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quential, but that particular amount would be, let's say, ahead of the Government loan, unless it was all equity capital.

The CHAIRMAN. What assurance have you that the local agencies would furnish the money? They are lending for profit and they are interested in safety.. What assurance have you that they would lend 60 percent?

Mr. MUELLER. Well, in Wilkes Barre, Pa., again to use that as an example, the Eberhardt Faber Pencil Co. was brought to that area on that basis, and the insurance company in that particular instance loaned 60 percent.

The name of the local entity was the Wilkes-Barre industrial fund. Personally, I can give you some real personal experiences. I happen to have been a director of what is known as the Grand Rapids Industrial Corp., which was a corporation organized in the days of the depression to bring new industries to Grand Rapids.

At the time of the depression, Grand Rapids was one of the worst spots in the country, because we were more or less a one-industry town. Now, those of us who felt we were charged with the responsibility for the community, organized this corporation, we loaned money to small corporations, and our criteria was "How much employment can you furnish, and how much employement can you keep on adding?"

We have some industries that today are $15 million industries that were loaned $5,000 many years ago and are now large concerns.

It merely shows what a group of interested people at the local level can do, and I think the main thing this bill will do is to stimulate, at the local level, the desire to help themselves. We want to stimulate our people to do those things for themselves which they can do, and not to depend on anybody else.

We didn't have a cent of Government money as far as we were concerned in Grand Rapids, and today, look at it in Business Week or any of the business publications and you will see it is one of the brightest spots and has been for the last 10 or 15 years.

The CHAIRMAN. What importance do you attach to technical assistance? I can understand why the undeveloped areas of the world need technical assistance, but I doubt very much whether technical assistance would be very helpful in this country.

Mr. MUELLER. Well, technical assistance can cover a large area. In other words, it doesn't necessarily mean the process, but it means more advice on the type of industry or type of manufacturing corporations that would best succeed in that area, taking all factors into consideration.

In other words, if it has a favorable climate, if it has plenty of good water; plenty of good water is always a drawing card for certain types of industries, paper, for example.

The CHAIRMAN. Of course, we are all interested in the people we represent in our own States, but how could you help the depressed areas of Kentucky?

Mr. MUELLER. We have given you two examples. We mentioned the brines. That is where research and technical assistance comes in. In other words, if those brines contain certain types of minerals that can be reduced and developed and extracted economically, you may have a bit chemical industry. You know, right up in Midland, Mich., you have the Dow Chemical Co.

The CHAIRMAN. What those fellows up there need is something to eat right now. They can't wait for this research.

Mr. PATMAN. On that point, Mr. Chairman, would you yield for a question and a brief observation?

The CHAIRMAN. Yes, sir.

Mr. PATMAN. The people in Kentucky don't know anything about the chemicals made from brines, do they, the local people?

Mr. MUELLER. They wouldn't know.

Mr. PATMAN. In other words, it is just like putting a steel industry in Texas. We know cotton, cattle, and oil, but we don't know steel. You can't get people interested locally to invest in something they know nothing about, and take a third mortgage; you couldn't get them to do that at all. You have got to have something they know something about. Banks will not make loans in these instances.

Mr. MULTER. I think Mr. Patman overlooks the fact that eventually, maybe 5 or 10 years from now, scientists may develop a process by which these brines can be used.

Mr. MUELLER. The people in eastern Kentucky, Mr. Patman, certainly do not know about brine and the chemicals which may be derived from it, but if research shows that that can be a profitable operation, you will see plenty of chemical companies coming in there and establishing plants for the utilization of that brine which gives employment to the community.

Mr. MULTER. Venture a guess as to when that will happen in Kentucky.

Mr. MUELLER. Well, you are asking me a specific question there which I cannot answer.

Mr. MULTER. Well, you should not come in with a speculation as a solution to a problem. You can't say whether it will be 15 or 20 years before Kentucky can use that brine. Kentucky has a problem now. How are we going to put those people to work now? Don't tell us that 15 or 20 years from now we may develop something that will put these people to work. They want to eat now.

Mr. WOLCOTT. What is the alternative?

Mr. MULTER. I will give you some alternatives if I testify on the bill. In the meantime, let's get the information from the agencies that are advocating this bill. But let's not have these general ideas that are up in the air. Let's get down to earth. How are we going to put these people to work now in Kentucky and West Virginia? Mr. BOLTON. Will you yield?

