Mr. FALLON. On behalf of the committee, we thank you for coming down.

Mayor MAIER. It has been a pleasure, gentlemen. Thank you. Mr. FALLON. Our next witness is Mr. Jerome P. Cavanagh, mayor of Detroit, Mich.

Mr. Mayor, on behalf of the committee we thank you for your appearance this morning, and you may go right ahead with your

statement.

STATEMENT OF JEROME P. CAVANAGH, MAYOR OF THE CITY OF DETROIT

Mayor CAVANAGH. Mr. Chairman and gentlemen, thank you. My name is Jerome P. Cavanagh. I am mayor of the city of Detroit, and I appear here today in that capacity, and also as a representative of the U.S. Conference of Mayors.

Let me say at the outset, it is a very real pleasure for me to make my first appearance before a congressional committee in support of legislation designed to help American cities and distressed areas through a federally assisted accelerated program of planned public works. The people of Detroit were heartened to read President Kennedy's suggestion that immediate assistance be given to those sections hard hit by continuing unemployment. We strongly endorse his proposal. The acceleration of federally aided capital works grams and the substantial support called for in these bills for local public works programs is needed to shore up the national economy and to help the cities help themselves. Cities all over our Nation are prepared to swing into action and speed up their capital works projects.

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The Detroit area, it is true, has special problems, but so does Pittsburgh and so does Providence, and so do many smaller communities which are classified as having substantial and persistent unemployment. Today, as I speak before you on this committee, nearly 200 men and women from the Detroit metropolitan area will have exhausted their unemployment compensation benefits and another 100 will have used up their entitlement to temporary extended benefits. While the national economy has shown strong indications of recovery, the Detroit area is burdened with an unemployment rate of 9.3 percent. Translated into human figures, this means 130,000 men and women without work. Nationally, the jobless rate remains at the high level of 5.6 percent despite strenuous efforts by all levels of government. Detroit will continue to be classified as a distressed area until the local forces we have set in motion have had a fair chance to succeed.

For example, we are encouraging participation in the Area Redevelopment Administration program. Also, we have embarked on a cooperative effort with the State government and the Detroit Board of Education to retrain many of those whose skills have fallen into disuse because the local economy has changed or technological developments have made their skills obsolete. As a part of this program we will attempt to include specific on-the-job training and work-study programs in our contracts subject to acceleration under the bills before this committee.

Here, gentlemen, is a good illustration of how one good Federal program, the manpower retraining law, can be used to help another good Federal program, accelerated public works.

I want to pause here momentarily and labor a point which I do not believe has been emphasized to the Congress. In Detroit, industrial mobilization for World War II and the Korean fighting recruited numerous laborers to meet the military needs of our Nation. We are left with an oversupply of workers in the face of a shift in military hardware to new weapons, decentralization, automation, and relocation of defense production and military suppliers' operations. These workers, recruited to fill the Nation's needs at a time of crisis, were younger and more mobile, more able and more competitive than they are today. Now they have roots, homes, friendships, and associations to which they are as entitled as you or I, and which they cherish and wish to keep. We will help them to get the new skills they must acquire to meet our changing needs. But we feel that the problem of readjustment faced by Detroit is, and should be accepted, at least in part, as a Federal problem, born of a national crisis.

The Nation_recognized its responsibilities to its servicemen in the Servicemen's Readjustment Act. I urgently propose for your consideration the adoption of this urban adjustment bill to help the Nation's cities which underwent serious dislocation in response to the Nation's needs for survival. As a corollary of this theme I suggest to you that many rural areas classified as distressed areas can trace their troubles to the same period when young men and women left the farms by the thousands to serve in the Armed Forces and the factories. And we must recognize that the structure of our economy has been changing, foreign competition is an increasing factor, and automation and mechanization have complicated an already complex picture.

