professional or middle classes with the initiative and daring, or trade unions with the experience to undertake so vast an effort at economic rehabilitation. These small communities have been so accustomed to having the lives of their people and their economic destiny directed by these representatives of outside interests, that they have been left without the resources for self-assertion in a crisis. The lessons of the present distressed areas should not be missed by the prospering communities in our country which are characterized by similar conditions at the present time. It is important to change these characteristics and to eliminate this industrial domination while there is a chance and while the crisis is not upon them.

We can offer you many illustrations of textile communities where the people have been unprepared for the disasters which have befallen them because they have had no past experience with stimulating local enterprise or economic opportunities. The fault does not lie with these people. The large outside enterprises repressed them and prevented opportunities from arising. Low wages had long kept the people submerged. The best proof that the human material is rich, and that it is the climate created by these enterprises which prevented initiative, is that many more venturesome individuals have left these communities and established impressive successful businesses in other parts of the country.

Any program, therefore, which assumes that all communities can initiate and undertake the responsibilities for local economic rehabilitation is starting from a wrong premise. Moreover, it is punitive in its conception, since it would penalize the more submerged communities which need the greatest amount of outside help.

Third, it is an area which has low financial resources and is, therefore, least capable of raising the capital required for these long-term, bold programs for rehabilitation. The very fact that unemployment has persisted and become chronic has meant that the community's tax rolls have suffered and its financial resources have been arained. It is not as capable of financing its own programs as are the more prosperous communities. The philosophy underlying the present program seeks, therefore, to withhold help from the needy and reward with assistance the less critical areas.

H. R. 8555 has not faced up to the economic realities of the distressed areas. The authors have begrudgingly accepted the principle of assistance, but have not recognized that the economic reverses have left these communities least financially capable of acting. They need investments in public services and facilities, investigation, model projects, and the planting of nuclei industries. These cannot be provided, or even adequately conceived, by the distressed community which has been left stranded by economic reverses.

Fourth, an economically distressed area is seldom a single community. It extends beyond a political subdivision and includes a geographical region. It is usually coexistent with a full labor market. If economic assistance is to be provided, it must be conceived on a larger pattern than a specific municipality. The program must be planned for an entire area. The distress affects the entire area since people are recruited from different parts of the labor market area. It cannot be localized to a limited area, as is proposed in H. R. 8555, section III (A and B).

S. 2663 has a broader definition in that it sets no such restriction and the area which can be selected for the organization of local committees may more truly correspond to the economic bounds of the full region. In continuing the present practice of relying on restricted, existing political subdivisions, the failings in the present programs will be perpetuated. The purpose of the legislation will be largely negated.

Three deficiencies of present programs require special mention. First, many of them are modest because they are conceived in terms of a small, local development for local residents, whereas the actual employees formerly engaged in other employment may reside in other political subdivisions. Second, the plans invite competition among political subdivisions, which often encourages an emphasis on subsidies rather than constructive programs. Third, they prevent full exploitation of the economic resources of the area and the opportunities for constructive redesign of the locational characteristics, since such broader programs often involve sites outside the immediate political subdivisions eager to solve their problems. Only by dealing with the area as a whole can adequate programs be developed to meet the challenge.

DEFICIENCIES OF STATE GOVERNMENTS

One of the basic deficiencies of H. R. 8555 is contained in section 106 (8) which requires programs to be approved by the "State or any agency, instrumentality, or local political subdivision thereof," which would have to make a positive finding that "the project for which financial assistance is sought is consistent with such program."

All of us who have followed the procedures adopted by State governments know that this proviso is fatal to the entire program. Many State governments have no interest in industrial development. In fact, we can run up a list of States which have resisted such programs or have shown little interest in them. The agricultural complexion of many State governments has biased their executive and administrative personnel against such undertakings. Development commissions have become advertising bureaus for their lakes and vacation resources rather than planning bureaus for industrial development. It would be fatal to this entire undertaking to enable them to veto efforts in this field.

