The Future of the South
ECONOMIC PROBLEM NO. 1
By JAMES A. FARLEY, Chairman of the Board of The Coca-Cola Export Corporation
Delivered at the annual Banquet Meeting of the Alabama State Chamber of Commerce, Birmingham, Ala., November 16, 1944
Vital Speeches of the Day, Vol. XI, pp. 145-147.
WE live in a country great in spirit, in might, in courage, in humanity. The mainspring of its greatness is the freedom of the individual. Our Democratic way of life, our Bill of Rights and all our institutions are but expressions of that freedom. Our national sovereignty is lodged in that freedom. That we could in the midst of a world war, you may say at the very crisis of that war, exercise that sovereign right in free elections on November 7th, is the most convincing proof to ourselves, to the world, and particularly to our enemies, of the greatness of our country and the vitality of our institutions.
Contrast this with Nazi Germany where a Fuehrer, buttressed by the Gestapo, dictates the policies of the State and the action of its people, and you have the very issues of the World War—the eternal struggle of free men against brutal arbitrary force.
But to me an ever clearer measure of the greatness of our country is the fact that as soon as our people rendered their sovereign verdict at the elections we freely and promptly closed the ranks and, with a united might and replenished vigor, are backing the President, our Government, and our forces for an early victorious termination of the war and a permanent establishment of peace.
Truly it may be said that necessity is frequently the mother of invention, and this old saying may be applied to the situation in which your great Southland finds itself. You have long followed the aftermath of the ravages of war, and while no section of this country, from the closing of the War Between the States, to this time, has lost any ground to speak of, some have ventured forward on a continual program of progress while the South was forced to mark time. It has been stated that it was more than fifty years before the economic budget of the South reached the proportions of even 1861.
Your section was never an industrial section; the climate, the soil, the rain-fall, and the way of life of which its first settlers were enamored, shaped it into a great agricultural area. And the type of labor available before the War Between the States fixed definitely, for decades, your use of the land and your method of securing a living.
It has been only in recent years, with the full development of natural resources in certain other areas, and the exhaustion or near exhaustion of many of those natural resources, that the eyes of the nation have been turned southward and that we have found throughout this land of yours a great wealth of natural resources, barely scratched or wholly untapped. Few states in the Union are so blessed atop of the ground and under the ground as your State, Alabama. Large industrial concerns have found this out years ago, and have rapidly developed it, but with the coming of the war, and the necessity for expanding the production necessary to sustain the armed services, great impetus has been given to the development of the whole South, and particularly your own State. Your State has enjoyed larger contracts for erection of plants and development of properties than any other Southern State. This was not because you were named "Alabama" but because within the confines of the State called "Alabama" the Divine Creator had deposited that which was necessary for men at the time.
While for many years the eyes of the Nation have been turned to the South as a general source of underground deposits of great value, and as a great agricultural area, the public was not fully conscious that you had also in this area the largest untapped reservoir of labor. I think it was only natural that industry would think that an agricultural people largely consisting both of blacks and whites, might not have the skill and techniques that would go with industry—that they might not be capable by temperament and experience to be taught to master intricate operations to the degree required for skilled avocations. But because of this reservoir of labor, the open climate and the fair price of materials, many great establishments were erected throughout the South. The great industrialists of the Nation have found in this population of yours men and women who are:
First; 100% loyal, and take second place to none in patriotism and love of country;
Second, Industrious; andThird, Capable of training to any degree of skill. Indeed, I am told that work to one thousandth of an inch in accuracy is being turned out in many plants throughout this section by people who a year or two ago never dreamed of holding a job in production.
So I say that the necessities of War, which turned the eyes of the Nation to your section and to your State, and the large experiments that had to be inaugurated by virtue of that necessity, proved the case beyond any shadow of doubt and caused the invention which will accrue to the benefit of your section, and to the benefit of this Nation.
