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averaged around $150 million a year, and the current estimate is $300 million a year in the future. Senator LEHMAN. Professor, may I interrupt you there? .

? Mr. HARRIS. Yes, sir. Senator LEHMAN. The figures that we have received from a number

a of witnesses show that the average loss is much more than $150 million.

Mr. HARRIS. On floodings!
Senator LEHMAN. On floodings.

Mr. HARRIS. These figures are taken out of the Hoover report, and it may well be these are wrong, but these are the figures that have been presented to the Hoover Commission.

Senator LEHMAN. Well, I am quoting now from figures that have been given to us by General Sturgis, of the Corps of Engineers, and by the Department of Commerce. They say the losses run in excess of $500 million a year on the average.

Mr. HARRIS. Is that so?

Senator LEHMAN. This year, of course, they will be very much greater than that, and in several previous years.

Mr. HARRIS. One year it went up to $1,050 million.

I would like to say this: That I have read Senator Kennedy's bill, and I think it is a fine bill. I would disagree with it in some issues. For example, I would think it would be a great mistake to have the rates as actuarial rates—that is, according to the risk. I would certainly try to encourage property to move from vulnerable places, and to that extent I would have different regional rates, but I think if you put the rate on a purely actuarial basis the net result would be that you would help aggravate or accentuate the migration of industry from the vulnerable States. This problem of migration of industry is a very serious matter partly brought on by Federal policies I may say. It would be a great mistake for the Federal Government to impose an insurance program upon the industry of this region which would further accentuate that movement, and I think that actuarial rates would tend to have that effect.

Senator LEHMAN. Professor, may I interrupt you? I wonder whether you have studied the bill which I drafted!

Mr. HARRIS. Senator, I am ashamed to say I have not because you did not send me a copy, and Senator Kennedy did send me a copy. I read his and did not read yours.

Senator LEHMAN. We will rectify that omission.

Mr. HARRIS. I would very much like to see it, and, Senator, I will be very glad to send the committee my comments if you would like.

Senator LEHMAN. I provided for just that kind of coverage.
Mr. HARRIS. I am awfully sorry I have not read it.
Senator LEHMAN. We will see that you get one.

Mr. Harris. May I also say that, therefore, although in general I agree with Senator Kennedy's bill, I would like to see a narrowing of the range of rates so that you don't establish fully actuarial rates, with this one reservation: That when new property comes into a vulnerable area, that property should be hit for the full actuarial rate. In other words, this would discourage people from coming into a vulnerable area.

Senator, I would like to be a little eloquent on one point. This point has not been made. Actuarial rates would not be fair from the viewpoint of equity. I am thinking now of what has happened to the New

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England region in recent years as a result in no small part of Federal policy.

In a general way—I want to put this on a national basis—there have been many policies that I have approved that have helped the South has against the North, but I also want to point out that the South has had many favors. I made the following statement to at

. least two Senate committees on which there were prominent Southern Senators: The Southern Senators in general talk free enterprise, but they actually practice somialism.

It is an interesting thing. For example, I have been making a study of more than a hundred programs of Federal expenditure, and the State that gets the most money out of the Federal Government and gives back the least-I mean gets the most and is taxed the least relatively speaking—is Texas. And the State that gives the most and gets back the least is Connecticut.

Senator, the Governor of Texas said a good deal about socialism in the Democratic Party, and I'm not raising a political issue here, but the fact did impress me that here was Texas talking free enterprise all the time but getting as much money as it possibly could out of the Federal Government, never refusing any money and always begging for more.

If you take a look at the New England situation, you will find something like this on the basis of the preliminary study I have made: If you take the three States of Massachusetts, Connecticut, and Rhode Island

Senator Bush. May I ask the witness are those per capita figures ? How do you arrive at that?

Mr. HARRIS. These are per capita figures. That is, how much money each State pays, not only pays in taxes but the burden of taxation. In other words, if North Carolina pays taxes on tobacco, we estimate how much of those taxes are paid by Massachusetts. The same with Michigan automobiles. So that putting this on a per capita basis, what we find, for example, is that the three major industrial States of New England, Massachusetts, Connecticut, and Rhode Island, received back one-third as much relative to what they paid into Federal taxes as five major southern industrial States, North Carolina, South Carolina, Georgia, Alabama, and Tennessee. Surely, the Northeastern States can fairly claim some help from the Federal Government to meet part of the costs of disaster.

