(The full statement of Chairman Kluczynski follows:)

OPENING STATEMENT OF HON. JOHN C. KLUCZYNSKI, CHAIRMAN, SUBCOMMITTEE ON SMALL BUSINESS PROBLEMS IN SMALLER TOWNS AND URBAN AREAS

The Subcommittee on Small Business Problems in Smaller Towns and Urban Areas today commences hearings on the Future of Small Town and Rural America: The Impact on Small Business.

Under the very capable leadership of our full Committee Chairman, Representative Joe L. Evins of Tennessee, our Subcommittee has been able to continue its work in the field of rural areas. Chairman Evins has been one of the most able and forceful spokesmen in the Congress to improve and enhance life in our countrysides. His efforts have gone a long way to improving the entire Nation by revitalizing rural areas. Our Chairman is to be highly commended for his concern and dedication, not only to his constituency, which he serves so admirably, but to the people of small towns and rural areas everywhere.

Our hearings today represent an effort to determine the future of Small Town America. The impact on small businesses in rural areas is, of course, directly related to the question of whether small towns are able to continue in existence and whether people living in rural areas can continue to reside in their present location. There is an increasing concern over the problems faced by the American countryside. 70 percent of the Nation's population live on one percent of the land, but migration from rural areas to big cities continues, although at a lesser rate stagnation exists in many parts of rural America stemming mainly from lack of economic diversification-health and medical services are oftentime not adequate education and training fall short of desired goals, and so forth.

There is not time to list all the ills presently being encountered by rural areas, but we intend, during the course of these hearings, to explore some of the more important and pressing problems. Specifically, we will study four basic areas: (1) the extent to which the Federal Government has responded to existing problems confronting rural America; (2) the definition of existing and projected problems; (3) the development of recommendations as to how the Federal Government can best meet the needs of Small Town America; and (4) the exploration of the casual relationship between domestic difficulties generally, and problems confronting rural areas.

The problems of rural areas have too often been ignored at their expense and that of the big city. Having the honor and privilege to represent the 5th Congressional District of Illinois (Chicago), I have a deep commitment to resolving the plight of metropolitan areas. Like many of my colleagues who also represent big cities, it is evident to me that the dilemmas facing the countryside must be properly dealt with before we can adequately stem the difficulties of metropolitan areas.

Reports have reached us that the Federal Government is lessening its efforts to aid and assist Small Town and Rural America. I hope this is not the situation, and we look forward to testimony from Federal officials reassuring us that the Government is actually increasing its efforts to provide Americans living out side of metropolitan areas the kind and quality of help that is so desperately needed.

Mr. KLUCZYNSKI. I recognize the gentleman from Massachusetts, the ranking member of this committee, Silvio Conte.

Mr. CONTE. Mr. Chairman, I want to join you in commending the chairman of our full committee, Mr. Evins, for his support of this subcommittee's efforts to spotlight the need to revitalize smalltown America. That effort, of course, would bear little fruit without the active leadership which you, Mr. Chairman, have also provided.

I need not refer to our past hearings to demonstrate the importance of your leadership. One need only note the outstanding caliber of the witnesses that we will hear in these next few days to appreciate the influence and significance of this inquiry. We are honored to have such witnesses as the former Governor of Arkansas, my good friend, Winthrop Rockefeller; the Agriculture Secretary, Earl Butz, as well as many other distinguished witnesses.

Mr. Chairman, you have already made clear why the subject of these hearings is vital to all Americans. Unless we stem the tide of migra

tion to the cities, the quality of life for all Americans will suffer. Our overburdened cities can't adequately provide the services required today, much less accommodate new arrivals from rural areas, and those rural areas will find themselves even more disadvantaged unless we can help to generate new economic life there. I look forward to examining what can be done to improve the situation during these hearings.

Thank you, Mr. Chairman.

Mr. KLUCZYNSKI. Thank you.

The Chair recognizes the gentleman from California, Mr. Corman, the ranking member of this subcommittee, and a very able and valuable member.

Mr. CORMAN. Thank you, Mr. Chairman. I just want to join you and Mr. Conte in saying I think these hearings are extremely important. I come from a very large city, Los Angeles, and we have all of the complex problems of suburbia, but all of us who came originally from small towns recognize that there is tremendous value to being able to raise a family in a small town and that the Federal Government must pay attention to what its programs do to either encourage or discourage the vitality and health of small communities.

