Senator DOUGLAS. Senator Goldwater? Senator GOLDWATER. No further questions. I see Senator Smith, of Maine. I assume she is accompanying Mr. Broggi. If the two of you would care to come forward we would welcome any comments you care to make. Senator MARGARET CHASE SMITH. Thank you very much. It is a privilege to be here to present my distinguished colleague, and to present the man about whom I talked the other morning, Carl Broggi. STATEMENT OF CARL J. BROGGI, COMMISSIONER, DEPARTMENT OF DEVELOPMENT OF INDUSTRY AND COMMERCE, STATE OF MAINE Mr. BROGGI. Thank you, Senator. Senator Douglas, members of the Subcommittee of Labor, my remarks deal with the State of Maine, which I represent. I assume similar problems are present all over the country. These deal with the State of Maine. In spite of the fact that this country is enjoying a buoyant peacetime economy, plus the fact that economists predict a continuance through 1956, there are "soft spots" that exist. These soft spots or depressed areas, are frequently caused or created by circumstances entirely beyond the control of the people residing in the areas. I certainly believe that legislation, such as is contained in this bill, can be an important vehicle to minimize or erase the existence of such depressed areas. Washington County in the State of Maine is a good example of one of these depressed areas. For many years the economy of this county has depended to a great degree upon certain seasonable industries. The sardine and clam industries are examples of this. The gradual disappearance of sardines or herring off the Maine coast has progressively lessened activity in this industry to the extent that some plants have not even opened in the last year or two. Senator DOUGLAS. Mr. Broggi, is there any explanation of that? Mr. BROGGI. The marine biologists cannot agree on that. The same is true of the clam industry. There is a gradual lowering of the earth's table. There have been the presence of tropical fish in Maine that were never seen before. Senator DOUGLAS. Has the temperature of the ocean been increasing? Mr. BROGGI. Decreasing. Senator DOUGLAS. The temperature is decreasing? Mr. BROGGI. I beg your pardon, it is warmer water. There has been the presence of these tropical fish and the Japanese crab which is an enemy of the soft-shell clam, has been in existence for the last couple of seasons. They think that is partly the reason. Senator DOUGLAS. And the sardines? Mr. BROGGI. The canning plants operate when the sardines run. In the last 2 or 3 seasons the run on the sardines has been practically minimized to the extent where I said in my remarks that some plants are not even opened. Senator DOUGLAS. Is it felt the increase in temperature in the ocean is adverse to the sardine? Mr. BROGGI. Yes; marine biologists agree on this. In the case of the clams they have tried in the field of marine biology, have tried to seed clams, but they don't seem to last. From time immemorial in this county in the State its economy was based on the presence of those natural resources which existed in the water. I have advocated as commissioner of the Department of Commerce of the State of Maine that inasmuch as these natural resources are drying up and practically disappearing, that they must supplement their economy with year-round payrolls to take care of the depressed conditions created by this drying up of natural resources. Senator DOUGLAS. You have probably seen this letter that the Assistant Secretary of Labor submitted to the junior Senator from Maine, saying that they would not classify Washington County as an area of substantial labor surplus because it has a labor force of less than 15,000. Do you have any estimates as to the percentage of unemployment? Mr. BROGGI. There is no question in my mind but the Washington County unemployment figure is well above the limitations as put in the bill. I believe 6 percent over a 3-year period and 9 percent over 3 months. I would guess that the unemployment would run between 12 and 15 percent. I am thoroughly in agreement with Senator Payne that I think that the ceiling would have to be lowered, because the depressed area in the community, as Senator Payne said, of 2,000 is just as bad a situation as if it is a city of 100,000. I mention another reason for the correction of depressed areas. That is the great mergers that are going on in industry. The Goodall-Sanford Textile Co., of Sanford, Maine, is a good example. Established in a Maine community for over 80 years this textile mill became famous for its great products, which are known all over the world. Products such as Palm Beach, Spring-Weave, Seamloc Carpets, Velmo Plush, and so forth were and are bywords in the field of textile products. This industry, employing 3,500 to 4.000 in a Maine community, had an 80-year record of good community relations, labor relations good, too. There was never a strike in the 80-year period. The industry did much of a philanthropic nature, communitywise. Suddenly, last year Burlington Mills, Inc., the largest textile organization in the country, acquired the majority of Goodall-Sanford