Blank, Uel

English

Research Papers in Economics

Staff Paper Series
STAFF PAPER P71-3 MARCH 1971
The Future of the Onanegozie Area
by
Uel Blank
Department of Agricultural and Applied Economics
University of Minnesota
Institute of Agriculture
St. Paul, Minnesota 55101Staff Paper P71 -3 March 1971
THE FUTURE OF THE ONANEGOZIE AREA
by
Uel BlankTHE FUTURE OF THE ONANEGOZIE AREA
1/
by Uel Blank -
It is a favorite indoor sport of economists to predict the future. The reader
is reminded, however, that everyone engages in the practice. Each action
implies a prediction of favorable results for the individual involved. Unfortunately,
al I crystal bal Is are somewhat cloudy. But, at the same time, it is possible to make
reasonable iudgements about the future despite the many pitfalls inherent in such
a procedure.
In general we predict the future by a careful look at the past and present.
By doing this, it is possible to identify the trends that are presently operating and
extend them into the future. Some such predictions have turned out to be surprisingly
accurate. On the other hand, there have been outstanding y poor guesses; one of
the more famous being that of Thomas Jefferson, who, at the time of the Louisiana
Purchase in 1803, declared “it will take a thousand years to settle the area. “ A
contemporary social scientist would, almost certainly, have agreed. Actually, the
area was settled in less than 100 years and in less than 175 years, parts of it were
emptying out, at least temporari Iy. The example i IIustrates hazards of future pro-
jections. Technical and social innovation cannot be foreseen, thus Jefferson did not
~’ Adapted from an address delivered to the annual meeting of the Onanegozie
Resource Conservation and Development District (Counties of Aitkin, Carlton,
Kanabec and Pine). January 1971.
Staff Papers are published without formal review within the Department of Agricultural
and Applied Economics.a Ilow for such events as the
The Present - An Overview
-2-
deve Iopment of railroads, and the Homestead Act.
Now a look at the Onanegozie area - a future projection based upon
immediate trends is not opt im ist ic. The best single overal I indicator of an area’s
economic future as given by the popu Iation growth trends: During the past decade
1960 to 1970- U.S. population has increased at the rate of about 13.5 percent,
the Minnesota population was increasing by 10.4 percent, but the population of
Onanegozie decreased, declining by 1.7 percent.
Any such decline is the result of a complex set of many factors. But an
unfortunate sequence often accompanies a reduction in population numbers in which
certain other factors come into play reinforcing the decline and causing it to
continue. For example: As some individuals in the population adiust to need for
smal Ier numbers of agricultural producers and rural services by seeking employment
in metropolitan centers (An ad iustment that has been underway throughout the period
of the Industrial Revolution) the area left behind by these people has fewer customers
for retai I stores. Because of smal Ier volume the stores are not as able to provide as
good service and stil I other people find the community a poorer place in which to
live. A result is the desire on the part of individuals who might be satisfied with
available iob opportunities to leave in search of better kind of service facilities.
Departure of these families, in turn, wi II reduce the tax base in the community
possibly leading to poorer schools, which again, diminishes the community’s
attract iveness - thus, the decline-cycle continues!-3-
Fortunate Iy the reverse is also true. Positive factors can reinforce each
other to produce an upward spiral of growth and development. The problem: HOW
to induce the necessary critical mass of positive factors to reverse a down trend ?
One overriding principle is suggested: Place yourself in the “path of
history. “ In other words, what maior tides are running that have specific economic
and social application to Onanegozie ? Possible positive interrelationships between
three maior factors should be examined: (1) What is the overal I course of the
United States and Minnesota economy and society of which Onanegozie is a
part ? (2) What resources of the area have particular relevance to the trends in
the general economy ? and, (3) What is the degree to which the human resources -
citizens of the area - have the skills, vision and desire to do something about it?
