classifications of—of a labor force of 15,000 and 8,000 nonagricultural employment. We have 3,000 counties in the United States, and this does to some extent restrict it to the areas that were industrial or are industrial areas basically. Senator DOUGLAS. You would say this should not apply to areas which have a labor force less than "X" number? Mr. BATT. Yes. Otherwise, you thin out your medicine pretty severely and limit its usefulness to the ones that you are trying to shoot at. Again, I say it is not an easy club to get in. And I would not press this point. But if you are going to give arithmetical percentage limitations to guide the Administrator, then I do feel you ought to also give him a cutoff point. Now, section 7, local committees: These are, of course, essential. The criticism I have run into in talking with folks about your provision of the Administrator appointing them is that this is liable to run into a lot of local opposition. I wonder if instead of the Administrator appointing these committees, the Administrator might not be required to approve local committees. Senator DOUGLAS. Which would be broadly representative? Mr. BATT. Yes. Broadly representative is awfully important, because there is no requirements now as to who sits on those committees. There are no requirements that labor be there. And I think it is important that the requirement be in that labor and business, and perhaps public representatives, be on those committees. You have got to have the Administrator approving them, however, because in Cumberland, Md., Senator, we had four committees all wanting to do economic development back when their unemployment problem first hit. And nobody was doing the job. Now, the chamber of commerce has gotten serious about it, and they have collected some $160,000 and have put on a good man. And they have gotten the Pittsburgh Plate Glass Co. in there. And they are doing the job. But there has to be some one group that is authorized and that is recognized. Section 8, the loans: The loans provision is, of course, the root of the problem. And I think that the Douglas bill makes an enormous contribution in that respect. The 66% percent for 40 years is far more realistic than the 25 percent for 20 years proposed in the administration bill. Twenty-five percent for 20 years-I can do better than that from insurance companies. Senator DOUGLAS. The Administration representatives say if the Federal Government gives 25 percent, the localities and the local governments give 15 percent, that the remaining 60 percent can probably be obtained from insurance companies. Would you comment on that? yesterday. We had some testimony on that Mr. BATT. The 15 percent from local public sources: There are many communities where this might be raisable through private sources. I think the Administration bill is too restrictive in this regard and requires a public subscription. It is rather surprising coming from an Administration source that it rules out raising this local money from private means. I think your bill is better. Senator DOUGLAS. Of course, these communities have been so hard hit with their shrinkage of payrolls and decline of property values and decrease in trade and so forth that they in general have great difficulty in maintaining their existing services. Mr. BATT. In their bill they say the Government has got to put it up, which looks to me like a local governmental participation which is not sound at all. It does permit, however, local Senator DOUGLAS. You would be in favor of local participation but not necessarily require local governmental participation? Mr. BATT. Right. In other words, we have been fortunate enough to have an enterprising group of small-business men-it isn't big, Senator; not over a dozen men-who have put up the funds for the construction of our ever-available plant program. That has amounted to over $100,000. And they have put it up on the understanding that they will use it as a revolving fund. And the minute we sell that plant or lease it and sell the lease, they will receive that in another plant, and another one and another one. So, we will always be in a position of offering a new plant to new industry. Now, under the Administration bill, let's assume a group in Scranton or Wilkes-Barre or one of the chronic areas with much initiative; they would not qualify as I read the Administration bill, because it is private money done on the operation of the private-enterprise system. Then I think it is fallacious also to depend upon the insurance companies, Senator. This study was first prepared when I was in the Government as a selling piece to the insurance companies to get the insurance companies to help out in solving the area unemployment problem. Senator DOUGLAS. I notice that you have columns here "Raisable from insurance companies." They are expected then to take twothirds of the loan with community participation limited to one-third. And I wonder whether that hope has been realized? Mr. BATT. This hope has not been realized. And I would like to give a new title to column 12, "Loans needed," rather than Senator DOUGLAS. You would revise that table, then? Mr. BATT. Yes. Because I personally went to the presidents of the four largest insurance companies of the United States and I personally got turned down on every one. The insurance companies you can depend on for blue chips in blue-chip neighborhoods only. And occasionally an insurance compay with real gumption helps out a depressed area as they did with the big alum industries plant in Herron, Ill.