stock and in a matter of months had moved the entire industry out of Sanford, Maine. In a small Maine community of 15,000 people the loss of its only major industry and 4,000 jobs created an exceedingly desperate situation. Senator GOLDWATER. Did they stay in New England or move out? Mr. BROGGI. It is traditionally a South industry. They have 87 industries in the South. I believe they moved South. The gross bill of Burlington is over half a billion. The entire operation was incorporated into their southern operation. The town of Sanford, Maine, has made a remarkable recovery; as of now, new industries have been brought in with projections of almost 2.000 new jobs. The saving grace of the situation was the existence of well-maintained industrial space, plus an energetic desire on the part of the community for economic rehabilitation. The need for a vehicle such as the Douglas bill is more poignant in those communities with no industrial space or antiquated industrial space. Major effects of a depressed area: Obviously, the major effect of a depressed area is the loss of job opportunities. Certain governmental functions such as unemployment compensation do cushion this to a degree only. This type of assistance, however, does not get to the base of the problem. Senator DOUGLAS. Mr. Broggi, I think we have all read articles in Pageant and Coronet on Sanford, and the implication which I gather from those articles is that Sanford can solve its own problems. Do you agree? Mr. BROGGI. They have, sir, because they have the benefit of pretty well-maintained space, space that wasn't too old and space that-I wouldn't say was easy to rent and get new industries into, but at least space that was desirable for possible incoming industries. Senator DOUGLAS. You have lost 4,000 jobs. How many new jobs as of this date have come in to take the place? Mr. BROGGI. I would say as of now there are seven or eight hundred people working, but industries have come into the town when their machinery is all set up and are in full production, which would employ about 50-percent rehabilitation. Senator DOUGLAS. As of this moment you have about one-fifth of those displaced employed, and Mr. BROGGI. About a half. Senator DOUGLAS. And when those industries are fully equipped, you will reemploy about half? Mr. BROGGI. That is correct. Senator DOUGLAS. Do you think there is a residual problem? Mr. BROGGI. There is no question about it. One of the phases of the bill that appealed to me was the fact that possible extension of unemployment benefits. Even though Sanford's recovery has been faster than par for the course, I believe some of the people's checks have run out at this time. I think that particular phase of the bill is excellent. I have mentioned here some of the major effects of depressed areas, briefly, the loss of job opportunities, and while unemployment compensation does cushion this to a degree it does not get to the base of the problem. Another effect is loss of income to municipalities due to lowered inventories of retail stores, lowered valuation of real estate property, and so forth. This lowered income makes it difficult for towns to maintain good health and educational standards at a time when it is needed most. I think one of the biggest problems that presents itself is the social problem. In a time like this when the economy is pretty generally buoyant oftentimes a father will go off to another community to work. His children may be in school, he may have ownership of his home and is hoping that rehabilitation can take place so he can come back to the locality in which he lives. Oftentimes with the father away there is an increase of juvenile delinquency in the family, and with the father away during the week normal family life is disrupted. It creates a serious social problem. Another very bad effect is that many of the skilled workers leave an area, or if they insist on living in the area may take nonskilled employment. This, of course, is not good when one considers that the population of the free world is considerably less than that of possible enemy. The free world cannot afford to lose any of its skills nor can it afford to lose the communities around which these skills have been developed. We must make up in quality what we lack in quantity. I have not seen the administration proposal relative to this problem, but I sincerely believe that the Douglas bill does much to solve the problems of the depressed areas, and so forth, because it gets to the roots of the problems. It provides funds for capital facilities and public facilities, which create new jobs for the people in the area. provisions of these funds a depressed area can conduct a program of diversification which will preclude to a degree any repetition of the problem. By The governmental procurement phase of the bill, plus the extended benefits of unemployment compensation, provide a further cushion in the transition period plus the possibility of a more rapid activation of the new industries. The industrial mobilization plan of the Department of Defense will benefit by this plan because it will broaden the