Mr. MUMMA. They do that. There are no taxes. You take those Paper Mate pens, they are all made in Puerto Rico. Mr. BARRETT. Mrs. Griffiths expressed our fears the other day. Mr. MUMMA. I may be wrong. I think a restrictive bill would limit normal development, development in industry and housing out in the outskirts. The Autocar factory moved out in the country. Mr. HENLE. I think that is the point, Congressman Barrett. You see, the way this bill would operate, if your plant in the city of Philadelphia were to move 5, 10 or even 15 miles outside of Philadelphia, it would still be in what the Labor Department calls the Philadelphia labor market area, and it would not come under the provisions of this bill in any way. Now, what would come under the provisions of the bill would be if a plant in the city of Philadelphia were desirous of moving to one of these designated distressed areas, like Wilkes-Barre or Scranton or a city of that type. Then there would be a problem involved there of getting Federal assistance for that move. That plant could move any time it wants to, using its own money. This bill could in no way interfere. It is only a question of Federal assistance. It is a question of whether Federal assistance should be granted to a firm that would move. Mr. MUMMA. These towns that want to get that factory has to put up some inducement, the same as they do down South, to get it. It is a case where Federal assistance wouldn't enter into it. I don't know what Congress will vote on this. Mr. HENLE. We want to provide a bill, and we think the Congress can provide a bill of helping Wilkes-Barre and Scranton, but not at the cost of penalizing Philadelphia and Pittsburgh, say. We think that can be done, because every year we have close to $30 billion spent for new plant and equipment, of new factories, new enterprises, new branch plants, factories that had not been established in any locality before. We think that a Federal program can attract those types of enterprises to these depressed areas. Mr. MUMMA. Why would American Safey Razor Co. locate in Virginia? Mr. HENLE. I don't know. Mr. MULTER. I can give you part of the answer. I am familiar with the situation, if you will yield to me. The American Razor Company of Brooklyn contemplated expanding their plant. Whether it was a bona fide attempt to expand their plant or not, we will never know. They said they wanted to expand their facilities. They bought ground and built a new plant, I think, in West Virginia. Mr. MUMMA. Staunton, Va. Mr. MULTER. That is correct. When they did that, the local union, which did have the contract for their plant in Brooklyn, called a strike on the Brooklyn plant and raised the question that this was just an attempt to move the plan from Brooklyn to Virginia. I had several conferences with the officials of the American Razor Co. in Brooklyn. They assured me that they had no intention of putting out of employment those in Brooklyn; that they had every intention of continuing to run the Brooklyn plant, and in addition, operate the Virginia plant, but the union officials refused to credit them with good faith, continued to picket and strike and to make it so uncomfortable for them that before the plant was even completed in Virginia, they closed down the Brooklyn plant and moved out, lock, stock, and barrel. Now, whether they would have done it anyway, nobody knows, but they assured me they intended to continue to operate both plants until the union made it impossible for them to operate in Brooklyn. I want to say at this point that this union, I believe, was not affiliated either with the AFL or the CIO. I think it was an independent union. Mr. RILEY. It was a UE, one that had been read out of the federations. Mr. MULTER. I don't want to get into the question of whether it was a good or bad union, although there was considerable talk about that phase of the subject at the time. Mr. MUMMA. I know of a case in Philadelphia. I don't want to quote the name, but the situations was they wanted to move into the outskirts of Philadelphia, and their employees raised a point about it; that is in the same area. The CHAIRMAN. There is a provision in this bill that the local subdivision shall furnish 15 percent of the loan as a condition precedent to getting the loan from the Government. Say a million dollars was needed. The Government might agree to put up $250,000. They might be able to get the rest of the money elsewhere, but it is the condition precedent that they must go to that area. I think that area means the local depressed area. The State is not going to invest money in one section of the State to any great extent. The whole area is depressed. It is hard to get money there. Do you think that provision ought to be in the bill? Do you think that ought to be a condition precedent, that the local subdivision shall furnish 15 percent of the loan? Mr. HENLE. If I understand you correctly, Mr. Chairman, you were questioning the provision in the bill under which the local community had to raise for any particular