Onanegozie possesses substantial positive advantages. It is an area of
about 3 million acres, and home for 65,000 people. Its location offers distinct
opportunity. It is the Iink between two of the unique regions of the United States:
OtI the north are M innesota’s iron ranges; Duluth - one of the world’s most beautiful Iy
situated cities; Minnesota’s greatest wood processing complex; and further north the
magnificent lakes, and woods area. To the south, and within commuting distance of
the southern part of Onanegozie, is the dynamic metropolis of Minneapolis-St. Paul.
Passing through the Onanegozie area and linking the above two regions are
Interstate 35 and U.S. Highway 65. Transportation nodes and linkages have per-
formed key roles in past development and they stil I do. In earlier eras, seaports
and rivers were determiners of much development; later railroads became important;-4-
To these factors can now be added highways, interstates and airports.
Al low, for the minute, an assumption about goals of the 65,000
inhabitants of Onanegozie: That they be able to share at least equal IY in the
economic growth of the United States. Such a goal might imply migration for
certain individuals. But this paper concentrates upon ways in which the region
may reverse the net out-m igrat ion pattern, by attent ion to those features in which
it has a comparative advantage.
In order to develop an ecosystem that is attractive for human habitation,
three interrelated social and economic needs must be fulfilled by the area: (1) it
must provide a place to work , in other words, the economic base, (2) it must pro-
vide a suitable living environment, (3) it must provide a place to play and recreate
given the prevailing mood of today’s society. It is proposed to examine the capacity
of the Onanegozie
A Place to Work
How well is
met by the area?
Agriculture
wea for fulfi 11ing these needs.
the need of a place to work, that is, the economic requirements,
constitutes one significant economic component. Farm product
sales total approximate y 24 mil lion dollars annually. IS this sum large or smal I ?
That depends upon the area of comparison. It is more than 50 percent larger than
farm sales from the 15-count y area
the other hand, 19 single counties
of sales of agricultural produce.
comprising the Upper Pennisula of Michigan. On
in the state of Minnesota each has a larger volume-3-
As significant as dol Iar volume is trend; the most recent trends available
compare the years 1959 and 1964. In this period, agricultural sales in the state of
Minnesota increased by 13.5 percent, while sales of the Onanegozie area
increased at only about half that rate, or 6.2 percent. Again, this trend is only
good or bad by comparison. There were 14 counties in the state of Minnesota that
actually had a loss in agricultural sales in this five-year period.
The above comparisons indicate the Onanegozie
as a Minnesota agricultural area. But its agriculture is
area to rank below average
stil I a substantial economic
generator for the future. One of these is dairy. Dairy product demand is strong as
indicated by the current price. Part of the price strength resu Its from shifts away
from dairy production in areas adapted to cash crops. Since cash crop farming is not
wel I adapted to Onanegozie and since there is currently a strong dairy component
and one that is wel I located relative to market, it is one industry that should be
careful Iy fostered and strengthened where possible. In order to do this, steps toward
continued viabi Iity of the dairy industry include: (1) continuing efforts to strengthen
the sales machinery, (2) availability of adequate agricultural services such as
fertilizer, dairy equipment and veterinary skil Is, and (3) maintenance of managerial
and technical capabilities of producers at a high level.
Note has been made of the poor adaptation of common kinds of
There is, however, the possibility that specialty crops may play a cash
cash crops.
crop role.
Wild rice falls in this category. While its production is stil I in the experimental
stage, expansion is under way and it may prove to be one means of expansion in
agriculture. Perhaps there are other specialty crops that can be developed.-6-
Beef isanother adapted agricultural product for which there is a strong
demand. Our current society demands increasing supplles of beef as a food fitting
their styleof life and having a prestige appeal. In areas where forage crops can
be produced, but for various reasons dairying is not applicable, beef production
represents one possible alternative. Some types of beef enterprise particularly fit
the situation for part-time farmers. There may even be adaptations possible to a
setting where there are absentee owners.
