View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

NINTH DISTRICT ECONOMY IN 1963
The growth experienced in the Ninth Federal Reserve District in 1963 depended
to some extent on the growth in the nation as a whole.

The economic prosperity or

growth in the United States has a dominant influence on a particular region.
tie together the regional economies.

Markets

Much of the agricultural products, manufactured

goods and minerals produced in this district are sold in national markets.
and security markets have become predominantly national in scope.

Credit

Both consumers

and business executives in their decision making are influenced by attitudes and
developments transmitted by the news media throughout the nation.

The Federal

Government through its large revenue collection and expenditure has become a far
greater influence on economic activity than either state or local governments.
The economic growth in the United States during the current period of
expansion, which began in February 1961, has not been as vigorous nor as consistent
as in former ones.

The Gross National Product, a conventional measure, rose'by

about $29 billion in 1963 or by 5 percent, by 7 percent in 1962 and by 3 percent
in 1961.

Total personal income, which includes all current receipts received from

all sources by individuals and families, rose by about $20 billion, or by 4 . 5
percent, by 6 percent in 1962 and by 4 percent in 1961.

The new jobs created in

1963, aggregating about 840,000 did little more than match the growth in the
expanding labor force resulting in little improvement in the unemployment rate.
In recent months, it was still fluctuating between 5.5 percent and 5.9 percent of
the civilian labor force.
Although national developments have an important bearing on the district !s
economy, there are also developments within the district that have resulted in a
faster rate of economic growth in some areas and slower in others than in the
country as a whole.

In considering the growth of a region, these factors are

of prime importance.
Weather during 1963 was favorable for both agriculture and resort operations.
Feed crops were ample for livestock raising due to an adequate supply of moisture




-2in most areas.

Crop yields were not a record but better than average due to

favorable moisture conditions and temperatures during the growing season.

Crop

yields in this region not only affect agricultural income but also have a bearing
on the volume of food processed in the many manufacturing plants.

As a result of

temperature extremes in 1963, receipts at resorts were generally higher than in
former years.

Hot temperatures during the summer stimulated vacationers to move

to resorts in this region.

The low winter temperatures and sufficient snowfall

early in the year improved conditions for skiing and allied winter sports.
In some district localities, U. S. Government projects added to the volume
of business activity,

this has been the situation in the building of the Oahe Dam

at Pierre, South Dakota and the Big Bend Dam below that city.

The installation of

Minuteman missile bases in Montana and North Dakota has added to business activity
in a number of localities and the maintenance of military bases has benefited other
urban centers.
Growth in a few centers has resulted from noneconomic factors.

College and

university communities are the best illustration where the rapid expansion in
enrollment has led to an expansion in facilities and services.
The overall economic growth in the district states as a result of both
national and regional developments can be described to some degree through the
growth occurring in population, employment and income received by individuals and
families residing here.
Population
Large numbers of people annually shift their residence, some within the
district states and others to distant parts of the United States.

The population

movement out of the Ninth District states has been substantial ever since the
thirties.*^ Farm and rural areas have a long history of out-migration; in fact,
ever since the homesteading period ended.

On the other hand, urban centers in

1/ See Larry A. Sjaastad, Migration and Population Growth in the Upper Midwest: 19301960. Upper Midwest Economic Study, p. 20.



district states have been growing rapidly although not fast enough to absorb all
of the migrants from the rural areas.
The net out-migration during the decade of the 1950 !s was 5.39 percent of
the 1950 population plus the increase in births during the decade.

The rate was

well over ten percent'in North Dakota, South Dakota and Northwest Wisconsin.

In

spite of the rapid growth of the large urban centers, the out-migration is continuing
in the current decade.
The district states in the period from July 1962 to July 1963 held more of
the natural increase in their population than in the previous twelve months1 period.
The provisional estimates made by the Bureau of the Census on July 1, 1963 shows
a significant population growth for all states except North Dakota and in that
state the decrease declined from 10,000 in the earlier period to 1,000 in the latter.
The increase in the four district states averaged 1.1 percent compared with 1.5
percent in the United States.

The recent increase is no indication of the long-term

population trend as there is considerable fluctuation in the rate of growth from
year to year.
Employment
Ninth District employment during 1963 rose at about the same rate as in the
nation.

In the first 10 mohths of the year, employment in nonagricultural establish­

ments rose by 1.3 percent as compared with 1.4 percent in the nation.

As is always

the case, employment over short periods of time and in certain regions fluctuates
more than the total in the nation.

The fluctuations are even greater from

community to community where economic activity depends primarily on one or two
basic industries.
The district!s nonagricultural employment growth lagged materially in the
2/
first half of the 1950-1960 decade but improved in the latter half.—

2/ See R. Stephen Rodd and James M. Henderson, Employment and Earnings in the Upper
Midwest; 1950-1960. Upper Midwest Economic Study, p. 20-22.