Mr. KLUCZYNSKI. Thank you. The gentleman from Ohio, Mr. Stanton, would you care to make any remarks?

Mr. STANTON. Thank you, Mr. Chairman.

It is a pleasure, Governor, to have you before our committee and, Mr. Chairman, I did have a short statement of welcome for the Governor. With unanimous consent, I would like to have it put in the record at this point.

Mr. KLUCZYNSKI. Without objection, so ordered. (The statement follows:)

OPENING STATEMENT BY MR. STANTON

I too want to express my appreciation to you, Mr. Chairman for initiating these outstanding hearings, and I also want to welcome Governor Rockefeller and the other fine witnesses we have before us today.

As a representative of a number of small towns in Ohio, this inquiry has special importance to me. I am confident it will prove useful not only to my constituents, but to many others from rural areas across the country. And, as has been noted already, all Americans, both rural and urban, are now so interdependent that the future of smalltown America is of vital concern to everyone. Thank you, Mr. Chairman.

Mr. KLUCZYNSKI. The gentleman from Missouri, Mr. Hungate, although not a member of this subcommittee, is nevertheless very much interested in the problems of rural America. He is a very dedicated member of our full committee and is chairman of the Environment Subcommittee. Mr. Hungate.

Mr. HUNGATE. Thank you, Mr. Chairman. I appreciate the Chairman and members of the committee taking up this problem. It is certainly of vital concern to my district. I am very pleased to see Governor Rockefeller here and the man who brings him here, a very distinguished gentleman, Congressman John Paul Hammerschmidt. Thank you, Mr. Chairman.

Mr. KLUCZYNSKI. Mr. Bergland, any comments?

Mr. BERGLAND. Thank you very much, Mr. Chairman. I am a freshman member of this Congress, representing a rural district of Minnesota. During my tenure, I have voted consistently to support pro

grams aiding the big cities of the United States even though I do not have a big city in my district. I have done so because I firmly believe that a problem left untended in the cities of this country will soon affect the bloodstream of the whole United States. The fact is that half the poverty in this United States is in the rural areas. My people don't march, they don't demonstrate, they suffer in silence, and the problems of the rural areas have generally been overlooked in the big city press. My people need help. I am convinced that the problems of our cities will get progressively worse until we find an effective way to stem this aimless, aimless drift of people out of the rural areas streaming into the cities searching for opportunities that are extremely limited in the countryside. I am pleased that the hearings have been scheduled today to focus attention on this very important question of the rural areas.

Mr. KLUCZYNSKI. Thank you.

At this point we will insert the statement of Representative Sebelius, without objection.

(The statement follows:)

STATEMENT OF HON. KEITH G. SEBELIUS, A MEMBER OF CONGRESS FROM THE STATE OF KANSAS

Mr. Chairman, I appreciate this opportunity to offer testimony regarding "The Future of Small Town and Rural America: The Impact on Small Business.” I would like to commend Subcommittee Chairman John C. Kluczynski and Committee Chairman Joe L. Evins and the members of the Subcommittee for their leadership and dedication to solving small business problems throughout America.

There is no question of the urgent need for action to revitalize our rural areas. The long-standing cost-price squeeze and the effects of inflation have combined to force an ever-increasing amount of our rural citizens off of the farm and out of our rural communities. We must provide adequate economic opportunity for those of our citizens who prefer to live and enjoy the proven and traditional way of life in our rural areas.

I think it is appropriate to focus attention on the Rural Job Development Act of 1971. This proposal initiated by Senator James Pearson has the bipartisan support of 50 Senators and over 40 Representatives.