The forestry and wood using industries constitute another important part of
the economic base of this area. Much of the colorful part of the areas past heritage
stems from the days of early logging operations. Fortunately, there are maior positive
tides in the current setting of the wood’s industries. During the period 1960 to the
year 2000, it is proiected that the demand for pulp in the United States wi II increase
by 3 to 5 times! Linked with this maior demand is the 1.8 million acres of commercial
forest in Onanegozie, occupying approximately 60 percent of the land area. Full
advantage of economic resources, therefore, demands management of forests for
opt imum production and the cent inued deve Iopment of processing opportunist ies. As
has been noted, the Cloquet area has a concentrate ion of wood processing operations,
maior plants inc Iude those of the Northwest Paper Company, Weyerhauser, Diamond
National and Wood Conversion Company. The Blandin plant at Grand Rapids is
another that is located iust outside Onanegozie.
Yet another economic component is manufacturing. At present, manufacture ing
is not a maior economic contributor, even including the wood processing operations
total employment was only 4,600 in 1968. But comparisons in employment growthare significant.
increased in the
-7”
in the four-year 1964 to 1968 period, manufacturing employment
Onanegozie area by 7.3 percent, but the tide in Minnesota was
much stronger - manufacturing employment increased at a four times faster rate, and
was up 27.7 percent in the same four year period. The biggest component of the
area’s manufacturing is in wood processing where little growth occurred. If the
effect of the wood mil Is is removed, employment in “other” manufacturing grew
the rate of 50 percent - almost double that of the increase in manufacturing
at
employment general Iy in Minnesota. While the sample is small, both in time span
observed and in the volume of “other” employment, the trend is decidedly encouraging.
A Place to Live and Play
Now let us look briefly and perhaps, somewhat superficial Iy, at the character-
istics of Onanegozie as a place to live and play.
There are two maior tides that are moving, of which we should be aware.
One is that the American public is currently spending in the vicinity of 150 to
200 bil lion do[ Iars annual Iy for recreation and leisure purposes. This rate of
expenditure is one of the largest single items of expenditure. The other trend is
the change in life styles related to choices of a place to live. In an earlier day
most fam iIies were forced by economic necessity and by transportation Iimitat ions
to live in narrowly restricted areas. There is now a wider choice in where families
may live. People tend increasingly to live where they wish, and as population
clusters develop~because of the fact that many types of economic endeavors are
relatively footloose there is a tendency to move economic operations to the population
concentrations. This latter point says that the quality of the living environment and-8-
the quality of services for living and raising a family, may play a maior role in
an area’s economic future.
In this context, let us look at a Iist of some of the maior unique features
of these four counties. The Iist is indeed impressive:
1. Just to the Northeast is one of the outstandingly beautiful cities in the
world, Duluth.
2. The iron mining area of Minnesota , including the Cuyuna range and
the border of the Mesabi, is another unique feature of the area. It lends
distinctive appearance and atmosphere.
3. The logging, timber and wood using industry, are outstanding. The
cluster of wood processing plants at C
of forest land, make this an ideal site
aquet, along with the 1.8 million acres
to continue to manage the forests
and to tel I the story of logging and wood using industry - its contribution
to our nat ion’s past, to the present and its future potential - in a way
that has never been told. Forests add to the quality of living. Most
people do not necessarily need virgin woods to enioy them. In fact,
our stud ies have shown that many people consider any area that has
forests to be a “wi Iderness. “ Management of forests for timber production
improves their appearance to the average individual.
4. The two traffic arteries, Interstate 35 and U.S. 65 make most of Onanegozie
readily accessible to the metropolitan population of Minnesota, to visitors
from out-of-state, to markets, and make commuting feasible.5.
6.
7.
8.
9.
10.
11.
12.
13.
The St. Croix River isone of the
Wild and Scenic River System of
There are three maior state parks
and St. Croix.
first to be dedicated as part of the
the United States.
at Savannah Portage, Jay Cooke,
Mine Lacs Lake isthe most accessible large
There are960ther lakes in Onanegozie that
or more in size.
There are 656 miles of rivers.
lake in Minnesota.
are at least 150 acres
Five of the 17 rivers designated as canoe trails by the Minnesota
Department of Natural Resources are in this area. They are the
Mississippi, theSt. Louis, the Snake and the two most famous
canoeing streams in the state - the St. Croix and the Kettle.
