UNEMPLOYMENT RELIEF WEDNESDAY, APRIL 12, 1934 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met at 10:30 o'clock a.m., Hon. Henry B. Steagall (chairman) presiding. The CHAIRMAN. Gentlemen, the committee will please come to order. We should be glad to have Senator Costigan, who is present, discuss the bill that the committee now has under consideration. STATEMENT OF HON. EDWARD P. COSTIGAN, A UNITED STATES SENATOR FROM THE STATE OF COLORADO Senator CoSTIGAN. Mr. Chairman and gentlemen, I shall speak very briefly. It is a privilege to appear before this distinguished body, in conjunction with my colleague, Senator Wagner, and in cooperation with Congressman Lewis of Maryland, who was long my colleague as a mebmer of the United States Tariff Commission. I ought to add that Congressman Lewis, more than a year ago, introduced in the House of Representatives a bill identical with the one introduced in the Senate by myself, out of which, in cooperation with Senators Wagner and La Follette, the present bill has emerged. The pending bill is designed to provide, until measures to restore employment can become operative, for effective Federal assistance to the States in coping with the emergency growing out of the general prevalence of unemployment over a period of three and a half years, with the consequent exhaustion of the State and local resources previously available for relief purposes. The steps proposed by the bill to meet this immediate and urgent situation are, first, the provision of an additional $500,000,000 to continue Federal aid for unemployment relief; second, the substitution of definite grants in aid for the present system of loans or advances reimbursable to the Federal Government, or at least presumably reimbursable to the Federal Government; and third, the temporary establishment of a Federal Emergency Relief Administration to supervise the making of grants to States and to give leadership and the cooperation of the Federal Government in working toward a constructive solution of the relief problem. The $500,000,000 newly authorized by this bill is to be used for grants to aid in furnishing relief in the following manner. It is proposed that the Federal Government assume definite responsibility for one third of the expenditures in each State, Territory, and the District of Columbia, for emergency relief out of public moneys from all sources, subject to the limitation hereafter to be mentioned. The sum of $200,000,000 is set aside to permit the discharge of this obligation on a quarterly basis. The balance of the fund made avilable, except the amount required for administrative expenses which are limited to $350,000 out of the total fund, is to be used for supplemental grants in areas in which a Federal contribution of one third of the total load would still prove insufficient, because of the absence of sufficient State or local resources, to make adequate provision for the relief of those in need. To prevent any unforseeable tying up of funds, the President is authorized to transfer, after October 1, sums from the $200,000,000 fund to the funds provided for grants not to be matched to the extent that may prove necessary. A limitation of 15 percent out of the respective appropriations of $200,000,000 and $300,000,000, for any one State, is provided in the bill. Senator Wagner referred to this limitation yesterday. Grants may also be made where necessary to States applying therefor, and within the discretion of the Federal Emergency Relief Administrator, to meet problems caused by the presence in some States of large numbers of unemployed transients, who have no legal residence in the State or the local community in which they happen to be, and to assist so-called "self-held associations" established for the barter of goods and services. Responsibility for the making of grants is vested by section 3 in a Federal Emergency Relief Administrator, to be appointed by the President, by and with the advice and consent of the Senate, and the life of the emergency organization to be set up is limited to a period of 2 years. The procedure governing applications by the States is defined in section 5. The Reconstruction Finance Corporation is, in effect, under sections 2 and 6, designated as the Administrator's fiscal agent. Funds for the program proposed are to be obtained through the sale of the corporation's debentures or notes, subject to the limitation that additional debentures or notes for the purposes of this act are to be sold only with the approval of the President. The provisions of title I of the Emergency Relief and Construction Act of 1932 are suspended, so far as the making of new loans is concerned, 10 days after the new organization has begun to function. May I add, Mr. Chairman, that the present bill was originally prepared by Senators Wagner, La Follette, and myself, pursuant to a request reaching us from the President. We subsequently conferred with Secretary Perkins and later Senator Wagner conferred with the President in person about the bill. The