project something like 15 percent. The CHAIRMAN. It would be all right to induce them to raise it, but you make it a condition precedent before they can get the loan from the Government, they must raise it. I believe that will be a roadblock. I think frequently you will find the local subdivision can't raise it. If they can't raise it, they don't get the Government money. Do you think that is a good provision to have in the bill? Mr. HENLE. Mr. Riley mentioned in his statement how we want these provisions kept more flexible so that the Federal Government, working with the local community, can actually, under the program, develop these new industries in these localities. We don't think that you should have hard and fast rules on this to require that the local community do such and such and such before it would get a cent of federal money. The CHAIRMAN. In many cases, local communities can offer tax exemptions for periods up to 5 years as an inducement for new industries. But when it comes to raising that amount of money, I think they will find that can't be done, and we will block the whole procedure. Mr. HENLE. We prefer the provisions in title II of the Gray bill, which are far less restrictive than in H. R. 8555. The CHAIRMAN. Are you more interested in the location of new industries or in the revival of the industry that is down? Don't you think by the inducement of new industries, such as the aluminum. industry and other industries that use coal, if you could bring them into the coal-mining region, it might revive the coal industry? Mr. HENLE. I think you have to work on both sides of the problem. Mr. RILEY. That is the kind of process going on in the Ohio River, in West Virginia. A gentleman told me the other day about Du Pont and other chemical companies which are expanding, putting more capital investment into the community, and I would judge from the way it was described to me that that community, which has probably been down and low as most any in recent months and years, is beating its way back to some sort of financial competency of its citizens and of the communities as a whole. The CHAIRMAN. What we need now to fight the unemployment in depressed areas is some immediate remedy. We can't rely on the construction of industries in the future. I think that is the question that presents itself more forcibly than any other. Mr. HENLE. That is why we emphasize, among other things, the desirability of granting additional unemployment compensation to these workers who have exhausted their benefits in these areas under the State laws. Mr. VANIK. Mr. Chairman. The CHAIRMAN. Mr. Vanik. Mr. VANIK. On that question, I wondered whether our committee staff could just check the statutes of the various States that are affected and determine whether by State law some of the depressed areas are precluded from making any contribution toward a loan. The CHAIRMAN. Take Kentucky, for instance, the municipalities in Kentucky are by the constitution limited as to the expenditures, limited as to their tax rate, limited as to their indebtedness. Now, often those local subdivisions would have their hands tied. Mr. VANIK. That is correct. The CHAIRMAN. They couldn't raise this money. It is necessary as a condition precedent to get the Federal loan. I think in almost all of the States there is some provision in the constitution with reference to what the municipalities can do. Mr. VANIK. That is correct. The CHAIRMAN. The municipalities are limited in their powers by the State. I have no doubt you will find that is general. If that is so, this ought not be made a condition precedent to get the Federal money. In many instances they will be unable, though willing, to do it. When a factory closes, men are not only thrown out of work, but the financial status is in bad shape and it makes it a bad place to get a loan. Mr. VANIK. I would like to have our staff find out if possible what the legal restrictions are in the various communities. The CHAIRMAN. The staff could do that. Are there any further questions? Mr. MULTER. Mr. Chairman, if no one else has any questions-I don't want to ask a question of the witnesses unless everyone else is through, but I have one brief subject about which I would like to ask the witnesses, and that is with reference to the question of determining what is a distressed area. I believe one bill refers to 8 percent unemployed and another bill refers to 9 percent, another bill refers to 6 percent for 3 years. What is your thought? Can we set up a standard of that kind in the bill or should it be left flexible, without any fixed percentage being named? Mr. HENLE. Congressman, in the brief statement I submitted supplementing Mr. Riley's, I discussed this particular question, and you have criteria that are different in the two different types of bills. Of the two, we think the criteria in H. R. 8555 is preferable to that in the Gray bill, and yet we feel that even that is not sufficiently flexible to allow the administrator to designate these distressed areas, and we suggest for