Thank you, Mr. Chairman.

Mr. MCVEY. Mr. Chairman ?

Mr. FALLON. Mr. McVey.

Mr. MCVEY. Mr. Whitton, recently the Midwest Governors held a conference here in Washington, D.C., which was called at the instance of your Governor from Missouri.

The purpose of that conference was to try to get more Government contracts and facilities located in the Midwest States which are presently going to other certain States in the country, apparently, on the basis of patronage.

Now, did you really believe, Mr. Whitton, that if we would enact this program that is before us today that it would operate in any different manner than the present programs which are operating under the patronage system?

Mr. WHITTON. The present Federal-aid program?

Mr. MCVEY. I am speaking of the general contracts

Mr. WHITTON. I will have to answer toward the present Federalaid program for highways, and I say yes, it would operate differently. You see, the present Federal-aid program for highways is confined to designated highways on the Federal-aid system, while the program proposed here would make it possible to improve roads, like Congressman Perkins was speaking of, that are not on the present Federal-aid system.

It would also allow, in my judgment, the States to do some needed work even on the Federal-aid system that is not now eligible for Federal aid, and I have in mind such work as resurfacing or surfacing gravel highways; such work as widening shoulders; such work as drainage improvement, betterment, and such work as bridge widening, which the States would like to do now and which needs to be done now, but it is taking, in most States, all their money to match available Federal aid on the normal improvement program.

Mr. McVEY. Well, I would like to, perhaps, direct this question to Mr. Gudeman, and that is why some States are overlooked in awarding these Government contracts.

It would seem to be let out on the basis of patronage, would it not? Mr. GUDEMAN. Well, I am not sure I know exactly what contracts you are talking about. In our own Department we are concerned primarily with area redevelopment and with public roads under Mr. Whitton.

I think Mr. Whitten has answered the public roads part. We are not concerned with any other contracts given, defense contracts or others and, therefore, I am not able to answer your question. Mr. BALDWIN. Mr. Chairman ?

Mr. FALLON. Mr. Baldwin.

Mr. BALDWIN. Mr. Gudeman, the Maritime Administration is one of the agencies under the jurisdiction of the Department of Commerce, is it not?

Mr. GUDEMAN. That is correct.

Mr. BALDWIN. Every maritime shipbuilding union on the Pacific coast, I think, has been in contact with me to say that instead of the Maritime Administration carrying out their obligations on an expeditious basis for letting of contracts for the building of merchant marine vessels, that there actually has been a deliberate slowdown within the Maritime Administration, and that many of the contracts

that could have been let for new ship construction during this present fiscal year are being pushed into the fiscal year 1963, not to be let or actually gotten under construction until after July 1.

Now, I do not think the shipbuilding unions are just making misstatements of fact.

They point out that the Maritime Administration has authority to let these contracts. They have got funds to do it and they have not done it.

Now, if your statement indicates that the Department of Commerce is so anxious to expedite construction and provide jobs, why has not the Department of Commerce broken this roadblock in the Maritime Commission?

Mr. GUDEMAN. Well, the shipbuilding program has been carried on within the funds available as logically as we could approve the ships, and at the same time try to stay within a reasonable expenditure of subsidy money.

Mr. BALDWIN. When you say "a reasonable expenditure," that is in direct contradiction with your statement.

Your statement says you need additional funds to speed up expenditures to provide jobs, but you have got funds that you are not expending.

Mr. GUDEMAN. Well, we think that we have put forth new ships to the degree that they should be, sir, in the Maritime Administration. It is true that not all of the expenditure was utilized at the particular time. We have tried to, as I have said in my statement, spread some of this work so as not to have ups and downs in the curve, but to give more even production to ships.

And I might add that we are trying our best to work that out over a long period of time.

Mr. BALDWIN. But your statement here says that you need $600 million immediately to provide additional employment, and you have got funds available to the Maritime

Mr. GUDEMAN. But that $600 million is not all for ships, sir.

Mr. BALDWIN. I know that, but my point is that the administration says it needs $600 million to be appropriated by Congress to provide additional jobs and it has got funds in the shipbuilding program that it is not using, and that it is deliberately deferring.