The programs thus far adopted, the distressed areas legislation, the Manpower Retraining Act, and the urban renewal program, have not sufficed to meet the very serious challenges of this decade. There are crying demands which must be met with dispatch. Too many people have been out of work for too great a time. Enforced idleness is destructive of individual initiative and creates situations of dependency which are dangerous to our national well-being. Yes, we do have work assistance programs for those who are able bodied and are on welfare. These men are given housekeeping activities while in sharp contrast the program you are asked to adopt involves capital improvements and the utilization of much labor and many skills.

I would like to make clear we do not wish to compete with private business; we will do everything we can to stimulate it to new levels of activity.

The most immediate method to stimulate the local economy is to authorize a speedup in both federally aided capital works projects and local capital works programs. We want to put men to work right now, some within 30 days and others within the next few months. We have local programs for street resurfacing, for example, which will give men jobs now. To delay in the adoption of Federal legislation would mean we would have to wait until next spring to do much additional street work. Many other sections of the country are similarly affected by seasonal factors.

A realistic total of $118 million and almost 18 million man-hours is documented in the appendix to my testimony. We have included as a separate figure the long-range program since many projects may be moved up to the near future by telescoping the time necessary to complete the initial program and by making funds available for their completion. The Detroit Board of Education has a demonstrated need for classroom facilities and has bonds authorized for the completion of a construction schedule in excess of $70 million. These totals mean jobs and Detroit is ready once again to show its willingness to break ground in the struggle for what I call urban survival. These figures are merely illustrative of the tremendous impetus which our economy could gain by expediting projects needed and desired by the residents of cities all over the country.

I might say a word of caution is proper at this point. To a large measure the ability of municipalities to participate in the proposed accelerated public works program has practical limitations. One important restriction will be familiar to those of you who have served in city government. Once a budget is closed it is extremely difficult to reopen it, even though it may mean that substantial aid will thus be made available to a community.

A second restriction is characteristic of the urban problem: highdensity living with hordes of daylight residents from the suburbs have combined to increase the demands for public services.

Additional complications arise from the need for welfare assistance and other services which increase astronomically during periods of economic stress at the same time that the community's financial resources may be rapidly shrinking. In Detroit our tax base has declined dramatically due to the aging of the inner city structures, freeway construction, urban renewal land clearance, and decentralization of industry. The total expenditure for all our welfare programs during good times back in 1953 was $7.4 million and a caseload of about 4,000 cases, as contrasted to the tremendous drain on our economy for fiscal 1960-61 of $32 million, and a caseload of 12,000

cases.

What solution do I have to offer? I might suggest that if the Congress wishes to help depressed areas, areas of persistent unemployment, then I suggest that you seriously consider alternatives to the financing set forth in these bills. I submit there are some rational alternatives for financing by the use of outright Federal grants to distressed areas, credits to distressed areas, and matching arrangements where local funds are available. One variation to get the depressed areas program underway would be to allow places such as the city of Detroit outright grants, under appropriate safeguards, for the first year of the accelerated program. This would give these communities. time to go through the formalities of voter approval of bonds or to work out alternative methods of financing. It would also enable them to relieve their unemployment significantly and with immediate impact on the economic life of the locality. An alternative method would be to grant credits to distressed areas for their current public works program to meet the matching requirements for Federal funds. This concept has worked some degree of great success in the urban renewal program. In certain situations money can be made available for a matching formula even in depressed areas.

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To illustrate, our residents have voted approval of bonds for water expansion, sewers, and sewage disposal. These projects would give immediate employment to thousands of jobless.

As to the other programs suggested in the documentation I have reservations as to our ability to come up with matching funds. We are near the maximum of our budget bonding limitation, we have stretched our local resources to the outer reaches, and we are in the process of adopting a local income tax, I might add much to my chagrin, to relieve the pressure on business and industry. But there is little left for the increase required under these bills. If one of the above alternatives were adopted, the effect would be immediate and dramatic for our capital improvements program for streets. My city engineer informs me that we can put another 2,813 people to work for 32 weeksthe normal street work season-if we had an additional $24 million. But we cannot use revenue anticipation bonds from the weight and gas tax since that is already pledged in our program for this year. And there is no place in our budget to find additional money. If you were to adopt an outright grant approach, we could put these people to work very quickly. With the adoption of a 50-percent credit arrangement, we could put one-third of that number to work-971 people.

