While section 107 (b) (7) (B) refers to security for the loans, there is nothing in the proposed legislation requiring security for any of the loans. Neither does the proposed legislation contain any criteria for determining the rate of interest to be charged on the loans nor require that any interest whatsoever be charged. It is not clear who is meant by the term "Administrator" in section 107 (b) (5), line 9, page 10. It appears that the term "Area Assistance Administrator" or the word "Secretary" should be substituted for the word "Administrator." We suggest that the term "aggregate cost" as used in section 107 (b) (7) (p. 10, line 24) should be defined. If it is intended that other Federal aid be excluded, the language "to the municipality taking into consideration all other Federal aid in connection with the undertaking” might be inserted immediately following the term "aggregate cost." Subsection (1) of section 108 (f) would require that payments be made to the civil service retirement and disability fund for the Government's share of the costs of such fund applicable to officers and employees occupied on a fulltime basis on this financial-assistance program. This automatically would be required by existing law contained in section 4 of the Civil Service Retirement Act of May 29, 1930, as amended by title IV of the Federal Executive Pay Act of 1956, Public Law 854, 84th Congress, (70 Stat. 736, 747). Subsection (1) of section 108 (f) is therefore unnecessary and we suggest that it be deleted. Section 109 (a) would require the Secretary to prepare and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act, as amended, for the proposed area assistance fund. Section 56 of Bureau of the Budget Circular No. A-11: Instructions for the Preparation and Submission of Annual Budget Estimates, provides that business-type financial statements will be prepared for all revolving funds, except those "feeder accounts" which are solely available for making advances to other funds or accounts. Since under existing law and regulations the budget program for this fund would be prepared as provided for wholly owned Government corporations, section 109 (a) is unnecessary. Section 109 (b) of the bill provides that the Secretary of Commerce, in connection with the program of loans and participation in loans, shall maintain an integral set of accounts to be audited by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended. These accounting and auditing requirements are unnecessary since they are adequately authorized under existing law. The Budget and Accounting Procedures Act of 1950 places in the head of each executive agency the responsibility of establishing and maintaining a proper system of accounting and internal control for his agency. The accounting system developed by agencies must conform to broad principles and standards prescribed by the Comptroller General but the details of the system are left to the agency to provide full disclosure of the results of its activities and adequate financial information needed for management purposes. Also, the Budget and Accounting Procedures Act of 1950 provides specific statutory authority for the General Accounting Office to make the type of audit most suited to the activities of the agency involved and in accordance with generally accepted principles of auditing. In short, this enables the Comptroller General to prescribe the type of audit that would be most practicable and useful for this financial-assistance program. There thus is no need for any special accounting or auditing provisions in this bill. Section 109 (b) provides further that the determinations of the Secretary relating to the program of financial assistance authorized by section 101 (a) (2) shall be final and conclusive upon all other officers of the Government. We know of no reason why this extraordinary authority should be granted to the Secretary. Its real effect would be to preclude the General Accounting Office as the agent of the Congress from taking action on behalf of the Government concerning any illegal or improper transactions found in the audit. Accordingly, we strongly recommend that section 109 (b) be deleted from the bill. Section 111 (a) also provides that all findings and determinations made in the administration of the act "shall be final and shall not be subject to review in any court by mandamus or otherwise." For the reason stated in the fore going paragraph, it is strongly recommended that the words "shall be final and" in line 22, page 14, of the bill be deleted. The word "it" in lines 1 and 2, page 19, should be "him." JOSEPH CAMPBELL, Comptroller General, of the United States. SMALL BUSINESS ADMINISTRATION, Hon. J. W. FULBRIGHT, Chairman, Committee on Banking and Currency, DEAR SENATOR FULBRIGHT: Th's is in further reference to your letter of January 14, 1957, in which you request the views of this agency on S. 104, a bill to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise, and for other purposes. The Small Business Administration has no objection to the enactment of S. 104. I have been advised, however, that the Administration prefers the provisions of S. 1433. For this reason, the Small Business Administration recommends the adoption of the latter bill. The Bureau of the Budget has no objection to the submission of this report. Sincerely yours, WENDELL B. BARNES, Administrator. GENERAL SERVICES ADMINISTRATION, Hon. J. W. FULBRIGHT, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in reply to your letters of March 4 and 25, 1957, requesting the comments of the General Services Administration on S. 104 and S. 1433, 85th Congress, substantially similar bills to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise, and for other purposes. The proposed legislation would place authority in the Secretary of Commerce to assist areas, designated by the Secretary of Labor as areas of substantial and persistent unemployment, through financial aid and the coordination of betterment programs. In addition, the Administrator of the Housing and Home Finance Agency is authorized to provide financial assistance for publicworks construction to areas certified under the bill. Since GSA has no basic responsibility for the formulation of policies to assist areas of substantial and persistent unemployment, detailed comments on the merits of the proposed legislation would be