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(2) to the employees' compensation fund, on the basis of annual billings as determined by the Secretary of Labor, for benefit payments made from such fund on account of officers and employees (and beneficiaries thereof) occupied on a full-time basis on this program of financial assistance.


SEC. 109. In the performance of and with respect to the functions, powers, and duties vested in him by this Act in connection with the program of loans and participation in loans, the Secretary shall

(a) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act, as amended; and

(b) maintain an integral set of accounts which shall be audited annually by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended, and no other audit shall be required: Provided, That the determinations of the Secretary with respect to the program of financial assistance authorized by section 101 (a) (2) shall be final and conclusive upon all other officers of the Government.


SEC. 110. The Secretary is authorized to appoint an Area Assistance Administrator who shall perform such duties as the Secretary may prescribe. The Area Assistance Administrator shall receive compensation at a rate equal to that received by Assistant Secretaries of Commerce.


SEC. 111. In the performance of, and with respect to the functions, powers, and duties vested in him under this Act, the Secretary may—

(a) under such regulations as he may prescribe, make such findings and determinations as may be required for the proper administration of this Act and such findings and determinations, together with those required to be made by the Secretary of Labor pursuant to section 102 hereof, shall be final and shall not be subject to review in any court by mandamus or otherwise: Provided, That with respect to the validity, effect, and enforcement of loans and participations provided for by section 101 (a) (2) hereof or security taken thereunder, statutes, rules and regulations pertaining generally to suits by and against the United States shall be applicable;

(b) under regulations prescribed by him, assign or sell at public or private sale, or otherwise dispose of for cash or credit, in his discretion and upon such terms and conditions and for such consideration as the Secretary shall determine to be reasonable, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of loans granted under this title, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in connection with the payment of such loans until such time as such obligation may be referred to the Attorney General for suit or collection;

(c) deal with, complete, renovate, improve, modernize, insure, rent, or sell for cash or credit, upon such terms and conditions and for such consideration as the Secretary shall determine to be reasonable, any real property conveyed to or otherwise acquired by him in connection with the payment of loans granted under this title;

(d) pursue to final collection, by way of compromise or other administrative action prior to reference to the Attorney General, all claims against third parties assigned to the Secretary in connection with loans made by him. Section 3709 of the Revised Statutes, as amended (41 U. S. C. 5), shall not be construed to apply to any contract of hazard insurance or to any purchase or contract for services or supplies on account of property obtained by the Secretary as a result of loans made under this title if the premium therefor or the amount thereof does not exceed $1,000. The power to convey and to execute in the name of the Secretary deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real property or any interest therein acquired by the Secretary pursuant to the provisions of this title may be exercised by the Secretary or by any officer or agent appointed by him for the purpose;

(e) acquire, in any lawful manner, any property (real, personal, or mixed, tangible or intangible), whenever deemed necessary or appropriate to the conduct of the activities authorized in section 101 (a) (2) of this Act; and

(f) in addition to any powers, functions, privileges, and immunities otherwise vested in him, take any and all actions, including the procurement of the services of attorneys by contract, determined by him to be necessary or desirable in making, servicing, compromising, modifying, liquidating, or otherwise administratively dealing with or realizing on loans made under the provisions of this title.


SEC. 112. To advise the Secretary in the performance of functions authorized by this Act, there is authorized to be created an Area Assistance Advisory Board, hereinafter referred to as the "Board", which shall consist of the following members, all ex-officio: The Secretary, as Chairman, the Secretaries of Agriculture, Health, Education, and Welfare, Labor, and Treasury, the Administrators of the Housing and Home Finance Agency and of the Small Business Administration. The Chairman may from time to time invite the participation of officials of other agencies of the executive branch interested in the functions herein authorized. Each member of the Board may designate an officer of his agency to act for him as a member of the Board with respect to any matter there considered.


