Area Assistance Act of 1956

you are talking about creating in Duluth-Superior 3,000 new jobs in manufacturing. You are talking about a very substantial investment. In plants alone you are talking about an investment of $11 million. Well, now, this is over a period of years. You are not going to solve this overnight, but let's say you are going to do this over a period of years, 5 years, or something like that. I feel that the Government ought to be in a position to take a larger part of each loan, or gain, it makes it harder to work, because it is harder to raise the rest of the money. Seventy-five percent is a tremendous amount of the loan to raise through other sources.

Now, it is too big a load.

Mr. MUMMA. There is nothing in the bill that would limit the primary loaner to 60 percent, or whatever it is. He could take 75 or 80 percent if he wanted to, couldn't he; that is, the insurance company could?

Mr. BATT. No. You are right. The Government could only take a maximum of 25.

Mr. MUMMA. I mean the other fellow could take it.

Mr. BATT. The other fellow could take a hundred, 80, or 90.

Mr. MUMMA. That doesn't limit him. He has the first lien. It depends on how big a chance he wants to take; doesn't it?

Mr. BATT. Yes, sir.

Mr. MUMMA. The Government is the only one that is limited.

Mr. BATT. I think your Government is the primary lien, isn't it? Mr. MUMMA. No; the Government is the third.

Mr. CARDON. Local is the third, Federal second.

Mr. BATT. There is no limitation on that. I think if you make it more liberal, you make the club easier to get into, and I think you just have a more effective instrument to work with.

Mr. MUMMA. It would make it easier.

Mr. BATT. That is right. You have a more effective instrument to work with.

Mr. MUMMA. May I ask you, do they make mining machinery in Duluth?

Mr. BATT. Mining is seasonal. When the lakes are open, they are fine. The rest of the year they are not.

Mr. MUMMA. What is the cause of the unemployment above the seasonal; is there any?

Mr. BATT. I don't know, sir, unless the primary cause is seasonal. Mr. BETTS. You would have a hard time finding an industry to go in where employment is seasonal; wouldn't you?

Mr. BATT. Well, sir, you change the character of employment in the area. You would make it harder for your seasonal employers to get workers. You would give much more stability to the area. You wouldn't have any trouble getting workers, I don't think.

Mr. MUMMA. Doesn't this taconite help it?

Mr. BATT. I would hope it would. It is pretty well down the road at the moment.

Mr. MUMMA. It is used in a manufacturing process; isn't it?

Mr. BATT. It has an enormous future. Again, I suppose it will have the same seasonal characteristics as the iron mining has.

Mr. MUMMA. You would want to take the impurities out of the iron the year around.

Mr. BATT. I don't know enough about the taconite business to be intelligent on that, sir.

I would like to make a couple of more comments, one on the advisory board.

In section 112, Mr. Chairman, the major procurement and plant location agencies are not included on the advisory board in the administration bill. That is Defense, General Services, Atomic Energy, and ODM.

I think this is a major oversight.

Also, I would recommend that you add a public advisory board, with labor and management and the financial community in the United States, and academic people and representative State and local economic developers to help mobilize private resources and people and ideas and money.

Now, there are two omissions in this bill, Mr. Chairman, that I think are glaring, and one is the fact that the procurement program, the existing Government program I think has been of very substantial help, channeling contracts into areas of heavy unemployment.

With your permission, I would like to introduce the reports, Mr. Chairman, on military supply contracts that have been put into labor surplus areas in industries. They total over the last calendar year $23,437,000, Mr. Chairman, the contracts that have been channeled into surplus labor areas.

I would hope that this provision would be included in your bill. It is included in the Douglas bill. It is not included in the administration bill.

That has created about 2,343 jobs for 1 year, or the equivalent of it, at no cost to the Government.

The CHAIRMAN. I understand the witness has to take a plane. Do you want to leave about this time?

Can you think of any other point you want to make?

Mr. BATT. The only last one I was anxious to make, I was distressed about the administration bill leaving out the procurement, because that is a program that President Eisenhower came out for in his 1955 Economic Report. I have those procurement reports for 1955 here, and then the second point that the administration bill omitted, and the Douglas bill included, which I would hope you would include, is you would either include or do it through some other committee, and that is the tax amortization proposal.

As nearly as I can estimate, that has led to the location of $217 million worth of new plants, creating $11,311 new permanent jobs from this present Government program, at no long-term cost to the Government.

I would like to put in the record the report of the Office of Defense Mobilization on these plants. They run to about 58 different plant locations, many of them which went in because of this tax amortization proposal. I am distressed that the administration did not have it in their bill, particularly since President Eisenhower endorsed it in his January 1955 Economic Report, and the question that occurs to me is, and I hope it isn't true, whether or not the administration is backing off that endorsement that they gave the program in January of 1955.

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