Mr. MUELLER. Right.

Senator DOUGLAS. And while it fixes 75 percent as the maximum Federal participation, that percentage need not come up to that figure in each loan, so if $50 million can do something of a job you will admit that $20 million can do much more of a job. Is that not true! Mr. MUELLER. If it would be essential that you would have that amount of money, yes. Merely saying that X amount of dollars will do twice as much as half X amount in any field is something we cannot agree with.

Senator DOUGLAS. Therefore, $200 million would do 4 times as much as $50 million?

Mr. MUELLER. Yes, but my contention is it is not necessary.

Senator DOUGLAS. Why is it not necessary? Here you have 22 major areas in the country with unemployment of over 6 percent, 5 of which have unemployment of over 9 percent, and between 40 and 50 areas in the country with unemployment over 6 percent. This has continued in these localities for long periods of time. It is not merely during the recession of late 1953 and 1954, but during the boom of 1955, and most of 1956.

Mr. MUELLER. The assumption is if you are going to analyze the number of jobs that would be created-the inference is that it is entirely with Government or Federal funds. It is my contention that if Federal funds may be used on a conservative basis it will stimulate other private investment in the same area.

Senator DOUGLAS. That is also provided in S. 964. It was not the intent of S. 964 that the Federal loan shall be the entire loan.

Mr. MUELLER. No, but it is not necessarily provided in either bill, I believe, sir, that it is entirely, or that all of the stimulus is to be developed by Federal funds.

Senator DOUGLAS. No. I quite agree with you. What I am trying to say is, if S. 964 gives four times as much money to meet this problem as S. 1433, do you think that S. 1433 is adequate to meet the problem?

Mr. MUELLER. We do, sir.

Senator DOUGLAS. Why do you?

Mr. MUELLER. Because, in our analysis, it is not the function of the Federal Government to finance all activities, even in this area.

Now, as I stated before, it is my belief that the stimulation in any area by the new companies coming in, or the new projects starting up, stimulates other people who will not need Federal aid.

Senator DOUGLAS. That would be true under any loans.

Mr. MUELLER. Right.

Senator DOUGLAS. Under any made by S. 964?

Mr. MUELLER. Right.

Senator DOUGLAS. The secondary effect would be true in both cases. Mr. MUELLER. Absolutely, sir.

Senator DOUGLAS. The question is, How much priming of the pump do you have to do? You say $50 million is adequate?

Mr. MUELLER. Right.

Senator CLARK. What I cannot understand is what analysis you have made. It does not seem to me that you have made any analysis at all, but have just pulled this out of the air. I may be doing you a grave injustice. Please correct me if I am.

From what you said to Senator Douglas, it looks to me as though you have not made any analysis at all.

Mr. MUELLER. I have tried to bring out that I do not believe you can use any figure for the cost of establishing new jobs on an average. Seantor DOUGLAS. You have the Bureau of the Census, do you not, in your Department?

Mr. MUELLER. Yes, sir.

Senator DOUGLAS. It collects figures on the amount of capital invested in industry.

Mr. MUELLER. Yes, sir.

Senator DOUGLAS. You also have figures on the numbers employed? Mr. MUELLER. We do.

Senator DOUGLAS. Dividing the former by the latter, what is the average that you get?

Mr. MUELLER. I would have to refer to my figures to get that accurately.

Senator DOUGLAS. Would you supply that for the record?

Mr. MUELLER. Yes, we would, sir.

Senator DOUGLAS. It seems to be a very fundamental fact in this whole connection.

(The information furnished by Mr. Mueller follows:)

Capital invested per production worker, all manufacturing

Sources: The Conference Board; Treasury Department; Bureau of Labor Statistics; Interstate Commerce Commission.

Senator DOUGLAS. How long have you had a program of so-called technical assistance for industry, Mr. Mueller?

Mr. MUELLER. We have the Office of Technical Services which provides mainly printed matter, of various forms of the Government-a bibliography. It is really a library where any interested citizen can obtain information as to the type of material that is provided by the Government and all of its agencies. I think we have had that since right after the war.

Senator DOUGLAS. That is, if a community is in trouble you offer them a pamphlet?

Mr. MUELLER. No. Do not confuse the Office of Technical Services with the Office of Area Development. We have an Office of Area Development.

Senator DOUGLAS. Oh, yes. The Office of Technical Services will offer a pamphlet. What will the Office of Area Development do?

Mr. MUELLER. Personal services, advice, and recommendations as to the best manner of proceeding to obtain new industries. If you would like, we can introduce as evidence the program that we have, which is very elaborate.

Senator DOUGLAS. We will be very glad to have you do so.

How many jobs has this office been able to help to call into being in the last few years?

Mr. MUELLER. We have no figure on the number of jobs, but we do have figures on the number of communities that we believe we have aided and who have themselves stated that we have aided them. That has been in approximately 500 different areas last year.

Senator DOUGLAS. You mean 500 areas in which you went in and held conferences?

Mr. MUELLER. We went in and gave some assistance.

Senator DOUGLAS. How many jobs were created as a result of those conferences?

Mr. MUELLER. We have a limited staff, sir, of approximately 45 at the present time. I doubt if we could make a complete survey of the number of jobs, and I do not think we could claim credit for entire responsibility for that. We believe we have been

Senator DOUGLAS. What can you claim credit for? I would be very glad to have you claim as much credit as possible.

Mr. MUELLER. We can introduce again letters from Congressmen and Senators from both sides of the aisle that we have assisted in their communities, in which they have stated it has been of great assistance. If you would like that, we would be glad to introduce that.

Öf

course, we have letters from chambers of commerce and indi

viduals.

