cost of Government by means of an emergency economy program approximating $238,000,000. Yet this very morning this committee is contemplating undoing all of the work of the Special Economy Committee and adding over $300,000,000 to our actual expenditures for the fiscal year 1933.

Providing for a special issue of bonds does not eliminate the deficit. It recognizes its existence. For how otherwise does a government neet a deficit save by borrowing? From the standpoint of the public finances and of cost it would be infinitely preferable, instead of limiting us to the issuance of special bonds, frankly to acknowledge the creation of this deficit and then permit the Treasury to borrow the $300,000,000 as part of its current financing program through the issuance of the most suitable securities.

There is another inconsistency to which your attention should perhaps be directed. The day before yesterday the Senate passed a tax bill with surtax rates so high as to invite the purchase of taxexempt securities. To-day, with gracious generosity it is proposed to make them available in the form of 25-year tax-exempt bonds.

This, however, is but an incidental objection. The fundamental objection to this section is that it unbalances the Budget; that it resorts to the unsound device of an extraordinary Budget; that it breaks down a sound financial policy pursued since the beginning of the Government; and opens a breach which I am fearful will be only too promptly widened.

Senator HULL. Mr. Secretary, are you now referring to the first section of the bill?

Secretary MILLS. I am referring to the public-works section, which I think is section 4.

Senator HULL. Pardon me for interrupting you, but I was unfortunate in being a little late arriving at the committee room.

Secretary MILLS. And for what purpose? For the humane and righteous purpose of creating employment. But does it actually accomplish that purpose in a way commensurate with the sacrifice of sound financial principles and commensurate with the expenditure of public funds involved? Let us consider the three main items of public works for which these funds are to be expended:

The bill provides approximately $136,000,000 for roads and trails. I have not the detailed figures covering the $16,000,000 for the construction of forest highways and trails, but I am submitting with this statement a table showing the allotment of $120,000,000 of road funds by States, the allotment per capita, and the total labor that would be employed directly.

The expenditure of $120,000,000 for road-building purposes would give employment directly to but 33,193 men.

Senator GORE. I didn't catch that number.

Secretary MILLS. I said it would give employment directly to but

33,193 men.

Senator WAGNER. Who were those figures given to you by?
Secretary MILLS. The Department of Agriculture.

Senator WAGNER. By Mr. McDonald?

Senator MILLS. I think they are Mr. McDonald's figures.
Senator WAGNER. Then he gave other figures to me.

Secretary MILLS. The maximum number of men who would receive employment in any one State is 2,130 in Texas, 1,683 in New York, 1,461 in Pennsylvania, 1,410 in Illinois, and 1,051 in Michigan;

and so on down to 216 in Connecticut-I do not see Senator Walcott here.

Senator GORE. And how many for Oklahoma?

Secretary MILLS. And 167 in Delaware.

The CHAIRMAN. Mr. Secretary, I note that you use the words "direct employment." Is that on the theory that only 15 per cent of the money will be used in the employment of labor?

Secretary MILLS. Direct employment does not include transportation of material to be used there, and road machinery, and so forth. It is the actual work in the making of roads. But I am not an expert on the roads program, and should much prefer, if you want to test out these figures, that you get someone who is conversant with them. The CHAIRMAN. Of course, I think the figures are wrong. I think that the situation is covered up by using the words "direct employment" instead of using the word "employment."

Secretary MILLS. That may be so, but that is for you to develop. I do not pretend to be an expert on road building. Far from it. I am here presumably to speak on the whole bill, and I am giving you a table which was not prepared in the Treasury Department and which you are at liberty, of course, to test out as to accuracy in any way you see fit. However, I am going to give you some figures from our own department which I will stand on, in connection with public buildings, and they are more startling than those just given to you.

Senator GORE. What are the figures for Oklahoma?

Secretary MILLS. In Oklahoma under the road provision you would give direct employment to 804 men.

Senator COUZENS. For how long a period?

Secretary MILLS. For one year.

Senatore GORE. The point I wish to make on that is, that indirectly in the way of production of materials and transportation there is additional employment of labor.

Secretary MILLS. Senator Gore, might I complete this statement, and then I will be glad to be cross-examined.

