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Full text of "Post-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic policy and planning"

POSTWAR ECONOMIC POLICY AND PLANNING 

HEARINGS 

BEFORE THE 

SPECIAL COMMITTEE ON POSTWAR ECONOMIC 

POLICY AND PLANNING 

HOUSE OF EEPEESENTATIVES 

SEVENTY-EIGHTH CONGRESS 

SECOND SESSION 
AND 

SEVENTY-NINTH CONGRESS 

FIRST SESSION 
PURSUANT TO 

H. Res. 408 and H. Res. 60 

RESOLUTIONS CREATING A SPECIAL COMMITTEE ON 
POSTWAR ECONOMIC POLICY AND PLANNING 



PART 6 



JULY 27, 28, 1944; MARCH 13-16; APRIL 4, 1945 



POSTWAR PUBLIC WORKS AND CONSTRUCTION 



Printed for the use of the Special Committee on Postwar 
Economic Policy and Planning 




UNITED STATES 
GOVERNMENT TRINTING OFFICE 
99579 ■ WASHINGTON : 1945 



\j;S. SUPERINTENDENT OF DOCUV.EHTO 

NOV 1 1945 



SPECIAL COMMITTEE ON POSTWAR ECONOMIC POLICY AND 

PLANNING 

WILLIAM M. COLMER, Mississippi, Chairman 



JERE COOPER, Tennessee 
FRANCIS E. WALTER, Pennsylvania 
ORVILLB ZIMMERMAN, Missouri 
JERRY VOORHIS, California 
JOHN R. MURDOCK, Arizona 
WALTER A. LYNCH, New Yorii 
THOMAS J. O'BRIEN, Illinois 
JOHN E. FOGARTY, Rhode Island 
EUGENE WORLEY, Texas 



HAMILTON FISH,i New York 
CPIARLES L. GIFFORD, Massachusetts 
B. CARROLL, REECE, Tennessee 
RICHARD J. WELCH, California 
CHARLES A. WOLVERTON, New Jersey 
CLIFFORD R. HOPE, Kansas 
JESSE P. WOLCOTT, Michigan 
CHARLES S. DEWEY,2 Illinois 



Subcommittee on Public Works and Construction 

WALTER A. LYNCH, Chairman 



JOHN R. MURDOCK 
JOHN E. FOGARTY 
EUGENE WORLEY 



HAMILTON FISH ^ 
B. CARROLL REECE 
JESSE P. WOLCOTT 
Marion B. Folsom, Director 
A. D. H. Kaplan, Consultant 
Haery E. McAllister, Consultant 



1 Replaced in 79th Cong, by Jay LeFevre, New York. 
^ Replaced in 79th Cong, by Sid Simpson, Illinois. 



CONTENTS 



statement of— ^"g^ 

LaGuardia, Fiorello H., mayor, city of New York 1709 

Lyons, James J., president, Borough of the Bronx 1725 

Nathan, Edgar J., Jr., presiden^^, Borough of Manhattan 1732 

Fitzgerald, Maurice A., commissioner of borough works. Queens 1735 

Catherwood, Martin P., State of New York Commissioner of Com- 
merce 1738 

Walton, Harry M., Jr., Delaware County, N. Y 1753 

Pirnie, Malcolm, president, American Society of Civil Engineers 1757 

Upham, Charles M., director, American Road Builders Association.. 1767 

Moses, Robert, park commissioner, city of New York 1773 

Church, Stanley W., mayor, city of New Rochelle 1810 

McSpedon, Howard, president, Building and Construction Trades 

Council 1814 

Brutschy, Fred, chairman, Joint Committee of Building Trades Em- 
ployers and Building and Construction Trades Council 1818 

Sheridan, Arthur V., editor, American Engineer 1824 

Taft, Thomas K., Cornwall, N. Y 1828 

Jonas, James A., president, Orange County Chamber of Commerce.. 1830 

Shipp, E. Maltby, chairman, Newburgh (N. Y.) Planning Board 1832 

Bush, Peter H., executive chief engineer, Orange County Planning 

Board 1836 

Heins, Oscar J., staff supervisor, Rockland County Planning Board.. 1844 
Ambrev, Richard F., member of board of supervisors, Rockland 

County 1844 

Ruml, Beardsley, chairman, National Planning Association Business 

Committee 1846 

Colean, Miles L., consulting architect 1848 

Holden, Thomas S., president, F. W. Dodge Corp 1865 

Palmer, Edward P., Chamber of Commerce of the United States 1889 

Cleary, Edward J., managing editor Engineering New-Record 1901 

Dick, Harry A., president, the Association of General Contractors of 

America, Inc 1916 

Hedges, M. H., director of research, International Brotherhood of 

Electrical Workers 1929 

Kelly, Edward J., mayor, city of Chicago, 111 1951 

Weeks, Donald C, director of Michigan Planning Commission 1970 

Sabath, A. J., Congressman from Chicago, 111 1989 

Gorski, Martin, Congressman from Chicago, 111 1991 

Link, William W., Congressman from Chicago, 111 1992 

Bonner, John F., assistant to city attorney, Minneapolis, Minn 1992 

Anderson, Robert L., superintendent of public works, Winnetka, 111.. 1998 

O'Brien, T. J., Congressman from Chicago, 111 2000 

Wallace, James E., city manager, Kenosha, Wis 2000 

Rhomberg, A., city manager, Dubuque, Iowa 2001 

Richards, Glenn, director of public works, Detroit, Mich 2002 

Bossert, H. Dale, director of planning, Illinois Postwar Planning Com- 
mission , Chicago, 111 2006 

Kinsey, Milton N., president, board of public service, St Louis, Mo_. 2010 

Hurless, V. H., construction accountant and auditor, Milw^aukee, Wis. 2018 

Ames, John, city manager, Ames, Iowa 2023 

Ludwig, C. T., secretary, Minnesota League of Muncipalities, Min- 
neapolis, Minn '. 2023 

Howell, Leonard, city manager, Port Huron, Mich 2028 

Chatters, Carl, executive director, Muncipal Finance Officers Associa- 
tion, Chicago, 111 2032 

in 



IV 



CONTENTS 



Statement of — Continued Page 

Bean, George, city manager. Pontiac, Mich 2040 

Beams, R. C., Fort Wayne, Ind 2042 

Youkey, W. Vincent, mayor, Crown Point, Ind 2043 

Graham, Ralph C, superintendent of public works, Davenport, Iowa. 2046 

SCHEDULE OF EXHIBITS 



No. 



Title 



Intro- 
duced 
at p. — 



Appears 
on p.— 



9 
10 
11 



Report of proposed public works for the city of New York. 

Postwar projects in work for the Bronx 

Statement by James A. Burke, president, Borough of 
Queens 

Report of the New York State Postwar Public Works 
Planning Commission 

Sample report of dollar volume of postwar construction 

plans (public and private) under way or completed 

Supplementary statement by Coinmissioner Robert Moses_ 
Letter of transmittal from Hon. Walter H. Judd, Member of 

Congress, Fifth District, Minnesota; resolution adopted 

Apr. 16, 1945, by city council of the city of Minneapolis. 
St. Ivouis A: Postwar public works program for St. Louis 

for which financing is already available 

St. Louis B: Expanded ])rogram which could be put into 

operation with Federal aid 

Statement of Herbert D. Fritz, associate director, American 

Public Works Association 

Statement of Earl D. Mallery, executive director, American 

Municipal Association 



1713 
1729 

1735 

1743 

1759 
1791 

1998 
2012 
2014 
2048 
2048 



2048 
2054 

2057 

2059 

2060 
2062 

2065 
2066 
2070 
2072 
2074 



POSTWAE ECONOMIC POLICY AND PLANNING 



THURSDAY, JULY 27, 1944 

House of EErRESENTATivEs, 
Subcommittee ox Public Works and 
Construction of the Special Committee on 

Postwar Economic Policy and Planning, 

New York, N. Y. 

The subcommittee met, pursuant to notice, at 10 a. m., in the United 
States Courthouse, Foley Square, New York City, Hon. Walter A. 
Lynch, chairman, presiding. 

Present: Hon. Walter A. Lynch, New York; Hon. John R. Mur- 
dock, Arizona; Hon. Eugene Worley, Texas; Hon. John E. Fogarty, 
Rhode Island; Hon. Hamilton Fish, New York; Hon. B. Carroll 
Beece, Tennessee ; Hon. Jesse P. Wolcott, Michigan, and Hon. William 
M. Colmer, Mississippi. 

Also present: Mr. Marion B. Folsom, director; Dr. A. D. H. Kap- 
lan, consultant. 

The Chairman. This is a hearing of the Subcommittee on Public 
Works and Construction of the House Special Committee on Postwar 
Economic Policy and Planning. 

The purpose of this hearing this morning is to learn the points of 
view of a large municipality concerning the necessity for postwar 
construction as a means of solving the problem of employment for 
the demobilized soldiers and servicemen and those who will give 
up their jobs in the munitions factories and return to peacetime 
work. 

The committee thought that the best representative to express the 
viewpoint of the municipality, as it were, would be the distinguished 
mayor of the city of New York, Mayor LaGuardia ; and Vv^e have in- 
vited him here this morning to give his views on public works and 
postwar construction. 

Mayor LaGuardia, you may make your full and complete state- 
ment and then, if there are any questions, they will be asked at the 
conclusion of your statement. 

STATEMENT OF HON. EIOEELLO H. LaGUAEDIA, MAYOE, 
CITY OF NEW YORK 

Mr. LaGuardia. Mr. Chairman, and gentlemen of the committee, 
I am very happy to have you gentlemen in our town, and I do hope, 
before you leave, that you will give us an opportunity to show what 
we have done with respect to this matter of public work, and also 
to show the progress we have made in our postwar program. 

1709 



1710 POSTWAR ECOXOMIC POLICY AXD PLANNING 

I always feel quite at home with a congressional* committee, and I 
know that every member of the committee will understand if I speak 
very frankly, it is only my desire to get things going. 

This is the fifth time that I have testified before a congressional 
committee on this same subject. I am very fretful that we may not 
be ready when the time comes. 

The appointment of this committee by the House was a great step 
forward and I believe will be very helpful. 

I do want to say that, from my 14 years' experience in the House, 
the happiest period during my 40 years of public office, I do not 
believe the House went far enough. I would like to see this com- 
mittee have full and complete jurisdiction over the subject matter, 
and the power of standing committee of the House to submit legis- 
lation and not merely recommend. 

I have been before several committees. It is my feeling that the 
jurisdiction should be given to one committee. I need not tell you 
gentlemen how each committee of the House will guard its own juris- 
diction, and the jealousies of jurisdiction. I have seen bills of merit 
fought on the floor because of the question of whether or not the 
committee bringing in the bill had jurisdiction. I just can't make 
that too strong. 

As I see it, this war may be over before many anticipate. That 
does not mean that we can let down for a single moment, but it does 
mean that we should step up our postwar planning. 

We have never, in the entire history of our country, faced as 
gigantic, as far-reaching and transcending a situation as will face 
us when the war is over. The sudden stoppage of war production, 
the reconversion of industry back to peacetime production, the dis- 
location of millions of men and women now in war factories, demobili- 
zation of the largest armed force we have ever had, create problems 
that must be frankly and courageously faced. 

In stating New York City's postwar program I shall dwell upon 
the public-works program which we are planning. That program, 
gentlemen, is coupled with the Federal program. There is not a city 
in this country, including my own, that is able to fully and completely 
finance a postwar public-works program to the extent that it would 
make itself felt in this postwar period without generous aid in the 
form of grants from the United States Government. 

Now, I want to make this statement without any equivocation at 
all, and in that statement I speak for all the cities of this country. 
We have gone beyond any other city, and even the Federal Govern- 
ment, in preparing for the postwar ])ublic-works prograni. 

Wlien I talk about New York City's plan, I want you to know, 
gentlemen, that it is not a list of desirable projects; it is not a few 
sketches ; it is the preparation of the actual construction plans, enabling 
us to go to work the minute the war ends and materials are available, 
provided we do get aid from the Federal Government. To prepare 
these plans, gentlemen, costs money. We have authorized the ex- 
penditure of some $30,000,000 for these plans. 

Some of you gentlemen were in the House in 1933 and 1934 when 
Congress appropriated funds for PWA. I do not mean WPA. I 
mean the PWA. And they felt at the time that having made these 



POSTWAR ECONOMIC POLICY AND PLANNING 1711 

huge appropriations for loans and orants for public works, the wheels 
of industry would be spinning. If you will look back at the record, 
you will fiiid that impatience was expressed 6 months, 12 months, and 
18 months after the appropriation because the impact was not yet felt. 

You may also remember that I came in for some criticism because 
New York was getting grants. And why were we getting grants? 
It was because we were ready to go to work. That was the only 
reason. We had several large projects going before others were even 
started, including those of the Federal Government. 

You must constantly bear in mind that it takes from 12 to 18 
months to prepare plans for any sizable construction. I do not mean 
a little $20,000 building, but the kind of public works that reverts 
back to the mines and the forests, to the industries, and to construc- 
tion requires from 12 to 18 months' preparation. 

While that is going on, the acquisition of the sites and the land in 
many, many places is a long drawn-out procedure, and the land should 
be acquired during this time. 

I, therefore, as my first recommendation, ask this committee to 
recommend an immediate appropriation to aid States, counties, and 
municipalities in the preparation of plans for approved projects. I 
would suggest that the locality or State be required to make some 
appropriation in order to avoid getting a flood of projects that may 
never be constructed. 

The projects, of course, should be approved by the Federal Works 
Agency, first, as to the ability of the applying authority to carry its 
share ; and, second, its ability to maintain and operate, after construc- 
tion, in good faith, the project itself. That, gentlemen, should be 
done without delay. 

I am quite certain that when General Fleming makes his report to 
your committee, you will find that 96 percent of your States and coun- 
ties and municipalities know what they want but have not the means 
to prepare the necessary construction plans. That means that if it 
is delayed, and later Congress appropriates funds for grants, it will 
take, as I said before, from 12 to 18 months to get started. That is 
too long. 

I started out in the latter part of 1941 preparing for this postwar 
program. New York City, as you know, is governed by a board of esti- 
mate, consisting of elected officials : The mayor, comptroller, the pres- 
ident of the council, and five borough presidents. The board of 
estimate approved the program which included more projects in cap- 
ital outlay budget ; and each year apropriated money for the prepara- 
tion of these plans. 

Our present postwar public works building program as of today, 
July 27, 1944, contemplates the program of $993,000,000. That does 
not include the programs of authorities, such as the Port Authority, 
as they have a separate program, and the Bridge Authority. 

Of this program, today, 221/2 percent of the plans are completed, 
gentlemen, and we are ready to go to work; 221/2 percent of the plans 
are over 50 percent completed ; 36 percent are under 50 percent com- 
pleted, leaving 19 percent not yet started. 

With your permission, I will file a chart showing the progress on 
these construction plans. 



1712 



POSTWAR ECONOMIC POLICY AND PLANNING 



(The chart referred to is as follows :) 



Chart 1. Postwar Works Pbogr.\m Summary of Planning Progress as of 

JANUAHY 1, 1944 




Estimated cost of program, $993,000,000, not including study projects for which 
estimated costs have not been determined 

Note. — This total estimated cost and groupings shown in chart have been adjusted to 
include revised estimates and new projects added to the program as of January 1, lt)44. 

Source : City of New York City Planning Commission. 

The board of estimate from time to time adds new projects to the 
postwar program, and the percentages, therefore, vary with the addi- 
tion of the total amount. That does not include housing, and to that 
you add $126,000,000, and I will give you those projects. In the 
housing program we have already acquired the land for several of the 
projects. Two of the projects were discontinued because of the war. 
We are acquiring land for the others. I want to stress that every 
project authorized was approved as a necessary, desirable public 
improvement. 

Now, this is our plan. We would like to get in full swing w^ithin 
a few months after the bars have been lifted on material, and when 
labor will be available. We want to work up so that at the beginning 
of the third year, we will have 200,000 men at work on the site. You 
can estimate that those 200,000 men will occupy 800,000 men back of 
the line in the production of raw material, in the manufacture of 
building material, and in transportation. We cannot proceed on this 
program on a 3-year basis or a 5-year basis. That would depend a 
gj^eat deal on the condition of the country as to labor. 

I do not say that public works is the only solution of our postwar 
economic problem. It is not. It is one of the very important factors 
in getting things going. It cannot be kept up indefinitely. Every- 
body knoAvs that. But, it plays an important part during the first few 
years. I would say that we should have at least a 5-year program. 
There are other parts of this postwar rehabilitation to which Congress 
will have to give painstaking attention, consideration, and action. 

If time will permit, I would like to discuss some of these other fac- 
tors. We have made a survey here in New York City as to what private 



POSTWAR ECONOMIC POLICY AND PLANNING 1713 

industry and business plan to do. We have covered but a small per- 
centage of industry and business, but we have included all of the 
largest concerns. It was a very thorougii survey, made by a corps of 
engineers which we borrowed from industry, under the supervision 
of the city department of commerce. 

There, too, we did not register any projects unless the corporation 
was sure that it was part of its expansion, extension, deferred main- 
tenance, or new activity. That shows that in our city $15300,000,000 
will be spent in postwar programs of private industry and business. I 
do not want to venture a guess as to how much that would be increased 
if we had surveyed evei-y industry and business concern in this city. 
Now, in the projects in complete state of plan preparation, accord- 
ing to the definition of the Federal Works Agency, I am able to report 
on highways, roads, streets, bridges, viaducts, and grade separations, 
airport terminals, sewer, water and sanitation facilities, schools and 
other educational facilities, hospitals, and health facilities, public 
buldings other than those mentioned, parks and other recreational 
facilities, miscellaneous public facilities — 215 projects, completed 
plan preparation totaling $196,000,442, exclusive of land. The land 
values total $21,000,000. I have inserted the break-down of each of 
these so that vou will know exactly how much there is in each category, 
exhibit No. 3^ p. 2048.) 

I want to point out that we have not included in this No. 1 all of the 
new airports, because $11,000,000 has already been spent or appro- 
priated. We do not go into postwar at all. And $50,000,000 more 
in that airport is included in this other category of the Federal Works 
Agencies because the plans are not completed. 

For projects in design stage of plan preparation, the same break- 
down is $213,000,932, exclusive of land. 

Projects in preliminary stage of plan preparation — that was the 
third that I gave you from the chart of the progress of our plan 
preparation — the same list of public works is $310,275,000, exclusive 
of land. 

Projects in the idea stage — you are going to find a great deal of that 
throughout the country, but we have the authorization for the appro- 
priations for the preparation of these plans. It is more than authori- 
zation now. In a sense, it is actual appropriation, which amounts to 
$117,216,000. 

The total number of projects is: 215, 136, 111, and 165, totaling 627 
projects. 

In housing, we have Amsterdam Lillian Wald, Jacob Riis, Browns- 
ville, Morrisania, Abraham Lincoln, INIarcy (combined), Gowanus 
(combined), James Weldon Johnson, St. Mary's, Astoria, and Gover- 
nor Smitli — authority for which finances have already been arranged. 
That is $126,000,000. 

Now, in the totals that I gave you, we did not include the Federal- 
State highway. State parkway program, city and State matched- 
money program — and there are 1,500 of those — sewers, sewer connec- 
tions and streets. Federal grade-crossing program. State grade-cross- 
ing program, and the wliolesale produce terminal market. 

The Federal-State highways totaled $93,000,000. The State park- 
ways totaled $8,818,000. The city-State matched money totaled $69,- 
000,000. The Federal grade crossing totaled $2,500,000. The State 
grade crossing totaled $9,000,000. And the wholesale produce termi- 



1714 POSTWAR ECONOMIC POLICY AND PLANNING 

nal market totaled $20,000,000. That, I think, should be financed by 
the city, State, and Federal Governments, It is a vast terminal mar- 
ket. We hope we will reduce the cost of handling produce at least 25 
to 30 percent. We are working on the preliminary plans now. The 
board of estimate has appropriated money for that. It wdll require 
the demolition of some 20 blocks of existing run-down property. That 
is a $20,000,000 project. The United States Department of Agriculture 
has been working with us in the study and is very deeply interested in 
its development. 

Now, gentlemen, we are progressing every day, and more of these 
construction plans will be completed. 

If the war blows up in Germany — as some of us think it will, and as 
all of us hope it will — we are ready to go with $223,000,000 at the drop 
of the hat. But you have to give us some money. We have invested in 
our hopes that Congress will recognize the necessity of this vast public- 
works program. 

I want to repeat that without any delay at all Congress should give 
appropriations for plans, and also state its policy as to grants. That 
W'ill enable States, counties, and municipalities to see what they can 
do, knowing how much in grants they will receive. 

I would appropriate for the first year immediately following the 
end of the war a 20 days' cost of the war, and I would double that 
for the second year. I am speaking now of the cost of Federal, State, 
and municipality public- works programs, and a 5 -year program of at 
least $40,000,000,000. It w^ill help considerably, and it may do the 
trick. 

Gentlemen, if we do not do that, then I predict now we will spend 
more money and get less for it, as we did with WPA. 

Now, I have a great deal to show in this town for WPA. I would 
say it would save the country. It provided help to millions of Ameri- 
can families when there was no other help in sight at all. 

If you came to New York by air, you undoubtedly saw our airport, 
which is a monument to the WPA. We put $18,000,000 into it. It 
was WPA labor. 

I will take you all through this town and show you permanent monu- 
ments to the industry of the unemployed people of this city during that 
unhappy era. It was costly. It was inefficient and it did not solve 
any problem permanently, but it was the only remedy we had at that 
time to save the country. 

That is why I want to stress that if this public-works program is 
provided for in time, the country will get its value for every penny. 
It will give us that necessary push to get things going on a peacetime 
basis. 

If Congress does not do that in time, it will have to make huge appro- 
priations to take care of millions of people who will be out of work. 

Now, to give you an idea of what this program means, not only to us 
locally, but to industry, if a program benefited only the locality, then 
it would be difficult to make a case. 

I need not tell you gentlemen that we are not a heavy industry 
city here, nor do we have any of the natural resources that go into 
the material that is needed for public works. 

The program would require 081,500 tons of structural steel, 1G3,- 
625,000 square feet of rough and finishel lumber, G7,000 cubic yards 



POSTWAR ECONOMIC POLICY AND PLANNING 1715 

of stone" masonry, 3,948,000 cubic feet of cut stone, 787,500 square 
yards of block pavement, 4,437,500 square yards of concrete pave- 
ment, 5,000,000 square yards of asphalt pavement, 3,975,000 square 
yards of bituminous pavement, GG,900 tons of cast-iron piping, (5^,700 
tons of wrought iron and steel pipe and fittings, 2,702,000 feet of 
vitrified pipe, 777,000 feet of precast concrete pipe, 19,775,000 feet of 
timber piles, 170,800 tons of steel piling, 15,225,000 barrels of cement, 
5,702,000 square feet of windows — frames, sash, and glass, 103,000 units 
of doors and bucks, 2,025,000 pounds of finished hardware, 11,498,000 
cubic 3^ards of stone — broken and riprap, and so forth, 5,880,000 cubic 
yards of sand, 4,130,000 cubic yards of topsoil, 340,900 tons of reinforc- 
ing steel, 344,750,000 brick, 42,525,000 square feet of tile, 25,025,000 
square feet of flooring, terrazo, asphalt, tile, and so forth. 

Those are some of the chief materials thut go into building construc- 
tion and come from all parts of the country. Every State which you 
gentlemen represent produces part of that material. That is why this 
vast, huge public-works program — Federal, State, and municipal — 
is an influential factor in bringing about reconversion of our country 
to a peacetime economy. 

At a later date, gentlemen, I would like to appear again before this 
committee, not in my capacity as mayor of New York City, but as 
president of the United States Conference of Mayors, to present 
the views of the communities that will not have had the opportunity 
of testfiying. 

I can readily understand that this committee could not hear every 
city in the country ; but, we will try to prepare for you a summary of 
the requirements of the 200 largest cities in the country, and I would 
like to present that. 

Congressman Fisii. Mr. Mayor, you say that is limited to 200 of the 
largest cities. Does that include the recjuirements and needs of the 
smaller cities? 

Mayor LaGuardia. No. We do not cover that. But, we are in a 
position to take all cities of over 30,000. 

The Chairiman. We would be very glad, Mr. Mayor, to have you 
appear again before the committee and submit any further informa- 
tion that you desire. 

Mayor LaGuardia. Now, gentlemen, I stated that public works was 
just one of the factors that enter into this postwar planning, and just 
one of the problems that Congress will have to consider. 

I strongly recommend the study by Congress of uniformity in all 
labor laws, wage and hour, in order that we prevent dislocation of 
population. 

Before we entered the war, but after the first mobilization, when 
it was apparent that we would get into the war, I recommended two 
things in connection with war production : ( 1 ) An additional set- 
aside of pay, over and above the unemployment insurance, to take 
cai-e of this period of unemployment; (2) and all overtime would be 
paid in deferred certificates, commencing at a definite period after the 
war ended. 

That was intended to help curb inflation, and would have been a 
sort of a saving up of extra labor. 

I am afraid it is too late now to think about that. But we should 
have uniform unemployment insurance in all the States of the country, 
and uniform working conditions as to hours. 



1716 POSTWAR ECONOMIC POLICY AND PLANNING 

If we should g;et into a period of unemployment, which we all pray 
we will not, then, gentlemen, unless we have uniform relief, there are 
two or three places in this country that will be so congested with the 
unemj^loyed as to create a most dangerous condition — and New York 
City is one of them. 

We cannot be prosperous in a city unless agriculture is prosperous. 
While there will be a great demand for everything that we can pro- 
duce, I would say, for nearly a year following the war, after that 
there will be a sudden drop, as occupied and enemy countries start 
production. We must avoid a let down such as we had after the last 
war. I was a Member of the House then. 

I hope to see the pooling of all agricultural services. Through the 
medium of an import-export corporation, we can exchange surpluses 
w^ith native products of countries which are in need of them in order 
to maintain a necessary balance of trade. 

Congressman Fisii. Mr. Mayor, coming from a farm district, could 
you amplify a little on that? 

Mayor LaGuardia. Yes. I do not think your district produces any 
of these surpluses that would enter into a world surplus mai'ket. 

Congressman Fish. What about milk products, or apples? 

Mayor LaGuardia. I was going to say apples. But I think we can. 

Congressman Fish. Of course, we have a few onions, too. 

Mayor LaGuardia. We can eat those, too. 

The Chairman. I would like to call the attention of the gentleman 
from New York that, after all, this is a Subcommittee on Public Works. 

Mayor LaGuardia. On public works? 

Congressman Fish. I knew that. 

The Chairman. And not on onions. 

Congressman Fisii. I have to apologize, then. It is all right with 
me because I am on the Subcommittee on Agriculture, too. 

Mayor LaGuardia. I apologize. 

The Chairman. Not at all, Mr. Mayor. We would like to get your 
opinion, in any event. Other committees are going to call upon you. 

Mayor LaGuardia. Then, may I just strike that out? 

Congressman Fish. I will call you before the Subcommittee on Agri- 
culture, if I have my way with the subcommittee. 

Mayor LaGuardia. I thought it was all postwar planning. 

The Chairman. This is just a Subcommittee on Public Works. 

Mayor LaGuardia. Then, I am open to questions. 

The Chairman. Mr. Mayor, we certainly appreciate the statement 
that you have made here this morning. It shows that New York is 
far in the forefront, that is. New York City, insofar as postwar plan- 
ning is concerned. 

It has been the experience of our committee thus far that postwar 
planning, insofar as public works is concerned, is probably the most 
nebulous of all postwar planning to date ; that most States and munici- 
palities have things in mind but not down in blueprint and nothing 
on the shelf. 

Therefore, it gives us a great deal of encouragement to know that 
New York is so far advanced. 

I shall not take very much time, myself, to ask questions because 
I feel that perhaps I might call upon you at City Hall sometime when 
I am in New York and will get the benefit of your suggestions. I 
would like to have my colleagues ask further questions. 



POSTWAR ECONOMIC POLICY AND PLANNING 1717 

However, I am interested in your statement with respect to the aid 
that the Federal Government should, in your opinion, give to the 
States and municipalities. I have introduced a bill now before the 
Ways and Means Committee which provides aid for comprehensive 
postwar planning, and also provides, in its second title, aid for specific 
projects. 

ISow, in your opinion, is the time past when comprehensive post- 
war planning could be undertaken, or do you think that the crisis 
is now so near that comprehensive planning would take too long, and 
that specific projects would be the order of the day? 

Mayor LaGuardia. Comprehensive planning is always desirable. 
But, it does not get you anywhere today. 

Now you will remember, Mr. Chairman, that the President ap- 
pointed a committee with Mr. Delano as chairman. I do not recall 
the name of it. 

The Chairman. It is the National Resources Planning Board. 
Mayor LaGuaedia, That is right. With the best of iniention, and 
a great deal of earnestness and sincerity and industry, they embarked 
upon just such a program of comprehensive planning. Congress 
wanted something definite — with the result that their appropriation 
was just cut out, if I remember correctly. 

Now, comprehensive planning is one of the most interesting things 
that people who have a great deal of time, can indulge in. Really, 
it just brings one back to boyhood days vv-hen we played with blocks. 
I built the most perfect cities out of Arizona sand when I was a 
little boy. 

But it is always nice to take a table about this size, and you say, 
"Oh, look at Broadway — it is all crooked. Tear it down. Make it 
this way." 

Then you will say, "There is Gramercy Park. I don't like that. 
We don't like that. We will twist that around and tear all these 
buildings down," Then we put a school here, and we will put a park 
there. You get the most beautifid pictures, gentlemen, but you just 
cannot take a city and remake it that way. What we do is to feel 
our way. 

We have a master plan that is under constant study for modifica- 
tion, and in this country we just cannot rub out property unless we 
pay for it. You get these comprehensive studies, gentlemen, and 
you get the most beautiful pictures, the most perfect lay-out, and 
there you stop. 

The Chairman. My idea, when I said "comprehensive plan," was 
somewhat in line with your master plan. It seems that some of 
the best authorities feel that before the Federal Government goes 
in and aids in these public works there should be some master plan 
for the community, ratlier than that there should be picked out a 
post office here, or a police station there — just for the sake of erecting 
buildings. 

Mayor LaGuardia. Well, I think that such a plan would be very 
helpful if Congress intends to provide aid to the grandchildren of 
these veterans when they have become unemployed. You won't get 
anywhere. 
Are you going to have Commissioner Moses here ? 
The Chairman. We expect to have him here tomorrow. That is 
why I am asking you these questions today. 



1718 POSTWAR ECONOMIC POLICY AND PLANNING 

Mayor LaGuardia. Suppose you ask liim about that. Now, gentle- 
men, seriously, if you are going to build, don't wait for that. We 
have lost 2 precious years on that. What is needed each community 
knows best, and if it has to appropriate 50 percent of the cost of a 
project, you can rest assured the community is not going to throw that 
money away. You will get good projects because of the communities' 
investment and interest, and because of the scrutiny of the Federal 
Works Agency, and the mandate of Congress. 

The Chairman. Is it your opinion, Mr. Mayor, that Congress should 
adopt a policy with respect to a possible financial aid in construction? 

Mayor LaGuardia. Absolutely. 

The Chairman. That is, at this time? 

Mayor LaGuardia. The community should know so that it can plan. 
For instance, if you say, "We will give you now 75 percent of the cost 
of the preparation of the construction plan of any approved project, 
without any commitment now, but, if we do embark upon a policy of 
aid and grants, we will give you 50 percent of the approved cost of the 
project." Then each community can go out and plan according to its 
own resources. 

The Chairman. Would you have those grants go through the munic- 
ipalities or right out through the Federal Works Agency or some 
other governmental agency? 

Mayor LaGuardia. Well, speaking for myself and 99.99 percent 
of the mayors, I would have it come direct. It is easier to exchange 
prisoners of war with an enemy country than to get anything out — 
well, what is the use of talking. 

The Chairman. Mr. Mayor, I want to thank you for the answers you 
have given, and I am going to ask the chairman of our full committee, 
to take over. 

Congressman Colmer. Mr. Mayor, I would like first to add my com- 
mendation to your splendid statement and the progress that you have 
made in this great metropolitan center in making plans for public 
works in the postwar era. I was particularly impressed with your 
statement in answering Congressman Lynch's question that we ought 
to know in advance what the Federal distribution is going to be before 
•any plans can well be made. 

There is some thinking down in Washington on the part of some of 
the Government agencies that the Federal contribution should be con- 
fined to financing the plans. Well, I do not agree with that idea at all. 
I know, as an individual, if I were going to build a house, that I 
would first want to know where I was going to get the money for the 
construction of the building, as well as the plans. 

Now, that brings us to the question of what portion of the cost 
should be contributed by the Federal Government. What is j^our 
idea ? 

Mayor LaGuardia. Fifty percent. I would say 50 percent of the 
construction, with the community or State providing the land. So 
that would make it less than 50 percent of the actual cost. Then you 
are sure, if you are not going to have any waste. 

Congress Colmer. That is the cost of construction. Do you think 
the Federal Government should make any contribution to the plans? 

Mayor LaGuardia. I would give a little more than that, and I will 
tell you why. A great many cities — and I am talking about cities 



POSTWAR ECONOMIC POLICY AND PLANNING 1719 

now — are limited in their charter or in the State constitution to any 
appropriation for capital improvements by first obtaining the consent 
by referendum vote, and they cannot spend for bonds unless that 
project is approved in a referendum vote. 

Ill others, you will find they have not tlie available resources. I do 
believe, though, that a community, if it needed a given public improve- 
ment could get 75 percent from the Federal Government, and I think 
they could manage to borrow in the community if the community 
financed 25 percent so as to be ready to go ahead. In the meantime, 
they could have their referendum vote or the legislative sanction, or 
whatever it may need to spend money for capital improvements. 

Congressman Colmeij. Then your idea would be that the Federal 
Government would bear 50 percent of the cost of construction and 75 
percent of the cost of planning. I think that is reasonable. 
■ Maj'or LaGuakdia. Exclusive of land. 

Congressman Colmer. Exclusive of land. Now, otherwise, if the 
Federal Government were to pay the entire cost of the plan, and then 
leave the cost of construction to the various subdivisions of govern- 
ment, would we not run into the danger of having a great many plans 
mnd3 that would never get beyond the blueprint stage. 

Mayor LaGuardia. I am sure you would. You would not put any 
men to work. It is not there. 

Congressman Colmer. That is right. Now, Mr. Mayor, I have one 
other thouglit in mind. I gathered from your statement that you are 
in accord with the idea that public works is not the answer to the 
postwar problems. 

Mayor LaGuardia. Not the complete answer. 

Congressman Colmer. Not the complete answer. But, you do feel 
that we should have a shelf of public works ready to proceed when the 
economy of the country demanded it. 

In the height of the WPA, I think we had about 3,000,000 people on 
the public pay rolls on a subsistence wage. Now, the economists tell 
us we are going to have about 53,000,000 jobs in the postwar era. At 
that time, also, we had a national debt of less than $40,000,000,000. 
Now, the chances are our national debt will be around $300,000,000,000. 

So, then, to come back to this proposition, in the final analysis 
private enterprise is going to have to do the main job in this postwar 
era of furnishing jobs for our national economy. Do you agree with 
that ? 

Mayor LaGuardla.. I do. 

Congressman Colmer. You spoke of housing. You have some plans 
for housing, slum clearance and so forth. What is your idea about the 
Federal Government's contribution to the cities for that? Wliat 
would you expect in the way of contribution from the Federal Gov- 
ernment; what percentage? 

Mayor Laguaedia. That percentage necessary to permit the opera- 
tion of the unit at a rate that will give sanitary, cheerful shelter to 
a group of wage earners v^dio could not otherwise afford to get the 
right kind of dwelling. New York City's cost for land is out of pro- 
portion to most communities. Say an apartment house would have 
to rent a room for $14 a month, and the Federal Government deter- 
mines that $6 a month is the amount that a certain wage group can 



1720 POSTWAR ECONOMIC POLICY AND PLANNING 

afford to pay. Then, the difference between 6 and 14 would have to 
be absorbed in subsidy. 

Congressman Colmer. Gentlemen, I would just like to make this 
observation in conclusion. I would just like to compliment you, sir. 
as chairman of tliis Subcommittee on Public Works for your industry 
and for your pioneering spirit in this matter. 

So far as I know, I think you are the first member of the House who 
introduced a bill to look after the postwar public works program. I 
am sure that the whole country is indebted to you for the splendid job 
you are doing in that capacity; and we are very happy to meet with 
you today and to collaborate with you in the conduct of these hearings. 
The Chairman. I appreciate very much your kind words. All I 
need now is to get my bill passed. 

You niay proceed, Congressman Fish. 

Congressman Fish. Mr. Mayor, I want to join in complimenting you 
on your constructive suggestions and on the able way you have pre- 
sented them before the committee. In my humble opinion, the most 
critical and most difficult problem with which America is faced, or will 
soon be faced, is finding jobs for 11,000,000 returning soldiers, and some 
11,000,000 others wdio wall be demobilized in our war industries. 

I assume, like every other American, that we are on the march to 
victory; we will hope the war will be won in the near future; and 
that the peace will be solved. But these questions which affect Amer- 
ica alone, are so critical and so difficult that I don't even believe the 
mayor and this committee can solve half of them, or begin to solve 
more than half of them. 

You mentioned a question of unemployment insurance; having a 
uniform unemployment insurance. Would you like to elaborate on 
that? 

Mayor LaGuardia, Well, I don't want to encroach on the time of the 
committee. 

The Chairman. Why not hold that up ? 
Congressman Fish. There is another committee. 
Mayor LaGuardia. I would like to come before that committee. 
Congressman Fish. So far as New York City is concerned, are you 
interested, as we are, in the counties adjoining New York in establish- 
ing a large trunk line and roads that will lead from New York City 
out to the northern and western parts of the State? Is that in your 
program ? 

Mayor LaGuardia. Yes. And for the first time cities are getting 
a break in the recognition that a road can't stop at a city limit. We 
are working very closely with the State department of public works 
on that. 

Congressman Fish. You have a great many bottlenecks and it will 
be increasingly difficult, as the population increases, getting in and 
out of New York. 

Mayor LaGuardia. The bottlenecks do not happen until you get 
into New York. Our parkway system in Long Island and West- 
chester County is very efficient, and with the highw^ays now author- 
ized, on which we are working, that part will be all right. Our 
trouble is in Manhattan and some parts of Brooklyn. 

Congressman Fish. There are trunk lines on the west side of the 
river, but in the Eockland County area, that enormous part of the 



POSTWAR ECONOMIC POLICY AND PLANNING 1721 

State, I think there is room for big improvement. I think the mayor 
will agree with me there. 

Mayor LaGuaedia. We have the George Washington Bridge and 
we have the Holland tunnel and the Lincoln tnnnel. 

Congressman Fisii. I meant with roads which connect np with those, 
on the other side of the river, over the Palisades Park, and through 
Rockland County. 

Mayor LaGuakdia. You will find quite an elaborate program and 
we have an interlocking directorate on that. Mr. Moses is on some 
of the State commissions, as well as being the commissioner of parks, 
and he is my personal representative in the State for city planning. 
He will give you all of that information. It is quite an ambitious 
program. 

Congressman Fish. Then, as I understand it, you are recommending 
that the Government contribute approximately 50 percent of the cost 
of public works for the city of New York, and the same, I assume, for 
other cities. It is a universal proposal to apply to small and large 
cities on all public works. 

Well, that is all I have to ask. 

The Chairman. Congi-essman Reece, of Tennessee. 

Congressman Reece. Mr. Chairman, I first want to join in making 
the expression of apj^robation with reference to the mayor unanimous. 
It is very encouraging that, under his direction, the city has pi"o- 
gressed so far in a definite way in making plans. 

I believe from your figures, your postwar public works program, 
including the public housing program, calls for something over a 
billion dollars. How does that compare in size with the postdepression 
public improvements, in a general way? 

Mayor LaGuardia. I think, about five times as great. You mean 
the last depression? Yes. You see, the Federal Government helped 
a lot. It put in $54,000,000 in the Tri-Borough Bridge alone. And 
then out of that refinancing, we built the Whitestone Bridge, and 
built the Henry Hudson, and the Marine Park. 

I think on the schools, hospitals, highways, and both the east and 
west side drives, excluding the bridges, we spent about $4:00-,000,000. 
That is a rough guess. Now, that is permanent. That was out of 

invA. 

Congressman Reece. However, the WPA here contributed very 
greatly to the program which you now have included in the Public 
Works program. 

Mayor LaGuardia. It is very costly. You do not get the produc- 
tion. You do not get the efficiency. These men are not working only 
on a subsistence level, and then in WPA, of course, we had to take into 
consideration the need. I have in storage any amount of paintings 
and poetry and essays. It does not show, but those people had to eat, 
you know. There were a lot of scientific studies, too. 

Congi-essman Reece. You referred to the city's inability to finance 
the public-works program. Down my way, we' look upon New York 
City as being possibly one of the more substantial, if not the most 
substantial, among our industrial and financial communities. 

The Federal Government is made up of New York City and numer- 
ous lesser cities and rural communities. If New York City is unable 
to finance its public-building program, how is the Federal Govern- 

99579 — 45 — pt. 6 2 



1722 POSTWAR ECONOMIC POLICY AND PLANNING 

ment able to finance, that is, contribute substantially to the financing 
of this city's building program, together with all of the other building 
programs, in view of the conditions which will obtain after the war 
is over ? 

Mayor LaGuardia. In the first place, because of its responsibility 
for the welfare and health of the people of the country. We have 
already learned that if we do not approach it constructively after de- 
liberate study, then we have to snap into hasty legislation and enor- 
mous appropriations for relief. That is the purpose of a vast public- 
vs^orks program, which is to stimulate heavy industry and transporta- 
tion and provide employment in a period where employment other- 
wise would not exist. Therefore, it is the whole countiy^that benefits. 
_ x\nd, as you pointed out, consider the New York City administra- 
tion. None of the material is made here. You are going into the 
mines of Minnesota, to plants in Pennsylvania, and into forests out 
in the Northwest. Materials come from the entire country. 

Then, the people in the city have something to buy food with, 
and they are able to buy that which the rural districts have produced.' 
It is an artificial stimulant, if you please, that benefits the entire 
country. 

If it were only one building in New York, or one building in Nash- 
ville—then I agree with you. The Federal Governm.ent has no con- 
cern in subsidizing that building. But when this work is going on 
all over the country at the same time, drawing this material and'get- 
ting the industries and plants moving, then of course it is something 
that benefits the entire country. 

You might ask why do we have to appropriate to defend our coast. 
The people in Kansas have no concern if the coast is attacked. The 
answer is a matter of national defense, and it is a matter of national 
existence. 

Congressman Keece. My question was not directed to the question 
of the advisability or, rather, the desirability of the public building 
program. I think it is a highly desirable program, but I question only 
the method of financing it. 