As principal sponsor for this legislation in the House of Representatives, I am honored to have been joined by the following who are cosponsors of the Rural Job Development Act of 1971: Mr. James S. Abourezk, of South Dakota; Mr. Bill Alexander, of Arkansas; Mr. Mark Andrews, of North Dakota; Mr. Bill Archer, of Texas; Mr. John N. Camp, of Oklahoma; Mr. W. C. Daniel, of Virginia; Mr. William L. Dickinson, of Alabama; Mr. Harold D. Donohue of Massachusetts; Mr. John J. Duncan, of Tennessee; Mr. Bill Frenzel, of Minnesota; Mr. Don Fuqua, of Florida; Mr. Seymour Halpern, of New York; Mr. Orval Hansen of Idaho; Mr. Michael Harrington, of Massachusetts; Mr. James F. Hastings, of New York; Mr. Edward Hutchinson, of Michigan; Mr. Ed Jones, of Tennessee; Mr. Peter Kyros, of Maine; Mr. Arthur A. Link, of North Dakota; Mr. Manuel Lujan, of New Mexico; Mr. Romano L. Mazzoli, of Kentucky; Mr. James A. McClure, of Idaho; Mr. John Melcher, of Montana; Mr. Clarence E. Miller, of Ohio; Mr. Wilmer Mizell, of North Carolina; Mr. John T. Myers, of Indiana; Mr. Bill Nichols, of Alabama; Mr. William R. Roy, of Kansas; Mr. William J. Scherle, of Iowa; Mr. Garner Shriver, of Kansas; Mr. Robert L. Sikes, of Florida; Mr. Robert H. Steele, of Connecticut; Mr. John Terry, of New York; Mr. Charles Thone, of Nebraska; Mr. Al Ullman, of Oregon; Mr. Victor V. Vesey, of California; Mr. Richard C. White, of Texas; Mr. Lawrence G. Williams, of Pennsylvania; Mr. Jim Wright, of Texas; and Mr. John M. Zwach, of Minnesota.

Every day we hear of the crisis in our nation's cities. Crime escalates, pollution threatens the health of urban life, complexities of everyday affairs multiply, and the quality of life in general continues to decline. No one disputes the severity and crucial nature of the urban crisis, but there is another and equally

important related crisis in this country: The declining economy and eroded vitality of rural America.

These problem areas are distinct; however, in terms of cause and effect, they are related. Over the past several decades, rising production expenses, higher taxes and declining farm prices have forced millions of farmers out of business, as well as the closing of many business establishments in rural communities. This coupled with the lack of adequate housing, educational opportunity, water and sewer facilities, health care facilities, community services, and general economic opportunity has created the tremendous population migration from Irural to urban America.

Into the cities have come the unskilled rural poor attracted by the lure of economic advancement. Many gain, but a tragically high number do not. Instead of economic salvation, too many of the rural poor, both white and black, find tenements, unemployment, welfare and the depersonalized, demoralized environments of the slum-ghetto.

Into the cities also come the young, the educated and the talented. They often do much better materially, but for this economic gain they pay the social costs of the loneliness of the crowd, the frustrations of congested streets and crowded stores, the stultifying sameness of the bedroom suburbs, the loss of community identity, and the lack of contact with nature.

These overcrowded conditions in our cities have imposed impossible demands on urban resources to meet the requirements of transportation, education, welfare, crime control, pollution control, health care, public services, and housing. If answers are not found, the pressure of people against the resources and services of our cities of the future may simply break them down.

In short, too many communities are underdeveloped. Too many of our metropolitan areas are overcrowded. This unequal distribution of population and economic activity will surely worsen unless we take strong positive action.

To underscore this fact, statistics show that even if today's rural population were doubled by the end of this century, there would still be up to 40 million people added to the metropolitan areas.

Former President Dwight D. Eisenhower was one of the first to recognize this problem in the decade of the 1950's. His proposed solution include the location of industry in rural areas and the possibility of creating new towns in the country. This proposal, in part, reached fruition with the development of the new pilot city, Jonathan, located 20 miles southwest of Minneapolis, with an eventual population of 50,000 as its target.

The former Secretary of Agriculture, Dr. Clifford M. Hardin, in announcing the creation of President Nixon's Rural Affairs Council, succinctly outlined our task in solving the problems of rural and urban America. Dr. Hardin said: "We have to make the whole of rural America more attractive, economically, culturally, and socially. We must expand opportunity not only for the ten million farm people, but for the other 45 million residents living in the countryside. It is not enough that we think in terms of improving conditions and opportunity for the people living today in rural America, and thereby stemming the flow of people to the cities. We must do much more. We must make it a matter of national policy that we create in and around, the smaller cities and towns sufficiently good employment opportunities and living environments that large numbers of families will choose to rear their children there."