Mr. GUDEMAN. Well, you are talking about certain areas, in the first place.

The $600 million would be used throughout the United States in those areas that required it because of unemployment or underemployment. Part of that is in shipyard areas, there is no question about that.

I must answer you, however, by saying that we have gone forward with the shipbuilding program in what we think is a very sensible way, and, while we have not utilized every bit of money available during the past year, I think you will find that that is not the case during the coming year, and that we are trying to spread the work in the shipyards as best as can be done.

Mr. BALDWIN. Can you tell me how much of the funds, that would be available to you if you wanted to use them, have not up to today been committed for shipbuilding

Mr. GUDEMAN. I have not got that figure in mind. We will get it for you, though.

Mr. BALDWIN. Can you submit it for the record?

Mr. GUDEMAN. Yes, I will be glad to do so.

(The material was furnished for insertion.)

Funds available under ship construction appropriation during fiscal year 1962

1. Unobligated balance carried over from fiscal year 1961.

2. Appropriation fiscal year 1962‒‒‒‒‒.

Total available fiscal year 1962-

Obligated through Feb. 28, 1962_.

Obligations Mar. 1, 1962 to June 30, 1962, estimated__

Unobligated balance June 30, 1962, estimated_____.

$54, 881, 741 98, 000, 000

152, 881, 741

-43, 106, 414

-45, 896, 586

63, 878, 741

Of the balance being carried over into fiscal year 1963, $56,250,000 is for construction-differential subsidy for nine new ships and acquisition by the Government of the ships being replaced. These nine ships (four for Grace Line and five for United States Lines) were originally scheduled for contract award on June 1, 1962. Both lines submitted new designs for the type of ships to be built. The normal time required for the administrative processing of these proposals and the technical review of the new designs have delayed the award of these contracts beyond June 30, 1962.

The balance of the unobligated funds, $7,628,000, being carried forward into fiscal year 1963 is being held in reserve to cover adjustment of prior years' contracts.

Mr. CRAMER. Mr. Chairman?

Mr. FALLON. Mr. Cramer.

Mr. CRAMER. I think this line of questioning by the gentleman from California, this is an interesting ball game. You have three batters and one pitcher, but I will do my best to ask questions of all three. Mr. Baldwin's questioning was with regard to unobligated funds. Now, how much in area redevelopment, Mr. Batt, does there remain unobligated?

Mr. BATT. By the end of the fiscal year we will have

Mr. CRAMER. I mean now.

Mr. BATT. Well, the projects that are in the works will be committed by the end of the fiscal year but, as nearly as we can estimate, we will have committeed $72 million of the $72 million that was appropriated under section 6 of the business loans part of the program. We will have committed all of the training money. We will have committed all of the technical assistance money under section 11.

And we will have committed about $40 million out of the $90 mil lion made available by the Congress under sections 7 and 8 of the public facilities part of the program.

Mr. CRAMER. For grants and loans and

Mr. BATT. For grants and loans for public facilities connected with new industrial plants.

Mr. CRAMER. You have $50 million unobligated that could, if the President gave an order to accelerate public works within your existing authorized authority-you would have $50 million available to put in public works programs relating to redevelopment if the President should see fit to give an acceleration order.

Is that not correct?

Mr. BATT. Well, sir, under the authority that we have under section 8 of the act, as Congressman Blatnik tried to point out we are limited both by the amount of funds and more particularly by the limitation put in by Congress.

These are not public works as contemplated in the proposed act be

fore you. These are public facilities which will relate to, and I quote the act:

the location, the establishment or expansion of industrial or commercial plants or facilities which will provide more than a temporary alleviation of unemployment in such areas.

So the kind of thing that we are talking about, Congressman, and the kind of loans and agents that we have made so far have been loans and grants to such as that to Cambridge, Md., for a sewage system out to an industrial park which will provide or permit a branch plant of a midwestern company to locate there, and a company already in the community to expand, and create 875 new pobs.

There is one in Mountain City, Tenn., a combination grant and loan of $160,000, to permit the Leco Manufacturing Co. to locate there. Is that in your jurisdiction, Mrs. Reece?