The Journal of Commerce in an editorial on April 5, 1956, declared that the “Administration is not entirely consistent in requiring State approval of projects under the area-aid bill, for it proposes to bring the Federal housing law into the plan, including provision for sewage, water facilities, and the like and these do not require State clearance. Dealings are directly with appropriate local entities as in the case for urban renewal programs, except in situations where Statematched funds are involved." Two State governors, the newspaper further adds, declared that the "States ought not to be permitted to veto it or to exclude the otherwise eligible labor surplus areas in their borders from benefiting, once the plan is adopted by Congress." Governor Leader of Pennsylvania suggested that the Federal Government should work through States which were themselves working effectively in the field, but where they were not, the Government should reserve the privilege to work with appropriate local entities.

The basic fact is that there are States as well as local communities which will discourage or will refuse to take action or receive assistance. The dominant leaders of the areas may refuse to act. They are often able to take this position by diverting local attention from the true issues and using smoke screens to hide their motives for refusing such action. Our national economic interest and the well-being of the thousands of innocent victims demands that neither the backward State nor the community should stand in the way of needed economic recovery.

H. R. 8555 will allow State and local groups to veto the intent of the economic rehabilitation of distressed areas. While these provisions remain basic to the program, we can only declare that we suspect the motives of the supporters, for they must know that they cannot effectively rehabilitate communities if they face this hurdle.

LOCAL RESISTANCE TO ADEQUATE PROGRAMS DEMANDS FEDERAL LEADERSHIP Your own committee has had sufficient evidence that many local development groups are led by men determined to hide their community's problems from the public's gaze. They are concerned with sick economies but refuse to acknowledge them. They are laboring under the impression that if they seek new businesses quietly and entice companies to move from existing sites that they will solve their problems.

This "conspiracy of silence" has been fostered by short-sighted realtors who seem to dominate these local development boards. They are accustomed to dealing with small business problems rather than the challenging tasks presented by a depressed area. They are seeking minor additions to emplovment as relief rather than programs for long-term growth. They are so blinded by their dogmatism in economic philosophy that they are sacrificing the economic well-being of the communities which they pretend to represent. Instead of pressing for economic growth, they are obsequiously seeking businesses to locate in their midst. Therefore, they fall prey to intimidations by strong outside powers. The business community in many of these depressed communities have, as a result, carried on a campaign against Federal assistance. The best example is that of New England where the New England Council decided to oppose these bills. It took the position that the responsibility for the development of employment opportunities should remain primarily at the local level. The irony of this position is that New England is one region in which many communities have remained on the distressed list for years and many of them are still on it.

Local committees and assistance have proved inadequate because the conceptions and personnel have been insufficient. Yet the New England Council, presumably speaking for the business interests, is refusing to endorse programs which would bring new light and assistance to relieve the desperation of the tens of thousands of unemployed people whose despair continues to deepen with the passing of the months.

While the New England Council speaks of local initiative, plants continue to close, employments disappear, and thousands of new persons continue to be added to the labor force; older persons are being forced out of the market because of the insufficiency of jobs. Its offices being located in Boston, it is dominated by the financial interests, real estate promoters and public utility spokesmen. They sit by smugly while human wants cry out loudly for satisfaction. Since their own economic interests are not being adversely affected, they have no sense of urgency. The New England Council, composed of the region's business interests, again is adding to the evidence of its incapacity to lead the region and is dampening the efforts of those who wish to bring assistance to it. These attitudes of the business and realtor interests have produced this conspiracy of silence when broad-scale action is required. They have coerced public officials into making statements explaining their refusal to obtain Federal assistance while their communities remain chronically depressed. No greater evidence of subservience to dogmatism and indifference to public interest and human needs can be paraded before any congressional committee.

UNITED STATES CHAMBER OF COMMERCE OPPOSITION CLOAKS ITS DESIRE FOR INACTION AND BUSINESS DOMINATION OF OUR POLITICAL AND SOCIAL STRUCTURE

One has but to read the pamphlet entitled "Getting and Holding Good Employers," published by the committee on economic policy of the United States Chamber of Commerce to understand the long-term purpose of this opposition to Federal programs. The emphasis on local action is not born out of a conviction that the local communities are adequate to handle the problems and the challenges of a depressed area. It is rather intended to capitalize on the distress to create what the committee calls "a better climate for business and jobs everywhere." This thought is further emphasized in the conclusion that "though the plight of the depressed areas is most dramatic and pressing, it should not blind us to the need for a better climate throughout the country."