Senator DOUGLAS. But you now feel that mere counseling is not enough; that there must be Federal loans in addition?

Mr. MUELLER. We do, sir.

Senator DOUGLAS. Do you think the $12 million which you provide for technical assistance is enough?

Mr. MUELLER. I think experience will demonstrate that, sir. Senator DOUGLAS. You mean demonstrate that it will be enough? Mr. MUELLER. We hope it will.

Senator DOUGLAS. Are you aware of the provisions in S. 964 with regard to technical assistance?

Mr. MUELLER. Yes.

Senator DOUGLAS. How much is that?

Mr. MUELLER. I think you have $42 million.

Senator DOUGLAS. That is correct, $412 million.

Do you find that communities have to provide facilities in order to attract new industry in many cases, notably the provision of industrial water?

Mr. MUELLER. I would put it this way: I believe that any industry that is proposing to locate in a certain area wants to feel sure that they have proper facilities for their operation.

Senator DOUGLAS. And increasingly, industry needs water; is that not true?

Mr. MUELLER. Certain types of industry.

Again, I happen to be in one, sir, that does not need water.

Senator DOUGLAS. The major portions of industry. Industry as a whole is demanding more and more water per unit of profit. Mr. MUELLER. As a total; yes.

Senator DOUGLAS. Suppose a community suffered a long period of unemployment and lost population; debts are high, the tax rate is high, and it has used up its bonding facilities, and so on. An industry says, "Well, if you can provide us with water or access roads we will come in." However, the community is flat on its back and cannot

do so.

Do you think in these cases a Federal grant would be appropriate to the community?

Mr. MUELLER. I do not know, sir. I cannot answer that question. Senator DOUGLAS. Your bill, as you describe it, does not have that in it?

Mr. MUELLER. It does not.

Senator DOUGLAS. S. 964 has a provision

Mr. MUELLER. I appreciate that.

Senator DOUGLAS. It has a provision for $75 million in loans and $50 million in grants.

Mr. MILLER. I will put it this way: It is entirely possible that if Federal grants of that character were available, and facilities were provided, that it might attract industries that might otherwise not be attracted.

Senator DOUGLAS. In other words, this may be one instance in which you would be willing to adopt some of the provisions of S. 964? Mr. MUELLER. I am speaking personally, sir, and I do not believe I would like to make that as a categorical statement.

Senator DOUGLAS. I understand that, but you are not adamant in your refusal?

Mr. MUELLER. Let us put it this way again: That I could conceive of an industry willing to relocate in a community if such facilities were provided.

Senator DOUGLAS. You can conceive of an industry willing to start in a community if such facilities are provided?

Mr. MUELLER. Well, I do not want to pick it as to whether it is starting or relocating. It does not make any difference.

Senator DOUGLAS. That is true. I notice you say if training facilities are inadequate, that the Department of Commerce can call on the Department of Health, Education, and Welfare and advise them of that fact. After you have informed the Department of Health, Education, and Welfare, is there any obligation on the part of that Department to respond?

Mr. MUELLER. I would think so. In other words

Senator DOUGLAS. With what would they respond?

Mr. MUELLER. The provision is through the State agencies of which the Department of Health, Education, and Welfare

Senator DOUGLAS. This all costs money. To train people costs money. Where do you get this money?

Mr. MUELLER. I think Health, Education, and Welfare has provision for retraining of workers in their regular appropriation.

Senator DOUGLAS. I would like to have the staff investigate that matter in the appropriation bill.

Mr. MUELLER. May we leave that to Health, Education, and Welfare? They will be here to testify. (See p. 406.)

Senator DOUGLAS. Oh, yes. Surely.

Your bill, as I understand it, provides for loans for plant and buildings, but not for machinery; is that correct?

Mr. MUELLER. That is right.

Senator DOUGLAS. How do you feel on the machinery question? Mr. MUELLER. Well, as we state, or as I stated in my presentation, we should be reasonably sure that the money that is loaned would be returned. Now, there are certain chattel mortgages in which the security would be immediately available, but by and large equipment as such is of questionable value as a salable item upon recapture and foreclosure of a mortgage. It has its difficulties.

Senator CLARK. I am sorry, Mr. Mueller. I cannot hear you. Would you mind repeating that?

Mr. MUELLER. I said that the equipment as security for a chattel mortgage has, shall we say, difficulties which are involved in disposing of same in the event of the necessity for recapture under foreclosure. Senator CLARK. There are hundreds of millions of dollars being loaned all over the country by private institutions on machinery and equipment.

Mr. MUELLER. They are, sir. There is no question about that. But it is on a different basis, and generally on a basis in which the loan is repaid fairly promptly; whereas we are talking about long-term loans.

Senator CLARK. Would it not be possible to write a provision in the statute which would make a shorter term loan for machinery and equipment available?

Mr. MUELLER. I think it would.

Senator DOUGLAS. If the financing of machinery and equipment must be conducted privately, then the share of Government participation in the total effort would be reduced very much below 35 percent; would it not?

Mr. MUELLER. That is right.

Senator DOUGLAS. Do you know what the average division of capital is as between plant and building on the one hand, and machinery and equipment on the other hand?

Mr. MUELLER. I would have to give a horseback opinion on that. I would say about one-third of the investment, on the average now-and again I am not talking about certain specific industries, but the average of the machinery and equipment—would probably be from one-third to one-half of the total value.

Senator DOUGLAS. So that the 35-percent limit of Government participation for building and plant would boil down to a 1712 to 23 percent loan for total fixed capital. Then working capital, of course, would be required in addition, and is outside the provisions of both bills.