Arizona, 1948

ARIZONA 1948 BY HERBERT A. LEGGETT Vice President of the Valley National Bank State Chairman of the Committee for Economic Development

Readers of ARIZONA HIGHWAYS, accustomed to a diet of breath-taking photography embellished with equally breathtaking adjectives, are in for a surprise this month. These aesthetic and utopian pages are about to be sullied with some very earthy and matter-of-fact statistics. Even a belching smokestack or two may be openly discussed. It seems like sacrilege, and this writer, as a first-time contributor, feels as self-conscious as if he were entering an art gallery in levis. However, man cannot live by scenery alone-even in Arizona. We have the same economic problems with which less fortunate mortals generally have to contend. In addition, lest anyone regard our present economic sunshine with the same surety as our solar variety, it is well to point out at the start that we have other problems, peculiarly our own, arising from the rapidity of our growth in recent years and the unbalanced character of our original development. There is so much of antiquity in our surroundings, it is hard to realize just how new our present evolution is. In the space of a single generation, Arizona has been transformed from a rather primitive frontier to a bustling, chrome-plated prototype of twentieth-century progress. No longer an oasis of tranquility, much to the disgust of nostalgic old-timers, the Land of Manana is being translated literally into the "Land of Tomorrow." Until comparatively recent years, Arizona was a kind of No-Man's-Land situated between colossal California to the west and titanic Texas to the east. Although the fifth largest state in land area, it has heretofore been dwarfed in importance by its more populous and more prosperous neighbors. To most people east of the Mississippi, Arizona was simply a pretty name represented by a nebulous blotch of indigo in the lower left-hand corner of their Rand-McNally. At the turn of the century, Arizona's population consisted almost entirely of cowhands, miners and Indians. Farming in any appreciable volume did not get started until World War I. As late as twenty years ago, agriculture and mining represented perhaps 90% of the Arizona economy. Only in the last decade has significant progress been made in the direction of economic diversification. Today, Arizona derives substantial revenues from the tourist business, miscellaneous manufacturing, lumbering. military aviation and other operations of government. We now boast almost every known species of activity except deepsea fishing. A striking illustration of what has materialized out of thin air, or out of the kind of air typical of Arizona, is the fact that two Army Airfields (Williams and DavisMonthan) now produce almost as much income annually as our entire agricultural industry ten years ago. Civilian flying, both private and commercial, has also expanded rapidly in recent years. Whether for business or pleasure, air travel is "a natural" in this land of clear skies and vast distances. Practically every community in Arizona now has its own landing field. Nearly 200 airports are regis-tered with the Civil Aeronautics Administration, double the number listed at the end of the war. With the best flying conditions in the world, aviation has already become one of Arizona's permanent basic industries.

BY STATISTICAL YARDSTICK WE MEASURE BUSINESS GAINS AND POPULATION GROWTH IN ARIZONA. THE BABY STATE HAS DISCARDED ITS SWADDLING CLOTHES. IT IS NOW A VIGOROUS ADOLESCENT.

Distances are shrinking and decentralization is on the march. Arizona, no longer a remote and isolated outpost, suddenly finds itself in the path of a broad, irresistible move-ment. It has become the crossroads of the Great New South-west which improved transportation in bringing about.

Four transcontinental air routes now span the United States. Two of these cross Arizona. Two of the nation's great railway systems serve Arizona. Three transcontinental highways, as well as the new Canada-to-Mexico highway, cross our state.

All told, somewhere between nine and ten million people have visited or passed through Arizona in each of the past two years. Inasmuch as it costs from $10.00 to $20.00 per head just to get from one side of our state to the other, it is obvious that this volume of traffic is in itself a very substantial source of revenue. That is true whether or not they even pause in transit.

The population growth of Arizona, although less spectacular than some states in total number, has been uninterrupted as far back as records go. Sometimes rapid, sometimes moderate, each decade shows a substantial gain. An accompanying exhibit (Table I) indicates that Arizona ranks second among all the states in rate of population growth since 1900. It will also be noted, by the way, that nine of the ten leading states are located west of the Mississippi River. The lone maverick, as might be expected, is Florida which was one of the first to discover that sunshine and oranges are readily marketable commodities.

