empty plants making their total contributions to the war effort, and I know how important it was then, and therefore it is of vast importance now, and the approach that you are giving to it, the time that it will require, and the results that I anticipate, will be a notable contribution to the legislation that will be enacted as a result of your study and to the legislators who participate in that study. It is vastly important for another reason. At the Federal Trade Commission we made an investigation of an ever-increasing wave of mergers, that are still in progress, and we find in almost every industry a drift toward a few, or a fewer large corporations, leaving small towns without the employment that they used to enjoy. A study is made of a dozen or more corporations that produce a certain product that are now included in a vast corporation and the so-called expensive units are dropped, closed down, with the result that you have unemployment, in some cases a ghost town, so that the wave of mergers more than offsets the desire of certain businesses to locate in small communities. Another reason that we disclosed in our study of the merger problem was the inability on the part of independent industry to get raw materials. As an illustration, and not an accusation, but commonsense seems to indicate that there is a possibility when independent business is unable to secure raw materials such as they receive now from the iron ore range at Mesaba, and when we know that the giant corporations in that field own the fields in Liberia, Venezuela, and Labrador, or control them, that it will be increasingly difficult for the independent producer to get raw materials when business is booming and the raw materials available is only sufficient to take care of those that control the output. The lack of loans is another reason why consolidations and mergers are taking place. We had one party before us who told us that the reason he sold out was the inability to get long-term credit. It was just impossible and about 25 years ago, Mr. Chairman, a group of us met in Georgetown and there was the publisher of the World Report and News Week, a representative from Dun & Bradstreet, from Brookings Institute, from the Congress, and several others, and we had a portfolio of one of the big banks and the applications rejected for loans to independently-owned department stores, to independent industries, were amazing, and that 25 years ago, and the reason they were rejected was that character loans are out; we are afraid the chains will move in and ruin the loan, and therefore they stand rejected. From that time on we endeavored to enact a small loan agency, and we were successful only when the war came on, and I am very happy to note that we have one now, and I hope it will be continued. It will be reinforced because it too fills a great need, so that, Mr. Chairman, the study is timely because of our national security, because it will lengthen the life of the independent and the small producer. It will provide him with long-term capital, particularly in the States where they now have a development corporation, and it will, I think, increase the number of States that will provide that service to their industries. It is a good time to do it, too, because not only is it necessary to eliminate these pools of unemployment from the standpoint of our national security, but it is a good time to tackle the problem because we are away behind in the manufacture and production of metals. It will probably take us 5 years to catch up with the present demand. We are far behind in the production of aluminum, and in jet and rocket equipment, and so there is opportunity now, without any invasion of the rights of prosperous communities, to rebuild these small communities that are suffering from unemployment and lack of industrial activity. Now, the question was brought up about the possible strengthening of the provision of the bill so that it wouldn't apply to an industry that was going to close up in one locality and open up in another. I am for that. I think that the task of the legislator is to make that specific, and the task of the administrator is to see to it that it is completely and fully and adequately carried out in his regulations, but, from the overall viewpoint, there is little or no excuse in a democracy such as ours, with the leadership that we possess, to tolerate these pockets of unemployment. I recall when I was on the Tennessee Valley Authority Commission there was fear in adjacent areas that the Tennessee Valley would attract the industries now operating in adjacent areas, and the result would be an injury to our economy. In the building of the TVA, Columbia River Authority, St. Louis River Authority, and now the St. Lawrence Seaway Authority, we are going to provide a more healthy, more prosperous economy for all the country and the markets they will create, the increased buying power of the people that reside in them will improve the prosperity of communities all over the country. So it is an opportune time for a study of this character. It is an essential need of our period, and we in New York favor it generally, and we trust that the recommendations that have been submitted to the Committee will be broadened so that our depressed areas will be permitted to qualify. That is about all that I have to say, because I am restricted, as I told you in the beginning, to a general approval of the principle contained in the several bills that are now under consideration. The CHAIRMAN. Thank you, Senator. You have made a very spendid statement. The Committee appreciates it. Mr. MEAD. Very good. Mr. MUMMA. Does Rome, N. Y., have a big air installation? Does it still have a big air installation? Mr. MEAD. Rome has an air installation. Mr. MUMMA. How many people? Could you guess? Mr. MEAD. I don't know. I visited Rome after the war was over, and when they were thinking about closing it up. I knew then, but today I would only guess, but there are several thousand there. But that is another question that ought to be considered by this committee, like Sampson at Geneva, in John Tabor's district. They have a payroll running into millions every month. It probably represents the biggest investment in payrolls in that entire county. When that closes up, it intensifies the Federal Government's responsibility in the rehabilitation of that area, because with diversification of industry, with the closing up of military and naval facilities, of vast magnitude, we are, by action of the Federal Government, creating unem ployment and misery in that area, and so I think that that is another good point to bring out in a study of this character. Mr. MUMMA. You are lucky that it is an air installation instead of a naval. Mr. MEAD. Yes. Mr. MUMMA. The switch there was to your advantage, because the airpower is growing in leaps and bounds. Mr. MEAD. That is correct. It is difficult to see them close up and to see what follows, unless we have an instrumentality such as is included in this legislation to look forward to for ready relief. The CHAIRMAN. I may say we have a bill coming up in the House in a few minutes and we