Senator GORE. I should like to ask

Secretary MILLS (continuing). The section as drafted, apportioning $300,000,000 among the several States in proportion to their population and not in accordance either with their needs or their ability to meet those needs, is not only a direct invitation to all States to apply for Federal funds, but creates such a rigid process of distribution as to insure the grant of Federal funds to States that do not need them at all and in an amount unrelated to their needs or

resources.

The only limitation is the certification by the governor as to the necessity for such funds. This does not seem to be adequate. Certain definite tests should be specifically provided in the law adequate to demonstrate that the State needs the funds and has exhausted its own available resources before it shall be permitted to turn to the Federal Government for relief. Whether the State has complied with these requirements should be determined by duly authorized agents of the Federal Government. I know of no conceivable reason why great, rich States like New York and Pennsylvania should receive a grant from the Federal Treasury or be invited to accept one. They are well able to take care of their own.

The bill should be so drafted as to provide for an emergency fund for the States that need it; not for a gratuitous distribution to all States on a per capita basis irrespective of need or resources.

I shall be glad, if the committee so desires, to make suggestions as to possible amendments to this section.

In conclusion I find myself in agreement with much in this measure, subject to amendments along the lines I have suggested. I am, however, very definitely opposed to the public-works proposal as ineffec-. tive and inconsistent with sound financial principles.

Estimated distribution of appropriation of $45,500,000 for river and harbor and floodcontrol works

Estimated distribution of appropriation of $45,500,000 for river and harbor and floodcontrol works-Continued

.40

476

3,783, 179.00 3,373, 560.00 2, 160, 628. 00 3, 761, 014. 00 2, 525, 108. 00 2,557, 683.00 1,578, 025. 00 600, 000. 00 1, 659, 121. 00 1,962, 340. 00 6, 057, 965. 00 2,890, 203. 00 1,940, 325. 00 4, 501, 069.00 2, 893, 101.00 1,996, 128. 00 5, 261, 052. 00 600,000.00 1,666, 492. 00 2,002, 076. 00 2,609, 757.00 7,668, 024.00 1,387, 190.00 600,000.00

2,258, 196. 00 1,905, 627.00 1,316, 720.00 2, 992, 438.00 1,540, 811. 00 600, 000. 00 120, 000, 000. 00

Senator GLASS. Mr. Secretary, assuming that all of the States would apply for this aid, upon what basis would you apportion a distribution of the fund?

Secretary MILLS. I deny the fact that I would ever permit all of the States to so apply. There may be

Senator GLASS (interposing). I am not asking about what you would permit. I am asking upon the assumption that the governors of all the States would make application, then upon what basis would you make a distribution of the fund? You understand that I am opposed to the whole business. I don't think a State has a right to exist that can not take care of its own interests. I should be ashamed of my State, Virginia, if I thought it could not do it.

Secretary MILLS. And I would be ashamed likewise of New York if I were faced with the spectacle of the governor coming down here, hat in hand.

Senator GLASS. But you are criticizing the propositions contained in this bill, and so far as I am concerned, I would reject it all. But

I am asking you the question upon the assumption that all of the States would apply, then upon what basis would you make a distribution of the fund?

Secretary MILLS. I am not making any such assumption, and I say that I would never permit it.

Senator GLASS. But how could you prevent it?

Secretary MILLS. Oh, of course, you could not prevent them from applying, but it is my thought that no State should get one penny of Federal funds unless it were shown that it had reached a point where its own resources were no longer adequate.

Senator GLASS. I could draft for you in five minutes a provision where no State could get any of the funds. But that is not what we are dealing with here in this bill.

Senator WAGNER. I am trying to relieve the situation of destitution. My bill was not drafted with the purpose of preventing the destitute from getting something. My bill was drafted with the purpose of giving relief to the destitute where the facts justify it. Secretary MILLS. Well then, if this is

Senator WAGNER (continuing). And that is where we are working toward opposite objectives. I am trying to alleviate destitution, and you are trying to prevent that being done.

Secretary MILLS. Oh, no. But, Mr. Chairman, if this provision is intended to appropriate $300,000,000 and give it out to all of the States on the basis of population irrespective of their resources, and irrespective of their needs, then I will say that I am unqualifiedly opposed to it.

Senator WAGNER. That is not my bill, and you know that that is not this bill.

Secretary MILLS. That is the net effect of the bill, becauseSenator WAGNER (interposing). Must we not trust the men selected by the people of the States to represent them? Have we got to the point where we can not trust every public official? Can not we rely upon the honor of a governor not to certify that his State needs the money for the destitute unless that is an actual fact? Now, I will say that I have that much confidence and faith in the integrity of the governors of our States.

Secretary MILLS. I am not questioning the integrity of the governors of the States.

Senator BULKLEY. I should like to ask

Secretary MILLS (continuing). May I answer the Senator from New York?

Senator BULKLEY. Certainly.