The economic potential resulting from rural job development is tremendous. Recently a community in my Congressional District of Western Kansas revealed the projected impact of 100 new jobs. In Hays, Kansas, according to the statistics 100 new jobs would mean: A population increase of 296 people, 112 more households, 174 total additional workers employed, 107 more registered passenger cars, four more retail establishments. $360,000 more in annual retail sales, $270,000 more in bank deposits, and $590,000 additional personal income in the community.

We must work together to find solutions to the dual crisis in rural and urban America.

When we speak of rural development we are, of course, talking about government action and what government can do for our citizens in relation to a specific problem. I am also most concerned about a related problem-what government is doing to citizens under the auspices of Federal assistance.

The number one issue of concern right now in my Congressional district is in regard to the Occupational Safety and Health Act of 1970. This legislation is most representative of a Federal program designed to help and assist people but whose practical application has opened up a box of arbitrary and unreason

able nightmares for the small businessman. The result has been that this act could force many of our small businessmen out of business.

This glaring example of small business neglect by Congress and the Department of Labor is shockingly apparent in the requirements of this Act. The ridiculous and burdensome regulations that have been imposed threaten the foundation of the small business community. Without some responsible relief through action by Congress on comprehensive reform amendments and administrative flexibility, we are facing a crisis of business closures and unemployment in our rural and small-town communities.

These individuals do not have the capital or the income to comply with regulations that were established for corporations and factory workers. This problem is currently the number one concern in my district in Western Kansas. I am hopeful that this subcommittee will recommend positive action on H.R. 13941 to provide some immediate and responsible relief.

The Federal government should provide services for the people as opposed to action that is arbitrary and restrictive. Recently, a businessman in my district in Western Kansas told me that it requires one week out of every month to fill out all of the necessary forms and reports required by state and Federal government departments and agencies.

Instead of regulating the small business community, government should serve the businessman. This can be done through a small business coordination or "ombudsman" such as specified now by the Concerted Services Training and Education Program. The CSTE Program is designed to coordinate all of the Federal services and programs designed to benefit the small businessman through assistance and awareness. Though still in "pilot" status, I am hopeful this kind of program can truly mean Federal assistance and direct help to our rural areas. As the principle sponsor of Rural Job Incentive and Development legislation with Chairman Joe Evins, I also feel that a series of tax incentives as proposed by this legislation is most essential to rural redevelopment. We must provide jobs and economic opportunity if we plan to stimulate business activity.

Another bill that is much overdue is the Small Business Tax Simplification and Reform Act of 1972. For too long the small businessman has been forced to shoulder a disproportionate burden of business taxation. It is time that we provide tax reform so that the small businessman has more dollars after taxes. We must reverse the trend that has seen business costs rising and income falling. Again, I want to commend you for your forthright efforts to provide some much needed administrative and legislative relief for the small business community. I am hopeful that these hearings will produce substantive recommendations for the 92d Congress so that some meaningful relief and reform can be enacted to benefit the small businessman.

The future of the business community and the future of rural and small town America weigh in the balance.

Mr. KLUCZYNSKI. The Chair now recognizes a gentleman, a very good friend of ours, Representative John Paul Hammerschmidt of Arkansas, to introduce the witness.

TESTIMONY OF HON. JOHN PAUL HAMMERSCHMIDT, A MEMBER OF CONGRESS FROM THE STATE OF ARKANSAS

Mr. HAMMERSCHMIDT. Mr. Chairman, distinguished members of the committee.

It is a great honor and pleasure for me to be here to introduce this witness. I agree with Mr. Conte, when he says that you have some outstanding witnesses, and the next witness is certainly one of them.

I know that many of you know him and he really needs no introduction. But for the record, I would like to make some brief comments to tell you about his life of service.

I want to go back to pre-World War II. He went into the Army 2 years before the draft, and served 6 years. He went in as a private, came out as a lieutenant colonel. Among his decorations is the Purple Heart. The reason I go back that far is that now, a quarter of a century later, he is still involved in the U.S. Infantry. To bring you up