-

4-

Employment in the first half of the decade grew by 8.0 percent and in the nation
by 11.4 percent.

The growth rate for the district as a whole was slightly higher

than the national rate during the second half of the decade, 6.7 percent compared
to 6.1 percent.
In the current period of economic expansion, which began in February 1.961,
district nonagricultural employment rose at a slower rate than in the nation but
it also fell less during the mild recession of 1960.

As a result, the growth

over the entire period is above the national rate.
The total number of workers on district farms--including the farmer and his
family--increased in both 1962 and 1963 due to the harvesting of better than average
farm crops.

Such employment has been declining over many years although not as

rapidly as in some of the southern states.

The recent increased labor on district

farms is temporary and, in fact, the long-term downward trend remained in evidence
even in the past two years.
How extensively the labor force is utilized in this district is revealed
by the small number of individuals unemployed and seeking work here.

Since there

continues to be a net out-migration of workers during prosperous periods when there
are better employment opportunities elsewhere, in the current period of economic
expansion the percent of the civilian labor force unemployed has been quite
consistently below that for the United States.

During the first ten months of

1963, the rate has ranged from 5.0 to 5.5 percent in the district and from 5.5
to 6.1 percent in the nation, seasonally adjusted.
Although the Ninth District as a whole in the current recovery period has
had a relatively low unemployment rate, it, at the same time, has had numerous
areas of high unemployment.

In October, the district had 52 areas or communities

where job seekers were substantially in excess of job openings, the unemployed were
6 percent and over.

Fortunately, these areas are not extensive and comprise a

small proportion of the district total labor force.

They are concentrated in

the lumber and mining regions of Upper Michigan, Northern Wisconsin, Northeastern



-5Minnesota and Western Montana.

A few isolated communities in other parts of the

district also have appeared in the substantial unemployment classification,
frequently due to the temporary or permanent closing of a manufacturing plant
with a large work force.
Personal Income
The civilian income, excluding transfer payments and property income, that
is, interest, dividends and rental income of persons, provides a more accurate
measure of current economic activity by industry classification than does total
per sona1 income.
Such income in the four district states rose by 8.0 percent in 1962 and
by 3.6 percent in 1963.

The comparable increase in the nation was 6.2 percent

and 4.0 percent respectively.

In Montana^, the income was up almost 10 percent in

1963, but in Minnesota and in South Dakota, it was up only slightly over 2 percent
and in North Dakota, it was down about 5 percent.
Developments in agriculture influence the aggregate level of personal
income to a marked extent in this district.

In 1962, net farm income rose by a

record 25 percent while in 1963 it declined by 5 percent from this high level.
Crop yields in 1963 were above average in most areas of the district but they were
not at the record yields harvested in the prior year and prices received by
farmers for their products weakened in the first half of the year.

On the other

hand, prices paid by farmers for equipment, seed, fertilizer, etc. continued to
inch upward.

These prices averaged about 1 percent higher in 1963 than in the

preceding year.
Even in this district where the economy is heavily weighted by agriculture,
the largest source of income is derived from manufacturing.

This income in 1963

rose by about 5 percent compared with 7 percent one year earlier.

The output of

durable goods was on a plateau in the first half of 1963 and then broke out on the
top side in the latter half of the year.



The output of nondurable products rose

-

6-

quite steadily throughout the year.
District manufacturing since the mid-1950,s has expanded faster than in the
nation.

During the general business recession extending from May 1960 to February

1961, the output remained fairly steady while in the nation it declined, and in the
current period of economic expansion, the rate of growth in the district has
exceeded slightly that occurring in the nation..

It has absorbed a substantial

portion of the labor released from agriculture.
Much attention has been devoted to the nature of the industrial growth in
this region.

3/
A special study released in June 1963 — provides detailed information

on the expansion in Minnesota during 1962.

A total of 62 new manufacturing plants,

defined as a new manufacturing or research operation, were placed in service.

The

employment created was estimated at 4,320 and the estimated valuation placed on
these facilities was $44,350,000.
produced in these plants.

A wide range of soft and hard products are

The expansion was brought about almost entirely by

Minnesota-based companies; only two of the establishments were built and placed in
operation by out of state companies.
There were 34 expansions, defined as an addition to an existing manufacturing
or research operation, including the enlargement or remodeling of an existing
building, the construction of a new building or the installation of additional or
newer machinery or equipment.

These facilities added an estimated 1,661 workers

and increased the valuation of the plants by $19,220,000.
The National Defense Program has had a differential affect on manufacturing
in this region.