Mrs. REECE. Yes.

Mr. BATT. But we have to see a bird in hand.

We have to see the particular permanent jobs that this loan or grant is going to provide.

Mr. CRAMER. What you are saying then is that this bill has no application to area redevelopment authority presently existing under existing legislation?

Mr. BATT. Well, but, you see, the act also says that we should do everything we can through every existing agency of the Government to help these areas get rehabilitated.

What we found is an enormous number of demands for things which do not strictly come under our program, but which are most useful and need to be done. And I have

Mr. CRAMER. What you want to be done are local public works in new programs that never have been, and are not now, financed by direct grants by the Federal Government.

Is that what you are talking about?

Mr. BATT. They are all across the board-some of them are hospitals, some of them are sewage disposal plants.

Some of them are roads, and these have been authorized but there are projects that are now several years down the road that could be accelerated under these bills

Mr. CRAMER. Have you requested, under present authority, that the President consider, in these areas of redevelopment where the admitted unemployment problems or other problems exist, that such public works programs, which are already authorized by Congress and where there are unobligated funds, be accelerated in these areas?

Mr. BATT. Within the limitations in present authority, every one of the Federal agencies have assured us and have assured the Presi dent that they are doing everything they can.

The distinction was made very well, sir, in the President's letter, which was put into the record by the chairman of the Council of Economic Advisers, and I think it may well be worthwhile reiterating here.

And this is what he said:

The area redevelopment program, however, is a continuing effort to help comInunities to attract new and permanent jobs to solve their long-range economic problem; it is not primarily designed to provide immediate relief of distress caused by unemployment, or to assist in the general rehabilitation and improvement of public facilities.

I believe that a further Federal effort is necessary, both to provide immediate useful work for the unemployed and the underemployed, and to help these and

other hard pressed communities, through improvement of their public facilities, to become better places to live and work.

You see, you are doubling the ante in the bill that is now before you. You would include not only redevelopment areas, but you would also include the labor surplus areas which have been such for over a year, to help these and other hard pressed communities to become better places to live.

Mr. CRAMER. If you put all of this $600 million that you are asking for in the some 900 communities that you say are in your area redevelopment program

Mr. BATT. No, sir, about half of them. As I say, in terms of population and labor force and unemployment, about half of this is included in the area redevelopment program that we are related to, and about half of it is related to the labor surplus areas of a year or

more.

Mr. CRAMER. All right. Both of them. It would mean $750,000 per area.

Now, how much help is that going to be?

Mr. BATT. Well, sir, of course, this is not the way the cookie crumbles.

All of these programs require very substantial local initiation and local participation, and the areas which come in and participate and need the things most, these are the ones which

Mr. CRAMER. I am talking about the legislation, the legislation authorizing you to go into public facilities of any kind not presently financed, to give 50 percent in grants, and if the city or local community cannot afford it, to put another 50 percent in in the form of loans.

Now, if they went into every area with $600 million, it would beMr. BATT. Well, sir

Mr. CRAMER. Let me finish my question.

Mr. BATT. Yes, sir.

Mr. CRAMER. It would mean $750,000 per area. Now, that is peanuts $600 million is not going to do the job, and you know it.

Mr. BATT. Well, sir, if you think the committee would like to increase the amount of money, of course, that might be well worthwhile. Mr. CRAMER. I guarantee you this much, if we pass the bill for $600 million, the other body would pass twice that amount.

Mr. BATT. The President has not asked for more than $600 million, and the Council of Economic Advisers testified to that point, and they feel that this would create a very substantial amount of jobs and would have a very useful countereffect.

I can guarantee you, from what we know of the needs of these areas, which are reflected in the overall economic development plans that they have submitted to us, that loans would be enough to more than use up the $600 million, in useful projects with long-term possibilities.

Mr. CRAMER. I would like for you to submit for the record a list of those public utility projects which you find under section 8 of the Area Redevelopment Act have been obligated.

I would like to be submitted for the record that information, including the date obligated, the type of project, the cost, the amount of Federal funds, the location, and the status of completion.

Mr. BATT. I would be happy to do so.

(The information referred to follows:)