bears to the whole number of unemployed in all of the distressed areas in the country. That is a formula we have repeatedly used over the years. We used it, I recall, in the so-called Farm-Tenant Act long ago. We simply took the money and divided on the basis of what tenancy in a State represented to the whole number of tenants in the country. We do it today in connection with rural electrification laws. Then we use a residual amount in order to meet special needs in given States. I think the committee can very properly in the interest of complete equity and fairness take both of these funds, whatever they may be, and allocate 75 percent of both funds to the States on a proportionate basis, and then leave the remaining 25 percent as a residual sum for the administrator to use where some special circumstance may arise in a particular area. I have forgotten whether the word "revolving" is used in connection with these funds, but if not these may very well be made revolving funds so that as payments are made, and there are accretions to the fund, that they will be available without further action on the part of Congress in appropriating to that fund. One other item I would suggest to the attention of the committee, and that is the problem of electrical energy in distressed areas. I am speaking notably about southern Illinois. We had a recent experience, and, Mr. Chairman, where I could not get a plant I sincerely hope that you got it, perhaps, but here was a very large responsible organization, ready to establish a plant for the manufacture of aluminum; it really involved millions and millions of dollars. One of the real problems was to locate a constant and adequate suply of power. They had three areas in mind for location. One was in the extreme southern end of Illinois, one was in West Virginia, and the other was in the vicinity of Portsmouth, Ohio. I do not know as of this moment whether the plant has been finally located, or not, but I do know that the first problem that they encountered in southern Illinois was securing an inadequate constant suply of power, and it is a question that must be considered. Obviously, plants today in order to operate must have power. They can go in for steam in a coal area, then drive their generators and manufacture power, but where you need power in large quantities, and they do not want to build their own generating facilities, then there must be a place to go. There are two possible ways of doing this. It goes back to what I mentioned a moment ago, about regional committees to plan, perhaps over a larger area, they can undertake a financial responsibility of this kind, so that power would be available not only to a community but to a larger group, but there is still another approach to it, and that is to carry language in a bill of this kind which would amplify the authority that rural electrical cooperatives have at the present time. They operate, of course, under the limitations of the REA Act, but we are dealing with a national problem. I think this or any committee has a perfect right to take a look at the whole REA Act, and then determine whether the authority of a cooperative can be extended so that it could get money from the Administration under an act of this kind for the purpose of augmenting its own power facilities to a point where power will be available in a distressed area, if and when the Administrator is satisfied that an operator or contractor is coming in, that he is going to operate for a substantial 73437-56-pt. 1-13 period of time, and that he cannot operate unless the necessary power is available. It is a very important consideration in dealing with a matter of this kind. Then I would suggest, respectfully to the committee, that some language be included in the bill whereby the Administrator can make at least modest funds available out of the whole amount to colleges and universities that are very much interested in this field. In southern Illinois we presently have the University of Southern Illinois. It serves as a sort of a cultural center for about 30 counties in the State and when we first did some work on securing funds for a pilot plant to do work in the field of timber resources, the logical place to put it, of course, was under the jurisdiction of the University of Southern Illinois. The technicians are there, the scientists are there, they are dealing with the resources in that section of the State. The Administrator should be empowered out of the funds made available herein sums to do the kind of work that I have in mind in the hope that the resources that are there will be fully utilized. Now, perhaps the committee would like to give attention also to whether or not there ought to be State approval for any of the projects that are set up. That may or may not be necessary, but cretainly it is in the interest of good cooperation between a Federal agency and the appropriate State agencies. Finally, if you are going to set up a plant in a given community where you may fortunately employ as many as 500 people, promptly you have a housing problem. That means that if this is to be an overall and wholehearted approach, obviously there must be housing for the people who are going to work in a plant of that kind. We presently have, I don't know how