Hon. JENNINGS RANDOLPH, NATIONAL COAL POLICY CONFERENCE, INC., Senate Public Works Committee, Senate Office Building, Washington, D.C. DEAR SENATOR RANDOLPH : The members of the National Coal Policy Conference, Inc., many of whom conduct operations within Appalachia, are extremely interested in the Appalachian recovery legislation (S. 3) which is now being considered by the Senate Public Works Committee. We realize that the problems which the region faces are of long standing and of a serious nature. Because the bituminous coal industry has long been identified with the region, we obviously have a deep and abiding interest in finding solutions to the problems so we can get on with the job of alleviating personal hardship and creating conditions under which men can be put back to work at gainful, useful jobs. I want to compliment the Senate Public Works Committee for the diligence with which it has approached this legislation. Also, I want to commend you personally for the leadership you have shown in bringing this matter to the attention of the Congress and the public. You have a personal knowledge of the many serious problems of Appalachia and your recommendations, as to solutions, deserve the most careful consideration. Although the provisions of the bill do not directly affect the coal industry or offer a solution to the more pressing problems which are retarding coal production in the region, we nevertheless feel that the broad public interest would be served by passage of legislation along the lines of your proposal. Certainly, those segments of the bituminous coal industry operating within Appalachia would want for selfish reasons, if no others, to remove men from the unemployed rolls and put them back to work. The high cost of welfare is reflected, in the final analysis, in the tax bills of these companies. It is good business, aside from the humanitarian aspects of the proposed program, to turn these men into taxpayers. Anyone familiar with Appalachia fully appreciates the unsurpassed scenic beauty of the region. It would, therefore, seem to make sense to open these scenic areas for the development of tourist attractions. This would create jobs and added spending power. Enhancement of this natural beauty, through a cooperative Federal-State effort, could make a major contribution toward this end, and to the attraction of new industries. Obviously, any program directed toward the economic revitalization of Appalachia must take into consideration the bountiful supply of natural resources of the region. These resources must be fully exploited so that productive jobs can be created. Coal is by far the most valuable of these resources. As your committee's report on similar legislation pointed out during the last session of the Congress, "despite drastic reductions of employment in the past two decades, the production and transportation of coal still remains the single largest source of employment in Appalachia." About 126,000 men are employed in the mines and another 70,000 on the railroads in transporting the coal. Your committee's report further pointed out: "* ** the production of bituminous coal in the region can exert a stabilizing influence on the Appalachian economy. Thus, as part of the economic development plan for Appalachia, the State and Federal Governments should take every measure to encourage the production of bituminous coal." The coal industry is convinced that given the proper economic climate, it could significantly increase production. Any significant increase in production would have to come from men added to the work force. Leading coal companies and railroads operating in Appalachia have estimated, on the basis of present productivity trends, that an increase of 100 million tons in production would mean jobs for about 32,000 additional coal miners and 19,000 railroad workers, with a combined payroll of $297 million annually. The coal industry is gravely concerned over a number of Government policies which are inhibiting the growth of coal markets and production. These policies relate to imports of residual fuel oil, Government subsidy for commercial nuclear power and the sale of surplus natural gas in off-peak periods at dump prices in competition with coal. Obviously, such governmental policies cannot be dealt with in legislation of the type before you. Even with the passage of this legislation, however urgently it might be needed, the need will remain for these other matters to be given urgent attention. Other 42-031-65-14 wise, the coal industry will never be able to realize its full potential in Appalachia insofar as providing new, well-paying jobs are concerned. Let me repeat that the National Coal Policy Conference believes the broad public interest would be served by passage of legislation along the lines your committee is considering. At the same time, we believe it is important that the committee make clear in its report, which will be filed with the legislation, that insofar as coal is concerned much remains to be done, and urge that appropriate legislative committees begin work at once at trying to resolve the serious problems which inhibit the expansion of coal production and, hence, the creation of new jobs in the region through the mining and transportation of coal. Respectfully submitted. JOSEPH E. MOODY, President. WEST VIRGINIA MOUNTAIN PROJECT, Senator JENNINGS RANDOLPH, Washington, D.C. DEAR MR. RANDOLPH: Needless to say, we are all excited over the prospects of the Appalachian bill and its ramifications and assistance for our State. Couple with this the Economic Opportunity Act, and the prospects are greater than ever. My wish, however, is that some program could be devised in the Appalachian bill to assist public school education. Each year in our State we spend disproportionate amounts of our income on public education (compared with other States) only to have our students leave us for other places, thus benefiting those other States to which they go. How much we need, back in these hollows, some good schools that prepare the students to live in our kind of society: remedial schools; classes for the exceptional student. Certainly good roads are important, yet so are good schools. Is there any possibility of the Appalachian bill, serving as it does States whose youth migrate elsewhere, including some assistance for vocational and academic public school education? Yours sincerely, The Reverend JACK WELLER. PRESBYTERIAN APPALACHIAN COUNCIL, Senator JENNINGS RANDOLPH, Washington, D.C. DEAR MR. RANDOLPH: The Presbyterian Appalachian Council, representing the work in seven States of the southern Appalachian region by the United Presbyterian Church, the Presbyterian Church, U.S., the Cumberland Presbyterian Church, and the Reformed Church