-Prudential. But this is the exception rather than the rule. I would like to see the insurance companies come in on this. And I think this will help. But I wouldn't depend on it. Senator DOUGLAS. They might come in on it for less than 60 percent; that is, if you had the Federal Government go up to two-thirds and required some local participation; then the insurance companies might come in for 20 percent. Mr. BATT. Yes. Senator DOUGLAS. Providing they got a first lien, of course. Mr. BATT. Yes. You have got to treat them real well. And provided you had a very blue-chip concern coming in on it. Senator DOUGLAS. Do you think they would be willing to venture 20 percent if they got a first lien? Mr. BATT. I can't speak for the insurance companies, Senator; that is out of my department. But I do think that one way Senator DOUGLAS. There is another feature. The trouble that the insurance companies generally insist that a loan be repayable in approximately 11 years. And that with interest comes to a charge, refunding charge, of 1 percent per month, which would mean that on a plant of a million dollars, to repay the million you would have to make a payment of $10,000 a month. Mr. BATT. Well, that is typical of the problem that you face when you depend on them. I think you might enveigle some of that private capital out. And there is a lot of capital around in pension funds and insurance companies, if you did add participation and guaranties to line 16 of your section 8. The participations and guaranties language is used in the Smith bill. And I think that might help stretch the Government money. Senator DOUGLAS. Is that on page 5? Mr. BATT. Page 4, sir. Line 16, page 4: The Administrator is authorized to make loans * I suggest that the language of the Smith bill in that instance is "including participations therein and guaranties thereof.” Why the "thereof's" and the "therein's" I don't know. Senator DOUGLAS. Yes. I see. Mr. BATT. Then, it seems to me with participations and guaranties in that the hundred million dollars that you have provided on Government loans and guaranties should generate the $540 million needed, especially if it is a revolving fund, and I assume, although the words "revolving fund" are not used in the bill, that that is implicit, Senator? Senator DOUGLAS. It should be made explicit. Mr. BATT. I would hope that it be made explicit. Then Sol Barkin made an excellent suggestion. And that is tightening subsection 4 to eliminate relocation entirely and limits the bill's application to expansion. That is on page 5, subsection 4. That I think is important, because I recall case after case where companies have left one area to go to another because of some inducement or other. And if there is any Government participation involved, the area that has lost the company feels very bitter about it. Senator DOUGLAS. Yes. Mr. BATT. Section 9, public facilities: This, I think, is a good provision, not only because it provides short-term employment, but because it improves the resources of areas for new industry. Senator DOUGLAS. Now, would you feel that this section should be restricted to purposes which would make it more possible to get new industry; or whether it should be in its present form so that you would help in providing communities facilities for depressed areas which are under the definition of hard pressed. That is the question of whether it should include schools and such things? Mr. BATT. I think it should include everything. I have seen companies go into the areas because of the good schools. And I have seen companies stay out because of rotten schools. Industrial development strikes at the very heart of the community's whole. It may be the condition of the stores and the main street. I 1077 know one case where a community did not have any planning. And that kept an industry out. There is very little that doesn't relate to industrial development. Senator DOUGLAS. On the other hand, we do not want to provide an agency to take over a lot of the burdens of localities-the common burdens. Mr. BATT. That is very true. But here you have water. Of course, water is closely related Senator DOUGLAS. That, of course, is essential for industry, now. Mr. BATT. I cannot think of a more classical example than Crab Orchard Lake, which was built with WPA funds and without which the jobs that they have gotten into that Crab Orchard reservation and in the city would be out of the question. And that lake has made possible 5,000 new jobs. Senator DOUGLAS. That is correct. And interestingly enough, in one of those communities, in Marion, the employment of which has been partially maintained by the lake and by the furnishing of buildings turned over from the ordnance plant, the paper in that region is insisting that the area as a whole is prosperous and does not need governmental aid when that community has been stabilized by the water provided by the Government and by the industrial facilities provided by the Government. Mr. BATT. I cannot think of a better example, because without that water that area would not have gotten one of those jobs. I think there is no doubt about it. Thirdly, I was tremendously interested-I can't say I know much about urban renewal provisions but I was interested in the urban renewal provisions of the Administration bill. And although that is no substitute for the Public Works Commission provision, I think it might be well to add those urban renewal provisions to the Administration bill. Section 11, the procurement side: This I am delighted to see in this bill. And I am dismayed to see left out of the Administration bill, Senator. And I hope it does not mean that the Administration is planning to jettison this program. Senator DOUGLAS. Well, I insisted that it be placed in the draft. But I am not satisfied with the language. I have been afraid that this clause "to the maximum practicable extent" would be interpreted by them to give them an escape hatch on virtually any contract. And if you can suggest more precise wording Mr. BATT. No, sir. That is certainly worth praying over. I am not one to defend your bill against you. Senator DOUGLAS. I wouldn't defend it if I think it can be improved. Mr. BATT. And that is one of those things that gives you a lot of leeway. Certainly one of the ways Frank Fernbach suggested is requiring reports. Certainly reports should be required. That would be a minimum way of strengthening that section. I would like to point out to you, Senator, that I went around to the ODM when I got in town and got the latest report on military supply contracts in surplus areas. If this has not been entered into the record by anybody, I would like to do so. Senator DOUGLAS. I wish you would. (The document referred to above follows:) |