View original document

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

j
October 14, 1965

THE CHANGING WOBLD OF BUSINESS

Business organizations do not emerge from an economic vacuum; they
emerge from a particular economic environment, and that environment leaves
its imprint upon them.

They may be molded and shaped by the men who are

responsible for their organization, but only part of their success results
from those who guide and operate the business, no matter how hard work­
ing and ingenious they may be.

There must be an economic opportunity.

Generally, the success of the business depends upon its successfully meet­
ing a challenge or economic opportunity to provide services or goods that
the public needs or wants.

However, no matter how skillful the business­

men may be, the challenge of an economic opportunity must first be there.
These challenges, of course, are different at different times and in
different places.

Many of you have been associated with the Plantation

Pipe Line Company since the early days of its inception.

You know the

names of the men who conceived the idea of the company, those who reached
a decision to incorporate on July 8, 1940, those who molded its original
policies and who have taken care of the many details involved in this
successful business operation.

Thus, you probably know the kind of chal­

lenge that resulted in the organization of this company.
To refresh my own memory a little, I have had one of our staff econo­
mists look up the discussions of economic conditions in this part of the
South that were being made by the Bank’s economists at that time.

In 1940

as you remember, war had broken out in Europe; and, although the United
States had not formally entered the war, the impact was already being felt




-2-

There were preparations for war, and the nation was stepping up its defense
program.
activity.

This part of the South was sharing in this increased economic
The expected further general expansion in economic activity

throughout the nation presented an economic opportunity and a challenge
by itself to the businessmen in this area.

The declaration of war by the

United States after Pearl Harbor, however, presented a challenge of the
first magnitude.
Before World War II, bulk petroleum products in this area were moved
primarily by tankers.

After the war broke out, this method was no longer

feasible because of the depredation of Axis submarines.
the challenge:

This then was

How could petroleum products be moved with ocean shipping

practically cut off and the railroads already overburdened with war-swollen
traffic?
Fortunately, the Plantation Pipe Line Company started operations in
January 1942, just a month after Pearl Harbor and at least partially met
the challenge.

Somehow or other, our petroleum products got transported.

Seldom does the challenge of change present itself in as dramatic
a fashion.

Changes go unnoticed from day to day although over time their

accumulated total impact may be very great.

It is these less dramatic

changes that, if not recognized, can get us into trouble and, if recognized
and met, may be met to the profit of all of us.
Let us examine briefly the economic changes in this area since this
corporation started business.

When the Plantation Pipe Line Corporation

was formed in 1940, there were 28,263,000 persons living in the eleven
Southeastern states, the area in which the Plantation Pipe Line operates.




-3-

Today, there are over 40 million people living here.

This population

growth of 11.6 million persons was one-sixth of the total growth for the
United States of 60.6 million.

To provide these additional 12 million

persons with the goods and services they would need to maintain the standard
of living prevailing at that time was a major challenge by itself, but the
challenge to Southerners was much greater than that.

How could the level

of living in the area, a level far below the rest of the nation’s, be im­
proved?

In 1940, Southerners, on an average, had to feed and clothe them­

selves, to secure some of the good things of life, to educate their children,
to finance their governments, and to provide for capital investment out
of a per capita income that was just about half of the average for the
rest of the United States.

Per capita personal income in the Southeastern

states in 1940 was only 51 percent of that of the rest of the United States.
The basic challenge to Southerners was obvious.

How could the South

raise its income more nearly to that of the rest of the nation?
goal was to be achieved, obviously changes had to be made.

If this

Thus, the

challenge was not only to meet the conditions of the changing times; it
was to stimulate changes.

Southerners needed to change their ways of work­

ing, they needed to change their jobs, they needed to improve their pro­
ductivity, and, in some cases, they needed to move to places other than
where they were living.
All of these changes occurred.

As a result, in the space of twenty-five

years per capita income in the Southeast reached a figure that last year
was 70 percent of the per capita income of the rest of the United States.
Moreover, this was in comparison with a vastly expanded income for the
nation generally.




■4-

These two figures--50 percent in 1940 and 70 percent in 1964--show
what can result from economic changes.

They conceal, however, the myriad

variety of changes characterizing the last twenty-five years.

We can

touch on only some of them.
Population in the Southeast between 1940 and 1965 increased at just
about the same rate as in the United States generally.
at the economic measures that the contrast is striking.

It is when we look
From 1950 through

1964, the annual average rate of growth in the Southeast’s personal income
was 6,7 percent; for the United States, about 6.0 percent.

Total nonfarm

employment grew in the Southeast during this period at an average rate
of 3.5 percent; for the United States, the increase was 1.9 percent.

The

value added by the region's manufacturing plants increased at an annual average
rate of 8 percent; in the United States, 6.7 percent.
To make this growth in manufacturing output possible, new plants had
to be built and equipped and the old ones refurbished.

Thus, expenditures

for new plants and equipment increased in this area at an annual average
rate of 5.7 percent; the comparable figure for the United States was 4.2
percent.
Changes were also taking place in the South's financial position.
In 1940, the total deposits of commercial banks in the Southeast were $4.5
billion, or 6.4 percent of the national total.

Last year these had reached

$35.5 billion, or 10.7 percent of the national figure.

Along with this,

of course, came a growth in the Federal Reserve Bank of Atlanta.

In 1940,

it was tenth from the top of the twelve Federal Reserve Banks ranked by
their total assets.
sixth from the top.




Today, with total assets of over $3.7 billion, it is

■5-

Econoraic change in the Southeast has been rapid and more rapid than
throughout the nation generally, as these figures testify.

