courses of action. Therefore, it is of key importance that practical men learn and understand the results of the research so that desirable actions can be taken. To this end a number of advisory committees have been created with widespread representation from throughout the district. Altogether more than 200 people serve on these committees which will be expected to appraise, consent on, and help shape specific actions to make this region grow faster. I want to stress again the fact that this study is going to be as objective as possible and 1 hope that the action programs will be equally objective. We all live in this region, we all want it to grow soundly. We all know a lot of things about this area, most of which are correct but seme of which just aren’ t so. You will recall the old statement that the things that hurt you are the things you know that just aren't so. It is our hope that the objective research will reduce the number of these things to a minimum and let us go forward http://fraser.stlouisfed.org/ onof aSt. sound Federal Reserve Bank Louis basis. (Ninth District) • 6 ~ Just one last word on the action phase of this work. has some natural advantages. This district One of the greatest of these, perhaps the con trolling advantage, corns from the fact that we are interrelated with the rest of the U.S. economy - indeed with the rest of the world. resources are the resources of the world. inseparably interwoven with them. In a large sense our We draw on them, yield to them, are We have access to the inventiveness, the technological thrust, the financial resources, the human skills of the nation to which we belong, and we have access to its markets and those of the world. But from this interdependence come many of our problems. All of our natural endowments, whether depletable or renewable, are subject to the sometimes severe adjustments that come from the sweep of technology, the dynamic movement of world and economic change. The key word here is '’ adjustment”. We can fight them or facilitate them, but we have to adapt to than. Perhaps the greatest difficulty we face is our slowness to recognize what adjustments are required of us or our inability to agree on the inevitability of the required adjustment. We must try to under* stand better the nature of impending adjustments and the extent of economic pressures upon our own resources. We have to have knowledge about specific advantages and disadvantages, about our own resources and their physical and economic characteristics. And we have to approach this whole problem with an open and receptive mind.
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