The fundamental change made by the military from conventional

weapons to missiles shifted a portion of the military prime contracts from the
Upper Midwest to the Southwest and to the East Coast.

Midwest manufacturers

produced such hard goods items as vehicles and tanks which gave way to the production
of electronics and missiles.

However, the rapid growth of an electronic industry

in Minnesota has resulted in the awarding of some prime contracts for such equipment
3/ Research Division, Department of Business Development, State of Minnesota,
Growth in Minnesota, 1962

 Business


-7in this state.

In recent years, military prime contracts awarded in the four

district states has been about 2 percent of the total which was approximately the
proportion through both the World War II and Korean War periods.
The total income derived from mining operations in this district has grown
only slightly since 1960.

The source of income in many iron ore mining communities

has been shut off abruptly as mines were closed.

However, the expansion in the

production of iron ore pellets in Minnesota and in Upper Michigan has offset this
decline in income.
Iron ore shipments from U. S. ports in the Lake Superior region through
November aggregated 55.4 million gross tons, up almost two million tons from a
year earlier.

The expanding production of pellets more than offset the decline

in the tonnage of other types of ore shipped.
The expansion of taconite pellet capacity in Minnesota has been held up
by mining companies until they receive an assurance from the people in the state
of equal tax treatment with manufacturing in the state.

If the proposed taconite

amendment to the state constitution is adopted in November 1964, construction is
expected to be started on several new plants.

The Oliver Mining Division of the

U. S. Steel Corporation has developed plans for a plant of 4 million tons of
capacity annually near Mountain Iron, Minnesota.

The Ford Motor Company, in

association with Oglebay Norton Company, has announced plans to build a taconite
plant of about 1.5 million tons capacity near Eveleth.

The reserves of taconite

ore are between Eveleth'and Virginia and the beneficiation plant is to be built
at Forbes on the St. Louis River, south of Eveleth.

The McClouth Steel Corporation

in Detroit announced in February 1963 that out of five possible sites for a
taconite plant it has under consideration two in Minnesota. • The plant would have
a capacity from 2 to 2% million tons annually.
in
The copper industry in the district is also/a transitional stage of
installing new equipment and utilizing new deposits.




A recent discovery of a rich

vein of copper near Mohawk, Michigan on the property of the Calumet and Hecla
Mining Company has brought a new future to this community.

Preliminary core tests

show that the ore contains about 200 pounds of copper per ton whereas the ore
mined in recent years has contained from 12 to 20 pounds per ton.

A new shaft

being sunk by the company is scheduled for completion in 1964.
In 1959, close to the White Pine mine near Ontonagon, Michigan, there was
discovered a new ore body for which test cores revealed the ore to be at least
•50 percent richer in copper than ore presently mined.

The ore body is over

2,000 feet below the surface and must be mined by the more costly method of
vertical shaft as opposed to the slope technique now employed.

The new ore body

is close enough by the present facilities so the ore can be fed into the present
crusher and smelter.

Mining from the new ore body is expected to begin in 1964.

In Montana, a copper concentrator has been built in Butte and the ore
concentrated during 1963 was gradually shifted from Anaconda to Butte.
The other industries listed on the chart are secondary in that their
growth depends largely on the number of workers employed and income received in
the primary industries just described.
than the primary ones.

Some of these industries are much larger

For instance, in terms of income generated, wholesale and

retail trade is the second largest industry in the district.
The growth in income received from services requires a special comment as
it includes the receipts derived from the tourist or vacation business.
receipts of hotels, motels and resorts

The

rose sharply during the fifties and,

on the basis of fragmentary information, continued in the present decade.

The

receipts at sporting and recreational camps in both Minnesota and South Dakota
from 1954 to 1958 exceeded not only the national average but outperformed many
of the states in the Southern and Western regions where large gains have been
made in this field.




Summary
In general, the people residing in the Ninth Federal Reserve District
enjoyed economic prosperity during 1963.

The exception was mainly in the iron ore

and copper mining regions where the transition in the mining industry has led to
the closing of some mines, only partially offset by the opening of new ore bodies
and the application of new mining techniques.

The gain in population residing in

the district states was greater than in former years.

Employment in nonagricultural

establishments expanding by about 25,000 increased at a rate comparable to that in
the nation as a whole and the number employed on farms rose due to the harvesting
of better than average crops.
low rate in the district.

Unemployment, at the same time, was at a relatively

Personal income derived from current economic activity

was not as high as in 1962 but approximated the increase in the nation.




IRON ORE SHIPMENTS FROM UPPER U.S. LAKE PORTS
Gross Tons

U

1963

1962

16,675,809

14,212,524

3,600,000

2,700,000

Other ores

35,150,005

36,714,951

Total

55,425,814

53,627,475

Taconite pellets

2J

Jaspilite pellets 3/
>

1/ Shipments made to December 1 in both years.
2/ Includes an estimated 1,000,000 tons shipped by Oliver Mining Co. Pilotac
plant.
3/ Estimated on basis of expanded facilities.

