SOURCE (THE INCOME OF KENTUCKY RESIDENTS BY COUNTY 1953)

TABLE 3.-Selected indicators of Kentucky economic needs by area

1 Some areas and some counties in other areas apparently do not participate in this program.

The CHAIRMAN. Amongst the States of the Union, Kentucky needs help as much as any of them, doesn't it?

Mr. EZELLE. Yes, sir. That is true. We are 47th in education, 44th in per capita income. For awhile we were badgering for first place with West Virginia in unemployment.

The CHAIRMAN. That is a contest we don't want to get into. How do we stand now in unemployment?

Mr. EZELLE. It changes almost on a month-to-month basis. We are very close to the top. I know that. We are second or third, I would

say.

The CHAIRMAN. It seems to me we are in a singularly deplorable condition because those people who are unemployed have had but one occupation and that was mining coal. If we have to give them other employment, they would have to be trained. It seems to me any other employment would be agreeable to them because I know some of them in the old days used to go into the mines before the sun was up in the morning and come out after the sun was down at night and they hardly ever saw the sun.

Well, unless there are further questions, we are very glad to have your views, Mr. Ezelle.

Mr. Ezelle. Thank you, Mr. Chairman. I thank the committee and yourself.

The CHAIRMAN. You have given us some facts about our State which are not very agreeable to hear, but we ought to know.

We thank you.

Call the next witness, Mr. Clerk.

The CLERK. Mr. Chairman, the next witness is Mr. Solomon Barkin, director of research, Textile Workers Union of America, and he is accompanied by Mr. John Edelman.

STATEMENT OF SOLOMON BARKIN, DIRECTOR OF RESEARCH, TEXTILE WORKERS UNION OF AMERICA; ACCOMPANIED BY JOHN EDELMAN

Mr. BARKIN. Thank you, Mr. Chairman, and members of the committee.

The CHAIRMAN. You may proceed as you desire.

Mr. BARKIN. It would be helpful, Mr. Chairman, if my statement were included in the record, and I restrict myself to highlighting what is in the statement.

The CHAIRMAN. Your statement may be included. You may comment on it.

(The statement follows:)

STATEMENT OF SOLOMON BARKIN, DIRECTOR OF RESEARCH, TEXTILE WORKERS UNION OF AMERICA, AFL-CIO

We are much encouraged by the present interest in providing Federal assistance to depressed areas. This concern for the well-being of the people in the chronically distressed communities has been slow in coming. But we are heartened by the fact that the representatives of both parties have finally determined that Federal action is timely and imperative. The local efforts are insufficient. The principle of Federal responsibility in the field of local economic recovery is now clearly recognized even though there are major differences in approach and in the amount of Federal assistance, guidance and moneys which the proponents of the respective plans are willing to grant for this project.

We are troubled by the conviction that the philosophy underlying and the provisions of H. R. 8555 will frustrate efforts in this field rather than provide the help that is truly needed. Hope will be awakened among the distressed communities that real assistance will be offered and that the Federal Government is starting an all out drive to help them in their economic rehabilitation. But the provisions of the bill are not sufficient to back up this promise.

We are anxious to see such changes in this bill and that of the Douglas bill (S. 2663) which will guarantee an effective workable program of assistance and leadership to the distressed areas. We have previously been assured of Federal assistance but the Government failed to implement these promises. Candidate Dwight D. Eisenhower assured the citizens of New England and particularly Lawrence, Mass., in 1952 that the communities would be helped. The Federal administrations since 1950 have issued several administrative and Executive orders designed to give preferential considerations to the needs of these communities. But few practical results followed.

Gestures in the direction of assistance are not enough. We must end the wastage of human and national resources. We can ill afford to continue this traffic in human hopes. An effective program must be substituted for vague promises and generous speeches. The program must be an effective one which will help in the practical economic rehabilitation of these areas. H. R. 8555 is insufficient to accomplish this purpose. It must be modified so that its philosophy and provisions more nearly reflect those incorporated in S. 2663.