I was very pleased to read in the New York Times, which I think is generally very accurate, the statement by Senator Bush that he thought it was about time, when we were in trouble and had to have some help as a result of disaster not of our own doing, that some of the other States might pay back a small amount of the money that we have put into the Federal Treasury.

This is not merely a matter of spending. For example, you can go through almost every Federal policy, social security, tax amortization. Under tax amortization, which has provided plants for the South and West particularly, the South and West have been able to build plants with special tax privileges, even textile plants, which have taken away our business as a result of special tax favors.

As far as agriculture goes, we pay more for our food and raw materials and therefore have to export more to pay this particular bill.

The same principle holds as regards certain labor policies.

What I am trying to say here, Senator, is that on the grounds of equity in terms of what the Federal Government has done for New England we have a strong claim that part of the cost of this kind of disaster should be borne by the rest of the country.

Senator Kennedy pointed out very effectively in a statement he made sometime ago that if you look at flood control that of the $10 billion authorized 3 percent of these $10 billion for flood control has gone to New England, and of the $1.8 billion appropriated in the last 5 years only one-third of 1 percent has gone to New England. I have recently looked into the figures for the last 2 years of the Army engineers' expenditures of about $1,200 million and the expenditures for reclamation of about $400 million which are no small part of flood control. of these sums in the last 2 years New England had received $7 million, or less than one-half of 1 percent. And in terms of her share of income which is 612 percent, of Federal taxes borne 742 percent, of manufacturing employment 9 plus percent, and in terms of our vulnerability to floods, we should have had 15 or 20 times as much as we actually received.

I shall not take the trouble to read you paragraph 8, of the resolutions of the New England governors, because Governor Herter presented this well, but the statements in a general

Senator Bush. Would the professor mind interruption?
Mr. HARRIS. I wish you would.

Senator Bush. I think it would be very helpful if you would amplify these comments or give tables or whatever information you think would give a completely clear picture of these statements about the beating New England has taken vis-a-vis some of these other States respecting the matter of taxes paid and benefits received. I am sure you have more comprehensive information.

Mr. HARRIS. I have a great deal of information I could give you.

Senator Bush. If you would prepare a supplementary statement on that point, I think it would be very useful to have in the record.

Mr. HARRIS. I would be glad to.

Senator LEHMAN. We would like to have that. I wonder if you could include New York State?

(The information referred to will be found at the end of Mr. Harris' testimony, p. 468.)

Mr. Harris. I might say I have talked to Governor Harriman about this twice, and he is interested, and I talked to Senator Douglas about it. I said that it seemed to me that States like Illinois and New York should be very much interested in this problem because the South is tighting the Civil War all over again in terms of trying to take away our industry. They are on the make, and they want to take away our industry, and we have got to fight them equally.

I must say on behalf of Senator Kennedy that he has taken a great deal of leadership in trying to organize New England Senators especially. I hope ultimately he is going to get other northern Senators in this group, so if they are well organized we will be equally well organized so we can at least get our share of what is coming to 11s.

Senator LEHMAN. I can assure you I always enjoy working with Senator Kennedy, and we have joined our forces on many occasions.

But I think if you could make a survey of New York that you would find that the situation was approximately the same as in the New England States.

Mr. HARRIS. Exactly. The only reason that New York State hasn't bled over textiles as we have is that she has relatively more of other industries, and she has a better location than some of the New Eng. land States. Connecticut has a good location. Connecticut has done very well compared with other New England States. Of course, Connecticut has taken more of a beating on the flood than other New England States.

Senator KENNEDY. Of course, as Professor Harris has gone into this more than anyone else in the country, he knows every program that devised, such as Hill-Burton, all laudable programs, have written into them formulas which give us the short end, which is inevitable because we are a high-income area. But, nevertheless, in every new program that is developed, these traditional bad balances against us are continued, and I think that we are going to have to be more concerned with that as time goes on.

Mr. HARRIS. Senator, I would say this: What you say is absolutely right. I go even further and say, even in terms of our income we pay a larger part of the bill.

