Road improvements also will be a key factor in determining whether total United States employment will rise in the next ten years to the degree that Government economists declare is necessary to serve our growing labor force.

With the rise in highway travel over the years, two major shifts have taken place in the Nation's economy.

First, mass-production methods became possible on farms and in factories because farm and factory products now could move economically over the highway to even the most market place, and because the family automobile gave the customer easy access to the market place, to make complete the ingredients for mass distribution of industrial and agricultural output.

Second, with the rise in living standards that came with mass-production and mass-distribution methods, and the increased ability of people and goods to move freely over our highways, vast new employment opportunities opened up in the so-called service industries.

Today only about 1 in 3 United States jobs are in the farming and manufacturing fields that once accounted for most United States employment.

The rest are in retail trade, finance, home and business construction, education, and a host of other occupations that have expanded with the rise in motor travel-including the tourist and recreation enterprises that now are a leading source of income for residents of more than half of our States.

Of the 11 million additional jobs needed in the next 10 years to serve our growing labor force, 8 million must be in the service industries, according to Government studies.

The service industries are capable of tremendous future growth as our economy expands. But their past growth has been directly related to growth of highway travel, and their future growth depends heavily on a continued rise in highway travel.

A RECOMMENDED FEDERAL HIGHWAY PROGRAM

We believe that the facts we have presented up to this point make clear the urgent need for an accelerated road program over the next 10 years, with special emphasis on improving the key routes embraced by the Interstate Highway System.

The questions now arise as to the sharing of responsibility for parts of the road program among the Federal, State and local governments, and as to how the Federal share can be financed.

(The chart entitled "How Present Road Program Falls Short of Needs" is as follows:)

$17.0

$13.4

98604

$11.7

$8.8

Highway officials declare that funds presently in sight for the next 10 years will cover $47 billion of the $101 billion in total needs for this period.

Under existing programs, the Interstate Highway System will be the most neglected of all road systems in relation to its improvement needs. It will not be fully modernized for more than 40 years under present financing programs.

The State highway departments and the Governors' Conference have recommended that the Federal Government take over most of the $27 billion cost of modernizing the Interstate System in 10 years. The automobile industry supports this recommendation. We believe no other method exists that will get this key system built in any reasonable period of years.

An extreme need exists for doing this work on a planned basis over a period of years. We believe the only practical and economical method is to authorize a 10-year program so the States can carry out this long-term project with definite assurance that needed construction funds will be available as they are required.

In addition to a 10-year Federal Interstate System program, we would recommend that Congress provide increased road funds for the primary and secondary Federal-aid systems, to help the States make faster progress on these other important road programs.

To the extent that Congress may find that this enlarged Federal road program cannot be financed from current tax revenues, we believe Congress should authorize the issuing of special long-term Federal securities. These securities could be serviced from scheduled appropriations by the Congress.

This is the method all business and industrial firms follow to pay for capital improvements whose costs can be met from higher future revenues generated by the improvements.

This program represents an emergency effort to catch up with highway deficiencies that have accumulated over the last quarter century. A large part of the cost can properly be spread over 30 years or so, and paid for out of future tax revenues.

The next chart shows the relationship between the expected national economic growth and the Federal revenues. (The chart entitled "National Economic Growth and Federal Revenues" is on next page.) The Joint Congressional Committee on the Economic Report has declared that the national economy-measured by gross national output of goods and services-must expand by 50 percent in the coming 10 years to assure sufficient employment and higher family income for our growing population.

If this economic growth does occur-and better roads hold much of the answer here-the Joint Congressional Committee points out that the Federal Government can make sharp tax reductions and still obtain much larger total yearly tax revenues because of the general economic expansion.

The automobile industry believes that this needed growth in the national economy is the really important issue before Congress in the proposed expansion of the Federal road program.

We believe the decisions of Congress on this new road program will have a compelling influence on the question of whether employment and family income continue to rise in the next 10 years, at the rate that

63235-55-50

Rate Reduction by 1965)

they are capable of rising and that the economic well-being of our growing population requires that they rise.

As the Governors' conference declared in its report to the President on national highway needs:

An adequate highway system is vital to the continued expansion of the economy. The projected figures for gross national product will not be realized if our highway plant continues to deteriorate.

We believe the facts we have set forth support the four points we outlined at the start of our statement:

1. The interstate highway system should be modernized over the next 10 years, because it holds the key to future expansion of traffic in the United States.

2. The Federal Government should assume most of the cost of the interstate system improvement, because of its paramount national importance. Unless such emergency action is taken, the system will never catch up with growing traffic demands.

3. The Congress should grant some increases in other Federal-aid road funds, to help the States step up the improvement of routes outside the interstate system.

4. To the extent that this expanded Federal road program cannot be met from current Federal tax revenues, Congress should authorize the use of long-term securities, to be serviced by scheduled appropriations from the Federal Treasury.

On behalf of the automobile industry, I again want to thank the committee for the opportunity given us to offer our views on the highway proposals now under consideration.

Obviously, we have a direct interest in safer, more free-flowing highways. The future of our industry depends on them.

But to an even larger degree, we believe, the future expansion of employment and living standards in the United States demands that major road deficiencies be overcome as quickly as possible.

We believe that these considerations impose on our Federal, State, and local governments a clear obligation to carry out a cooperative accelerated program of capital investment in urgently needed road and street improvements.

I thank you very much for the privilege of reading the statement, and I will now try to answer any questions you may have.

Mr. FALLON. Mr. Nance, on behalf of the committee I would like to thank you for a very fine statement. If you will just remain, some of the committee members would like to ask you a few questions. Mr. Davis?

Mr. DAVIS. Mr. Nance, this is a splendid statement. I just have one question. Did you appear before the Senate committee?

Mr. NANCE. Yes, sir, I did.

Mr. DAVIS. And you made substantially the same statement?
Mr. NANCE. Substantially so. Yes.

Mr. DAVIS. I just cannot understand how the other committee in the other body has gone so far afield. My own colleague over theic, Senator Gore, has a substitute when the Highway Commission and the mayors of the cities and now your organization and others have come along with a unanimous front on this matter. How they have gone so far afield I just cannot understand. It seems to be rolling and pick