Mayor LaGuakdia. You see, it could not be done on a scale to create 
that impact unless there is Federal aid. 

Congressman Reese. How much money has New York City set aside 
for postwar planning and building, or has it set aside any for that 
purpose ? 

Mayor LaGuardia. We cannot set it aside because we are not fi- 
nanced that way. We have a debt limit, as you know. We are per- 
mitted to invest in permanent iinprovements that we call capital outlay, 
U}) to the borrowing capacity of that j^ear. We have alreadv appro- 
priated $30,000,000. They are spending that for the plans, "in view 
of the debt limit, say, at the end of the war, we may have a borrowing 
capacity of from $200,000,000 to $250,000,000. 

Now, if we spend that all in 1 year, why, it is all gone. It is self- 
evident that you could not finance your building program in 1 year. 
Therefore, we cannot encumber more than what the total cost of the 
projects in construction amount to. In other words, I could not spend 
the whole $200,000,000 in 1 year unless I could complete the program 
in that year. Therefore, it boils itself down into a program, a nol^mal 
program that I don't think would be felt. That is true of every other 
city m the country. 



POSTWAR ECONOMIC POLICY AND PLANNING 1723 

Congressman Reece. That is all I have. 

The Chairman. Congressman Wolcott, ot Michigan. 

Congressman Wolcott. Mr. Mayor, it was a pleasure for all ot us 
to be up here, and so be a little closer to the held. 

Do you know what part of the $50,000,000 which we made available 
last year for planning on highway construction has been used i 

Mayor LaGuardia. Yes. Some of the items that I read came out 
of there. It is that $96,000,000 item. That comes through the btate, 
and Mr. Moses will give you the complete figures on that. 

Congressman Wolcott. Will he give us an approximation ot how 
much of the State's allocation has been used? 

Mayor LaGuardia. Yes. ■ 

Cono-ressman W^olcott. We have had frequently called to our atten- 
tion the fact that when the Federal Government deals directly with the 
city, there is a question of State sovereignty involved. Do you want to 

comment on that ? i i x ^i j. 

]\Iayor LaGuardia. Well, I don't worry very much about that. 

Congressman Wolcott. I suppose you have at your right hand 
sever af outstanding economists. 

Mayor LaGuardia. Just as good as the rest ot the economists, i 

would say. ^ • , , n ^i ^ 4^1 

Congressman Wolcott. Well, the economists tell us that there is 
some relationship between the production of durable goods and na- 
tional income. Have you predicated your case primarily upon the 
necessity for spending money for the durable goods industries to main- 
tain a stable, adequate national income? That is the theory, as I un- 
derstand it behind all public construction. ,..,-, 

Mayor LaGuardia. Yes. And that is why it is a limited program 
for a given number of years in order not only to get the durable goods, 
but to o-ive the people 'an opportunity to get the consumer goods that 
they must have to live. You couldn't justify it as a permanent pro- 
gram. I would put it down as part of the war costs. 

Congressman Wolcott. Well, there is a school of thought that 
recommends the expenditure of, I think it is, 16 percent of the whole, 
to illustrate, if we want to maintain a national income of $100,000,- 
000,000 we should spend 16 billion for durable goods, and it will follow, 
ipso facto, if we do that, that what we spend for durable goods will be 
16 percent of the total national income. . 

Mayor LaGuardia. Well, now, I. was pretty conservative when 1 
said $40,000,000,000 in 5 years. ,. , ,, , v. 

Congressman Wolcott. Of course, this durable goods expenditure 
is both private and public. _ . , , . .i 

Mayor LaGuardia. Well, then, I guess that is about right lor the 

first 5 years. • ^ ^ ^t -j 

Congressman Wolcott. I wonder if you share with them the idea 
that if we set out to maintain a national income of, to make it easy 
figuring, 100 billion, we should have a shelf of Federal, State, and 
municipal projects sufficient to fill up the difference between what 
private industry is contributing and the 16 percent. 

Mayor LaGuardia. That is why I stressed the bigger appropria- 
tions for the first 3 years. 

I think, also, gentlemen, that the entire program ought to be classi- 
fied so that if an unexpected spurt on the part of private industry 



1724 POSTWAR ECONOMIC POLICY AND PLANNING 

should come up, we can control the public-works program accordingly. 
I think everybody agrees with that. 

Congressman Wolcott. I think it vx^ould be helpful 'if you talk with 
your economists and determine if they accepted that theory as an eco- 
nomic truism ; and, if so, it will be helpful if your part of the pro- 
gram could be p' edicated upon that, because there is some question 
amongst economists as to whether national income follows expendi- 
tures for productive goods, or whether the productive goods follows 
the expenditures for consumer goods— whether the hen or the e^yo- came 
first. *=^ 

Mayor LaGuardia. Well, I would say that this 5-year period fol- 
lowmg the war would be an abnormal period; and no accepted rule of 
economy will apply any more than it will apply in war. There is not 
an economist in the world who can tell you that you can finance a war 
under any sound basis. He will concede that it is destructive, that it is 
costly, that it is wasteful, and that you could not continue a country 
very long under constant war conditions. 

Therefore, any rule or any school of economic thought that fixes a 
given percentage on durable goods to producers or consumer goods 
would not be applicable, because this is an emergency with abnormal 
conditions greatly aggravated by the war. You have to go through 
this period as one of the costs of the war in order to get things started. 
And even then, I think the program is modest. Whether it will do the 
trick or not, I do not know. 

Congressman Wolcott. Then, what the objective should be is to 
utilize our resources, those which are available to the Government, and 
to stabilize our postwar economies. 
Mayord LaGuardia. That is the objective. 
Congressman Wolcott. That is all I have. 

The Chairman. Mr. Mayor, I have just one further question. The 
consensus of opinion seems to be that for a period of 1 year after the 
war, there will be sufficient repair and maintenance work to take up 
the ordinary slack in the building construction line. Then after that 
first year, will be the time when the heavy construction should probably 
commence. Do you agree with that ? 

Mayor LaGuardia. No. It will take 6 months to get started, at 
best ; and the period for deferred maintenance, you will find, will be 
short since we will not be able to get the material. Take wiring, for 
instance. That is a big part of your deferred maintenance cost! It 
will take some time before they will be able to get that. I think we 
ought to get into full swing in 6 months. 
The Chairman. That is, on the heavy construction ? 
Mayor LaGuardia. I do think so. 

The Chairman. Let me ask you this : There will be a great shortage 
of construction, insofar as private industry is concerned after this 
war; and if the Federal Government, the States, and municipalities 
start in to compete immediately with private industry both for mate- 
rials and for manpower in the construction industry, will that have, 
in your opinion, any inflationary trend that might be rather danger- 
ous at that time ? 

Mayor LaGuardia. I hope that M^e will have that problem to solve. 
That will be fine. Because this public-works program has to be regu- 
lated and controlled in keeping with the activities in private industry 
and business. 



POSTWAR ECONOMIC POLICY AND PLANNING 1725 

The Chairman. That is what I have in mind. 

Mayor LaGuardia. In other words, if w^e get to a state where there 
is competition for labor or material, which influences the prices, then 
we will have to retard. Public works gives way to the other. 

The Chairman. Well, noAv, suppose this situation were to arise. 
Suppose here in New York we were in that position, and out in San 
Francisco the opposite was true. Would you, in your opinion, feel 
that the Federal Government then should give aid only to San Fran- 
cisco in order to take up their slack of unemployment ? It is a prac- 
tical proposition. . 

Mayor LaGuardia. Oh, yes. Necessarily, we will have a shrftmg, 
not as much and as violent as we have had during the war. But, I 
just dread thinking what is going to happen here when all our people 
come back. We have a lot of our skilled mechanics out on the coast, 
and scattered all over this country. We have a lot of our building 
trades employees working all over the country. There will be three 
or four spots like that. Detroit will have a problem, if 50 percent of 
the war workers who went there remain. The problem is far reach- 
ing. 

The Chairman. I quite agree wnth you. 

Congressman Fish. I just want to follow that up just to make clear 
in my own mind. 

As I understand it, you are perfectly willing to give priority to 
private enterprise over public works. 

Mayor LaGuardia. Yes. 

Congressman Fish. And regulate the public works on the basis of 
the needs at that time. If there is great employment of labor, we 
don't want to rush the public-works program. 

Mayor LaGuardia. You will find universal agreement on that. 

The Chairman. Well, again, we wish to thank you, Mr. Mayor, for 
your kindness in coming here. 

The Chairman. We will now call upon Mr. James J. Lyons. 

For the benefit of the committee, I desire to say that Mr. Lyons 
is the president of the borough in which I live and which I represent. 
As you heard the mayor say, w-e have five boroughs in New York City. 
Of course, I cannot help but agree that the Bronx is the greatest 
borough of them all. 

Congressman Keece. We would like to agree with the mayor that 
they dfd a very excellent job when they sent you down to Washington. 

The Chairman. Thank you very much. 

Congressman Colmer. Mr. Chairman, since we are going into that, 
I should like to echo that sentiment, and also to commend this good 
Republican for feeling that way about it. 

May the record show that both Democrats and Eepublicans on the 
committee are in accord? 

The Chairman. It is a nonpartisan committee. 

Mr. Lyons, for the record, will you please state your name and 
your official capacity? 

STATEMENT OF JAMES J. LYONS, PRESIDENT, BOROUGH OF THE 

BRONX 

Mr. Lyons. My name is James J. Lyons. I am president of the 
Borough of the Bronx. Now, I do not have to tell you what tlie 



1726 POSTWAR ECONOMIC POLICY AND PLANNING 

Bronx is, now that your able chairman has told you that he also hails 
from that great borough. 

Of course, some of you may have read in tliis morning's paper 
that the Queen of England, visiting one of the hospitals, inquired 
of a lieutenant in the Army as to how he felt, and then where he was 
from, and he responded that he was from the Bronx. The Queen 
wanted to know just where the Bronx was. She said that she knew 
it was a part of the city of New York. And the boy did his best. 
He could only tell her where it was, but he could not tell her where 
the name came from. 

So, for the enlightenment of the committee, the Bronx is named 
after Jonas Bronck, who settled there in the early 1700's and who 
came from Holland, but there is some question as to whether he is a 
Dutchman or Scandinavian. 

The Chairman. The gentleman from Michigan says that the year 
is 1652. 

_Mr. Lyons. I see that the gentleman from Michigan knows his 
history. It is too bad that he was not the one to respond to the 
inquiry from the Queen. 

One of the questions asked the mayor was whether you thought 
that in connection with grants of money, the Federal Government 
should deal direct with the cities, and his response was "With the 
cities." Now, I am not going to supplement that by saying that I 
think you should do business direct with the boroughs. I am satis- 
fied to clear through the city of New York. 

We have a nonpartisan and nonpolitical administration here in 
the city. I have been the Democratic member and a minority mem- 
ber of this reform administration since its inception. I have dis- 
agreed frequently and very loudly with his honor, the mayor. But 
notwithstanding that, my voting record shows that I cooperated with 
him 99 percent of the time. 

Now, I hold tliat out to some of the Kepublican Members of Con- 
gress as to whether they can say that they cooperated to the same 
extent with our great Democratic President. 

The Chairman. Of course, we are concerned now with the subject 
of public works. 

Mr. Lyons. I cite that simply as a basis for saying that although 
I supported the mayor 99 percent of the time in the past, I endorse 
entirely and 100 percent what he said to you gentlemen here this 
morning. 

Although politically a part of the city of New York, the Bronx is, 
in itself, a county and borough of more than 1,500,000 people. Its 
needs and its problems are similar to those of cities of comparable 
size, such as Detroit and Los Angeles. 

As the gateway through whicli passes the traffic and commerce of 
New York destined for New England and points northwest and west, 
includino; Canada, its needs, especially in the matter of adequate 
transportation facilities, are particularly critical. 

In an effort to meet these needs, and in so doing provide against 
postwar unemployment, the Bronx, acting through the city of New 
York, has prepared an extensive program which is presently in various 
stages of planning and which is being pressed to the completion of 
plans, specifications, and other essential instruments. 



POSTWAR ECONOMIC POLICY AND PLANNING 1727 

Exclusive of transportation, water supply, and quasi-public pro- 
posals, more than $200,000,000 is involved in the progi'am presently 
being planned for the Borough of the Bronx. Approximately one- 
half ''of this program is being developed under the direction of the 
president of the Borough of the Bronx. 

In addition to the projects actually being processed, the otlice ot the 
president of the Bronx has been, and is, studying numerous future 
improvements, aggregating even greater expenditures, the execution 
of which will require the approval of other city officials and agencies 
and in some instances, quasi-public and private institutions and organ- 
izations The justification of this latter planning is to be found m 
the fact that the development of projects and improvements under 
the direct supervision of the borough president involves many appar- 
ently extraneous factors, envisions both public and private considera- 
tions, and requires a comprehensive approach to the development ot 
the community as a whole. 

Highways, parkways, sewerage and sewerage disposal, water supply,, 
housing, hospitals, health centers, schools, libraries, parks, recrea- 
tional areas, police and fire structures, correctional building, trans- 
portation, and various other improvements are included in those proj- 
ects for which final plans are progressing toward completion. 

A Bronx civic center, a Bronx airport, Bronx helicopter landing 
fields shore-front improvements of the Harlem and Bronx Rivers, as 
well as Westchester and Eastchester Creeks, local community centers, 
shopping and theatrical districts, industrial areas, parking facilities, 
conversion of depreciated areas into boulevard and new housing sites, 
railroad, water-front and air-terminal facilities, together with rezon- 
ino- of the entire borough, are some of the items which, althougli not 
yet advanced to the stage of definite planning, are nonetheless receiv- 
ing the attention of public officials of the borough, who hope for an 
early approval when studies have been completed and their advance- 
ment justified. 

Two main considerations underlie the development of the present 
postwar program of public works for this city and borough : First, the 
immediate issue of providing against widespread unemployment, and, 
secondly, the execution of necessary public improvements, the com- 
pletion of which will provide essential services, increase property 
values, and improve the social, esthetic, and economic, as well as the 
physical, features of this great county and borough. 

With the close of hostilities will come the demobilization of mil- 
lions of men in thousands of industries. The effect of this will be felt 
in the Bronx as well as elsewhere throughout the country. 'Wliile 
every effort to make this demobilization gradual will doubtless be 
undertaken, sight must not be lost of the fact that few will choose 
to remain in the armed forces longer than the restraining hand of com- 
pulsion decrees. Public opinion and congressional action will un- 
doubtedly insist that men in the armed forces be held no longer than 
necessary, and in no event so long that civilians who have made no 
sacrifices comparable to those of the military personnel will have pos- 
sessed themselves of most of the available and attractive opportunities 
that will follow the coming of peace. 

Industries will likewise have to turn their attention to peacetime 
endeavors at the earliest opportunity. Under any circumstances, the 



1728 POSTWAR ECONOMIC POLICY AND PLANNING 

opportunity for employment must be j^rovided, and while the hope 
and prospect for private endeavor are great there Vvill unquestion- 
ably be a period between the end of the war and full industrial activity 
that cannot be overlooked. It will be the obligation of Government 
to provide the opportunity for widespread employment or else. Tliere 
is no more certain preventive than public works, where for every dollar 
spent at the site of a project two are made available to those who 
prepare and transport the essential materials and equipment. 

With adequate cooperation upon the part of Federal, State, and local 
governments, the program in the Bronx can be sufficiently developed to 
have ready, within a year to a year and a half, a reservoir of plans 
adequate to provide, through contract execution, employment for ap- 
proximately 40,000 persons for a period of 2 years. 

Plans for a considerable number of the projects listed herein are 
presently being prepared, under the direction of the office of the 
borough president, by recognized private engineering firms whos-'e 
qualifications have been approved and whose services have been con- 
tracted for. 

The line of demarcation between "necessity" and "desirability" is 
not easily defined or agreed upon. It is believed, however, that all 
the proposals herein referred to are or will be essential to the future 
growth and maintenance of the Borough of the Bronx. 

It is the hope and expectation of public officials that Federal funds 
will be forthcoming for the execution of the major portion of this 
program. An appropriation of one-quarter of that required annually 
for the conduct of the war would provide ample funds for a Nation- 
wide public-works program. There will probably be made available 
some financial assistance from the State. The remainder of the financ- 
ing will have to be borne by the city through its various forms of rais- 
ing revenue for public improvements. 

As the spokesman for the people of the Bronx, and in support of 
the plan of the mayor of the city of New York, I would add my 
earnest plea for speedy action upon the part of Congress and an early 
allocation of the funds essential to the prosecution of this most desir- 
able progi^am. 

The financial detail of these projects is included in the submissions 
made by the mayor in behalf of the city of New York. 

Private industry can do a great deal. It should ; and we all hope 
that it will. But, gentlemen, who is going to insist upon or insure 
private enterprise to a sufficient extent to meet an emergency? 

A public-works program is a definite insurance and does not require 
private approval. Its size should be such that it can be expanded or 
contracted to meet the needs of unemploj'ment. There is everj- reason 
to believe that, within 6 months of a cessation of hostilities, a public- 
works program will be imperative. It will be augmented until private 
industry provides widespread employment, and thus dispense with 
public-works contracts. Plans should be made ready without delay. 
Public works afford employment, develop wealth, provide necessary 
services and facilities, and improve the tax structure generally. The 
recommendations of this committee will vitally affect the immediate 
postwar employment situation in this Nation. 

We all recall the early days of the CWA and the PWA when we 
were faced with serious unemployment problems and were forced to 



POSTWAR ECONOMIC POLICY AND PLANNING 1729 

assign persons to unessential tasks due to the lack of a planned pro- 
gram. Few will forget the "boondoggling" and the leaf-rakiiig proj- 
ects. But these fantastic performances were absolutely unavoidable, 
as there was no "work shelf" of useful planned projects; and it was 
a vital necessity to give some sort of work to the deserving people who 
were out of employment and in need of assistance. It was humane 
and proper for Government agencies to take care of these needy per- 
sons and their families. It would have been cruel and catastrophic 
to have failed them. Our experience should caution us against any 
repetition. 

All of us are extremely proud of our brave boys in all branches of 
the service and w^e anxiously await their safe return to our homes. 
Nothing should be too good for these boys who stood ready to give 
their all to preserve for us and for future generations the choice 
legacies of the type of democratic government that we inherited from 
our forebears. We must make certain that there will be no forgotten 
veterans of this war. There must be an opportunity for all of them 
to assume a rightful place in our society and a job in keeping with 
their individual abilities and talents, 

I intend to submit to you a list of the projects that we have set up. 

The Chairman. Without objection, the list will be accepted, (See 
exhibit No. 2, p. 2054.) 

Mr. Lyons, what is the population of the Borough of the Bronx? 

Mr. Lyons. I contend that it is 1,700,000. Some might argue and 
say that it is only 1,500,000. It is a difference of opinion of ^00,000 
which is probably enough to make a substantial city. 

The Chairman, When the war is over, do you think that there will 
be sufficient construction through private enterprise to take care of 
any unemployment that may develop there ? 

Mr. Lyons. Definitely no. 

The Chairman. Mr. Colmer. 

Congressman Colmer. Mr. Lyons, thank you for a splendid state- 
ment. I am going to ask you a question that I intended to ask the 
mayor. 

Mr. Lyons. I hope I can answer it as well as he answered the ques- 
tions asked of him. 

Congressman Colmer. I will ask you, since the point was raised. 
This committee, and I think Congress and the country, generally, 
realizes the necessity for some public-works program in this postwar 
period. The thing that worries some of us is the question touched 
upon by Mr. Eeece a moment ago, about the ability of the Federal 
Government to substantially finance or to finance industry's financial 
part of this program. 

There must be a bottom to the Government's meal barrel as well 
as to the individual's. If we are going to have a $300,000,000,000 
indebtedness when this war is over, with a $7,500,000,000 carrying 
charge on it, is it not going to be a rather serious proposition for the 
Federal Government to go into a gigantic public-works program? 

I am not asking ; but rather, I am emphasizing the proposition. Of 
course, I would be glad to have any comment that you would care to 
make with reference to that. 

Mr, Lyons, I would agree with you. There must always be some 
limit considered. But I would say, would it not be much better fo 



1730 POSTWAR ECONOMIC POLICY AND PLANNING 

expend the money that we are spending today for the welfare of the 
citizens of this country? None of lis can say how long the war will 
last. If the war is to continue, it must be financed by the people of 
this country. And the time of peace and the return of these men who 
fought this war is a greater time and of greater importance to the 
well-being and the welfare of this country than the continuance of 
the war and its cost. 

None of us, no Member of Congress nor the President himself, 
can determine when the war will cease. But so long as it lasts, it 
must be financed. And I say that this period of peace, this period of 
readjustment is part of the period of the war and must be viewed in 
that category by those responsible for the conduct of the government. 

Congressman Colmer. Well, I quite agree with you, sir, that noth- 
ing is too good for these returning veterans, that jobs must be fur- 
nished for them. I quite agree with you that the postwar era is closely 
connected in a line with the war itself. But if we are going to de- 
stroy this heritage, of which you so eloquently spoke, by the destruc- 
tion of the Government's credit, and the confidence of the people in 
the Government, we will have not gained much by winning the war. 

The mayor said that the WPA had saved the country, or words to 
that effect. I am sure that there was some necessity for that. But 
isn't there also a danger of a WPA on a gigantic scale destroying the 
country ? 

Mr. Lyons. I agree with the mayor that there have been great monu- 
ments throughout the country done by WPA in the later stages when 
there was time to plan and follow through with the plans. It was 
in the early stage where there was no work shelf the things that were 
criticized arose. 

Let us assume that we are not prepared ; we have no plans ; we do 
not have a postwar program in this country; then we face the unem- 
ployment situation which calls for a return to another WPA or CWA, 
or whatever you want to call it. You have got to help these people. 
You cannot let them starve. You must keep their body and soul 
together; that is all that WPA did. They just existed. I have seen 
men out working on the road — men who were members and graduates 
of Annapolis — one a high ranking officer, who was out with a pick 
and shovel. Many had no experience in that type of work, as they 
were trained in a different direction; but they were ready to go out 
with a pick and shovel in order to bring something home to their 
families. 

I do think that if we provide with intelligent planning and with 
useful projects, we will then be prepared to avoid a repetition of that 
serious situation. 

Congressman Colmer. I think that that is a very good answer, sir. 
I certainly do not want to be put in a position here as chairman of this 
committee — I have reference to the whole committee — of being op- 
posed to these studies. I did not mean that at all. 

I rather wanted to emphasize the necessity for private enterprise 
tackling this job rather than tlie Government. 

I will go this far, sir, as I said to a group of automobile manufac- 
turers, we have got to have these jobs. They should be furnished by 
l^rivate enterprise. But we have got to have the jobs and if private 
enterprise does not furnish the jobs, the Government must. 



POSTWAR ECONOMIC POLICY AND PLANNING 1731 

Mr. Lyons. I think that is absolutely true. I think private enter- 
prise really should do the job. But you cannot force them to do it 
during that period. There must be this helpfulness. 

The Chairman. Mr. Fish. 

Congressman Fish. I want to commend you, Mr. Borough President, 
for your contribution to telling us of the needs of the Bronx, and 
particularly telling us the origin of the word Bronx. I thought that 
had something to do with the cocktail. 

I also note, so long as we are discussing the origin of words, that you 
have emphasized here the pictures which you have presented to the 
committee. I see the Putnam Express Highway, and two pictures of 
helicopter landing fields. Does that connect up with Putnam County, 
which I have the honor to represent ? 

Mr. Lyons. I think we can get there all right. We don't hit your 
county. There are a few counties in between. 

Congressman Fish. I was hopeful that you were going to start 
something. 

Mr. Lyons. You have a better chance to get there if we get that 
through, because your trouble now is to get through Westchester, along 
the river front there. 

Congressman Fish. You will have to find a way. 

Mr. Lyons. We will get up to your territory if you will give us 
that project. 

Congressman Fish. I was also interested in the picture of the pro- 
posed landing fields for helicopters. You are going to have all of 
them up there ? 

Mr. Lyons. There may be a need for more if they make the progress 
that is expected. 

Congressman Fish. It is very interesting. I have often wondered 
why we have not made more progress. But why would you need four 
landing fields in the Bronx? Wliy couldn't you use the top of the 
big apartment houses in the Bronx ? 

Mr. Lyons. Well, Congressman, those that you looked at for the 
helicopters, those are things that I think 

Congressman Fish. Excuse me. I am commending you. I am not 
criticizing you. 

Mr. Lyons. I think there is another one there of a parking facility. 
We might be able to utilize the parking field for that. Those are only 
in the study stage. 

Congressman Fish. I have never seen it before. I hope we will 
reach that time. But I do not know why we could not use some of 
the top of the enormous apartment houses if it is practical to use that 
type of machine. But this is the first time that I heard it mentioned 
by anybody. 

Well, I am very glad to hear what you have had to say about the 
requirements of the Bronx. Of course, we in Putnam County are glad 
to know that we are linked to the Bronx. 

]Mr. Lyons. Thank you. 

The Chairman. Mr. Reece. 

Congressman Reece. I do not have any questions. 

The Chairbian. Mr. Wolcott. 

Congi-essman Wolcxjtt. I enjoyed your statement. I have no ques- 
tions. 



1732 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Thank you very much, Mr. Borough President 
Lyons. 

Our next witness is Mr. Edgar J. Nathan, president of the sister 
Borough of Manhattan. 

Mr. Nathan, would you please state your name and office that you 
hold for the purpose of the record. 

STATEMENT OF EDGAE J. NATHAN, PRESIDENT, BOROUGH OF 

MANHATTAN 

Mr. Nathan. Edgar J. Nathan, Jr., president of the Borough of 
Manhattan. 

I have a letter, Mr. Chairman, which I will read in answer to your 
courteous invitation for me to comment today. 

Answering your invitation, I am submitting my views on post- 
war public works, with particular reference to borough projects, their 
financing and the part, if any, that the Federal Government should 
take in aiding the municipalities in the planning and construction. 

The estimated cost of postwar projects under my direct jurisdiction,^ 
as president of the Borough of Manhattan, is $68,780,000, of which 
$12,000,000 in completed plans can be advertised for initial contract 
on 2 weeks' notice, the remaining $50,780,000 in various lengths of 
time up to July 1, 1945. The projects are normally financed by local, 
borough, or city-wide assessment or by the issue of city bonds. 

The general policy of the administration of the city of New York 
is to restrict public improvements to those that are absolutely nec- 
essary, rather than to consider resourcefulness in spending public 
money a criterion of the nature and extent of such improvements. In 
that way rash undertakings are avoided, policy is directed toward 
economically sound projects, and intrinsic value becomes the basis of 
the formula. 

All our plans for what now constitutes the postwar program of the 
Borough of Manhattan were conceived prior to Pearl Harbor. 

Unless a depression is seen coming, or some other national need 
arises, requiring Federal grants, I do not believe that municipalities 
should look primarily to the Federal Government for the financing of 
local public works. In the absence of special or other compelling cir- 
cumstances. State and local governments should not advance public- 
works programs beyond their own ability to finance them. This in 
no way argues against Federal funds for certain types of highways, 
for port development, and for other projects to which the Federal 
Government has been contributing from earliest times. 

In preparation for conditions that may exist at the war's end, a 
formula for equitable allocation of Federal funds should be worked 
out, to avoid overparticipation in and excessive appropriation of Fed- 
eral funds, both in the interests of the national economy, and to avoid 
loss by local governments of a degree of sovereignty due to loss of 
power which accompanies shirking of local responsibilities. Excessive 
or inequitably apportioned Federal funds for local projects tend to 
subsidize extrava2;ance in local government. 

The State of New York is deeply interested in economical Federal 
administration and expenditures because of the large percentage of the 
total Federal tax burden that it bears. We in Manhattan especially 



POSTWAR ECONOMIC POLICY AND PLANNING 1733 

know the danger of such disproportionate tax burdens, since Man- 
hattan furnishes nearly half of the city tax revenue. 

Regardless of any immediate policy of financing, however, plans 
for public works should be so well advanced that whatever economic 
conditions have to be faced, there will be enough design work com- 
pleted so that construction can go forward on short notice. Lack of 
completed or nearly completed designs is a serious deterrent to the 
creation of jobs. 

As the construction industry normally employs many more men m 
private than in public work, it is important that public-works projects 
for the postwar period be such as to encourage private construction 
that borders on such improvements in the form of both residential and 
business structures. Where highway, park, or water-front improve- 
ments come within this classification, the earlier their plans can be 
formulated and made known the more likely that private initiative will 
build up its own backlog of related construction projects. 

Recommendations on topics expressly mentioned m your invitation, 
or impliedlv included, follow : • i , 

1. Plans for public works known to be required by cities and other 
political subdivisions of States should be advanced as near as practica- 
ble to completed design, so that no time would be lost in beginning work 
should the occasion suddenly arise. Keeping design well ahead of 
maximum estimated construction should be a continuous Nation-wide 

policy. , , , -n • 

2. All planned projects should be absolutely necessary. Economic 
conditions may influence the decision on how many of these are to 

be built. . 

3. Federal funds, when contributed, should be apportioned equit- 
ably on the basis of States. Federal grants-in-aid should not be fore- 
closed, as exceptional situations may well require a relaxation of any 
established mathematical formula. 

The Chairman. We thank you for your contribution, Mr. Nathan. 

You made a statement there that was very interesting, and that is 
in connection with the financing of these projects. If I understood 
your statement, you do not think that any aid should be given by the 
Federal Government on these local projects. 

Mr. Nathan. No. I think that it would be necessary m the event 
of a depression coming along, or some other special circumstance 
which may very well follow the end of the war. 

But I think^the basis for Federal aid is the benefits that will flow 
to the Nation in the event that unemployment comes to us all of a 
sudden. Private industry may not be able to take up the slack 

immediately. , , n , -r. i i 

The Chairman. Do you think that there should be any l^ederal 
aid in connection with^he preparation of plans apart from the aid 
in construction? 

Mr. Nathan. Well that, again, would depend on whether it was 
necessary to speak of plans to meet contemplated or foreseen emer- 
gencies, Federal aid in other than normal times. 

The Chairman. We are all acquainted with the present situation. 
We know that we have some 11,000,000 men and women in the service, 
and that there are possibly twenty or thirty million people, perhaps, 
engaged in war industries. With that in view, do you think that 



1734 POSTWAR ECONOMIC POLICY AND PLANNING 

at the present time the Federal Government should embark upon a 
program whereby it would give aid to the municipalities or States 
m connection with the preparation of plans for public works? 

Mr. Nathan. AVell, I do not draw any differentiation between the 
plans and the construction, except insofar perhaps as you have in 
mind that the plans being made now, before we know what the eco- 
nomic or employment situation might be at the end of the war. 

The Chairman. The reason I mentioned that is this, Mr Nathan 
everybody seems to be agreed that when the WPA started, projects 
of no value whatsoever were undertaken. But as the work pro- 
gressed and they had time to prepare plans, then some really worth 
while projects were undertaken. 

Therefore, there is a growing sentiment, it seems to me, that the 
municipalities and communities should commence now, by way of 
insurance against a repetition of those projects which were not worth 
while, to plan ; and in connection with that, that the Federal Govern- 
ment in order to encourage that forward step should make some 
imancial contribution for the preparation of the plans. 

Now, are you in accord with that? 

Mr. Nathan. Well, I don't know all the situations throughout the 
country. In Manhattan, we are ready to proceed with construction as 
soon as men and materials are made available. 

I can conceive of some special circumstances elsewhere from a Na- 
tion-wide point of view where local planning should be advanced. 

The Chairman. Mr. Colmer. 

Congressman Colmer. I have no questions to ask Mr. Nathan. 

The Chairman. Mr. J'ish. 

Congresmasn Fish. As I take it, your suggestion is simply this : 
that you believe there should be Goverment aid only when a very 
serious economic crisis arises in unemployment, or in case of a national 
emergency where private enterprise cannot take care of the employ- 
ment of millions of wage earners. Then you think under that emer- 
gency, that the Government should step in with aid up to 50 percent 
say of the public works ? ' 

Mr. Nathan. That is substantially so. 

The Chairman. Just so as to clear it up in my own mind, let me ask 
you this, Mr. Borough President. You do not believe that we should 
actually wait for an emergency to develop, do you ? 

Mr. Nathan. Oh, no. 

The Chairman. Before we begin to plan against such an emergency, 
I mean, do you ? » ^ 5 

Mr. Nathan. Certainly not. 

The Chairman. So, you still agree with my previous thought that 
insofar as planning is concerned, we should go'ahead and at least draw 
the plans for these public works even though we do not go into the 
proposition of actual construction. 

_ Mr. Nathan. Yes. I said that if we see an emergency or a depres- 
sion coming, we should pl-epare for it. 

The Chairman. Mr. Keece. 
^ Congressman Eeece. I thought your statement was particularly 
interesting and offered some very constructive suggestions, Mr 
Nathan. 

I take it that there is no difference of opinion as to the desirability 
of drafting plans and developing a public-works program in order to 



POSTWAR ECONOMIC POLICY AND PLANNING 1735 

be ready to move when it becomes necessary. The only difference of 
opinion, judging from my observations in hearing the witnesses, points 
to the method of financing which, as the chairman of the full com- 
mittee indicated a while ago, becomes not only a serious but a very 
practical question, a serious question from two viewpoints, as I see it : 
First, as to the ability of the Federal Government to continue expen- 
ditures; and second, important from the viewpoint of the munici- 
palities and the States in that there is a feeling — I think one munici- 
pal official particularly so expressed himself to the committee — that 
if the Federal Government continues to offer inducements for assist- 
ance which are accepted by the cities, it has an undermining influence 
on, we might say, the moral fiber of the municipality. 

They give away, and put themselves in a position of always being 
a recipient of favors from some other agencies. This destroys the 
spirit of independence and responsibility. I think that is a very im- 
portant consideration. 

I am glad to see it indicated by your statement that you at least have 
that in mind, that somewhere there ought to be a line of distinction 
drawn between the responsibility of the local government and of the 
Federal Government ; and all, except in cases of emergency, should 
discharge the responsibility of their respective positions. 

Now, I have spoken longer than I have intended, and I did not ask 
any questions. I do not know that I have any question to ask, except 
to indicate some of the considerations that present themselves to me 
at least, as a member of the committee, when it comes to this particular 
aspect of the question. 

But, I might say, off the record — 

( Colloquy ensued off the record at this point. ) 

The Chairman. Mr. Wolcott. 

Congressman Wolcott. I have no questions, thank you. 

The Chairman. Thank you, very much, Mr. Nathan, for your 
contribution. 

The next witness was to be Borough President Burke, of the Borough 
of Queens. I understand that the Commissioner of Public Works 
Fitzgerald is here and will make a brief statement in behalf of the 
president of the Borough of Queens. Mr. Fitzgerald. 

STATEMENT OF MAURICE A. FITZGEEAID, COMMISSIONER OF 
BOROUGH WORKS, BOROUGH OF QUEENS 

Mr. Fitzgerald. I am commissioner of borough works in the 
Borough of Queens. 

Mr. Chairman and gentlemen, originally I had intended to be 
present merely as an observer, and to merely request from the com- 
mittee the privilege for the borough president of submitting a state- 
ment at a later date. He unfortunately is away from the city and 
could not be here, and for that reason, t would like to make that re- 
quest at this time. 

The Chairman. Without objection, that may be done. 

Mr. Fitzgerald. That he be permitted to file a statement later. 
(See exhibit No. 3, p. 2057.) 

However, there were a few questions raised, which I thought were 
vital to the answers of which I thought I might be able to contribute 
just a bit. 



1736 POSTWAR ECONOMIC POLICY AND PLANNING 

There was a question raised by Congressman Reece, and restated by 
your chairman, Congressman Cohner: Why cannot the city pay the 
whole cost and why should the Federal Government pay for the public 
works program, or programs of the cities? I think that is a fair 
paraphrase of the questions asked by the two Congressmen. 

Congressman Reece — and I hope I am not paraplirasing him too 
far away from the fact — said that he thought of the Nation as being 
made up of the most substantial cities and many lesser cities. 

Congressman Rp:ece. And rural communities. 

Mr. Fitzgerald. And I draw the inference: Why should the most 
substantial city in the Nation be asking assistance from the Nation? 

Well, my answer to that would be that we have two classes of tax- 
payers in the city, only one of which is within the province of the 
taxing power of the city, that is, the real estate taxpayer; Avhereas 
the Federal Government taxes our income taxpayers, so that actually 
we have to divide them when we consider a question of this kind, on 
tax levels rather than geographically. 

Now, if we are to engage in expedited construction of useful and 
necessary work, we would have to, and without aid from any outside 
agency, depend upon the real estate taxpayers of the city to finance the 
program. 

The mayor indicated a program for the city of New York of 
$1,100,000,000. Of that program, the president' of the Borough of 
Queens has about $95,000,000 or, in round numbers, $100,000,000. 

Congressman Reece. If you will permit an interjection by me: I 
do not want to be put in a position of indicating, necessarily, that 
the Federal Government should not participate. I was simply raising 
the question. 

Mr. FiTZGEKALD. Ycs, sir. I hope I have not given any other in- 
ference but that it was a question you asked. 

Congressman Reece. Which my statement, in connection with the 
statement of Mr. Nathan, amplified somewhat. 

Mr. Fitzgerald. I think I understand it, sir. 

As I was saving, the program of the president of the Borough of 
Queens amounting to about $100,000,000 concerns your project de- 
scriptions here, items Nos. 1, 2, and 4; highways, roads, and streets; 
bridges, viaducts, and grade separations; servers and sanitary facilities. 

And that program in the Borough of Queens — and in other bor- 
oughs, and I think more largely in the Borough of Queens than in 
any other borough — our borough, having doubled in population with- 
in the past 20 years, has a population of 1,500,000 now, so we have a 
city to build. 

So, I think it is a fair assumption that we are going to use many 
of the materials that the mayor mentioned in our program. The items 
are as follows: Asphalt, cement, stone, vitrified pipe, reinforcing steel, 
casting, manhole covers, catch basin heads, lumber for sheathing, and 
everything that goes into the building of higliways and sewers. 

The payment for this construction would fall upon the real-estate 
taxpayers according to the area of their holdings, so that a street 
sweeper owning a 20-by-lOO lot would pay relatively the same as his 
wealthier neighbor. 

Now, obviously, in the normal course of events, the borough would 
not construct these improvements except in accordance with the ability 



POSTWAR ECONOMIC POLICY AND PLANNING 1737 

of these taxpayers to pay. So, it might take us 15 years to install 
these improvements \Yhi('h we have set up in our postwar program. 

If the purpose of the Federal Government is to expedite the con- 
struction of useful and necessary improvements so as to afford em- 
ployment at an early date, then I would say that we w^ould be unable 
to carry on this entire program within any such limited period, be- 
cause of the inability of the taxpayer to pay on the basis of his realty 
holdings. The same would be true where the rent payer would be 
surcharged and his rent raised in order to meet the taxes falling upon 
the multiple dwellers. 

We feel, therefore, since the problem of postwar unemployment is 
a national problem, that the Federal Government should call upon 
the Nation, in accordance with the princi])le of ability to pay, to assist 
in defraying the cost of these improvements, thereby expediting con- 
struction. 

Congressman Wolcott asked if the Federal Government should deal 
with the cities. And my answer to that is that it would seem reason- 
able that the Federal Government should deal with that agency which 
is defraying the balance of the cost of the improvement, State, or 
city, or both, as the case may be. 

Congressman Lynch asked a question with relation to the time ele- 
ment of getting these things under way. And my inference was that 
the question arose as to the possibility of rushing things through 
when there might not be the need for all of that construction. 

Our experience is that contracts are let by the contracting agency, 
usually in accordance with the availability of labor in that particular 
area. We have that experience in some very necessary and essential 
sanitary sewers. We can only give out the contracts in accordance 
with what labor is available to build these sewers. 

Usually governmental contracts contain a time clause. And when 
you know that the labor is not -there, it is hard to give out the con- 
tract. You won't get any bidders if you include the ordinary time 
clause. So, you hold back the contract until the labor is available. 
That is what we are doing now. I imagine that is how it would work 
out in the postwar period. 

Then there was a question by Congressman Colmer as to industry 
doing the job. Our program — I speak only for the borouoh's ])ro- 
gram — is predicated on the thought that private industry will do this 
job. That is, they will do it by contract through private enter])rise. 

We have not even given a thought to the idea that we might build 
the improvement by either our own or Federal labor, such as WPA 
labor. I do not know that we find any sentiment for a program 
of that kind. W^e feel that this work should be done by private en- 
terprise. If I may bore the committee wnth a remark on that sub- 
ject, we did about $20,000,000 worth of work, or sponsored about 
$20,000,000 worth of work done by the WPA, It is our belief that, 
when all of the costs are added together, those projects cost more 
than they would have cost had we let them out by private contract. 

The unfortunate thing about the expenditure of that sum of money 
was that it only provided a subsistence wage. That removed the 
wage earner from the markets. He was unable to buy except in a 
very limited field and in very limited quantities; so that the problem 

99579— 45— pt. 6 3 



1738 POSTWAR ECONOMIC POLICY AND PLANNING 

was not met at all. We merely postponed a meeting of the problem 
through the medium of WPA. 

I think here we should avoid that mistake. This work should go 
out to private contractors and to private industry. Those who are 
engaged in this work should receive a living wage, and not a subsist- 
ence wage. 

I know that that was not the exact question that the chairman 
asked. I feel that his question went into a much broader field. I do 
not feel qualified at this time to answer the whole of the question, 
only so far as it might apply to private industry doing the public 
works program. 

The Chaikman. I want to thank you very much for your state- 
ment, Mr. Commissioner. 

Mr. Colmer. 

Congressman Colmer. This is only to amplify my position on the 
question raised by the Commissioner. 

Of course, what I had in mind was Government-made employment, 
rather than employment by private enterprise. That is all I have 
in mind. 

The Chairman. Mr. Reece, 

Congressman Reece. I have no questions. 

The Chairman. Mr. Wolcott. 

Congresman Wolcott. I do not have any questions to ask. 

The Chairman. Thank you very much, Mr. Commissioner, and 
you may file the further statement of the president of the Borough 
of Queens at his convenience. 

That completes the witnesses for this morning, except for the fact 
I understand that Commissioner Hall is here representing the office 
of borough president of Richmand. 

Do you desire to file a statement ? 

Mr. Hall. Our borough president feels that the mayor speaks for 
us. I am here as an observer and I am enjoying every minute of my 
time, thank you. 

The Chairman. Thank you. Commissioner Hall. 

The committee will now adjourn until 2 o'clock p. m. 

(An adjournment was thereupon taken until 2 o'clock, at the same 
place.) 

AFTERNOON SESSION 

The Chairman. The meeting will come to order. 
The first witness this afternoon will be Commissioner Martin P. 
Catherwood, New York State Department of Commerce. 