President, I think I am at liberty to say, read the bill throughout and it met with his approval. Mr. GOLDSBOROUGH. Senator Costigan, there is only one inquiry I think I want to make. Senator Wagner made the statement yesterday, and I think very correctly, that the State of New York paid about 28 percent of the total Federal revenues or tax collections. The bill provides that only 15 percent can go to any one State. Of course, if New York is actuated by altruism, I can understand the support of New York for the legislation. But, in the absence of that motive, what would be the reason, so far as you can see, for New York to support a measure which would require it to pay out about $1.90 for every dollar it receives? I am only trying to find out something more about this bill. Mr. BUSBY. May I suggest, Mr. Chairman Mr. GOLDSBOROUGH. May I please ask him that concrete question first, and then I shall be glad to yield? Senator CoSTIGAN. Mr. Chairman, I should not attempt to pass on the motives of the citizens of New York in supporting a measure of this sort. Mr. GOLDSBOROUGH. When I said New York, I was using that State only for illustrative purposes, that was all. But that was the definite statement made yesterday. The provisions of the_bill definitely are that only 15 percent may go to any one State. I am just trying to ascertain, as well as I can, just why a State like New York would support this measure. Senator CoSTIGAN. I have no doubt that Senator Wagner's conviction is deep-seated-my own certainly is-that we are dealing here with a national problem. It is national in origin and it calls for a national solution. Take, for example, the matter of transients to which Senator Wagner made slight reference yesterday. There is at this hour an army of unemployed people wandering up and down America. They drift from region to region, seeking employment or at least hoping for it, hoping for better conditions. They do not come ordinarily within the scope of local relief laws. As you are aware, our poor laws grew out of the practice of taking care of our neighbors. The person who has no legal residence is ordinarily not one to whom local relief goes. The tendency is to say, "Well, this man is not our concern; I do not know him. He comes from somewhere else. He ought to be at home and cared for by his people there." Mr. GOLDSBOROUGH. I have no doubt, Senator Costigan, that that is what is in Senator Wagner's mind. But what I am trying to ascertain, if possible, is why the State of New York is backing this bill; not why Senator Wagner is supporting the bill, but why the State of New York is supporting this bill. I am going to support the bill myself. There is a lot of opposition to it and it is deep-seated and it is vocal, and if there is anything sinister about the measure, we ought to know what it is. Mr. BUSBY. Mr. Chairman, I think I can answer your query. As I understand it, Senator Wagner indicated that New York State was charged with 28 percent of the tax funds that go to the Federal Treasury, and for that reason they were entitled to get back some of it in this way. That is how I understood Senator Wagner. I understood him to say that they contributed 28 percent to or put 28 percent into the Federal Treasury, of the total of Federal taxes, and for that reason-which is a wholly different proposition from the dictates of altruism-they would like to come in and get 15 percent out of the first $300,000,000 and then on a reallocation get more of the $200,000,000. Senator CoSTIGAN. The chairman's question, however, goes back Mr. BUSBY (interposing). That was my understanding; I may be wrong. Senator COSTIGAN. The chairman's inquiry goes back to the question why New York is willing to put 28 percent into such a bill. Mr. BUSBY. Because the law requires it, that is all. Mr. GOLDSBOROUGH. Personally, I do not desire to proceed any further along that line. Senator COSTIGAN. May I suggest, another reason is that New York is, of course, not only wealthy in itself, but it draws much of its wealth from other portions of the country. It is a part of the Nation. The conditions which have led to this proposed legislation may very well be said to threaten the security of our institutions. I should suppose that I may take it for granted that New York, like other parts of the country, would be concerned in abating evils which invite the agitator to drive against the security of our institutions. Mr. GOLDSBOROUGH. If that view of it is the view that is being taken by the State of New York, if those who are in control of the affairs of New York have that vision, do you not think that it would carry them a little further, do you not think that it would carry them to the point of understanding that we must raise the price levels before we can do anything substantial in the way of social welfare? Senator COSTIGAN. I agree with you heartily; I am sure that you will find no more cordial supporter in that philosophy than Senator Wagner. Mr. LUCE. Mr. Chairman, may I ask the Senator a