Mr. HENLE. I think at the present time the writeoff problem is handled largely through the Office of Defense Mobilization. The final authority on the defense writeoffs is given by Arthur Flemming.

Mr. MUMMA. They are in sympathy with the proposition; they work with the proposition, don't they?

Mr. HENLE. Yes, they work with the Commerce Department.

Mr. MUMMA. Do you know much about the unemployment situation in Pennsylvania?

Mr. HENLE. I am not from Pennsylvania. I can say I am simply familiar with the figures.

Mr. MUMMA. Mr. Kennedy will talk more about that?

Mr. RILEY. That is right.

In fact, Mr. Chairman, I was at the regional hearing at WilkesBarre, where Mr. Kennedy was a witness, and I think I heard voiced then quite a bit of the story of what is happening in that region in eastern Pennsylvania.

Mr. MUMMA. That is all.

The CHAIRMAN. Mr. O'Hara.

Mr. O'HARA. Do I understand that you approve of the general principle of this proposed legislation?

Mr. RILEY. The general principle, yes.

Mr. O'HARA. But you are concerned, as are a number of us on this committee, that the program should not result in the relocation of factories from one section where the wage structure is good, to another section where it is on a lower plane?

Mr. RILEY. That is right. We don't favor a type of movement of that sort, where it is plainly visible that the movement is because of getting into a low-wage area and therefore perpetuating that sort of thing, or getting a tax advantage over some other competitors in that region or for whatever reason. We have gone into that subject rather fully. That is why we are aware of it and want to make it part of this presentation.

Mr. O'HARA. You are making recommendations that will strengthen the legislation against that danger?

Mr. RILEY. Yes, sir. That is built into this proposal we are making here.

Mr. O'HARA. I am in agreement with the general principle of the bill, but before I could vote for it, I would want to be sure that we are completely eliminating or certainly minimizing to the greatest extent any danger of encouraging and aiding relocations to bring down wages.

Mr. RILEY. We are certainly aware that is the problem.

Mr. O'HARA. Thank you.

The CHAIRMAN. Mr. McVey.

Mr. McVEY. Thank you, Mr. Chairman.

I gather from Mr. Riley's remarks that he feels the amount of money set up in this bill is quite insufficient. I think, Mr. Henle, in your statement you didn't mention that.

Mr. HENLE. I was only touching on some of the issues Mr. Riley had not dealt with.

We do feel that the amount of money which is included as title II of the Gray bill is a more adequate sum to get this program going than the sum that is included in H. R. 8555.

Mr. McVEY. I find something over a hundred million dollars set aside in this bill.

Mr. HENLE. My understanding is in H. R. 8555 the amount is $50 million, and it is a hundred million in the Gray bill for loans and a hundred million for assistance in terms of public facilities.

Mr. McVEY. I notice the sum of $50 million mentioned twice. Perhaps reference is made to the same expenditure twice. It does mention the sum of $50 million twice.

Mr. RILEY. Are you looking on any particular page, Mr. McVey? Mr. McVEY. The part in which you discuss H. R. 8555.

Mr. RILEY. I thought you were looking at the page number in the bill.

Mr. HENLE. I think that the answer to these figures is that in the administration proposal it is $50 for loans, and at the same time, under another section, there is a fund to be established in the Treasury of the United States of not more than $50 million, but I think that is the same money. In other words, the loans come out of the fund, so that although $50 is mentioned twice, it is the same $50 million.

Mr. McVEY. I am interested in this financial aspect of program. It seems to me if we can spend so much money abroad to help depressed areas in other parts of the world, we can't be too restricted here at home. That is why I have raised the question.

Mr. RILEY. We are responsive to that expression ourselves, Mr. Chairman.

Mr. McVEY. Thank you, Mr. Chairman.

The CHAIRMAN. Mrs. Griffiths?

Mrs. GRIFFITHS. Mr. Moore, of the Department of Commerce, told this committee that under the provisions of H. R. 8555 the management of a firm could reorganize and move into another labor area under that bill.

What provision do you have to keep them from doing it? What provision would you suggest?