At a time when the present administration boastfully declares that it rescued the economy and claims credit for "the good times we enjoy today" with its "unprecedented prosperity," the United States Chamber of Commerce is carrying on its fight for basic economic changes in tax laws, Government operations and regulation of unions because it wants to improve the climate for American business. One wonders how much profit business wants; how much of the tax burden does it wish to shift to the consumer; how much wantonness is desired in the operation of our business economy.

The policy statement is more of an attack on labor legislation, taxes, and the refusal of communities to heed the United States Chamber of Commerce policies than a prescription for the growth of local communities.

In the chronically distressed areas we are concerned with unemployment and the disappearance of jobs because of the fundamental changes in our economy and the loss of historic locational advantages. Cringing local attitudes may bring in low-wage employers seeking to exploit a cowed work population. But they provide no real answer.

We have seen that happen in New England. The realtors who have taken over empty mills have secured new tenants. Many fled from other communities to get lower rents, tax concessions, or in some cases, to avoid unions. Many may be counted among the lowest wage payers and have held their rates well below those previously prevailing in the community.

More than a "business climate" is required in these communities or areas which have to be economically rebuilt. They must get new strong businesses within them. This result is not accomplished primarily by "climate"; success demands careful planning and the development of new locational advantages. This challenge the chamber of commerce does not meet nor treat in its pamphlet.

FEDERAL LEADERSHIP IS VITAI.

Opponents of effective Federal leadership and assistance to distressed areas have begrudgingly acknowledged that we are faced with a serious problem of

economic distress. But, in formulating a program, they have been hampered by their dogmas and prejudices and have not faced up to the primary problems of finding methods of reconstructing the economies of entire areas. These same men know how much thought, imagination, study and investment are required to start new industries or to revive old ones. Cannot they realize that equally large efforts and funds are required to accomplish the same for distressed regions? The present administration has affirmed that such programs are needed in undeveloped countries. Are we not entitled to similar efforts and appreciation for our distressed communities in our own country?

Private enterprise is the backbone of our entire economy. But we realize what public investment and efforts must often precede and lay the foundation for later private endeavors. The very basis of the urban renewal movement is Federal Government insurance against real estate losses or to allow for profitable local private redevelopment. The New England Council and the administration favor these programs. Why cannot they conceive of using this technique on a broader, area basis to assure redevelopment of an entire distressed area? Why shrink from the use of the very instruments which the administration itself proposed for limited use for local projects?

What is at stake is the economic well-being of millions of people. We cannot afford to be half-hearted in our efforts.

AN INDEPENDENT AGENCY IS VITAL

The present Federal agencies providing assistance to local communities are, we are all agreed, inadequate and too modest. They are primarily located in the United States Department of Commerce. Mere expansion and increased personnel are not enough. A new spirit must suffuse the people engaged in this work. It is a dedicated task to help plan and develop programs on a broad scale, equal to the needs. It requires a conviction among the administrators that the Federal Government properly can utilize the general welfare clause in the Constitution to aid communities and that it is in the interests of the Nation that it be done.

Unfortunately, the continuance of the program in the Department of Commerce, as is contemplated by the bill, would perpetuate the unfriendly, tightfisted and casual attitudes which have hitherto pervaded their activities. The present agency has published a few pamphlets, sent its employees to deliver some speeches, and led realtors to distressed communities to extend messages of sympathy, but to provide no real assistance.

The responsibility for the stimulation of the economic recovery of depressed areas is so vital to our national economic existence that it should stand on its own and be directly accountable both to the President and the Congress of the United States. It should not be subordinated to the administrative functions of existing executive departments. The problems are so specialized and pressing that they require the attention of an independent agency devoted solely to the promotion of the economic recovery in these areas.