There are great difficulties in a lack of balance between industry and agriculture, and from this unbalance manyproblems arise. Very thickly populated areas in any nation suffer from lack of proximity to the requisite products of grain, fruit, vegetable and animal matter, to sustain them from the standpoint of food. The agricultural area on the other hand distinctly suffers from the proximity of manufactured products and the lack of income which industry produces both in the form of purchasing power and revenue for the Government, whether it be city, state or county. The ideal communities are those which flourish in perfect balance being sufficiently industrial and sufficiently agricultural. For this reason, I see in the offing a great day for this section and this area, with the expansion of its industries until they become every year more nearly in balance with the agricultural. What this process will bring to you in buying power and prosperity in years to come is beyond the exact prediction of any man.
Often we hear it said that the South is the last frontier in this Nation. I have often wondered and analyzed what this means. Certainly it was the first part of the Nation to be settled; the Virginia Colonists landed in 1607 and the movement of people from that original State of Virginia—North, South and West, spread to the Ohio, to the Mississippi, and across the Mississippi—and so it is not a frontier in the matter of time, in the matter of settlement, in the matter of age, or in the matter of agricultural expansion. Neither is it a political frontier. What the expression must mean is that it is the industrial frontier—that it is the section of the Nation where industry has developed least and has more room for expansion. With this I agree. Lands necessary for industry are reasonable in price and available without limit; climate renders the cost of living much less than in the frozen areas of the Nation with their arduous winters, meaning an amazing saving in the character of houses that must be built for employees, in the installation cost of heating apparatus and in fuel requirements. Proximity of agricultural products renders food available in liberal quantities and at reasonable prices. Expense of clothing is considerably less than in the cold areas. The proximity of all building materials—this being a great timber area, with deposits of sand and rock, enables any industry to erect its buildings at a material saving in cost. Taxes are not unreasonably high. Power from water is available everywhere, and now that knowledge has been gained of labor, the entire analysis indicates that men of vision and of wisdom will, more and more, locate establishments here.
In locating establishments, two primary things must always be considered: First, the proximity of raw material, which is the production approach. This includes the location of raw material, their transportation to the factory, the cost of land and the erection of buildings, the availability of satisfactory labor, the prevailing standards of hours and wages. This is problem No. 1. On the other hand, in comparatively recent times, businessmen have begun to weigh more and more the other aspect,—viz., distribution—the facility of getting the finished product to the consumer. This naturally raises the problem of assuring enough consumers. Now in this great Southland there are millions of people with wants and needs—probably more wants and more needs, and, up to now, less ability to satisfy them than in most other sections of the Nation. As we bring industry into balance with agriculture, more millions in the South will be able to satisfy, through increased incomes, their economic needs and desires. Therefore, in a distribution sense, there is a great and amazing potential demand in this area which must be met and can be met by proximity—having the articles near the demand.
Agricultural implement companies are looking around over the South to find possible locations for factories—and why not? Raw materials are available, power is available, transportation is available, labor is available, and one of the largest markets in the world for agricultural implements lies within this area. This may be said of countless other things. Indeed, this very Chamber of Commerce I am addressing could no doubt have its Secretary rise here in this meeting and read out the names of six or eight hundred concerns, large and small, who are at this time looking in this direction and considering locating here.
At one time the President of the United States, upon a survey which he had made, described this section as Economic Problem No. 1. This caused great comment—in the South arose many critics of this remark, and many defenders of your land. I want to call your attention particularly to the fact that the President indicated you were only Economic Problem No. 1; he made no reference to your character, your breeding, your glorious land, your traditions, your customs and habits, your beliefs. He referred only to your economic situation, and I think upon careful analysis, facing the truth, and studying the figures, the soundness of his remark must be admitted by everyone.