As a part of the 1.8 mil Iion acres of forest land there are 11 state
forests. These add many kinds of special
There is a fascinating history based upon
appea Is to the area .
the early forestry, the
Hinckley fire, the iron mining development, the discovery of Mi IIe
or
Lacs, the Indian culture and the other components of early history.
Rice Lake is one of the large, beautiful, natural National Wild Life
Refugees in the state.
The Next Steps
It is obvious from the above discussion that this four-county area is possessed
of a wealth of resources. These are features that can be utilized to play a decisive-1o-
role n the area’s wel l-being. It should be possible to share in the expansion of the
Minnesota and U, S. economy; there can be superb environmental quality; these
two factors interact and can make possible an outstanding living quality.
A few examples wil I il Iustrate some of the kinds of
feasible.
A recent study has produced an estimate of $72 mil
woiects that are
ion that will be spent
on snowmobi Ies in Minnesota in the 1970-71 season. Snowmobi Iers have a problem -
-i
where to operate their machines? If there is a place accessible to the metropolitan
area that has an abundance of space that is adapted to snowmobi Iing, it is
Onanegozie. But more than simple space is required - the space must be organized
as to permissible use , and made accessible. Further, if economic significance is
to be derived, a package of appropriate services - food, entertainment, events,
lodging, guides - must be available and sold to the snowmobiles.
Simi Iar services and organization for other kinds of retreat ion adapted to
the area is needed - hiking, sightseeing, fishing, canoeing, etc. Where would you
advise a person who wished to take a three-day back-packing hike to start, and
what route should be taken? Where can I do an overnite saddle-pack trip? While
the natural resources are we II adapted to these and other retreat ional act ivities,
if services are not available, and trails are not laid out and mapped then this
recreation is really not available to most people. Economic returns can come thru
these activities only if supporting services and facilities are “sold” to the public.
There may be ways in which more than one end may be simultaneously-11-
achieved through initiative and organization. Take the interre Iated problems of
land that is going tax delinquent, the demand for hunting and recreational lands
on the part of metropolitan dwel Iers, the need for we Il-managed forests, and the
opportunities for beef production. There might be a simultaneous solution, in part,
for al I of these problems.
An organized effort could be made to list land that is available for sale -
public, private and both. This land might be merchandised to individuals who
might wish to own it for recreation purposes as wel I as other reasons. This wi II
help to keep land in private hands and on the tax rolls. You might rightly obiect,
however, that such a step will keep the land at a low use and return relatively
little tax income. Then, may I suggest that a land managment service be organized.
Such a service could manage the land for timber if timber is its best use, including
arrangements for timber harvest and saIes. It would help to supply timber for processing,
provide returns to absentee owners or those working away from home, and general Iy
upgrade the area’s productivity. A similarly organized service can be made to set
up leasing arrangements so that some of the bright young men who wou Id Iike to continue
to farm and run a beef cattle operation and yet who have difficulty in getting enough
capital and land together for an adequately sized operation. It would operate by renting
tracts of Iand for beef and for hay production from absentee owners or part-time farmers
who do not have enough time or skill and knowledge to manage this land themselves.
Thus, the land can be kept working, on the tax rol Is and make it possible for loggers
and farmers to make a living from this land.-12-
On the lower end of Interstate 35 traffic averages over 5,000 vehic Ies
daily. Traffic on U.S. 65 is substantially smal Ier, but together these two trans-
piration arteries feed 2,500,000 to 3,000,000 vehicles annual Iy into and through
the area. This is a substantial volume and offers potential for much more than its
present contribution to the area. How? Each citizen might perform a simple
experiment: As he enters his home community ask himself, “Does my town have
highway appeal ? Are there quality services available, and how would I as a
highway traveler know this?” Then, he and his fellow citizens should set to work
making certain that these questions have a right answer!
These are only a few examples. There are many more specific proiects that
may be undertaken to ensure that citizens of the Onanegozie area share adequate Iy
in the economic growth of the United States.

THE FUTURE OF THE ONANEGOZIE AREA

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