STATEMENT OF MARTIN P. CATHERWOOD, COMMISSIONER OF 
COMMERCE, STATE OF NEW YORK 

Mr. Catherwood. Mr. Chairman, my remarks are made as com- 
misioner of commerce of New York State, and as one of the members 
of the New York State Postwar Public Works Planning Commission. 

The State of New York has developed a postwar public works pro- 
gram which should be helpful in alleviating potential unemployment 
and in getting the wheels rolling in the transition period. However, 
no public works program can be a permanent solution for the problems 
of high-level production and full employment. 



POSTWAR ECONOMIC POLICY AND PLANNING 1739 

Private enterprise will be faced with a tremendous problem of 
adjustment, the magnitude and nature of which cannot be completely 
foreseen. Consequently, New York State is actively developing pro- 
grams in other directions, one of the most important of which relates 
to the encouragement, promotion and development of private enter- 
prise through the program of the New York State Department of 
Commerce. 

This program, the details of which are possibly not within the 
scope of your meeting today, includes an information service for 
business; the supplying of data on transportation, markets, and other 
factors important in proper plant location ; assistance in the develop- 
ment of export markets ; technical information on new products, new 
materials, and new processes; and similar activities to encourage the 
healthy development and growth of business. In this way, we hope 
to provide every reasonable opportunity for business to play its full 
part in a continuing high level of production and employment. 

Public works plans have their proper and necessary place in prepa- 
ration for the postwar period, as action on several fronts will be re- 
quired to minimize the potential dangers of wide-spread unemploy- 
ment as well as to promptly take care of unemployment, if and when 
it arises. 

Here in New York, the public works planning program includes 
necessary State projects and many municipal projects that have been 
postponed due to the shortage of men and materials during the war. 
It has seemed only the part of intelligence to develop detailed plans 
and specifications for necessary postponed public works so that they 
mav be undertaken when and where they will be most helpful. 

Prompt, appropriate action by the Federal Government, as well 
as by the States and municipalities can go far toward strengthening 
our defenses. For example, clarification of governmental policies 
on problems such as taxation and the disposal of war plants, would 
be a great contribution. 

While Ave recognize that the policies of the Federal Government will 
be of great importance in determining the level of employment and 
unemployment after the war, we feel, nevertheless, a State obliga- 
tion to plan necessary public works so that they can be undertaken 
at the time they will be most helpful. 

However, our program for the preparation of plans for State 
projects and the program of State aid for the planning of municipal 
projects are not based upon the expectation of Federal funds in the 
financing of such public works. 

With the stupendous national debt at the end of the war and with 
the level of Federal expenditures which will be required for debt 
service, assistance for veterans, and other necessary functions, it would 
seem that States and municipalities should look forward to financing 
most of their own public works. This concept is not meant to be in 
opposition to Federal aid for works such as highways and possibly 
airports, where a strong case can be made for continuing Federal 
aid, irrespective of the employment situation. 

Comprehensive plans for postwar public works should be prepared 
now. Thus those public works required under normal conditions 
can be undertaken when they will be most needed and if there should 
be a severe depression requiring a telescoping of public construction 
to alleviate critical unemployment, such work could be undertaken 



1740 POSTWAR ECONOMIC POLICY AND PLANNING 

speedily and effectively. Such concentration of public construction 
might well constitute a financhil burden which States and municipali- 
ties could not absorb Avithout Federal assistance. 

States and municipalities have made large strides in the prepara- 
tion of detailed plans for postwar public works. But more should be 
done. We should not be caught short in a situation where an exten- 
sive public-works program might be urgently required. Even though 
proceeding upon the assumption that State and local units should 
pay for most of the normal program of public works, the immediate 
availability of such plans would make possible the prompt undertaking 
of a large construction program in the event of an emergency. 

In summary, I would emphasize these points : 

(a) Public works can be of assistance in meeting postwar problems, 
but continuing high-level production and employment is dependent 
upon the effective functioning of free enteriDrise. 

(b) The States and municipalities have a fundamental obligation 
to prepare now detailed plans for necessary public works. These agen- 
cies should be primarily responsible for financing construction costs 
unless, in combating a severe depression. Federal aid is necessary. 

(c) The Federal Government should: 

1. Immediately accelerate the preparation of plans for necessary and 
usual Federal public-works projects, 

2. Clarify and determine Federal policy on financial aid for such 
works as highways and possibly airports, the type of activity for which 
Federal aid is suitable, irrespective of the employment situation. 

3. Take prompt action in relation to such factors as tax policy, dis- 
posal of war plants, and cancellation of contracts, so that private enter- 
prise may be given an opportunity to contribute the maximum to post- 
war employment. 

Vigorous action on these fronts would reduce the severity of poten- 
tial postwar unemployment, provide a substantial foundation for cor- 
rective action as required, and go far toward enabling private initiative, 
State governments, and local governments to meet the problems of 
postwar adjustment. 

The CiiAimiAN. We appreciate your statement, Mr. Commissioner. 
It has been the policy of the committee to question those who appear 
before us so that wemay get the benefit of their further suggestions 
on points that need a little clarification. 

Mr. Catherwood. I shall be glad to go just as far as I can in clarify- 
ing anything. 

The Chairman. Do I understand from your statement that you are 
not in favor of Federal funds being used in connection with the con- 
struction of public works insofar as those public works might be under- 
taken by States and municipalities? 

Mr. Catherwood. That would be going further than I have gone 
in this statement, Congressman, and would be going a little further 
than I would be prepared to go. 

There would be two exceptions that I would make to a flat statement 
that I was opposed to Federal financing; that is. Federal aid in financ- 
ing of public works. 

One of the exceptions would be insofar as the type of works is con- 
cerned where there has been, as in the case of highways, a Federal-aid 
program for years where similarly they would turn in the future for 



POSTWAR ECONOMIC POLICY AND PLANNING 1741 

airports. I do not mean to preclude the approval of Federal aid in that 
circumstance. 

Secondly, I do not think that I would be approaching the matter in 
a reasonable manner from the standpoint of my own concept if I in- 
sisted that under no circumstances, even in the event of a depression, 
a severe depression, there should be no Federal aid. 

My assumption is that in the event of a severe depression some type 
of Federal financial assistance would be required in getting out of it, 
and that such Federal financial assistance in the event of a severe de- 
pression might well include assistance in the financing of public works. 

My hope would be that we would have a shelf of public works to 
make possible an effective program to help take up the slack if we were 
really faced with a severe depression. And as a practical point, as well 
as on the point of the philosophy and theory involved, I would b© 
willing to see Federal aid under those circumstances. 

But I think the approach from the start, basically, ought to be 
from the other end. That in terms of first line of defense we should 
think of a fully functioning system of private enterprise to provide 
most of the jobs. 

Secondly, that insofar as public works are concerned, the primary 
responsibility should be on the States and localities for supplying 
their own public works. 

Thirdly, that in the event of a severe depression, we_ then might 
properlv expect the Federal Government, of necessity, to enter that 
field. 

The Chairman. If you follow that line of reasoning, are you not 
likely .to be confronted with the situation that confronted us at the 
last depression, that there would be some communities which would 
have no plans at all, even in the event of a depression, with the result 
that we would be back on the old WPA which nobody wants to see 
revived, as far as I can understand. 

Mr. Cathekwood. My own appraisal of that situation is possibly 
a mixture of points of view and ideas. I would like to see more 
detailed plans and blueprints being prepared than are actually being 
done at present. 

Whether the way to get the blueprints prepared for the type of 
public works that you want in the future, is to hold forth Federal aid 
seems to me doubtful. I am inclined to question it. 

Now, in the State of New York, we have a State program of help- 
ing municipalities finance the preparation of the plans for postwar 
public works, and one of the things that we have to constantly guard 
against is the assumption by municipalities that, because the State 
helps with the plans, the State will also hel]:> with the construction 
cost, and there is no commitment in that direction. 

The Chairman. Then, would you say that insofar as New York 
State is concerned, there would be no need of any Federal aid either 
to the cities or smaller communities for the preparation of plans? 

Mr. Catiieravood. I think, as my own conviction — I assume there 
would be differences of opinion — is that we have a very good start 
in New York, both from the standpoint of State projects, and, gen- 
erally speaking, from the standpoint of action by municipalities in 
the State in the preparation of a useful and sizable shelf of detailed 
public works. 



1742 POSTWAR ECONOMIC POLICY AND PLANNING 

Not all municipalities have gone as far as it would seem to me 
desirable that they should go. Some are inclined to go further than 
would seem to me to be practicable. Because, there are limitations, 
very practical limitations in the preparation of certain types of 
plans, as to how far in advance you can prepare them without the 
necessity of complete revision or throwing away in some cases, be- 
cause other circumstances change in the intervening period during 
which they are on the shelf. 

The Chairman. I do not think you have answered my question. 
My question was whether or not in your opinion you think that 
there is no necessity for Federal aid for the cities and counties in 
New York State in the preparation of plans for public-works con- 
struction to meet postwar conditions. 

Mr. Catherwood. T doubt if there is need in the case of the State 
or municipalities in New York State for Federal aid in the prepara- 
tion of plans for postwar public works. In explanation of that, I 
think that if you had asked me the question 2 years ago, I would lean 
a little further in the other direction. Among my reasons for coming 
to the conclusion which I have just mentioned, is* that one of the very 
real circumstances to be faced where there is any financial aid for the 
preparation of plans, is the assumption that is likely to be made as to 
corresponding financial aid for construction. And the problem of 
administering such financial aid, while it may be that it can be solved, 
is a very tremendous one. 

I would also concede that many other States are not as far along in 
the direction of preparation of plans as is the case for the State and 
municipalities here. However, I understand that a number of States 
have made, within the past few months, considerable progress in that 
direction. 

The Chairman. How much has b^en appropriated by the State and 
used by the municipalities in New York State for the preparation of 
postwar construction ? 

Mr. Catherwood. The schedule, the appropriations to date for 
State assistance to municipalities for preparation of postwar planning 
is in the neighborhood of $3,000,000. 

The Chairman. How much of that has been expended? 
Mr. Catherwood. I cannot give you the exact amount that has 
been expended because, as applications are received from communi- 
ties, they are processed, and they are at all varying stages of process 
at the present time from those on which applications are just being 
made to a relatively small part of the total that have been completed. 
Of course, you understand. Congressman, that in addition to the 
State-financed program or the State-aided program to municipalities, 
many municipalities have proceeded upon their own. For example, 
a very large part of the postwar public works program anticipated 
for the future here in New York City is being financed completely out- 
side the scope of the State-aided program. 

The Chairman. Well, my point was this : Although there has been 
appropriation by the State for the purpose of helping the municipali- 
ties to do postwar planning, it is my understanding that outside of 
New York City there is practically no shelf at all of blueprints in the 
other municipalities. 



POSTWAR ECONOMIC POLICY AND PLANNING 1743 

I was wondering whether or not that was in accord with your knowl- 
edge of the subject. 

Mr. Catherwood. No. I think that is a definite understatement. 
Although it admittedly is a situation where many of the projects that 
are in process as part of the State-aided program are not yet complete. 

If the emergency arose and the plans were needed tomorrow, many 
of them would not be available. Most of the program which has 
been undertaken with State-aided funds, the plans would be available 
by the end of the present calendar year ; not 100 percent, but a very 
large proportion. 

The Chairman. This morning Mayor LaGuardia testified insofar 
as New York City was concerned that 221/0 percent, if I remember the 
figure correctly, was already completed, 221/2 percent was more than 
50 percent completed, and 35 percent was less than 50 percent com- 
pleted, and some 19 percent, I think, had not yet been commenced. 

Now, insofar as the plans of these municipalities in New York are 
concerned which have received State aid, what percentage, if you 
know, are fully completed and ready to go to work tomorrow if they 
could get the men and material; what percent are more than 50 
percent completed, and what percent are less than 50 percent com- 
pleted, and what percent not yet started ? 

Mr. Catherwood. I do not have at my fingertips, Congressman, 
those figures. 

The Chairman. Can you get those figures for us ? 

Mr. Cateekwood. I think that our staff can supply them. Cer- 
tainly, they could supply a reasonable approximation of them, and 
I presume that is all you can get when you are in the appraising 
stage of development of plans anyway. 

I would be glad to get that for you. The break-down you wanted 
there was what? 

The Chairman. What percentage of plans had been completed by 
municipalities that are receiving State aid ; what percent are 50 per- 
cent completed; what percent less than 50 percent completed; what 
percent being considered but not commenced. I think that was the 
way Mayor LaGuardia phrased it this morning. 

Mr. Catherwood. I will be glad to get that and send it to you. 
(Exhibit No. 4, p. 2059.) 

The Chairman. Could you give us also the same figures with re- 
spect to wholly owned State projects? 

Mr. Catherwood. State program? I cannot cite any more specific 
answer at the moment, but I can get you an approximation there as 

well. 

The Chairman. Now, you stated with respect to these public works, 
that you thought that Federal aid should be given where an emer- 
ency had developed. . . , , 

I just want to go back to that again with the idea in mmd that, 
knowing your own broad experience in that field, I am wondering if we 
miffht not misunderstand what you have in mind. 

You do not really mean that we should wait until the emergency is 
right upon us insofar as a Federal policy is concerned either with the 
planning or with the actual construction, do you; or was that your 
intention ? 



1744 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Catherwood. It was not my thought, that it was proper at the 
national level to close our eyes to the possibilities of problems that 
mio-ht be developing in the future, and the action which Congress 
might see fit to develop in meeting it. 

At what stage it is possible to sufficiently visualize the onset of the 
depression of sufficiently severe proportions to justify aid or programs 
of different types, I have difficulty in defining exactly what my posi- 
tion would be there. 

I think that there is much that Congress can well be doing, as I take 
it, as illustrated by the work of your subcommittee here, in really 
analyzing this problem and getting determined in advance just what 
the Federal policy should be. 

The CiiAiRMAi"^. I do not intend to take the time any longer of the 
committee in questioning Commissioner Catherwood, but he is one of 
the outstanding authorities in the State. I was very greatly interested 
in our own State, and I know that the other members of the com- 
mittee here are particularly interested in the question of financing 
these projects. I will call upon Mr. Colmer to take over. 

Mr. Colmer. 

Congressman Colmer. Mr. Cliairman, it would be perfectly agree- 
able to me if you would continue and utilize my time. 

I would like to commend Mr. Catherwood on his very able state- 
ment of the situation. If I understand you, sir, you realizs'tlie inability 
of the Federal Government to continue indefinitely the expenditure 
of public funds. That might strain even the credit of the Federal 
Government. As a matter of fact, during this war, while the Federal 
Treasury has been undergoing rapid depletion, many of the States 
have built up their treasuries, haven't they? 

Mr. Catherwood. Yes. Of course, in New York State, the first law 
passed by the legislature this year on Governor Dewev's recommenda- 
tion was the freezing or setting aside of the State surplus which had 
been accumulated in the amount of about $ir)0,0(XXOOO, for postwar 
reconstruction work in recognition of the fact that it was a surplus 
accumulated out of wartime conditions ; that the State had not been 
able to keep its physical plans in order; that expenditures in that 
direction might come in a very helpful way after the war. So, that 
money was actually earmarked for that purpose. 

Congressman Colmer. Would you be willing to agree with the 
statement that the States and many of the subdivisions of State 
governments are better qualifisd financially to undertake some of this 
postwar work than the Federal Government is, on a proper ratio basis? 
Mr. Catheravood. Well, I don't know whether it is an exact answer 
to your question or not. I do have the feeling that the first responsi- 
bility should be on the part of the States and municipalities, and that 
they are in a financial condition -where, to a considerable degree, they 
can carry that obligation or a large part of it. 

At the same time, I do not want to be misunderstood as going fur- 
ther than I would prefer to on one direction or the other, as to the 
practical situation that might be encountered in the event of a severe 
depression. If there were a severe depression, I do not know. I 
think you might have this circumstance where the States and munici- 
palities could not finance as much public works as would be desirable 
from the standpoint of the national interest. But I would rather see 



POSTWAR ECONOMIC POLICY AND PLANNING 1745 

tliem start out with tlie proposition that it was their responsibility 
and point their financial policies in that direction just as far as pos- 
sible. And I think in a very considerable degree, that it can be done 

Congressman Colmer. I think that is all. 

The Chairman. Mr. Fish. 

Congressman Fish. Mr. Catherwood, you say you are in favor of 
the Federal-aid contribution to highways and airports. Do you think 
the Federal Government should supply all the money for the high- 
ways and airports? 

Mr. Catherwood. I do not pretend to be an expert in that field, and 
all I am giving you is my own conviction. I think it would be unde- 
sirable for the Federal Government to go as far as supplying all the 
funds for airport purposes. 

I think that even for airports in which there is admittedly very 
broad interests in terms of national welfare, there should be a local 
contribution and local participation and interest. 

Congressman Fisn. You will agree, for all Federal buildings, such 
as this or the veterans' hospital, the United States Government should 
pay the whole thing ? 

Mr. Catherwood. It was not my thought to depart from what was 
accepted in the past as the method of financing of that type of Federal 
project. 

Congressman Fish. You rather limited it to highways and airports. 

There is one question I want to ask you if you can answer it. It is a 
sort of hypothetical question : Assuming the war was over in 60 days, 
and there was a great deal of unemployment, private enterprise was 
not able to convert itself to take care of the peacetime requirements, 
and there were millions of unemployed, and so on, what would be the 
first projects that the State would Want to undertake, with or with- 
out Federal aid ? 

Mr. Catherwood. I am not sure that my judgment there as to what 
I would say would actually come first on the list is of very much value, 
Congressman Fish. 

I am acquainted with the general projects that we have. I would 
assume that one of the first things that we would want to get under way 
with would be the program in relation to highways and throughways. 
There are some urgent building needs also in the State government. 
We are trying to get these different types of projects to the point where 
action could be taken promptly. But in terms of large-scale projects 
a highway and throughway program quite possibly adds up consider- 
ablv more rapidly than the others do. 

Congressman Fish. Now, I assume that you have your blueprints 
made already for any such emergency, and you must have projects that 
you would give ]Driority to. What is that ? 

Of course, I do not want to press you about it, but I would like to 
get as much information as you could give the committee. 

Mr. Catherwood. I would" not want to assume that the blueprinting 
of the projects has been carried actually further than it has; that is, 
the commission has been at work on this problem for 2 years, and very 
substantial progress has been made. But as you begin to lay plans 
for future public works in a State such as New York you do have a 
tremendous number of administrative questions to settle and get agree- 
ment on in terms of the type of projects. You may have to have 
additional facilities such as mental-hygiene institutions. 



1746 POSTWAR ECONOMIC POLICY AND PLANNING 

But, there are questions in terms of whether you have a dormitory 
type of building, or an independent unit type of building and questions 
as to the size of rooms. There are many {hings that we do not attempt 
to settle in the commission, but that takes time to decide. 

You have to develop your planning. To reallv be effective, you have 
to develop the general lay-out plans for the institution; get an archi- 
tect at work; prepare and consider the preliminary plans — all before 
the final plans are drawn. Now, much of this work at the State level 
is in that same situation. For example, at the present moment there 
are plans drawn for only a part of the highway and throughway 
development that are foreseen as necessary in New York State after 
the war. 

We think it represents a very substantial and desirable progress. 
But I do not want you to be misled in terms of concluding that we 
actually have all of those plans on the shelf in New York at present. 
We don't. We have got some or all of them. And as far as I can 
see, the effort would be made to start many of them just as promptly 
as possible after the war with the greatest possibility really m the 
highway and throughway field, simply because of their magnitude. 

Congressman Fish. What do you mean by highway and through- 
way? 

Mr. Catherwood. The throughway system which is contemplated 
in New York is what— to a layman such as mvself— would be described 
as a special type of highway. It is distinguished from, the parkways 
with which you are familiar. It is visualized as a great system of 
three traffic lanes, I think, in each direction. It is called a through- 
way as a technical name, partly arising from the fact that there is no 
access to the road from the adjoining properties. There are no grade 
crossings or entrances to the throughway. It might be described in 
lay language to many people as a superhighway type of development. 

Congressman Fish. Well, then, as I gather from you, if this emer- 
gency should arise, you would probably be prepared to go ahead with 
building highways and throughways ? 

Mr. Catherwood. And some State institutions, some developments 
in connection with parks, various school buildings — different items of 
that nature. 

Congressman Fish. That is all, thank you. 

The Chairman. Mr. Eeece. 

Congressman Reece. I am very much impressed with the initiative 
and responsibility which the State administration has shown in its 
relationship with the various subdivisions of government in the 
State in helping to get this program set up. 

And I felt, with the State government coordinating the effort of 
and assisting the cities that much could be done in preparing the 
plans. This is evidenced by what we have heard here today with 
reference to the city of New York, and what you have said with ref- 
erence to the State in other localities. 

As I recall Mayor LaGuardia's testimony (and this returns to the 
chairman's question with reference to the necessity for aid, Federal 
aid and blue-printing, so to speak), he stated that one-fifth of the 
city's program had been completed, and another one-fifth was more 
than 50 percent completed, and only some 10 percent had not yet 
been begun. 



POSTWAR ECONOMIC POLICY AND PLANNING 1747 

And this thought occurred to me, and that is why I want to get 
your reaction to it. In order to be ready to move at the end of the 
war, or when occasion should arise, is it necessary for the entire 
public-works program to have been completed, that is, the blueprints? 

Mr. Gather WOOD, I think the answer to your question, as I visual- 
ize it, is that it is not necessary for the complete program to be in 
plan, because there are, not only from the standpoint of the avail- 
able supply of materials and that sort of thing, certain limits beyond 
which you cannot go. 

There are limits in terms of a large State highway or throughway 
program, for example. There are just limits to the amount of work 
that can actually be undertaken and processed there in any given 
period, such as the first year after the war. 

Actually, in terms of our New York State program, I think that 
one of the very real values of it is that so much of the preliminary 
work has been gotten out of the way and work could start relatively 
promptly ; and could be followed by work for which plans were com- 
pleted 6 months or a year from now. 

Congressman Reece. The mayor's program called for an expendi- 
ture of something over a billion dollars, and the plans are something 
over 20 percent complete. That would indicate, I should think, that 
the city is now ready to go forward immediately with the public- 
works program calling for an expenditure of something over 
$200,000,000, which is a substantial sum and which would give more 
time for the completion of what has been begun. 

For one, I was very much interested in what you had to say with 
reference to the responsibility of the State and local authorities in 
financing these projects insofar as lies within their power to do so. 
And that fund is being set aside for that purpose by the State which, 
I take it, you consider more or less a depression fund. 

Mr. Catherwood. That, in a sense, is what it is. 

Congressman Reece. That you are unable to spend, but able to 
accumulate. 

As the chairman of the full committee indicated by his questions, 
States and the local governments now do not have the responsibility 
in war expenditures that the' Federal Government has had to assume. 
These are reaching staggering and stupendous figures or terms. But, 
I do not believe you were present here this morning. 

Mr. Catherwood. No ; I was not. 

Congressman Reece. It is the inability, the possible inability of the 
Federal Government to assume the financial responsibility that dis- 
turbs me. I want to get your reaction to this aspect of it. 

But if the Federal Government continues to assume the responsi- 
bility which we heretofore have felt should fall primarily upon the 
State and local government, this would have a tendency to undermine 
the initiative of those governments, and they soon become accustomed 
to coming to the Federal Government for whatever they want. Is 
there any danger in that regard, do you think? 

Mr. Catherwood. Well, I think that there is. Congressman. I think 
we are faced with a type of situation where in any event, there are 
functions that are going to have to be taken over and expanded by the 
Federal Government in the future, expenditures coming out of the 
war situation, terms of aid to veterans and that sort of thing. 



1748 POSTWAR ECONOMIC POLICY AND PLANNING 

From the standpoint of the ahility to finance the function as well as 
from the standpoint of maintaining, as far as is practicable to do so, 
our Government in units tliat at least in some defjree are closer to the 
citizen, it is essential to develop a little greater i)articipation or little 
greater feeling of responsibility on the part of the citizen. 

I do not think I am reactionary in terms of opposing every and all 
proposals for Federal expenditures, but I think the approach, the 
point of view, the philosopliy back of the decision as to where the pri- 
mary responsibility should rest is exceedingly important. 

Congressman Keece. I was somewhat disturbed at the mayor's state- 
ment, that New York City was unable to finance its public works pro- 
gram, and if it sliould be financed, it would have to be by participation 
of the Federal Government. If it is true of one city, it is apt to be 
true of another city. And as Mr. Colmer indicated in his f}uestion 
earlier, the Federal Government has had to assume the responsibility 
for the cost of the Avar, which placed a debt burden upon us that we 
heretofore have tliought ourselves incapable of assuming. We are 
now hopeful that we can carry it and ultimately discharge it. I would 
not speak with any great assurance on that, but I anx hopeful at least. 

The Federal Government has assumed that tremendous burden over 
a period of years Avhen the States' and municipalities' income had in- 
creased without any proportional increase in expenditures and if they 
now are unable to carry their own responsibilities, it is disturbing. If 
the responsibilities have to come back to the Federal Government, 
then it is really disturbing to me. 

Mr. Catherwood. And one wonders where we come out if that is the 
case. 

Congressman Reece. I think that we cannot go on the theor^^ that 
distance lends enchantment because some time we will reach the end 
of that road. If we have credit, it is easy to borrow and spend. But 
we cannot go continuously on that theory. 

If a municipality requires a public expenditure, if it can go to the 
Federal Government, it does not immediately meet the impact of hav- 
ing to pay for that expenditure, although the municipality knows that 
it is going to be paid, or it Avill have to be paid for sometime by some- 
body. But, it does not appear visibly and in a concrete way that the 
expenditures are going to have to be made. 

Therefore — and that gets back to my earlier statement^ — it is easy 
under those circumstances, or at least easier, for a city to keep moving; 
keep spending without adequate provision being made for paying back. 
Whereas, if they assume the responsibility, they plan as they go; and 
planning, as I see it, consists of more than making a blueprint. It is 
also paying for the bill. 

Sometimes, in connection with the planning, I think we have a 
tendency to discount too much one phase of the planning — that is, to 
pay for it. 

Mr. Catherwood. Well. I think your remarks are very pertinent 
there. They remind me of an element or two of our situation that I 
think might be of interest to the connnittee. 

Of course, as pointed out, a large part of the New York City postwar 
program is being financed outside the State-aided program, and en- 
tirely by New York City, as far as the preparation of plans is con- 
cerned. So far as the municipalities within the State are concerned, 
some of them are doing nothing in the preparation for postwar plans, 



POSTWAR ECONOMIC POLICY AND PLANNING 1749 

and some of them are proposing a lot more in the preparation of post- 
war plans than the municipalities have any funds m sight to take care 
of it. 

Insofar as our action as the State commission is concerned, our 
funds have been limited and not available to broadcast extensively. 
We have limited for the most part our approval of projects by munici- 
palities to those that had a good prospect of being financed within the 
relatively near future. 

Of course, it is true that New York City and the other cities in the 
State are faced with certain limitations. We have in this State a 
constitutional debt limit, and we have a constitutional limit. 
Congressman Reece. You are very fortunate. 

Mr. Cathekwood. Our municipalities have been fortunate in terms 

of maintaining extremely good credit standing irrespective of one's 

philosophy in one direction or another on this question of public works. 

Those Innits, of course, do place certain limitations on the ability 

of the nuniicipality to finance public works in the future. 

Congressman Reece. You referred to a certain type of public 
works, primarly a Federal responsibility, wdiich amounts I should 
ratlier think, to a large program of highway construction, through- 
ways, bridges, overpasses and underpasses, hospitals which Mr. Fish 
referred to, and airports, a program requiring billions. So, it occurs 
to me that there would be a rather wide field for expenditures on the 
part of the Federal Government for projects for which it has pri- 
marily a direct responsibility. 

And I assume, JNIr. Cliairman, that sometime we will have some 
presentation on just what that program may involve in connection 
with the whole public works program. I had not intended to take so 
mflch time. 

Mr. Catherwood. On that point, Mr. Chairman, I am not in close 
enough touch with the programs and activities of the Federal Govern- 
ment to know how much progress has actually been made there. But 
as you men probably know, there is a tremendous amount of time- 
consuming work that goes into the proper preparation of plans for 
an agency of the State government, or for an agency of the Federal 
Government. It is not done overnight. 

As many of you know, in terms of appropriations w^ork, a proposal 
comes up and is developed ; ideas are changed on it maybe over a series 
of years; finally the appropriations are made and the detailed plans 
are drawn. When progress has been actually made in the preparation 
of the shelf for these Federal projects, there will be a very real oppor- 
tunity right there to be sure that we are in a position to undertake 
construction at a time wiien it will be most helpful in the post -employ- 
ment situation. 

Congressman Reece. I have completed my questions, except I might 
make one reference to my conception of our highway requirements. 

I am impressed that our highway development is still in its infancy 
and there are tremendous expenditures that will be required in the 
reasonably near future to make an adequate system of through high- 
ways. 

The Chatrmax. Mr. Wolcott. 

Congressman Wolcott. ]Mr. Commissioner, your thought is that it 
is advisable for the Federal Government to accelerate its plans and 
clarify its policy. I think the latter has given us perhaps more 



1750 POSTWAR ECONOMIC POLICY AND PLANNING 

concern than anything else. I wish, if you would like to, that you 
expand on that and tell us how Congress would be able to develop a 
policy which might be helpful to the States in laying out their 
program. 

Mr. Catherwood, I do not know whether my point of view would 
be helpful or not. But I can give you what I think is the reflection of 
the problem, as we see it on the part of small business as well as large 
business in New York. 

There is tremendous uncertainty in the minds of business as to 
what the Federal tax policy will be after the war. I do not pretend 
to know, or attempt to say to what degree it is feasible to clarify and 
state that policy at the present time. 

But the uncertainty Ihat faces business from that standpoint is 
such that if it were possible to outline and clarif v and state in advance 
at least part of the intention with respect to Federal tax policy, it 
would be most helpful from the standpoint of business which, by and 
large, within the last year, has been making rather remarkable strides 
in its own efforts to plan for the postwar period. 

It is the same type of uncertainty wherein businessmen fear that the 
Federal policy with respect to the use of federally financed war plants 
will have the eifect of Government competition with them in their 
business. I do not know how far that can be defined in advance. But 
it is the type of uncertainty that makes it difficult for business to 
plan and anticipate the future as effectively as it otherwise would. 

I am afraid that is so general as to not be very helpful in terms of 
actual problems that confront you gentlemen. But that is the sort of 
thing to which I referred. 

Congressman Wqlcott. Well, if Congress were to enact a general 
policy that it desired to cooperate with the States in the solutioiT of 
our economic problems, that would not be very helpful, would it? 

Mr. Cathekwood. It would not accomplish a great deal, in and of 
itself. 

Congressman Wqlcott. It would naturally follow that the Fed- 
eral Government would help the States if it was necessary. Unless 
you become somewhat more definite, then we would not accomplish 
our purpose. 

Now, I thought you perhaps might mean that the Federal Govern- 
ment could lay out a framework program for highway construction, 
we will say, and determine a formula for the distribution and the 
allocation of Federal moneys. 

Then, of course, we run against the situation that the States will 
want us to get even more specific than that; they will want to know 
how much Federal money they are going to have under any particular 
formula, so they can make their plans accordingly. 

We are in a quandary here as to how far we can go in the develop- 
ment of a policy without creating contractual obligations on the part 
of the Federal Government to pay a definite amount. We have no 
more information as to the needs of the States than the States have, 
themselves, and this committee is trying to find out what the States 
need, as I understand it, and try to put them into the broader picture. 

In that respect could you tell us, or do you want to wait until Mr. 
Moses takes the stand, how much the State's share of the $15,000,000 
which was allocated last year for highway planning has been utilized? 



POSTWAR ECONOMIC POLICY AND PLANNING 1751 

1 think New York must have gotten probably $3,000,000 from the 
Federal Government. 

Mr. Catherwood. I do not happen to be familiar with that, Con- 
gressman, That does not come within the scope of onr commission. 
It is handled through the department of public works. 

AVhile we maintain an interest and try to have data on all such 
projects within the State, I know that Charley Sells, our superintend- 
ent of public works, has been actively in touch with the agencies of 
the Federal Government in relation to this highway planning. I 
cannot tell you how far that has actually gone. 

Congressman Wolcott. This might become an embarrassing situa- 
tion to this Postwar Committee. I understand, of that $15,000,000 
we made available some time last summer to be allocated to the States 
under the Federal Highway formula, a third, population; a third, 
roads and bridges; and a third, area, that less than two-thirds of 
that money has been used by the States. We would put ourselves in a 
very peculiar position if we were to recommend the appropriation of 
a few more million dollars to supplement this fund, which is already 
made available, when the States have not in fact made use of that 
money for planning pur})oses. 

I was wondering about that. You say that is handled through the 
public-works department ? 

Mr. Catherwood. I regret that I am not acquainted with the answer 
to your question. 

Congressman Wolcott. That is all I have. 

The Chairman. Mr. Folsom, who is the staff director of the com- 
mittee, has a few questions he would like to ask at this time. 

Mr. FoLSOM. So far as your planning in New York State is con- 
cerned> you pay half the cost and the municipalities pay the other half ? 

Mr. Catherwood. Substantially; yes. We limit the State's con- 
tribution to 2 percent of the estimated construction cost of the project, 
and we do not pay more than half of the planning cost. The munici- 
palities pay the remainder, whether the remainder should run more than 

2 percent or not. 

Mr. FoLSOM. It would run about half ? 

Mr. Catherw^ood. Yes. 

Mr. FoLSOM. That plan, as I understand it, is in effect in only one 
or two States. Do you know of any other State? I think Michigan has 
such a plan. 

Mr. Catherw^ood. I have a faint recollection that California had 
something of the kind, but I am not certain. 

Mr. FoLSOM. Since so few States have it, do you think if the Federal 
Government 

INIr. Catherwood. Excuse me. I have some reservations on that, 
altliough it would certainly have the effect of stimulating the prepara- 
tion of the plans. Whether you can get that stimulation without it, T 
am not certain. AVhether, in getting stimulation and the preparation 
of plans, you set in motion some forces which anticipate Federal aid 
on construction and have an inclination to rely on Federal aid for con- 
struction may be desirable or undesirable, depending on one's point of 
view. 

Mr. FoLSOM. Do you think it ought to be on a 50-50 basis ? 



1752 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. CxVTiiERwooD. If the Federal Government were undertaking a 
program of that kind, it would seem to me to be essential tliat there be 
substantial State and/or local contribution. 

I have seen an inclination on the j)art of some of the municipalities 
in New York State, in view of the limited financial aid that we pro- 
vide, to think in some instances that there is going to be a gift of 
some kind along the line some place. Occasionally there is the attitude, 
''Well, let's get in line," rather than to consider the matter on the basis 
of real needs, and their ability to make really effective use of the aids 
in question. 

Mr. FoLSOM. You mentioned that New York State has been able to 
accumulate a surplus of $140,000,000 because of the war conditions, 
primarily. It is your impression that the cities and municipalities have 
all been, within the past 3 years, able to accumulate surplus funds. 

Mr. Catiierwood. I cannot give you any statistics on that. But I 
am certain that the facts show that municipalities have improved their 
standing — if from no other point of view, at least in terms of beginning 
to make substantial reductions in their outstanding indebtedness. 

There are also provisions under New York State law, but I do not 
know how far the municipalities have taken advantage of it — I am 
afraid not nearly as much as they should — where the municipalities 
can set up reserves in order to make use of revenues at the present time, 
and earmarking them for future public works. 

Mr. FoLSOM. You think, then, that the cities and municipalities 
-of the State could finance a reasonable public-works program of their 
own and pay it off themselves ? 

Mr. Catherwood. On public works — thinking of construction costs 
now — yes. Although the answer, or the question, basically depends 
on the definition of the word "reasonable." It is my conviction that 
the cities, certainly a great majority of the cities in New York could 
finance, in a period of a year or two after the war, public works to an 
extent that would exceed those that would normally be constructed in 
a period of that length. 

Now, when you expand that further and talk in terms of a public- 
works program that would be large enough to be a really big factor 
in combating a severe depression, then you begin to get into the range 
where I don't think au}^ one is ])repared to say that the cities and States 
can necessarily finance a public-works program of that magnitude. 

Mv. FoLSOM. Of course, it is pretty much guesswork as to what 
type of situation we will face after the European war is ovei'. 

Mr. Catherwood. There are many differences of opinion there as 
to whether it is "boom" or "bust"; or how long and how big a transi- 
tion period there will be. 

Mr. FoLSOM. Do you agree with the mayor when he says that no city 
in the country can finance a public-works program? 

jNIr. Catiierwood. I regret I did not hear the mayor. Bu!, I don't 
think I am in agreement with the conclusion that no city in the countrj^ 
could finance a public-works program after the war is over. 

Mr; FoLSOM. Those are all the questions I have to ask. 

The Chairman. Mr. Colmer. 

Congressman Coljier. There is a distinction, is there not, between 
the ability of the States and of the municipalities, in their ability to 
finance their own construction? 



POSTWAR ECONOMIC POLICY AND PLANNING 1753 

Mr. Catherwood. Yes, sir. 

Congra'^sman Colmek. I made reference earlier to the fact that many 
of the States had increased their reserves: but it has also been my 
observation that many of your municipalities, because of war indus- 
tries coming within their confines, have expended substantial sums to 
meet those added burdens. Do you agree with that ? 

Mr. Catherwood. Yes, sir. 

Congressman Colmer. That is all. 

The Chairman. We want to thaidv you. Commissioner, for your 
appearance here this afternoon. 

Mr. Catherwood. I wish to express my appreciation for the op- 
portunity, from my standpoint, of a very interesting discussion with 
your committee. If there should be other information with which we 
can supply you that would be helpful to you in your consideration of 
this important problem, please do not hesitate to call on us. 

The Chairman. Thank you. 

Mr. Fish. 

Congressman Fisii. Mr. Chairman, there are two gentlemen here 
representing Delaware County and they want to get back this evening. 
I wonder if we could not hear them briefly at the present time. 

The Chair3Ian. If there is no objection, we will hear from them at 
the present time. Mr. Harry M. Walton of Sidney. Please state 
your name for the purpose of the record. 

STATEMENT OF HARKY M. WALTON, JR., REPRESENTING 
DELAWARE COUNTY, N. Y. 

Mr. Walton. Harry M. Walton, Jr., of Sidney, a representative of 
Delaware County, N. Y. 

The Chairman. You may proceed, Mr. Walton. 

Mr. Walton. Thank you, Mr. Chairman. I am rather embarrassed 
in appearing here today, following all the very able men that you have 
had appear before you, particularly in view of the fact that they have 
so veiy complete and definite plans prepared. 

Just a word to explain our situation. Delaware County is one of 
the largest counties in New York State. It is primarily a rural county ; 
the largest milk-producing county in the State of New York. 

We have only one community in the county that has a substantial 
industry, and that happens to be Sidney, in which I live. We have 
there a branch of the Bendix Aviation Corp. 

Delaware County, being a rural county, is very much limited in the 
tilings that it can do by reason of the tax limitation. By that, I mean 
the amount of money they can raise by tax cm the farmers is small, 
by reason of the limitation of indebtedness that the constitution of the 
State imposes. We have found that we really do have problems there. 
There are things that we need and that we cannot possibly do, unless 
W( get State or Federal aid. 

Now, in Sdney — one of the Congressmen mentioned the fact some 
war communities have had increased burdens to bear. Sidney has. 
Our plant increased from 1,000 employees to — the exact figure is a 
military secret — somewhere around 8,000. That necessitated addi- 
tional streets, sewers, water, and other conveniences. 

99579— 45— pt. 6 4 



1754 POSTWAR ECONOMIC POLICY AND PLANNING 

Our tax burden and bonded indebtedness has increased terrifically. 
On the other hand, our income from taxes is not too great. There are 
many things we still need if the community is to continue to grow, or 
if the community is to live up to the proposed postwar employment 
plan. 

There are many things we will still have to have. We could not 
possibly do them without Federal aid or State aid. 

You would like to know whether we feel that the Federal Govern- 
ment should contribute to the preparation of plans. We feel that it 
should. We do not feel that it would handicap the community or dull 
its initiative. 

On the other hand, it presupposes some person or group interested in 
a project or something that is needed. The completion of the plans 
also gives you a group to work for that project ; a group that is inter- 
"ested in it. And thereby they are more apt to fulfill the completion 
of those plans. 

As to Federal aid or State aid, I think I have expressed the idea that 
there are many things needed in Delaware County, in my own com- 
munity, which could not be done without aid of some kind. 

And do not lose sight of the fact, gentlemen, that the creation of 
these things is not the end of it. Many of them carry additional bur- 
dens of cost, of carrying charges. They must be taken care of. 

And so, when you say that the community should pay for creating 
them, don't forget that they also have to maintain them afterwards ; 
they can neither maintain them, nor build them entirely by themselves. 

We have here a list of projects that would be of great value and 
assistance and which we think are needed in Delaware County. We 
would like to present this to your committee. 

The Honorable Hamilton Fish, our Representative in Congress, has 
asked us to present to you a statement of possible postwar projects in 
Delaware County. Time has not permitted a detailed survey or a 
detailed description of the various postwar projects we wish to recom- 
mend for your consideration. 

However, a committee of representative citizens of Delaware County 
met at Delhi, N. Y., on Tuesday, July 25, 1914, under the chairman- 
ship of the Honorable Ogden E. Bush, former assemblyman of Dela- 
ware County and appointed a committee from Delaware County to 
present to you the following briefly described projects that would be 
of immense value, aid, and assistance and that are vitally needed in 
the various communities and Delaware County as a whole. 

We, therefore, submit the following proposed list of projects divided 
into various subheadings. 

Roads. — We recommend the construction or reconstruction of the 
following roads, briefly described as follows: Cadosia to Rock Rift; 
Downsville to Roscoe ; Sidney to Sidney Center to Walton ; Kingston 
to Delhi, Route 28; Deposit to Walton, Delhi, and Stamford, Route 
10 ; Sidney to Unadilla, Extension 7B ; Masonville to Bainbridge, 
Route 206 ; Shavertown to Livingston Manor. 

Improvement of existing, and the construction of many more, farm- 
to-market roads in all the towns in the county of Delaware. 

Airport,% air parks^ and air strips. — The improvement and enlarge- 
ment of the present airport at Sidney, N. Y., with paved runways, 
proper marking, lighting, and so forth, including the necessary change 



POSTWAR ECONOMIC POLICY AND PLANNING 1755 

of road. Creation of air parks or air strips for villages in Delaware 
County, such as Walton, Delhi, Andes, Stamford, Roxbury, Hancock, 
and Deposit. 

Schools and school facilities. — The construction of school buildings 
at Walton and Sidney Center. The construction of school garages for 
school busses in central districts such as Delhi, Andes, and Sidney. 
Enlargement and improvement of school grounds in various places, 
such as Grand Gorge and other communities. 