Other variations I am sure will occur to the committee members as a means to expand this specific program. A combination of credits and full grants during the first year the projects are initiated by depressed areas would provide the muscle to get these capital works underway— and to get the men and women back on the job quickly.

Let me turn now to a source of irritation to many cities. This is a provision in these bills for acceleration of federally assisted projects such as urban renewal. In Detroit we have authorized bonds for extensive urban renewal projects. But these projects will have little impact on our community for some time. Why? Under the present methods of execution, taking into consideration the timing of the various elements involved-planning, Federal review, Federal approval, public hearing, land acquisition appraisals, condemnation procedures, relocation of site occupants, site clearance, installation of public improvements and sale of the land to redevelopers-under a cumbersome set of rules, the jobs would be made available over a period of from 3 to 5 years. Drastic changes to speed up the administrative procedures are necessary to reduce the time significantly. In the urban renewal program it is the multiplier effect which private redevelopment offers that make this a relatively cheap way to put a lot of people to work. For example, while direct labor for site clearance and site improvements shown in the documentation total only about 500 jobs for 1 year, the redevelopers would need over 21,000 employees to improve this cleared land.

We have included documentation of the capital improvement program of the city of Detroit. It demonstrates the vast amount of unmet needs of our city. Many of these projects have been proposed and desired for better than a decade but due to limitations on the financial capacity of our city, have been postponed in favor of more pressing needs. Some of the projects are now ready to be placed

in construction; others, in the absence of new sources of revenue, will again need to be deferred. Acceleration of federally aided projects and of local capital works programs has a direct meaning in the human equation.

In Detroit, thousands could be hired for sewer, water, sewage disposal, parks and recreation improvements, public building construction and modernization, airport expansion, and a host of other projects. The benefits to the community in the expansion and modernization of these facilities will be widely distributed. These assets will contribute greatly in making it easier for Detroit to attract business and industry and to revitalize our economy.

Much of my presentation has emphasized the desirability of an accelerated public works program for distressed areas. I do not intend to minimize the very real need for standby authority to be vested in the President for a broad public works program for the Nation. The economic indicators tell him when there is a need to act. Delay in the implementation of an accelerated public works program caused by the necessity to appeal to Congress for authority might cause undue hardship and permit the Nation to slip into the further morass of a deep recession. The deliberative processes of the Congress are a necessary safeguard against a hasty and poorly conceived public works program. These bills provide the leadtime, the careful consideration and the advance planning such a program must have. I believe also there should be the kind of permanent office for preplanning public works called for in H.R. 10113. I believe also that the actual administration of this program should be directly under the President so that the administrator would be able to get active participation from all the Federal departments and agencies summoned to support this broad-gaged attack on our economic ills.

In conclusion, let me thank you for allowing me to come before you and testify, and let me say this in conclusion: I seriously urge your consideration of these two proposals, and that they be adopted quickly, because they will, in turn, in my judgment, give us the tools for the remaking not only of our city, but the country, which will fulfill the American dream.

Thank you.

Mr. FALLON. On behalf of the committee, Mayor, let me thank you for apearing here this morning and congratulate you on a very fine

statement.

Mayor CAVANAGH. Thank you, Mr. Chairman.

Mr. FALLON. Without objection, at this point the appendixes to the statement of Mayor Cavanagh will be made a part of the record. (The appendixes referred to are as follows:)

APPENDIX TO Statement of Mayor Jerome P. Cavanagh, CITY OF
DETROIT, MICH.

The following summarizes and details public works projects which are ready or in preliminary planning stages. A standard formula computation was applied to project cost to determine man-hours of labor.

Direct labor was estimated to be 50 percent of total project cost.

Direct labor hours were obtained by calculating labor costs at $5 per hour. Indirect labor hours were added at a rate of 50 percent of direct labor hours.