At this point, a word or two about California, our closest neighbor and chief rival for population honors, might not be amiss. Despite some differences of opinion over such matters as the distribution of Colorado River water and which of us has the world's best climate, we know how important it is to have ten million people living right next door. This is one of the most significant factors in Arizona's own development. California's rapid population growth has radically altered its own economy and, by the same token, has materially affected the Arizona economy. California no longer has exportable surpluses of many commodities that were formerly sold to us or shipped through Arizona to distant markets. We must now produce these things ourselves or look to others to supply them. Furthermore, many of the products which Arizona has always shipped to eastern and northern markets are now readily disposed of in California.

Ten million prosperous Californians represent a lot of purchasing power, not only for our raw materials but for our tourist attractions. Curiously enough, these neighbors of ours are by no means as smug and self-sufficient as they might have us believe. For example, last year 22.8% of the motor cars visiting Grand Canyon (It's in Arizona) bore California license plates.

Our chambers of commerce, guest ranches and resorts report that California inquiries top all other states throughout most of the year. Close to half our tourist business is derived either from Californians directly or from the residents of other states who are on their way to or from California. We gratefully acknowledge our debt to California for contributing so much to our present prosperity, unpremeditated though it be.

Table II shows Arizona's population growth, in five-year steps, since being admitted to statehood (February 14, 1912). Also, to indicate how far we have come since the days of the smoke signal and covered wagon, we have listed motor vehicle registrations and the number of telephones in service for the same years.

It is amusing to observe that, back in 1912, Arizonans had less than 2,000 motor cars and only 10,000 telephones. Life then was at least uncomplicated by gasoline shortages and wrong numbers.

As to Arizona's current population, many local observers feel that the census figures are considerably understated. Our present volume of retail trade and other business indices would appear to indicate a much larger population than estimated by the Census Bureau. The apparent discrepancy is no doubt attributable to tourists and new residents who are not technically classified as Arizonans. This non-fixed or floating population, which we sometimes refer to as our "permanent transients," has apparently totaled no less than 100.000 at all times during the past year and, at certain seasons, may run to 200,000 or more.

Unquestionably our effective population, for business purposes, is much higher than officially shown. Based on the national norm, consumer spending in Arizona at the presenttime would suggest a population closer to the million mark than the 644,000 with which the Census Bureau credits us. Table III, for example, shows that dollar retail sales for the past year amounted to $700,000,000 compared with less than $170,000,000 prior to the war. In other words, sales have more than quadrupled! It is doubtful if any other state can make that allegation. (See chart comparing the Arizona retail index with neighboring states.)

TABLE IV PER CAPITA INCOME AND RETAIL SALES COMPARED WITH THE NATIONAL AVERAGE

In Table IV, our income and retail figures have been converted to a per capita basis and compared with the national per capita average. This table brings out an amazing paradox, namely that Arizona's per capita retail sales normally run well above the national average whereas our per capita income has always been well below the national average.

In fourteen out of the last nineteen years, our per capita sales have been above average, thus confirming the magic effects derived from outside money that is spent within our borders. Most folks are hard pressed to ascertain where their money goes. One of Arizona's problems is to figure out where all its money comes from. One thing sure, money is spent here.

And speaking of climate, as Arizonans occasionally do. it is becoming more evident each day that this is the most valuable and indestructible of our natural resources. Sunshine and beautiful vistas are not subject to depletion, mismanagement and cyclical fluctuations nor, so far at least, are they taxable either as property or as income. Although agri-culture and mining have each produced a billion dollars worth of income for the state in the past decade, it is probably a good guess that the tourist business and other by-products of climate will outstrip both of these industries in the decade which lies ahead. Thanks to the priceless publicity which came to us dur-ing the war and subsequently, Arizona has now been “discovered” by millions of Americans. Appealing to young and old alike, particularly to those who are partial to outdoor living, it has so far been impossible to accommodate everyone with a desire to settle here. Thousands upon thousands of ex-servicemen from other states have descended upon us and, for them, both housing and the necessary jobs have not been easy to provide in sufficient quantity - up to this present point.