We need effective legislation to offset the disillusionment which has set in from the failure of administrative action to help in the rehabilitation of these areas. Congress can redeem this Nation's record through positive action. We believe that the program of economic reconstruction for depressed areas must occupy as significant a place on the calendar of congressional action as the programs of aid to foreign countries. The latter are designed to rebuild the economies of our allies and neutral nations so that they can better fend off external and internal communist and totalitarian aggression. Programs for domestic reconstruction of depressed areas will help create the economic resources from which the funds for such assistance can be derived.

Both H. R. 8555 and S. 2663 recognize the true nature of the problem presented by the depressed area. The former declares that these areas are characterized by "substantial and persistent unemployment *** (which) causes hardship to many individuals and their families and detracts from the national welfare by wasting vital human resources." In S. 2663 there is recognition of the "present

existence of excessive unemployment in certain areas of the Nation is jeopardizing the health standard of living and general welfare of the nation." Our goal for our domestic economic program must be at least as high as that for our foreign assistance program. The President of the United States declared in his message on the mutual security program that we seek to develop "a society marked by human welfare, individual liberty, and a rising standard of living." Only an effective program of assistance to the distressed areas can help realize this objective.

FEDERAL LEADERSHIP VITAL

Two basic deficiencies are evident in H. R. 8555. First is the refusal to provide Federal leadership and adequate financial aid in these programs. The second is the determination to make this a subordinate program by rejecting the principle of an independent administrative agency and placing this activity in an established agency devoted to very different functions. The existing departments have shown little determination or inclination to promote an all-out program of economic rehabilitation, nor have they any sympathy for Federal leadership in this area. We have great fears that the assignment of this responsibility to present agencies will severely limit the activities, and enthusiasm and imaginative initiative required for effective work in this field.

Federal leadership is vital in promoting the economic rehabilitation of the distressed areas. Unfortunately H. R. 8555 does not recognize this principle. As a matter of fact it is constructed on a very different principle. In the words of President Eisenhower it seeks to assist "communities to help themselves." The "major responsibility in planning and financing the economic redevelopment of their communities must remain with local citizens."

The dependence on local initiative, we contend, is insufficient and even unsound. We have relied upon such efforts in most communities now considered distressed and they are inadequate. Such local efforts have been so limited that the challenge of economic rehabilitation of distressed areas has become a national problem. Would it have become a national issue if local efforts were sufficient? The continued emphasis on local efforts reflects an inadequate grasp of the difficulties and the size of the problem. H. R. 8555 represents blind rejection of the lessons we have learned during the last 10 years on the need of Federal leadership. It suggests that the authors were more intent on providing a cynical gesture of interest rather than a real program of assistance. The need is to supplement or substitute for inadequate local efforts or the absence of local efforts because the greater national interest dictates that the continued distress is destructive of the national well-being and at variance with the commitment under the Employment Act of 1946 that "it is the continuing policy and responsibility of the Federal Government *** to coordinate and utilize all of its plans, functions, and resources for the purpose of creating and maintaining *** maximum employment."

We do not have maximum employment while we have chronic unemployment in these distressed areas. The Federal Government cannot escape responsibility by merely passing the onus to the inactivity of the local group. It has an obligation to provide leadership and assistance to assure their economic rehabilitation through direct intervention and leadership when the local communities fail. The broader national interest dictates that such positive steps be taken.

We cannot endanger our entire economy through the deficiencies and inadequacies of sectors thereof. We are recognizing this challenge in the field of agriculture. Setbacks in this area are endangering our stability and progress. We similarly must face up to the seepages in our economic structure occurring in the distressed areas and demand immediate Federal action to avoid the economic reversals of broader magnitude.