Senator GORE. Yes, but relating to roads, I want to ask a question before you pass that subject.

Secretary MILLS. Very well.

Senator GORE. Here is my point on that: We are trying in the Senate to-day to effect economies that will mean about $250,000,000. Can you think of anything that the American people could do without better than these trails?

Secretary MILLS. Well, I don't know. I think, however, Senator Gore, I might say that

Senator GORE (interposing). I do not want you to have to make invidious comparisons, but that thought occurs to me.

Secretary MILLS. As far as roads are concerned I think we are somewhat overbuilt in this country.

Senator GORE. I think so, too.

The CHAIRMAN. You may proceed, Mr. Secretary.

Secretary MILLS. Paragraphs 3 and 4 of section 4 provide $45,500,000 for river and harbor and flood-control projects.

The expenditure of this $45,500,000 would give employment to only 18,150 men. And that figure I got from General Pillsbury of the War Department, directly from him.

Senator WAGNER. You say directly. Therefore you do not consider the employment that goes into the machinery that is used in connection with this work.

Secretary MILLS. Senator Wagner, I think you had better examine General Pillsbury on that. However, I think you will find out that the machinery has to a large extent already been purchased, and that this is a very true figure as far as actual employment to be afforded when it comes down to taking mud out of ditches.

Senator WAGNER. What does the other money go for if you do not think the $45,000,000 would afford employment to more than 800 men?

Secretary MILLS. I said 18,150 men.

Senator WAGNER. Well, 18,150 men. Are they going to get the $45,000,000?

Secretary MILLS. No.

Senator WAGNER. Where then does the other part of the money go? Secretary MILLS. I should prefer that you would ask General Pillsbury to answer that.

Senator WAGNER. Isn't it obvious to anyone that it is not possible the entire $45,500,000 is to be distributed among 18,150 men?

Secretary MILLS. Senator Wagner, please do not cross-examine me as to the figures of the Agricultural Department, or the figures of the War Department. If you want to challenge them call down here the men who made them up. I asked the War Department to tell me how much employment would be afforded by the $45,500,000, and General Pillsbury came to my house last night at 9 o'clock and gave me the figures, 18,150 men. Will you ask him how he makes it up?

Senator WAGNER. I am trying to make the point that is so obvious to you, or anyone else, that those figures can not be accurate, that $45,500,000 is to be distributed in one year among 800 men. Secretary MILLS. 18,150 men.

Senator WAGNER. Well, 18,150 men. Why, that is preposterous. Secretary MILLS. It may be preposterous, but your quarrel, if any, is with General Pillsbury. And I will say that you are dealing with one of the leading engineers of the country, and that you and I, who have no experience in engineering—and you will have to admit it unless you have picked up sone experience along that line that I know nothing about. I would suggest that you ask General Pillsbury about that matter.

The CHAIRMAN. But he does not claim that it covers it all.

Secretary MILLS. Now, let us come to my own department, and you will be even more surprised at the figures, and we have the men here to prove them.

Senator WAGNER. Well, I am surprised by the figures you have given.

Secretary MILLS. I am submitting herewith a table showing the expenditures and per capita expenditure per State, as well as the number of men to be employed in each State.

Senator COUZENS. Which item do you refer to?

Senator GORE. Let me ask you

Senator WAGNER (interposing). That is under your discretion. You select the particular buildings to be constructed.

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Secretary MILLS. I have not come to the buildings yet.

still dealing with the $45,500,000 for river and harbor and floodcontrol projects.

SENATOR BLAINE. I believe you said something about "this item." What item do you refer to?

Secretary MILLS. I think Senator Couzens asked what item I was talking about. This has reference to $45,500,000 for river and harbor and flood-control projects.

Senator WAGNER. Were you talking about what States it will be spent in?

Secretary MILL. Yes.

Senator WAGNER. Well, I have viewed this from a national standpoint, from the effect throughout the country. I do not think we can afford in a crisis like this to be provincial upon this question.

Secretary MILLS. This is not a question of being provincial, but it is very important to see what it will do in the matter of unemployment in the centers of unemployment and New York happens to be one of the centers of unemployment. It would give work to 985 men in the State of New York, just as your other proposal, the road proposal, would give 1,683 men work there. So that here with an appropriation of $165,000,000 you will be giving work in one of the biggest centers of unemployment to just 2,500 men.

