Nation's resources and a real threat to the credit structure of the economy. This is a trend of long standing that must be reversed. The present lending proposal encompassed in S. 2663 is a move in the wrong direction. Moreover, despite certain loose limitations stated in the present bill, there is no way of knowing how much further the proposed lending powers may be extended by future potential legislative amendments and additional steps. Experience has demonstrated in many fields that initial proposals for lending and guaranteeing, in various social-economic Federal programs of past years, have inevitably expanded sharply and sometimes have attained gigantic proportions. Thus the present proposal could all too readily become an economic "Jack and the Beanstalk," with no assurance that the giant will be killed in the end. In fact, there is no time limit in the present bill on the program of lending operations. This seems to indicate an intention to make this a permanent program, which would include construction loans with maturities up to 40 years and public facilities loans with no specific provision for maturity. Federal aid to depressed areas is already quite extensive, and this fact raises a question as to whether there is actually any real need for this bill. For example, under Defense Manpower Policy No. 4 (revised November 5, 1953), issued by the Office of Defense Mobilization, extensive responsibilities were delegated to the Labor Department, the Commerce Department, the procurement agencies, the regional defense mobilization committees, the Surplus Manpower Committee, and the Small Business Administration. These responsibilities include technical assistance, help in getting Government contracts, and many other forms of local aid. The lending operation of the Small Business Administration we regard as not essential, but other forms of aid by that agency have been helpful. In this connection the association is publishing immediately a brochure on the New England development credit corporations as a case example of what can be done through private channels to meet the local and marginal needs for credit and area development. This is a movement which is spreading and growing. 2 The association has just published an intensive study of the recent financial experience of thousands of small manufacturers among its membership. This experience has been so satisfactory on the whole that again we seriously question whether there is truly a need for the present bill. State and other local aid to depressed areas is already organized on a very extensive basis. For example, some 41 of the 48 States have established economic development commissions or similar bodies which are equipped to assist in easing the adverse effects of local economic dislocations and unemployment. For this reason, too, we question the need for the proposed legislation embodied in S. 2663. There is a further question of very basic significance. Would not the steps proposed in the present bill tend to perpetuate the local economic dislocations and make them a permanent drain? If the existing economic pressure to adjust or to move is relieved by Federal loans and handouts, why would anyone bother to change? Would this not amount to asking Uncle Sam-or rather, the taxpayers of America-to subsidize and perpetuate the economically depressed area as against the efficient and progressive community? Would this not tend to immobilize both labor and industry in these situations? S. 2663 seems to be headed in the direction of the welfare state in that it encourages an increasing paternalism of the Government, instead of relying upon the vigor and ingenuity of the States and communities in adjusting to changing economic realities. The flexibility and resourcefulness of free competitive markets, at all levels and in all areas, made this Nation's economy the envy of the world. It is imperative that these qualities be preserved if the Nation is to meet the enormous challenge of future growth and prosperity. The entire problem of helping local communities reduce unemployment calls for further study before the steps proposed in S. 2663 can be thoroughly evaluated. Likewise, the proposals of the Area Assistance Act-S. 2892-should be given careful study by all concerned. 1 A New Source of Credit for Small Business, Economic Series No. 73. Financing Small Business-1955, Economic Series No. 70. AMERICAN PAPER & PULP ASSOCIATION, Hon. LISTER HILL, Chairman, Labor and Public Welfare Committee, MY DEAR SENATOR: We are submitting this letter to the Labor Subconrmietee and the full Labor and Public Welfare Committee on the Senate, in tieu »f personal appearance before the subcommittee. The American Paper & Pulp Association is the overall national association for the pulp and paper industry, America's fifth largest industry. We are vitally concerned with S. 2663, the so-called Depressed Areas Act which is now pending before the Labor Subcommittee and particularly with the implications of this proposed act as spelled out in the testimony given by Senator Humphrey at earlier hearings before the subcommittee. As a result of a careful study of S. 2663, we can only conclude that this bil as presently drafted or as it might conceivably be redrafted to implement the testimony of Senator Humphrey, would be designed primarily to create another governmental agency-in this case a Depressed Areas Administration—which would be authorized to put the Federal Government into competition with private business through the guise of loans or outright