of America, urgently requests the Congress of the United States to provide funds for a massive program of public education, academic and vocational, in its pending Appalachian bill. Because these churches are concerned with the development of human resources, we consider effective public education to be the greatest single need for Federal action in dealing realistically with the deeply rooted problems of Appalachia. Yours sincerely, The Reverend JACK WELLER, Chairman. STATEMENT OF NATIONAL ASSOCIATION OF MANUFACTURERS As a voluntary organization long devoted to fostering economic progress, the National Association of Manufacturers is interested in any constructive measures which might contribute to this objective and serve the national interest. Your committee and the national administration quite properly are focusing public atention on a persistent economic problem-the plight of people and communities which have failed to keep pace with the gratifying economic progress of the Nation as a whole. Our association, therefore, welcomes this opportunity to comment on S. 3, and we would like to assist the committee in finding satisfactory ways to help ameliorate problems resulting from economic decline, wherever they may be found. The feelings of members of the business community about such problems differ in no important way from those of members of other major segments of the national society; business leaders generally have a deep concern for the unemployed and other people who, for whatever reason, are deprived of the social and economic benefits the vast majority of Americans now enjoy. As employers, businessmen are keenly aware of the complexities of some of the human problems involved. A number of companies belonging to the National Association of Manufacturers have operations located in the Appalachian region and other areas where some of the residents are handicapped by extreme poverty, inadequate education, and low standards of health, sanitation, and housing. The difficulties of speedily raising the general standard of living of people in longdepressed communities are fully apparent. Despite the scope and individual variations in the overall area known as Appalachia, a great deal of economic progress has been made. We would like to devote the first part of this statement to discussing some of the basic reasons for this progress. We then will turn to an analysis of S. 3 and in conclusion offer the committee several suggestions about some nongovernmental approaches that may be helpful in getting at the human problems. I. PROGRESS IN APPALACHIA The President's Appalachian Regional Commission emphasizes what the National Association of Manufacturers and many other responsible business organizations believe is the most basic and enduring way of creating more and better jobs for people: investment of capital by private business in enterprises that will satisfy economic and social needs, and done in the expectation of realizing a profit for the entrepreneurs and other investors. In the language of the report, this viewpoint is stated thus: "The private businesses of the Appalachian region are critical to future growth. "They provide the means by which the potential of regional public investment is realized in the form of more and better jobs for the people who are the target for the developmental effort. "The entrepreneurs who translate the capacities of the region's economy into first-level jobs are indispensable to economic growth. The availability of adequate developmental capital will be critical to their contribution." (PARC report, p. 53). The outlook for the Appalachian region is considerably brighter today than in recent years because of accelerated interest on the part of private investors in the economic possibilities of the area. Because of growing diversification of economic pursuits, the Appalachian region seems unlikely to experience again the discouraging economic setbacks such as accompanied the decline of mining and agriculture in the 1950-60 decade. In these 2 fields of endeavor, 640,000 jobs were lost over a 10-year period. However, it is significant to note that employment in manufacturing, construction, and services in the Appalachian portions of the 10-State region in the 1950-60 decade increased by 565,000 persons, manufacturing employment being responsible for more than 35 percent of the increase. Thus, there was a net loss of 75,000 jobs in the decade. Yet, the President's Commission has commented: "The Appalachian people are clearly striving to meet the challenge of deprivation. Their achievements are the best augury for the ultimate success of a fullscale, concerted developmental effort." In the present decade and beyond, the best hope for the Appalachian region is for further investment in job-creating facilities by private business-both those who already have experienced satisfactory results from operations placed there and by others who may be persuaded to locate there because of beckoning economic opportunities. While the rate of increase in manufacturing jobs in that area was smaller than for the U.S. economy as a whole during the decade, the rate of increase in Appalachia for 8 out of 14 manufacturing industries was greater than for the remainder of the country. Industries whose employment gains in Appalachia were comparable to, and in some cases in excess of, employment provided by the Nation as a whole, included: Fabricated metals; nonelectrical machinery; transportation equipment, other than motor vehicles; food and kindred products; apparel and other fabricated textile products; printing, publishing, and allied products; motor vehicles and motor vehicle equipment; and other nondurable goods. While the area is not especially rich in metallic minerals, Appalachia has begun to develop as a source of metal-processing employment. During the 1950-60 decade, fabricated metal industries added jobs in the Appalachian portion of each of the 10 States, and in all but 2 of the States jobs were created in the primary metal group. A star performer in Appalachia, however, was the motor vehicle and motor vehicle equipment industry, which showed a 67.3-percent increase. Although the President's Commission does not indicate the number of jobs involved, it is evident that job creation in this industry requires considerable investment. The availability of electric power provides an inducement to industry to locate in a given area, and in this respect the Appalachian region is in solid shape to compete with other regions. Not only is there no power shortage, but power is being exported over a broad geographical area. Twenty-three investor-owned electric utility companies have made important contributions to the economic development potential of the region. Their 