inappropriate. The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee. DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to S. 964, 85th Congress, a bill to establish an effective program to alleviate conditions of substantial and persistent unemployment and underemployment in certain economically depressed areas. The Secretary of Defense has delegated to the Depart ment of the Army the responsibility for expressing the views of the Department of Defense thereon. The bill would establish within the executive branch of the Government an Area Redevelopment Administration to aid economically depressed areas by assisting in the expansion of their productive facilities and resources, thus providing new employment opportunities in such areas. The Department of the Army on behalf of the Department of Defense has considered the above-mentioned bill. Section 16 would establish a Federal procurement preference for economically depressed areas. Subsections (1) and (2) of this section are consistent with current Department of Defense policies concerning labor surplus areas, which are in implementation of Defense manpower policy No. 4 issued by the Office of Defense Mobilization November 1953. It is not clear, however, whether subsection (1) contemplates the payment of price differentials in carrying out the policy expressed therein. Such payments are not currently authorized because of limitations contained in the Department of Defense appropriation acts. It is doubtful if the enactment of S. 964 would provide authority for payment of price differentials so long as specific statutory limitations in connection with such payment are elsewhere expressed. Considerable question exists as to the authority of the military departments to negotiate contracts in furtherance of labor surplus area programs except under title 10, United States Code, section 2304 (a) (1) (formerly sec. 2 (c) (1) of the Armed Services Procurement Act), which related to procurement during a national emergency. It is recommended, to assist in effectuating the purpose of the bill, that section 16 be revised to provide clear authority for negotiation of contracts under subsection (1), or in set-asides under subsection (2) whether general solicitation is by negotiation or by formal advertising. Consideration should also be given to the possible effect of the proposed legislation on existing small-business set-aside programs under the Small Business Act of 1953. Subsection (3) of section 16 would authorize negotiation after formal advertising to ascertain whether a firm in a redevelopment area will furnish supplies or services for an amount equal to, or less than, the lowest bid received under formal advertising. This is contrary to current procedures based on title 10, United States Code, section 2304 (a) (15) which permits negotiation as to supplies and services for which bids have been received under formal advertising only upon a determination by the military department that the bid prices are unreasonable or were not independently reached in open competition. If the policy expressed in subsection (3) is to be implemented to any great extent, a considerable burden may be placed upon contracting agencies in seeking out, in redevelopment areas, firms which might meet the low bids obtained in advertisement procurements. Such a procedure may also place considerable strain upon the competitive-bid system, and thus adversely affect bidder incentive, by injecting into that system a further element of uncertainty. It should also be observed that under subsection (3) a low bidder under formal advertising would have no further chance to reduce its price in competition with the supplier in the redevelopment area. For the foregoing reasons the Department of the Army on behalf of the Department of Defense recommends that subsection (3) of section 16 be deleted from the bill and that subsections (1) and (2) be modified in accordance with the views above expressed. It is further recommended that section 14 (11) of the bill be clarified to exempt military procurement officers from the rules, regulation, and procedure power of the Administrator as therein set forth. Since the remaining portions of the bill are of only indirect interest to the Department of Defense no recommendations are made with reference thereto. The fiscal effects of this legislation are not known to the Department of Defense. This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advises that while there is no objection to the submission of this report, the objective of the program of area assistance recommended by the President, although partially covered by S. 964, would be more adequately met by enactment of S. 1433. Sincerely yours, WILBER M. BRUCKER, Hon. J. W. FULBRIGHT, TREASURY DEPARTMENT, Washington, D. C., May 10, 1957. Chairman, Committee on Banking and Currency, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your requests for the views of this Department on S. 244, to authorize loans by the Small Business Administration to alleviate unemployment in areas of substantial labor surplus; S. 964, to establish an effective program to alleviate conditions of substantial and persistent unemployment and underemployment in certain economically depressed areas; and S. 1433, to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise, and for other purposes. The Department suggests that consideration be given by your committee to S. 1433, which incorporates the recommendations of the administration with respect to Federal assistance in areas of substantial and persistent unemployment, rather than S. 244 or S. 964. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee and that the enactment of S. 1433 would be in accord with the program of the President. Very truly yours, G. M. HUMPHREY, Secretary of the Treasury. DEPARTMENT OF AGRICULTURE, Hon. J. W. FULBRIGHT, Chairman, Committee on Banking and Currency, United States Senate. DEAR SENATOR FULBRIGHT: This is in reply to your request of January 31, 1957 for a report on S. 964, a bill to establish an effective program to alleviate conditions of substantial and persistent unemployment and underemployment in certain economically depressed areas. The Department supports the objectives of S. 964 but has no comment on the proposed administrative organization or the specific measures proposed to handle problems of industrial development. The bill proposes a program to alleviate conditions of substantial and persistent unemployment and underemployment in certain economically depressed areas. An Area Development Administration would be established and funds provided for defraying administrative expenses of local and regional committees, for technical assistance, grants for public facilities, and loans for public and private development. Authority is provided to appropriate not to exceed $4.5 million for technical assistance and $50 million for grants for public facilities. Notes and obligations in amounts up to $275 million might be issued and outstanding for purchase by the Treasury to obtain funds for loans. Seventy-five percent of the aggregate cost of a project could be financed by these loans. A revolving fund would be established. Provisions are made for programs to secure greater access to vocational training and for retraining subsistence payments. An Administrator would be appointed. Government and public advisory committees would be established. The Government advisory committee would include the Department of Agriculture. The Administrator would designate as rural redevelopment areas those rural areas within the United States in which he determines that there exists the largest numbers and percentage of low-income families and conditions of substantial and persistent unemployment or underemployment. The Department of Agriculture and other agencies would make studies as needed for designation of redevelopment areas. The proposals of the bill with respect to administrative organization in the executive branch of the Government and the specific proposals with respect to the size of the funds to be appropriated for loans, grants, and technical assistance, the terms of such loans and grants, and related technical provisions of the bill are in the field of responsibility of agencies other than the Department of Agriculture. The Department consequently has no specific comment on these matters. It is suggested that S. 1433, on which we are making a separate report, be considered in connection with your review of S. 964. The Bureau of the Budget advises that, although the objectives of the area redevelopment program recommended by the President would be partially met by S. 964, they would be more adequately met by the enactment of S. 1433. Sincerely yours, TRUE D. MORSE, Acting Secretary. Hon. J. W. FULBRIGHT, DEPARTMENT OF LABOR, Chairman, Committee on Banking and Currency, DEAR SENATOR FULBRIGHT: This is in further response to your request for my comments on S. 964, a bill to establish an effective program to alleviate conditions of substantial and persistent unemployment in certain economically depressed areas. I also wish to take this opportunity to comment on S. 1433, a bill to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise and for other purposes. Each of these bills offers a plan to assist areas of substantial and persistent unemployment and underemployment to develop and maintain stable and diversified economies. The formulation of such a plan is a matter of great importance and a goal with which I am in full accord. However, while the bills seek the same ultimate goal, there are important differences in the methods they would use to attain that goal. I believe that S. 1433, which is in accord with the program of the President, would more effectively enable the citizens of these areas to rehabilitate, expand, and diversify their economic base, and so remove the underlying causes of the chronic unemployment they now suffer. S. 964 would authorize industrial loans to be made by the Administrator in amounts up to 75 percent of the aggregate costs of the project for which such loan is made. Such broad participation by the Federal Government is inconsistent with the principle that Federal assistance should aim at helping communities to help themselves and leave the major responsibility in planning, and in financing the economic redevelopment of their communities with local citizens. Federal funds should only cover any deficiency that may exist after local equity capital has been subscribed and the normal financing institutions have undertaken to provide the maximum amount of credit they can reasonably extend. I believe that the 35 percent participation in industrial loans authorized by the provisions of S. 1433 is adequate for that purpose and will stimulate capital investment in these areas. The creation of an independent agency to administer this program, as provided in S. 964, would run counter to the sound and growing view that it is desirable, whenever possible, to avoid a proliferation of independent executive agencies. The approach taken by S. 1433 in creating an Area Assistance Administration in the Department of Commerce, which already has considerable responsibilities in this field, seems more desirable. I am concerned by the procedures provided by section 5 of S. 964 for determining redevelopment areas. The criteria proposed are such that they may permit areas to qualify on the basis of temporary unemployment problems. Occasionally, some areas develop unemployment situations as a result of a temporary drop in consumer demand for certain products. It is necessary to distinguish between short-run problems such as these and the localized substantial and persistent unemployment which presently gives us concern. It is my belief that the criteria suggested in S. 1433 are better designed to cope with the problem of identifying areas with long range unemployment problems. Furthermore, section 5 of S. 964 appears to authorize the Administrator to designate any area in the United States, including one or more countries or one or more municipalities, or a part of a county or a municipality as a redevelopment area, regardless of that area's ability to qualify within the criteria specified. This may cause serious administrative problems. Delicate situations may arise if the benefits afforded an area by virtue of its designation can accrue on the basis of discretionary action. I believe it is highly preferable to designate redevelopment areas only on the basis of objective criteria embodying standards which are clear and equally applicable to any area which seeks designation as provided for in S. 1433. S. 964 makes no provision for clearance through the States of proposals for construction of industrial or commercial facilties. Apparently, the Administra |