Mr. MULTER. Yes, sir.

Mr. BOLTON. I can give you an example from my own district. Just prior to the war-you must remember that the war stopped a great deal of development-brines were discovered along Lake Erie. As a result of that you have a chemical development where it is expected that within 10 years you may well have the second largest chemical center in the country, just because of the discovery of those brines. So I think it is an apt illustration of a long-range standpoint. I don't think it is an immediate one.

Mr. MULTER. I am in favor of all the research we can get, but let's not come in with a 10-year research and development plan when we are talking about trying to relieve a situation that exists now.

I am for that program, too, but let's not bring it in as a part of a program to help distressed areas.

Let's talk about what we know we can do now, not what we are going to develop over a 10-year period.

Mr. MUMMA. There are a lot of places in Pennsylvania which are trying to lift themselves by their own bootstraps.

The CHAIRMAN. I know that the people in Kentucky now need food and not brines and we ought to do something as quickly as possible. I do think we ought to make some investigations as to what we can do in the future, but it will not relieve conditions now.

Mr. WOLCOTT. Mr. Chairman.

The CHAIRMAN. Mr. Wolcott.

Mr. WOLCOTT. Before we get off this question of brines, the witness has mentioned that the Dow Chemical Corp., at Midland, Mich., has developed certain industrial uses for these brines. As I recall it, magnesium is made from these brines, is that not right?

Mr. MUELLER. That is correct.

Mr. WOLCOTT. I do not like to get provincial, but inasmuch as we are talking about northern Ohio, I want to get in a plug for my own hometown, Port Huron, Mich.

Port Huron, Mich., was a distressed area at one time. The Dow Chemical Co. found it advisable to establish a magnesium plant in that area. They had to go so far as to ship the brine from Midland to Marysville for the production of this magnesium, because of certain qualities of the water in the St. Clair River, I presume, the combination of the two would develop a very splendid magnesium. As a consequence, the magnesium industries prospered in Port Huron for some years, and gave employment to I don't know how many hundreds of thousands of people.

That is an example of what you would like to develop, is that correct?

Mr. MUELLER. That is correct, yes, sir.

Mr. WOLCOTT. I am just asking a question, and then in typical Yankee fashion, answering it. What has happened to the leather goods industry of the New England States? It has gone down to the source of supply, in the Southwest.

The textile industry of the New England States has gone to the South, close to the sources of supply.

The precision instruments industry, under what I consider a very fallacious tax policy which we discussed rather briefly here yesterday, has been practically destroyed in the New England States, and has gone to Switzerland.

The New England States, as I understand it, have recovered somewhat, on their own, from a very disastrous recession, and with the little help that you might give them under this bill, if enacted, they might get the shot in the arm which may make the New England States again as prosperous an area as they used to be.

I think it might be interesting to put into the record at this point, the official statistics on what has happened to our economy at the present time, taken from the official document known as Economic Îndicators—this is of March 1956, the last available. These indicators are prepared by the Council of Economic Advisers. They are mostly figures from the Department of Agriculture and Bureau of Labor Statistics and from the Office of Business Economics of the Department of Commerce.

Now gross national product, which is the value of all goods and services produced in the United States, in the fourth quarter of 1955, amounted to $397,300 million, which is the highest it has ever been, and an increase, since 1952, of $52 billion, roughly.

That of course has been reflected in national income.

National income in the fourth quarter of 1955 was at an all-time high, notwithstanding our great prosperity during the war periods, and stands at $331,200 million.

Of course, that is reflected in an increase in employment. The labor force, civilian labor force, as you have pointed out, is at 65,491,000 as of February of this year.

In February of 1955, it was 63,321,000, an increase over the year before of over 2 million.

Of course, that has been reflected also in unemployment, and the percentage of unemployed in the labor force, as of February 1956, was 4.4 percent.

That is a decrease, from February 1955, of just about 1 percent. It was 5.3 percent at that time.

I think here is an interesting situation, in view of the problem, something that I haven't been able to reconcile myself, and I wish somebody would help me do it: Notwithstanding the decrease in farm income, which we of course recognize, if we are realistic about it, the total of people employed, over 14 years of age, on farms in the United States, is 5,470,000, which is 400,000 more than in February 1955, and there have been few occasions-let's go back to 1953, we there were employed on farms, 6,562,000; 1952, 6,805,000.