Senator WAGNER. But to how many indirectly? Have you any means of knowing that?

Secretary MILLS. I have figures when it comes to public buildings because that is a matter under my jurisdiction. But in the matter of public road figures, and rivers and harbors, you ought to go to the departments that make up the figures. I am not prepared to be crossexamined on those figures.

Senator BLAINE. If you will permit an interruption, Mr. Secretary, I will say that Mr. McDonald testified that for every man employed directly you should multiply him by three in order to ascertain the total number of men employed directly and indirectly; but that those employed indirectly went back so far, as to the building of the machinery that is used in road making and for road materials

The CHAIRMAN (interposing). Or the manufacture of cement.

Senator BLAINE. Yes; for the manufacture of cement, and for transportation, building of railroads, cars, and so forth, that it meant three for one.

Secretary MILLS. Very well. If you multiply it by three, taking the matter of roads, you are going to put approximately one hundred thousand men to work by an expenditure of $120,000,000.

Senator BLAINE. I am merely telling you what Mr. McDonald said. Secretary MILLS. And I am willing to accept Mr. McDonald's figures, and will assume those figures to be correct. So that instead of taking the figure 33,193 men you will get a figure of approximately 100,000 men. But if you question these other figures I have given you, I think you ought to call General Pillsbury and get him to explain his figures.

The third major item is $100,000,000 for public-building projects, none of which have been specifically authorized to date. Of this amount, taking into consideration the time required for acquiring the sites, preparing the plans, and letting the contracts, it is estimated that $24,500,000 could be expended during the fiscal year 1933, of which $11,500,000 would be for land and $13,000,000 for construction.

It is estimated that the $13,000,000 for construction will provide direct employment for 2,600 men, and indirectly to 7,800 men. So that an appropriation of $100,000,000 will provide employment for just 10,400 men on public buildings. And these figures were made up in the Treasury Department. I am prepared to stand on them.

Senator BLAINE. That does not include post-office facilities that are under lease where the lease expires or there is an option to purchase by July 1, 1934. I think the results of those is four and threequarters millions of dollars in round numbers. So that that would be a sort of self-liquidating proposition.

Secretary MILLS. Well, to the extent of that your rent exceeds your cost of maintenance and operation and fixed charges, that is a saving.

Senator BLAINE. Well, the rent runs a trifle over 12 per cent. So that you could build those buildings in the saving of rentals over a period of 12 years.

Secretary MILLS. All that I am pointing out is as to a definite appropriation of $100,000,000, and this is the unemployment relief section.

Senator BLAINE. Immediately, you mean.

Secretary MILLS. In the course of the next 12 months that would provide work for 10,400 men at the maximum.

Senator BLAINE. But if you include the post office leases on buildings that are under lease, and construct these buildings within the year, it would take care of a much larger amount.

Secretary MILLS. Well, I should prefer that you would ask Mr. Heath and Mr. Martin, who are here, as to that matter.

To summarize appropriations aggregating $265,000,000 will result in the direct employment of 53,943 men during the next fiscal year. These figures prove beyond question that this method of attack is wholly ineffective in solving the unemployment problem. This factor alone is sufficient to warrant the committee in eliminating the provision.

It becomes all the more necessary when you consider that an unbalanced Budget and the abandonment of sound financial practices will cause a further shock to public confidence, tend to retard business recovery, and so not only prevent reemployment on a large scale, but very possibly add to the number of those already unemployed. There is much greater hope not only of relief to unemployment but of actually stimulating a business revival, through the loans provided for under section 2 (a) for so-called projects of a self-liquidating character, though on the one hand the list of projects could be advantageously added to, and on the other the protective features need strengthening. I should like at the appropriate time to discuss the details of this provision with the committee.

Turning, now, to the provision for loaning $300,000,000 to the States for relief purposes, I approve heartily of the principle that the Federal Government should create something in the nature of an emergency fund that can be loaned to a State that has exhausted its own resources and actually needs funds for the relief of destitution. Senator COUZENS. Might I ask a question there?

Secretary MILLS. Might I complete this first? I am almost through.

Senator COUZENS. All right.