grants. Our industry and indeed all industry today is embarked upon heavy capital investment programs which are designed to increase production of products and bring about f ciency of operation and which, incidentally, are providing tremendous vehicles for increasing employment of workers. We are opposed to any legislation which has as its purpose the placing of the Federal Government in a position where it, for all practical purposes, wall be operating business in competition with private enterprise. Where there is a legitimate need for the construction of a plant or factory, private capital is not lacking, nor indeed a desire on the part of private industry to establish a plant or factory in that area. There are many examples also of where local communities have by cooperative effort on the part of industry, labor, and the public been able to attract new industry into temporarily economically depress. areas. Municipal governments frequently have cooperated with such private enterprise efforts by providing tax relief and other lgitimate inducements at a local level. We therefore respectfully request the Labor Subcommittee and the full Labor and Public Welfare Committee to act adversely and vote not to report 8. 2663 in its present or any amended form, or any legislation of similar intendment. We also request that this letter be made a part of the record of the hearing on this legislation. Very truly yours, E. W. TINKER, Executive Secretary. INTERNATIONAL LADIES GARMENT WORKERS UNION, Senator PAUL H. DOUGLAS, Chairman, Subcommittee on Labor, Senate Committee on Labor and Public Welfare, Washington, D. C. MY DEAR SENATOR DOUGLAS: President David Dubinsky has drawn my atten tion to the hearings you are holding on the depressed-areas bill, S. 2663. In view of the fact that, as the director of the northeast department of our union, I have firsthand knowledge of the so-called depressed areas in Pennsyl vania, President Dubinsky suggested that I submit to you a memorandum reciting some of our experiences in this area and, on the basis of these, to offer you co ments on behalf of our union regarding the pending bill. As the director of the northeast department of the International Ladies Garment Workers Union, it is my responsibility to supervise the operations of loes! unions with a constituent membership of some 75,000 in Pennsylvania, the New England States, and upstate New York. These sections of the country, unfortunately, are pockmarked with numerous areas where substantial numbers are without work. It is because of my expe riences in these areas, which may also be typical of other sections of the country, that I am taking this opportunity of submitting my views to your committee. Representing thousands of members in islands of despair, surrounded by growing and expanding communities, has presented a longstanding challenge. which experience has demonstrated cannot be solved by the efforts of the communities, States, or populations directly involved alone. A large number and variety of such efforts have been made without any significant results. At the onset, I believe that the problem which I should like to discuss with this committee would be placed in sharper focus if we used the Department of Labor description of the word "chronic" is much more accurate than the general and unqualified designation of “depressed" for such areas as, for example, Johnstown, Altoona, Scranton, Wilkes-Barre, and Hazleton. Historically speaking, the economy of these communities have known nothing but labor surplus since World War I. Even the stresses of World War II upon our manpower pool did not alter the state of such areas as Scranton, WilkesBarre, and Hazleton, which supplied substantial contributions of industrial manpower to labor markets within upward of 500 miles away. It was a standard comment in New England in 1943 that the most likely place for a Scrantonian to meet a hometown neighbor was in Bridgeport, Conn. During the height of the material shortages of World War II, a housing survey disclosed that about the only place in Pennsylvania which reported a housing surplus, as distinguished from the then generally prevailing shortage, was the Wilkes-Barre area. It is therefore paradoxical when one considers the above-described history against the background of the contribution which these same communities make, and the role which they play, in our national economy. Coal, steel, railroad transportation, production of railroad equipment, and electric power, are the major products of these areas. One cannot mention any five other single items more essential to our economy in times of peace, and more indispensable to our survival in times of war than coal, steel, railroad transportation, railroad equipment, and electric power. These facts pose a serious question. How long can a nation, which is the undisputed leader of, and example for the free world, maintain its position of leadership and as exemplar for other countries, when the centers of economic activity vital to its survival are afflicted by a chronic economic malady which its national society appears to have neither the will nor capacity to arrest or cure? That is the question to which the people of this country must find a satisfactory answer, if we are to survive as a free nation, with a free society, within the framework of a free economy. To solve this problem it is the unpleasant duty of Congress to face the facts, and moreover, it will probably be the even more unpleasant duty of this committee to provide its congressional