Mr. RILEY. Certainly, we are not offering any incentives for it. That part of it we think is a substantial gain, if the thing can be stopped and no longer movement given the free and easy trend it has been enjoying in recent years.

Mrs. GRIFFITHS. The bill would permit 25 percent of the amount of the plant investment to be supplied by the taxpayers, and it is possible that it can be done under H. R. 8555. If we vote for this bill, do you have any suggestions for any amendments that would stop that exact thing from happening?

Mr. RILEY. I think it would be better, Mr. Chairman, if we might have a little time to come up with a special memo on that thing, which would include, we believe, adequate suggestions, knowing of the lady's interest in this problem. We would certainly want to give every thought we could possibly bring to bear on it.

Mrs. GRIFFITHS. The second point was that while it might not be the management of an existing factory that moved into a low-laborrate area but rather that other people with know-how could move into such an area and put the high-labor rate factory out of business. I would appreciate your putting into the record whatever suggestions you have to show us how you would propose to stop this type of thing. No matter what the situation is now, I would personally be opposed

to the taxpayer supplying the money, but if they do it with their own money that would be different.

Mr. RILEY. Mr. Chairman, and Mrs. Griffiths, we have felt so clearly on this subject that less than a year ago the then AFL issued a booklet of some 85 pages on this very subject of runaway plants. I won't presume to request that the committee might find value in every page here. It may well be that your staff may wish to digest this and take pertinent parts out of it, and include it as an appendix in your proceedings. We are convinced it has a very definite value for discussion purposes and for solution of what we consider a very definite problem in today's everyday life. If we may leave this with Mr. Cardon, we will appreciate having its contents examined.

Mr. MUMMA. Why couldn't you just give another copy to all the members of the committee?

Mr. RILEY. We will be happy to supply separate copies to you. That will be a pleasure. We will see that that is done.

Mr. HENLE. The only point that I might like to add here is that although we are acutely conscious of the problems involved in this legislation, and particularly this issue of whether the legislation could be used to assist firms who want to simply move away from a highwage area to a low-wage area, we feel that if the committee is of mind to write a bill that would prohibit Federal assistance for such purposes, language could easily be found, and we would favor such an arrangement.

As we mentioned in our statement, the language that is now in H. R. 8555, as well as the language in title II of the Gray bill, neither of these is adequate to cover the problem, but we see no reason why the legislative draftsman could not write adequate language to cover this point.

Mrs. GRIFFITHS. Thank you.

That is all.

The CHAIRMAN. Mr. Holland?

Mr. HOLLAND. Mr. Riley, to bring this in sort of a capsule suggestion, do you not think that this department should not be placed in the Department of Commerce? It should be more of an independent department of its own?

Mr. RILEY. Even as the Federal Housing Administration is, having great responsibility and being responsible for many hundreds of millions, even into billions of dollars a year.

Mr. HOLLAND. Don't you thing that this study is even greater than just merely going into a community and building industry or bringing industry in? I believe it should be a department which continues to make a study of the displaced worker by automation. We don't know where it is going to go eventually. If possible, it should have ways and means of retraining the displaced worker in other fields so that he can enter. I think that this department should be so specified in the bill that the heads of the department or the commission workmen in the department should have representation of actual labor, by labor, suggested by labor or themselves, and that the chamber of commerce should have representatives in that department, and management should have representatives in that department, because I think it is an overall problem.

Mr. RILEY. It is, indeed.

Mr. HOLLAND. It isn't a problem of getting business or industry into some distressed area but it is an overall problem of a displaced worker by automation. What is to become of him, and how will he be retained to go into something else?

There is another point I believe that we are facing. We are spending a lot of money to store surplus food. Unfortunately, it is stored in districts where they don't need surplus food.

Do you not think that the Government would be wise to have the storage of surplus food in close to these distressed areas so that the local communities, the local governments, don't spend thousands of dollars out of tax money, which is hard to get in those distressed areas, to store that surplus food before they can distribute it? Don't you think all these things should be considered in this one problem?

Mr. RILEY. As close as you can get the supply to the consumer, I think is all to the good.

Mr. HOLLAND. Thank you.

The CHAIRMAN. Dr. Talle, we are operating under the 5-minute rule. I recognize you.