The thing which I am interested in is, if farm income is declining, and farm employment remains almost constant and increases, periodically-of course I take into consideration seasonable adjustments and so forth-why are we employing on the farms just about as many people now, with the lowering of farm income, as we did a year or two or three ago?

Mr. PATMAN. Mr. Wolcott, would you mind stating the figures for the years 1951, 1952, 1953, 1954, and 1955 ?

Mr. WOLCOTT. 1951 is not in here, but 1950 is 7,507,000; 1952, 6,805,000; 1953, 6,562,000; 1954, 6,504,000; 1955, 6,730,000.

It seems to average out at just about 6,700,000.

Mr. PATMAN. If you will notice it kept going down to such a low point that it had to go back up.

Mr. WOLCOTT. Why did it have to go back in view of the decline of farm income?

Mr. PATMAN. They had to produce to make a living.

Mr. WOLCOTT. You mean they had to go to work because-why did they have to produce more? Why did they have to use as large a labor force to produce as much income on the farms during all this period? If you want the farm income figure, it has risen, in this fourth quarter of 1955, $100 million.

Mr. PATMAN. You mean on an annual basis?

Mr. WOLCOTT. Yes, on an annual basis. As a matter of fact, farm income is just about where it was in 1955.

Mr. PATMAN. How does that compare to 1952?

Mr. WOLCOTT. $2,919 million in 1952.

Mr. PATMAN. That cannot be correct.

Mr. WOLCOTT. It is your figure.

Mr. PATMAN. I know, but there is something wrong about that. The CHAIRMAN. Well, there is nothing in this bill to help the farmer. Mr. WOLCOTT. Yes, there is. He has covered that, I believe, because if you develop these small industries in these agricultural areas, you supplement the farmer's income. I would dare say that 60 percent of the farmers in the Detroit area supplement their income by working in Detroit.

Mrs. GRIFFITHS. Will the gentleman yield right there?

Mr. WOLCOTT. I yield.

Mrs. GRIFFITHS. I would like to ask, Mr. Secretary, in this building of factories in distressed areas, the factory owner is going to be permitted to borrow 60 percent of the money from the bank, is that right? The local bank?"

Mr. MUELLER. Well, it is assumed that he will get a 60-percent mortgage.

Mrs. GRIFFITHS. And the Government will supply 25 percent.
Mr. MUELLER. Yes, sir.

Mrs. GRIFFITHS. And at what rate of interest?

Mr. MUELLER. The rate is not specified, but it would be undoubtedly the going rate in the community.

Mrs. GRIFFITHS. And how long will he have to pay?

Mr. MUELLER. 20 years, maximum.

Mrs. GRIFFITHS. And the people in the community will supply 15. percent, is that right?

Mr. MUELLER. That is right.

Mrs. GRIFFITHS. For a third mortgage.


Mr. GRIFFITHS. I would like to know what is built into this bill to see to it that the Government is not subsidizing a competition for a present industry.

Mr. MUELLER. It is stated in the bill, in section 107 (a) the last part:

It is not to assist establishments relocating from one area to another when such assistance will result in substantial detriment to the area of original lo- cation by increasing unemployment.

Mrs. GRIFFITHS. That is it would not assist, for instance in relocating Grand Rapids Furniture in High Point, N. C.

Mr. MUELLER. It certainly would not.

Mrs. GRIFFITHS. But would it assist men from Grand Rapids, who knew the furniture industry, who were not moving their plant at all, who kept their plant in Grand Rapids, but to go down to North Carolina to set up a branch?

Mr. MUELLER. It would, if it was in an area of persistent unemployment. Of course, you have we call an “iffy" question because in North Carolina there is not unemployment.

Mrs. GRIFFITHS. Well, let us take the textile industry. Is it going to build up textile industries, for instance, in the South? The Government is going to subsidize the building of these textile industries, which is going to create competition for plants in the New England area, isn't that right?

Mr. MUELLER. I think you would be right in that instance, although : I would say this: that I feel the Administrator of the bill and the Department of Commerce would have to take a very close look at any request for assistance where there would be a considerable possibility of depriving another area of the country.

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