CONTENTS Bishop, Charles E., professor, North Carolina State College, Raleigh, Parsons, Kenneth, professor, University of Wisconsin, Madison, Wis_- Ruttan, Vernon, professor, Purdue University, Lafayette, Ind. Letters, statements, etc., submitted for the record by- Ellis, Lippert S., dean and director, University of Arkansas College 967 974 957 981 Letter to Senator Clark_ _ 980 980 Mendenhall, Howard, manager, Rend Lake Conservancy District, 983 Murray, C. C., dean and coordinator, University of Georgia, College 981 Parsons, Kenneth, professor, University of Wisconsin, Madison, Wis.: Age-sex distribution of open-country population in Price County, Letter to committee on recreation as an industry. Pasarew, I. Alvin, director, Maryland State Planning Commission: 982 Proxmire, William, a United States Senator from the State of Wis- consin: Study from Milwaukee Journal, Four Out of Ten Farmers Raymond, Julia, Monrovia, Calif.: Letter to Senator Fulbright 982 983 AREA REDEVELOPMENT MONDAY, FEBRUARY 24, 1958 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The subcommittee met, pursuant to call, in room 301, Senate Office Building, at 2:05 p. m., Senator Paul H. Douglas, chairman of the subcommittee, presiding. Present: Senators Douglas, Frear, and Proxmire. Senator DOUGLAS. The subcommittee will come to order. The Production and Stabilization Subcommittee is resuming hearings on legislation dealing with area redevelopment. A number of bills have been introduced on this subject-S. 104, S. 964, S. 1433, and S. 1854. All were considered at length, and were printed in part 1 of these hearings held during the last session. The problems of the areas involved are made far worse by present business conditions. Areas which suffered from a high rate of unemployment in 1956 and 1957 are now far worse off. Many areas which were just on the borderline of being in the surplus unemployment category in 1956 and 1957 are in real trouble now. Last year the Labor Department's statistics classified 19 of these areas as being in distress. Today there are 45 so classified. We have been assured that these difficult times too will pass way, by March, or June, or anyway by November. But, even if full prosperity resumes by one or more of these selected dates, the areas which needed redevolpment in 1957 will still need redevolpment in 1958 and 1959, and a number of the areas which were marginal in 1957 may have fallen permanently into the class which needs redevelopment. Also, the normally hard-hit areas are the first to feel the full impact of an economic dip or slump and really contribute to the spread of the problem across the Nation. The present time is, I think, desirable for many of the public projects which would be authorized by my bill, namely, industrial water, sewers, power, and other similar projects on which further industrial or commercial development of a city or a town may depend. I may say in this connection that the provision of industrial water is essential for the attraction of industry in the hard-pressed areas. Yet this cannot be counted in the benefit-cost ratio. The Army engineers primarily concentrate on navigation and flood control. Similarly, in the Small Watersheds Act generally the industrial lakes thus provided will be too small for the attraction of large industry. So this provision of industrial water tends to fall between two stools. It cannot come under the Flood Control and Navigation Acts and it cannot come adequately under the Small Watersheds Act. The bell which I have the honor of introducing, S. 964, I think does meer is problem. It also includes a provision for loans to assist in the development of low-income rural areas. We heard a good deal of testimony in support of this bill last year, but the problem of the rural areas was not fully developed. We expect to do that with this very capable group of witnesses who are to appear before us today. This afternoon we are fortunate to have a number of agricultural economists who have studied the problems of the low-income farm areas and have sought to find ways to enable these low-income areas to become prosperous segments of the national economy-to become efficient and profitable producers, as well as substantial paying customers for our markets. Gentlemen, we appreciate your coming to Washington to give the subcommittee the benefit of your views on this legislation. We would like to call as our first witness Prof. Charles E. Bishop of North Carolina State College. Mr. Bishop, we appreciate your coming here very much indeed. STATEMENT OF CHARLES E. BISHOP, PROFESSOR, NORTH Mr. BISHOP. Thank you, Mr. Chairman. There are large income differences among regions in the United States. On a State basis per capita income in 1956 ranged from $964 to $2,858. In 1950 there were 51 economic areas in the United States that had median