Erosion and flood control. — To change the course of the Susque- 
hanna River at Sidney from its present bed to the original stream 
bed to eliminate erosion of a part of the village of Sidney. Flood- 
control project on both the Susquehanna and Delaware Rivers. 

Recreation facilities. — The construction and equipment of swini- 
ming pools, athletic fields, recreation centers, parks, with proper facili- 
ties for all athletic events for .communities of Delaware County such 
as Walton, Stamford, Sidney, and in fact practically all of the villages 
in the county. 

Sewage disposal plant. — In order to reduce the pollution of the 
streams and rivers, to construct and establish storm sewer systems or 
sewage disposal plants in Deposit, Walton, and Sidney. 

Hospitals. — The creation, establishment, and construction of a 
veteran's hospital to be located somewhere in Delaware County, to- 
gether with a general hospital to be established at Delhi and an addi- 
tion to the present inadequate hospital at Sidney to provide additional 
beds, office and storage space, nurses home, ambulance, and garage 
quarters with living quarters above for ambulance driver and grounds 
maintenance staff. 

Public buildings. — The construction of a new post-office building for 
Sidney, N. Y., which is the only first-class post office in Delaware 
County, now housed inadequately in quarters rented by the Govern- 
ment. The construction of an addition to the county courthouse and 
the county clerk's office at Delhi, providing proper bulk facilities for 
storing ancient and valuable records, providing additional and up- 
to-date working space and conveniences. The construction, enlarge- 
ment, and improvement of the town hall at Roxbury, N. Y., and the 
village hall at Delhi and Sidney, N. Y., and town sheds or buildings 
to house town equipment or additions thereto in the various towns of 
the county. The construction of a new and enlarged public-library 
building at Sidney, N. Y. The construction and improvement of fair 
buildings for the Delaware County Fair at Walton, N. Y. 

Public loater works and water supply. — The creation and improve- 
ment of public water works, enlargement of reservoirs and mains. The 
establishment of filtration plants at Sidney and Walton, N. Y. 

General items. — The establishment of more rural-delivery post- 
office routes throughout the county. 

To furnish and assist electric companies already in existence with 
equipment and means for the establishment of additional rural elec- 
trification throughout Delaware County not now served by electricity. 

The creation and establishment of fish and game farms in Delaware 
County and a much enlarged program of restocking of both fish and 
game in Delaware County, together with an enlarged program of re- 
iorestation throughout Delaware County in submarginal lands. 



1756 POSTWAR ECONOMIC POLICY AND PLANNING 

Railroads. — The reestablishment and reeqnipnient on a sound basis, 
of the New York, Ontario & Western Railroad together with the estab- 
lishment of additional manufacturino; industries along- the right-of- 
way to enhance the business of the railroad and to provide additional 
cmplo3nnent. 

Now, I would just like to go back and review these. 
Congressman L'ish. Could you just name offhand some of the more 
im]X)rtant ones without going through the whole list ? 

^Iv. Walton. I woukl say roads and airports. I might enlarge on 
that for a moment. Sidney is one of the terminals of proposed main air 
lines far postwar development. An airport at Sidney (I believe it is 
termed now air parks or air strips in other parts of the country) 
would furnish a complete air contact for the entire county. 

Congressman Fish. Have you got an airport in Delaware County 
noAV ? 

INIr. Walton. There is one large airport at Sidney, and one or two 
airports in the county. 

The other headings are "Schools and school facilities," "Erosion and 
flood control," "Recreation facilities," "Sewage disposal plant," 
"Hospitals," "Public buildings," "Public water works and water sup- 
ply," and "Railroad assistance." 

We have a railroad, one of the few railroads in the country today 
that is in receivership. It runs through a rural area. It is of vital 
use to that rural area. But it has not benefited as many other railroads 
have — the New York, Ontario & Western Railroad. 

Congressman Fisii. I am glad you brought that up, because I really 
think the Government can do something in connection w^ith that rail- 
road, either directing traiiic over it that they control, or locating some 
w^arehouses that could be placed there for surplus goods. 

The Chairman. Have you finished your statement, Mr. Walton? 

Mr, Walton. Yes, sir. 

The Chairman. Mr. Colmer. 

Congressman Colmer. I just w^ant to ask you whose congressional 
district that is. 

Mr. Waltox. Mr. Fish's. 

Congressman Collier. I am sure that with that able representa- 
tion your county will be well cared for in the postwar plans. 

INIr. Walton. Thank you, sir. 

The Chairman. Mr. Fish. 

Congressman Fisii, I have no questions to ask. I am glad you 
came down here liecause you really represent a typical rural com- 
munity. V\Q are not only covering the big cities, but we are covering 
the country. We want to hear from the small cities and the com- 
munities and the counties. Your town is a typical town developed 
through a war industry from 1,000 to 7,000, and has all the earmarks 
of continuing on that large scale after the war. At least we hope so, 
and I will try to see that it does, too. That is very unusual. There 
will be very few big war industries that will continue on the same 
scale. Therefore, that town is in a peculiar situation in that you have 
got three times as many people in that factory as you have in the 
town. 

Well, as far as I am concerned, I am very glad you came dovrn here 
and gave us the benefit of your advice, and presented your views — on 
what the requirements and needs of Delaware County are. 



POSTWAR ECONOMIC POLICY AND PLANNING 1757 

The Chairman. Mr. Reece. 

Congressman Reece. I see Mr. Colmer by his questions is assuming 
that the services of Mr. Fish in Congress should be continued beyond 
January 3, in which I heartily concur. 

CongTessman Colmeh. I did not want to be so bland about it. 

The Chairman. Mr. Wolcott. 

Congressman Wolcott. I haven't any questions to ask. 

The Chairman. There is one other gentleman from that territory 
we will hear from next. 

I wanted to say that when we were making up this program of those 
who were to appear, it was the suggestion of the Representative from 
your district that we get a cross section of testimony through New 
York State, and include not only the cities, large cities or small cities, 
but also some representation from the rural connnunities. 

So, we adopted the suggestion of Mr. Fish, and that is the reason 
why you gentlemen have been invited to come before us. Thank you 
very much, Mr. Walton. 

Mr. Walton. I only regret that I am not better able or qualified 
to express our problems up there, too. 

The Chairman. You did very well. Mr. Wallace, do you care to 
say anything? 

Mr. Thomas Wallace. I am from D.dhi, and also represent Dala- 
ware County. 

I have nothing further to add to what ]Mr. Walton said. 

The Chairman. Thank you. 

The next witness is Mr. l^Ialcolm Pirnie, president of the American 
Society of Civil Engineers. 

STATEMENT OF MALCOLM PIRIJIE, PllESIDEHT, AMERICAN 
SOCIETY OE CIVIL ENGINEERS 

Mr. Pirnie. Mr. Chairman and gentlemm, my '^-^nie ^'^' ISIilcolm 
Pirnie. I am president of the American Society of Civil Engineers, 
and a consulting civil engineer with oliices at 25 West l^oriy-ihird 
Street, New York, N. Y. My residence is 15 Woodland Place, Scars- 
dale, N. Y. 

It is a pleasure to appear before your committee on behalf of the 
American Society of Civil Engineers. I trust that what I have to 
say, together with such additional information as you may call on 
our society to furnish in the future, will be of value in your delibera- 
tions on postwar economic policy and planning. 

The American Society of Civil Engineers is 92 years old and has 
approximately 20,000 members widely distributed geographically. 
Our members are united in support of the highest professional ethics 
and sound engineering practices. They serve in industry, in consult- 
ing practice, and in engineering departments of Federal, State, and 
local governments and in large numbers at present in the armed forces. 

One 3'ear ago this week, the society's board of directors approved a 
program j^repared by its committee on postwar construction and dedi- 
cated itself to the furtherance of the general statements and policy 
outlined therein. The program appears on pages 88 to 94 of the 
record of hearings before the Committee on Public Buildings and 
Grounds, House of Representatives, Seventy-eighth Congress, on post- 



1758 POSTWAR ECONOMIC POLICY AND PLANNING 

war planning. Some 25,000 copies were sent to governors, mayors^ 
chambers of commerce and various agencies. 

Our program called attention to the early completion of the gigantic 
war construction job, which was making available increasing numbers 
of trained planners for immediate employment in the development 
of plans and specifications for constructions of all types, which are 
needed as soon as materials and manpower can be released to build 
them ; and to the fact that many months are required to prepare de- 
tailed plans and specifications, acquire sites, arrange for financing 
and be ready to let contracts for the work. 

With possibly a third of the younger engineers and architects in the 
armed forces, it is obvious that every one of the older two-thirds of 
the trained planners should be employed full time now if a normal 
volume of construction is to be made ready to be built by contractors in 
the first postwar year. This needed construction may be divided into 
three general classes. 

First, the alteration or construction of industrial-plant facilities 
needed for most efficient production units in postwar satisfaction of the 
pent-up demand for durable and consumer goods and of public-utility 
plants, stores, hotels, and office buildings. 

Second, the large volume of needed new homes and farm building 
construction, residence modernization, and construction of multiple- 
family dwellings ranging from small units to large housing develop- 
ments, embodying park areas, playgrounds, and central heating plants. 

Third, the accumulated requirements for public-works construction 
to satisfy the collective needs of constructions and activities which are 
privately financed. 

Each of the above three classes of construction normally accounts for 
about one-third of our Nation's total volume of construction. The 
greater part of construction in the first and third classes and only the 
larger residences and housing developments in the second class require 
engineering and architectural services involving time-consuming prep- 
aration of plans and specifications upon which competitive bids for 
construction may be invited from contractors. The volume of this 
engineered construction normally amounts to a little more than two- 
thirds of the total volume of construction. 

We are soliciting the energetic cooperation of professional, civic, 
business, and labor organizations and of the executive and legislative 
branches of Federal, State, and local governments to prepare a definite 
program of needed construction, which is necessary to absorb the con- 
struction industry's share of manpower soon to be released from the 
armed services and from war plants. 

We know that preliminary studies, preparation of plans and speci- 
fications, arrangements for financing, and acquisition of real estate are 
time consuming and must be completed before construction can be 
begun. This preconstruction work must be done now with the avail- 
able planning ability. If we wait until the war is over to start plan- 
ning, construction jobs must wait until the planning can be done. 

The American Society of Civil Engineers offers to the Government 
and the people of the United States its facilities and the accumulated 
knowledge of its members in working out the practical procedures 
needed. We offer the cooperation of our local sections, of which there 
are 64, and our members in interpreting this program to public and 



POSTWAR ECONOMIC POLICY AND PLANNING 1759 

private agencies and in stimulating local activity and specific action 
consistent with the proposed program. 

To implement this program, our society has established a research 
and development division with a full-time staff, working under the 
direction of our committee on postwar construction. 

This staff has started an intensive campaign through our local 
sections to establish postwar committees for the purpose of energizing 
our program at State, county, and local government levels; and to 
cooperate with any organizations actively engaged in promoting 
action now in the actual preparation of plans for postwar construc- 
tion. At the present moment we have cooperating committees in 40 
of our local sections. 

A relationship has been established with the Committee for Eco- 
]iomic Development whereby our local committees will participate 
wherever possible in providing contacts with both private and public 
construction-planning agencies. 

In order to maintain and report running inventories of tlie volume 
of postwar construction planning throughout the United States we 
have perfected a working arrangement with tlie Business News depart- 
ment of Engineering News-Kecord. Each month we prepare and 
distribute widely to national organizations, Government agencies, 
technical and trade journals, and others a comprehensive report of 
the dollar volume of postwar construction plans under way or com- 
pleted. A typical report dated July 7, 1944, is attached hereto. (See 
exhibitNo. 5, p. 2060.) 

Preliminary steps have been taken to augment our present inventory 
of postwar construction projects with statistics of the F. W. Dodge 
Corp. 

The American Society of Civil Engineers is endeavoring to have 
plans and specifications for new construction ready for bids by July 1, 
1945, which will permit letting of contracts in the following weeks 
for a construction volume costing $15,000,000,000. 

Two-thirds of this desirable construction volume, to cost 
$10,000,000,000, v;ill require engineering and architectural services 
to develop the projects, prepare plans and specifications, aid in acquir- 
ing sites, and in arranging the financing before contracts can be let 
for construction. 

In the tabulation mentioned above postwar construction plans under 
way or completed as reported prior to July 7, 1944, show a total 
volume of 31/4 billion dollars, which is just under a third of our goal. 
Most of the reported volume is for public-works projects. Only 
$111,000,000 of private projects are listed. 

Our $10,000,000,000 goal for engineered construction anticipates 
$5,000,000,000 of public- works projects and $5,000,000,000 of private 
projects. Thus, as of July 7, 1944, less than 2I/4 percent of the antici- 
pated volume of private projects are listed as compared with 63 
percent of the anticipated volume of public-works projects. 

Granting a less efficient coverage of the industrial and commercial 
field by our reporting facilities than their coverage of the public- 
works field, there can be little doubt that incentive to plan for con- 
struction to be privately financed is practically nonexistent. We 
hear frequently that business would be preparing plans now for post- 



1760 POSTWAR ECONOMIC POLICY AND PLANNING 

war construction if tlie cost could be deducted from gross revenue in 
arriving at the taxable net income. 

This very serious lack of planning now for the anticipated 
$5,000,000,000 of eitgineered construction to be privately financed 
undoubtedly extends into the field of nonengineered construction of 
small homes, farm buildings, residence modernization, and so forth; 
of small unit cost but in number of operations suiUcient to total an 
anticipated volume of another $5,000,000,000 of construction. Thus, 
planning now for $10,000,000,000 volume of privately financed con- 
struction is waiting for a reasonable incentive before it can provide 
its ])roper share of postwar jobs. 

To expect public-works projects to expand from their anticipated 
aniuuil volume of $5,000,000,000 of construction to three times this 
volume in order to compensate for needed but discouraged construction 
which is normally privately financed, we must first anticipate sub- 
stantial Federal grants-in-aid for local, county, and State public 
works. This might require immediate announcement of a Federal 
appropriation of at least $5,000,000,000 to provide 40-percent grants- 
in-aid of all non-Federal public-works projects. 

It would be a definite step toward encouragement for rejuvenation 
of free enterprise to permit industry, business, and individuals to 
deduct from their taxable net income the cost of preparing plans and 
specifications now. Proof of payment for such plans and specifications 
and for payment on account of contracts entered into with builders 
and equipment services for ]:)0stwar renovations and constructions 
could be required to justify the deduction. 

Assuming a cost of 6 percent for plan preparations, a $10,000,000,000 
program would add $000,000,000 to the net income of planners, 
builders, and equipment services. On the average, this additional 
income might fall in the 30-percent bracket and produce an increase 
in the Federal income-tax revenue of $18,000,000. If the original 
$600,000 000 deduction is in the 60-percent bracket, representing there- 
by $360,000,000 in taxes, the actual loss in revenue to the Federal 
Government is 360 minus 180, equaling $180,000,000, or 1.8 percent of 
the privately financed construction program of $10,000,000,000 antici- 
pated by our society. 

With regard to public works, our experience to date definitely indi- 
cates that there would be far greater activity in the immediate prepara- 
tion of plans .and specifications if it were possible to make funds 
available at once to local public planning agencies to pay the cost 
of these preconstruction services. 

Further, a larger majority of all political subdivisions are waiting 
to learn the definite policy of the Federal Government regarding 
financial assistance both in the planning of postwar projects and in 
constructing them later. 

In our July 7 tabulation of volume of construction for which plans 
are under way or completed, over 80 percent of the recorded total 
originates in 12 States. Three of these States — New York. California, 
and Michigan — have legislation in force providing financial assistance 
to counties, cities, towns, and villages in providing funds to pay for 
plans and specfications authorized now for postwar construction proj- 
ects. It is anticipated that other States will enact similar legislation 
next year. 



POSTWAR ECONOMIC POLICY AND PLANNING 1761 

We cannot wait anotlier year to o'et plans under way both for pri- 
vately financed and publicly financed constructions if the construction 
industry is to shoulder its 10-percent share of the Nation's business in 
the first postwar year. 

Last year we proposed legislation to provide Federal loans to 
political subdivisions to pay for complete plans and specifications for 
postwar public works. Such loans were to be repaid from financing 
arranged for the projects in advance of construction as a recognized 
part of project costs. This a})peared to us to be the most expedient 
method of enlisting all public bodies in a united effort to have sound 
public- works projects ready to begin their construction when there 
will be need for the jobs such activities would make available. It 
still appears to be a necessary provision to circumvent delaj^s in au- 
thorizations for expenditures for plans for public works. Such delays 
are imposed by law governing a large number of our public agencies 
responsible for the expenditure of public funds. 

■ We believe that a large majority of the States, counties, towns, 
cities, and villages will have little difficulty in arranging attractive 
financing of public-works projects to serve the collective needs of 
industries, commercial and business enterprises, and the citizens who 
direct or aid in their operations. It is obvious that free enterprise 
must have adequate incentive to plan its future operations before it 
can know what new or extended public services it will need. 

Therefore, authorization of local public-works postwar construc- 
tion is dependent upon the faith of free enterprise in an attractive and 
profitable future. 

The Congress can re-create faith in the future needed by free enter- 
prise to convert its ideas into actions. This will involve concise 
legislation to implement the intent and purpose of the Baruch-Han- 
cock report on reconversion of war productions to peacetime ac- 
tivities. 

It will involve attention to agencies of Congress to restrict their 
activities within their authorizations and submit their rulings to 
legal review that will insure adherence to the law established by the 
Constitution. 

It will involve radical revision of the v/artime income-tax law to 
effect a peacetime law directed entirely to equitable production of 
the necessary revenue and devoid of punitive intent against the suc- 
cessful and lawfully conducted activities of free enterprise. 

It will also involve care to avoid Government competition with es- 
tablished privately financed and operated businesses and services, 
particularly where new services are to be provided at public ex]:>ense. 
In such cases commensurate reductions in taxes upon established 
competing services should be authorized to establish equality of in- 
centive for each needed type of service to improve and perfect the 
operations for which it is best suited. 

The following is the Julv T, 19-14, report : 

Since January 1, 19-13, a total of $11,422,839,000 in proposed post- 
war construction plans has been reported by Engineering News-Rec- 
ord. During the same 18-month period only $3,259,510,000 has been re- 
ported in the design stage. Comprehensive data concerning the per- 
centage of plans in the completed state and actually ready to adver- 
tise for bids are not yet available. 



1762 POSTWAR ECONOMIC POLICY AND PLANNING 

The increase over May 31, 1944, in the volume of plans under way 
amounts to $G04,252,000 or about 23 percent. However, $331,030,000 
of this sum, or over half, is for Federal earthwork projects in the 
State of California. 

In volume of total engineering plans in the design or completed 
stage for postwar construction, the following 12 States are leading 
in the order listed : 

1. New York 7. New Jersey 

2. California • 8. Michigan 

3. Oliio 9. Maryland 

4. Texas 10. Indiana 

5. Wasiiington 11. Coneeticut 

6. Pennsylvania 12. Oregon 

Oregon in twenty-fourth position last month is now the twelfth 
State with a reported increase in volume of plans of $51,259,000. 

Michigan increased her volume from $71,142,000 to $96,007,000 
moving from eleventh to eighth position. 

Sanitation. — Waterworks projects total about $230,000,000, an in- 
crease during the last month of 36 percent. This type of work rep- 
resents about 7 percent of the entire volume of engineering construc- 
tion now in the design stage. 

Sewerage projects represent 9.8 percent of the total of all planned 
construction. The increase since May 31, 1944, being about 14.6 mil- 
lion dollars, or 4.8 percent. 

No plans are reported from 16 States for waterworks and none from 
^ 19 for sewerage. 

Highways and hridges. — Streets and roads in the design stage total 
approximately $750,000,000 with $571,000,000, or 71 percent being 
reported from only nine States. 

Specific data on postwar highway plans have not been released in 
21 States. 

Bridge projects are reported in only 28 States and 5 of these have 48 
percent'of the total volume of $334,655,000. 

Streets, roads, and bridges combined represent about one-third of 
all engineered construction in the design or completed stage as of June 
30,1944. 

Public huitdings. — A fair-sized proa:ram of public buildings is being 
planned with little or none being Federal-sponsored. The total of 
$521,000,000 is well distributed geographically althouc;!! the major 
portion is reported in the mid-Atlantic and Midwest States. 

Private construction. — During the years 1925 to 1939 inclusive, pri- 
vate construction averaged about 48 percent of civil-engineering con- 
struction. In a postwar civil-engineering program of $10,000,000,- 
000 this classification should total approximately 4.8 billion dollars. 
At present, $111,870,000 worth of private projects is reported which 
is only 2.3 percent of the postwar potential and 3.4 percent of all 
engineering construction. 

Attached to this report is a chart on postwar construction plans 
under way or completed. 

I kept to my text because I thought that would help very much in 
getting this information before you. 

The Chairman. We appreciate that very much, Mr. Pirnie. 

Mr. Pirnie. Thank you. 

The Chairman. Mr. Wolcott. 



POSTWAR ECONOMIC POLICY AND PLANNING 1763 

Conp:ressman Wolcott. I think Mr. Pirnie made a very splendid 
and helpful statement. I noticed that you, as well as two or three of 
the other witnesses, have stressed the desirability of changes in the 
tax laws. 

Do you think that so important that the success of any postwar 
planning which we might do for public construction would be sub- 
servient to that ^ Is that paramount ? 

Mr. Pirnie. I think that it is important to put in the heart of pri- 
vate enterprise, free enterprise generally, the hope that it is going to 
have an opportunity to operate in a bright and profitable future. 
Unless it has that hope, it .will not authorize large public expenditures 
with a tax lien on the properties of free enterprise in that- area. 

So that you have the problem of faith of general business in the 
future, not only affecting the authorization of local public works, 
but also affecting the determination to go forward with the private 
construction, both for your large plants and for business buildings, 
and muLiple family houses down to the small house on the farm. 

Congressman Wolcott. I feel that a beginning could be made almost 
immediately. In the long run, our Treasury would not pass very 
much of its amiual revenue by allowing industry generally to deduct 
6 percent of the planned works that they v^'ere willing to execute im- 
mediately after the war from the otherwise taxable net income in this 
next taxable year. 

Mr. Pirnie. They would then immediatelj'^ have to do the planning 
in order to make the deduction. As I showed in this rough calcula- 
tion, if the money paid to the planners went into the same tax bracket 
of net income as the money paid out by the industry making the 
deduction for the plans, if they were in the same tax bracket, there 
would be no loss at all to the Federal Government. 

And I snnply assume that the first would be only a 30-percent 
tax bracket, that is the planners, and those who purchased the plans 
would be in the GO-percent bracket on the average. 

Congressman Wolcoit. Is that predicated upon the thought — and 
I am just asking for information now because although I have given 
some thought to it, I don't think any of us have the answer to it. 
This is what is going through the minds of some of us — that any 
planning which we do now, we hope, is for a transitional period. 
We hope that we do not have to continue public works indefinitely. 

If we concede that our economy is based upon continuing and 
perhaps increasing expenditures by the Federal Government, then, 
of course, we will eventually collapse; we will eventually have 
economic chaos, and our economic structure will collapse. 

So we like to think that we are planning for a transitional period, 
and I assume, from what you said, that one of the very important 
elements in the stabilization of our economy, in addition to an 
adequate public-works program during that transitional period, is 
an incentive for private enterprise to take over, gradually perhaps, 
during that transitional period; so eventually we will be on a free 
economy independent of the Government. That is your idea? 

Mr. Pirnie. I think that is a very good summary statement of what 
I hope we are all aiming to accomplish. 

Congressman Wolcctt. Let us put it right in a nutshell : That any 
public- works program which we lay out here now must be predicated 
upon the philosophy of free enterprise, otherwise it will eventually 



1764 POSTWAR ECONOMIC POLICY AXD PLANNING 

fail, and it must encourage the reconversion to free enterprise, rather 
tlian to continue to make industry, business, agriculture, and so forth, 
de])endent upon Government subsidy. 

Mr. PinNiE. Yes, sir. I agree with that statement, too. 

Congressman Wolcott. And probably the factor which has more 
weight in this than any other is adjustment of our taxes, to encour- 
age the flow of capital into private enterprise. 

Mr. PiRNiE. I think that that is a very important thing. I think 
just the generally accepted promise that it is going to be done in that 
direction would have a salutary effect. 

I think that one of the things that would result from it would be the 
consent on (he part of business in every community and county, and so 
on, to authorize their own financing, and going forward with their local 
public W'Orks which, in the last analysis, is the much larger part of the 
total $.5,00(),000,()00-a-3'ear public-works program. The Federal works 
normally may be only 20 to 2.5 percent of that. 

Congressman Wolcott. I do not want to take up the time of the 
committee further on this. But do you believe that in the aggregate 
now there is a scarcity of reconversion industrial rehabilitation of 
capital ? I put it that way so as to give you an opportunity to tell us 
if you believe it to be true that the capital is not inadequate, but that 
it needs adjustment because it is concentrated, perhaps. 

Is that, you think, a rather fair statement ? 

Mr. PiRxiE. Well, I think it is very true that capital toda}^ will not 
go into the risk class at the promise of return under present tax 
arrangements. 

Congressman Wolcott. I just assume — I don't know — that General 
Motors, for example, would not have much trouble in reconverting. 
They are in a pretty good capital state. Smaller industries might have 
some difficulty. 

Now, will we have to take into consideration a readjustment or a 
redistribution of that capital before we effectuate our purpose here 
through the medium, ]:)erhaps, of adjustments to our tax schedules? 

Mr. PiRNiE. Well, of course, I am an engineer and not a financial 
expert, but I have this idea 

Congressman Wolcott. I am neither. 

Mr. PiRNiE. Well, I have this idea. To lend money to a risk oper- 
ated under present tax arrangements and tax schedules, offers the 
lender no return commensurate with the risk. Therefore, he would 
rather just leave his money in bonds, and salt it away in the safe- 
deposit box than take it out and put it out as risk capital. 

I think most of your smaller businesses would have difficulty in their 
reconversion until there is a general feeling that the future is going 
to give risk capital a fair return on its investment. 

That is a personal view not backed up by checking with someone 
who is more particularly engaged in financial operations. 

Congressman Wolcott. In certain phases of our study here, it has 
beer? suggested that the Government make credits available for smaller 
industries during the transition period, which contemplates, of course, 
some, may we say, liberalization of the tax structure to encourage them 
to pay that back to the Government as deductibles. 

So that eventually, when we can safelj^ reduce the tax burden, it 
will be on a horizontal line which won't give any particular industry or 
business any decided advantage over another. 



POSTWAR ECONOMIC POLICY AND PLANNING 1765 

The thing that is bothering us a great deal in that field is that, if 
^xe precipitously decreased taxes with a $300,000,000,000 debt, we will 
either give a decided advantage to certain industries, or our whole 
structure might collapse, because our revenues will not be sufficient to 
carry our burden — I am just thinking out loud. 

Mr. PiKNiE. Well, I have this feeling at the moment: We have one 
major purpose now, and that is to win the war. And people are not 
kicking about the way the tax structure is set up for that purpose. 

I do feel that it has the possibility of revision for a postwar opera- 
tion of tax structuie which will get more revenue than the present 
structure ajiplied to postwar economy. 

I think the present structure applied to postwar economy, when the 
urge to win the war has gone by, would prove the diminishing-returns 
principle very clearly, and you would not have the business to tax 
and bring in the revenue. 

Congressman Wolcott. Thank you very much, 

Mr. FoLSOM. Do I understand you feel it is necessary to have the 
Federal Government underwrite about 40 percent of the cost of the 
jjrojects, with govenunent at all levels underAvritiug 00 ? 

]\fr. PiRxiE. I said that if it was necessary to boost the normal 
public-works program to three times its size, the only wa}' it could 
be done was by a Federal grant. 

The normal program of $5,000,000,000, I think, can be financed by 
the Spates, counties, and their political subdivisions with normal 
Federal projects such as higliAvays and rivers and harbors. 

Mr. FoLSOM. Do a-ou think it is necessary to boost it to three times 
its normal? 

Mr. PiRxiE. I don't think it is necessary. I think that the con- 
struction industries' operation, which our societv has determined to 
be reasonable for th.e first postwar year, is $15,000,000,000; $5,000,- 
000,000 of which will be public works; $5,000,000,000 of which will be 
your small homes, farms, buildings, and works that take no engineer- 
ing services; and $5,000,000,000 of which will be industrial plants and 
large hotels and municipal buildings and so on. 

Two-thirds of the ])rogram normally would be privately financed. 
And that two-thirds of tlie program must go forward to prove that 
the ]3eople have faitli enough in the future to authorize the other 
third. They all run together. 

Mr. FoLS03i. On the other hand, if you went ahead on big public- 
works programs, the Federal Government paying half, that would of 
course cause an increase in the public debt. Wouldn't the effect of 
that on this incentive counteract any good you might have? 

Mr. PiRxiE. That is just the fear. The only time you have to do a 
thing like that is when you have scared private investment out of its 
normal field of activity. It Avould be much better to put attractive 
bait to bring out $10,000,000,000 of private investment in construc- 
tions, then to triple the normal value of public works to take its place. 

The industry will build. It just seems that we ought to get the 
incentive back into free enterprise to finance its own $10,000,000,000 
share of the program. 

The Chairmax. I think, Mr. Pirnie, we are all agreed that we 
would like to have private industry do this job rather than have public 
works. But we are doubtful as to whether or not private industry 
will be able to do it. And at the same time, if it is able to do it, we, 



1766 POSTWAR ECONOMIC POLICY AND PLANNING 

I tliink, do not want to ^et the government, either Federal, State, or 
municipal, out on a building spree that is going to cause keen compe- 
tition between government on the one hand, and private industry on 
the other, trying to get the men and material. 

Of course, the purpose of this committee is to study the postwar 
conditions so far as we are able to peer into the future, and to deter- 
mine whether or not a program of public works will be necessary to 
have on hand. 

In other words, what I think we are striving for is some sort of, 
perhaps you might call it, construction insurance, that in the event of 
the. faihire of private industry to absorb any unemployment that 
might develop — and we do not know that it will — immediately after 
the war, we would have plans in readiness for public works that might 
take up that slack. 

Mr. PiRNiE. I think that is exactly in line with what our committee 
on postwar construction is trjdng to energize. 

We show in our July 7 tabulation, $3,259,000,000 of total volume of 
construction as of July 7. The sad part of it is that all of that prac- 
tically is public works with the exception of $111,000,000 of private 
projects. 

Now, these projects which are actually being planned or for which 
the plans have been completed are reported upon monthly. Our serv- 
ice, that we worked out, is feeding information into our committee so 
that we can help our local sections in their activities locally and, with 
other organizations interested in the same effort, spur them in their 
activities in gathering this planning for postwar activities. 

Now, we will be glad to keep your committee up to date with this 
information as rapidly as we issue it. But I think that $111,000,000 
is the field we ought to go after, if there is any way of giving them the 
incentive to start in their planning for postwar work. 

The Chairman. We would be very glad to have you send us that 
information. But your rather disquieting figures there would seem 
to indicate the absolute necessity of the committee encouraging it, as 
far as possible, by some plan of public works ; because it does not look 
to me, judging by your figures, that industry has yet recognized the 
vital necessity of going forward. Now, it may be that they are so 
intensely engaged in war work that they have not yet got to the point 
where they are looking for the days of peace to come. 

But judging from the number of contractors coming down to Wash- 
ington regarding the termination of contracts, I should think they 
would look pretty far ahead for a speedy termination of the war in- 
sofar as their contracts were concerned. 

I am a little surprised that the figures do not show more anticipated 
work by private industry than those which you have revealed here 
this afternoon. 

Mr. PiRNiE. Of course, as I say, we may not yet have the equal 
coverage of the private projects, and these are simply the engineered 
private projects. 

Mr. FoLsoM. Those figures do not check with Dodge's figures. 

Mr. PiRNiE. These figures do not include the F. W. Dodge figures. 

Mr. FoLSOM. When Mr. Holden was before our committee, he gave 
much higher figures. 



POSTWAR ECONOMIC POLICY AND PLANNING 1767 

Mr. PiRNiE. We are working out arrangements with them to get 
their reporting into these same cohimns that we have. 

Mr. FoLSOM. We got the impression from him that private con- 
struction was goin^ to be at a very high level and did not want the 
competition of public works. 

Mr. PiRNiE. I think that a lot of this is wishful thinking. I think 
it ought to be, myself. 

Mr. FoLSOM. He had figures 

Mr. PiRNiE. You meanhe has the plans done? 

Mr. FoLSOM. I do not know about the plans. 

The Chairman. I think he called it deferred maintenance, and 
seemed to think, in the first year in any event, that there would be 
little if any need for real, heavy construction work, so important was 
the necessity for repairs and bringing buildings back to their original 
condition. 

Mr. PiRNiE. Of course, that particular field is the one for which 
we will not have reports here. That is the field of what we call non- 
engineered construction. It is where the owner goes to a builder 
and makes a contract with him to build something ; or he goes to an 
air conditioner or furnace man and makes a contract with him to 
renovate his house; so mavbe he is right. That will jump clear up 
to the full $5,000,000,000 figure, in that field. 

We hope so, because it will greatly benefit the construction industry 
share of the postwar business. 

The Chairman. Well, Mr. Pirnie, we want to thank you for your 
scholarly and professional statement here this afternoon. We feel 
that the committee has greatly benefited by it. 

We will next hear from Mr. Upham, who is an engineer and director 
of the American Road Builders Association. 

Mr. Upham, do you wish to make a statement, or do you wish to 
file one? 

STATEMENT OP CHARLES M. UPHAM, DIEECTOR, AMERICAN ROAD 
BUILDERS ASSOCIATION 

Mr. Upham. I would like to commend the committee on its activi- 
ties, because I think you will create the formula that will bring about a 
proper period after this war. 

The two briefs that I would like to file with you are studies that 
were made during the depression and contain discussions of many of 
the basic features that you have been concerned with here today. 

(The two briefs,are found in a Senate committee print, 78th Cong., 
2d sess., A Sound Plan for Postwar Roads and Jobs.) 

It was a study which was started about 1932, and then found that 
the causes and effects during the depression, the things that created 
conditions were as continuous in the postwar period as they were then. 

So we have compiled all of these basic figures and causes and effects 
and put them into these briefs, and I would like to file them with you. 
It shows just very briefly that we have an economic pattern, and the 
pattern after every major war is more or less identical. 

There is one other thing we were very much surprised in, and one 
that is not realized today as completely as it should be; that is, the 



1768 POSTWAR ECONOMIC POLICY AND PLANNING 

part that the constniction industry plays in our entire national 
economy. 

When you had between 12 and 15 percent of our national income 
generated through construction, you would have a prosperous period • 
when it dropped below the 12 percent, you got into depressed condi- 
tions. 

Then, with a certain number of people, you can figure out approx- 
imately what the national income should be. From that formula you 
can get the total construction required to bring about prosperous con- 
ditions, which entails relatively full employment. That figure is 
around 14 or 15 billion dollars, as previously mentioned by Mr 
J irnie, that is, taking into consideration the 1940 value of the dollar, 
ihen, as to the public investment and private investment in normally 
prosperous periods : the private investment has been about two-thirds 
or a little more ; and the public investment has been the remainder. 

I do not think it has been only a period of 2 or 3 years where 
private investment has anywhere near approached the condition 
required for prosperity. I don't think there is any question, if you 
study the briefs, conditions, and the records carefully, but that you 
will need a public works or public investment program. 

There is no question about that, because I do not think we have 
had over 3 years where the private investments have created enough 
of a stimulus to continue prosperity. 

There is just one feature and that is the manner in which this 
money should be spent. In the first pla:ce, probably the ideal con- 
dition would be sufficient construction through private investment to 
do the entire job, and only have the minimum of public investment. 
In other words, let the private investment do the whole thing, if pos- 
sible. But if you lack that private investment, then vou must take up 
the remainder through public investment. If you "do not, you will 
bring depression. 

After you figure the amount of money that should be invested, 
then the method by which that is invested is just as important as the 
amount of money being invested. That is, you have got to do it by the 
most economical and most efficient means 'possible. This, of course, 
means the competitive system of private enterprise where the work 
is put up and several people will bid on it ; and the project is con- 
structed for the least amount of money. If you do it otherwise, you 
lose that advantage, which may be the difference between prosperity 
and depression. 

In the basic set-up, if you have a large construction program using 
public funds you will find that you will create relatively full employ- 
ment with a high national income, and it is from this national income 
that the Government draws its taxes. 

Under those conditions you will witlulraw enough from that national 
income to pay the ordinary expenditures of Government, pay some- 
thing on our national debt — and our ccmditions in the future" will be 
entirely different from those of the past. 

Before the war we had a debt of some 25 billions, and during the 
depression that went up to 50 or 60 billion dollars. Now, we have a 
250- to 300-billion-dollar debt. If we are not going to repudiate those 
debts, then we have to have a high national income which will only 
be brought about through relatively full employment; that will be 



POSTWAR ECONOMIC POLICY AND PLANNING 1769 

brought about by sufficient public works programs to fill in the gap 
between private industries' investments and the minimum require- 
ments of construction. 

Those things are all taken up in detail, and I would like to submit 
to you, Mr. Ciiairman, these two briefs. One is more or less the writ- 
ten brief with a few charts, and the other brief is the same story told 
in the form of charts and graphs. 

The Chairman. Without objection, they will be received for filing 
with the committee. 

Congressman Wolcott. Mr. Chairman, I might say that I wish the 
committee would give special thought to Mr. Upham's graphs and his 
suggestions. INIr. Upham has been working very closely with the 
House Rules Committee ever since I have been a member of it, for 
the last 10 years. 

We have relied heavily upon Mr. Upham's advice. He is an out- 
standing highway engineer. He has been consulted on the Pennsyl- 
vania highway, among others. He has studied economics, and has 
been applying it to highway construction. I am sure Mr. Upham 
and his advisers will be available if the committee would like to turn 
to any phase of their work later on in Washington. 

The Chairman. I think we will probably take it up in Washington 
in connection with further testimony. 

Are there any further questions to be asked of Mr. Upham '^ 

Mr. FoLSOM. No. 

The CiiAiRiiAN. I think that concludes the program for witnesses 
for the day. Without objection, the committee will meet at 10 o'clock 
tomorrow morning when Commissioner Moses will be our first witness. 

(An adjournment was thereupon taken to Friday, July 28, 1944, at 
10 a. m.) 



yU571)— 45— pt. 6- 



POSTWAR ECONOMIC POLICY AND PLANNING 



FBIDAY, JULY 38, 1944 

House of Representatives, 
Subcommittee on Public Works and Construction 

OF THE Special Committee on Postwar 
Economic Policy and Planning, 
New York, N. Y. 

The subcommittee met, pursuant to notice, at 10 a. m., in the United 
States Courthouse, Foley Square, New York City, Hon. Walter A. 
Lynch, chairman, presiding. ^ ^ ^ ^^ ^ ^ 

Present : Hon. Walter A. Lynch, New York ; Hon. John R. Murdock, 
Arizona; Hon. Eugene Worley, Texas; Hon. Hamilton Fish, New 
York ; Hon. B. Carroll Reece, Tennessee ; Hon. Jesse P. Wolcott, Michi- 
gan ; Hon. William M. Colmer, Mississippi. . -r^ tt t^ ^ 

Also, present: Marion B. Folsom, staff director; A. D. H. Kaplan, 

consultant. i t-, j? j 

The Chairman. The meeting will come to order. Be tore proceed- 
ing with the testimony this morning, I wish to state that I received a 
telegram from our colleague, John Fogarty, of Rhode Island, that 
he has been unable to attend the hearing because of the death of his 

T*1 Ml PT* 

So, without objection, we will send a letter expressing the condol- 
ences of the committee to Congressman Fogarty. 

I also wish at this time to express the appreciation of the committee 
to the genial United States district attorney for the southern district 
of New York, Mr. James B. McNally, through whose kindness and 
courtesy we have secured the use of this spacious and cool courtroom. 

Mr. McNally, you do not know how gi^eatly we appreciate your kind- 
ness. I think it is quite appropriate that we should be in this spot, so 
that our friends on the committee from the South and from the West 
would know that, although New York is always a "hot spot," neverthe- 
less, we have a cool atmosphere, too. 

Congressman Colmer. Before you leave that subject, would you 
yield to me ? 

The Chairman. I will yield to Mr. Colmer. 

Congressman Colmer. I express the hope that our genial district 
attorney, who has been so courteous and hospitable, will not ask for a 
new courthouse under the new program. 

The Chairman. We will see whether Commissioner Moses will rec- 
ommend such a thing. 

The first witness that we will have this morning is Commissioner 
Robert Moses. I shall permit Commissioner Moses to give the present 
positions which he holds. I also want to say for the benefit of my 
colleagues that the commissioner is an outstanding authority on public- 

1771 



1772 POSTWAR ECONOMIC POLICY AND PLANNING 

lA'orks construction, particularly parks and the like, and lie belongs to 
and is a member of so many different commissions that I doubt whether 
or not he actually remembers all the commissions of which he is a 
member. 

Before proceeding with your testimony, Commissioner Moses, I wish 
to review for your benefit, so that you may, if you want to, direct your 
remarks to the subjects that I have in mind. 

Yesterday there was apparently a clear and deep-cut division of 
thought with respect to postwar public-works planning. Mayor 
LaGuardia and Borough President Lyons and one of the witnesses 
from up-State testified to the effect that there would be need, as soon 
as possible, of Federal aid in postwar planning, and even in postwar 
construction. 

A different theory was expressed by Borough President Edgar 
Nathan and by Commissioner Catherwood, representing the State 
department of commerce. 

Their testimony, in effect, was that there was no need of Federal 
aid in postwar planning, or in construction ; that that was a State and 
numicipal task which should be undertaken, with the possible excep- 
tion of airports and roads. 

Now, it seems to me that the latter theory fails to take into con- 
sideration that we are facing a grave emergency which has not yet 
come, but which certainly appears to be in the offing. Personally, I 
disagree with the theory that there is no place for Federal planning 
in postwar construction at this time, and I feel that any moneys 
that may be expended by the Federal Government in connection with 
postwar planning of public works, whether those public works be 
Federal projects, State or municipal, or county projects, is just so 
much insurance that the Government will not thereafter have to under- 
take such projects as were originally undertaken in the early days of 
WPA. 

I understand that you have a prepared statement. After reading 
the prepared statement, or in the course of it, if you could give an 
expression of your own opinion — 

Congressman Reece. Excuse me, Mr. Chairman. "Would you permit 
an interjection? 

The Chairman. Surely. 

Congressman Reece. 1 did not gain the impression that any of the 
witnesses who were on the stand yesterda}', suggested otherwise than 
that we should have adequate plans for building programs in readi- 
ness, so that, in the event public building programs to absorb unem- 
ployment became necessary, we would be ready to take these projects 
from the shelf and proceed immediately with construction of useful 
projects. 

The only difference, as you indicated, was whether that responsi- 
bility should be assumed by the State and other governmental agencies, 
rather than the Federal Government. 