Research Department
Federal Reserve Bank
Minneapolis
December 10, 1963




NINTH DISTRICT.!/PERSONAL INCOME FOR 1961, 1962, AND 1963 BY INDUSTRY
(Millions of Dollars)

1961

1962

1963

1,208

1,517

1,441

Mining

160

161

162

Construction

509

575

551

Manufacturing

1,503

1,606

1,680

Trade

1,353

1,391

1,448

Finance, Insurance and
Real Estate

304

325

338

Transportation

456

462

462

Communications and
Public Utilities

224

222

228

Net Services

691

747

789

1,167

1,251

1,329

Farm and Farm Wages

Government

1/ Four full states (Minnesota, Montana, North Dakota and South Dakota).

Research Department
Federal Reserve Bank
Minneapolis
December 10, 1963




the current period of expansion, which began in
February 1961, has not been as vigorous nor as
consistent as in former ones. The Gross National
Product, a conventional measure, rose by about
$29 billion in 1963 or by 5 percent, by 7 percent in
1962 and by 3 percent in 1961. Total personal in­
come, which includes all current receipts received
from all sources by individuals and families, rose by
about $20 billion, or by 4.5 percent, by 6 percent in
1962 and by 4 percent in 1961. The new jobs
created in 1963, aggregating about 840,000, did
little more than match the growth in the expanding
labor force resulting in little improvement in the
unemployment rate. In recent months, it was still
fluctuating between 5.5 percent and 5.9 percent of
the civilian labor force.
Although national developments have an im­
portant bearing on the district’s economy, there are
also developments within the district that have re­
sulted in a faster rate of economic growth in some
areas and slower in others than in the country as a
whole. In considering the growth of a region, these
factors are of prime importance.

NINTH DISTRICT
ECONOMY IN 1963
BY O SC A R L/TTERER

T h e growth experienced in the Ninth Federal Re­
serve District in 1963 depended to some extent on
the growth in the nation as a whole. The economic
prosperity or growth in the United States has a
dominant influence on a particular region. Markets
tie together the regional economies. Much of the
agricultural products, manufactured goods and
minerals produced in this district are sold in national
markets. Credit and security markets have become
predominantly national in scope. Both consumers
and business executives in their decision making
are influenced by attitudes and developments trans­
mitted by the news media throughout the nation.
The Federal Government through its large revenue
collection and expenditure has become a far greater
influence on economic activity than either state or
local governments.
The economic growth in the United States during
26




Weather during 1963 was favorable for both
agriculture and resort operations. Feed crops were
ample for livestock raising due to an adequate sup­
ply of moisture in most areas. Crop yields were not
a record but were better than average due to favor­
able moisture conditions and temperatures during
the growing season. Crop yields in this region not
only affect agricultural income but also have a
bearing on the volume of food processed in the
many manufacturing plants. As a result of tempera­
ture extremes in 1963, receipts at resorts were gen­
erally higher than in former years. Hot temperatures
during the summer stimulated vacationers to move
to resorts in this region. The low winter tempera­
tures and sufficient snowfall early in the year im­
proved conditions for skiing and allied winter sports.
In some district localities, U.S. Government proj­
ects added to the volume of business activity. This
has been the situation in the building of the Yellowtail Dam in the Bighorn River Canyon south of
Hardin, Montana, the Clark Canyon Dam on the
Beaverhead River south of Dillon, Montana and the
Big Bend Dam on the Missouri south of Pierre,
South Dakota. In addition to these major projects,
there were numerous smaller ones at reservoirs,
irrigation districts and military bases. For instance,
GREATER MINNEAPOLIS

JO H N D AN IELS

CHEMICAL PROCESSING
S e v e ra l significant developments of the past year
could make 1964 a prosperous year for agriculture
and the industries such as ADM that are so closely
allied with it:
1. Record production of crops in 1963.
2. The prospect that wheat exports may reach
one billion bushels in the 1963-64 marketing
year.
3. The vote of wheat farmers last spring for the
freedom to manage their own affairs and to
compete on an even greater scale for world
markets.
The all-crop production index for 1963 is 110
percent (1957-59 = 100), which surpasses the
previous high of 108 percent in 1960 and 1962.
The first corn crop exceeding four billion bushels
and the first soybean crop exceeding 700 million
bushels contributed substantially to 1963’s record
production.
If wheat exports during the year reach the billionbushel level, carry-over supplies will be reduced
JANUARY, 1964