incomes, of families, of less than $1,000. Senator DOUGLAS. I may say that Mr. Morse, the Under Secretary of Agriculture, testified that there were 112 million farm families which had total incomes of less than $1,000. Mr. BISHOP. That sounds about right. All but 4 of these economic areas with median family incomes of less than $1,000 were located in the South, and 2 more were contiguous to the South. These income differences are not of recent origin, but have existed for a long time. The differences in income among regions are larger than the differences in cost of living, and cannot be explained by differences in the composition and earning capacity of the population. Income differences seem to be associated to a large extent with differences in the occupational distribution of the population. In general, those areas that are characterized by a large proportion of the population engaged in agriculture, have low incomes. The low incomes of farm families result primarily from low earnings of labor in farming as compared with the earnings of labor in nonfarm occupations. Even after adjustments for differences in population characteristics and in purchasing power of income in farm and in nonfarm sectors, the per capita income of the farm population in the United States in 1956 was about one-third less than that of the nonfarm population. Furthermore, there are large differences among regions in net income from agriculture per capita of the farm population. Net income from agriculture per capita of the farm population in the Southeast, for example, is only about one-half that of agriculture in the rest of the United States. Low-incom as in agriculture have certain characteristics. The amount of ther capital investment per worker tends to be low in areas characterized by low income per farm worker. Capital per worker in agriculture is 3 to 4 times as high in some regions as in others. For example, the amount of capital invested per farm worker in the Southeast is only about one-third as much as the amount of capital invested per farm worker in the Corn Belt. Areas with small amounts of capital and land per farm worker tend to produce commodities which have a high value per dollar of capital invested, and per acre of land, but which yield a low return per unit of labor employed. Seasonal variation in labor requirements usually is high in the production of the major farm commodities produced in low-income areas. Hence, during much of the year there is a large amount of unemployed labor on farms in these areas. In the Southeast, for example, the man-hours of work performed on farms is three times as much in some months as in other months. Generally speaking, labor on farms is fully utilized at harvest seasons. At other seasons, however, it is not fully utilized and there is a lot of underemployment of labor on farms. The number of hours worked on farms per male farm resident is lower in low-income areas than in other areas. Studies in several regions, however, using the Cobb-Douglas type of index Senator DOUGLAS. That is a memory of another life. Mr. BISHOP. Studies in several regions, however, indicate that only a very low return can be expected from the use of additional labor on farms in the Southeast, without sufficient additional capital and land to change the type of farming. Low-income areas are also characterized by a relatively large proportion of the population in the young and the old-age groups, and a small proportion of the population in the income-producing age groups. The population of low-income areas also has less formal schooling than the population of other areas. The replacement ratios for the population are also high in low-income areas. During the present decade it is estimated that in the Southeast 2 males will enter the rural farm population between the ages of 20 and 64 for each 1 who retires or dies. In spite of the high replacement ratio, the farm population has decreased as a result of the high rate of migration from farm to nonfarm residences. During 1956 alone 1 person of each 11 living on farms transferred to nonfarm residences. Senator DOUGLAS. One person out of 11? Mr. BISHOP. In 1956. Senator DOUGLAS. In other words, there was a decrease of 9 percent in farm population in 1956 alone. Mr. BISHOP. That is right. The figures indicate over 1,800,000 people migrated from farm to nonfarm residences in 1956 alone. Senator DOUGLAS. Did they mostly come from poor farms? Mr. BISHOP. Studies we have made indicate the rate of migration tends to be highest in the low-income areas. Much of this migration, I might add, has been across State boundaries-from one State to another. Areas with low incomes of farm families also tend to have low incomes of nonfarm families. Basically the same characteristics tend to cause the low incomes of nonfarm families as cause the low incomes |