We are suspicious of the motives of H. R. 8555 because its spokesmen have defined the problem as well as the proponents of broader action. But they have not constructed a program which is equal to the needs. Mr. Arthur Larson, Under Secretary of Labor, declared that the "Federal Government should concentrate on aiding localities where the situation is of long duration." The program is then to be directed to meeting not minor recessions or difficulties but basic structural ones in areas suffering from persistent unemployment and economic inactivity. Palliatives and temporary relief are insufficient but broad programs of assistance are needed. The short-comings of the H. R. 8555 will become even more evident if we spell out the characteristics of an area beset by these long run problems.

CHARACTERISTICS OF DISTRESSED AREAS

First it is an area which has lost historic locational advantages. The losses in employment were far-reaching so that large pools of unemployment have persisted for long periods of time. The reasons for these reversals tend to be most fundamental. Vast economic, social, or competitive factors have disturbed the stability of the prevailing industrial and employment structure. Plants have been closed; and older employments have virtually disappeared. The newer industries and employers have not recognized advantages which would encourage them to move into or be established in the area.

The disappearance of locational assets may have been due to many factors well beyond the control of the community itself or the very employers who were forced to contract or close their operations. In the majority of cases, the plant closing has not been accompanied by migration. They represented a contraction of operations. The closings and shrinkage may well have been due to the exhaustion of mineral or natural resources, changes in consumer habits which have diverted demand from this to other products; shift in market locations; newer technologies and materials which may have made existing sources uneconomic and processes obsolete; tariff policies which originate in Washington or Geneva which may make it impossible for the local plant to compete with imports; or subsidies or differential inducements offered by other communities which would include tax exemptions, aids in financing construction or machinery, attractive terms for expansion or vigorous anti-union policies.

We may incidentally note that the new technologies are likely to increase the rate of plant closings, since the benefits to be obtained from new plants designed to incorporate the latest technological developments are so huge and the economies of new plant construction methods and materials are so impressive that management may find it more economic to abandon older plants and substitute newer structures for them in different areas. The problem of distressed communities resulting from such abandonment is likely to be intensified and become an integral part of the normal experience of industrial areas.

The problems of a distressed community are structural rather than superficial. A solution must look to the redevelopment of the area and the careful promotion of new locational advantages which can become the nuclei of economic growth. A new economic structure has to be built to encourage new enterprise. The construction of a new plant site or the rehabilitation of an industrial property is not enough. Real economic redevelopment requires prolonged exploration and planning for long-term growth. Such a project the local communities have seldom undertaken and are not prepared to launch. Only a Federal agency with these specific objectives in mind can provide the initiative, technical help and financial assistance which will encourage this type of growth.

We have enough experience to know that private enterprise can do this job if it is so minded and can see specific advantages for itself in a specific area. Our problem is not with the communities and areas where private enterprise is doing or can do the job. Our task is to stimulate and assure the consummation of programs for rehabilitation in areas where private enterprise and local endeavors have been insufficient. These exist in the chronically distressed areas for which the present legislation is designed.

Second, it is an area where local enterprise and initiative have usually been smothered and repressed by the existence of persistent and chronic unemployment, or may not even have been encouraged. Areas suffering from prolonged unemployment are like individuals who have been physically ill or unemployed. They lose heart and courage. They become resigned and discouraged. Their spirit has been knocked out of them. Their physical energies have been drained. The failure of the previous efforts tends to discourage newer efforts. They cannot be relied upon to act for themselves. They are like unemployed persons who need the outside help of a professional agency dedicated to correcting this attitude and providing them with specific guidance and courage and assistance. Outside assistance can only come from the Federal Government.

Many depressed communities have been without experience in successful independent local enterprise. The communities, like those in the textile and coal industries, have usually been single-industry towns and areas where a single group of employers, usually absentee in character, have dominated the area. The communities have been governed, dominated, and directed by the managements and representatives of these absentee owners. They have not encouraged independent action. They are not likely to have many civic organizations, or