SEC. 113. The Federal Reserve banks are authorized and directed to act as custodians and fiscal agents for the Secretary in the general performance of the powers conferred by this title. Any banks insured by the Federal Deposit Insurance Corporation, when designated by the Secretary of the Treasury, may act as custodians and financial agents for the Secretary. Each Federal Reserve bank shall be entitled to be reimbursed for all expenses incurred as such fiscal agents.


SEC. 114. With respect to lending activities authorized by this Act

(a) Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security, for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the Secretary, or for the purpose of obtaining money, property, or anything of value, under this Act, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

(b) Whoever, being connected in any capacity with the Secretary (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged or otherwise entrusted to it, or (2) with intent to defraud the Secretary or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the Secretary makes any false entry in any book, report, or statement of or to the Secretary, or, without being duly authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond, or other obligation, or draft bill of exchange, mortgage, judgment, or decree thereof, or (3) with intent to defraud participates, shares, receives directly or indirectly any money, profit, property, or benefit through any transaction, loan, commission, contract, or any other act of the Secretary, or (4) gives any unauthorized information concerning any future action or plan of the Secretary which might affect the value of securities, or, having such knowledge, invests or speculates, directly or indirectly, in the securities or property of any company or corporation receiving loans or other assistance from the Secretary shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both. (c) As used in this section the term "Secretary" shall mean, with respect to the lending activities of the Housing and Home Finance Administrator authorized under this Act, the Housing and Home Finance Administrator.


SEC. 115. (a) To avoid duplication of activities and minimize expense in carrying out the provisions of this Act, the Secretary shall to the extent practicable and with their consent use the available services and facilities of other agencies and instrumentalities of the Federal Government on a reimbursable basis.

(b) Departments and agencies of the Federal Government shall exercise their powers, duties, and functions in such manner as will assist in carrying out the objectives of this Act. This Act shall be supplemental to any existing authority and nothing herein shall be deemed to be restrictive of any existing powers, duties, and functions of any other department or agency of the Federal Government.


SEC. 116. The Secretary is authorized to procure the temporary service of experts and consultants or organizations thereof, including stenographic reporting services, by contract or appointment and in such cases such services shall be without regard to civil-service and classification laws, and, except in the case of stenographic reporting services by organizations, without regard to section 3709, Revised Statutes, as amended (41 U. S. C. 5). Any individual so employed may be compensated at a rate not in excess of $50 per diem, and, while such individual is away from his home or regular place of business, he may be allowed transportation and not to exceed $15 per diem in lieu of subsistence and other expenses.


SEC. 117. The Secretary shall make a comprehensive annual report of his operations under this Act for the fiscal year ending on the preceding June 30 to the President, for transmission to the Congress as soon as practicable in each year, but in no case later than the third day of the following January.


SEC. 118. In addition to appropriations specifically authorized by sections 106 and 108, appropriations are further authorized for the carrying out of other provisions and purposes of this Act.

The CHAIRMAN. This is a bill which the chairman introduced at the request of the Department of Commerce. Of course that does not commit me to the bill or to any of the provisions in it. I am heartily in favor of furnishing some aid to the depressed areas of the country which we know exist, and where there is very deep depression in many cases. This is the Department bill.

We have with us this morning Mr. Mueller, Assistant Secretary of Commerce, to give us the views of the administration on the bill.

We are very glad to have you, Mr. Mueller. If you have a prepared statement, you may read it without interruption and then subject yourself to interrogation.

Mr. MUELLER. Thank you, Mr. Chairman.

I do have a prepared statement that I would like to, if possible, read without interruption, although if any of the members of the committee would like to ask questions, I certainly would be more than happy to answer them.

The CHAIRMAN. I am sure we will be glad to let you conclude your statement without interruption. That would be the most expeditious way.


Mr. MUELLER. Thank you, sir.

I am glad to have this opportunity to appear before this committee to present the views of the Department of Commerce with respect to H. R. 8555 and identical bills, here under consideration, to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise, and for other purposes. Because of the number of Congressmen and Senators who have sponsored bills for this general purpose, there appears to be widespread agreement on the need for legislation in this field.