will have to adjourn. Mr. MEAD. Thank you very much, Mr. Chairman. The CHAIRMAN. Do you want to ask a question? Mr. Multer wants to ask a question. Mr. MULTER. Just very briefly, Senator. The Department of Labor service submitted to us a map on which they have indicated the distressed labor areas, and various categories, and the strange part of it is that most of these places are in the East, in the eastern part of the country. We know that for a long time there has been a very serious unemployment situation in Puerto Rico. Under a bill like this, if we clear up the situation and bring additional industry into Puerto Rico and keep those people employed, it will relieve the situation all along the east coast, will it not, because we won't have that tremendous influx of people from Puerto Rico? Mr. MEAD. That is right. This will increase the stability of our labor force because it will keep them where they are if industry follows them to where they are rather than to force them to follow industry to where they find it. Mr. MULTER. That will also give the Puerto Ricans a chance to become more skilled and be welcome where today in various parts of the country they try to stop them from coming in. Mr. MEAD. That is quite right. It certainly will help in more cases than in the Puerto Rican case, because as you point out, it will bring the industry to them rather than forcing them to go to the industry and when they go to the industry, they go without skill, but when the indusry comes to them, they will develop to an extent where if they do leave and the chances are they won't leave so readily, they will bring their skills with them. Mr. MULTER. Thank you, sir. The CHAIRMAN. Well, we are glad to have your views. Mr. MEAD. I am very happy to be with you. The CHAIRMAN. The committee will now adjourn until Monday at 10 a. m. (Whereupon, at 11:50 a. m., the committee adjourned, to reconvene Monday, April 23, 1956, at 10 a. m.) AREA ASSISTANCE ACT OF 1956 MONDAY, APRIL 23, 1956 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, The committee met at 10:20 a. m., Hon. Brent Spence (chairman) presiding. Present Chairman Spence (presiding), and Messrs. Brown, Rains, Fountain, Mrs. Griffiths, Messrs. Vanik, Talle, Nicholson, and Bolton. The CHAIRMAN. Who will consider H. R. 8555. Mr. Sam Ezelle, who is the chief officer of the Kentucky State Federation of Labor, is here to testify. We are glad to have your testimony, Mr. Ezelle. We know that you have a message that will be worthwhile receiving. You may proceed. If you have a written statement, you may proceed as you please. You may read it without interruption or you may make your statement in any way you desire. STATEMENT OF SAM EZELLE, SECRETARY-TREASURER, KENTUCKY STATE FEDERATION OF LABOR, AFL-CIO Mr. EZELLE. Thank you, Chairman Spence. My name is Sam Ezelle, and I am secretary-treasurer of the Kentucky State Federation of Labor, AFL-CIO. Mr. Chairman and other members of the committee, I am grateful to you for this opportunity of appearing before you this morning and submitting reasons why the Kentucky State Federation of Labor is so hopeful that you gentlemen will feel it proper to enact this legislation which Kentucky now needs so badly. Generally, employment conditions along the Ohio River are fairly good at this time. You might say that in Kentucky we have a boom in the valley and abuse in the hills. This depression that is now going on today in most of Kentucky is an ugly and dismal condition to exist at a time when the gross national product is in the neighborhood of $400 billion. I have for the committee's convenience material analyzing Kentucky's depressed areas. Our problem in Kentucky today, Mr. Chairman, is highlighted by these key facts: In March of this year, total unemployment in Kentucky was estimated at about 81,000, or equal to 7.9 percent of Kentucky's labor force. Nationally, unemployment was 4.3 percent, so in Kentucky we are just about double in unemployment. Our rate in Kentucky, for insured unemployment was 8.2 percent in March compared to a national average of 4 percent. The rate of insured unemployment exceeded 15 percent in 8 areas of our State-over 15 percent unemployed. Insured unemployment in Kentucky has been about double the national average right now, since late in the year 1953. This high rate has been partially the result of depressed conditions in the mining industry, construction setbacks, due to some degree to the cancer scare in the tobacco industry, and more than usual fluctuations in distilling and segments of the machinery industry. At the present time the State of Kentucky has 11 areas, covering 30 of the State's 120 counties, that are classified by the United States Department of Labor as "areas of substantial unemployment." Six of these 11 areas are in sore economic straits because of the coal industry. Unemployment in most of these areas is of a long-standing nature, but underemployment and lack of labor force participation are also important. Areas of substantial unemployment are dramatic and they are eyecatching and spectacular, but Kentucky's major problem is underemployment and underutilization in the basically rural areas of our State. I mean by underemployment these people weren't employed to begin with. These people have been operating farms. They have been operating as farm laborers. They were never eligible for unemployment compensation. They were never in the labor market. We estimate now that there are 96,000 women and 79,700 men either unemployed, underemployed, or not in the labor force in Kentucky, who would be available for employment or other jobs. Lack of jobs for its surplus workers in Kentucky resulted in the net outmigration of 210,276 Kentuckians between 1950 and 1955. Now, between 1940 and 1950, the census figures showed that we lost a half million people in Kentucky. We used to have 11 Congressmen. Then we had 10. Now we have only eight. We lost a half million there in that decade, and already since 1950 we have lost over 200,000 more, people who leave our State and who go to Ohio or who go to Detroit, and most of them to Detroit or Cleveland, industrial centers of the North, the East, and even out into Tennessee, seeking employment. Manufacturing offers employment for less than 5 percent of the population in 97 of our 120 counties. Think of that. We have 120 counties in our State; only two States have more. Out of 120 counties, in 97 of them there is employment in factories for less than 5 percent of the counties' population. The Kentucky economy lacks an industrial-agricultural balance. This isn't necessarily bad when farming is in the high-income class, but here is what is happening in Kentucky: In almost half of our counties, 25 percent or more of the commercial farmers-I am not talking about farms where the fellow works in town and has a little farm he runs on the side but the commercial farms sold less than $1,200 in products during 1954. In 57 counties-we are talking about sale, gentlemen, we are not talking about profit. This is sale. This is gross sale. In 57 of our counties all that they would get in on these commercial farms is $1,200 annually. |