The figures

only hint at the variety of changes that took place during this period.
For these, I turn for illustrations to the area served directly by the
Federal Reserve Bank of Atlanta, an area embracing Alabama, Georgia, Florida,
the southern halves of Louisiana and Mississippi, and the eastern two-thirds
of Tennessee.

It is a typical Southern area with 55 percent of the South­

east's total population.
Back in 1940, this Federal Reserve District was predominately rural.
The Census of Occupations shows that, of the total number of persons em­
ployed in 1940, just about 36 percent were employed in farm work.

This

contrasts sharply with the 20 percent employed as craftsmen and operators,
including those in manufacturing.

Ten years later, in 1950, the proportion

of farm workers had dropped to 21.8 percent; and in 1960, the latest year
for which we have data, only 8.9 percent of all workers in the Sixth District
states, the area served by the Federal Reserve Bank of Atlanta, were work­
ing at farming.

The other types of occupations, of course, had increased

in importance correspondingly.
These figures highlight one of the major changes in the Southeast,
the migration of Southern workers from the farm to the cities of the South­
east and to cities elsex^here in the country.

Within this part of the South

itself, urban population increased from about 35 percent of the total in
1940 to almost 60 percent in 1960.
While all these shifts were going on, the average Southerner was be­
coming better educated.




As short a time ago as 1950, the proportion of

-6-

the adults over twenty-five years of age in this region who had completed
high school was only 75 percent as great as throughout the nation.
ten years later, in 1960, the ratio had increased to 87 percent.

Only
The

increase in the number of the region’s college graduates has been even
more impressive.

The 1950 total of 418,000 had jumped to 717,000 by 1960,

an increase of 71 percent compared with the growth of 44 percent in the
nation as a whole.
That the improvement in this part of the South’s income meant that
the average Southerner was able to buy more goods and thus raise his level
of living is obvious.

A couple of statistics about the favorite American

durable consumer good, the automobile, provides a good illustration.
In 1940, if every man, woman, and child in the Sixth District states had
simultaneously gone for a ride in an automobile, there would have been
an average of 7.8 persons in each car.

The national traveler would have

had more elbow room with an average of 4.8 persons per car.

By 1962, the

passengers in this part of the South would have had a much more comfort­
able ride with an average of about 3 persons per car.

Private passenger

cars in the Sixth District states had increased from about 4 million in
1940 to 7.5 million in 1962.

What is striking about this change is that,

as a result of a faster-than-national rate of growth in the South, these
Southerners would have had just about as comfortable a ride in the 1960's
as their national counterparts since the average number of persons per
car for the nation was 2.9.

If we measure our economic progress by our

ownership of automobiles as many of us do, the South has indeed achieved
a remarkable growth and, incidentally, provided a lot of business for those
who transport petroleum products.




-7-

All of these statistics emphasize that Southerners have changed the
ways by which they earn their livings, have become better prepared to
do these things, have changed their places of living, and, because of
their resulting higher productivity, are now receiving higher incomes.
Economic change has meant economic growth; economic growth has meant better
1iving.
Were these changes forced upon the Southeast?
because they had to?

Did these people move

Did economic forces by some sort of an invisible

hand direct Southerners to better ways of earning their living?
have been what happened, but I think it is only partly so.

This may

Southerners

themselves recognized the need for change and made efforts to stimulate
change and direct it in the right direction.

These efforts cannot be

measured by any sort of statistics but are extremely important neverthe­
less .
I would be foolhardy indeed if I were to try to describe with pre­
cision what the South will be like in 1990, twenty-five years from now,
or even what it will be like in 1975.

As we look back and remember how

little we knew about what would happen by 1965, we are impressed with our
limitations in foretelling what will happen in the future.
Nevertheless, if the quotation from Shakespeare inscribed on the
National Archives Building in Washington, "What's past is prologue," can
be taken as true, we can expect that the South will continue to be faced
with the challenge of change.

We can also expect that the future will depend

upon how well we meet the challenge.

The kinds of changes that will occur

between now and 1990 may differ from those occurring in the preceding twentyfive years, but the basic challenge of change will still be there.




-8-

A quotation from a publication issued by the Federal Reserve Bank
of Atlanta a few years ago suggests a few of these challenges that we may
have to face.
"Will the rest of the nation continue to absorb part of
the South's expanding population or will jobs have to be found
here for all who will enter the labor force in the 1960's?

Is

there no limit to the move away from the farm to nonfarm jobs?
Gan we keep attracting such a large part of the nation's capital
investment to this area?

Will the South's labor force be ready

to meet the challenge of an increasingly technological and sci­
entific productive process?"
Although the economic growth for the past quarter of a century that
we have discussed measured indirectly at least how well we took advantags
of the economic opportunities that we recognized, there is no measure of
the opportunities that we missed.

I am sure that there were some that were

ignored or could not be taken advantage of because of the resistance of
many persons to change.

We may well ask, "Will economic opportunities be

missed in the future because of the absence of leadership or because we
will not be prepared to adapt ourselves to the rapidly changing sociological,
political, and technological changes that are part of the present and future?"
We cannot find answers to questions such as this in the statistics ordinarily
used to measure economic change.

Perhaps the missed economic opportunities

cannot be measured at all, but it will be the Southern businessman who
recognizes that opportunities may be missed unless he makes a special effort
to watch out for them and takes action when they arise that will make people
in this part of the nation masters, to some extent, of their own destiny.




-9We cannot, of course, be specific about how businessmen will need to
operate in the changing years that are ahead of us.

The sentiment expressed

by the inscription on the base of the column that supports the bronze eagle
in front of the building of the Federal Reserve Bank of Atlanta, however,
might well serve as a guide:

"The Federal Reserve System through which

our banks and government join hands to further the enduring prosperity of
American commerce, industry, and agriculture."
change must be a co-operative endeavor.




Meeting the challenge of