Mr. GUNTHER. Yes, sir. In these days of tight money, it is doubtful that loans under conditions set forth in the administration measure would encourage new development.

Public facilities essential to attract new industry: Again, in respect to loans for public facilities, S. 964 would provide far more funds and a larger percentage of the total investment than would the administration proposal. Local communities, particularly those with large numbers of unemployed or underemployed workers, have an extremely difficult time raising the revenues necessary to support existing facili ties and, for the most part, would be unable to raise the new funds needed to qualify for the Federal funds that would be made available under the administration bill. The provision in S. 964 which would permit outright grants for public facilities where the local community just cannot put up new funds, represents a realistic acceptance of the economic facts. Often private industry has refused to go into a town where public facilities-streets, schools, sewage-were worn out or inadequate.

Government procurement policies can help: While it recognizes that the inducement of private business is the basic hope of area redevelopment, S. 964 justifiably places emphasis upon the role Federal Government procurement policies can play in promoting private economic activity in specific areas. Over the past few years, to an increasingly large extent, Government procurement has permitted prime contractors, who are generally located in highly active economic areas, to determine the placement of secondary or subcontracts for Government work. This function is a Government function, and should be reclaimed by the Government and used as a tool to meet its responsibilities in area redevelopment.

Families of retrainees need subsistence payments: The retraining features of S. 964 approach this problem realistically in providing subsistence payments for retrainees. The administration measure fails to provide for such payments. A worker with a family cannot exist without cash income while he undergoes a period of retraining. Therefore, under the administration measure, if the worker could not find employment he would by force of circumstances be required to move on to find some job, any kind of job, to provide food for his family. The retraining subsistence payments provided in S. 964 would permit the conscientious family head to stay put long enough to be retrained.

It seems to us, Mr. Chairman, that we have here another instance in which the administration permits its proclaimed intentions-and by proclaimed intentions I refer to the Economic Report of 1956 and the one of 1957 quoted by Mr. Schnitzler this morning-to be frustrated by its unwillingness to do what needs to be done and to spend what needs to be spent. The experience with piecemeal measures under two administrations should have taught us by now that these stubborn problems will yield only to bold, energetic action, backed by enough money to start these distressed areas on the upward spiral to prosperity. We believe your bill will do this; we are certain the administration bill will not.

Senator DOUGLAS. Thank you very much for testifying. The next session of the committee will be Wednesday at 10 a. m.

(Whereupon, at 12:50 p. m., the subcommittee recessed until Wednesday, March 13, 1957, at 10 a. m.)

AREA REDEVELOPMENT

WEDNESDAY, MARCH 13, 1957

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

SUBCOMMITTEE ON PRODUCTION AND STABILIZATION,

Washington, D. C.

The subcommittee met, pursuant to recess, in room 301, Senate Office Building, at 10:05 a. m., Senator Paul H. Douglas (chairman of the subcommittee) presiding.

Present: Senator Douglas.

Also present: Senator Clark.

Senator DOUGLAS. The subcommittee will come to order.

We are very much honored in having with us this morning the distinguished Governor of the Keystone State, George M. Leader, who is accompanied by his secretary of commerce, Mr. William R. Davlin, and his secretary of labor, Mr. William L. Batt, Jr.

I know my distinguished colleague, the distinguished Senator from Pennsylvania, Senator Clark, would like to have the privilege and the honor of introducing the Governor.

Senator Clark.

Senator CLARK. Mr. Chairman, may I say for the record how grateful I am to Governor Leader and his cabinet members, Mr. William L. Batt, Jr., secretary of labor, and Mr. William R. Davlin, his secretary of commerce, for coming down here today from Harrisburg.

This bill is of vital importance to the Commonwealth of Pennsylvania. That fact is attested to by the willingness of the Governor and his top administrators to come down here and give the benefit of their thinking to the committee.

I think it is fair to say that their testimony, which I certainly do not want to anticipate, will disclose that we believe in self-help in Pennsylvania. We are not asking for a Federal handout.

Under Governor Leader's inspiring leadership, the Commonwealth is doing everything which could be humanly expected at the State level to assist these areas of chronic unemployment.

