Mr. CAMPBELL. No, sir. I certainly am not. Mr. DONDERO. That is all, Mr. Chairman. Mr. DAVIS. We pass now to Mr. Dempsey. Mr. Dempsey, ladies and gentlemen and visitors, is the former Governor of New Mexico, a longtime and valued member of this committee and of the Congress. Mr. DEMPSEY. Thank you, sir. Mr. Campbell, yesterday the Secretary of the Treasury testified and he stated very frankly that these obligations would be moral obligations of the Federal Government. There was no question about that. I do not find anything in your statement where you object to this form of financing, but you think another form is more advisable. Is that right? Mr. CAMPBELL. Our primary objection, Governor, is to the possibility of having these securities issued and not be a part of the debt of the Uninted States. Mr. DEMPSEY. It would be morally a part of the debt, as many other debts are, but I think you had some doubt in your mind about the method of paying off the indebtedness. I know of no surer way than to earmark the gasoline tax. That is a sure revenue; much more sure than the tolls from the St. Lawrence seaway. Mr. CAMPBELL. I personally have no objection to earmarking the amount of the tax. I say that is Congress' job, I think, to decide whether these revenues should be earmarked. But we have no hesitancy in saying that the gasoline taxes will be sufficient or should be sufficient to meet the obligations. Mr. DEMPSEY. Probably the present rate of taxation would take a longer period than some of the Members of Congress would like, and they are considering whether we should increase the Federal gasoline tax rate. To the extent that they increase it, then to that extent we decrease the number of years over which the payments will be made. Are you familiar generally with the situation on the highways today in America? Mr. CAMPBELL. Yes, sir. I think I am. Mr. DEMPSEY. You know they are outmoded in many respects; that the roads are congested and we are killing too many people on the highways, injuring too many people, and destroying too much property. This is a terrifically big program and I question whether the Congress would be as sympathetic to it if it were made a part of the Federal debt, because to that extent the Federal debt limit would have to be raised. But under this plan, while it is a Federal obligation and would be so assumed in the event that Federal gasoline taxes are discontinued, in my opinion this seemed to me to be the better way to finance the proposed program. It is the method pursued by many of the States, which works out beautifully for them, to earmark the gasoline tax for one specific purpose, that being the building and maintaining of highways. We would have no trouble with it at all. In order to get this job done quickly if we are to eliminate or reduce a great number of accidents which we are having, it must be done quickly-I rather think this is a better form of financing it. If we can get Congress to go along and give us this money then that will be all right with me. I think, however, it would be very much more difficult to get the amount necessary that way to do the job which we must do; or else allow this fearful toll these accidents take to continue. We are losing more people on the highways in 1 year in America than we lost in the years when we were in the so-called Korean war— many more about 50 percent more than were killed in Korea. We are losing them every year on the highways. We are injuring a million and a half people a year. Of our bridges on the interstate system alone nearly 10,000 of them are below minimum required standard. That is what is confronting the Congress of the United States. We are trying to work out a formula which will take care of these deficiencies, and yet not put it on the national debt. As a Member of Congress, and one who has viewed with concern the national debt since he has come to Congress, I find it is easier to increase it than it is to decrease it. Once we establish the national debt limit it stays up there. This would earmark certain funds, which as you say go to the general fund now, but which would be set up for this specific purpose. As I understand it from your statement, and I looked over it very carefully, you have a preference but you have no objection to the bill. Is that right? Mr. CAMPBELL. That is correct. Mr. DEMPSEY. Thank you very much. Mr. DAVIS. We proceed now to my left, ladies and gentleman, to Mr. McGregor of the State of Ohio. Mr. McGregor, I suppose, knows as much about highway legislation as anybody in this country. We are delighted to have you listen to Mr. McGregor, as he seeks information from the Comptroller General. Mr. McGregor. Mr. McGREGOR. Thank you, Mr. Chairman. General, I am trying to clarify your statement as to why you are objecting to this means of financing when it is similar to programs that are already in existence. I listened to your statement relative to the St. Lawrence seaway and I join with you in being kind with our friendly neighbors to the north, and south, and other neighbors. I will lean backward to do the same thing, but it is hard for me to get through my mind why you are objecting to this means of financing when you are doing it by objecting to a gasoline tax. May I say there is no new tax recommended in this legislation. You do not know what the financing of this bill is going to be, do you? Mr. CAMPBELL. No, sir. Mr. SMITH. Yes. Read the bill. Mr. McGREGOR. I will yield to the gentleman from Mississippi. Show me where there is a new gasoline tax or any new tax that is put into the bill, because this committee does not have any power to We can make recommendations, but the taxing power is confined to the Ways and Means Committee of the Congress. We can only make suggestions. Now, the St. Lawrence seaway is to be paid for by tolls collected by the revenue raised from tolls. Is that not correct? Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. And your reason for being satisfied with that arrangement is, it is because of an international boundary line. Is that correct? Mr. CAMPBELL. Yes, sir; and it has revenues. Mr. McGREGOR. Such being the case, what do you think about the Federal National Mortgage Association? That has been financed by a combination of capital stock sales to other Government corporations, such as the RFC. Do you object to that financing? Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. You object to it? Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. Why do you not recommend to this Congress that we change that law? Mr. CAMPBELL. Well, I think it is a little different, Mr. McGregor. I think that the FHA and Fannie Mae, as they call it-the Federal National Mortgage Association-have behind them certain specific assets. I have not made a recommendation because I am in my post, as you know, only since December. But you asked me-perhaps the question should have been would I have opposed it in the first place, and I say I would have. Mr. MCGREGOR. How about the Tennessee Valley Authority? That has been financed by direct appropriations from the Congress. Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. And sale of bonds from the revenue from its operation. Mr. CAMPBELL. There was a bond issue originally, I think, sir, and it is now down to a relatively small sum. There have been no bonds issued since then. All of the Tennessee Valley Authority has been financed either by appropriations or by Congress specifically setting aside or allowing them to use some earnings from their resources. Mr. McGREGOR. Their revenue? Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. And that has been suggested in this particular legislation, although it has not been specifically defined. Mr. CAMPBELL. Yes, sir. Mr. McGREGOR. It is a similar situation to the TVA? Mr. CAMPBELL. Yes, sir. I think so. Mr. McGREGOR. You raised the question that the Congress would be relinquishing its authority. Is there anything in this bill which would justify that statement? Mr. CAMPBELL. My recommendation is that the program be reviewed annually. If you set up this corporation carefully and limit its authority to a point where you have the same control as you now have over appropriations, I would not object. Mr. McGREGOR. My dear General, can you find anything in this bill that says it will will not require specific appropriations of the Congress? Mr. CAMPBELL. I think the bill does not spell out definitely the powers of the corporation. Mr. MCGREGOR. That is true; but can you find any place in the legislation where we are taking any power from the Appropriations Committee of the Congress? Mr. CAMPBELL. Mr. Keller would like to answer that. Mr. KELLER. Mr. McGregor, I think the point is you will have to make appropriations either now or each year to service these bonds. Mr. McGREGOR. And when we make appropriations the Congress will say yes or no, as to how much money is to be spent. Is that not correct? Mr. KELLER. I think that is correct, sir, but if you do not make a permanent appropriation you will then be in the position of having to appropriate to service bonds which are already issued. In other words, I do not know just what you can do about it at that stage. Mr. McGREGOR. And you feel that Congress will take care of its moral obligations? Mr. KELLER. Yes, sir. I think they will. They always do. Mr. McGREGOR. Is that not the same as any other obligation we have? Because it is the right of the Congress to say to the Tennessee Valley Authority, "We are not going to give you any more money." You have suggested we might repeal it if we would pass a 1-cent tax on gasoline. Mr. KELLER. We said you would have the authority to Mr. McGREGOR. It is the right of the Congress to repeal any of the laws if they want to. Mr. KELLER. Yes, sir; with a few exceptions. Here is the point we are trying to get across, Mr. McGregor. The advantage of a direct appropriation each year is that that money is not spent until the Congress actually appropriates it. When you issue bonds under the authority given in this legislation I think that the appropriation action of the Congress would come as a second step-appropriating money to retire the bonds that have already been issued, assuming a permanent appropriation is not made. Mr. MCGREGOR. Who appropriates the money? Mr. KELLER. The Congress. Mr. McGREGOR. That is exactly what I am trying to bring out. In no instance under any section of the legislation before us for consideration are we relinquishing the power of the Congress. Is that statement correct? Mr. KELLER. You are doing it to a degree, in my opinion, in that