about 465 million bushels and will total only 725
million bushels. This is approximately 50 percent
of the record wheat carry-over and is about the
minimum safe reserve stock for the United States.
Even with the record corn crop produced in 1963,
consumption and export are expected to exceed that
production, further reducing feed grain stocks. Soy­
bean supplies are in close balance in spite of high
production. Domestic processing and exports con­
tinue to increase. Increased demand for soybean
meal at home and abroad is holding soybean prices
above the price support level but, because of low oil
prices, processors find their profit margins reduced.
The increased production and widening foreign
markets for grain will accelerate merchandising,
handling and processing. Grain procurement offices,
terminal elevators, mills and plants throughout the
Upper Midwest should be unusually active in the
year ahead.
The rising production of grains and desire of the
farmer to compete for markets throughout the world
place an obligation on allied industries to speed that
grain to market as rapidly and economically as pos­
sible. It also intensifies industry’s responsibility to
create new uses and new markets for agricultural
products.
To facilitate the movement of grain from farm
to market in this country and abroad, the grain in­
dustry has expanded its merchandising activities in
this country and abroad. New export elevators will
provide year-around access to world markets for
midwestern grain.
The world grain market offers a promising outlet
to farmers for their products, but equally important
is research for development of new and more profit­
able uses for agricultural products. From the natural
fats and oils derived from agricultural commodities,
scientists are developing new materials for uses as
diverse as paints, plastics, foundry products, foods,
detergents, cosmetics, paper making and ore sepa­
ration.
The chemical industry, especially that part of it
based on agricultural materials, is expected to con­
tinue expanding in the year ahead. Competition in
this part of the chemical industry will continue to
be intense and profit margins will tend to stay
narrow.
In view of these conditions which prevail as 1964
opens, it appears that the year ahead will be one of
continued high level business activity for agricul­
ture and associated industries, with no boom and no
recession. If congress votes a tax cut, the outlook
will be even better.
25

the installation of Minuteman missile bases in Mon­
tana and North Dakota has added to business activity
in a number of localities and the maintenance of
military bases has benefited other urban centers.
Growth in a few centers has resulted from non­
economic factors. College and university communi­
ties are the best illustration where the rapid expan­
sion in enrollment has led to an expansion in facili­
ties and services.
The overall economic growth in the district states
as a result of both national and regional develop­
ments can be described to some degree through the
growth occurring in population, employment and
income received by individuals and families resid­
ing here.

POPULATION
Large numbers of people annually shift their resi­
dence, some within the district states and others to
distant parts of the United States. The population
movement out of the Ninth District states has been
substantial ever since the thirties. Farm and rural
areas have a long history of out-migration; in fact,
they have had ever since the homesteading period
ended. On the other hand, urban centers in district
states have been growing rapidly, although not fast
enough to absorb all of the migrants from the rural
areas.
% CHANGE
FROM PREVIOUS
YEAR

The net out-migration during the decade of the
1950’s was 5.39 percent of the 1950 population plus
the increase in births during the decade. The rate
was well over 10 percent in North Dakota, South
Dakota and Northwest Wisconsin. In spite of the
rapid growth of the large urban centers, the out­
migration is continuing in the current decade.
The district states in the period from July 1962
to July 1963 held more of the natural increase in
their population than in the previous twelve months’
period. The provisional estimates made by the
Bureau of the Census on July 1, 1963 show a sig­
nificant population growth for all states except
North Dakota, and in that state the decrease de­
clined from 10,000 in the earlier period to 1,000
in the latter. The increase in the four district states
averaged 1.1 percent compared with 1.5 percent in
the United States. The recent increase is no indi­
cation of the long-term population trend, as there
is considerable fluctuation in the rate of growth
from year to year.

EMPLOYMENT
Ninth District employment during 1963 rose at
about the same rate as in the nation. In the first 10
months of the year, employment in nonagricultural
establishments rose by 1.3 percent as compared
with 1.4 percent in the nation. As is always the

PERCENT IN CREASE OR DECREASE IN CIVILIA N POPULATION IN NINTH DISTRICT STATES

+41-----Source: Bureau o f the Census, Series P-25, Nos.
272 and 273. Data is as o f J u ly 1 of
each ye ar.