many hundreds, perhaps thousands, who drive 40 miles, 50 miles, 70 miles to places of employment. That is spending an awfully long time on a highway, and in an automobile. If the jobs can be brought closer to the places of distress, then the housing must be brought closer. It would require perhaps some modification of the appropriate sections of the Housing Act to make sure that housing can then go forward in connection with industrial development. So much then, Mr. Chairman, for the first approach, namely, to do those things that might attract industry, make it easier to set up an industry in the hope that durable jobs will be created. Now, the second section of Senator Douglas' bill deals with assistance to useful facilities. That, of course, would include schools, hospitals, airports, all that sort of thing, and certainly will create jobs, although when the construction is done it would be more or less temporary and might run out after a period of a year or two. think here, again, the funds that are made available should be allotted to the States on the basis of need, with some portion of the overall fund available within the discretion of the Administrator. and, secondly, I envision, of course, that this will involve some schools and public facilities, and I believe very properly an antisegregation provision ought to be written into that section of the bill that deals with facilities, because that problem is before us. It is in the school bills that are pending at the present time, it is part and parcel of the whole theory that has been advanced by the Supreme Court, and has been mandated on the States. I am a conformist in that respect, and I think, very properly speaking, where these funds are available for that purpose that provision ought to be incorporated in the bill. Those are rather informal suggestions. The record will speak for itself. I trust that the committee will give these suggestions respectful attention, and I know they will. Senator DOUGLAS (presiding). May I apologize to my colleague, and to the other witnesses, for being late this morning. I started from my house at 9 o'clock, but the icy condition of the streets held me up. and I regret very much that I was not present when you began your statement. Senator DIRKSEN. I can say to my colleague I have a ready appreciation of that condition. Senator DOUGLAS. Senator Neely? Senator NEELY. Off the record. (Discussion off the record.) Senator DOUGLAS. Senator Goldwater? Senator GOLDWATER. I would like to take advantage of the Senator's being here, inasmuch as he is a member of the Appropriations Committee, to ask if he would have any further light to throw on the situation that developed last year, where, as a result of the President's recognizing the distressed area problem, and having made recommendations in his economic report to the Congress regarding it, recommendations that in turn were held up and approved by the Joint Committee on the Economic Report, the Congress did not give the additional funds needed to increase the personnel in this partienlar office? Do you recall the details of that? Senator DIRKSEN. Well, may I say to you. Senator Goldwater, that actually work in this field began in 1946. It was then tied, of course, to the defense aspects. Considerable money was expended. I think perhaps over $200 million, and a good many thousands of jobs were created, but always it had a defense tag on it. However, the interest in that agency in the Department of Commerce continued, and they did want to do more work I noticed in the evotonic report in January 165 the President alluded to it—that there was a request in the estimates for appropria tions for fiscal 1955 for more fu Vuforiolates, of onre. Vie funds were not made available. The senate did add to the amount $100,000 in the committee. $5000 s te foor, but the item *** stricken finally in conference I may say I had the sunse pilot plant operations be about it, beva P Senator DOUGLAS. The next witness is the Honorable Frederick Payne, Senator from Maine. Senator Payne, we are glad to have you here. We heard your colleague last week, and we are very glad to welcome you today. STATEMENT OF HON. FREDERICK G. PAYNE, A UNITED STATES SENATOR FROM THE STATE OF MAINE Senator PAYNE. Mr. Chairman, members of the committee, I want you to know that I appreciate very much your invitation to state my views on the question of Federal assistance to economically distressed areas before this distinguished subcommittee. At a time when the vast majority of Americans are enjoying unprecedented prosperity, the continued existence of scattered pockets of chronic unemployment is a matter of deep concern. In the State of Maine at the present time, according to the November 1955 United States Department of Labor Bimonthly Summary of Labor Market Developments in Major Areas, the Biddeford-Sanford area is classified as a substantial labor surplus area; and Portland, our State's largest city, is listed in group C, indicating that the number of job seekers is from 3 to 6 percent in excess of job openings. The United States Department of Labor, in cooperation with the Maine Employment Security Commission, has just completed making a survey of unemployment conditions in Washington County, Maine. to determine whether