This program involves relationships between Federal, State, and local governments, and I would like to set forth our views on these relationships insofar as they touch on area development. They said:

The States have responsibilities not only to do efficiently what lies within their competence, but also to refrain from action injurious to the Nation; the National Government has responsibilities not only to perform, within the limits of its constitutional authority, those public functions the States cannot perform, but also to refrain from doing those things the States and their subdivisions are willing and able to do.

This statement points to a recognition of common aims in our political life, growing out of the kind of people we are and also to the necessity of achieving our aims within our constitutional framework. For we must not lose sight of the fact that ours is a Federal system of government. That system must be preserved.

Certain fundamental characteristics of Americans go far to explain the problems peculiar to our economy. One is a passion for independence: Americans refuse to be pushed around. Another is the desire to improve their standard of living: Americans want to progress and want their children to have it even better. The idea of abject dependence on any Government is repugnant to Americans.

Today the challenge to statesmanship is to continue to resolve our domestic and international problems within the framework of our traditional love of freedom and of progress. Freedom requires that government avoid dictation and foster the self-reliance and self-development of its citizens.

The President recognizes that our ideals cannot fully be realized as long as we still have areas of chronic economic illness in this country. In his recent message to Congress on the state of the Union, he said:

We must help deal with the pockets of chronic unemployment that here and there mar the Nation's general industrial prosperity. Economic changes in recent years have been often so rapid and far-reaching that areas committed to a single local resource or industrial activity have found themselves temporarily deprived of their markets and their livelihood.

Such conditions mean severe hardship for thousands of people as the slow process of adaptation to new circumstances goes on. This process can be

speeded up. * * *. Improving such communities must, of course, remain the primary responsibility of the people living there and of their States.

In his latest economic report, the President stated:

The fate of distressed communities is a matter of national as well as local concern.

He then went on to state the four major principles which should govern a Federal program for this purpose:

First, Federal assistance should aim at helping communities to help themselves. Major responsibility in planning and financing the economic redevelopment of their communities must remain with local citizens.

Second, the program should aim at lasting improvement of job opportunities by the establishment or expansion of productive industries. Projects that generate only temporary employment do not help a community solve its basic problems and may even worsen its predicament.

Third, Federal assistance should be contingent on the active participation of governmental authorities who are close to the troubled community; that is, the State or local government or a community-sponsored development or credit corporation must provide part of any financial assistance required for specific projects.

Fourth, Federal aid must not be extended to a community if the proposed project will create unemployment in some other area.

Happily the record economic growth and progress throughout the Nation during 1955 has gone far to reduce the number of areas of substantial labor surplus. At the end of 1954, 48 major areas and close to 100 smaller centers had been so classified by the Department of Labor. By the end of 1955, only 19 major and 64 smaller areas were in that unhappy category, representing decreases of about 60 and 36 percent, respectively.

While this is an extraordinary record of progress, it is not good enough. This Administration will not cease its efforts to continue to alleviate this situation.

Now I believe that the overwhelming majority of American citizens want to see any economic ills handled in the same wise, humane, and scientific spirit which they expect in their physicians when assailed by bodily ills. Quack remedies won't do. They want their cases treated on an individual and personal basis. They want permanent cures, not temporary palliatives. And they know that what is required first is an examination of the cause of the malady before a remedy is prescribed.

This is precisely what the President contemplates in his program to assist areas of severe and persistent economic illness. The causes have been analyzed, the resources for recovery appraised, and a sound course of treatment prescribed in recommended legislation now before Congress. Let us review the case step by step.

If you were to plot on a map the major and smaller areas classified as having "substantial labor surplus" in the January summary of the Bureau of Employment Security, one fact would stare you in the face. There were only a half-dozen west of the Mississippi.

This is clear evidence that chronic or severe unemployment in the 19 major and 64 smaller areas is in most cases due to long-term causes. Those sections of the country where mining and manufacturing developed early to meet the demands of our economy a century or more ago were particularly vulnerable to rapid technological change. An analysis of the 19 major areas by the Office of Area Development shows these results:

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