As I recall, they were all in accord that these plans should be drawn 
up and be on the shelf. 

The Chairman. I quite agree with my distinguished colleague that 
the witnesses were all in accord, that there should be plans. 

But my point was directed to the testimony, as I understood it, and 
which appears in the newspapers this morning, to the effect that some 



POSTWAR ECONOMIC POLICY AND PLANNING 1773 

of the Avitnesses yesterday were of the opinion that there was no need 
of Federal aid to the political subdivisions at this time, and until the 
emergency should develop. And it was my thought that we would 
get an opinion here this morning, if we could, without lengthy ques- 
tioning. Therefore, I wanted the Commissioner, if you care to later 
on, to direct your remarks to whether or not you believe that the 
Federal Government should be of assistance to the States and the 
municipalities and political subdivisions in the preparation of the 
plans. When I speak of assistance, I mean financial assistance — the 
possibility of financial aid in any of the projects undertaken thereafter 
by the I^^'tate and political subdivisions. 

Mr. Commissioner, will 3'ou give your name and long number of 
titles which you hold ? 

STATEMENT OF ROBERT MOSES, PARK COMMISSIONER, CITY OF 

NEW YORK 

Mr. IMosES. Robert Moses. I am park commissioner of the city of* 
New York, and a member of the city planning commission. 1 am 
president of the Long Island State park commission, chairman of the 
State council of parks, chairman of the Jones Beach Parkway Au- 
thority, Beth Page Park Authority, chairman of the Triborough 
Bridge Authority. I think that is sufficient for the titles which I hold. 

Mr. Chairman, I prepared this memorandum as a way of saving 
your time and to indicate my approach to this problem. It is a much 
broader problem than public works. 

AVhatever the j^ardstick, the magnitude of the coming postwar 
dislocation of spending and employment is staggering. Congress,, 
which knows the figures, seems not to realize their importance. Com- 
pare the current and last prewar year. National income is 142 billions, 
as contrasted with 95 billions. Of the present enormous total, some 
86 billions represent Government spending. Employment todaj^, in- 
cluding the armed forces, is 62 millions as against a 52 prewar top. 
If Government spending drops swiftly, how much income and employ- 
ment can business make up and how quickly ? The best we can pos- 
sibly expect is a national postwar income of 122 billions and employ- 
ment totaling 50 million people. 

The Committee for Economic Development and other optimists 
tell us that, as soon as the war orders are completed, defense contracts 
wound up and conversion effected, business will immediately absorb 
all those seeking employment because of accumulated savings, ex- 
pansion of plants, experience in mass production of munitions, new 
incentives, boundless confidence in the future, and finally, because of 
the tremendous unsatisfied demand for all kinds of goods and serv- 
ices. These people claim that the real problem is the control of infla- 
tion in the face of abnormal purchasing power and extreme shortages 
of consumer goods. 

The same groups overemphasize the effects of technological im- 
provements and argue that enormous additional employment will 
immediately be afforded through developments in the fields of metals, 
plastics, aeronautics, electronics, television, power, prefabrication, 
and so forth. Technical improvements do not always increase em- 
ployment, and in any event it takes time to get them into mass pro- 



1774 POSTWAR ECONOMIC POLICY AND PLANNING 

duction. They belong, therefore, in the class of post-postwar stimu- 
lants. Similarly, the notion that many millions of new cheap houses 
with all the latest gadgets will be built right after the war is sheer 
nonsense. Most people who have the means and the ambition will 
repair, repaint, and refurnish their present homes rather than build 
new ones. 

We cannot afford to minimize the difficulties of conversion and the 
time required for retooling. Business needs capital. It must be guar- 
anteed opportunities for expansion in a friendly atmosphere. It must 
be reliably informed in advance as to the rules of tlie game so that 
it will not be subject to the whims and vagaries of politics. Small 
business particularly needs restoratives but direct Federal loans with 
the inevitable Federal control can't revive small business. That is 
what the local banks and loaning agencies are for. Perhaps a Fed- 
eral guarantee for local loans on the FHA model is the answer. 

Labor must be assured of proper awards in the form of high wages, 
reasonable hours, increased leisure, and a fair share of profits of all 
kinds. Taxpayers must be promised an embargo on exorbitant and 
punitive tax rates which would make both saving and spending im- 
possible and throttle private enterprise. The debt must be retired 
as prosperity increases and must not be a millstone around the necks 
of those who are trying to get on their feet after the shock of war. 
Relief abroad must be on a generous scale but rehabilitation and 
reconstruction must not exceed our means. Immigration must con- 
tinue to be reasonably restricted, so that we will not aggravate our 
own domestic employment problem. 

Another assumption which must be examined critically is that in- 
creased foreign trade will immediately stimulate domestic employ- 
ment. The average American's approach to international cooperation 
is friendly but conservative. He is not a free-trader in the sense 
that he is willing to lower American wage and living standards to 
redress the balance in other countries. He is not willing to depend 
entirely on foreign countries for strategic materials and to risk the 
cutting off of these materials in another war. The average American 
is for international economic and political cooperation, but he regards 
these as ultimate objectives and does not favor the adoption of an in- 
ternational planned economy. He believes that God still helps those 
who help themselves and that full employment, like charity, begins 
at home. 

Given time and favorable conditions we can produce in unprece- 
dented abundance the countless benefits of a mechanized civilization, 
but it can't be done in a few months. There is a yawning gap which 
must somehow be bridged. A tough transition period will precede 
the new era of full employment. No responsible person can afford to be 
dogmatic about the length of this period; but it may safely be as- 
smned that it will last 2 years, beginning with the end of the Euro- 
pean war and depending to a considerable extent on the length and 
severity of the far-eastern campaign. 

Given a reasonable amount of time, I do not question the initiative 
of our people nor the resiliency of our American economic system. It 
is the interval which concerns me, because in that period the entire 
outlook on life of the generation which fought the war will be deter- 
mined. Two years of buffeting about and pillar-to-post job hunting 



POSTWAR ECONOMIC POLICY AND PLANNING 1775 

will result in disillusionment, cynicism, and recourse to the desperate 
remedies which have always been the stock in trade of demagogues and 
agitators. Mustering-out pay and similar expedients are no substitute 
for jobs. 

In the transition period, business cannot possibly absorb all of those 
looking for jobs, no matter how highly we estimate savings, en- 
thusiasm, pent-up consumer demand, and the urgent need of all kinds 
of repairs. Millions of men, discharged from the armed forces and 
industry, must be employed by the Government on worth-while public 
works, relegated to w^ork relief or the dole, or taken care of through 
tremendous soldier and security benefits, largely paid out of the 
Public Treasury and involving a crushing burden on business in the 
form of direct and indirect taxes. 

We do not even know what the men in tlie armed forces want to do 
when they are discharged. The War Manpower and draft authorities 
tell us rather glibly that jobs for servicemen will be taken care of by 
the draft boards which are ready at a moment's notice to go into reverse 
and to become branches of tlie employment service on what is called 
D or demobilization day. On the other hand, those in charge of the 
draft machinery frown on the suggestion that they make a canvass of 
men in service to see that sort of jobs they actually want when they 
get home. They say that such a canvass is too complicated and would 
produce nothing of value. It is difficult, however, to understand why 
machinery established to enable soldiers to vote in a Presidential 
election cannot be used to find out what the same soldiers want to work 
at after tlie war, a matter which from all accounts concerns them 
much more vitally. 

It is true that a sound public-works program, consisting only of 
needed repairs, reconstruction, and improvements, and carried «n by 
contract instead of w^ork relief, is not likely to employ at the scene 
more than a maximum of 5,000,000 men at any time during the transi- 
tion period; but back of these men are millions of others in mines, 
mills, factories, transportation, and management, whose temporary 
employment in this period will enormously help business recovery. 

The public-works program should be flexible. It should be adjusted 
to regional demands. It should not compete witli or elbow out private 
employment, but should supplement it. Even a comparatively modest 
works program will be difficult to achieve because of lack of funds; 
delays in the preparation of detailed specifications; inability or un- 
willingness of municipalities and States, wholly or even partly, to 
finance either plans or construction ; absence of a definite policy as to 
Federal grants; and the difficulty of getting the Federal, State, and 
local governments together on a comprehensive program. 

It was precisely the situation which, late in 1933, led to the estab- 
lishment of the CWA and its successors. We had to accept a make- 
shift relief program because we were not ready for contract work on 
a large scale and had nothing better to offer. It is, however, fact, and 
one which believers in a public-works program must face, that out of 
$60,000,000 made available by Congress many months ago for high- 
way plans on the basis of matching 50-50 by the several States, only 
a fraction has so far been spent. I would suggest, therefore, that the 
proportions of Federal and local design contributions be changed to 60 
percent Federal and 40 percent local. Even this will be futile, unless 



1776 POSTWAR ECONOMIC POLICY AND PLANNING 

there is a definite promise of substantial Federal contributions to 
construction as well as to design. 

Not long ago a writer of financial articles described me as a very 
badly informed gentleman because I advocated a conservative works 
program to supplement the revival of private business. The main 
argument on which this critic based his conclusion was that accumu- 
lated savings in war bonds, bank deposits, and cash, and enormous State 
unemployment reserves would tide over the average family, and that, 
therefore, all those out of work need not fear an extended unemploy- 
ment period. It seems incredible that any responsible person would 
make this argument. If the owners of war bonds, many of them of the 
cumulative savings type, cash them in before they are due, draw out 
their bank deposits and spend their cash, we will have the finest 
financial mess this country has ever seen. 

As to unemployment reserves, it is theoretically true that such re- 
serves are adequate to pay $20 a week to 5,000,000 persons for over a 
year if we don't mind taking the last penny out of the till. Prac- 
tically, however, the statement is false, because under existing laws it 
is impossible to pay $20 a week to any person for a year. The average 
maximum of benefits over all the States of the Union in 1 year is less 
than $295. 

It is all very well to depreciate, in principle, a deficit economy and 
to characterize every Government expenditure as waste. For example, 
large manufacturers of motorcars, who war against Government 
spending, propose to turn out tremendously increased quantities of 
cars after conversion. These cars are wholly dependent upon roads 
built with Government money. Present highways have deteriorated 
through age and neglect to the point where they are actually disin- 
tegrating. It is high time we got over the preposterous notion that an 
order for structural steel is beneficent if the steel goes into a private 
speculative enterprise; but wasteful if it is used to repair or im- 
prove a needed public facility. 

The only really constructive official step taken thus far was the 
appointment of Bernard M. Baruch and John Hancock to report to the 
Director of Economic Stabilization on orderly cancellation of war 
contracts, prompt disposition of surplus materials, and simplified ac- 
counting. Unfortunately the Baruch report ran afoul of the contro- 
versy between the President and Congress over Executive usurpation 
and congressional prerogatives. If such controversies continue to 
bedevil the adoption of plans for demobilization, we are headed 
straight for the rocks. 

We need a single representative and aiithoritative commission to 
insure jobs in the transition and subsequent postwar period. It should 
be a commission which fairly represents the Executive, both Houses 
of Congress, business, labor, agriculture, technical groups, and the 
general public. Its chief mandate would be to reconcile differences, 
find common grounds, and prevent another of those great revulsions of 
public opinion from global thinking to normalcy such as followed the 
First World War. 

There are too many investigating agencies and autliorities, public 
and private, in the field today ; and it is almost impossible to reconcile 
their pronouncements. Can we still establish such a commission this 
year in the midst of a Presidential campaign when the tendency of 



POSTWAR ECONOMIC POLICY AND PLANNING 1777 

the party in power is to win with its friends, and of the opposition 
to oppose everything which comes from tlie administration, irrespec- 
tive of merit ? 

It may seem a counsel of perfection to urge both leadership and 
the spirit of compromise in the eve of a close election, but as applied 
to the most urgent of our domestic postwar puzzles, it should not be 
impossible. It is the greatest service we can render those who are 
fighting at the front. 

The proposed commission should establish, besides the principles 
of conversion and disposition of surpluses; the national income and 
employment which we aim at in the transition period and in the new 
era; accumulation of reserves and other proper incentives to business; 
the tax system of the country; our immediate objectives in inter- 
national trade; the stimulation of American enterprise abroad; the 
scope and financing of a flexible Nation-wide postwar public-works 
plan ; the stimulation of repair work on a large scale ; the extent of 
special soldier benefits; the necessary expansion of the Social Security 
System; and finally, the proper relationships of the Federal, State, 
and municipal governments in carrying out this program. 

Suppose the present Congress does nothing further about the matter 
this year, proceeds through its present numerous committees with 
their conflicting objectives and ambitions, and refuses to take definite 
action on the Baruch report and generally marks time to see how the 
election is coming out. The situation which would then arise is 
comparable to the one recently described by the Irish Minister to the 
United States who was asked how things looked in London and in 
Dublin. His reply was, 'Tn London the situation is serious but not 
hopeless. In Dublin it is hopeless but not serious." 

The employment and reconversion problem would be serious but 
not hopeless, assuming that some constructive thinking continued to 
be done on the subject and that public opinion was clarified as the 
result of the campaign. On the other hand, it would take the new 
Congress several months to come to any conclusions, and if the Euro- 
pean war ends this year, we shall be in the midst of demobilization 
by the time we have a plan and right up against the same old problem 
of relief expedients on a large scale. 

Only full cooperation of ca])ital, industry, labor, agriculture. Gov- 
ernment, and all other forces will meet the challenge of postwar 
emploj'ment. Neither private nor public leadership alone can do it. 
Academic perfectionism is not the answer, nor unlimited expansion 
of Government functions, nor leaving it all to business or all to public 
works, nor complete international planned economy. The answer 
lies in united effort, in sinking petty differences, in the objective con- 
sideration of every tried and promising expedient, and finally in as 
prompt, nonpartisan and patriotic action as can be brought about 
in the midst of a national election. If we must wait until the election 
is over, let us pray that the delay will not result in another gigantic 
relief program, which will be a confession that we have learned 
nothing since World War I. 

As I understand it, this is a subcommittee of the committee dealing 
with the general policy of policy and planning. 

I thought in the short time that I had available to indicate, first 
of all, the scope of the problem as to which I think there is very little 



1778 POSTWAR ECONOMIC POLICY AND PLANNING 

dispute. I mean, the various yardsticks in national income between 
Government and private expenditures, the highest peak of prewar 
employment and present employment, excluding and including the 
people of the armed forces, and the idea of those figures was to show 
what a tremendous drop seems to me to be inevitable after the war, 

I have indicated, more or less arbitrarily, my notion that the real 
problem of unemployment will last for at least 2 years following 
the war. That is based on these figures which I think are in- 
disputable. It is based also on a good deal of observation here and 
in other parts of the country, and is based on experience, rather bitter 
and unpleasant experience, that I had with a number of others at 
the time of the depression. 

I want to refer to that briefly in passing. Perhaps I ought to say 
that I happen to be a Republican and a conservative. I went down 
to Washington in the late fall of 1933 with a representative of the 
Democratic administration here in New York City. I represented 
Mayor-elect LaGuardia, who had not taken office. My old friend, 
Frank Taylor, who was later comptroller and commissioner of wel- 
fare, represented Mayor O'Brien. We went down to a conference 
called by INIr. Hopkins to introduce the CWA, 

My views were conventional ones at the time, and views that you 
would expect from a conservative. I did not like to see the Federal 
Government expand its functions, reach out into communities to do 
what the localities, I thought at the time, were able to do for them- 
selves. And I did not foresee, as some so-called wise people now 
say they did, the extent of the unemployment. 

But there was one thing down there in Washington, and it im- 
pressed me and it stuck in n\y mind ever since. Harry Hopkins had 
come from New York, as you know, and had been working on similar 
matters here. And he asked me this question which I was unable 
to answer. He said, "If you do not want anything in the nature of 
work relief, what have you to offer as a substitute?" I did not have 
anything. 

I think that is the situation we are going to be in again. He 
talked to me about public works and he said, "How many plans have 
you got ready; how many contracts are ready to be let?" As far as 
having anything to do with the city administration, I never met the 
mayor until after election, and did not agree to go into the city 
administration; so I certainly had no plans for that particular 
agency. So far as the State was concerned, we were caught com- 
pletely unprepared, 

Weil, a few weeks later, I inherited 82,000 people, I think it was,, 
on work relief here in New York in the then 5 city park departments, 
which had been consolidated. 

If any of you want a good, strong argument against a recurrence 
of that, I commend you to the records of that period, I dropped 
most of my academic and political consideration of the subject, but 
I had to find something for those 82,000 people to do that was 
constructive. 

Well, we improvised and rigged up about 1,800 small projects to 
keep these people entertained while we were developing plans for 
larger ones. There is no use going into the details of that. 

One year during that period, which went on altogether for close 
to 7 years or 6i/^ years, we spent in the city park department on re- 



POSTWAR ECONOMIC POLICY AND PLANNING 1779 

lief alone over $80,000,000. I tried very hard to see that none of 
that was wasted. I don't think much of it was wasted. It was an 
expensive way of getting work done, and one that I think we ought 
to avoid. It does not seem, though, that we learned very much from 
experience since that time. 

Now, in the rest of this memorandum here I pointed out, perhaps 
somewhat dogmatically but that is inevitable in a short memoran- 
dum, that private enterprise ought to absorb all the workers that 
can possibly be absorbed, as they are discharged from the war 
industries and the armed forces. I have seen something of the leaders 
in that movement and have great respect for them. Some of them 
are quite close friends of mine. 

But, I don't think that they have made any case yet to prove that 
they can take care of the entire problem. I think they can take care 
of a good deal of them ; a great deal of what they say is very sketchy 
indeed. 

I do not know what Commissioner Catherwood testified to yester- 
day, but I would like to refer to one thing that was mentioned in 
this morning's papers. 

When business people come to the State commissioner of commerce 
or to the city commissioner, Mr. Sloan, and say they plan to expand 
their plant after the war to take care of a loit of people, you must 
have in mind that there is no guaranty of that. There is no pledge. 
The statement is not made under oath. And usually it is accom- 
panied by a great many reservations. 

For example, I have had conferences with business people — and I 
have represented the mayor often in very practical matters relating 
to bringing business to this city and keeping it here — I am working 
on two or three of those projects right now. "VVlien you talk about 
these postwar expansions that are going to take care of so many 
people in private enterprise, the man you are talking to says, "Now, 
all this is conditional." Some of them say it is conditioned on a 
change in administration in Washington. Some of them say it is 
conditioned on what Congress is going to do about conversion. Some 
of them say it is conditioned on whether Mr. Baruch's plan is 
adopted, or one like it. 

But these statements are so hedged about with mental and other 
reservations, I would not count on them too heavily. Similarly, I 
would not count too much on these rather broad generalizations 
about the coming age of the airplane and helicopter and plastics, as 
if that were complete evidence that everybody who is looking for a 
job after the war was going to find one. Some of those inventions 
involve for their manufacture a very small number of people, an 
astonishingly small number. It is one of the characteristics of mod- 
ern inventions. 

So my conclusion is that we had better think about public works, 
at least for this period of 2 years, maybe longer. 

Now, public works in Washington got off to a bad start. I don't 
need to tell Members of Congress that. They know it better than I 
do. Unfortunately, the long-range academic planners under Mr. 
Delano got busy and they encouraged people all over the country to 
send in thousands of requests for the design of improvements. Half, 
at least, of the things that were submitted were completely irrespon- 
sible. 



1780 POSTWAR ECONOMIC POLICY AND PLANNING 

They came, in the main, from local officials who were told that 
Uncle Sam was going to shell out a devil of a lot of money, and 
*'Why not get your share?" Had those requests from Washington 
been coupled with the demand that the locality furnish a substantial 
part of the cost of the plans, a totally different list would have been 
fiubmitted. Then, as I understand it, there was a good deal of rivalry 
between th6 works agency and Mr. Delano's outfit, and I gathered 
that the latter group are now out of commission. 

But I just Avant to call attention to the fact that an enormous 
amount of harm was done all over the country by the preparation 
of this great roster of proposed improvements; many of them un- 
sound; many of them irresponsible. It gave the whole "idea of public- 
works planning a black eye. 

Now, as to the origin of these plan, it is a fact here and in a certain 
number of other States — and I am no authority on all the 48 States of 
the Union — that a large proportion of all the municipalities are un- 
able to pay for anything like a substantial public-works program. 
When I say "pay for it," I am talking now about construction. 

By the same token, you cannot expect them to be very enthusiastic 
about paying 100 percent for plans, unless they see in the offing 
somebody who is going to contribute toward the construction. As they 
say, "What is the use of making plans for things we haven't money 
enough to build?" 

Now, you may say that the State might solve that problem for the 
municipalities, wnthout reference to the Federal Government. I don't 
believe that can be done in most cases. 

I had a good deal to do with the preparation of the State program 
about which Mr. Catherwood testified yesterday. I was a member of 
the original commission, and I guess it is no particular secret that I 
did a good deal of the work along with Mr. Moffet. After a great 
deal of argument, I sold them the idea of paying half the cost of the 
plans for municipal developments. That program has gone along 
fairly well; but it has lagged to a considerable extent because of the 
municipalities who say that it is all right for us to put up 50 percent 
of it for these worth-while improvements, but is the State going to 
contribute 50 percent toward construction ? So far the State has said, 
"No." And, if the States continue to say "No," I think only about 20 
percent of all the plans being made will be realized. 

That is not an irresponsible guess because I have been looking at 
these things for a long time. I perform some functions around the 
rest of the State and I think I know the situation. 

Now, the State of New York happens from some angles to be in a 
somewhat favorable position compared to other States, referring to 
public works. I do not know whether Commissioner Catherwood 
described this situation to you, but I think I can give you a few main 
points. 

To begin with, back in 1938, as your chairman can tell you, we had 
a constitutional convention here, and we did two things in connection 
with that convention that gave the present State administration a 
considerable amount of money for postwar work. 

First of all, we took care of the grade-crossing program by gradually 
reducing the railroad's share and making available all the balance of 



POSTWAR ECONOMIC POLICY AND PLANNING 1781 

$300,000,000 which had previously been set up in the constitution for 
grade-crossing elimination. 

In the second place, we made available a very substantial amount of 
money for public housing on a 100-percent State basis, and the money 
is available for the construction of the units which are now being 
planned. Those were windfalls. 

We had a bond issue which I originally drafted, the legislature 
adopted, and the people approved, as a result of a referendum which 
set up $60,000,000 for highway and parkway work, all of which is 
available the minute the war ends. The only thing that is holding it up 
now is priorities. Well, the State is in the rather fortunate position 
of having some funds. 

Now, that does not apply to the city of New York, or to many 
other municipalities. If you are going to have a substantial public- 
works program and if you agree that business is not going to take care 
of all of these people, you want to employ a certain number of people 
for a certain period, and also those back of them, away from the scene 
of the job — more people in mines, plants, railroads and so forth — 
then you have got to have a substantial program. And just having 
it in the form of plans, no matter how detailed, won't do the job if 
the money is not there to pay for the contracts. 

It is my honest opinion based on a good deal of experience that 
there will have to be Federal subvention for undertakings for other 
than highways. 

I might add that the highway story is, at the moment, not as good 
as it might be. Out of sixty-odd million dollars of Federal money 
to be matched bv another $('.0,000,000 of State money, making a total 
of $120,000,000, which is 4 percent of $3,000,000,000, a very small pro- 
portion has been called for by the States. 

My opinion is that the reason why that planning program has not 
gone faster is because so many of the States are worried about where 
the construction money is coming from. As you know, Congress has 
not done anything about that yet. There has been no legislation.. 
Nobody knows what they are going to do. 

The amount that is being discussed is about half the amount that 
was being discussed a year ago. It makes a lot of difference. It makes 
a great deal of difference in the interest and enthusiasm of a public 
ofticial, State or local, in pressing plans for highways, whether the 
money is going to be available after the war to build them or not. 
If it is not, then there is no great hurry. You cannot steam up people 
in a drafting room to work overtime on something that is 5 or 6 years 
off. 

I think there ought to be a Federal subvention of other worth- 
while public works. I do not think it should be too great a sum.. 
I do not tliink it should be too little. 

I happened to have been called in by General Johnson right after 
the National Industrial Recovery Act passed when for a short time 
he was the head of the entire recovery program, including both the 
control of business and public works — because later, as you know, 
that was split. He took the blue eagle part of it, and Mr. Ickes took 
the other part of it. I felt very strongly at the time that the nublic- 
works end of it would not get anywhere without some kind of a Federal 
grant or subvention. 



1782 POSTWAR ECONOMIC POLICY AND PLANNING 

Hugh Johnson was a little doubtful and his other advisers, with one 
exception, were doubtful. I suggested 40 percent and they started 
with 30 and they worked up to 40 percent. They just could not make 
that program go without it. 

One of the things they found out was that merely making a loan, as 
distinguished from a grant, or a loan and grant, did not do the trick. 
Why'^ This administration, the Roosevelt administration, came to 
those grants. It came to the grants because it was the only way to get 
the work going. It does not make any difference whether you call them 
grants, subventions, or aids. What is the difference as to what the 
word is? 

It all comes down to the same thing, if it was found necessary for 
the Federal Government to contribute a substantial amount toward 
public works. They came to it so late and so haltingly that we had 
to go into a CWA, and then into the various manifestations of work 
relief under the different alphabetical titles. It did not go fast 
enough. 

I think we can meet our problem here in New York City, as the 
mayor no doubt told you j-esterday, if we can get our plans finished and 
we can get the work schedules. This is under a committee, of which 
I am the head, and Mr. Spargo, who is really doing the work on it. 

But we cannot conjure up enough money here in New York City 
to carry out that program. There is not enough money within the 
debt and tax limits. It is some help to know that the grade-crossing 
work is practically done. We get a good deal of housing help. 

What is the alternative going to be? Well, you have only two 
alternatives, unless you want to laugh off the whole problem. One 
is to assume that Eric Johnston, Paul Hoffman, and my other friends 
in the business movement can take care of the whole thing (bearing 
in mind that they were not able to during the depression) ; the other 
is to resort to a relief program. We are very anxious to avoid another 
relief program. 

That is my story, Mr. Chairman. 

The Chairman. I think it is a very interesting statement, Mr. Com- 
missioner, and one that will be most helpful to the committee. 

I should like to ask you a few questions. You spoke about these 
grants by the Federal Government to the municipalities or States 
which might be undertaking the work. To what extent would you 
now recommend Federal aid with respect, first, to planning, and then 
to actual construction ? 

Mr. MosES. Well, you get down to arbitrary figures, as you know. 
I always felt, as to the higliAvay work, that the 50-50 arrangement 
which we have been familiar with for twenty-some-odd years in Wash- 
ington did not quite meet the present situation. 

On the other hand, I thought that 25 and 75 — that is, 75 percent 
Federal and 25 percent local — was too large a proportion of Federal 
contribution. That is just an arbitrary thing. You can make it 
one-third, or two-thirds, or 60 and 40. There are all kinds of possi- 
bilities. 

I think that the local share should always be substantial. I do not 
think it should be any nominal amount, as it had to be toward the 
end of the relief program. You will remember that. We had all 
kinds of projoortions in relief. CWA was 100 percent Federal. We 



POSTWAR ECONOMIC POLICY AND PLANNING 1783 

had every proportion that the human mind or that a mathematician 
can conceive of. 

The Chairman. Well, Mr. Commissioner, what I mean is this : Ap- 
parently from what we have heard at other meetings, actual postwar 
planning has not been undertaken by the municipalities and by many 
other States. They have been talking about it, but it has not gotten 
down to the blueprint stage thus far. 

Now, what percent do you believe the Federal Government should 
appropriate in order to encourage, first, the actual planning by these 
various communities? And then, of course, that would be followed 
up later by aid for construction. Do you think the Federal Govern- 
ment should insist upon a substantial contribution insofar as the 
drawing of the plans are concerned ? 

Mr. Moses. Yes; I do. I cannot give you an exact figure. And I 
want to confess that I am puzzled — I am still puzzled by the slow 
progress on those highways. I think there are a lot of reasons besides 
the one that I have emphasized, particularly the absence of any knowl- 
edge on the part of the States as to what is going to be available for 
construction later on. There are other obstacles and difficulties in 
the way, but it will take too long to go into them. 

But I would say that if you had, let us say, $100,000,000 available, 
on the basis of 40 and 60 percent, which would represent a 60-percent 
contribution toward plans for other than highway's, you would be on 
your way. 

I am afraid that for a good many States and municipalities, it 
is already too late. 

The Chairman. Do you think it is? I assume you do from your 
present statement. But for the record, do you think it is too late now 
to embark upon comprehensive planning as distinguished from spe- 
cific projects? 

Mr. Moses. I don't know what comprehensive plans are. If you 
mean this long-hair planning of ripping up cities and doing them 
over again, that is preposterous. That is not going to happen here. 
It is not happening anywhere else. I would go to the opposite ex- 
treme. 

Here in the State, in connection with the matched-money program, 
as it is known, that is the fund which the State has made availalile on 
a 50-50 basis toward the preparation of plans for local, municipal im- 
provements; that program, following the suggestion that some of us 
originally made, is largely confined to very small projects, not even 
very large public works projects, on the theory that those are the 
things that can be started quickest. These require the leasit time to 
prepare plans, such as local sewer and street improvements, and things 
of that kind. These plans can be prepared in, say 60 days, as against 
any major public improvement which requires a year for the prepara- 
tion of plans. But I think as to the very large plans, you have missed 
the bus. 

The Chairman. So that insofar as being of any effective aid at this 
time, the drawing of master plans and comprehensive plans is a 
thing of the past, and the situation is now such that we should get 
down to specific projects? 

Mr. ]MosEs. You have got to get down to specific projects. And I 
think if you want to have any volume of such projects, they have to be 
small ones. They cannot even be the largest of the specific projects. 



1784 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Now, Commissioner, assuming, then, that we have- 
these specific projects, and assuming that there might be a contribution 
by the Federal Government in connection with tb.e completion of these 
projects, what would be your thought with respect to the agency that 
might develop these projects from the Federal point of view? 

Mr. Moses. I think it should be the Works Agency. I think from 
the very beginning it should l)ave been the Works xVgency; for the 
simple reason that, when you have a plan, a scheme of cooperation 
between the Federal, State, and local governments which has worked 
well for a period of years, why get up a new one? The highways 
scheme has worked. 

It has meant tl^e minimum of Federal interference with local home 
rule and autonomy, by and large, over a period of years in both Demo- 
cratic and Republican administrations. That agency has been non- 
partisan. It has been respected. It has insisted on certain stand- 
ards and principles, but it has not interfered with local autonomy. 

Now, if you have a thing of that kind that has worked well as to. 
highways, why not expand it? Why invent sometljing new? 

The Chairman. I am very glad to hear you say that, because I think 
that we have had quite enough of all these other agencies. But more 
particularly, because this committee has been working with tl^e Fed- 
eral Works Agency in the compilation of planning, it seems to me 
that it is quite an efficient agency. However, with respect to Federal 
projects entirely, I might say that the testimony before the sub- 
committee in Washington Avas to the effect that, in connection with 
Federal projects, the Bureau of the Budget would be the agency; and 
that, with respect to Federal aid to States and municipalities, probably 
the Federal Works Agency was the best equipped to continue the 
work. 

I think that is all. 

Mr. Colmer. 

Congressman Colmer. Mr. Moses. I don't know that I have any fault 
to find with your statement, sir. On the contrary, I think you made 
a very splendid statement. There are just one or two things though 
that I would like to emphasize. 

You seem to have some doubt as to the ability of so-called private 
enterprise to do this job. 

Ml". MosES. The whole of it. I think they have got to do a very large 
proportion of all of it. 

Congressman Cclmer. Well, that is fine. You realize, of course, and 
T am sure your statement reflects that attitude, that the Federal Gov- 
ernment is bound to have some limitations upon its ability to furnish 
jobs. I think your statement covered that pretty full}'. However, is 
there not a danger of overemphasizing public woiks and the obligation 
of the Federal Government? In other words, couldn't we make the 
same mistake that way as well as in overemphasizing the duty of pri- 
vate enterprise ? 

What I am trying to say is this — and I think you are in accord with 
the statement that private enterprise must do the big job if our Amer- 
ican system is to continue — there must be plans made for public works 
to take up the slack which would appear to be inevitable as a result of 
a conversion of the war to the peacetime economy. 



POSTWAR ECONOMIC POLICY AND PLANNING 1785 

Mr. Moses. I think that is so. Let me siigj^iest another line of reason- 
ing which is mentioned here in this memorandum. 

A few months ago I went out to Detroit at the invitation of the head 
of General Motors to talk to some of the automobile fellows out there 
with whom I have been working on highway and other matters. They 
had most of the heads of the industry tliere. It was a little private 
session, if you can call anything with 200 people a private session. 
I'hey announced plans that they were going to carry out for th& 
manufacture of cars, which — perhaps the figures have been changed 
since then — involved an increase of 50 jiercent of the number of cars 
the}^ proposed to numufacture in the 18 months following the war, 
compared to the 18 months before the war. 

I pointed out, 'Tf you are going to do that, you had better take a look 
at the condition of your records and figure out, unless the public officials 
responsible for highways have enough money to take care of the road 
proposition, what your cars are going to run on, unless you want to 
take over the road system as a part of the expansion of private enter- 
prise." None of them seemed very eager to do that, however. 

Now, that is very important work. It is not merely a question of' 
creating jobs. It is not merely a question of thinking up things to 
spend money on. It is an integral part of the program of reemploying 
a lot of people in the manufacture of cars. There is no good making 
cars unless you have the roads for the cars to run on ; and the roads of 
the country are in horrible condition. 

Now, there are other illustrations of that kind of thing. I hear a 
great deal of talk about steaming up people to build a great many 
private houses. As a member of the city planning commission here 
and in some other capacities, I have seen a good deal of that type of 
thinking. 

I represented the city in the negotiations for the only large private 
housing project that is actually readv to start after the war, which 
is Stuyve-ant Town. It is about a $55,000,000 project. But don't 
let us fool ourselves. There is a lot for the municipality to do in 
that connection. 

Now, I have heard real-estate men shout themselves hoarse about 
letting private enterprise take care of the entire problem; but when 
they get up a plan for subdivision they submit a plat to the planning 
agency — and they are always very eager to have that agency do a 
little somethino- about it — you know the approach, the sewers and 
all the other things that make that project a success. 

Congressman Cclmer. Of course, there are bound to be duties and' 
ob'igations that must be performed by the various governmental sub- 
divisions. But you are in accord with the principle, as I under- 
stand it, that we should not put public works ahead of everything 
else; that it is, at best, a method of assisting in this reconversion 
program rather than the answer. 

Mr. MosES. I entirely agree Avith that, and I have indicated here 
what the figures are. As a matter of fact, there is a question what 
public works can do now because so much time has elapsed, and 
what is left for private enterprise to do, which is the greater part 
of the problem. I think they are going to have a v^ry,. very toughi 
time doing it. They did not do it the last time. 

99579— 45— pt. 6 6 



1786 POSTWAR ECONOMIC POLICY AND PLANNING 

Now, I saw these very men and their predecessors, as the heads of 
these companies and banks — and a great many of them are friends 
of mine and the people I see all the time — and they were going to 
lake care of the whole problem in the depression, but they did not. 
They took on too much territory. They talk in figures that are too 
large. 

To give another practical illustration : Not long ago some of the 
leading citizens out in Portland, Oreg., got together with Mr. Kaiser 
and they began worrying about what they were going to do with 
those fellows out in the shipyards, and a lot of others. There were 
S3,000 people employed in three shipyards. They decided that they 
wanted to go into a public-works program, and I went out with a 
number of engineers and experts, and went into the question. We 
got ujD what we thought was a reasonable program, which was so 
conservative that it shocked a lot of people who thought we were 
going to come out and say they had means of taking care of 83,000 
people. We did not say anything of the kind. 

A^'e gave them a limited program of projects which we thought 
were necessary. I ran into people out there who just waved their 
hands in the air and said, "That will be all right. We will take care 
of those fellows." But I could not find anybody who would tell me 
how tliey were going to do that. 

Congressman Colmek. But, on the other hand, Mr. Commissioner, 
I think it is very encouraging to see that private enterprise — the 
heads of these companies that you referred to — is really making an 
earnest, conscientious effort to try to meet these problems. I think 
there is a place in this picture for both. 

Mr. Moses. So do I ; and I think the greater part of the job is up 
to private enterprise. My only quarrel is that some of them take 
on too much territory. It is that marginal business that is so dan- 
gerous in the body politic. It is having millions of people out of 
work milling around, looking for jobs. That is the thing that dis- 
turbs anybody who went through the depression. 

Congressman Colmek. There is just one thing further, if I may. 
You commented upon the Federal Works Agency as being the proper 
agency. I think so, too. 

But what do you think — well, I will put it this way. General Flem- 
ing, who testified before our committee down in AVashington, said 
that he thought the Federal Government's obligations should be to 
furnish the finances for the planning, but he could see no necessity 
for Federal contribution to the construction. 

Mr. MosEs. Well, he has not studied local finance if that is what he 
says. Again, I want to emphasize the fact that I do not know all 
the constitutional and statutory and charter limitations throughout 
the country. I know a good many of them. And they are not differ- 
ent in most other States from what they are in New York. 

We have in New York City a perfectly definite debt limit which we 
cannot exceed, and we have a definite tax limit which we cannot ex- 
ceed. And when you say that, you really have not told the story hon- 
estly because, as the city comptroller would tell you, you cannot walk 
right up straight to the debt limit and stop there. 1 ou have to stop 
short of it, otherwise your entire financial structure is undermined. 



POSTWAR ECONOMIC POLICY AND PLANNING 1787 

I know there are some States that have no debts and that there are 
■counties that have no debts. But they are the exception and not the 
Tule. . 

Congressman Colmer. Do you agree with the thought that if Gen- 
eral Fleming's idea was to be put into execution, we would have a lot 
of plans and very little construction? 

Mr. Moses. I think you would have comparatively little construc- 
tion. And as I said before, I don't even think you would have the 
plans. Because what happens is this : When you get up a program 
as we have here in the State, and in the city, or as they did out in 
Portland, after they had the referenda out there, and adopted three 
propositions — a lot of people sit back and say, "Well, that is fixed." 
They put their feet up on the desk and say, "That is all settled." 

Well, of course, there is nothing settled. The fact is that there are 
many obstacles in the way of making plans, such as a shortage of 
engineering talent and unwillingness of officials to hire outside con- 
sultants. There is a certain prejudice against that. It makes no 
sense to me, but there it is. 

Then you find that inevitable tendency on the part of every human 
being to postpone the thing he can postpone. He just is not going to 
get steamed up and work hard, if he works at all, on a thing that is a 
long way oflf. 

Now, we find that when we start to schedule these things, we do 
not say that they are on all fours; that all the projects here in New 
York, given to you by the mayor, are all of equal importance. They 
are all important. They have all run the gamut of criticism and dis- 
cussion. They are, none of them, frivolous, and some of them are 
more urgent than others. And, naturally, those that are urgent go 
ahead first. 

When you get down to it, the philosophy behind it devolves on the 
question "Where is the money coming from?" The monev is not in 
prospect. Then you have nothing in front of you but the idea of 
liaivng a devil of a big shelf of plans, so you can go to it 10 years from 
now and dig out something, no matter how much dust you have on it 

The only things that are worth planning now are the things you 
-can finance. If you do not see the funds ahead of you, you are wast- 
ing your money and time. 

Congressman Colmer. I agree with you that there has to be some 
contribution, both for the planning and for the construction. 

But just to emphasize again what I tried to say, you referred to the 
limitation upon the ability of the municipalities, and so forth, to do 
this work. Isn't there a limitation upon the ability of the Federal 
Government? 

Mr. MosES. It certainly is not constitutional. 

Congressman Colmer. I understand it is not. 

Mr. MosEs. And it is in many of the States, and practically all 
•charters. 

Congressman Colmer. Do you think there should be some Constitu- 
tional limitation? 

Mr. Moses. No ; I don't. I think the Federal Government has more 
leeway than any other agency has. 

Cono-respman Colmer. Having that leeway, isn't there a danger of 
overdoing it? 



1788 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Moses. Why, certainly, there is always a clanger, and that is 
something you have to guard against. But don't forget that if you 
don't do anything about it, we may face a situation similar to the 
one faced in 1933 — the time when Frank Taylor and I had the talk 
with Harry Hopkins, when the people were out of jobs, and many 
were selling apj^les — you will need to find the money; you will find 
it all right. 

I don't think we face any such situation as that at present. The 
fact of the matter is that you can get away from public works if you 
don't like public works. You can set up a Beveridge system which 
will avoid all public works, if you want it. It is going to cost you 
a lot more in the end. 

You can make the benefits for soldiers and returning veterans 
greater than you made them so far, and you have made them fairly 
substantial. You can increase your unemphwment benefits so that, 
instead of being good for an average of 16 weeks, they are good 
for an average of 16 months. You will bust every employment system 
in every State in doing it. 

But if there are, in fact, a large number of people out of work, j^ou 
are going to have to find some way of meeting that problem, even if 
it is expensive. 

Congressman Colmer. I don't think we go that far apart. I want 
to bring out some of the things and to emphasize the point which I 
have always tried to make, and that is that we have got to encourage 
private enterprise. 

I am sorry. Mr. Chairman, because I think I took too much time. 

The Chairman. Mr. Fish. 

Congressman Fish. Commissioner Moses, I am a little disappointed 
in you. You must be slipping, it seems to me. 

Mr. Moses. It is possible. 

The Chairman. But not probable. 

Congressman Fish. I came here a little late. I live up in the 
"sticks." But I assumed you would be contributing your wisdom^ 
and experience here for several hours. 

Now, I find that I missed a large part of what you said, although 
you did furnish a memorandum in written form. I am going to com- 
ment on some parts of your memorandum which you submitted to the- 
committee. 

In the first place, I think, in one instance alone, that you must have 
been listening to some of the commentators and some of these special 
writers, who wanted to give good stories to the people back home,, 
when you seem to think that there is a serious conflict between 
Congress and the Executive about writing postwar legislation. 

I agree, I am a great admirer even of Mr. Baruch and Mr. Hancock 
in their constructive suggestions. This committee did put through 
the contract termination bill, after going over it for 45 days, I 
think — a month, anyhow. 

We were prepared for a considerable time before the recess of 
Congress to ])ut through a bill for the disposal of surplus goods and 
plants. That was not held up through the fault of the committee- 
or the Congress. It was held up by Mr. Clayton — W. L. Clayton, 
who was Administrator of Surplus Property. He took over 2 months> 
to get in form his ideas about a proper bill. 



POSTWAR ECONOMIC POLICY AND PLANNING 1789 

And when we had a hearing just before the recess, I took occasion 
to say to him : 

Of course, the press will blame Congress that we are delaying this legislation. 
and I told him then : 

It is unfair. You have had this for several months. We have been asking all 
that time to put your views in writing, so that we can go ahead as we agreed to 
do it that way; now we are recessing and we cannot do it. The blame should 
not rest on Congress, but, of course, upon you — 

and Mr. Clayton accepted the criticism. 