colleagues with some disconcerting shocks. I believe that if we face the problem presented by the "chronic" labor surplus areas fully and fairly we find that the suggested approaches to solution or amelioration of the conditions there presented start from the wrong premise; i. e., from the point of what can be done by the Government to help the unfortunate people and their economically blighted community instead of what can we do to correct or cure a defect or ailment which undermines our entire economy, the correction or cure of which is essential to our national survival. A few additional facts and conditions which I have learned by research and observation add further support to the necessity of action by our Government in the interests of our national self-preservation. Here are a few of such relevant factors: (a) The per capita and family income of Pennsylvanians is low when compared with those of other industrial States; and (b) The realizable income per farm in Pennsylvania is about $1,000 per farm below the national average (Pennsylvania average, $1,500; national average, $2,500); and (c) The per capita and family income in the counties of chronic labor surplus areas in Pennsylvania and the farm incomes from the same areas operate most heavily to depress the State averages. Here we have the paradox of one of our Nation's most essential resources, coal, with its devastating impact upon both the society and the economy of the area of its source. But the above figures do not begin to tell half of the story. The corrosive quality of the "chronic" labor surplus (which means continuous and permanent unemployment) on the human spirit infects our country with a social malady of incalculable cost. One but has to see the depressing sight of the unemployed male "head" of the family delivering his wife to the entrance of one of our garment shops in the "coal regions" and his picking her up at the close of her work day to recognize the development of a social illness which we cannot afford and from which we may never recover. One has but to spend a few moments in the taprooms where these family "heads" repair during their wives' workdays for self-preservation and to play at their former role of "male lead" to witness the denigration of our most valuable assets-the independence, pride of status, and self-respect of our male population. These men are not without ambition, nor are they without personal resources and abilities. Mr. Boyer, the president of the Pennsylvania Industrial Union Council, when testifying before your committee, pointed out that 20 percent of the unemployed who registered with the Pennsylvania Bureau of Employmeat Service from the distressed areas of that State were skilled. Mrs. Matheson of our union, in her testimony before your committee, referred specifically to the same men whom I have just attempted to describe and she pointed out that 3 out of 5 of such men (the unemployed of the anthracite communities) were skilled and that one-half of them (the same group in that area) were under 45 years of age. Mr. Boyer also stated that one-third of the unemployed in the Johnstown and Altoona area were skilled. In an economy where the technological development is causing the ratio of the skilled to the semi-and unskilled worker generally to be diminished, it is appalling to have to acknowledge that skilled workers are actually a drug on any local employment market. It is possible to consider this human spirit, with the human skills and personalities, any less of a resource upon which our national survival is ultimately dependent Another factor which is present in the "chronic" labor surplus areas which we often term the "coal regions" which cannot be overlooked is that such areas are not depressed because they cease to hold the resources which prompted their original development and settlement. There is presently an abundant supply of bituminous coal in the "chronic" labor surplus areas of central and western Pennsylvania. The simple operation of such ordinary economic laws resulting from the contemporary ability to extract and market West Virginia bituminous coal at a lesser cost, and the reduction of manpower requirements through technological improvements, has converted this most prosperous region to a depressed area. The very uncomplicated situation in the form of the lack of markets has turned the erstwhile booming anthracite producing areas of Scranton, Wilkes-Barre and Hazleton into the central marketing points for ghost-town counties. In both the bituminous and anthracite areas of Pennsylvania, the very valuable and essential natural resource continues to exist in relative abundance. This factor in and of itself is sufficient to warrant the Government's expending substantial effort, administrative skill and money for the maintenance of the ready availability of such resource in the interests of our national security and for the preservation of a sound and healthy economy. Failure to provide employment for large segments of a community so vital to our critical needs as our coal, steel, and rail transportation centers carries with it the seeds of our destruction in more senses than the few examples which I have cited. As the mines and other industrial establishments are taken out of production, the tax base is contracted. This diminution of tax base has its greatest impact in the local political subdivisions in which such divisions in which such industries maintain their operating sites: the towns, townships, and counties. There is, therefore, a resultant