Mr. TALLE. Thank you, Mr. Chairman. I will save you the 5 minutes. I have no questions.

The CHAIRMAN. Mr. Vanik?

Mr. VANIK. I have just one question.

I read over the statement that was made. I am sorry to have missed the reading of it.

In my community we have an influx of people from depressed areas. It is my contention that this legislation, while it provides for aid for depressed areas, should also make some provision for those areas that take on an influx of people that come in from a depressed area, taxing our local facilities and also taxing our schools. These people will, for the greater part, become permanent residents, but during a period of transition they are an added burden on the community in which they may move.

What is your thinking on that? Do you think that cities that take on the people from depressed areas should receive help or should it come from some other form?

Mr. RILEY. In the regional hearing at Wilkes-Barre recently that was the type of discussion that former Mayor Clark of Philadelphia presented, and he pointed out that they had definite blighted areas down on Dock Street, the lower part of the city, along the waterfront; they have some 200,000 available to the labor force who are betwixt and between. They are not trained in the newer types of techniques and materials, and that sort of thing. They have to go through this transition period.

The city has a surplus of loft buildings that are outmoded, all constituting a drag on the tax productivity of the community; so many forces were brought in, which I think must be comparable to some of the knowledge that you have of your own fair city, Mr. Vanik, and those points were brought out, with the idea of showing that Philadelphia is in mid-channel right now, and is going to the far shore, and that they intend gradually to convert this liability into a definite asset.

As you know, Philadelphia has finally got rid of the Chinese Wall in the heart of the city, running from Broad Street up to the 30th

Street Station, and new, completely modern skyscrapers, glass-faced and all that sort of thing, are going right down that same channel of traffic.

The city is being opened up gradually, so there was an old city and an old part of an old city which has been a liability, which is gradually being converted.

Mr. VANIK. My question is should that be the burden of the local taxpayers or should the Federal Government in some way contribute to the cost of this transition.

Mr. RILEY. As we have said, we think anything that has a bootstrap aspect should of course be encouraged in all regards; that as much lift be given from within, but that lift is not sufficient. We have read of these comunities which have pulled themselves up a little bit out of the mire, but we don't get all of the bad aspects of it. We get, of course, the good side of the story.

There are these cities which have done a fair job in their own right. They only need incentive from the outside to perk them up and pull them all the way through. I think that is probably approaching an answer to your question.

Mr. VANIK. That is all.

Mr. BARRETT. Will the gentleman yield?

Mr. VANIK. Yes.

Mr. BARRETT. Mr. Riley, you spoke of all the very fine work that former Mayor Clark did in Philadelphia to create employment in all types of trade.

Mr. RILEY. I know you can tell the story a lot better than I could. Mr. BARRETT. I think you told it very well and very ably. However, I wish to remind the committee that we are still a distressed labor

area.

Mr. RILEY. That was made quite clear by former Mayor Clark.

Mr. BARRETT. We have 7.4 unemployment there. We have been clamoring for quite some time to get ahold of the bootstraps that Mr. Riley mentioned.

Mr. MUMMA. Mr. Barrett, will you yield a minute?

Mr. BARRETT. Yes, sir.

Mr. VANIK. I have no further question, Mr. Chairman.

Mr. BARRETT. I will yield to Mr. Mumma. He had yielded to me, Mr. Chairman.

Mr. MUMMA. Mr. Riley, you spoke of the Chinese Wall. That is not giving much industrial employment, as a result of the hotels and office buildings, but in speaking of a plant moving, you take the Curtis Publishing Co., they were in the Federal Square and they want to move out in the country where they have room to live and adapt themselves to new conditions. A restrictive bill would certainly penalize those people, and I think-isn't that right?

Mr. BARRETT. I don't think that is comparable at all.

Mr. MUMMA. There is a point where if it is 5 miles, 10 miles, or 50 miles, there is a point where the industrial development is all on the outside.

Mr. BARRETT. What we are fearful of is the same thing that happened in Puerto Rico with the Industrial Incentive Act in 1954. New Yorkers were bidding on jobs and getting the contracts and then hired Puerto Rican labor to do their work and ship it back into the State of New York.