Secretary MILLS. That is not the point, Senator Wagner. But when you create an appropriation based on population and get away from the standpoint of need, get away from the standpoint of the resources of a State, and then simply ask the governor to certify as to the necessity of his State for funds; why, there isn't a governor in the Union to-day who could not do full justice to his conscience and say they need funds in his State. Of course they need funds. But the question is, whether they are going to get those funds from their own people or are going to the Federal Government for them. New York State needs funds and you and I know that, Senator Wagner. They need funds for relief work to-day. But the question is whether the Governor of the State of New York is going to call the State legislature into session and ask additional income taxes let us say, for

relief purposes; whether he would call upon the great wealth of New York to meet the situation, or whether he will avoid that responsibility and come to Washington to get it.

Senator GLASS. And do you think he would do that? Do you think he would rather come here as a mendicant State or levy taxes of which you speak?

Secretary MILLS. I shouldn't want to speak of any particular governor, but human beings are human beings, and according to the experience of the last 10 years, and no one knows it better than you, Senator Glass, ever since we started this State-aid business, ever since we have had the Federal income tax, it has not been a question of mendicancy, but the States are here year after year trying to run pipe lines into the Federal Treasury for one purpose or another.

Senator GLASS. Oh, yes. I have contended over and over again that human beings are human beings, and human beings in the employ of the Federal Government are not any better than human being not so employed. This so-called Federal aid is the biggest humbug on earth. You get money from the States and bring it on here and land it in the Treasury, and then you dole it back to them. That is the process.

Secretary MILLS. Senator Glass, you and I are completely in accord on the matter of State aid. Let there be no illusions as to that.

Senator GLASS. If we have to trust anybody, I would rather trust the governor of my State than to trust some Federal subaltern here in Washington to determine whether the State should have State aid

or not.

Secretary MILLS. But you should put your tests in the law.

Senator WAGNER. That is the provision in my bill. All that has to be done is to certify as to necessity, and the governor of the State does that, and I am willing to trust his integrity.

Secretary MILLS. I am not willing to

Senator WAGNER (continuing). But you want a subordinate here in Washington and appointed by the Federal Government to determine the question. That is the difference between you and me. I want the governor of the State to do it.

Secretary MILLS. I want the Congress of the United States to provide the test, and the test shall be, Has the State got adequate resources and does it actually need the money? Write that into the law.

Senator BARKLEY. You would determine here in Washington the resources of a State. And suppose you find some State where the resources are out of all proportion to population and need, what will you do?

Secretary MILLS. Which way?

Senator BARKLEY. Either way. Suppose the resources of a State are less in proportion than the needs of the State, and less in proportion to population. Who would make that test?

Secretary MILLS. If a State has exhausted its resources and can not take care of its own needs, then the purpose of this bill is to provide Federal funds.

Senator BARKLEY. But the resources of a State may not be exhausted. I suppose until the taxing power is exhausted, and all the property is practically taken by the imposition of taxes, you would not give Federal relief?

Secretary MILLS. Oh, Senator Barkley, you would apply your rule with reason. I do not believe there are but very few States in the Union that feel they actually need Federal funds for relief purposes. I say need. That is a very different question, as to whether we want to provide Federal funds directly for relief purposes. That is another issue. But we are dealing this morning with the question whether the States need funds; not whether we will have the Federal Government provide funds for relief purposes. If you change to that question then that is an entirely different issue and we will discuss it. If you are going to proceed on the basis that States have exhausted their resources and you are going to give Federal funds to States, then write it into the law, and say that is what you mean, and permit New York and Pennsylvania, great rich States, to come down here to Washington and get a part of this $300,000,000.

Senator BARKLEY. Of course, as to your criticism of that section I find myself in harmony with some of your comments. That is, about the effect of public improvements, that in proportion to the amount of money expended very frequently it gives less actual employment to people than any other avenue of expenditure. But as I understand it we are going to make this sum available, your criticism is that it is distributed according to population, and you suggest that we write in here the tests, as to resources and need. Who is better qualified to pass upon the need of a State than its Governor? Secretary MILLS. Yes; and who is more unwilling to call his legislature in session to ask for additional taxes on his own people? Senator BARKLEY. Well, the governor of your State did do so, and asked for $20,000,000 and got it immediately.

Secretary MILLS. Oh, no; he did not. But pardon me, I hate to have to contradict you.

Senator BARKLEY. He got an increase in income taxes.

Secretary MILLS. I happened to be in Albany when that situation arose, and the responsibility lies on both parties, the Republican Party, through the legislature, and the governor, as the executive of the State of New York. They did not ask for taxes but issued bonds. Senator BARKLEY. I am not speaking of it in a partisan sense. Secretary MILLS. Senator Wagner knows what happened. Senator BARKLEY. I understood from the press that the Governor of New York asked for an increase in income taxes of $20,000,000. Secretary MILLS. He recommended an increase in income taxes in the beginning to meet a general deficit, but when they actually came to the point where to get $20,000,000 for unemployment, neither the legislature nor the governor stood up. They wouldn't impose the

taxes.

Senator BARKLEY. Well, at least they Washington.

did not come down here to

Secretary MILLS. They issued bonds. Oh, if the telephone line to Washington had been open, they might well have been down here, gentlemen of the committee.

Senator BARKLEY. Well, I did not know that the telephone wires were cut.

Secretary MILLS. Well, you know what I mean.

Senator WAGNER. I am not going to get into a controversy with the Secretary, but I will say that I think that statement unwarranted.