think, if I understand the type of organization you are referring to, they are usually private rather than governmental.

Mr. TALLE. They are private.

Mr. STEINER. Yes, sir; subscribed to maybe by the banks or indus trialists or otherwise in the particular locality.

Mr. TALLE. And interested citizens in the community.

Mr. STEINER. Yes, sir. In some cases development corporations of that sort are cooperating with us. The Federal Government, through the Urban Renewal Administration, makes available the money to clear out the old obsolete conditions, and the development commission makes available the money and the impetus to bring about the desirable new development. I can think, for example, of such an organization in Cleveland. There is one in Cleveland that we are working very closely with now and bringing about some improvements there that everybody in Cleveland feels are of tremendous importance. I know Congressman Vanik of the committee has talked to me about that. He is very much interested in it. There is a similar organization in St. Louis that we are working very closely with. There is also a very good one, I believe, in Buffalo, N. Y., which is not working with us at this time, but which has talked with us about the possibility of how the program of the Urban Renewal Administration might complement and supplement what they are doing.

Mr. TALLE. If I may mention a specific case, in Dubuque, Iowa, in an election by more than 60 percent of the vote required for constructive action, the people agreed to bond themselves.

Mr. STEINER. To bond themselves?

Mr. TALLE. To bond themselves for developing an island in the Mississippi River, and that development is under way. Construction is under way, and it will be a very fine industrial site. Water transportation is, of course, available at the island site.

Now, I am wondering, how will those people feel, having bonded themselves and having agreed to pay the cost themselves, if some other locality is getting Federal money for doing something of the same sort? We may have some complications in policy when some local communities are doing it on their own account, and the Federal Government is doing it in other areas.

Mr. STEINER. Well, I think certainly, sir, the activity in Dubuque is most commendable. We find as we look at this business of urban renewal and economic development and strengthening of communities around the country that there are many different ways in which various communities are trying to do the job of strengthening their local situations, and certainly by no means would we in the Federal agency want to impose any particular pattern or any particular methods on any locality. We feel that each locality must figure out its own method.

Now, it happens that most of the States have passed State laws so that localities can take advantage of the Federal funds administered by the Urban Renewal Administration. In some cases, localities have passed bond issues to do the thing entirely on their own, as you indicate. In other cases, localities have passed bond issues so that there would be local money available to do the job, together and in partnership with Federal money. Of course, in any case where a

Federal program goes in, there still must be one-third local participation in meeting the grants or the net cost of the project.

Mr. TALLE. You would set up a test, then, which would be that unless the community is declared a depressed community, it could not have any Federal grant.

Mr. STEINER. No, sir; let me clarify my position on that. I would say that unless it is declared to be an area of persistent and substantial unemployment, as provided in this act, we would not make available Federal funds for the clearance of an industrial or commercial area to be redeveloped for commercial or industrial purposes. We would, in any localities, make funds available under the present eligibility requirements involving the characteristic of being predominantly residential, either before or after redevelopment, or having a substantial amount of housing before redevelopment. The special exceptions to this act would apply only to the area where the finding had been made by the Secretary of Labor and the certification made to the Housing and Home Finance Administration by the Secretary of Commerce.

Mr. TALLE. The finger is pointed at persistent unemployment, then; isn't it?

Mr. STEINER. In this particular bill, I think the finger is pointed at those relatively few localities, as the Under Secretary of Labor just indicated, where unemployment appears to be persistent and chronic, even in times of very high prosperity nationally such as we now enjoy.

Mr. TALLE. That is all, Mr. Chairman.

Mr. BROWN. Mr. Bass, do you have any question?

Mr. BASS. No questions.

Mr. BROWN. Are there any other questions?

(No response)

Mr. BROWN. Do you have anything else, Mr. Steiner?

Mr. STEINER. No. That completes my testimony, sir, unless there are some further questions.

Mr. BROWN. We are vary glad to have your testimony.

Mr. STEINER. Thank you very much for this opportunity to appear before the committee.

Mr. BROWN. I see that we have out there in the audience my good old friend, Mr. Seward.

Mr. Seward, we are glad to have you. I have known Mr. Seward for many, many years, and he certainly has done a good job in his field of service. We are mighty glad to have you.

I was not going to let you get away without asking you one or two questions.

What credit requirements must the community meet to get a public works loan from you?

STATEMENT OF PERE F. SEWARD, DEPUTY COMMISSIONER FOR COMMUNITY FACILITIES OF THE HOUSING AND HOME FINANCE AGENCY

Mr. SEWARD. Mr. Chairman and gentlemen of the committee, this particular piece of legislation, Mr. Brown-and I will answer your question in just a moment-this particular piece of legislation that

you have under consideration makes reference to the priorities to be given in connection with public facility loans.

I am Pere F. Seward, Deputy Commissioner of the Community Facilities Administration of the Housing and Home Finance Agency. One of our functions is to administer the public facilities loan program as authorized by the Congress. This program is one through which the Federal Government finances by way of loan the construction of needed public works in small communities. The legislation itself, as well as the legislative history of the bill, directs the Administrator to give priority to the small communities.

In the legislation which you gentlemen have before you for consideration it is proposed to amend the existing legislation to give first priority to projects in these so-called distressed areas, rather than to the smaller communities as presently authorized by the law.

To make that change is a very simple operation, as far as we in the Community Facilities Administration are concerned. It is something that we can very readily do. We can do it without any difficulty.

Now, to get back

Mr. BROWN. Would you prefer to do it that way? Don't you want to help these communities not financially able to help themselves?

Mr. SEWARD. Yes, sir; but this would not eliminate the other communities, Mr. Chairman; it would simply give first priority to projects in the so-called distressed areas, and with the current authorization of moneys for this loan program, I don't think that it will create a situation whereby other communities would fall far enough down the line not to get consideration, sir.