question? Mr. LUCE. What administrative activities are contemplated by this bill? Senator COSTIGAN. Will you be good enough to specify just what you mean? Mr. LUCE. What administrative activities are contemplated by this bill? Senator CoSTIGAN. There is to be a Federal Administrator appointed. Mr. LUCE. What is he to do? Senator CoSTIGAN. He is to select a staff, advise himself about relief needs in the country, communicate with and respond to communications from, the governors of the respective States as to the needs in those States and certify the sums which are to be allocated to the States out of the funds made available by the Congress. Roughly, I think that outlines is his duties. Mr. LUCE. I do not find anything in the bill regarding any such work. Will you point it out to me? Senator COSTIGAN. There are provisions in the bill for applications to be made to the relief administrator. Take section 5: SEC. 5. Any State desiring to obtain funds under this Act shall through its governor make application therefor from time to time through the Administrator. Each application so made shall present in the manner requested by the Administrator information showing (1) the amounts necessary to meet relief needs in the State during the period covered by such application and the amounts available from public or private sources within the State, its political subdivisions, and private agencies, to meet the relief needs of the State, (2) the provision made to assure adequate administrative supervision, (3) the provision made for suitable standards of relief, and (4) the purposes for which the funds requested will be used. That section draws attention to the first step to be taken in moving toward relief. Section 6 provides that: The Administrator upon approving a grant to any State shall so certify to the Reconstruction Finance Corporation which shall, except upon revocation of a certificate by the Administrator, make payments without delay to the State in such amounts and at such times as may be prescribed in the certificate. The Governor of each State receiving grants under this Act shall file monthly with the Administrator, and in the form required by him, a report of the disbursements made under such grants. It is also provided that the administrator himself shall file reports. That is in section 3, subsection (d). That provides that: The Administrator shall print monthly, and shall submit to the President and to the Senate and the House of Representatives (or to the Secretary of the Senate and the Clerk of the House of Representatives, if those bodies are not in session), a report of his activities and expenditures under this act. In subsection (c) of section 3 it is provided that: In executing any of the provisions of this act, the Administrator, and any person duly authorized or designated by him, may conduct any investigation pertinent or material to the furtherance of the purposes of this act and, at the request of the President, shall make such further investigations and studies as the President may deem necessary in dealing with problems of unemployment relief. It is, of course, further provided, as already indicated, that these two funds are to be differently treated. Mr. KOPPLEMANN. In what way? Senator COSTIGAN. The $300,000,000 is to be expended on the basis of actual need as determined by the administrator. The $200,000,000 is to be divided on the basis of the Federal Government contributing one third as much in any particular county as any State has contributed, from all public sources in the preceding quarter. Of course, that calls for continuous supervision; as a matter of fact, both of these provisions call for continuous supervision. Mr. KOPPLEMANN. Then the one third provision does not apply to the entire $500,000,000? Senator CoSTIGAN. It does not. Mr. KOPPLEMANN. Only to the $200,000,000? Senator COSTIGAN. It only applies to the $200,000,000. As to that, the effort is to have a matching policy which will stimulate local giving. Mr. KOPPLEMANN. Insofar as the $200,000,000 is concerned? Mr. LUCE. Mr. Chairman, if I may continue my line of inquiry: Senator, to apply this procedure to a concrete illustration. Suppose the Governor of the State of Illinois sends to the administrator a statement showing that they have expended $30,000,000 for relief and that they would like $10,000,000 more. What is the administrator going to do? Senator COSTIGAN. If it is apparent to the administrator that the State of Illinois in the preceding quarter expended out of public funds from all sources $30,000,000 subject to the limitation that not more than 15 percent of the aggregate funds Mr. BUSBY (interposing). Will you allow me to interrupt, Senator. How do you know that is what will happen? Are you not surmising about the administration of all this? You have no concrete or tangible data before you and do not even know the mind of the individual who may be selected to administer this act. Is there anything in the act, or are you surmising what you would do if you were in that position? |