I think the press and public were led to believe that Congress was 
dilatory and that Congress was not cooperative. As a matter of fact, 
Congress would have been ready some time ago to put through the 
second phase. 

Now, we have reached the problem of public works. I want to say 
before my colleagues here, that I know of no man in the United States 
of America who knows more about public works, who can contribute 
more, and who has actually done more to put through useful and valu- 
able and beneficial public works than Commissioner Moses. He stands 
at the head of everybody in this country, and possibly the world, as 
an expert on public works. 

Now, after giving you all that praise. Commissioner Moses, I would 
like to get some information from you, some detailed information 
about the Palisades Parkway that goes up into a little county called 
Rockland County. 

Now, I am very anxious to know what you have up your sleeve in 
the way of constructing that with a high priority. I would like to 
reallv have some detailed information with respect to that. 

Generally, we know that Mr. Rockefeller put up $16 000,000 of his 
own money, at least I am told, to buy land and houses for this park- 
way, up on top of the Palisades. But we are interested in knowing 
when you are going to start constructing after the war and where it 
goes after it leaves the Palisades. Naturally, I want to cooperate with 
you; not only through the Federal Government, but through my per- 
sonal friends and political friends, who happen to be chairman of the 
Finance Committee of the Senate and chairman of the Ways and 
Means Committee of the House. 

I am following your advice. If you say that it is a good thing, I 
am going to endorse it because you know more about it than I do. I 
want to have you give an expression, more or less in detail, if you will 
do that. 

Mr. Moses. I will be glad to do it. It is a good illustration of some 
of the things we have been talking about here. It is a good illustra- 
tion, largely because the history of this particular project indicates 
how long it takes to do these things; what a large number of officials 
are involved ; and how any substantial, big improvement is going to 
lag unless you put a tremendous amoimt of effort and steam back of it 
and get a great deal of cooperation. 

The history of that project is that we persuaded Mr. Rockefeller to 
buy most, but not all, of the land on top of the Palisades in New 
Jersey up to the Rockland line. I think he spent about $14,000,000. 
It left some gaps where he could not buy at reasonable prices, or could 
not buy at all. The acquisition of those gaps has been one of our 
difficulties. 



1790 POSTWAR ECONOMIC POLICY AND PLANNING 

Now, we have to deal with New Jersey. The money for the prep- 
aration of the plans for the parkway has to come out of the Jersey end' 
of the Federal-State money; not New York. We are still in New 
Jersey. That has been difficult. It has been difficult, because the 
claim is made — I don't think it is a very substantial one, and I think 
it will be abandoned — that while this f)roject is very important to 
New York, it is not so important to New Jersey. They would rather 
spend the money where there are more people. 

That is being ironed out now, and the work will commence shortly.. 
Almost 2 years were spent in that wrangle as to whether or not that 
project was going to be high enough on the Federal-State highway 
program of New Jersey to be reached, because it was put down so low 
in the schedule. That is being settled. 

Now, coming to New York: We head away, we go away from the 
Hudson there, and head inland, going in a northwesterly direction. As 
to the exact route, we will be able to give you that very shortly. But,, 
we do now have the funds set aside. The contract for'^the consultants 
is about to be signed for the preparation of those plans, and approxi- 
mately 14 months have been devoted to discussing those contracts, the 
subject being complicated by the fact that the fellows up in Albany- 
wanted to know what the fellows in Trenton were doing, and vice versa. 

That project is going to be at the top of the list. It is a very important 
arterial project, measured in the only way you can measure those 
things — by the number of vehicles which are going to use them. It is 
the only test. 

It is just another indication, Mr. Chairman, as to how much time is 
consumed in these things; that when you talk about public works 
as against made work, you are talking about an enormous amount of 
detail. You are talking about rights-of-way. You are talking about 
widths and intersections; where they are going to be; how many lanes 
you are going to have ; and just about one hundred and one details that, 
just cannot be left in a vague state. They have to be settled. 

Now, just to give you an idea of the cost of some of these plans, per- 
haps measuring by money the amount of work there is to be done the 
cross-Bronx artery with which you must be familiar, Mr. Chairman, 
involves about $15,000,000 for land. It goes through a solidly built-up 
part of the Bronx . This is something that should have been done 25 
or 30 years ago, but it was not, and it has to be done. It will cost 
about $16,000,000 for construction. 

Now, tlie contract for those plans runs to over $600,000. This is a 
contract for plans, mind you— just plans. It takes a very large staff 
of men, working on rights-of-way, working on the rule and damage 
maps, working on every phase of the most complicated highway job 
probably in the world. 

Congressman Fish. Commissioner Moses, could I get you back from 
the Bronx up to the rural county of Rockland ? 

Mr, McsEs. I am in a mood to travel. 

Congressman Fish. Now, you have got that road pretty well up 
through New Jersey. After it gets out of New Jersey into Rocldand, 
can you tell me a little bit about where the line is going to stop ? 

Mr. Moses. I will give you a map of it. 

Congressman Fish. Leave out the details of it. I want to know 
this: When you get up to the Rockland line, how much money is it 
going to cost, and then how far up are you going. 



POSTWAR ECONOMIC POLICY AND PLANNING 1791 

Mr, Moses. We are fioin^- back of two intersections with Bear Moun- 
tain. I will give you the whole thing. 

Congressman Fish. Do you know how much it will cost? 

Mr. Moses, I suppose we are 97 percent right. Those are all esti- 
mates as to what the construction will cost after the war. We will give 
you maps and figures. 

Congressman Fisii. Have you got them with you now? 

Mr. Moses. I can give them to you tliis afternoon. 

The Chairman. I just wanted to ask you, when you got into Kock- 
land County, were you beginning to be envious of the Bronx ? 

Congressman Fish. We are a little envious. You have done won- 
derful work down in Long Island and in Westchester. We feel, on 
our side of the river, that we have been overlooked. I think our 
time has come. You said the plan is based on the number of vehicles 
that use it. 

The Chairman. Mr. Reece. 

Congressman Reece. In glancing over your statement, I would sug- 
gest, Mr. Chairman, that this be made part of the record, because it 
is more complete than the statement which Commissioner Moses made 
orally. 

The Chairman. It is intended that it be made part of the record. 
Without objection, it will be done. (See exhibit No. 6, p. 2062.) 

Congressman Fish. Don't you agree with my statement that we 
are not holding up anything? 

Congressman Reece. It was my purpose to comment on that. It 
is an accepted fact in Washington that there has been no controversy 
between Mr. Baruch and Mr. Hancock on the one hand, and Congress 
on the other. 

There was a statement which appeared in the papers, given out by 
some Member of Congress before the report had been carefully read. 
But Mr. Baruch and Mr. Hancock and Congress have worked in the 
closest cooperation, and in an effort to evolve this program. In fact, 
during my some 24 years in Congress, I have never seen an executive 
agency and the committees of Congress work together more closely 
or more harmoniously in attempting to discover solutions to the diffi- 
cult situations confronting us. 

In this statement, you refer to or state that we cannot afford to 
minimize the difficulties in converting and the time required for re- 
tooling. It has been the thought of some of us that provision should 
be made for retooling, for the acquisition of machines and all the tools 
and instruments needed in order to go back into civilian production 
in advance of the end of the war, if possible, making these machines 
and tools immediately available to get back into civilian production. 
We noticed with satisfaction that the War Production Board was 
now making some provision to that end. 

In these discussions — and yours has been very stimulating — it is 
disappointing to me that there does not seem to be any effort made 
to draw any line of demarcation between the responsibilities of the 
Federal Government and of the State. 

Now, you state that the Federal Government and the State have 
funds ; the municipalities do not have funds. At the same time you 
state that private enterprise is incapable of meeting the employment 
needs. I shall readily admit the truthfulness of all the statements; 
but the disturbing factor to me is that the result of all the statements 



1792 POSTWAR ECONOMIC POLICY AND PLANNING 

is that the final responsibility lies at but one place, and that is with 
the Federal Government. 

Mr. Moses. I do not say that, ^Ir. Congressman. After all, the 
action speaks louder than words. We have gone ahead here in the 
State and city of New York without waiting for the Federal Govern- 
ment. That proves that we don't put it all up to the Federal Govern- 
ment. 

If all the States of the Union and all the cities have done as much 
as has been done here by the State of New York and the city of New 
York and some of the other municii^alities of the State, we would be 
immeasurably further on our way than we are. I do not say that 
it has all got to come from Washington. I think these things have 
got to come from the ground up. 

But I do say that financial conditions are such that there must be 
help from Washington, I do not believe, referring to highways, that 
Mr. McDonald or General Fleming should sit down and tell us where 
to put our main arteries. 

I do say that they ought to see that thej^ conform to principles, so 
that they hitch up and tie into a genuine regional system, and that they 
ought to see that the Federal Government gets its money's worth. I 
do not want to see everything started from Washington. 

However, when it comes to this question of demarcation, why 

Congressman Reece. I will go one step further. I do not want to 
see everything started from Washington, and neither do I want to see 
everything end up in Washington, 

Mr. Moses. I agree with that, also. But I think, as a practical 
matter, a lot of this financing will have to be done in Washington. 
You have given it as regards benefits for servicemen. You did not 
transfer all of that to the States. 

Congressman Reece. Well, that gets back to the question that I 
raised that it would seem as if it should be possible to outline the Fed- 
eral Government's responsibility and the responsibility of the States 
and other governments, except in unusual situations wliich, of course, 
might alter the case. 

You spoke about highways. It is an accepted responsibility of the 
Government to assist in the construction of highways, bridges, via- 
ducts, underpasses, approaches which involve interstate transporta- 
tion, hospitalization programs for disabled veterans, and other provi- 
sions for their needs. 

The Federal Government has an accepted responsibility in the case 
of highways; not primarily, Mr. Moses, as a make-work program, but 
for development purposes in order to provide highways, as you said, 
on which our automobiles might operate in increased numbers, and, 
incidentally, gauged at times when we will get the greatest work bene- 
fit from it. 

Mr. Moses. I do not see how that differs in principle from sanitation 
or anything that comes under the field of health in the broad sense. 
Sanitation is a Nation-wide, at least a regional health problem. And 
I see no difference in principle between the Federal Government con- 
tributing toward major sanitation works and contributing toward 
regional highways. 

Congressman Reece. It happens that I come from a small city. 
Now, we do not look upon our sanitation problem there as a Federal 
problem. 



POSTWAR ECONOMIC POLICY AND PLANNING 1793' 

Mr. Moses. If you lived here, and you had New Jersey just across 
an arbitrary line, you would feel differently about it. 

Cono-ressman Keece. That is part of a movement to further project 
the Federal Government into, it would seem to me, every activity at 
lower governmental levels. 

Now, I, coming from what a very distinguished lady speaker a few 
days ago said to a very distinguished gathering in Chicago, was a 
section of country illiterate until a few years ago, when the beneficent 
arm of the Federal Government was extended to bring us into a pe- 
riod of prosperity for which we are very grateful — I look u]:)on these 
great eastern cities with considerable awe, but when I see the magni- 
tude and complexity of problenis of all kinds, 1 realize the difficulties 
that confront you up here. 

There is a strong disposition on my part to feel that Johnson City, 
Tenn., and Red Wing, Minn., and Pascagoula, Miss., and other towns 
all over the country that make up the United States of America, have 
a responsiblity and that we ought to come up here and try to come to 
the aid of New York City, and contribute out of our meager sustenance 
for that purpose. After all, the Federal Government is made up of 
New York City, and thousands of lesser cities and rural communities. 

Mr. Moses. I was always under the impression that we i^aid our 
share of Federal taxes, Congressman ; perhaps more. 

Congressman Reece. I am sure you do. But somewhere, as Mr. 
Colmer suggested, there is a limit to which the Federal Government 
can go. There is a limit to which it can go in expenditures. But as 
I stated yesterday, that is only one aspect of the problem, it seems to 
me. The other is the tendenc}^ to undermine the initiative of the local 
units and of private enterprise. 

If we start out on the assumptions that the States and the cities can- 
not finance projects, private enterprise cannot provide employment, 
and that the only alternative is the Federal Government, acceptance of 
that philosophy destroys their motive and undermines their deter- 
mination to solve their problem. It seems to me that is a very dis- 
couraging aspect. 

Mr. Moses. I think this particular government we have had in 
Washington for some time has gone entirely too far in undermining 
municipal and State governments. 

I am a conservative about these things. I believe in State govern- 
ment. I do not believe in wiping out State lines. But I do not see 
what that has to do with meeting an emergency unemployment pro- 
gram. It is an emergency, and it has to be met in a practical way. I 
do not want to go any further. 

Congressman Reece. There is no disagreement on that. But, first,. 
I do think the States and municipalities should feel the responsibility 
and have a determination to try to solve it. I do not think we are 
going to solve it b}^ starting out with an admission that the local gov- 
ernments are helpless and unable to accomplish a result ; and at the 
same time admitting that private enterprise is unable to accomplish 
a result and always feeling that we have somebod}^ to fall back upon. 

There was a countryman down home who had a large family. He 
had a good little farm and he sent his children through high school. 
He said that when each one married, all he expected to do for them 
was to give them a horse and $100. Then, after that, they were on 



1794 POSTWAR ECONOMIC POLICY AND PLANNING 

tlieir own responsibility to make their own way; they need not come 
back to him for any further help — and most of them got along pretty 
well. 

I think this feeling of dependence upon the Federal Government 
is a very weakening influence. I am not in disagreement when the 
occasion arises that the Federal Government must aid in public works, 
Ijut it is the fundamental principle involved with which I am con- 
•cerned. 

Mr. MosEs. Mr. Congressman, my remarks, as I said at the begin- 
ning, are addressed largely to the solution of the problem that I per- 
sonally think is going to arise and be with us in aggravated form for 
-a very short period. I said 2 years. Call it 2 years and a half. I 
■am thinking of this gap right after the war. 

I have no doubt of the capacity of the States and the cities to meet 
the problem, if you can get them by that tough transition period. And 
it is that emergency period that disturbs me. 

There is one other thing that I would like to say. When you speak 
of conversion and the problems that go with it, there are a lot of human 
pi'oblems that will make it drag out. 

For example, if you have a plan — let me be a little more specific — 
let us take the aluminum plant over in Queens which was shut up after 
a very brief career. It was placed here, not because it was an ideal 
location for an aluminum plant, but because we had a surplus of 400,000 
kilowatts in the Consolidated Edison. It is shut up. There are those 
buildings covering 100 acres sitting out there. There is not going 
to be any more aluminum plant there. Power is too expensive here. 
That area has to be adapted or used for storage by the Federal Gov- 
ernment. 

Where are these agents of the Federal Government who are going to 
be given enough authority to say to someone who comes along, "We 
will sell you this thing for 10 cents on the dollar because that is all 
it is worth for your purposes." 

The average fellow will say to the representative of the Federal 
Government, "Well, I will get into trouble. I will be investigated. 
1 have got to watch my step. Maybe I better not buy it." Those are 
practical problems. I could give you 50 other illustrations. 

It is not a thing that will happen overnight. 

Congressman Reece. We are formulating a bill for the disposition 
of surplus property, which we hope will provide authority to cope 
with particular problems of that nature. 

Mr. MosES. You will still have the human problem of determining 
whether the authority will be exercised and how fast it will be exer- 
cised. You have to look to a period of some length between the end 
of the European war and all this resumption of private business that 
so many people talk about, bearing in mind that we must have a na- 
tional income and expenditure and employment absolutely unpre- 
cedented. 

Even after women go home and get out of war industries, there is 
a great question of whether you can keep up anything like that amount 
of employment. It is that transition period that disturbs me. 

Congressman Reece. That is all I have to ask. 

The Chairman. Mr. Wolcott. 



POSTWAR ECONOMIC POLICY AND PLANNING 1795 

Congressman Wolcott. Mr. Moses, you have me confused now. We 
have been studying, in Congress, many of these problems. You start 
out in your statement by saying: 

Whatever the yardstick, the magnitude of the coming postwar dislocation of 
spending and employment is staggering. Congress, which knows the figures, 
seems not to realize their importance. 

What figures are you referring to there, Mr. Moses ? 

Mr. MosES. I am' referring to the figures in the first paragraph of 
my statement. 

Congressman WoLCOTT. As to spending? . i- 

Mr. Moses. Well, you can measure it, as I said, by the national in- 
come. You can measure it by the amount of expenditure on Govern- 
ment business which is being cut and will be cut more after the war. 
You can measure it by the number employed, plus the number m the 

Army. .„ 

Congressman Wolcott. The words that I find m there that modify 
the term "figures" are the words "spending" and "employment." Are 
those the figures you have in mind, do you know? You know what 
the spending is ? 

Mr. MosES. Yes. I assume we are in agreement on those figures. 
I said that before. There is no dispute as to the figures. The ques- 
tion is as to the import of the figures. 

Congressman Wolcott. Of course, we know what the present spend- 
ing is. We know about what the present employment is. Wliy do you 
say that we do not seem to realize the importance of it? 

Mr. Moses. I say that because there is obviously still a difference of 
opinion, a very serious difference of opinion, as to whether or not there 
is any such transition period in front of us and whether or not private 
business can take care of all of it. 

Congressman Wolcott. You mean to say, then, that Congress does 
not realize the problems confronting the Nation in the transition 
period. 

Mr. MosES. I do not want to, and I have no private quarrel with 
'Congress. . . 

Congressman Wolcott. But — I know you have not — but it is so 
natural that somebody should take a crack at Congress. Nobody is in 
a position to defend Congress but Members of Congress. 

So I wondered upon what you predicated our apparent lack of 
understanding on these problems. I think we know what the spending 
has been. I think we know about how many people are employed. 
And, according to your statement here, there is about 1 in every 2 
people employed, about 62,000,000 — or almost 1 out of every 2 people. 

You think, as a basis for our consideration in postwar planning, 
that we must predicate our plans on the maintenance of the ratio of 
1 to 2 in employment. 

Mr. MosES. Well, I state in the last sentence of the first paragraph — 
and this is my personal opinion : 

The best we can possibly expect is a national postwar income of one hundred 
and twenty billions. 

Congressman Wolcott. Gross. 

Mr. MosES. "And employment totaling 50,000,000 people," as against 
62,000,000 today, including the armed forces, and 52,000,000 prewar. 



1796 POSTWAR ECONOMIC POLICY AND PLANNING 

Congressman Wolcott. Do you agree that the bonded indebted- 
ness of the United States will be something in the neighborhood of 
$800,000,000,000 ? 

Mr. Moses. Yes. 

Congressman Wolcott. Can we reach agreement, approximately, on 
carrying charges ? It has been estimated that it is 3.9 and a fraction. 
We can say around 4 percent. That covers carrying charges, interest, 
refinancing, and refunding. 

So the Federal Government will have to raise in the neighborhood 
of $12,000,000,000 to carry a $300,000,000,000 debt. That is approxi- 
mately correct. And we have got to raise an estimated $8,000,000,000 
iv) maintain the Federal establishment. That is twenty billions. I 
think the nearest estimate that I have been able to get on the Federal, 
State, and municipal debt is about six billion, conservatively. So we 
start out with a $26,000,000,000 debt load which we will have to raise 
annually by taxation. 

As I understand it, until we got into this war, the national income 
of the United States has never exceeded $100,000,000,000, excepting 
possibly in 1929. It is a question of whether it went over it or was 
slightly under it. So if we maintain a national income of $120,000,- 
000,000, which you think is possible, of course, our usable income is at 
least twenty-six billion less than that, or $94,000,000,000. That is 
roughly correct, I believe. And that "uould correspond to a prosperity 
such as we enjoyed in 1929. 

Now, that is the dilemma that we are in. How can we maintain a 
1929 level of prosperity ? What can you tell us about that, and what 
part does public works play in the maintenance of that income? 

If I may make myself clear — I will state my position so that you 
v/ill know what I am predicating my question upon. I think we have 
got to build roads, regardless of whether there is an unemployment 
problem or not, as part of our economy. As you said, we cannot 
build and sell automobiles unless we have roads. And the road-build- 
ing industry might find itself competing in a very tight labor market. 
But, nevertheless, we have got to build roads. So, the thing that 
really alarms me is that yesterday and today, you seemingly have 
predicated all Government public works on the necessity for unem- 
ployment relief. 

So, with that in mind, ^^^lat part do you think public works plays 
in the maintenance of national income sufficiently large to assure a 
comparable standard of living income to that of 1929 ? 

Mr. Moses. Of course, that is a very tough problem to answer. 

Congressman Wolcott. That is our problem, Mr. Moses. 

JNIr. Moses. It is part of the problem. Of course, so far as the total 
expenditures are concerned, none of us sitting around this table here 
can predicate, or can prophesy the length of the war. If the war ends 
in Europe in November, that is one story. If it ends the following 
July, it is another. Irrespective of how much it costs the country, you 
will have to pay the bill for the war. There is no doubt about that. 
It may be a very unpleasant spectacle, but you will have to meet it. 

And I think you will have to meet the problem of the period of 
transition — let us say it is 2 years — in the same way. It is just as 
serious as war. Men out of work have to be taken care of. It is one 
of those things you have to take care of, like illness in the family. 



POSTWAR ECONOMIC POLICY AND PLANNING 1797 

•Citing the figures and saying, "It is just too bad," does not constitute 
the answer. It will have to be faced. 

Now, coming to this road matter, of course, I agree with you entirely 
that the road problem has to be taken care of. But to the extent that 

1 have any criticism — and I do not want to get this thing down to a 
question of an individual's criticism of Congress — my criticism is that 
the Congress has not come to any conclusion about roads. 

Congress has contributed generously, and I think wisely, money 
toward the design of roads which has not, as yet, been called for by 
the State. But Congress has neglected to come to a conclusion as to 
how much money there will be for roads, and it makes a great deal of 
difference. 

Congressman Wolcott. Mr. Moses, let me ask you this: Do you 
have, so that you may recommend to this committee so that we may 
pass it on to the Roads Connnittee of Congress, a figure which you 
believe is necessary to do the highway job? 

Mr. MosES. Yes; I can tell you that. It is just the impression of an 
individual who has been around a little bit. I think that the total 
program for a period of, let us say, 3 years after the war— I don't like 
these 5- and 6-year periods, and this business of stretching the pro- 
gram, because you don't do the job when you stretch it — should aim 
at certainly no less than a $o,0()0,()00,()00 expenditure for the maximum 
period of 3 years. I would like to compress it, because if your plans 
are ready, there is no highway job that takes more than 18 months, to 

2 to 3 years. 

Now, I do not believe that you are going to get that done by putting 
up a billion and a half dollars because I do not think, on the basis of 
recent experience, that the States will put up anotlier billion and a 
balf. In other words, I think the Federal contribution has to bs 
larger than that. I think if it got down to the Federal contribution 
being somewhere in the nieghborhood of 2 billion as against 1 billion 
matched by the States, that you would get the work done. 

Congressman Wolcott. As a 3-year program? 

Mr. Moses. As a maximum of 3 years. 

Congressman Wolcott. I was going to ask you under what formula ; 
the present highway formula? 

Mr. Moses. I recommended 00 and 40, Congressman. As I say, 
that is an arbitrary figure. I think the 50-50 basis is asking too much 
of States that cannot find the money. 

Congressman Reece. Will you permit a question? How much 
money was provided in the highway bill which Congress passed and 
which was vetoed ? 

Congressman Wolcott. I don't remember the amount. But we 
never appropriated, for Federal aid, more than $125,000,000 on a 
matched basis, on a 50-50 basis. Of course, a billion-dollar program 
is 10 times greater than any program which we have ever launched 
and ever done or ever had. A billion-dollar program, if the Federal 
Government permits itself to spend a billion dollars, is 10 times 
greater than any program which we have ever had. 

Mr. Moses. No; I don't think that is quite so, for this reason. 
Technically, of course, that is correct. But actually, if you figure in 
the PWA program — the separate PWA program 



1798 POSTWAR ECONOMIC POLICY AND PLANNING 

Congressman Wolcott. I am speaking now of the basis for the 
program that you and I are talking about. I say, matching it, of 
course. 

Mr. Moses. In those figures, when you speak of the highest previous 
amount of money contributed, appropriated by the Federal Govern- 
ment, you are leaving out a great many very important arterial 
figures. 

For example, here in New York the Belt Parkway involved an 
expenditure of $28,000,000, of which $12,000 000 came from the 
PWA. It was not highway money. It was a PWA loan and grant, 
you see. That was the most important single arterial highway con- 
struction in the United States. So that, actually, it has gone a good 
deal higher than that. 

I do not know how you get at the figures, but there is a great deal 
ofWPAwork. 

Congressman Wolcott. We should not take into consideration the 
WPA and PWA loans and grants in determining the proportion of 
Federal participation any more than you would want to take into 
consideration the expenditures by the Federal Government for WPA 
which might incidentally have been on highways. You have got the 
element of loans in there, as well as grants; and whether those loans 
are paid back or not must be taken into consideration. 

We are setting up a new plan now. But, even if you do take into 
consideration WPA and PWA and the Federal highway system, we- 
might conservatively say that this program is three times greater 
than was ever entered into in any one year before. 

Now, our problems following the first 3 years after the war, are- 
going to be three times greater than they were at the peak of our un- 
employment period. 

Mr. Moses. I do not concede those figures at all, Congressman- 
Congressman Wolcott. Well, the figure of $3,300,000,000—1 believe 
that was in 1934. 

Mr. Moses. It was in 1934. 

Congressman Wolcott. Over-all, for all purposes, all public works,, 
and now we are talking about the highway program. In the booklet 
which was left here yesterday by Mr. Upham, there are some figures 
on it. We can get them by reference. 

Mr. Moses. Well, Congressman, I do not concede those figures- 
Let me give you a perfect illustration of why they are not any good. 

Mr. Sterner, when he was highway commissioner of New Jersey, 
came to see me and asl'ed me if I thought he could carry out some major 
undertakings with WPA. I told him, on the basis of our experience, 
it could only be done if he could persuade the people in Washington 
to let him do WPA work by contract, providing that the contractor 
must hire a certain proportion of all his men from the WPA rolls. 
I did not think he would succeed in doing that, but he did. He went 
down there and he got agreement on that, and the result was that he> 
did many millions of dollars' worth of big highway work in New 
Jersey as a WPA project. I think that it was a swell idea. "V\niy 
they did not do it in other places, I don't know, but they did do it in 
New Jersey. 

Those figures are buried in your computations. They are just not 
there. But they actually represent the expenditure of money for- 
worth-while public works to employ people in the depression. 



POSTWAR ECONOMIC POLICY AND PLANNING 1799* 

Congressman Wolcott. We are talking about a road program and 
not anything but a road program. 

Mr, Moses. That was a road program, and nothing but a road 
program. 

Congressman Wolcott. On a 50-50 basis, an expenditure by the- 
Federal Government, matched by the States, an expenditure of a 
billion dollars would make a total of $2,000,000,000, for expenditures. 

Mr. Moses. And which amount, I think, would be inadequate. 

Congressman Wolcott. Now, the most that we have ever spent at the- 
peak of our unemployment is $4,000,000,000 for all public works. 
That is what I am getting at. Why should we make available a possi- 
ble $2,000,000,000 for road construction without considering any other 
public works, such as buildings, flood control, rivers and harbors, and 
all of the other works which we are financing. 

Mr. Moses. I can give you a very simple answer to that. It is be- 
cause this dislocation is more serious than anything we have ever 
faced in the history of the country. 

Congressman Wolcott. In your opinion, the dislocation following 
the war will be more serious than that caused by the depression? 

Mr. Moses. Yes. Let me give you two sets of figures from New 
York State. They may be 5 percent wrong, but they are substantially 
correct. In New York City we figured that the number of people in 
the armed forces is 700,000. The number in war industries is 600,000. 
Up-State, the total is the same, excepting that the figures are reversed. 
There are 600,000 people in the armed forces, and 700,000 in war in- 
dustries. That is a total of 2,600,000 people who are dislocated. 

Now, we never had a thing like that in the history of this State, no- 
matter how you measure the proportion of population, or anything 
else. That is what disturbs me. I do not want to be sitting around 
again. I am talking as an individual. 

Congressman Wolcott. In your opinion, the dislocation — economic 
and so forth — following this war, is going to present a much greater 
problem than that which confronted us in the depression ? 

Mr. Moses. That is right. At the end of the last war, we had a 
considerable number of people in the armed forces, but we had no 
such involvement of industry as we do today. We did not have the 
Uumber of people, either. 

Those are the actual figures, and they are paralleled by other States. 
Some of the agricultural States perhaps have fewer people in th© 
armed forces. The proportion is a little different. But they are 
enormous dislocations. 

Congressman Wolcott. I would now like to get to another question. 
You predicate your figures and the necessity for public works some- 
what on the basis of unemployment relief, or do you at least like to 
think of it as contributing toward economic stabilization? 

Mr. Moses. Both. I do not recommend any projects merely to. 
make work. These projects, I assume, are all going to be sifted. 
The greatest public-works program you could possibly carry out in at 
period of, say, 3 years in the United States, could not exceed $15,000,- 
000,000 with all the local, Federal contributions you can get, and I 
think it is too late for a program of that size. 

I mention that figure because of the time it takes to prepare plans, 
for one thing; and the other difficulties that are iulierent, such as a 
shortaire of certain kinds of materials. 



1.800 POSTWAR ECONOMIC POLICY AND PLANNING 

Now, I always come back to the spectacle that confronted anybody 
who had to deal with this very much smaller problem at the time 
of the depression, let us say, lOoJi. 

Congressman Wolcott. I am glad to hear you say that, because I 
think most of us like to think of this public- works program as a factor 
in our stabilization efforts following the war. 

Mr. Moses. Let me interrupt you there for just a moment. I can 
give you some figures that will illustrate exactly what I mean. 

I went to the chairman of the board of the United States Steel Corp. 
and asked him to assign some of his best men to work on a break-down 
for a program in New York City, and to show just exactly what steel 
was needed, and when, to carry out those two programs. 

They put one of their vice presidents on the job and some other man. 
We have all of those figures, which have been done with great care over 
a period of months. 

Now, answering your question, it seems to me to make no differ- 
ence — from the point of view of the effect on the economy of the Steel 
Corporation — whether they sell that steel to the State of New York, 
the city of New York, the Triborough Bridge Authority, or the first 
fellow who is building a house around the corner. It is still steel. 

Congressman Wolcott. What 1 vras getting at was this: We all 
admit that public works, especiall}^ roads, is one of the most important 
factors in this stabilization c-ffort. What do you consider as perhaps 
.equally important factors? 

Mr. Moses. Building. I do not think it makes any different whether 
it is a State postwar slum-clearance project, a city postwar project of 
the same kind, or a Federal prcJ3ct. 

Congressman Wolcott. I mean, out of the public-works field en- 
tirely. What other factors are necessary toward stabilization in order 
that we may maintain this $100,000,000,000 income? 

Mr. Moses. I do not believe that I follow your question. 

Congressman Wolcott. What tax adjustments will invite some 
reconversion and rehabilitation capital into the private-enterprise 
fields? 

Mr. Moses. On the tax question, that will take a long while, if we 
get into that. 

Congressman Wolcott. We have those problems, and it is just one 
factor. You tie in these millions of dollars you want ns to spend for 
public works, together with what seems to me to be the necessity of 
some adjustments in our taxes in order to encourage private enter- 
prise to expand ; and take into consideration the $300,000,000,000 debt 
which we have got to carry by raising at least 12 billions of taxes 
for that purpose alone. 

I think you will give some consideration, especially to the fact that 
many of the States have not used u)) the money — the total, I believe, 
is $150,000,000 — which is still available for road construction. In the 
face of that, we just cannot throAv the taxpayers' money out here on 
elaborate programs based upon a supposition. 

So, when you say that we have facts and figures, the facts and 
figures are imaginary so far as you are concerned and so far as we are 
concerned. We are not spending the taxpayers' money on imaginary 
figures- 



POSTWAR ECONOMIC POLICY AND PLANNING 1801 

Mr. Moses. I don't think these figures are imaghiary at all. As for 
suppositions, any program you have rests on supposition. 

You are relying now on the supposition that private business can 
take care of tlie entire problem. That is certainly debatable. 

Then you are assuming that you cannot do anything about the prob- 
lem. 

Congressman Wolcott. I am not assuming, either, that we can do 
this whole job by expenditure of Government moneys. 

Mr. MosES. I do not propose that. 

Congressman Wolcott. If we have to nuiintain and predicate our 
prosperity in this country from now^ on upon continuing and increas- 
ingly large public expenditures, we are seeing the beginning of the 
end of the American way of life. 

Mr. MosES. I can give you, perhaps, an indirect answer to that. And 
again, I want to call your attention to the fact that I am a Republican 
and a conservative. 

I think that unless the conservatives, irrespective of party, do some- 
thing to meet this employment problem which is going to be upon us 
shortly, they are going to lose a lot of ground. They cannot simply 
take the view that Government can be pushed out of the problem en- 
tirely, and private enterprise will take care of all of it. 

Congressman "Wolcott. I do not think there is any question at all 

but that the Federal Government is going to see to it that the people 

■f the United States are going to be given work during this transi- 

ional period. The only thing in dispute is the manner in which w^e 

lO it, and the size of our program. 

Now", you have spoken of this highway bill, which is pending be- 
fore the Rules Committee reported out by the Roads Committee. I 
was not tliere. I was busy working on OP A at that time. I was 
trying to prevent inflation from the other side of this picture. But 
the Roads Committee cut that bill down from an arbitrary $3,000,- 
000,000 to an arbitrary billion and one-half. And one of the objec- 
tions to the bill was that it was not enough, as you stated. One of the 
other objections to the bill was that in this planning there are con- 
tractual obligations created which make it necessary for the Federal 
Government to spend this money regardless of the financial condition 
that the States are in following the war. 

Now, of course, we haven't any definite knowledge of what the eco- 
nomic condition will be 6 months following this war. What we hope 
to get from you is some suggestions of a flexible enough program so that 
the Federal Government could contribute all that is necessary to 
maintain the base upon which we could build a national income suffi- 
cient for our needs ; and you have not given it to us. 

Mr. Moses. Well. I think I have given you everything that I am 
able to give you. When you come down to the question you just 
raised, of the manner in which you are going to meet the problem, I 
repeat what I said before, that you are either going to meet it by 
having business take care of the greater part of it or by having a 
public-works program of a substantial size. The amount of employ- 
ment, the expenditures, the effect of the public-works program will 
have to be realized by some other method, which will be some kind of 
relief, and you will pay the bill in some form of relief, which I think 
w^ill be a very bad thing. 

99579 — 45 — pt. 6 7 



1802 POSTWAR ECONOMIC POLICY AND PLANNING 

Congressman Wot.cott. CouW you suggest to us a program, large 
enough but flexible enough, so that ^Ye could fit this program into 
varying needs following the war? 

Mr. Moses. Well, I don't know what you mean by that. I think 
we ought to have a $3,000,000,000 program. 

Congressman Wolcott. That is purely arbitrary. 

Mr. MosKS. No, It is not purely arbitrary. It is based on a great 
deal of study of the amount of work to be done. 

Congressman "VVoLCOTr. It is based upon conjecture with respect to 
unemployment. 

Mr. MosEs. It is based upon the need of highways and roads. If 
there were time, I would give you the basis here in New York. 

Congressman Woi.cott. I understood you to say a while ago that 
you had to liave $3,000,000,000 to take up the slack of unemployment? 

Mr. Moses. Oh, no. You asked me how big a highway progi-am 
there ouglit to be and I said to take care of both unemployment and the 
need of tlie country we would need a $3,000,000,000 program to do the 
job. 

Congressman Wolcott. How much weight do you give unemploy- 
ment as the factor of necessity? 

Mr. Moses. I tliink all of the work needs to be done, every bit of it. 
And the only attention I give to the employment factor is by com- 
pressing the program, telescoping it within a shorter period of time. 
Tliat is all. 

Congressman Yv^olcott. "\Ve haven't any dispute here. We are 
trying to find out what the facts are. I think our objectives are the 
same. Tliat is all I have. 

The Chair:man. Mr. Foisom has some questions he would like to 
ask. 

Mr. FoLSOM. I might say, as to the figures, I don't quite agree with 
the figures you gave to us. A representative of the Municipal Finance 
Oiiicers Association a few weeks ago gave us some information about 
the ability of the nmnicipalities to finance public works program. He 
gave quite a different story than you gave us. As he presented it, 
they were able themselves to finance a public works program, and they 
were not in need of the assistance of the Federal Government, especially 
for smaller projects that you indicated were needed during the transi- 
tional period. 

I was wondering whether your information is based on this situation 
here in NeAv York State where you might have debt limitations, a 
factor which you would not have in other cities in the country. 

Mr. Moses. I do not know the source of his figures. I wish to cor- 
rect an impression that I said that I favored only small public works. 

I put the emphasis on them now because of the loss of time; 
because of the fact that tlie war may be over in a few months; and 
because we have wasted too much time in these discussions; and that 
it is too late to prepare plans for a great many big worth-while 
projects. They take 12 months, on an average. 

Now, coming back to the question of taxation and the question 
of debt limits: I don't profess to be an authority on conditions all 
over the United States. The conditions that exist here, in Connecti- 
cut, and some otlier States that I know, we found existed also out in 
Orcg;)n, in Michigan, Virginia, and California, and probably apply 
in other States. 



POSTWAR ECONOMIC POLICY AND PLANNING 1803 

Mr. FoLSOM. You would think he would be quite an expert in that 
field. 

Mr. Moses. I don't know who he is. 

Mr. FoLSOM. He mentioned the fact that the cities have benefited 
in that revenues have increased and the capital outlay has been 
decreased. 

ISIr. Moses. You mean, because they were not able to build? 

Mr. FoLSOM. There were debt reductions in some cases, and, in 
other cases, reserves were set aside. Doesn't that mean that the cities 
are in a much better financial condition to finance public works than 
they were 3 years ago '( 

Mr. MosEs; I would not want to try to speak about the whole 
Nation. In the places I know about, the municipalities are not able 
to meet the bill. That is the feelino- of Mayor LaGuardia, who is the 
head of the mayors conference of the United States, and he knows 
all the other mayors. It is the opinion of the secretary of that 
group. 

Now, you can say that that represents the big municipalities. That 
is probably true. Of course, a municipality is anything below a 
State. It is a village ; it is a town ; it is a county ; it is a special 
district. 

And in my village out in Long Island where I spend a great deal 
of time, I can tell you that they cannot afford any big public-works 
program.' How are they going to pay for it? You can say that 
they can raise their taxes indefinitely. Their great source of revenue 
is real estate. The real-estate tax out there is higher than New York 
City, with fewer services. It is a typical Long Island village com- 
munity. 

The same thing is true of the town there. I would not want to say 
that it was true of the county. I think that the county could afford 
a sub-;tantial part. But it is a big county, and it has never done 
any work of that kind. 

The fact of the matter is that if you get down to theory on these 
things, by the time we get through debating theory, we will be back 
to another CWA. That is what happened the last time. That is 
why Harry Hopkins won the argument. He won it because we did 
not have anything better than he had. 

The Chairman. I believe Dr. Kaplan has a few questions he would 
like to ask. 

Dr. Kaplan. I would like to get the benefit of some authority who 
is behind Mr. ]\Ioses' opiiiions. Mr. Moses indicated that the probable, 
practical limits of a public vrorks program would run to about $5,- 
000,000,000 a year. 

Mr. Moses. I said I could not conceive of any program that could 
be carried out in the emergencv period which woulcl run to more than a 
total of S;i 5,000,000,000, if that is what you mean. 

Dr. Kaplan. Does that not mean $a,000,000,000 a year? Would 
you want to indicate that some years we can move up faster than that? 

Mr. Moses. No. I said I thought the transition period would be 
from 2 to 3 years. Let us say 3 years. These are round figiu-es. I 
cannot distinguish between year one and year two. 

We probably have had as much experience as any group in this 
matter of preparation of plans in keeping track of progress. We 
have got a program here in New^ York City that runs to close to a bil- 



1804 POSTWAR ECONOMIC POLICY AND PLANNING 

lion dollars. I am very familiar with the State program, and had a 
good deal to do with setting it up, and I know how long it takes to pre- 
pare plans. I thiidc I know roughly, and I gaA'e it to you as my 
opinion based on some £:() years of experience in this kind of thing, 
that $15,000,000,000 would be tops in a program for a maximum of 
3 3^ears. I don't believe you could do that now because too much time 

Dr. Kaplan. I am trying to get that $15,000,000,000 tied to an 
amount of employment. A $5,000,000,000 construction program would 
mean direct employment of a million people. Would that be about 
right ? 

Mr. MosES. No. 

Dr. Kaplan. What is your ratio? 

Mr. MosES. My ratio would have to be based on how much was 
major public works and how much was minor. I can answer that by 
telling you that in the relief period, the amount spent per man ran all 
the way from $950 to $1,200. We never had an average here of more 
than $1,200 per man. That covers the man's wages, and it covered 
everything that went into the job, excepting overhead, which we were 
never able to measure. 

Dr. Kaplan. You are not talking about a $900 a year job when 
you speak of a regular building program ? 

Mr. Moses. If you will permit me, I will try to answer the question. 
The lower down the scale you get with small jobs, the lower the pay. 
The clearing of forests is one kind of job; grade crossing elimination 
is another. Now let me finish my line of reasoning and then you 
will see what I am driving at. 

In the relief period w^e never went above $1,200 a man. We did 
quite a little worthwhile work. The amount per man goes all the way 
up to $4,500, according to the job. The amount, the average I placed 
in here in making these calculations is somewhere around $3,000, which 
is perhaps a little low. 

The most that I can remember on any series of jobs per man was 
$4,500. The minimum was $1,200. It depended on the kind of job. 
The average certainly was not $5,000. It is much too high. 

Dr. Kaplan. We were given yesterday an estimate of $8,000,000,000 
as the amount it would take in order to get a public-works program 
that could be really useful, and I wanted to get your impression. 

In that $5,000,000,000 program, do you inclucle only public works, 
or do you consider that the total of the construction, let us say, in the 
year immediately following the v/ar? 

Mr. Moses. I don't Imow what j^ou mean. I am talking about public 
works. 

Dr. Kaplan. You are talking about public works. 

Mr. Moses. Yes. 

Dr. Kaplan. I am thinking in terms of how fast the national con- 
struction program can be increased after the war. We have now less 
than 600,000 people employed on construction. Private industry has 
a considerable amount. Would you care to give us your im]iression 
as to how fast we can step u]) employment from less than 000,000 today 
to the total number that you could practically get into construction 
over the next 3 years ? 

Mr. Moses. All construction, you mean? 



POSTWAR ECONOMIC POLICY AND PLANNING 1805 

Dr. Kaplan. Yes. 

Mr. Moses. I would not want to try to do that. 