Senator LEHMAN. Senator Kennedy pointed out that the Senate Labor and Public Welfare Committee is considering many projects, of which committee we are both members. He has been very active and very, very sound, I think, in his statements.

Mr. HARRIS. I am sure of that. He has had training at Harvard so he ought to be sound.

I shall not read you paragraph 8 because you had this presented to you a number of times. The program of the New England goyernors I think is a minimum program, because it does not deal with flash floods, of course, which the Army engineers have not had an opportunity to deal with, and it does not provide help in a number of cases where there were difficulties of getting a compact among the New England governors.

On the problem of insurance and expenditures on flood control, I think we are all in agreement that these should be increased a good deal. I have gone through I think it is almost 2,000 pages of the Hoover Commission report, and I would like to point out to you, Senator, that the Hoover Commission is very much worried about the amount of money we are obligated to pay out for flood control.

I think the Hoover Commission report came out at a very unfortunate time. If it had come out after the present floods the Commission probably would have taken a somewhat different position. It would be unfair to criticize the report on the basis of past history. But there are very exaggerated figures of how much money we are obligated to pay out. As you know, the Hoover Commission suggests that whenever local government is involved in a flood project it is the job of the local government to finance this project. If you are going to finance in that particular way, you are not going to get very much flood-control operation.

I just give you one example of the exaggeration of some of these figures in the Hoover report. They say, for example, that the Department of Agriculture has obligated us for something like $17 billion for flood programs. Actually, as you know, the Department of Agriculture cannot make these plans on their own without congressional approval, and so far, despite this $17 billion plan, only $42 million has been appropriated under Department of Agriculture plans.

The Hoover Commission suggests that what we really need is to put the burden on State and local government. Let me point out to you, Senator, in view of the rise of State and local expenditures in the face of their rigid tax systems—the rise of State and local expenditures has been 21, times since 1946 as compared to 134 times for Federal expenditures, and the rise of the national debt for the Federal Government has been 8 percent since 1946 and 110 percent for State and local government or 14 times as much--it seems to me un realistic to say that a larger part of the burden should be put upon the State and local governments.

I might say parenthetically here that when we are talking about tax reduction we might conserve some part of the money we would lose through tax reduction through this kind of a flood program.

On insurance and disaster relief, which has been one of our problems, of course, of late, I think we all agree the Federal Government has tried to do a good deal for us, but, unfortunately, it has not been enough for New England for various reasons.

In the first place, ODM regulation I, amendment I, which provides accelerated amortization, does not cover textiles, because textiles are not covered under the expansion program of the ODM, and yet it does cover the airplane industry, which, according to the Senate Military Committee, had profits of something like 40 or 60 percent-I cannot remember the exact figure, but I think it was 60 percent, or it may have been 40 percent-of net worth in the last year. The textile industry in that year had an awful time breaking even.

As far as the problem of loans to meet this situation, it is not at all clear that the textile industry would qualify.

Finally, there has been a great deal of talk about providing us with contracts, war contracts, under special terms. So far, according to the Department of Labor, and I quote:

Only 2 preference contracts, valued at $100,000 or more, were awarded to New England firms in labor-surplus areas in 1954. The entire program of granting tax-amortization assistance (in labor-surplus areas) was expected to create 9,000 jobs.

I think we are all agreed here in New England that this business of transferring contracts, however good the intentions are, has been a complete farce. It has been promised year after year it would help without any significant results.

What kind of insurance do we want? We need a combination of insurance and subsidy. We need rates that reflect only in part vulnerability. We need wide coverage. We need experimentation at the beginning. I suggest if you look at the bottom of page 8 you will see some figures on what is happening

Senator Bush. Mr. Chairman? Mr. Harris, when you say “we need experimentation at the beginning,” you mean the first bill we adopt should be a term bill of 3 years or 4 years or something of that order?

Mr. HARRIS. I was thinking, Senator, that we know so little about this whole problem I myself am a little critical of Senator Kennedy's bill because I think it does not go far enough.

For example, his bill, as I recall, provides $500 million of insurance 1 year, a billion the second, a billion and a half the third. For example, the United States Government granted $35 billion of housing

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