THE BAY AREA, ITS PROSPECTS AND ITS PROBLEMS - 4 - to make up the fiscal deficit that would otherwise exist. To provide for the increase in employment, it is obviously necessary to attract new industries to our area, and fortunately we have been able to match the population growth with an even greater increase percentagewise in employment. It is this healthy condition that has brought to the Bay Area an unprecedented prosperity and driven the index of business activity to new highs, month after month. The expansion of business is absolutely essential if we are to enjoy a sound growth and to be able to cope with the community problems that are with us now and which will be even more critically present in the years ahead. Taxes on business and business property are the primary source of local government revenues and pay the major share, sometimes up to 80%, of the community budgets. Business growth depends upon many things such as markets, suitable land for expansion, an adequate supply of raw materials, labor, capital and services, particularly those services such as transportation, water, and energy supply sources. Fortunately for our future, the Bay Area is in a good position, relatively, to offer these advantages to businesses that are considering coming into this area or expanding existing facilities here. First, the area has become a major market, an area populated by people with the ability to consume and the ability to buy. Secondly, it is a major market that can no longer be served in many lines economically from the East or the Mid-West, for the rising costs of transportation have made it necessary to establish local production sources in order to achieve transportation economies. Thirdly, the movement of a major company to the West sets up a sort of chain reaction within the industry which tends to accelerate the movement here. As one company comes to the Bay Area, all of its competitors must seriously consider doing the same thing or be forced to operate at a competitive