reduction of such essential loca governmental services as schools, hospitals, streets, and police and fire proter tion. Furthermore, in a State having a large number of such areas, as does Pennsylvania, the pattern is sufficiently widespread as to result in a consequen tial diminution of the State's tax structure, with a direct effect upon soh essential State services as educational subsidies and public assistance. Thus, a new and additional set of paradoxes is brought into play which contributes further to the undermining processes which I have described. The more that employment opportunities are reduced, the greater are the demand and the burdens that are placed upon our educational and hospital facilities, and the greater is the need for public assistance. Yet, the same circumstances which increase such demands and burdens decrease the base from which revenue car be derived for such services through taxes. This demonstrates the fact that the problem cannot be met through the local or even the State facilities and resources This is a problem that challenges the very best of the facilities and resources of our National Government. This characteristic of the problem which I have just described also serves t fix the limitations which apply to the "self-help" approach. I must concur with the statement which Joseph A. McDonough, president of the Pennsylvania Federation of Labor, made to this committee when referring to "rallies and pep meet ings," and declaring that "notwithstanding their good intentions, these heroic citizens have been unable to make any impact upon the structure and pattern of our complex system," because solution by self-help is contrary to and inconsistent with the inherent nature of the problem. I am sorry to confess that it is my studied judgment that these "operations boot strap" serve no real purpose in providing a substantial solution to the basic problem and that such an approach can have no validity except as an integral part of a program such as is offered by S. 2663. The kind of approach contemplated in this bill provides factors which are absolutely essential to any program but which are not available through self-help or local programs; substantial loans, long periods of amortization, and training and retraining programs supported by supplementary unemployment compensation benefits. I must say, however, that these "operations boot strap" serve an invaluable purpose to their communities and to our society as a whole if they do what I believe they have been doing, and doing reasonably well: Buoying the spirits of citizens in the face of abject hopelessness, thus maintaining their hopes and their willingness to survive; and also enabling them to keep their faith in our democratic processes until the time when these processes yield to constructive approach to the problem, such as is contemplated by S. 2663. The problem presents a number of aspects which make action on a national level, with the full resources of our National Government in a supporting role, absolutely indispensable to an effective program. One such aspect is the need for elimination of the rural and industrial slums existing in many of these "chronic" areas, as an incident to the solution of the basic problem. The blight of the "culm pile" and the "company town" is too great an obstacle to be overcome by the hysterical enthusiasm of a panicky local chamber of commerce committee. Even the Commonwealth of Pennsylvania has been unsuccessful in persuading industry to develop in such areas, notwithstanding the presence of an ample supply of well-trained manpower. Another aspect of the problem which requires national support and aid is the necessity for the rehabilitation of schools, community facilities, and essential services. This cannot be effectuated in most instances through local communities alone, particularly where part of the local problem has been a "starved" tax base of relatively long standing. A particularly important phase of the problem which S. 2663 has made some effort to cover and correct is the elimination of the abuses of "pirating" by certain sections of the country. No sound economy can exist so long as the attractions of one region or area as against another can be the subject of "auction block" techniques. A sound program will preclude this possibility. Our economy can support every area, each on its particular merits with respect to functions for which it is best suited. I would suggest that in reviewing S. 2663, your committee make certain that it will serve to effectively control and eliminate this already too prevalent abuse. There is much more that can be said in support of S. 2663, which I will summarize by the following conclusionary declaration. In my opinion, there is no legislative proposal before Congress, and there has not been any legislative proposal before Congress since it considered the Employment Act of 1946, which would have a greater bearing upon the stability of our domestic economy or would better demonstrate the superiority of our free economy over controlled societies, or which would serve more to inspire the confidence of the free and uncommitted peoples of the entire world in our way of life than would the enactment of S. 2663 or some similar legislation which attacks and attempts to solve by bold and uncompromising action the problems presented by the "chronic" surplus labor market areas. Very truly yours, DAVID GINGOLD, P. S. I would greatly appreciate it if you would make this communication a part of the record of your committee. |