Business: THE DEPRESSED-AREA PROBLEM

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Pennsylvania has set up the strongest program to aid local communities in their battle for survival. With about a fourth of all U.S. depressed areas within its borders, the state five years ago launched an industrial development program. Its heart was a $20 million revolving fund authorized to make loans to nonprofit development agencies for the construction of new plants in distressed areas. Result: the plan has attracted 389 plants (including Radio Corp. of America, Fruehauf Trailer and Chrysler Corp.) providing 106,000 factory jobs, encouraged the expansion of 700 existing firms, put to work 391 idle plants.

At the city level, Scranton has come up with one of the most imaginative programs. Hit by a cut in mining workers from 17.910 in 1940 to about 2,200 this year, Scranton set out to attract new employers by offering to build them a modern factory to meet their specifications. The city paid for all construction, charged the company only rent. The plan was first financed by the sale of municipal bonds, but the public has chipped in willingly with outright donations to keep the fund going. About 30 community-financed plants have been built at a cost of nearly $20 million, providing jobs for more than 10,000 people. One secret of the plan's success: low wage rates, which 81% of the new industries admitted were what made the area attractive to them.

Many plants have closed up or moved away from depressed areas largely because area workers cling to high wage rates out of line with other regions. But as their savings melt away, workers have lowered their sights. The loss of the Ackermann plant so upset Wheeling workers that a jobless steelworker, Thomas Elliott, set up a "save-a-plant" movement, signed up more than 700 unemployed workers who are willing to take much lower wages.

Industrial development agencies have found that one of the most valuable investments they can make is a complete survey of a depressed area's facilities and natural resources. A geological survey of the area around Freedom, Ind. turned up the presence of gypsum; it took little urging to persuade a gypsum mine and mill to locate in the area. More and more depressed communities are setting up training programs to re-educate workers for new jobs. Pennsylvania spends $500,000 a year retraining unemployed workers. Though it costs about $140 to train one worker over a course of several weeks, the state figures that it easily gets that back in taxes within a year.

Instead of concentrating solely on industrial plants, many communities now realize that their biggest hope is to create or attract more service industries. Pennsylvania's service industry employment has steadily increased, jumped from 79,000 in 1950 to 103,900 this year. By attracting enough factories to employ 10,000 people, Scranton figured that it created 17,000 additional jobs in the service industries, retail businesses and professions. One reason: an average of three people leave the relief rolls for every new job created, thus increasing the market for services.