1962

1963

—2
SOUTH DAKOTA

JANUARY, 1964




M O N TAN A

M IC H IG A N

M IN NESOTA

W ISCO N SIN

27

NORTH D AKO TA

case, employment over short periods of time and in
certain regions fluctuates more than the total in the
nation. The fluctuations are even greater from com­
munity to community where economic activity de­
pends primarily on one or two basic industries.
The district’s nonagricultural employment growth
lagged materially in the first half of the 1950-1960
decade but improved in the latter half. Employ­
ment in the first half of the decade grew by 8.0 per­
cent and in the nation by 11.4 percent. The growth
rate for the district as a whole was slightly higher
than the national rate during the second half of the
decade, 6.7 percent compared to 6.1 percent.
In the current period of economic expansion,
which began in February 1961, district nonagricul­
tural employment rose at a slower rate than in the
nation but it also fell less during the mild recession
of 1960. As a result, the growth over the entire
period is above the national rate.
The total number of workers on district farms —
including the farmer and his family — increased in
both 1962 and 1963 due to the harvesting of better
than average farm crops. Such employment has been
declining over many years although not as rapidly
MILLIONS OF
DOLLARS

MANUFACTURING

28



as in some of the southern states. The recent in­
crease in labor on district farms is temporary and,
in fact, the long-term downward trend remained in
evidence even in the past two years.
How extensively the labor force is utilized in this
district is revealed by the small number of indi­
viduals unemployed and seeking work here. Since
there continues to be a net out-migration of workers
during prosperous periods when there are better
employment opportunities elsewhere, in the current
period of economic expansion the percent of the
civilian labor force unemployed has been quite con­
sistently below that for the United States. During
the first ten months of 1963, the rate has ranged
from 5.0 to 5.5 percent in the district and from 5.5
to 6.1 percent in the nation, seasonally adjusted.
Although the Ninth District as a whole in the
current recovery period has had a relatively low un­
employment rate, it, at the same time, has had
numerous areas of high unemployment. In October,
the district had 52 areas or communities where job
seekers were substantially in excess of job openings,
the unemployed were 6 percent and over. For­
tunately, these areas are not extensive and comprise

NINTH DISTRICT PERSO N AL IN COM E FO R 1961, 1962, AN D 1963 BY INDUSTRY

TRADE

GOVERNMENT

SERVICE

GREATER MINNEAPOLIS

a small proportion of the district total labor force.
They are concentrated in the lumber and mining
regions of Upper Michigan, Northern Wisconsin,
Northeastern Minnesota and Western Montana. A
few isolated communities in other parts of the dis­
trict also have appeared in the substantial unem­
ployment classification, frequently due to the tem­
porary or permanent closing of a manufacturing
plant with a large work force.

PERSONAL INCOME
The civilian income, excluding transfer payments
and property income, that is, interest, dividends and
rental income of persons, provides a more accurate
measure of current economic activity by industry
classification than does total personal income.
Such income in the four district states rose by
8.0 percent in 1962 and by 3.6 percent in 1963.
The comparable increase in the nation was 6.2 per­
cent and 4.0 percent respectively. In Montana, the
income was up almost 10 percent in 1963, but in
Minnesota and in South Dakota, it was up only
slightly over 2 percent and in North Dakota it was
down about 5 percent.
Developments in agriculture influence the aggre­
gate level of personal income to a marked extent in
this district. In 1962, net farm income rose by a
record 25 percent while in 1963 it declined by 5
percent from this high level. Crop yields in 1963
were above average in most areas of the district but
they were not at the record yields harvested in the
prior year and prices received by farmers for their
products weakened in the first half of the year. On
the other hand, prices paid by farmers for equip­
ment, seed, fertilizer, etc., continued to inch up­
ward. These prices averaged about one percent
higher in 1963 than in the preceding year.
Even in this district where the economy is heavily
weighted by agriculture, the largest source of in­
come is derived from manufacturing. This income
in 1963 rose by about 5 percent compared with 7
percent one year earlier. The output of durable
goods was on a plateau in the first half of 1963 and
then broke out on the top side in the latter half of
the year. The output of nondurable products rose
quite steadily throughout the year.
District manufacturing since the mid-1950’s has
expanded faster than in the nation. During the gen­
eral business recession extending from May 1960
JANUARY, 1964




to February 1961, the output remained fairly steady
while in the nation it declined, and in the current
period of economic expansion, the rate of growth in
the district has exceeded slightly that occurring in
the nation. It has absorbed a substantial portion of
the labor released from agriculture.
Much attention has been devoted to the nature
of the industrial growth in this region. A special
study released in June 1963 provides detailed in­
formation on the expansion in Minnesota during
1962. A total of 62 new manufacturing plants, de­
fined as a new manufacturing or research operation,
was placed in service. The employment created
was estimated at 4,320 and the estimated valuation
placed on these facilities was $44,350,000. A wide
range of soft and hard products are produced in
these plants. The expansion was brought about al­
most entirely by Minnesota-based companies; only
two of the establishments were built and placed in
operation by out of state companies.
There were 34 expansions, defined as an addi­
tion to an existing manufacturing or research opera­
tion, including the enlargement or remodeling of an
existing building, the construction of a new build­
ing or the installation of additional or newer ma­
chinery or equipment. These facilities added an
estimated 1,661 workers and increased the valua­
tion of the plants by $19,220,000.
The National Defense Program has had a differ­
ential effect on manufacturing in this region. The
fundamental change made by the military from
conventional weapons to missiles shifted a portion
of the military prime contracts from the Upper
Midwest to the Southwest and to the East Coast.
Midwest manufacturers produced such hard goods
items as vehicles and tanks which gave way to the
production of electronics and missiles. However,
the rapid growth of an electronic industry in Minne­
sota has resulted in the awarding of some prime
contracts for such equipment in this state. In recent
years, military prime contracts awarded in the four
district states has been about 2 percent of the total,
which was approximately the proportion through
both the World War II and Korean War periods.
The total income derived from mining operations
in this district has grown only slightly since 1960.
The source of income in many iron ore mining
communities has been shut off abruptly as mines
were closed. However, the expansion in the pro29