the committee's consideration an approach which would allow the administrator to designate these areas, but using specific criteria set up in the law, but the criteria in the law would not mention 8 or 9 or 6 percent. I might summarize there the three points: 1. That the area has suffered persistent and substantial unemployment; 2. That the area is now classified as suffering from a substantial labor surplus; and 3. That the outlook indicates a continuation of the present conditions in the area. Mr. MULTER. Am I not right that most economists agree that when an area reaches a ratio of 6 percent of unemployment, that that is a very high rate, and a dangerous rate? Mr. HENLE. That is right. That is the rate that is already written into certain government regulations regarding Government procurement, but, of course, you have to be careful because you couldn't inaugurate a Federal program to an area which hit the 6 percent rate one month and suddenly jumped back up to 4 or 5 percent the next month. Mr. MULTER. Thank you, Mr. Chairman. The CHAIRMAN. We are very glad to have your testimony, gentlemen. It will be considered by the committee. Thank you. Mr. HENLE. Thank you. Mr. RILEY. Thank you. The CHAIRMAN. Call the next witness, Mr. Clerk. The CLERK. The next witness, Mr. Chairman, is Thomas Kennedy, vice president, United Mine Workers. The CHAIRMAN. You may proceed as you please, Governor Kennedy. You may read your statement without interruption. STATEMENT OF THOMAS KENNEDY, VICE PRESIDENT, Mr. KENNEDY. Thank you. It is a brief statement. The Congress declares that, notwithstanding the prospe Nation as a whole, some of our communities are suffering sistent unemployment; that such unemployment causes ha dividuals and their families and detracts from the national welfare by wasting vital human resources; that to overcome this problem the Federal Government, in cooperation with the States, should help areas of substantial and persistent unemployment to take effective steps in planning and financing their economic development; that Federal assistance should enable communities to achieve lasting improvement and enhance the domestic prosperity by the establishment of stable and diversified local economies; and that new employment opportunities should be created rather than merely transferred from one community to another. Mr. BARRETT. Will the gentleman yield? Mr. KENNEDY. Yes, sir. Mr. BARRETT. I have a meeting at 11:10, and I must attend that meeting, but I do want to go on record as saying that we have one of the most outstanding Pennsylvanians before our committee this morning and certainly he has had a great influence on the people of Pennsylvania. I am sure his remarks will center in this bill the truth of it, whether it has merit and whether it should be given consideration by this committee. It is certainly nice to have the gentleman here. Mr. MUMMA. May I second the motion? The CHAIRMAN. Those remarks were uttered by an outstanding Congressman, too. I am glad to join in the compliment this morning. Mr. KENNEDY. I am glad our Republican friends join with Mr. Barrett. Mr. MUMMA. I second the motion. The CHAIRMAN. You may proceed. Mr. KENNEDY. In a general sense this declaration points out the general principle of requirement which is essential in order to combat unemployment in distressed labor areas. Following up the bill, however, in succeeding sections and paragraphs, it is my opinion that something else must be added to benefit the distressed labor areas in the coal-mining communities, where unemployment is the rule rather than the exception; and where this unemployment has lasted for a considerable length of time. It is my conservative opinion that we have about 155,000 persons unemployed in the coal-mining communities including bituminous and anthracite. This unemployment is serious in such States as Pennsylvania, where it affects the bituminous and especially the anthracite regions, as well as other coal producing States like West Virginia, Kentucky, Ohio and Illinois. I have appeared before various Senate committees dealing with this subject and also before the Joint Committee on the Economic Report in February of this year with reference to the problems referred to in this bill. The Economic Report properly points out in the matter of helping local communities to reduce unemployment that it is a "matter of national as well as local concern." The various suggestions such as are now bringing some relief to distressed labor areas through establishment of new industries, and so forth, are very commendable and I place emphasis, Mr. Chairman, on "new industries"--but I doubt that they are sufficient to take care of the needs in the coal areas. My experience with respect to acquirement of new industries has been that it is only younger men who obtain employment. Ages in the mining industry run from 18 to 65 years and over. A great number of men beyond the age of 40 are affected by the present unemployment situation and they have very little chance of taking up employment in new |