Governor Leader, it is a great pleasure to welcome you today, and I am sure your statement will be of great use to the committee. STATEMENT OF GEORGE M. LEADER, GOVERNOR; ACCOMPANIED BY WILLIAM R. DAVLIN, SECRETARY OF COMMERCE; AND WILLIAM L. BATT, JR., SECRETARY OF LABOR AND INDUSTRY, STATE OF PENNSYLVANIA

Governor LEADER. Thank you very much, Senator Douglas and Senator Clark, and members of the Subcommittee on Production and Stabilization of the Senate Committee on Banking and Currency.

It is a rare privilege for us to be here, and we are very grateful to you for the opportunity.

With the consent of the chairman I would like to utilize the services of two very distinguished members of my cabinet, Secretary Davlin of the Department of Commerce of Pennsylvania, and Secretary Batt of the Department of Labor and Industry.

It is a satisfying duty for me, as Governor of the Commonwealth of Pennsylvania, to testify, again, this year on the proposed legislation for Federal aid in the economic redevelopment of the Nation's areas of acute and chronic unemployment.

We in Pennsylvania have reason to know from firsthand experience what a tremendous problem of human suffering-and what a shameful waste of manpower and economic resources-is entailed for the community, the State and the Nation by the toleration we seem to have shown over so many years for these spot conditions of mass unemployment, in the midst of the highest levels of production and employment we have ever known in the United States. I think it is a pertinent fact we ought to add here that one-third of the area unemployment in the entire United States is in Pennsylvania.

We are very proud that one of our own-Senator Joseph S. Clark— appears as a cosponsor of S. 964, the area redevelopment bill. The fact is that we consider this one of the major improvements in the bill this year, I might say, that is, the fact that Senator Clark is a cosponsor.

Senator DOUGLAS. I think that is quite true.

Governor LEADER. Also we are proud that companion legislation has been introduced in the House by Representative Daniel J. Flood, of Luzerne County, Pa. I understand that Pennsylvania Representatives Carrigg, Fenton, and Van Zandt appear as authors of the legislation being sponsored in the House for this same purpose by the executive department.

Senator DOUGLAS. I wonder if I could interrupt you for the sake of the record, because you make references to Pennsylvania Representatives Carrigg, Fenton, and Van Vandt, who appeared as witnesses, as submitting companion bills. I think I should say Congressman Augustine B. Kelley sent over a statement this morning, which we will make part of the record at the conclusion of your remarks. Congressman John Saylor, of Pennsylvania, appeared this morning and asked to testify, saying that he had another committee meeting and, therefore, would like to testify early. I was compelled to say "No," because I wanted to give precedence to you, as I believe a governor outranks a Congressman, and a Senator, too. I wanted to give you precedence, but I do think that the record should show that Congressman Saylor is interested in this problem and was here and wanted to testify this morning.

Senator CLARK. Might I also state for the record that Representative Thomas Morgan who comes from southwest Pennsylvania, in the coal region, has also expressed great interest in this subject, and I am confident he would like to give his views before these hearings are concluded.

Governor LEADER. I am very happy to learn that these additional Congressmen from Pennsylvania are showing an interest in a problem which cuts pretty well across the Commonwealth. It is a good indica

tion that Pennsylvania is always well represented every time the hope of Federal aid for distressed areas is raised.

That is a natural situation.

We, in Pennsylvania, have had what I believe to be a unique experience in the field of area economic maladjustment.

Before the miracles of modern-day industrialization were upon us, we saw the ravages of the "cut out and get out" philosophy of lumbering leave dozens of our communities ghost towns. We developed a thriving textile industry, only to see large numbers of mills move South, in search of lower wages and other savings in production costs. For over two decades we have seen markets for our anthracite coal shrink, with the advent of oil and gas for space heating. We have watched our bituminous coal operators produce more and more coal with fewer and fewer men, the result of mine mechanization. We have been, and we remain, a very great State in railroad transportation-but diesel engines have meant a drastic reduction in maintenance employment. We have been, and we are, a very great steel-producing State. We produce something between a fourth and a third more steel than we did after World War II, but we do it with virtually no increase in employment in this field of activity.

Senator CLARK. I am wondering if you do not feel, in connection with this legislation, the bituminous areas are also in need?