IR O N

O R E S H IP M EN T S

FRO M

U P P ER

U. S. L A K E

PORTS1

Other O res

60

-

Taconite Pellets2 -

Jaspilite C oncentrates3
55

50

45

40

35

30

25

20
’ Shipments m ade to December 1 in each y ea r,
in c lu d e s an estim ated 1,000,000 tons shipped
by O liver M ining Co. Pilotac plant.
E s tim a te d on basis of exp an d ed facilities.
15

10

5

W 3.61:$:

0
>
1



1962

1963

GREATER MINNEAPOLIS

duction of iron ore pellets in Minnesota and in
Upper Michigan has offset this decline in income.
Iron ore shipments from U. S. ports in the Lake
Superior region through November aggregated 55.4
million gross tons, up almost two million tons from
a year earlier. The expanding production of pellets
more than offset the decline in the tonnage of other
types of ore shipped.
The expansion of taconite pellet capacity in Min­
nesota has been held up by one mining company
and pellet user until they had received an assurance
from the elected officials of the state of equal tax
treatment with manufacturing in the state. The Ford
Motor Company, in association with Oglebay Nor­
ton Company, announced plans in February 1963
to build a taconite plant from 1.5 million to 2 mil­
lion tons capacity near Eveleth. The Ford Motor
Company announced in December that ground will
be broken for the plant in the spring of 1964. The
reserves of taconite ore are between Eveleth and
Virginia and the beneficiation plant will be built at
Forbes on the St. Louis River, south of Eveleth.
The building of other plants may be held up until
companies receive an assurance from the people in
the state of equal tax treatment. If the proposed taco­
nite amendment to the state constitution is adopted
in November, 1964, construction may be started on
several new plants. The Oliver Mining Division of
the U. S. Steel Corporation has developed plans for
a plant of 4 million tons of capacity annually near
Mountain Iron, Minnesota. The Hanna Mining Com­
pany also is considering building a plant near Nashwauk, Minnesota. The McClouth Steel Corporation
in Detroit announced in February 1963 that out of
five possible sites for a taconite plant it has under
consideration two in Minnesota. The plant would
have a capacity from 2 to 2 Vi million tons annually.
The copper industry in the district is also in a
transitional stage of installing new equipment and
utilizing new deposits. A recent discovery of a rich
vein of copper near Mohawk, Michigan on the prop­
erty of the Calumet and Hecla Mining Company
has brought a new future to this community. Pre­
liminary test cores show that the ore contains about
200 pounds of copper per ton whereas the ore mined
in recent years has contained from 12 to 20 pounds
per ton. A new shaft being sunk by the company is
scheduled for completion in 1964.
In 1959, close to the White Pine mine near
Ontonagon, Michigan, there was discovered a new
ore body for which test cores revealed the ore to
JANUARY, 1964




be at least 50 percent richer in copper than ore
presently mined. The ore body is over 2,000 feet
below the surface and must be mined by the more
costly vertical shaft method as opposed to the slope
technique now employed. The new ore body is close
enough by the present facilities so the ore can be
fed into the present crusher and smelter. Mining
from the new ore body is expected to begin in 1964.
In Montana, a copper concentrator has been built
in Butte and the ore concentrated during 1963 was
gradually shifted from Anaconda to Butte.
The other industries listed on the chart are sec­
ondary in that their growth depends largely on the
number of workers employed and income received
in the primary industries just described. Some of
these industries are much larger than the primary
ones. For instance, in terms of income generated,
wholesale and retail trade is the second largest in­
dustry in the district.
The growth in income received from services re­
quires a special comment as it includes the receipts
derived from the tourist or vacation business. The
receipts of hotels, motels and resorts rose sharply
during the fifties and, on the basis of fragmentary
information, continued in the present decade. The
receipts at sporting and recreational camps in both
Minnesota and South Dakota from 1954 to 1958
exceeded not only the national average but outper­
formed many of the states in the Southern and
Western regions where large gains have been made
in this field.