base of supply. The vocational training section of this bill will broaden the base of existing skills in this country. The fast tax write-off benefits of the bill will be an added incentive for expanding firms to carefully consider deressed areas. The proposed long-term amortization of capital construction will enable expansion of many desirable companies which are unable to do so under present conditions. A real safeguard in the bill is the provision that capital construction cannot rob another depressed area or create one. As commissioner of the department of development of industry and commerce in the State of Maine, I firmly believe that this type of legislation can be of considerable benefit to several depressed areas in the State of Maine. By the same token it should be of value to all of the States of this country. Senator DOUGLAS. Senator Kennedy? Senator KENNEDY. How much help have you received from the present program now in effect which has three features: priority procurement, tax amortization, and a provision for job retraining? Have those provisions been of any help to you? Mr. BROGGI. We have not used them yet. We have used many agencies of government, the Employment Security Commission has come in and done a job of valuation of our community which lists not only the available skills of the community, but projected possible transitory types of skills, and that was of tremendous benefit to us. Senator KENNEDY. As far as defense contracts being pushed into this area? Mr. BROGGI. To date not as yet. This all happened in the last 9 or 10 months, as these firms are gradually getting into the community. I believe one of the firms has an appointment in Washington next week relative to the possibility of governmental work. Senator KENNEDY. The section of this bill dealing with loans for building of new facilities doesn't seem to me to be of much help to you, if you already have the space available, as you testified in your statement. Mr. BROGGI. We found this, Senator, that the per capita occupancy of the buildings, the activation to date has been much less than it was before. Oftentimes in textile operations you might say that people work shoulder to shoulder. Some of the types of industries we have brought in have utilized much more space per capita than the previous type of industry that was there. As a matter of fact, with about 50 percent job activation we have used about 70 to 75 percent of the space. Of course, the selectivity of space left is not too good. I am certain in the case of Sanford they would want to utilize the capital features of the bill such as we have. Senator KENNEDY. How long does your unemployment compensation run? Is it 26 weeks? Mr. BROGGI. That is correct. Senator KENNEDY. What is the tax? Mr. BROGGI. Three percent. Senator KENNEDY. Do you feel that the section dealing with supplementary payments by the Federal Government would be helpful? Mr. BROGGI. I certainly do. I believe Sanford's acquisition has been a record one. Still at the present time those who have not been fortunate enough to get employed their collection runs out. With the community going full steam, and to the very best of their ability, it would certainly seem if there could be a further cushioning period it would be a great asset. Senator KENNEDY. Who is handling vocational retraining now, retraining the workers? Mr. BROGGI. We offer from the community level to a prospective manufacturer a training period. The State pays half of the salary of the trainer and the community pays the other half of the salary of the trainer. The only wrinkle from the Federal standpoint is that the trainer be a certified type of trainer. Generally we have put in 1 or 2 programs. We have the person connected with incoming industry be the trainer and that is always acceptable. Senator KENNEDY. Is that program as now in operation adequate? Mr. BROGGI. It has been quite helpful. Generally we will offer to the incoming industry a program of the length which he feels it is necessary to adequately train the people. One wrinkle of it that creates a problem, of course, if it is the type of industry that productivity of the workers does not make up for the Federal limit of wages, they have to pay the Federal minimum for the period, and they have a loss of income. Generally, it has worked out all right. Senator KENNEDY. Thank you. Senator GOLDWATER. No questions. Senator DOUGLAS. Thank you very much, Mr. Broggi. Our next witness is Mr. Paul Dorris, State industrial commissioner, Carterville, Ill. Mr. Dorris. STATEMENT OF PAUL DORRIS, STATE INDUSTRIAL COMMISSIONER, CARTERVILLE, ILL. Mr. DORRIS. Senator Douglas, members of the committee, after listening to the presentations of those who have preceded me, I would like, before going into my prepared statement, to ask permission to add to it. Would you rather have it after my presentation, or before I go into it? Senator DOUGLAS. As you prefer. Mr. DORRIS. I want to concur wholeheartedly with Senator Dirksen's statements. We have done quite a bit of preliminary work in several of the fields he mentioned, one in the coal pilot plant which |