or not this northeasternmost county in the United States can be classified as a labor surplus area so as to be eligible for assistance under existing Federal programs. The economic difficulties in Washington County are due primarily to the availability of only seasonal work for its labor force. In 1955 the usual available employment was seriously reduced because of the extremely small herring catch which resulted in many sardine canning factories either closing or not opening at all. Unfortunately, Washington County has too sparse a population to be designated a substantial labor-surplus area. According to the findings of the United States Department of Labor, and I submit the letter under date of January 6 from the Department of Labor with reference to their findings. (The letter referred to is as follows:) Hon. FREDERICK G. PAYNE, DEPARTMENT OF LABOR, United States Senate, Washington, D. C. DEAR SENATOR PAYNE: In accordance with arrangements made by Mr. Albert L. McDermott, special assistant to the Secretary, and a member of your staff in a telephone conversation on December 8, we have received and reviewed the report on labor market conditions in the Calais-Eastport area. This survey. prepared by the Maine Employment Security Commission, indicates that although there is sizable unemployment, the area has a labor force of less than 15,000 and does not meet the minimum-size criteria for classification as an area of substantial labor surplus by the Department of Labor. Staff members of this Department have discussed the problem of smaller areas with representatives of the Department of Commerce and the Small Business Administration. Consequently, we are referring the problem of the Calai Eastport area to Mr. Frederick H. Mueller, Assistant Secretary of Domestic Affairs, United States Department of Commerce, to provide suggestions in com munity economic and industrial development and to Mr. T. G. Waale, Director of the Office of Production Assistance, Small Business Administration, for attention to the small businesses located in the area. As you know, the Small Business Administration is empowered by legislation to assist small plants both with respect to securing Federal procurement and with regard to loans. In addition, we would like to call your attention to the enclosed amendment to Defense Manpower Policy No. 4 providing that areas too small to classify, the local employment security office shall be authorized to furnish a bidder with a certification (when specified conditions are met) that the area in which he is located is one of substantial labor surplus. Since the Calais-Eastport area currently has sizable unemployment, this procedure would be of assistance to firnis in this area submitting contract bids at this time. I sincerely hope that these arrangements will be helpful to the Calais-Eastport area. Sincerely yours, Rocco C. SICILIANO, Assistant Secretary of Labor. Senator PAYNE. There are also other areas in Maine which also warrant continuing attention, such as Brunswick, where the town's principal industry, a textile mill, was closed last June. Since I know that the subcommittee has complete information in its files on unemployment conditions not only in Maine but throughout the country, I will not take up your time by elaborating further and repeating information you already have or will receive from Maine commissioner of development of industry and commerce, Carl Broggi, when he testifies. Incidentally, I might say that my distinguished colleague, the senior Senator from Maine, will introduce Carl Broggi, but I want to mention the fact that Carl happened to serve as a very distinguished member of the State Senate of Maine from York County, while I served as Governor. I followed the excellent work that he did in the Sanford area in particular, where he is a native, in relieving much of the economic distress there. I feel that Maine is to be highly congratulated for having a man of his type, of his ability, initiative, and drive, heading this most important department. Senator DOUGLAS. You seem to be developing a bipartisan system of cooperation in Maine, Senator Payne. Senator PAYNE. Mr. Chairman, that is true. The Governor, as you know, a very splendid gentleman, happens to be of your party. Mr. Broggi, however, was a Republican senator when he served in the Maine Senate. Senator DOUGLAS. We are always happy to recognize merit wherever it occurs, and in those few instances where it occurs in the Republican Party we are glad to recognize that. Senator PAYNE. Thank you. Department of Labor statistics indicate that the present unemployment situation is serious in some 19 major and 74 smaller labor market areas. In other words, there are still people in this country who, through no fault of their own, are not enjoying the benefits of national properity. So long as this disparity exists, no matter how small it may be, I am certain that none of us will be satisfied, for economic quality of opportunity is an essential part of a healthy society. The Eisenhower administration has continually indicated its deep concern in regard to the problem of chronically distressed areas. Under Defense Manpower Policy No. 4, Executive Order 10582 implementing the Buy American Act, and the policy on accelerated tax |