Not everyone, of course, is temperamentally suited to pioneering - even the modern, plush-cushioned kind. It takes a good deal of adaptability, energy and imagination (as well as a little capital) to get satisfactorily established in any new community. Arizona is fortunate in attracting a steady influx of those who have what it takes. Infusions of new blood, new ideas and new money is the best tonic any area can have. The number of business concerns operating in Arizona has doubled since the end of the war. Most of these new enterprises have been launched by newcomers or by returning veterans.

As a consequence of such developments (plus the inflation common to all parts of the country), our local business indices now resemble a row of thermometers on a hot midsummer day. Whether we can push further into the statistical stratosphere, without oxygen tanks, or even maintain our altitude for any extended period is fortunately not the burden of this discussion. We are mainly concerned, at this time, with basic long-term trends and the fundamental changes which are taking place in the Arizona economy.

Table V gives a detailed year-by-year record of Arizona bank deposits, agricultural and mining income, for the purpose of pointing up the violent fluctuations characteristic of a raw materials economy. It illustrates, better than abstract theorizing, the desirability and importance of continuing to expand our other sources of revenue and production.

With respect to industry (if you will pardon the expression), Arizona has been making excellent progress in recent years. The war, of course, provided the initial impetus and a glimpse of the possibilities. Industrial decentralization, resulting from national population shifts and what might be termed atomic thinking, should provide further acceleration.

By no stretch of imagination can Arizona yet be classed as an industrial state but, all factors considered, present volume is quite respectable. The dollar value of manufacturers, exclusive of smelting, is now running at an annual rate of about $140,000,000 compared with only $30,000,000 prewar.

Manufacturing employment has doubled since 1940 and payrolls have quadrupled. Wage and salary payments now total as much as in mining and far exceed those of agriculture. Present manufacturing output is greater than the annual value of crops and livestock for any but the past three years and is greater than the value of minerals produced in all but five years of our history.

The importance of this development cannot be overemphasized. By continuing to expand industrially, we add balance to our economy and become increasingly self-sufficient. As our population grows, both in numbers and productivity, we reach the "pay point" in more and more things that can be manufactured locally for our own consumption. This has a double advantage in that it is not only increases our basic earning power but tends to bring down our cost of living.

Arizona imports are always costly because of high transportation charges. Yet, this is not an entirely unmixed calamity. It should be borne in mind that high freight rates work both ways. Often enough, they act as a protective tariff in favor of local manufacturers.

In considering the future, there is one rather awesome skeleton in our closet. As a producer of payrolls, Government is far and away our largest "industry." Needless to say. this situation is viewed with somewhat mixed emotions by local taxpayers. When we consider that federal, state and

TABLE V BANKING AND PRODUCTION TRENDS IN ARIZONA

local government payrolls now exceed all wage and salary disbursements in the state ten years ago, their importance becomes evident.

With 80% of the state owned by the federal government (primarily national forests and Indian reservations), with our large reclamation projects and veterans' facilities, federal expenditures in Arizona have always been relatively high. Furthermore, in other respects, we have become important enough to warrant governmental branches or headquarters of our own instead of being supervised by remote control from regional offices in Los Angeles, San Francisco, Salt Lake City, Denver or Dallas. With one exception (Los Angeles), these cities are all 700 to 800 miles from Phoenix or Tucson as the crow flies-and he gets pretty tired doing it.

There has also been considerable expansion of local government services to keep pace with our population growth, which carries with it a multitude of obligations as well as advantages. It is not all gravy. Schools, highways, utilities, police and fire protection, all the modern trappings of a civilized society must be provided. This is a mammoth and expensive undertaking.

Like most frontier areas, Arizona has heretofore been concerned largely with the rudiments of living rather than with its refinements. A bad case of arrested development for many years, it must now make up for lost time. The Baby State, therefore, has discarded its swaddling clothes and many now be classed as an energetic, if somewhat gangly, adolescent. Adolescence, it so happens, is often the most difficult period of life. It is apt to be characterized by growing pains, lack of direction, problems of readjustment and some roseate hopes doomed to die aborning. It is a time of unlimited vigor, boundless horizons and few inhibitions. That is Arizona, the 48th state of the Union, in 1948, A.D.