Governor LEADER. They most certainly are, and we will be discussing them in a moment. I am glad you called it to my attention, because I did not mean, by anything that has gone before, to imply that that is not an important aspect, largely, as you know, due to the mechanization in production there, and in some areas due to the depletion factor. Some of the more valuable types of coal, particularly metallurgical coal, in some areas have become depleted. Steel coal has not been in such great demand, so we have had problems in that bituminous area. You are quite correct.

These have been dominant industries in Pennsylvania. They are not all dominant industries in every State, nor in our neighboring States. But they have been, and are, in Pennsylvania. It is unique, I submit, for a given State-especially one so large as Pennsylvania to suffer concurrent and simultaneous maladjustment in its dominant industries. And these maladjustments explain the persistent prolifieration of distressed areas in Pennsylvania.

Lumber, textiles, anthracite and bituminous coal, transportation, steel-these have been major elements in the growth of the national economy.

When changing technology and market conditions, nationally, leave tens of thousands of workers in these industries without employmentand deprive their youth of employment opportunities at home-we have posed for us something more than a problem for individual initiative, or for community and State initiative. We have a problem involving a responsibility for the Nation as well.

As this subcommittee knows more expertly than we, Pennsylvania is not alone in this matter. Southern Illinois and Indiana, northern Michigan, eastern Kentucky, and West Virginia, all the New England States, some in the South are also involved. Let the national income or gross national product slip for a while, and dozens of communities in these several areas show up in the labor market reports as areas of

substantial labor surplus. And even during very high levels of national economic activity, such as those of the past year or so, places like Scranton, Wilkes-Barre, Hazleton, Pottsville, Altoona, Johnstown, Uniontown-along with dozens of much smaller Pennsylvania communities-remain areas of chronic mass unemployment.

Senator DOUGLAS. I wonder if I might ask for my own information a literary question.

Governor LEADER. Yes, sir.

Senator DOUGLAS. I have been reading for some years the novels of Mr. John O'Hara. Am I correct in believing the locale for the stories is the town known as Pottsville?

Governor LEADER. I am told that that is the locale.

Off the record.

(Discussion off the record.)

Senator DOUGLAS. Bad things have been said about Chicago too, occasionally, which I know to be untrue or unrepresentative of the city as a whole, so I do not want to have it thought that I am forming any bad impressions of your area. I did wish to give to Mr. O'Hara's novels, in the words of Shakespeare, a local habitation.

Governor LEADER. Yes. I think one of the last ones he did, the locale was Lykens, the community from which my executive secretary So we hear a lot about Mr. O'Hara in our office in Harrisburg. Senator CLARK. He has one about Harrisburg, too.

comes.

Governor LEADER. Yes. I had not realized that.

Now that we know some of the problems other than economic about this region, I would like to ask the secretary of labor and industry. Mr. Batt, to give us some of the statistics on unemployment in Pennsylvania, so that we can get a better grasp of the scope of the problem. Senator DOUGLAS. Mr. Batt, we are very glad to welcome you. Mr. BATT. Thank you, Senator.

Senator DOUGLAS. You would like to have this report of Pennsylvania's unemployment problem made a part of the record, Mr. Batt? Mr. BATT. Yes, because it is far too lengthy to read in detail. Senator DOUGLAS. We will do that and have it printed at the conclusion of Governor Leader's remarks. (See p. 228).

Mr. BATT. It goes into some detail. It has been prepared by the bureau of employment security and goes into much greater detail than we can go into with the time available for analyzing this problem.

Senator, it is with some trepidation and some humility that I get up to lecture on economics to an economics professor.

Senator DOUGLAS. That was a long time ago and I have forgotten most of what I knew.

Mr. BATT. These charts (see p. 223), I think, dramatize the problem of unemployment in Pennsylvania rather dramatically. As shown in chart 1, Pennsylvania currently has 11 areas classified as areas of substantial labor surplus on the official area classification list of the United States Department of Labor. Four of these are major metropolitan areas which are regularly included in the classification system, and seven are smaller areas which are classified because they have substantial labor surpluses. All 11 of these areas have been continuously classified as surplus areas for 2 years or longer, and all would qualify as industrial redevelopment areas under S. 964.