COMMENTS ON SECTIONS OF THE BILL

The following comments and recommendations are submitted for the respective sections of the bill.

A. Administration

1. We urge an independent authority such as is proposed in S. 2663. 2. Section 112 provides for an advisory board. In addition, we propose an advisory committee to supplement the activities of the governmental agencies which shall consist of labor, management, local and State officials, and persons engaged in the promotion of local economic development, as well as academic specialists in the problems of economic growth. They can furnish practical advice, a sense of urgency and a source of new ideas together with a running critical evaluation of the agency's activities.

B. Definition of depressed areas

1. The bill proposes that the authority for declaring areas to have "substantial and persistent unemployment" to be vested in the Secretary of Labor. We believe it should be assigned to the Administrator.

2. The definition prescribed in section 102 (a) provides a sound framework if the unemployment rate were reduced to 6 percent, rather than kept at 8

percent. We approve the provision that the defined percentage should have prevailed over "the major portion of each of the preceding" 2-year period. We would suggest a reduction of the period from 2 years to 18 months. We are impressed with the delays likely to follow in implementing the finding and also with the fact that the data themselves are likely to be 2 or 3 months behind the current month.

3. The functions of the Secretary of Labor should be those of providing information and making studies in areas in which the Department of Labor has special competence.

4. The Administrator should be entitled to make the determinations either at the request of the local areas or on his own initiative. He must be granted the latter power since we have indicated many localities will refuse to act.

5. The distressed area should be the entire labor market rather than political subdivisions thereof. The problems are those of a chronically distressed area rather than an individual community. If alternative employments are to be found within an area, the solutions for the specific community adversely affected by an economic setback is of a very different nature than where an entire area is affected. This bill should deal with chronically distressed labor market areas. C. Local committees

We endorse section 7 of S. 26633 providing for local committees appointed by the Administrator and urge its inclusion in the bill. This provision must be inserted in the bill, for without it little will be done in many areas. Another justification for this provision is that many local committees are set up for specific political subdivisions. They are more interested in getting temporary relief for their community than in providing for long-term growth. They tend to encourage fly-by-night concerns. The most economic programs must be worked out for an entire area rather than an artificial subdivision. Competition among local groups often develops into a battle on the amounts of subsidies rather than sound programs for growth.

The local committee appointed by the Administrator for a labor market area could well become the overall planning agency tieing together the work and operations of the subordinate local committees.

These committees should have wide planning functions. They should be empowered to conduct the appropriate planning and surveying activities as well as pilot operations in specific ventures to determine the feasibility of individual developments. They can also arrange for help and advice to small business organizations.

D. Technical assistance

We approve of section 106 providing for a specific appropriation for grants for technical assistance. These grants should be made to the above local committees on the submission of specific projects and activities to the Administrator. E. Industrial, commercial, and construction loans

We favor the provision of the Douglas bill respecting the loans for the construction of new factory, industrial, or commercial facilities. The parsimonious attitude reflected in section 107 of H. R. 8555 cannot be reconciled with any determination to help these communities or any conviction that the solution of their problems can be advanced by such loans. Actually, these loans will play only a minor part in the economic rehabilitation of distressed areas.

They can often provide the beginning of the reversal in trends rather than the foundation for an entire new economic structure.

While modern plant space is important, it is unlikely that in the great majority of cases where sound planning and public services and facilities have been developed that it will be necessary to tap these funds. There are many financial agencies ready to undertake the financing of such projects. But they will not venture into the depressed areas until the upward trend has been initiated. The funds provided by this section will provide this resource. A parsimonious attitude would only delay progress. We are in favor of the authorization of $100 million rather than the $50 million.

Because the communities which will have to tap these resources are likely to be the least financially capable of obtaining funds within their own area, we favor the more liberal provision of the Douglas bill providing that the Federal loan shall be up to 66% percent for as long as 40 years, rather than H. R. 8555, which restricts the loans to 25 percent and twenty years. We urge the deletion of the provision that 15 percent of the cost be supplied by the State or other