Dr Kaplan. Don't you think the amount that we try to allow lor 
public works is related to the question of how many people you can 
get into a total construction program ? 

Mr. Moses. Yes; excepting that the factors that enter mto stniiu- 
latino- this general private construction program are numerous and 
veryliard tl) gage and weigh. Usually when you get all through 
figuring them out, they are good on paper and don't work out m 

T)ractice. 

Now i have spent a good deal of time talking to people in the build- 
ing industry here and elsewhere. We have talked to people on the 
design side, on the construction side, on the financmg side, and the 
labor side. We have already got people around New York City who 
are looking for jobs on construction. 

When you say private construction, we get all kinds of taiitastic 
schemes for a tremendous Nation-wide building program, and 8,000,- 
000 houses. Everybody is going to have a new house. I find tha,t 
when I get through painting the front of my house, I can't get around 
to the back of it. I spent $180 just doing the porch and front of the 
house. I am going to fix up the old one. It is about 60 years old, but 
it will be good enough for us while I am around. 

Dr. Kaplan. When you talked of a $5,000,000,000 program, if you 
have in mind an average of $3,000 per man over the whole range of 
the program, you are speaking of taking care of something better than 
a millioii and "a half people through public works. Is that about your 
thinking, per year? 

Mr. MosES. Well, we did not figure it out that way. If you want 
to get the exact graph that was used— well, I will give you a graph 
showing how the thing worked up to a maximum ; how it continued on 
that nicudmum for 6 months ; and then dropped. 

Dr. Kaplan. Mr. Moses, we have to consider the question as to 
what the means are for getting a certain number of people employed. 
It may run as many as nine or twelve million people during the transi- 
tion period. You°^are suggesting a public- works program as a means 
of taking care of a certain number of people. Your figures may mean 
a million and a half, or a little more. 

Mr. MosES. We will give you the graph and show you how it was 
built up. 

Dr. Kaplan. Of that $5,000,000,000, you were talking about a 60-40 
over-all arrangement; in other words that the Federal Government 
would have to bind $3,000,000,000 a year of that program. 

Mr. Moses. That is my suggestion. 

Dr. Kaplan. That is about what you are suggesting? 

Mr. ISlosEs. Yes. 

Dr. Kaplan. In that program do you include repair and maintenance 
work that has been deferred ? 

Mr. MosEs. We don't include any minor repair work. As to just 
where the line is between repair and construction, that is something 
that at the end of many years of public service I have never been 
able to figure out. 

Dr. Kaplan. You wouldn't expect the Federal Government to 
participate in what you call minor repairs? 



1806 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Moses. No. 

Dr. Kaplax. You are talking about a $5,000,000,000 program in 
which the Federal Government participates? 

]Mr. Moses. Yes. 

Dr. Kaplan. Over and above what you call minor repairs, we have 
been tr3'ing to get estimates on how much self-motivating work there 
is in the municipalities. We have estimates from various repre- 
sentatives of municipal groups and from Federal agencies of about 
$1,000,000,000 of maintenance and repair work. I am sure that would 
include a considerable amount of what you would call major repairs. 

Mr. Moses. I cannot answer that. We have items, as you know, 
in our budgets that call for repairs and other items that call for 
construction. But as I have said, the line is more or less an arbi- 
trary one. 

Obviously, if you get to the point where you are doing a building 
ever because the whole roof leaks, that is a construction job. 

Dr. Kaplan. You don't feel that anything is necessary in the Avay 
of extensive planning, so far as the deferrecl maintenance and repair 
job is concerned? 

Mr. Moses. No. I think there that it will take some planning, but 
not very extensive. 

Dr. Kaplan. It is the sort of thing (he municipalities would do 
for themselves ? 

Mr. jMoses. Unfortunately they are not doing it. They should do it. 

Dr. Kaplan, Isn't the sort of thing they would be doing that which 
would be done in peacetimes? 

Mr. MosES. They don't face that particular problem. We find in 
the State park program that it takes about 4 months to prepare a 
deferred maintenance program. Theoretically it should take 4 days, 
but it doesn't. It takes time. 

These things accumulate. We never had a period like this in my 
lifetime where there has been so much deterioration; where there has 
been a priority system; and where things have decayed to the point 
where seme of them have collapsed and gone to pieces. 

I would say it w^as unfortunate that a groat many municipalities 
and Spates are not giving enough time for that. That is something 
the}' have to take care of locally, without any help. They should be 
vrorking on it. But the shortage of men and other things seems more 
important to them, and they don't do it. But it isn't anything you 
can do overnight. 

Dr. Kaplan. Talking in terms beyond that, it is pretty nearly 
getting into the dream stage ? 

Mr. MosES. Don't forget, if 5'ou get into Avork relief, you put 
people on your pay rolls. 

Dr. Ivaplan. That is putting them on, but it is not getting the 
work done. 

Mr. IMosEs. You get some work done, too. 

The Chairman, Dr. Kaplan, let me say that when Commissioner 
Moses suggests anything, it is always a real achievement. 

Dr. Kaplan. I agree, Mr. Chairman. I am asking these questions 
to get the opinions of an expert in the record. 

Now, with regard to this 3-year period. It is quite possible that we 
will have a short period as we had at the end of the last war when we 



POSTWAR ECONOMIC POLICY AND PLANNING 1807 

don't need much help. But the real need for help will develop perhaps 
a year after the war when the first commitment of catching up on a 
lot of things develops. 

Have you any suggestions, Mr. Moses, as to how to make this feeding 
in of Federal funds flexible enough so that it isn't a case of "here is 
something you can have," and a municipality may take it, whether it 
needs it or not, so that we can get timing into this thing — so it is a 
contingent fund that feeds in when it becomes necessary ? 

Mr. Moses. I suggested to General Fleming — I wish I had brought 
the memorandum along — but I suggested to him that he begin by sim- 
ply expanding the highway program into the fields of sanitation and 
health, and certain other fields, and making this whole thing simply an 
elaboration of the highway program. I think I once discussed that 
with you, Congressman. 

The Chairman. That is correct. 

Mr. MosES. But that was a year and a half ago. I don't believe now 
that you can have a $15,000,000,000 program. I thnk the time has 
run out. It has to be cut down, whether you want to cut it or not. 
Even if you wanted to do it, I think it is too late to do it. 

Now, it took us months to get an agreement between the States and 
the Federal Government to hire outside consultants to do highway 
major arterial plans because it never had been done. I don't say that 
there was great opposition in Washington. I think there was more in 
some of the States, and there was a lot right here in this State, just as 
there was opposition on the part of the Civil Service Commission. The 
thing to do was to hire more of them. Now, that took a matter of 
months. 

Now, there has been an argument going on and finally settled a short 
time ago regarding a form of contract for some of these improvements. 
That began 12 months ago, and the contracts have just been signed 
now. 

In the course of those 12 months, the contracts were passed back and 
forth, from one lawyer to another; from the regional representative 
to the State ; and from the State to the city ; and much time was con- 
sumed. The glass runs out on that particular thing. 

There is a terriffic amount of red tape in these matters. That is one 
reason, when you have an emergency you end up by saying, well, the 
simplest thing to do is to hire a devil of a lot of fellows — let's get the 
plans afterward — and put them on the pay roll now. 

Dr. Kaplan. If the funds were made available immediately, there 
would be no assurance of the timing of the use of these funds to fit in 
with the economic conditions? 

Mr. jSIoses. I think so. That is why I suggest that 3^ou look over 
this schedule. We have a unit here under Mr. Spargo that works on 
nothing but scheduling these improvements an.d on the break-down of 
the improvements into steel and stone and cement. We don't v.ant, 
for instance, to count on a lot of wood if there isn't going to be any 
wood. 

Now, that schedule is a totally different thing from getting up a 
program. It is totally different. You get up your program, and 
then your scheduling determines how much you can do and how many 
people you can use. 

Dr. Kaplan. Or need to employ. 



1808 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Moses. And it has to be flexible. 

Dr. Kaplan. Do you have enough confidence in municipalities gen- 
erally to feel that they can be fitted into a program of putting on the 
public works at the time they are most needed, or saving them until 
needed ? 

Mr. Moses. Only the larger ones, and only some of them. The rest 
of them have to count on some larger unit like the State. That is the 
reason we planned the matched money program. They don't have 
the money. They never thought about these problems. That is one 
of the difficulties with the municipalities. 

Dr. Kaplan. You don't feel it would represent undue dictation from 
Washington to have some control of that in terms of getting 

Mr. MosES. I think the model should be the highway system, which 
works well. I have not seen any disposition to dictate in all the time 
I have been dealing with the Federal highway authorities. I think 
they have been intelligent. I think they have been f arsighted about it. 
But I don't think that there has been any dictation. I think it has been 
just about the right measure of control. If they apply that same 
measure to other public works, they will be doing a good job. 

On the other hand, if you want me to be specific, I think there were 
times when the handling of the public-works program by Mr. Ickes 
was simply outrageous. Why, he had a gang of people work- 
ing on the Triborough Bridge, snooping and seeing how many people 
rode in motor cars. It was just a sheer waste of money. That kind 
of thing is just an imposition. When Congress gets all through mak- 
ing an intelligent set of regulations, success depends on who carries 
them out. 

Dr. Kaplan. I have just one thing more that I wanted to ask you 
about. I think we have your testimony as to how rapidly this sort 
of thing can be done. 

Now, with regard to the percentage that the Federal Government 
might contribute: Would you make that a flat 40-60 arrangement 
regardless of whether it was a short'-term or long-term program, or 
do you think there ought to be some difl^erence in the contribution of 
the Government for ditferent kinds of projects, running from your 
minor repairs to the long-range program for unemployment relief, 
where the Federal Government might feel that it has a responsibility 
that it cannot expect 

Mr. MosES. Excuse me. I would make it flat. I would like it over 
a certain period. For instance, in the case of highways, I don't know. 
If the States haven't spent their money in a certain period, I would 
give the rest of the money to the other States. 

Dr. Kaplan. There was another question of allocation on the popu- 
lation basis, or feeding it in where the stress seems to be greatest. 

Mr. MosEs: The safest thing is to adopt a formula. It may not be 
the wisest. It is the simplest and leaves less room for politics and 
pressure and all that kind of thing. 

But I think the important thing is to compress the program within 
a certain period and not to let it string out. Beyond that period, I 
agi"ee with some of the members of this committee that it isn't the job 
of the Federal Government continuously and over a long period of 
years to do this. This is an emergency. I think it should be con- 
fined to the emergency. Any State or municipality that does not 
come up to "bat" in that emergency is "out." 



POSTWAR ECONOMIC POLICY AND PLANNING 1809 

Dr. Kaplan. You feel that public works can meet the emergency 
to the extent of an average of $o,000 per man up to a practicable limit 
of someAvhere under $5,000,000,000 ? 

JNIr. Moses. I think there will be that number of men ^v\\o will have 
to be provided for in one way or another. 

Dr. Kaplan. I did want to get in the question of how much can be 
expected from the public-works program and match that against the 
other problem of stepping up the twenty billions of revenue which, 
they are thinking of as a possibility without crushing private incen- 
tives to that extra three or four billion per year in some revenue 
formula or else adding it to the national debt. 

Mr. jMoses. I think if you look at the graph that we prepared, which 
is only for New York City — it was based on a comparison with the 
240,000 peak we had in the relief period — you will see that we work 
up gradually to a top of 200,000, which is all we were talking about. 

You will find, Allien you work up to that peak, or before you get 
there, that the emergency is not as great. You don't have to spend the 
rest of it. You cannot start right out by employing these people. 
That is one of the difficulties in the program. 

Dr. Kaplan. That is all. 

Congressman Collier. While Dr. Kaplan is here, in Mr. Wolcott's 
questioning of the witness the point was raised of the carrjnng charges 
on this national debt based on $300,000,000,000. 

Just for the sake of the record, I w^ould like to get Dr. Kaplan's 
views on that. I had understood that the carrying charges on this 
$300,000,000,000 would be around seven and a half billion, rather than 
$12,000,000,000. 

I do not want to start any controversy here, but those are the figures 
I have been proceeding on. 

Dr. Kaplan. AVell, it is the kind of question I would like to answer 
when I have the data before me, I have them. My impression was 
when Mr. Wolcott was talking about something close to 4 percent that 
he was including a good deal besides the straight interest on that 
debt; straight interest would run something closer to 21^ to 2% per- 
cent, which we will say, on $250,000,000,000 would be running around 
six and one-half billion dollars. 

As ^Jr. Wolcott spoke, I got the impression that he was including 
a number of other things. 

Congressman Wolcott. I was including everything that was neces- 
sary. Interest was one factor. 

Dr. Kaplan. I did feel myself that twelve billion was making allow- 
ances for considerable loading. But I was not inclined to question 
your statement because I knew you were talking beyond the average 
interest rate, which, obviously, would make it considerably lower. 

Congressman Wolcott. I have been given the figures 3.9 and a 
fraction, and I was just using the round figiu'cs. 

Congressman Colmer. What do you include besides interest? 

Congi-essman Wolcctt. Your administration, your refunding, your 
long-term bonds. You have got to charge against that your admin- 
istration and bonds — all administrative activity within and without 
the Treasury Department. 

Dr. Kaplan. There was probably some allowance for a slow rate 
of debt retirement in that 4 percent, too. 

Congressman Eeece. This may be olf the record 



1810 POSTWAR ECONOMIC POLICY AND PLANNING 

(Discussion ensued off the record at this point.) 

The Chairman. Mr. Commissioner, I want to thank you on behalf 
of the committee for coming here this morning. You were more 
than generous with your time, and I feel that everything that I 
said about 3'OU before you came in fully justified by the exposition 
of facts that you have given. I think we all appreciate that the 
information you have given will undoubtedl}^ be of great help to 
the committee. We wish to thank you for your presence here this 
morning. 

Mr. INIosES. Thank you for letting me come here. 

The Chairman. We will now adjourn to 2 o'clock, if it is agreeable 
to the committee. 

(And adjournment was thereupon taken until 2 p. m., at the same 
place.) 

afternoon session 

The Chairman. The hearing will come to order. This afternoon 
we are going to be privileged in having the mayor of one of our 
suburban cities here, one who is very well acquainted with the prob- 
lems of the smaller city as contrasted with the problems of the large 
city adjoining it. I will now call upon the mayor of the city of 
New Rochelle, Mayor Church. 

You may proceed, Mayor Church. 

STATEMENT OF HON. STANLEY W. CHURCH, MAYOR, CITY OF NEW 

ROCHELLE 

Mr. Church. Mr. Chairman and gentlemen of the committee, I 
am delighted at the privilege of testifying here today, and I will make 
my remarks just as brief as possible. 

Like every other city in our State, New Kochelle has a number 
of postwar projects in mind. We have been planning these projects 
and in New Rochelle the total cost of these postwar projects will 
run to around $3,800,000. 

Now our city, the same as other cities, isn't in any position to spend 
that much money in this construction work. Our property owners 
are heavily taxed today. They are pa^dng extremely heavy taxes, 
the same as they are in every other municipality. 

The State calls upon the various municipalities to make substantial 
contributions to the State government. They ask our citizens to 
pay State taxes in the form of State income taxes and in the form 
of gasoline taxes, and many other taxes. The city, on the other hand, 
is required to collect a certain number of these taxes, and required 
to collect countj^ taxes. We are put to a lot of expense. 

The State will call upon the cities of the State to create State 
bureaus in our cities, which means that we have 'to pay employees 
for carrying on this type of work. At the same time, the State 
returns very little money to the municipalities. 

One example of that is the State income tax. The State retains 
for itself 85 percent of the income tax. In one year, in Westchester 
County, our people contributed $4,000,000 in gasoline taxes to the 
State, and yet we got back only $80,000. 



POSTWAR ECONOMIC POLICY AND PLANNING 1811 

Now, I feel, and I know many mayors feel the same waj', not only 
in New York City, but in other States, that there should be some 
new way of financinf^ municipalities with the help of the Federal 
Government and the State jrovernment. 

I have a pamphlet of the United States Conference of Mayors. It 
is called the United States ISIunicipal News, and it is a report from 
the city of Grand Rapids, Mich. I would like, if I am permitted, 
to read just a very small paragraph. I think it is applicable to 
nearly every city in the United States. 

The city has no power to raise money except as the State by law expressly or 
impliedly grants such right; that the State and Federal Governments have 
drained off the major sources of income from the mnnicipalities so that the 
people are paying plenty of money in taxes, and the primary trouble is in the 
distribution, the cities in most instances getting what is left and no more. 

That is our situation in New Rochelle, and we know that we can't 
go ahead with these postwar projects unless we have State or Federal 
aid. I favor Federal aid, and I hope that this Federal aid will come 
directly to the cities and not through the State government. 

I say that as a Democrat. But regardless of whether we had a 
Republican administration in Albany, or a Democratic administra- 
tion, I would still feel the same way. There has to be greater aid to 
the municipalities. The property owners must have some relief from 
the overburdened taxes. They should not be called upon to pay relief 
costs, I don't believe. 

I think in a situation like that, where the trouble is Nation-w^ide, 
the Federal Government should appropriate the money for relief and 
permit the municipalities to operate the giving of relief in the indi- 
vidual municipalities. 

I don't know, Mr. Chairman, wdiether you wish me to enumerate 
the projects that we have contemplated, or whether you prefer to 
have me file them with you. 

The Chairman. If you will file a list of the projects, and I think 
what we would like to have would be to set forth in the list to what 
extent the plans liaA^e been prepared, and to what extent you are 
ready to go ahead. 

Does that complete your statement, Mr. Mayor? 

Mayor Church. It does, with this exception. I believe that the 
Federal Government should finance at least 50 percent of these post- 
war projects so that the municipalities will be able to go through with 
their plans. Suppose I just read these off, then. 

1. Stephenson drain, $2,100,000. This is a large storm water drain 
running about 5 miles north and south in the city. It is designed to 
relieve serious flood conditions which occur now at every heavy 
storm and result in periodic property damage mounting into tens of 
thousands of dollars. 

The State postwar planning commission has approved the prepara- 
tion of preliminary plans for this project which have been completed 
and we are now awaiting approval for the preparation of the final 
contract drawings. It is estimated that all the plans will be com- 
pleted by the end of the year and the project will then be ready for 
immediate construction as soon as the funds and manpower are avail- 
able. 



1812 POSTWAR ECONOMIC POLICY AND PLANNING 

2. Railroad plaza, drain, $85,000. This is a large storm drain to 
carry off floodwater from the station plaza of the New York. New 
Haven & Hartford Railroad. At every heavy storm this plaza now 
becomes so badly flooded that it is practically impossible for com- 
muters to get in or out of the railroad station. No plans have as yet 
been prepared on this project, 

3. Beechtree Drive sanitary sewer, $41,000. This is a sanitary 
sewer designed to correct a bad sanitarv condition in the extreme 
northeast section of the city, known as the Woods of Larchmont, where 
there is no sewer at present. All necessary plans have been prepared 
for this project. An easement must be secured from the Westchester 
County Park Commission. Negotiations for this easement have al- 
ready been started. 

4. Northfield drain, $27,000. This is a large storm drain to correct 
a bad flood condition occurring at every heavy rain at the north end of 
Webster Avenue. No plans have been prepared. 

5. Mayflower and Winyah Avenue drain, $128,000. This is a large 
storm drain to provide relief from flood conditions in the Mayflower 
and Winyah Avenue sections. No plans have been prepared. 

6. City Hall, $400,000. A new city hall is a necessity and will also be 
an economy. The present structure is about 100 ye^ars old and is a 
veritable firetrap. It is so small that it does not begin to house the 
necessary departments, with the result that various other quarters 
have to be rented. 

7. Sewage disposal plants, $070,000. The existing disposal plant 
only screens the sewage and is a menace to the bathing beaches in the 
vicinity. It was condemned many years ago by the State board of 
healtli. 

8. Outfall sewer, $350,000. In conjunction with a new sewage-dis- 
posal plant a new outfall sevrer will have to be constructed to carry the 
effluent out to deep water in the sound. 

• Street paving. No estimate has been made of necessary street 
paving. _ Main Street and Huguenot Street, Federal Route No. 1, have 
been ruined by the excessively heavy and continuous war traffic and 
must be completely rebuilt, ifrora the foundation up. Many other 
streets are also in serious need of repair. 

The Chairman. For the benefit of the committee, would you state 
the population of your city, and also advise the committee whether or 
not there has been any increase in your city as a result of war industries 
in the immediate neighborhood ? 

Mayor Churck. The population of the city of New Rochelle is 
roughly 60,000. We have not benefited the way other cities have 
because of war industries. Our main industry was and is building. 

Of course, at the present time, we are not permitted, because of 
priorities, to do any building. But we hope to be able to put the boys 
from New Rochelle, Avho are now serving in tl:e armed forces, to 
work when they come back in our only real industry which is building. 

The Chairman. I think you have made a A'ery complete statement, 
Mr. Mayor, but I would like to ask you further, to what extent has your 
city, or if you know cities of comparable size in New York State, pre- 
pared themselves by the actual drawing of plans for specific public 
projects ? 

Mayor Church. I can only speak for our own city regarding that 
question. We have already made up our plans for these projects that 



POSTWAR ECONOMIC POLICY AND PLANNING 1813 

we are submitting. Some of tlie plans are not completed. But most 
of them are. I believe that is the situation in most of the cities. 

I happen to be chairman of the Mayors of the Cities of West- 
chester County, and I know they all have been busy i^reparing plans 
for quite some time. 

The Chairman. Do you believe it would be advisable, for the pur- 
pose of encouraging these small municipalities to get ready for post- 
war condition, for the Federal Government to make contribiitions or 
grants for tlie purpose of aiding the cities in getting started on 
their y)lans? 

Mayor Church. I definitely feel that the Federal Government 
would be rendering a real service to the municipalities if they did 
aid them financially in preparing these plans. And I might say that 
the city of New Rochelle would have no objection if the Federal 
Government would care to pay some of the expenses of the plans we 
have already set up. 

The Chairman. But the point we are trying to get at is this : We 
don't want to have the cities or municipalities feel that they can sit 
back and not do anything. At the same time, many feel that some 
aid should be given. 

The difficulty that we are faced with is whether or not the cities, 
particuhirly the small cities, are laying back just in anticipation that 
the Federal Government is going to come along and lift the load ofl- 
their shoulders without their doing anything themselves. 

Mayor Church. I think almost every municipality around the size 
of New Eochelle is desirous of going forward vrith their postwar 
plans- Some of the municipalities have been holding back because 
they haven't known for sure whether the Federal Government would 
finance to some extent — 50 percent, or whatever it may be — of the cost 
of these projects. 

The municipalities know right novr that they cannot afford to put 
these projects through at their own expense. They cannot tax the 
property owners, who are so overburdened today, with that cost of 
construction. 

The Chairman. Mr. Wolcott. 

Congressman Wolcott. Have you any other taxes other than real- 
estate taxes? 

jMayor Church. We are restricted. The State prevents the city 
from levjdng aii}^ taxes other than what thej^, by State law, may 
agree to. 

Congressman Wolcott. And that is real estate? 

Mayor Church. Eeal estate is the only means of taxation that the 
municipalities of our size have. 

Congressman VfoLcoTT. Isn't that true of all municipalities? 

Mayor Church. That is so in New York State. 

Congressman Wolcott. That is all. 

The Chairman. That included New York Cit_y although, the legis- 
lature can pass an emergency law ; isn't that correct ? 

Mayor Church. I believe that New York City had a special law 
passed to permit it to place a sales tax within its city limits. 

The Chairman. That is right. 

Mayor Chl^rch. But that situation does not hold true with the 
other municipalities of the State. 



1814 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Well, Mr. ^Mayor, we want to thank you for com- 
ing here and giving the viewpoint of the smaller city. And I am 
sure that the information that we have gotten here with respect to the 
need of smaller cities for lielp in the carrj'ing out of postwar plans 
will be very much appreciated by the committee. We want to con- 
gratulate you on your presentation, and also the people of tlie city of 
New Rochelle for having you come down here to represent them. 

JMayor Church. Thank you very much. Now, if I may make one 
more suggestion. I think that if the Federal Government was to set 
up an office to deal directly with the cities and locate that office some 
place in New^ York State, you would find that the municipalities would 
quickly complete their plans for postwar work. 

The Chairman. Thank you again, Mr. Mayor. 

Our next witness is Mr. Howard McSpedon, president of the Build- 
ing and Construction Trades Council. 

STATEMENT OF KOWASD McSPEBON, PEESIDENT OF THE BUILDING 
AND CONSTEUCTION TRADES COUNCIL 

Mr. McSpedon. I would like to say that our Council of Building and 
Construction Trades Unions is comprised of some lOl local unions with 
a combined membership of 250,000 men and women, not alone con- 
struction workers, but likew^ise mill and shop workers. 

To us, this talk of postwar planning is all very w-ell. But it does 
not help us a bit. We are out of business as it is now. The war has 
dislocated or disorganized our industry to such an extent that less than 
5 percent of our people are working at their normal occupations in 
their respective trades. 

To us, the so-called line of demarcation as to when the war ends and 
when the postwar period begins is a mythical one. I don't believe 
there is going to be any overnight transition from a period of war to a 
period of peace. Our people have, for many months, almost 2 years, 
sat with and conferred with the various Government agencies seeking 
relief for the unemployment condition in our trades, and for the 
release of some materials from the AVar Production Board to proceed 
with work that we feel is highly essential and necessary right now — 
forget waiting for tlie so-called postwar period. 

I heartily subsciibe and agree to the viewpoint and piogram of 
Commissioner Moses. To us in the building trades, he is one of the 
outstanding construction engineers in the country, and probabl}^ the 
most practical of all with postwar plans. 

We feel that it is the responsibility of the Federal Government to 
start the ball rolling; to supply whatever necessary moneys are re- 
quired to put our people back to work and to see to it that the wel- 
fare of boys coming out of service, who, for the most part, will have 
no place else to look forward to except the building and construction 
industries, is looked after. 

I think it is conceded that the construction industiy is the second 
largest industry in our country and ranks next to agriculture. Our 
industry's operations go back to the mines and back to the raw proc- 
essing, and include manufacturing, delivery, and handling of nuite- 
I'ials, as well as the actual construction-site vvork. 

I am not as optimistic as Commissioner Moses as to how soon this 
work can be started. As he stated, I agree that it wnll take several 



POSTWAR ECONOMIC POLICY AND PLANNING 1815 

months for plans. It takes many more months to demolish or to exca- 
vate or prepare foundations for the structure, or whatever type of 
buildino- project or construction project ]s required. 

I witnessed the chaos that resulted after the last war around this city 
of New York. . It took approximately 3 years from the date of the 
armistice before there was any noticeable resumption of employment 
in the building and construction field. _ , 

I mioht say that there were no Government restrictions or regula- 
tions oS our building industry in the last war. Pinvate building pro- 
ceeded to some extent; whereas in this war, WPB, under their order 
L-tl have prohibited the use of materials, even though they conceded 
that those materials were in stock piles so large that they do not know 
what to do with them— with the exception of possibly lumber, where 
there may be some shortage. , . ^ • . i i 

We o-ive a threat deal of credit to Mr. Nelson, who is trying to help 
us solv^'e this problem. Unless the WPB restrictions are lifted now, 
and even if they were lifted now, it would take a full year before 
men were actually employed at the job site. • ^ j, 

I listened very attentiveW this morning to the viewpoint of some 
of the Congressmen. I, of" course, agree that the taxpayers money 
should be wisely and well safeguarded. But, the people m New York 
or Kalamazoo did not declare war. It was the American people as 
a nation. In declaring such a war, they dislocated our industry to a 
great extent: to such an extent that it is my opinion, after conternng 
with heads of building trades of Chicago, California, Philadelphia, 
and other places, that it will take us anywhere from 3 to 5 years to get 

back to normal. i i -p. • i 

Our people, who are temporarily employed m makeshift jobs- 
some of them in shipyards and others in factories or doing anything 
they can to survive until their normal trade picks up— are going to be 
confronted with many problems. . , jt ^^ -^ 

We have in addition to our own 40,000 men m service out of the city 
of New York in the building trades many thousands of them who 
have learned a trade, either in the shipyard, the navy yard, or m the 
armed services, the Army engineers, the Seabees and many other 
branches. Those men and boys are coming out and we have them bacli 
now by the hundreds. To us, this is now a reconversion period. VVe 
have no place to put them. ■,^^^„A 

The thought, expressed by these various postwar committees— mclucl- 
ino- the Committee for Economic Development— that we have sat with 
and conferred with, is that private industry must do the ]ob We 
agree that they must and should do the ]ob. But they will not do the 
job unless somebody leads the way. The only authority that can do 
the job and can lead the way is the Federal Government. 

We in labor feel that when we were confronted with an emergency 
such as this war, it did not seem to take much effort for Congress or 
for our authorities in Washington to dig up and find ways to spend 
billions in order to win the war. It certainly should not be a severe 
hardship, financially speaking, to find the necessary money, whether it 
means five billion or fifteen billion, as cited this morning, to win the 

^^m are somewhat fearful that, unless immediate steps and imme- 
diate action is taken to appropriate the money now, there is going to 
be a wave of reaction and a wave of economy,' such as happened alter 



1816 POSTWAR ECONOMIC POLICY AND PLANNING 

the last war. Then the Federal Government stopped spending and, 
in turn, private business, to a large extent, started to conserve for 
many reasons. 

Some of the private industrialists in this city, in attempting to 
solve the postwar period after the last war, formed a connnittee of 
outstanding citizens. I believe Congressman John Delaney was one 
of the executive members of that committee. iVs the veterans re- 
turned, they were sent to jobs, where the department store needed a 
porter or a salesman or a handy man. Those were the type of jobs 
that were given to the returning veterans. 

We don^t believe, from the ex])erience we already have in tliis war, 
that our veterans who come back, are going to be satisfied to be sent 
to these makeshift jobs. They want jobs which will fully utilize the 
skill which they have acquired. 

We know that they can serve a constructive purpose. We know 
that they can help solve the economic problem in this country by 
returning to their own type of work in the construction field — not 
the WPA, nor the selling of apples, nor the picking of leaves in the 
park — wliich would serve no good purpose and demoralize our people 
as a nation, our building trade people in particular — but to jobs which 
contribute to the ultimate wealth of the country. Then the Federal 
Government need have no fears, in our opinion, about advancing 
$3,000,000,000 or $10,000,000,000 or $15,000,000,000— for they are going 
to get an adequate return on such an investment. 

And it v;ill not be money that is going to be spent, as it is now, for 
the purpose of destruction, for the purpose of killing, destroying, but 
rather for the purpose of building. 

Unless some people in this country have vision, we see a picture of 
chaos and unemployment that is going to happen without question, 
in view of the great unemployment in our building trades for the past 
21/^ years. 

I might say that the city of New York, insofar as building work 
is concerned, did not receive anywhere near its share of the projects 
that other parts of the country received. The military people, long 
before this war started, told our committee in Washington that this 
was due to the fact that New York was subject to bombing. They 
were wrong in that. 

It is quite ])ossible in the discussions with Mr. Nelson and the War 
Production Board, they are wrong again in their fear of permitting 
any work to start on a reconversion plan, lest the people of this coun- 
try may believe that the war is over which might undermine their 
morale, 

I would like to suggest, on behalf of our people, that there is a great 
deal of work now, both private and public in the nature of repair, 
maintenance, and some construction work where materials are avail- 
able. Manpower is also available, and there is no good reason that 
such projects could not proceed. An example is the Clinton Hill 
housing project in Brooklyn, which Avas originally scheduled to in- 
clude 11 buildings. Three of them were completed. The order of 
freezing building materials came along, and the propect was stopped. 

This job was originally sponsored and approved by the commander 
or the admiial at that time in charge of the Brooklyn Navy Yard for 
the housing of executives and other workers, both Navy personnel and 



POSTWAR ECONOMIC POLICY AND PLANNING 1817 

civilians. That job has been stopped; the material is lying in the 
storehonse and on the job site, lying there for over 2 years. And this, 
despite the fact that even as late of March in onr latest survey we 
had 14,000 unemployed men in the building trades, that is, completely 
unemployed. Of 10,000 bricklayers, for example, only 25 were work- 
ing at their trade. That type of project in this city would start 
the wheels of progress moving toward reconversion and help solve 
our postwar economic problem of unemployment. 

That type of project is privately financed, and the owner is paying 
storage charges, interest, and costs of safeguarding materials, which 
he cannot use and which hasn't been used or requisitioned by any Gov- 
ernment agency. That an.d many other types of work, such as alter- 
ations or additions to existing houses, would go far to solve our housing 
problem. About 2 weeks ago in the World-Telegram, there was a 
statement that our Army and Navy officers located here in New York 
could not find apartmen.ts within tlieir income range. Such work 
would furnish an ideal solution. There are many other similar types 
of work which would enable us to use our present facilities, without 
interfering one iota, or affecting the war effort in any respoct. 

And that, in brief, Mr. Chairman, is about the position of our build- 
ing and construction trades, not alone here in the city of New York, 
but in Westchester County and Jersey, and in many other places. 

We are having an executive council meeting in Chicago on the 16th 
of August, where I understand all of us there will discuss ways 
and means to solve our end of the national economic problem for the 
postwar period. 

The CHAiRivrAN. I think you have made a splendid statement, Mr. 
McSpedon, with respect to this viewpoint of labor insofar as postwar 
is concerned; and I think the committee would be very pleased to 
receive the report that will undoubtedly be made after your conference 
out in Chicago on the sixteenth. 

I take it from your statement that you are not quite in accord with 
the statement made yesterday by Commissioner Catherwood to the 
effect that he did not believe that there was any present necessity for 
Federal Government aid in this postwar planning. He thought that 
no Federal Government aid should be given until the emei'gency 
should arise; and that meanwhile the State and municipality would 
be well able to. as the Marines put it — keep the situation well in hand. 
Is that correct ? 

Mr. McSpeeon. I think, Mr. Ch.airman, that I am very much in 
disagreement. It is going to be like too many things we do, as Ameri- 
can people. We are going to wait and close our eyes; and then have 
it hit us, as Pearl Harbor did; then we get up and do something 
about it. 

The time to do it is now; and the time to get the money to spend 
is now, because on the day the war is over with Germany, somebody 
will get up in Congress and will say, "We spent too much mone3^ 
Stop it." And the pressure will be on. 

If those things are not planned, God help us. I say, by all means, 
Federal aid, and Federal aid now, before we get too far along. 

The Chairman. I want to say that I am thoroughly in accord with 
your viewpoint. 

Mr. Wolcott. 

09379—45 — pt. 6 8 



1818 POSTWAR ECONOMIC POLICY AND PLANNING 

Congressman Wolcott. I wonder whether conditions are similar in 
the building trades throughout the United States. Do you know from 
your observation and contact with others, whether they are? 

Mr. McSpedon, Yes. There are, and have been, quite a few busy 
places in the country but the curtailment of the construction program 
is similarly affecting them to a more or less extent; for example, Chi- 
cago, which had been very busy with some $300,000,000 worth of air- 
plane plants. I was in touch with Mr. Sullivan, the president of the 
Chicago Building Trades 2 weeks ago when he stopped in my office, 
and he told me that thej^ had, for the first time in the defense program, 
several thousands of their people walking the streets now. 

Congressman Wolcott. They passed the saturation point in war 
construction plants? 

Mr. McSpedon. That is right. 

Congressman Wolcott. It. is true. I believe, in Detroit. 

Mr. McSpedon. St. Louis is the same, and Boston. 

Congressman Wolcott. That is all I have. 

The Chairman. Thank you very much, Mr. McSpedon. 

Our next witness is Mr. Fred Brutschy, who is chairman of the Joint 
Committee of Building Trades Employers and Building and Con- 
struction Trades Council. Mr. Brutschy. 

STATEMENT OF FRED BRUTSCHY, CHAIRMAN OF THE JOINT COM- 
MITTEE OF BUILDING TRADES EMPLOYERS AND BUILDING AND 
CONSTRUCTION TRADES COUNCIL 

Mr. Bkutschy. Mr. Chairman, that association is an association of 
about 760 building contractors of this territory, and when I say "this 
territory" I mean Greater New York City. 

What we are interested in primarily is the so-called transition period 
because w^e get most of our work from private interests. Now, our 
industry is practically prostrate at this time. That is due, of course, 
to the restrictions that were placed through the materials section of the 
WPB— that is, L-41— which Mr. McSpedon spoke about. 

It requires a certain period of time, after a private investor or private 
interests decide that they are going to do something about a project. 
There is a certain period of time needed to design, and after that the 
contractor comes into the picture and begins to order material, and so 
forth. It takes, on the average-sized project, an3^where from 6 months 
to a year from the time it is really initiated until some men can be 
placed in the field to work on it. 

Now, wdiat we fear is this transition period. Nothing has been done 
about getting the private investor to start his planning. Little has 
been done by any private investor because he sees no definite time when 
he will be able to go ahead with whatever construction he has in mind. 

So he lias not clone anything, and until some confidence is given to 
him he will be unable to proceed with this project. 

Now, I agree with Mr. Moses that private industry cannot take this 
burden over — certainl}^ not the construction industry as we know it, 
and we are pretty close to it. The first step, it would seem to us, would 
be to instill some confidence into the private interests to go ahead and 
plun — to go ahead and get ready with tlieir projects. 

When these cut-backs come these men are gomg to be on the street. 
As Mr. McSpedon said, DO percent are not working at their trade. 



POSTWAR ECONOMIC POLICY AND PLANNING 1819 

Well, where are tliey? They are working in factories, and so forth. 
They are busy with the war effort. That will be cut off practically 
overnight. 

It will take a year for private industry, even if they get the green 
light to go ahead and begin to function. To do that and to get confi- 
dence, the industry will have to get tlie green light to function freely. 

If you are going to place a lot of restrictions, causing one to go down 
and get priorities and all sorts of permits, it just isn't going to happen. 
As I see it, I don't know what can be done. We have contacted all the 
agencies in Washington during the past, through a joint committee 
of both labor and ourselves, during the past 18 months, and, frankly, 
we have not gotten anywhere. 

There does not seem to be any tendency to change down there; 
we are told that this thing goes right back to the policy that is laid 
down by the armed forces departments; the WPB, of course, have 
followed what the Armed Forces want. 

Now, Mr. Chairman, that is our picture, and I am afraid that is 
what 3^ou are going to run into. Your postwar plannhig may be O. K., 
but that is some distance off. What are you going to do in the mean- 
time about taking care of these people? 

The Chairman. Of course, our problem here is what we are going 
to do after the war. There is another committee, I presume, that is 
handling that, so that is the responsibility of the administrative 
branch of the Government. We are trying to work out a program of 
legislation for our postwar period, which means for the time after the 
cessation of hostilities. 

But, you raised a very interesting point in my mind, and that is 
about the removal of priorities when this war is over. Don't you 
think that when the war is over, there will be such a scarcity of build- 
ing material, such as lumber, that unless you have priorities with 
respect to lumber, you are going to have an inflationary spiral that will 
stop construction work right before it gets started? 

^Ir. Brutscht. No. 

The Chairman. Where are you going to get j^our lumber if you 
do not have men in the woods immediately after the war to cut the 
standing timber down into logs, and saw the logs into wood necessary 
for building materials ? 

]Mr. Brutscht. Well, of course, your war effort has taken a great 
deal. As we understand, out of some 32,000,000,000 board-feet an- 
nually, 20,000,000,000 are going for this emergency war program. 
Now, just cut that in half with ten billion overnight, and see what an 
eifect it will leave you for civilian use. Thirty-two billion cubic board 
feet was last year's consumption. 

The Chairman. They have not got enough lumber to carry on the 
war now. One of the reasons is not because there is not any standing 
timber, but because they have not got the men back in the woods. 
They cannot get the men back into the woods on the day after the 
cessation of hostilities. It will take some time for them to drift back, 
even after they are demobilized from the Army. 

Now, if we are not going to have a priority of some kijid with 
respect to this very scarce material, will not the great demand at that 
time for the existing material cause the price to go up so high that it 
will start an inflationary spiral ? Probably, right from the beginning. 



1820 POSTWAR ECONOMIC POLICY AND PLANNING 

the building industry is going to be aeain at a disadvantage, as it was 
back in 1920. 

Ml-. Brutschy. Well, you may have to use some control. But I 
question whether you have to use the type of control that you now 
have in effect. 

Tlie Chairmax. I think we are all agreed that we don't need a 
tight control. But, when you spoke about relieving the industry of 
priorities, I was afraid that you were recommending that no regulation 
of an}" type would be needed after the war and that, despite the shortage 
of material, there would be no allocation. This would mean that the 
big boj's, for instance. wIjo wanted to do construction work, would be 
able to go out and get all the lumber; and the smaller concerns that 
needed lumber for construction, would be out of the picture. 

Mr. Brutschy. AVell, it has always been my experience in the in- 
dustry — and I have been in it for a long time — that industry has a 
kind of a way of helping itself, just like nature does with your body 
when you have a sore spot. They find ways of stepping up the pro- 
duction. The price brings about a slight increase — and back she goes. 
We have seen that in the spirals of copper — that is. the price of 
copper over many years. I have seen the situation when copper was. 
controlled; when they had the cartel and they shot the price up to 
18 cents from the basic price of around 14 or 15 cents, which is a com- 
petitive price. They got it up to 18 cents, and then raised it to 20 
cents and 21 cents. When they got it up to 22 cents, that was fine. 
That went along for (> or 8 months, and copper dropped to 9 cents. 
You know, industry has a way of taking care of those things. 

The Chairman. Industr}^ has a way of taking care of itself, so far 
as rising prices are concerned, to the detriment of the public. When 
copper went up to 22 cents, as you say, under the cartel agreement, 
certainly that was not advantageous to the public. 
Mr. Brutschy. No. 

The Chairman. It seems to me that one of the things that labor and 
the building industry should be very careful of is that the cost of con- 
struction shall not go so high that there will be nobody to live in the 
apartment houses because of the high rent that will be charged. 

It is like the statement made this morning by Commissioner Moses 
that in order to keep the automobile industry going, you had to have 
roads upon which the cars should run, 

I am just a little fearful from your statement that you are inclined 
to the belief, as a representative of the employers, that when this is 
over, you are going to have a free reign to carry on without regard 
for the public interests. When the public interests are affected the 
interests of labor are likewise affected. 

Mr. Brutschy. The thought I want to leave with you, Mv. Chair- 
man, is this: When 5"ou get these cut-backs, you are starting from 
scratch with private endeavor and with these so-called public-planned 
projects, that have been prepared by the several agencies. 

Wliat is going to happen? In your first year there will be prac- 
ticall}^ nothing to take up your unemployment. You won't get the 
projects n.ow on the shelf ready. How long does it take to go before 
\our bojrd; get your approval; have ^''our forms for bidding; obtain 
your estimates; and obtain an award of contract? 