You asked a question as to our financial requirements.

Mr. BROWN. Yes.

Mr. SEWARD. The act under which we currently operate specifically states:

All loans made under this section shall be of such sound value or so secured as reasonably to assure retirement or repayment.

We have administered the program to date and are continuing to do so on that sort of a basis. We do not have in our portfolio any loans which we do not consider sound. The rate of interest that is charged by the Government on those loans is based on a 30-year maturity, 44 percent on revenue bonds, 334 on general obligation bonds.

The projects on which we have made loans, and the procedure that we are currently operating on is one which in our judgment assures those loans to be perfectly good, sir.

Mr. BROWN. Now, have you made a public-works loan to any community in a depressed area?

Mr. SEWARD. No, sir.

Mr. BROWN. You have not?

Mr. SEWARD. No, sir. The Administrator, Mr. Cole, has had that problem placed before him on several occasions, Mr. Chairman. He has been requested to reduce the interest rate to lengthen the term, and I won't say requested to take less valuable securities-I don't mean that, but nevertheless to accept loans to aid in these distressed areas, which are not of the quality that we would like to have.

Mr. Cole has consistently refused to go along on that sort of a basis for the simple reason that in each of the last several sessions of Congress there has been before the Congrees legislation to give special aid to these so-called distressed areas. The Congress has not seen fit up to the present time to approve legislation of that type and consequently Mr. Cole has taken the position that he could not let down the bars on the public facility loan program to meet those situations until he had been specifically so authorized to do by the Congress. That is our position on the loan program, Mr. Chairman. Mr. BROWN. Now, what will happen if a community in a depressed area does not have credit sufficient to qualify for a loan?

Mr. SEWARD. I think it is very doubtful that it could be approved. This question has been discussed many times in connection with that sort of an operation.

The community in this so-called distressed classification of course has had its credit very materially impaired. For them to come in with an application for a loan, on a municipal improvement of some kind, whether it be a water system, sewer system, or whatever it might be under which they propose to give security, either in the form of general obligation bonds which would probably be very difficult to vote in a community, or whether they are going to give revenue bonds, it raises a very serious question as to the ability of the community to finance it, in my opinion, from the standpoint of the repayment of the loan and the carrying of the interest on it.

Mr. BROWN. Dr. Talle, do you have any questions?

Mr. TALLE. I think not, Mr. Chairman, other than this: In the event that a community did vote a general obligation bond and failed to meet the obligation, would then the land become the property of the United States Government?

Mr. SEWARD. No, sir; it would simply be a general obligation, Mr. Talle, of the community. There is no grant involved in the public facility loan program. There is no title taken in any way. The Government under our public facility loan program simply takes the securities of the local public body for the loan sir. We do not take title to anything.

Mr. TALLE. I misunderstood your statement. It is clear now.
Thank you, Mr. Chairman.

Mr. BROWN. Mr. Seward; do you care to make any other comment on this bill?

Mr. SEWARD. No, sir; that is all the comment that I have to make, Mr. Chairman.

Mr. BROWN. We are very glad to have you. Thank you very much for your testimony.

Mr. SEWARD. Thank you very kindly, sir.

Mr. BROWN. Are there any other witnesses?
The CLERK. That is all, Mr. Chairman.

Mr. BROWN. When do we meet again?

The CLERK. We meet again at 10 o'clock, Wednesday, the 18th. Mr. BROWN. The committee will now adjourn, to reconvene at 10 o'clock, April 18.

(Whereupon, at 4:05 p. m., the committee adjourned, to reconvene at 10 a. m., Wednesday, April 18, 1956.)

AREA ASSISTANCE ACT OF 1956

WEDNESDAY, APRIL 18, 1956

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,
NEW HOUSE OFFICE BUILDING,
Washington, D. C.

The committee met at 10:15 a. m., Hon. Brent Spence (chairman), presiding.

Present: Chairman Spence and Messrs. Brown, Multer, Barrett and O'Hara; Mrs. Griffiths; Messrs. Vanik, Holland, Talle, Widnall, Betts, Mumma, and McVey.

The CHAIRMAN. The committee will be in order.

I understand that there will be a rollcall in the House shortly after 12 on the veto message of the President. We will have to be there, so we will proceed in order to save time.

Mr. Clerk, call the first witness.

The CLERK. The first witnesses, Mr. Chairman, are Mr. George Riley and Mr. Peter Henle, of the American Federation of Labor and Congress of Industrial Organizations.

The CHAIRMAN. You may proceed, Mr. Riley.

Do you have a written statement? You may continue without interruption, if you care to.

STATEMENTS OF GEORGE D. RILEY, LEGISLATIVE REPRESENTATIVE, AND PETER HENLE, ASSISTANT DIRECTOR OF RESEARCH, AFL-CIO

Mr. RILEY. Mr. Chairman, Mr. Henle, who is in our research department, is present today, and I would appreciate it if you will indulge him at the end of my own remarks.

Mr. Chairman, my name is George D. Riley. I am legislative representative for the American Federation of Labor and Congress of Industrial Organizations.

President Meany is so completely interested in this problem that in view of the fact that he was unable to come here this morning, he provided us with a letter which we will appreciate having inserted in the record. If I may read it, it is as follows:

Hon. BRENT SPENCE,

Chairman, House Banking and Currency Committee,
House Office Building, Washington, D. C.

DEAR CONGRESSMAN SPENCE: I appreciate your kind invitation to appear in person to testify before your committee regarding proposed legislation to alleviate the hardship experienced in various distressed areas throughout the country. Unfortunately, I find it impossible within the limits of my schedule to appear in person regarding this legislation. I am, therefore, designating George