SUMMARY
In general, the people residing in the Ninth Fed­
eral Reserve District enjoyed economic prosperity
during 1963. The exception was mainly in the iron
ore and copper mining regions where the transition
in the mining industry has led to the closing of some
mines, only partially offset by the opening of new
ore bodies and the application of new mining tech­
niques. The gain in population residing in the dis­
trict states was greater than in former years. Em­
ployment in nonagricultural establishments expand­
ing by about 25,000 increased at a rate comparable
to that in the nation as a whole and the number
employed on farms rose due to the harvesting of bet­
ter than average crops. Unemployment, at the same
time, was at a relatively low rate in the district.
Personal income derived from current economic
activity was not as high as in 1962 but approximated
the increase in the nation.
3t

&
DIRECTORS
DE W A L T H. A N K E N Y
V ice P resident
Theo. H am m Brewing C om pany
CHARLES H. BELL
C hairm an o f th e Board
General M ills , Inc.
BENTON J. CASE
D ire cto r
S. T. M c K n ig h t C om pany
GEORGE B. CLIFFORD, JR.
JOHN H. DANIELS
P resident
A rc h e r-D a n ie ls -M id la n d C om pany
TH O M AS L. DANIELS
C hairm an o f th e Board
A rc h e r-D a n ie ls -M id la n d C om pany
D O N ALD C. D A YTO N
P resident
The D ayton C om pany
STEPHEN P. DUFFY
President
Our Own H ardw are C om pany
ALBERT G. EGERMAYER
Senior V ice P resident
C a rg ill, Inc.
ROBERT FAEGRE
P resident
M innesota & O n ta rio Paper C om pany
B. C. GAM BLE
C hairm an o f th e Board
G am ble-Skogm o, Inc.
PAUL S. GEROT
P resident
The P illsb ury C om pany
F. PEAVEY HEFFELFINGER
C hairm an o f th e Board
The Peavey C om pany
ALLEN S. KIN G
President
N o rth e rn States Power C om pany
FRANK P. LESLIE
P resident
The John Leslie Paper C om pany
GOODRICH LOW RY
President
N o rth w e s t B a n corp o ratio n
JOHN A. M OORHEAD
P resident
JOHN S. PILLSBURY, JR.
President
N o rthw e ste rn N a tio n a l
L ife Insurance C om pany
SAMUEL H. ROGERS
Senior V ice President and
E xecutive T ru s t O ffic e r
HENRY T. RUTLEDGE
E xecutive V ice President
LU C IA N S. STRONG
C hairm an o f th e Board
The Strong S cott M fg . C om pany
HAROLD W . SWEATT
C hairm an o f th e Finance C o m m itte e
M inn e a po lis-H o ne yw e ll R eg u lator Co.
* HAROLD H. TEARSE
President
Searle G rain C om pany
ALFRED M . W ILSO N
Executive V ice President
M inn e a po lis-H o ne yw e ll R eg u lator Co.
O. MEREDITH W ILSON
President
U n iv e rs ity o f M innesota
JOHN S. PILLSBURY
D ire cto r Em eritus

STATEMENT OF CONDI TI ON
December 31, 1963
RESOURCES
Cash and Due from Banks.................... $208,739*246.32
U.S. Government O bligations.............. 106,350,306.60
Other Bonds and Securities.................. 35,951,996.12
Loans and D isco u n ts............................. 346,478,014.32
Federal Funds Sold ..................................
12,000,000.00
Customers’ Liability on Acceptances. .
8,523,046.39
Income Earned But N ot Collected. . . .
2,614,893.18
Bank Premises, Furniture and Fixtures 10,074,370.02
Other R esou rces......................................
1,662,486.39
T o ta l R e s o u rc e s

.........................$732,394,359.34

NORTHWESTERN

NATI ONAL

M A R Q U E TT E A V E N U E , S IX TH TO S E V E N T H S T R E E T S




L I A B I L I T I E S
Capital S t o c k .......................................... $
S u rp lu s.......................................................
Undivided P ro fits....................................
Reserve for Possible Future
Loan L o s s e s ........................................
Reserve for Interest, Taxes, etc............
Income Collected But Not Earned. . .
Letters of Credit and Acceptances. . . .
D e p o sits................................................ .. .

•

T o ta l L ia b ilit ie s

BANK

OF

15,000,000.00
25,000,000.00
11,686,819.67
6,235,237.66
5,228,122.92
5,071,660.71
8,523,046.39
655,649,471.99

.........................$732,394,359.34

MINNEAPOLIS

M E M B E R F E D E R A L D E P O S IT IN S U R A N C E C O R P O R A TIO N