The economic wealth that inevitably leads to the enrichment of the finer things of life through education, travel, art, literature, and the sciences, comes from increasing the buying power of the consumer. This, under normal conditions, can only be done by earnings—by the sweat of one's brow. The South's population, because of its agricultural dominance, has, as a rule, a lower total gross income in dollars per average family than other parts of the Nation. It has, at the same time, generally a higher birth rate per thousand, a higher death rate per thousand, and a lower attendance per thousand at school. I name these not as reflections but because they all go directly to this matter of income. The per capita dollar income by states ranges from Mississippi on the bottom through South Carolina next, Kentucky next, Alabama next, Tennessee next, Georgia next, North Carolina next, and so on. The per capita income in many of these Southern States is less than half of the per capita income in other sections and the reason is largely that the other sections are highly developed industrially. So I say without fear of contradiction that the more industry you can induce to establish itself in the South, whether concerns coming to the South from other regions or concerns started here by Southern men with Southern capital—and the more highly industrialized you become, until you bring agriculture and industry into balance, the greater your progress, and that is Primal Requisite No. 1 for your section. You should direct your thought and your energies to this, for it is your future and your hope, and it is—in my opinion—attainable.
You must consider the impact on industrial activity of your Constitution and Statutes, particularly your Tax Systems. These have largely been built up to fit an agricultural community where we depend upon ad valorem Taxes for the great bulk of revenue. This, for the time, was as it should be, for by and large the wealth of a man in your area was measured by the land he owned, his buildings and properties, his physical assets. In course of time, "assets" as a word was stretched to cover all bills receivable, notes receivable, stocks, bonds, accounts, etc. I am neither a tax expert nor a lawyer, so I am not prepared to—nor shall I go into great detail in this matter—but I do invite your attention to the question whether your State Law places an undue share of the tax burden on the assets of an industrial enterprise, and so tends to impede the development of your section industrially.
My opinion is that what the investor seeks most in selecting his locale for an operation is stability—fair laws, fairlyadministered and stable in character. No man can afford to invest funds—whether they be large or small, because small funds are large to the small man, in areas that lack staunchness, continuity and philosophy in Government. Constant change, new panaceas, wild theories in Government frighten investment away. Business is interested in the rate of burden, but even more interested in knowing that whatever that rate is, it is likely to be maintained fairly evenly, with sound application through a long period of time. Business needs steadiness and stability. Take stock of your situation; eliminate unfair and arbitrary barriers; induce business to come.
Make no effort to buy business! Now, what do I mean by that? You have a great and glorious section. It's beautiful. It rolls. It has trees and forests, broadlands and flat-lands, streams and hills, and climate unsurpassed, and a people that are homogeneous—that are friendly—that have charm. Why shouldn't one like to live here? There is both the need and the opportunity for business to employ these people to make products which can be exchanged for those produced by their neighbors at a profit to all. Say to the world, "Come here, and consider locating here—you will find all I have said plus fair and equitable laws, justice wisely administered, and cooperation in every way." I am not one who advocates giving to industries, free sites, years of tax exemption, special concessions and franchises, guarantees of roads and highways, waterworks, etc. Substantial concerns do not ask, or expect these baubles. The business that does demand them is worth looking into—it savors too much of speculation and too little of permanency; it rings too much of dream and too little of reality; it's long on hope and short on know-how. Make up the bed with a good mattress and a good spring, have clean linen and let the bed be inviting, but charge the going rate for the lodging.
My knowledge of this Nation, my long association with innumerable people from this section, my many visits to its cities and hamlets, my business association, have taught me to appreciate the South. I would have liked it and its people even if I had resisted, but I didn't resist. One of my friends, Harrison Jones, has defined an Irishman—and is there anyone in doubt as to what I am—being one-half fight and one-half romance. If I know the history of this section and read the stories of all our wars, including this one, I know that every Southern man has that love of fight within him that is my 50%. And when I read of the days of glory, of the life you led, of its charm, of your halcyon days—when I breathe your air and the aroma of your flowers—whether they be flowers of earth, or flowers of Southern womanhood—I sense deep in you that romance which is the other half of me. So, I close by expressing my great faith in the future of the South!