244 powerplants generate 30 million kilowatts annually, and an additional 7.5 million of generating capacity is planned. Both the coal and railroad industries are helping to enlarge the national market for Appalachian coal, particularly in the growing electric power industry. Unitized trains, installed several years ago by railroad lines operating in and beyond the coal mining territories, are lowering transportation costs; such distant utility companies as Consolidated Edison Co. of New York are contracting for sizable Appalachian coal requirements over a 3-year period; and the coal mine operators in Appalachia are pricing their product more competitively because of the guarantee of volume orders. Thus, the operations of the marketplace-plus the ingenuity of entrepreneurs in detecting and fulfilling customer needs are moving to improve employment in the Appalachian coal mining industry. A projected program by 20 investor-owned utilities to create a vast network of power generating and transmitting facilities to serve major population centers will require an additional 60 million tons of coal a year. American Electric Power Co., which last spring announced a billion-dollar expansion program, will eventually increase its coal requirements by 12.5 million tons a year, according to its current planning. The trend toward diversification in the Appalachian region augurs well for increased employment. Movement of private capital into the area because of such inducements as available manpower and natural resources, plus the encouragement of local communities, is increasing. In our view, the major role in job creation will be played by private enterprise. National policies which encourage capital investment by the private sector of the economy should provide more enduring, meaningful, and satisfactory solutions for not only Appalachia, but other regions which may not have kept pace with the rest of the national economy. Acceleration of the rate of national economic growth is dependent upon greater encouragement to private investors to put their money to work in the expectation of making a profit. The unleashing of the creative energies of people who are thus provided opportunities to get productive employment is made possible. II. ANALYSIS OF THE RATIONALE OF THE BILL We note that section 2 of the bill states the following: "The public investments made in the region under this Act shall be con. centrated in areas where there is the greatest potential for future growth and where the expected return on public dollars invested will be the greatest.' If it is decided to have a program of this type involving massive Governmen spending, then the above-stated policy is, of course, a desirable one to pursue, Communities which have developed best in the past probably have the best chance for future growth. However, recognition of the desirability of such a policy by inevitable logic leads to the conclusion that Government intervention in economic processes is unsound. The forces of a free market, based on the decisions of millions of citizens seeking their own economic best interests, can better determine areas where there is greatest potential for future growth and where the expected return on dollars invested will be the greatest than can Government officials. If individual citizens make some economic mistakes from time to time, they do so at their own risk without imposing undue hardship on others. When Government officials make economic mistakes, the hardships are widespread such as in the case of perpetuation of price controls after the end of World War II. In essence, the issue is economic democracy versus economic dictatorship, and inevitably economic democracy will prevail. The arbitrary designation by Government fiat of certain areas to receive preferential treatment will create temporary artificial market forces which in the long run will lead to economic waste. Thus it appears that by this legislation, an economic choice will be made to give preferential treatment in public spending to so-called Appalachia (which we note is defined so that it does not include all the Appalachian range which actually extends through the States of New York, Connecticut, New Hampshire, Vermont, and Maine) and apparently to particular areas within so-called Appalachia. The preferential treatment will include various grants-in-aid on percentage bases not available to other parts of the country. We strongly urge that such economic choices be left up to the forces of the free market which have created the economically strongest nation in the history of the world. Income in Appalachia One reason given for a special Appalachia program is the higher than average proportion of low-income (below $3,000) families, and the relatively low proportion of families with incomes above $10,000. This is not, however, an urbanized area. Using the $3,000 figure without qualification as to such factors, as the Council of Economic Advisers did in its 1964 Economic Report, in 1962, 43 percent of all farm families and 32 percent of all southern families had money incomes below $3,000. Although the Council of Economic Advisers used the $3,000 of money income as the cutoff point for "poverty," they recognized that "refined analysis would vary the income cutoff by family size, age, location, and other indicators of needs and costs" (p. 58, Report of the Council of Economic Advisers, 1964). Because this region has a larger proportion of rural dwellers than the rest of the country, it has lower money income-but this should be somewhat discounted as cash income does not have the same significance for the level of living in rural as in urban areas. It is obviously cheaper to pick tomatoes from your own garden plot than to pay 49 cents a pound for them in a city supermarket. The report of the President's Appalachian Commission gives us the opportunity to compare family income for different types of residence in Appalachia and elsewhere in the country. This is summarized in the tabulation below:1 When we consider the wide range of family income within the economy, it becomes evident that, although these groups are below the national average, it is not by a very large proportion. With the variety of ways in which families earn their income, a variation of less than 20 percent is not great. Certainly not great enough to require a "crash" program. As the data presented by the President's study group show (tables C-1 and C-2), there is a considerable income range within the area. Although median family income in the metropolitan areas was consistently below that of metropolitan areas in the country as a whole, the range was from $4,274 in Tuscaloosa 1 Based on tables C-1 and C-2, 1964 report of the President's Appalachian Regional Commission. |