you are at this time authorizing a Government corporation, if the bill is passed, to issue $21 billion worth of bonds. In other words, there is nothing in the legislation that I see that says, "Mr. Highway Corporation, you come back again next year and we will tell you how many bonds you can issue this year for financing." Mr. McGREGOR. There is nothing in it that does not say that, is there? Mr. KELLER. No, sir; but unless it is in there I do not think they will be back. Mr. McGREGOR. Do you think as long as Congress is in sission— and we are always subject to call-that we will not assume our responsibility and make appropriations if we think they are necessary, or cancel those that we think are not necessary? That is all the questions I have, Mr. Chairman. I would like to ask unanimous consent of the committee to insert at this point in the record a statement by Philip A. Ray, General Counsel for the Department of Commerce, and included therewith a memorandum submitted by the Department of Commerce on this particular section of the legislation. Mr. DAVIS. Without objection, it will be included as a part of the record at this point. (The documents referred to are as follows:) DEPARTMENT OF COMMERCE, Hon. CHARLES A. BUCKLEY, Chairman, Committee on Public Works, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: In the course of Secretary Weeks' testimony before your committee on the interstate highway program, Congressman Rogers made reference to the testimony of the Comptroller General before the Roads Subcommittee of the Senate Committee on Public Works and asked that we comment thereon, I am enclosing herewith a copy of the prepared statement of the Comptroller General on S. 1160. In discussing the legal aspects of the various provisions of S. 1160, the Comptroller General's statement is substantially in accord with the views of the Department of Commerce and other agencies of Government, such as the Treasury Department and the Department of Justice. The Comptroller General stated that there is no question as to the legality of Federal appropriations in the form contemplated by S. 1160, and that there are no limitations either in the Constitution or in statutory law against dedicating a portion of the gasoline tax revenues to meet the obligations of the Federal Highway Corporation. He stated that the bond obligations of the Corporation would not be legal obligations of the United States and would not come within the Federal debt limitation. The Comptroller General's statement expressed some doubts in regard to the section of the bill (sec. 208) dealing with right-of-way acquisitions. He suggested that this section should be clarified as to the source of funds for payment of the property acquired. We are satisfied, however, that no substantial legal question exists with respect to the provisions of section 208 of the bill. I am attaching hereto a memorandum which was prepared in response to questions raised by the Roads Subcommittee of the Senate. Item 3 of this memorandum deals with the legality of the provisions of section 208. The Comptroller General in his statement expressed the opinion that bonds issued by the proposed Federal Highway Corporation would, as a practical matter, be moral obligations of the United States, and he advanced the view "that the borrowings should be handled under the existing authority of the Secretary of the Treasury under the Second Liberty Bond Act, as amended." He further expressed the belief that the funds for the highway program should be directly appropriated by Congress and financing responsibility should be placed entirely in the Treasury Department rather than in a new Government corporation. On this matter of policy, the testimony presented by Department of Commerce representatives and others before your committee expresses quite fully, I believe, the reasons why the financing method proposed in these bills is a feasible and practical way of accomplishing the necessary interstate road construction in a 10-year period. We shall be happy to be of any possible assistance to your committee in connection with its deliberations on this proposed legislation. Sincerely yours, PHILIP A. RAY, General Counsel. MEMORANDUM SUBMITTED BY DEPARTMENT OF COMMERCE 1. It was requested by the subcommittee that the Department of Commerce supply information with respect to other previous bond issues of the Federal Government similar in character to the bond issue proposed in S. 1160. The Federal Government has utilized a number of different methods to finance the activities of Government corporations. These various methods are summarized in the attached study prepared by the United States General Accounting Office, February 1955. It will be noted that Congress has frequently authorized the issuance of bonds and other obligations by Federal Government corporations. In some instances these bonds of Government corporations have been offered for sale to the public, and in other instances they have been authorized only for issuance to the Treasury Department as security for amounts borrowed from the Treasury. For example, the St. Lawrence Seaway Development Corporation, created pursuant to Public Law 358, 83rd Congress, is authorized to issue to the Secretary of the Treasury its bonds in an amount not to exceed |