By the time you get that contract, (5 montlis will have elapsed. What 
I am afraid of is that your private and your public will run neck and 



POSTVMR ECONOMIC POLICY AND PLANNING 1821 

neck, when thev are both ready to go. It will be a year or a year and 
a half, and yon will both be in a race for what labor there is. \\ hat 
can we do for that transition period ? . n .at 

The Chairman. That is what we are trynig to fignre out. Mr. 

Wolcott. , , ^ ^ i. ■ 4^ ■ 

Cono-ressman Wolcott. Something bothered me somewhat in tins 
rrobleni of building trades following the war, and that is the change 
in desion. You made some pretty rapid far-reaching advances m 
buildino- . Some people have been visionary enough to guess that 10 
years after the war. aljovit the only lumber to be used m houses will be 
flooring, if people want hardwood floors. I have henrd that many 
l)eoiDle are going to hesitate to build new homes in the first, let us say, 
2 or 3 years, until the new methods of home construction have been 
fiilly developed. Has your council given any thought or influence on 
tliat program immediately following the war? 

Mr. Brutsgiiy. Well, we have thought about it a great deal ; we have 
liad discussions on it ; and we are fully convinced that while there will 
be some improvements and some modifications, of course, there is not 
o-oing to be this tremendous radical change in construction that you 
hear about on the radio, as I have at times, and m the various 
magazines. 

Congressman Wolcott. You think it will be more gradual ^ 
Mr. Brutsghy. For many reasons, and one of them is this : Anything 
that comes out, must stand on a competitive basis. To sell it it ha_s to 
have some merit, and it has to compete with what you have. What does 
it irive you in dollars of cost against what you are going to get. That 
is'fundamental with everything you bring into the industry. 

Plastics have been talked about considerably. On a basin, you are 
are going to get plastic faucets, and all that sort of thing, instead of 
metal Maybe we will. I do not know. It becomes a question of cost 
and how it w^ill stand up. The capacity for metals has been largely 
increased during the past 2 years. They want to try to retain that 
business. They are not going to get out of the way of this new plastic 
substitute, •, ^ • 

Congressman Wolcott. I did not have plastics as the substitute m 
mind;1)ut casing, drop cords, blending into cement floors. 

Mr. Brutsghy. Well, again, what will be the finished cost of that 
project in comparison with what you can do with lumber, and what 
Ave have been using today ? 

Congressman Wolcott. That is the problem. Some people contend 
that they can manufacture and use these plastics. Lumber is almost 
]3rohibitive to the home builders in many sections of the country. I 
know my wife looks at her kitchen now, which is a reasonably modern 
kitchen.^ She does not think so. She looks at a magazine and sees a 
new kitchen. That is the kind of a kitchen she wants after the war, 
but I vcould have to build a brand new house. 
Mr. Brutsghy. I know. 

Congressman Wolcott. What will happen to the house which I 
have? 

Mr. Brutsghy. Don't forget this. Congressman. The house we talk 
about is not the house that will be built for the masses. You know, 
the masses talk about a S('),000 or $7,000 house. You can't give them 
all these things in a $6,000 or $7,000 house. It just won't be possible. 
1 think the $G,000 or $7,000 house will more nearly approach the house 



1822 POSTWAR ECONOMIC POLICY AND PLANNING 

built ill Enirhmd "with the four brick walls and the slate roof, and a 
partition that does not <^o to the roof, and with one "Joe" outside, off 
the kitchen. That is what you pet in England for the so-called work- 
men's houses. That is Avhat you <»et for $G.OOO. 

Congressman Wolcott. Of course, there will be enough heavy con- 
struction and building construction, and probably that would control 
it. 

Mr. Brutsciiy. I think that speculative housing for the masses, 
though, is a very big percentage of our business year in and year out 
in normal times. 

Congi-essman Wolcott. Do you have any housing ])rogram outlined 
Vv'hich you can submit that might be helpful to the committee to take 
up some of the anticipated unemployment in the building traded 

Mr. Brutsciiy. What do you mean by that, Congressman ; a pro- 
gram to what effect ? 

Congressman Wolcott. I don't think in Congress, jet, we have de- 
veloped any definite postwar housing program. 

Mr. Brutschy. You mean for public support ? 

Congressman Wolcott. Supported by the public; slum clearance 
and things like that in addition to private home construction, with 
perhaps the Government guaranteeing the loans such as the FHA. 
We will continue the FHA, of course. But do you know of any plan 
or have you in mind any plan that has been developed for slum 
clearance ? 

Mr, Brutschy. No; I have not. I think people have made a spe- 
cialty of that. Congressman. We are just contractors. AVe have not 
given that end of it any thought. 

Congressman Wolcott, Would it be advisable for us to give some 
thought for such a program in connection with postAvar building? 

Mr. Brutsciiy. Well, I think there is going to be considerable of 
that. It is going to be financed privately, and it may not be the garden 
type where you build a small house, and that sort of thing. It will 
be something that will have to support itself like the development of 
Parkchester. I think your larger insurance companies will get into 
that, for it is an excellent outlet for their capital. 

In this instance, I don't think they will even want that, you see, be- 
cause they will only control it under the State laws. A good many of 
the States have put through limited-dividend corporation laws. 

Congressman Wolcott. We expect quite a good deal of construc- 
tion — the title 2 construction, FHA, wherein the Federal Government 
insures 80 percent of the value — we expect quite a good deal of that 
after the war, and it should help in the development of these garden 
projects, as well as large multi-dwelling projects, 

Mr. Brutschy. My feeling about this situation is that you won't 
have any trouble 7 years after the war. There will be plenty of con- 
struction and work around in our industry. 

My feeling is that the first 2 years after that, we are going to have 
trouble. 

Congressman Wolcott. What are you going to do ? 

Mr. Brutschy. The only thing I can see is give help to private in- 
terests immediately; to see that they will be able to go ahead witii the 
project and be given as much freedom as is possible. But that has 
not been the policy to date. Appeal to private interests. 



POSTWAR ECONOMIC POLICY AND PLANNING 1823 

Congressman Wolcott. What would you suggest the Federal Gov- 
ernment do to give reasonable security to private enterprise im- 
mediately following the war ; to give assurance of security. 

Mr. Brutschy. Well, I know — — 

Congressman Wolcott. It is a pretty big job. 

Mr. Brutschy. I know it is a big job. We have a great deal ot 
private work here that is ready to go ahead, and would proceed, if 
some reasonable assurance was given that there would be no undue 
delay or red tape after they prepared for it. No owner wants to put 
considerable money into planning and take the time and then find 
that he is not going to be able to build for 2 or 3 years, because some 
official decides that it is not an essential i^roject. In other words, the 
restrictions, where possible, should be liberalized. 

Congressman Wolcott. I understand your recommendation, then, 
is to remove the restrictions on allocation as soon as possible? 

Mr. Brutschy. As far as it is possible. You can say to the owner, 
"If you get ready, we will do everything we can to go along with you. 
But'^it is going to be our policy not to try to restrict you. We will try 

to let you go." t t-. i i /-> 

Congressman Wolcott. You mean by that wlien the h ederal (gov- 
ernment is going to try to get material out of the stock piles ? ^ 

Mr. Brutschy. As soon as it is possible ; not merely say, "We don t 
know when we will let you. We are not in favor of your doing it. 
Go ahead and get ready." 

As I see the picture, it is coming very rapidly. I am not a military 
expert, but certainly something Nvill happen pretty quick. Surely 
we know that something will happen as far as the shipyards are con- 
cerned and the majority of our people in there. They want to come 
back and look for a job, and we won't have any. Naturally, they will 
be back, and say, "We will have to go on relief." 

Congressmaa Wolcott. Do you think the migratory movement ot 
popuhSion might have anything to do with the building program in 
large areas? 

Mr. Brutschy. I don't think so. The migratory workers' point ot 
vievv- is that they moved out there and they will state that they do not 
want to move if they have work out there. But if there is nothing 
doing in the section to which they have gone and find that there is 
work back here, they will certainly come back here. 

Congressman Wolcott. I was fitting this into the Detroit picture. 
Detroit has had an increase in population during the v/ar of approxi- 
mately 200,000 to 300,000. That would be a conservative estimate. 
On the basis of the population of Dstroit previous to the war, Detroit 
might be very much overbuilt if this new population moves back from 
whence they came. 

Mr. Brutschy. You can best answer that. If they have something 
to do. and make their living there, they will probably stay. If there 
is not, or if there is a struggle to make it, they will go to where they 
can make it easier. That is human nature. Congressman. 

Congressman Wolcott. That is all I have. 

Congressman Colmer. Thank vou very much for your statement. 

Our'next witness will be Mv. Arthiir V. Sheridan. JMr. Sheridan, 
do you have a statement for the committee ? 

Mr. Arthur V. Sheridan. Yes, sir. 



1824 POSTWAR ECONOMIC POLICY AND PLANNING 

Congressman Colmer. Please give your name and identify yourself 
for tlie benefit of the record. 

STATEMENT OF ARTHUR V. SHERIDAN, EDITOR OP AMERICAN 

ENGINEER 

Mr. Sheridan. My name is Arthur V. Sheridan, editor of the 
American Engineer ; past president of the National Society of Pro- 
fessional Engineers; past president of the New York State Society of 
Professional Engineers; commissioner of public works, Bronx, N. Y. 

Gentlemen, feeling that your schedule might squeeze me out. I have 
condensed this. I can finish perhaps more rapidly by reading in 7 
or 8 minutes what I have written, rather than attempt to give it to 
you ad lib. 

Permit me to say that while I have a close personal connection with 
the postwar public works program of the city of New York, especially 
that of the Bronx, I am appearing here in the role of an engineer who 
as past president of the National Society of Professional Engineers' 
past president of the New York State Society of Professional Engi- 
neers, and as present editor of the American Engineer, has had the 
occasion and opportunity to observe and review the subject of mass 
unemployment for the past quarter of a centurv. It is upon such 
basis and m behalf of those who must execute public works that I ask 
your indulgence of my views. 

Yesterday Mayor LaGuardia, in an able presentation, outlined the 
proposals of the city of New York. To his views on public works, 
planning, and economics generally, I would subscribe most heartily. 
In fact, one might rest his case on the Mayor's presentation— for 
few, if any, know the subject better than he— were it not for a desire 
to broaden the picture. In one respect I would differ with the mayor. 
While granting that New York City presents an unusual problem, I 
believe that Federal aid should come through the States. To do other- 
wise is to destroy the Federal, State, and municipal relationship 
essential to the maintenance of our republican form of government. 

Using the city of New York as a basis, the data, procedure, prob- 
lems, and aspirations of the Nation as a whole may be readily envis- 
ioned by realizing that, from the standpoint of population, New York 
City is a little more than one-twentieth of the Nation. Hence the 
problem, the program, and the cost thereof on a national basis might 
well be approximated as about 20 times that of New York. The 
mayor stated that over a billion dollars worth of public works were 
in the planning and designing stage in New York. 

On this basis, a program of at least $20,000,000,000 would be required 
for the Nation. _ This is exclusive of private endeavor. $20,000,- 
000,000 will provide employment at decent wage standnrds for some 
6,000,000 to 7,000,000 persons for 1 year. On a basis of 2 years it will 
provide for from 3,000,000 to 3,500,000. If three or more years are 
required to execute the work, the number w411 be decreased propor- 
tionately. In the opinion of the professional engineering societies, 
tliat is not enough. 

One hears constantly concerning the role private industry must 
play. Gentlemen, that is a consummation devoutly to be wished. As 
an ardent disciple of capitalism and free enterprise, I wish it were 
more. Who is to guarantee that private industry Mall do anything, 



POSTWAR ECONOMIC POLICY AND PLANNING 1825 

other than that which is in the interest of its millions of unrehited, 
uncoordinated entities, hirge and smalL There is no compulsion, nor 
should there be, except that of self-interest, plus a general sense of 
public responsibility, little understood or appreciated, judging -by 
history, past and present. 

A large corporation or even a large combination of corporations 
may propose a $100,000,000 program, but who will carry it through 
if its hopes or justification for such program do not promise a return 
or do not materialize as it is being carried out. A company may plan 
production for 1,000,000 cars a year but, if it sells only 500,000 the first 
year or two, what will happen ? What would you gentlemen, as own- 
ers, directors, officers or stockholders, do under such conditions ? This 
situation is multifold. Private industry may have such a market that 
its own interests will demand large expenditures. Let us hope so. 
But if not — what then? Can Government rest its obligations to its 
citizens, above all its 12,000,000 veterans, on hopes that George will do 
the job? 

It must be borne in mind that private industry is not organized as a 
unit, nor should it be. ]Most soldiers have some training suitable for 
construction. With one or two exceptions, such as motion pictures 
and baseball, it has not even a leader, a president, or a board of 
directors, let alone a so-called czar. Private industry is an unorgan- 
ized collection of many human enterprises and, like all things human, 
has its share of good intentions as well as lost horizons and unfilled 
promises. It is the opinion of professional State societies, composed 
of prominent engineers in private industry and public service alike, 
that government must provide against contingencies. Public works 
would more nearly fill the role of providing employment for men in 
the armed services than any other kind of endeavor because those men 
have been hardened sufficiently to be able to participate in a construc- 
tive manner in any form of construction endeavor. 

Few, if any, would contend that a large program of public works 
must be carried out regardless of other considerations. Engineers 
believe that a large reservoir of planned public Avorks should be made 
ready to be used to such extent as may be necessary to prevent wide- 
spread unemployment and its possible effect on our social, political, 
and economic systems. 

Veterans and citizens generally will not be satisfied by explanations 
concerning the obligations of industry in preserving an existing order. 
Economic theories will not preserve an order. Changes, which few 
desire, may av\'ait the postwar employment situation. Where em- 
ployment is widespread, there are few demands for change. 

Wiile reluctant to present data in the form of statistics, for the rea- 
son tliat engineering economics do not, like the general theories of 
economists, permit reasoning from unproven premises, I would sug- 
gest that a reasonable insurance against mass unemployment would be 
something along the following lines, as legal, financial phases take 
time : 

1. $500,000,000 at once for plans. 

2. $T,000,C 00.000 to $10,000,000,000 for the first year. (To be made 
available 6 months after peace.) 

3. $15,000,000,000 to $20,000,000,000 ior the second year. 

4. $15,000,000,000 to $20,000,000,000 for the third year. 



1826 POSTWAR ECONOMIC POLICY AND PLANNING 

5. $10,000,000,000 to $7,000,000,000 on a (lecliiiiiig scale for the 
fourth year. 

6. $5,000,000,000 to $1,000,000,000 for the fifth year. And tliat, 
indicating a oiadual rise and a gradual decline to that point wherein 
it is hoped, if private industry is going to participate in general pros- 
perity, it should arrive within 5 years definitely. 

The appropriation of these sums does not mean expenditure. It is 
merely an insurance. The execution could be controlled and the work 
contracted or expanded to meet unemployment needs. Unused 
moneys would remain in Federal custody. Ihe control would like- 
wise remain in Federal custody. A 50-percent grant, while quite 
generally referred to as reasonable would, in my personal opinion, 
be too small for most cities, where a 50-percent ability to provide for 
unemployment is not present. 

I do not advocate help only to those who need it. All pay taxes. 
All have employment needs. All are entitled to the same treatment. 
The factor of time will resolve the most pressing problems. Si'hedule 
first those who need the most but do not eliminate any State or city. 
Under ordinary circumstances, States and municipalities should 
finance their own works. Only interstate facilities merit Federal 
help in normal times. But to assume that the postwar will inaugurate 
normal times is to strain credulity. If there proves to be no need 
for postwar public works, postpone them — but do not leave the Nation 
unprepared for a dangerous emergency. 

Considerable has been said concerning the ability of the Federal, 
State, and numicipal governments to finance postwar public-works 
programs. Information from States and cities throughout the coun- 
try received monthly by the American Engineer indicates that the 
wish is father to the contention that any extensive program can be 
financed locally. Mayor LaGuardia is entirely correct in saying that 
practically no important city in the country can finance an adequate 
postwar employment progi^am. For political or other reasons, many 
States wish it were so. 

But, gentlemen, postwar employment is part of the war. The 
Federal Government calls the manpower for and finances the conduct 
of war. It must likewise finance, in a constantly decreasing amount, 
the aftermath. One hundred billions a year is being spent for war, 
and if the war were to continue for 4 years more, it would still be spent. 
Surely a fraction of that amount can be spent to preserve the peace at 
home. 

To my mind one of the greatest troubles with our economic system 
results from the inability of most of us to appreciate that wealth is not 
the bookkeeping astronomical figures posted for budgets, but rather 
the manpower and natural resources of the Nation. Andrew Mellon, 
financier of great repute, along with many other economists and finan- 
cial experts, contended that paying the adjusted compensation to 
soldiers of the last war — the miscalled "bonus" — would bankrupt the 
Nation. Who was right — the experts or the poor veterans who, at best, 
professed only a fundamental knoAvledge of what passes for economics. 

I cite this merely to indicate what poorly premised and consequently 
incorrect predictions so often emanate from professional economists, 



POSTWAR ECONOMIC POLICY AND PLANNING 1827 

Avlio are gradually recovering from the low estate into which the de- 
pression had phuiged them as a result of a century of misdirected 
reasoning fraught with dogmatism. 

The national debt has increased tenfold since the great depression 
began. Is the Nation one whit nearer bankruptcy than in 1982? To 
ai^propriate Federal moneys for postwar construction is an ephemeral 
event. It does not suggest a continuing policy any more than any war- 
rime endeavor. It should not be. States and cities do not want it 
continued. They are fearful and jealous of their rights. But postwar 
employment is a national problem that will develop a national emer- 
gency" if foresight and insurance are not provided before the 
occurrence. 

As an engineer, I freely grant that my point of view may be colored 
by too close association with public works. However, engineers do 
come closer to the execution of public works than laymen. I respect- 
fully submit that one would not select bankers to lead armies, mer- 
chants to cure plagues, or actors to conduct courts of law. 

One wonders win' sociologists, economists, real-estate men, and 
others are so frequently chosen to direct the planning and execution 
of public works when engineers, architects, and contractors are 
abundantly available. Engineers hope tliat for the sake of the public 
welfare competent experienced persons will be in command of the 
ai-mies to be employed on public works. 

In closing, I Avould direct your attention to the recommendation 
made on various occasions by the professional engineering societies, 
State and National, to the effect that the post of Secretary of Public 
Works be established with Cabinet status. This is a need long over- 
due. Other nations have corresponding agencies. All Federal con- 
struction, and through it, to a large extent. State and municipal public 
works could be coordinated and controlled. By providing for ex- 
pansion of programs when private industry declines and curtailing 
public works during times of plenty, a long step toward the prevention 
of mass unemployment would be taken. 

Today, agencies, Federal as well as other, without number, plan 
and execute work with little or no collaboration, either from the view 
of economics or construction. A reference to the past will indicate 
beyond question that an active construction industry and widespread 
unemployment parallel one anoiher. The construction industry 
represents from 12 percent to 15 percent of the national income during 
prosperous times. When one realizes that foreign commerce, which 
receives so much attention and premises so much distress, amounts to 
between 7 and 8 percent of the total national income, it can readily be 
appreciated how important the construction industry is to general 
prosperity. 

The establishment of a Department of Public Works with Cabinet 
status is recommended to this committee with the suggestion that such 
a proposal is currently opportune as well as urgent. 

That concludes my statement, Mr. Chairman and members of the 
committee. 

The CuAiRMAX. Thank you very mucli, Mr. Sheridan. 

The next witness will be Mr. Thomas K. Taft, of Cornwall, N. Y. 



1828 POSTWAR ECONOMIC POLICY AND PLANNING 

STATEMENT OF THOMAS K. TAFT, CORNWALL, N. Y. 

Mr. Taft. Mr. Chairman and gentlemen, we from Orange County 
have a little more difficult problem to present. Our territory covers 839 
square miles and about 141,000 people, of whom 00,000 are urban and 
80,000 agricultural. So, we have to cover a wide figld of operations 
and occupations if we are going to have work for the boys that return 
to the farms and the factories and for the women who return to the 
homes and the stores. 

It has been our thought that the first to be released would be the pro- 
fessional, semiprofessional men, engineers, and others of that type. 
And therefore, in selecting our program of work we should select proj- 
ects that would provide work for those men. 

Therefore, we have chosen as two of our projects agricultural or soil 
survey of the county, and economic geological survey. The soil survey 
would be carried on through the cooperation of the State department 
of agriculture, under the director of the School of Agriculture of 
Cornell, and would determine the types of soil and the locations where 
the crops would be more suitable. * They would also determine large 
areas of what we call marginal lands that have no particular agricul- 
tural or commercial value. These could be reforested, which would fur- 
nish a large amount of labor for returning men wdio had no trades, and 
particularly those who needed outdoor exercise in connection with 
their recovery from the rigors of war. 

The geological survey would have to be carried on through the State 
under the guidance of the Slate museum, and that would require pro- 
fessional men, as well as a good many stenographers and clerical help. 
Both of those would tend to develop our county economically and make 
it far more useful to the people, not only of the county but of neigh- 
boring territories. 

We feel that these two things would make it possible to exploit the 
advantages that the county offers to the large population in the 
metropolitan districts. And others from our county will dwell at 
length on that. 

There are other projects which would require a large amount of 
labor, such as the elimination of the railroad crosshigs and the grade 
eliminations of which there are a number that are very dangerous. 
Also, our highway system is very much in need of adjiistment. In 
this connection, it should be borne in mind that our region is the only 
pass through the Appalachians at low level until you go a thousand 
miles south. Practically all the western traffic that travels by low- 
grade routes has to come through our county. 

We are at the gates of the metropolitan area so that the people seek- 
ing recreation have to go through our county. It means that our popu- 
lation of about 141,000 lias the burden cast on its shoulders of provid- 
ing means of transportation for millions who originate from outside 
our boundries. 

So, there are in the county about 2,000 miles of roads of all kinds. 
About 500 of those are improved highways, and about 1,500 are dirt 
roads. That would furnish a vast amount of labor of all types. Such 
work would include bridges, and relocations and removal of obstacles. 
We have surveys of all of those things. We have them all on file and 
some estimates of the cost. 



POSTWAR ECONOMIC POLICY AND PLANNING 1829 

AVe have plans for some of our crossing- and grade eliminations, 
and we have drawings and plans that can be used for practically 
any type of enterprise that vvas brought up here today. Not all the 
estimates are complete, but some of the estimates have been made. 
Some have been started, and some have not been figured on at all. 
Now, the cost of those things is one that has concerned us a good 
(leal. The people of our country were not at all satisfied with WPA 
or the PWA. They feel that they can do things better than they 
were done by the dual control which existed previously. 

There has been some discussion among a number of us as to how 
that could be done. We feel that we can do it, and we feel we can 
do it economically, but we are unable financially to take care of all 
the exigencies of the case. We feel that the logical and business- 
like way to handle it would be long-term loans from the Federal Gov- 
ernment at low rates of interest, left entirely in our charge, because 
we are going to be financially responsible for the payment of those 
expenses. 

Mr. Jonas, who will follow me, has remarks more specific on an- 
other field. If there are any questions that I can answer, I should 
be very glad to attempt to do so. 

Congressman Fish. The only thing I wanted to call to your atten- 
tion, possibly, is in connection with this proposed road over the 
Palisades Park into Orange County that Commissioner Moses spoke 
about today. 

Mr. Taft. There are two, Mr. Fish, so far as I know. There is 
what is known as Eockefeller Drive, which starts at the George Wash- 
ington Bridge and runs up to Queensborough Circle. Our county 
planning board has studied that and laid out a route which we think 
should follow from the Queensborough Circle to the Ulster County 
line. 

Congressman Fish. Have you been in touch with Mr. Moses on 
that ? 

ISIr. Taft. We have been in touch with Mr. Morgan of the Bear 
Mountain Park Commission, and he agrees with us. 

Congressman Fish. Mr. Moses says that project has a priority and 
they are ready to go ahead after the war to build that road up to 
the' Rockland "County line, and carry it up to Bear Mountain. Or- 
ange steps in there. You ought to be in touch with it. You have 
a priority on that road. 

Mr. Taft. We have our plans all made on that, Mr. Fish, if that 
is the one you are referring to. But, there is also a 4-lane super- 
highway to*^ come up that way. Is it the superhighway that you 
are talking about? 

Congressman Fish. I am talking about a through highway. 

Mr. Taft. There is the Rockefeller Drive running from the Bear 
Mountain Bridge to the Queensborough Circle, ancl the superhigh- 
way will run all the w^ay up, and eventually west. 

Congressman Fish. Won't they connect up ? 

Mr. Taft. They are separate projects. 

Congressman Fish. The more the better, so far as I am concerned, 
so long as you know about it. I have no other questions. Thank 
you for coming here. 



1830 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Thank you. Mr. Taft. The next witness is Mr. 
James A. Jonas, of Waklen. Mr. Jonas. I believe that you are presi- 
dent of the Orange County Chamber of Commerce? 

STATEMENT OF JAMES A. JONAS, PRESIDENT OF ORANGE COUNTY 
CHAMBER OF COMMERCE 

Mr. Jonas. I have held that office for 7 years, ever since it was 
formed. 

The Chairman. Please state your full name for the benefit of the 
record. 

Mr. Jonas. James A. Jonas. I was going to talk about a develop- 
ment up there for the lower Hudson regional market in Newburgh. 
However, before that, I would like to say a couple of words, after 
hearing some of the other witnesses before "^the committee, if I may. 

Apparently some of them are suffering from an inferiority complex 
or psychosis. This country was never developed on that basis. We 
have only arrived where we are on the basis of individual initiative. I 
am qiiite convinced that while Government aid, financially and morally, 
is quite essential at times, there are a good many times when it smotliers 
any possibility of business getting on its feet. Then the public is ad- 
vised that business is not doing anything. They are in there for profit 
and progress, and the only way they can do it is to be given a chance. 

Naturally, every businessman feels the same way. I think that some 
of the things that would help, besides public works, would be reason- 
able taxes, for one thing. Nobody minds paying taxes as long as they 
have a chance to have something left when the year is over. The big 
thing is risk capital, that is, people who are taking unusual risks in 
business should be given a little added advantage to compensate for 

their ■ 

The Chairman. Mr. Jonas, I do not want to cut off your time in any 
wise, except that there is a special subcommittee on taxes. 
Mr. Jonas. Then, I will go right into this thing, if I may. 
The Chairiman. Perhaps, if you have a statement that you want to 
make on that, you can submit it to that special subcommittee. We want 
to holcl to this matter of a public-works program, in which Congress- 
man Fish is so greatly interested. 

Mr. Jonas. There is need for a regional market in Newburgh. They 
received some assistance in 1935 from the State in the amount of 
$30,000. Then the Federal Government gave them a grant in 1937 of 
$54,000. There was a later bond issue, which the Government took 
over, about $160,000, of which approximately $125,000 was spent in 
Newburgh, and the balance in Poughkeepsie. About $7,000 of this 
has been retired. 

There was an additional series of bonds issued for $26,000 for the 
purpose of installing some refrigerated cold storage space. Nothing 
has been paid off on this loan. 

Now, in this particular case, they want to develop additional cold 
storage to the extent of about 40,000 cubic feet, and for which they 
would need about $30,000. They have the property and the buildings. 
They would like $40,000 for a deep-freeze unit in "order to protect the 
crops that are not sold immediately; a unit of about 1,000 lockers,, 
which would include both commercial and private sizes. In addition,. 
a loan of about $35,000 for a covered shed to be used for the display 



POSTWAR ECONOMIC POLICY AND PLANNING 1831 

and sales of crops now being brought to Newbiirgli. The farmers have 
asked for this covered shed for a long time and find that inclement 
weather interferes with prices to be realized. 

I think the crops that are sold in Orange County run about $20,000,- 
000, and the sales in the Regional Market run about a million and 
three-quarters or $2 000,000. They now have to sell these crops in bad 
weather and under very adverse conditions. If the committee saw 
fit to develop this at all, a grant in the western part of the county, which 
would have refrigerated cold-storage space and a deep-freeze unit^ 
would be of very great assistance. 

As it is now, they are jannned up. They have no room for develop- 
ment, and they need that very badly. 

The Chairman. Have you completed your statement? 

Mr. Jonas. Yes. 

The Chairman. How does that statement of yours concerning the 
request for these amounts of money compare with your original state- 
ment that you think that private industry should do the job? 

Mr. Jonas. This happens to be a community enterprise. 

The Chairman. A community enterprise. Don't they pay rent for 
the use of those facilities ? 

Mr. Jonas. They bought the property with Government loans — the 
original grants, rather. 

The Chairman. They pay some charges, don't they, for the use of 
the market ? 

Mr. Jonas. They haven't been able to earn enough. I was going 
to bring out the fact, in the same way as Mr. Taft presented it, that 
what they need is long-term loans at low interest rates. They are 
only making about four and a half. It means they are paying their 
interest but not able to amortize their obligations. 

The Chairman. Mr. Colmer. 

Congressman Colmer. If I understand you correctly, Mr. Jonas^ 
these projects that you discuss are what you regard as worth-while 
projects ? 

Mr. Jonas. Yes, sir. 

Congressman Colmer. But they are projects that you think you 
could Avork out, not ])y grants from the Federal Government, but 
by assistance in the way of loans ? 

Mr. Jonas. We do not want anything for nothing. We want to 
pay the money back. 

Congressman Colmer. In other words, you feel that the communi- 
ties should carry their own burdens without looking to Washington ? 

Mr. Jonas. That is right. I think they would all prefer that. 
They want the privilege of paying the money back. 

Congressman Colmer. Of course, there is this disadvantage. If 
you had that, you will have control of it, and you will operate it. 

Mr. Jonas. That is right. 

Congressman Colmer. Every time you can get money out of Wash- 
ington, you can figure that j^ou are also going to have some Federal 
governmental management. 

Mr. Jonas. It reminds me of the old saying, the piper calls the 
tune. 

Congressman Fish. You are putting me on the spot. What you 
want me to do is get jon a lower interest rate and more loans. I guess 
that is a pretty good idea. That is what I will try to do. 



1832 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Jonas. We would ratlier have that than a grant. 

Congressman Fish. Everybody else is asking for somethino- You 
are the hrst outsider who says that you want a grant or loantmd are 
wilhng to pay it back. I am sure that the committee will take it 
under advisement. 

The Chairman. Thank you, Mr. Jonas. The next witness is Mr 
i?!P?'- f" J^^^burgh. Mr. Shipp, please state vour name and 
alhliation tor the purpose of the record. 

STATEMENT OF E. MALTBY SHIPP, CHAIRMAN, NEWBUEGH, N. Y., 

PLANNING BOARD 

Mr. Shut My name is E. Maltby Shipp. I am chairman of the 
Aewburgh 1 lanning Board and member of the Orange County Plan- 
ning Board, from Newburgh, N. Y. ^ j 

I think that I have got to go along a little bit different lines from 
wliat my two predecessors have because they have more or less speci- 
hecl certain things. I am going to try to cover what the municipalities 
m Urange County have done in postwar planning. 

Thei-e are three cities in the county: Newbui^gh, Middletown, and 
l-ort Jervis. Ihose cities have a population of approximately 31,000 
for the city of Newburgh, 21,800-and-some-odd for Middletown, and 
I think about 9,000 to 10,000 for Port Jervis. 

These cities have not been in any way backward in making their 
plans for the postwar period. They have, however, hesitated some- 
what in going ahead with any definite selection of the various thino-g 
that they want done, very laregly due to the fact of not knowing 
what would be the most advantageous for the consumption of the slack 
m labor that might come up, or where the money was coming from 

U e heard a good deal this afternoon about the cities not beino- able 
to hnance tlieir public works. I think that is so all over the countrv 
However, some of these public works could be financed by the cities' 
But the general program has been laid out with the idea that it is 
going to be necessary to prepare such a plan of coordinated work so 
mat It will cover perhaps a greater amount tlian they could possibly 
nuance m any one of those three cities. ' 

Newburgh alone has 11 items here, and I know of three others 
that have not been put on this list, amounting in all to $2,125,000 as a 
rough estimate. The list is as follows : 

Proposed list of postwar projects, city of Neivhurgh, N. Y. 

Sewage disposal plant ,{;-, QQr> on^ 

Tunneling South St. through Downing Park _ ^onam 

Rehabilitating roads and walks, """ H m)(YH) 

Amphitheater in Downing Park nn nn^ 

Repaying of streets ~" lOo' 000 

Extension of water lines 5o' 000 

Water storage reservoir within city limits lOo' 000 

Indoor recreation center ' -^9^' qqq 

Concrete bottoms for a 6-lap ice-skating rink and hockey rink 11 So'oOO 

i ire-alarm system 5q' qqq 

Some of those plans were drafted before the war, just as the war 
came on, and probably would have to be revised as to cost at the present 
time. 



POSTWAR ECONOMIC POLICY AND PLANNING 1833 

In Middletown, their work has principally been centered around 
sewage, a storm water system, and construction of a coagulation sys- 
tem. These amount to $705,495. That did not include, however, a 
large item for parks and recreation, amounting to $330,000. 
I do not have the figures on Part Jervis. 

As Mr. Bush is going to follow me on the matter of county work, 
I think that it might be well just to say that all of this work has 
been coordinated with a view to what is going to take place in the 
State and the county, as it may affect Newburgh from a transporta- 
tion point of view. We do feel that air- water transportation — I mean, 
by that, hydroplane landing — is very important on the Hudson River, 
and that is one of the omitted items. 

The feeling I have, I think a great many of the people in New 
York County have and it has been voiced this afternoon by several 
of the speakers, is that the words "public works" implies in the minds 
of a great many people a type of public works that took place just 
before we went into the war. There is a little bit of a feeling among 
most of the people planning the work, and I think the citizens them- 
selves, that that type of public work does not stimulate prosperity. 
The kind of public work we want is something that will keep the 
industries going. 

Mr. Schoonm'aker, who is chairman of the postwar planning in- 
dustrial committee, has done a very good job in Newburgh and in 
the vicinit}^ of Orange County. They themselves are planning to ab- 
sorb a great many of the people coming back from the war and 
other industries who have migrated away from Orange County be- 
cause we have very few war industries in Orange County, outside of 
the Newburgh area. Consequently, the whole plan of the work has 
been one to be in sequence with the absorption of those who are most 
in need of labor. 

Now, our building trade in Newburgh can undoubtedly provide 
a great deal of stimulus if such things as were spoken of a few min- 
utes ago are done in order to coordinate the work of reviving indus- 
try throughout the country. We are dependent upon the whole 
country in any program. The lumber trade, as we will know, has 
been in a state of stagnation due to the amount of lumber taken by 
the Government and the lack of manpower. Such things as that are 
going to require coordination of the general work that we are de- 
pendent upon throughout the country. 

Some of these projects will need lumber; some of them will not. 
And unless we can get the allocation of those things that are essential, 
we will have to drop down to one of these other lists. 

The Chairman. May T interrupt you for a moment? 

Mr. Shipp. Yes, sir. 

The Chairman. Do you believe, in accordance with the statement 
made yesterday by Commissioner Catherwood, of the New York State 
Department oi Commerce, that there is no need for Federal aid in 
these small communities like Newburgh, and Cornwall, and Port 
Jervis? 

Mr. Shipp. I am afraid that I cannot agree with him that there is 
no need for it. I know there is going to be a little opposition in the 
minds of people, as I said, because their idea of Federal aid has been 
one that has been brought out this afternoon that the moneys are going 

99579 — 45— pt. 



1834 POSTWAR ECONOMIC POLICY AND PLANNING 

to be just enough to support the people. Very little material was 
bought by Federal aid, or, as it was supposed to be, by the munici- 
palities. 

The Chairman. Well, now, Mr. Shipp, the idea that we have in 
mind when we talk of Federal aid excludes any such proposition as 
WPA. We are talking of Federal aid in terms of aid by the Federal 
Government to worth-while projects proposed by the States or 
municipalities. 

Mr. Siiirp. I appreciate that. 

The Chairman. And we had testimony here yesterday to the effect 
that the State administration did not believe it was necessary for the 
Federal Government at this time to make any advance other than for 
the planning. 

It does not seem to me that the small communities like Newburgh 
and Cornwall and Port Jervis, who have to make substantial outlays 
of capital in the event of unemployment, can possibly go along with 
that suggestion ; that, rather, the solution to the problem is that the 
municipalities and States undertake to some extent the original cost 
of both the planning and of construction ; and that the Federal Gov- 
ernment, in order to give impetus to that plannijng, should in some 
degree help finance it. I should imagine it would be very difficult in 
a small community like Newburgh to spend thousands of dollars in 
building up a shelf of plans and expending that money out of the 
treasury of 1944 for possible use in 1947 or 1948. Am I correct in that 
assumption, Mr. Shipp ? 

INlr. Snipp. You are decidedly correct, and we only have to look at 
tlie history of those towns to see that that is so. 

With reference to the sewage-disposal plant on which the plans 
were drawn, it was a long time before it was possible to get the 
amount of money necessary to even draw the plans, because we had 
to get outside experts to do it. 

With reference to any improvements, I will hesitate to call that 
public works. It may be private work and everything else. Pri- 
vate building, public works, and industrial work has been hibernating 
for 4 years. Consequently there has been an accumulation of that 
work. If the communities could not finance it as it accumulated, I 
cannot see how they could get started now and finance it themselves. 

It is like a snowstorm. If you begin plowing right away you are 
all right, but if it piles up on you it is almost impossible without 
outside help of snow plows to get it out of the road. The necessary 
w^ork that has accumulated, together with work on facilities that 
would be beneficial to the community, will be helpful in getting the 
people back to work and tiding over this period of transition. 

I don't see how they could possibly stand that expense at the 
present time, nor just how that is going to be done. I am an engineer, 
myself. I don't wish to go into the economics of taxing or whether 
it is a matter of direct loans or direct obligations by the Govern- 
ment. What I am trying to do today is give you the statement that 
the towns and the country have made preparations for a program 
of work, but they have not made preparations for a program of 
financing that work. The question as to whether they can do it 
themselves or whether it calls for outside aid is a matter for somebody 
else to answer. 



POSTWAR ECONOMIC POLICY AND PLANNING 1835 

I can say, oflhand, as a taxpayer, that I don't believe they can do 
it with the land values and taxes today on the scale that has been laid 
out, either in the county or State. 

I would like to say this in reference to a question you have asked 
some of the other witnesses, whether Federal aid would stimulate 
the drawing of plans at the present time. I think it would hurry 
the preparation of those plans — if it were only the fact that there 
was somebody from the Federal Government urging it to be done 
and giving a certain amount of technical assistance, the plans would 
be less likely to lie on the desks of the engineering offices waiting for 
something to happen. 

I think one thing further, Mr, Chairman, is this : One of the 
previous witnesses dwelt on the delay in getting things started, 6 
months or a year. My experience has been that the greatest delay 
in getting anything started is the financing of it and the knowledge 
of where the financing is coming from. 

After that is once established, it does not take long for the engineers 
to draw up the plans and get the estimates and the things "'in the 
works." If there is some plan whereby you know where the financing 
is coming from, the stimulus there for action is sufficient to make it 
possible to get almost any of these things actually started within a. 
few months. I think that that would take up the slack. 

Now, I still feel that this allocation of work cannot be local. I 
believe it has to be so coordinated that there will not be a stoppage 
or a bottleneck in the materials that are coming for the work. 

Congressman Fish. Have you concluded your statement ? 

Mr. Shipp. I think so. 

Congressman Fish. I have to leave, and I beg to be excused. I want 
to thank Mr. Shipp for his remarks in representing the Planning Board 
of Orange County. I understand that there is another member here, 
Mr. Peter Bush, whom I wish you would call next; also two gentle- 
men from Eockland County: Supervisor Williams and Mr. Lyone 
who will speak for the needs and postwar needs of Rockland County. 

I regret very much that I have to leave. I want to thank you very 
much for the able way you have conducted this subcommittee meetingy 
Mr. Chairman. 

The Chairman. Just before you retire, Mr. Shipp, I want to say 
that I am pleased that you are in favor of Federal aid or stimulating 
assistance in connection with the preparation of plans. That has been 
a particular pet of mine ever since we started this postwar planning 
work, because I have always felt that the most important thing to 
getting started is to get started. The only way we could do that, as 
far as I could see, was by the stimulation of the actual plans and 
specifications. 

I think that all through industry the lumber trade and everywhere 
else there is a sentiment for this building program. I am thinking 
now of our county which has a great scarcity of private houses. 
There are people, traveling as far as 60 miles, who cannot find hous- 
ing any nearer to their work in our section of the country. There is 
a great opportunity for private enterprise to build in that section: 
And slum clearance, also. The lower-bracket of rent payers cannot 
afford to pay the high prices of materials today and it may be nec- 
essary to have some subsidy on slum clearance. 



1836 POSTWAR ECONOMIC POLICY AND PLANNING 

I do believe private enterprise can take care of the building in our 
section of the country if we have proper allocation of materials, and 
the labor is available at the time. The labor will be available because 
that is what we are planning for. 

Thank you very much, Mr. Sliipp. Mr. Colmer. 

Congressman Colmer. I want to be sure that I understand Mr. 
Shipp's view. If I understand you correctly, there is going to be a 
necessity for some postwar construction, Federal implemented con- 
struction ; that the cost of that construction, both in the planning and 
in the construction itself, should be participated in by the Federal 
Government. 

Mr. Siiipp. Just how, I am not clear. But I believe it will be nec- 
essary if it is carried on to any extensive scale. 

Congressman Colmer. Yes. 

Mr. Shipp. You could take up any one of these things that we have 
on the list, and the municipalities could do it. If you are going to 
carry it on for an extensive period of time, they cannot do it. 

Congressman Colmer. That is all that I have. 

The Chairman. Thank you, Mr. Shipp. Now, with respect to the 
rest of the witnesses, of course, we are very glad to hear you. But, if 
there is anybody who has a written statement who would rather file 
it instead of testifying, we will be pleased to accept the statement in 
lieu of their testimony. 

The next witness will be Mr. Peter H. Bush, of Monroe, who is also 
a member of the Orange County Planning Board. 

Mr. Bush. First, I would like to make a correction on your last 
statement. I am not a member of the Orange County Planning Board. 
I am the executive chief engineer. 

The Chairman. With that correction, I think, probably, you are 
better qualified to testify than under the introduction which I gave. 

STATEMENT OF PETEE H. BUSH, EXECUTIVE CHIEF ENGINEER OF 
ORANGE COUNTY PLANNING BOARD 

Mr. Bush. I should also like to say that I am a member of the post- 
war planning committee of our Board of Supervisors of Orange 
County. Furthermore, I belong to the Committee for Economic De- 
velopment. 

Now, the subject which I wish to discuss or offer for your considera- 
tion refers to things that are needed in Orange County. I am basing 
my statement on the studies that I have made as a member of the plan- 
ning committee of actual needs 

One of the first needs, I should say, would be an adequate tax map 
of our entire county. The methods of assessing properties and making 
up the tax rolls now are entirely inadequate to apportion the burden 
of tax equitably among the people of the county. They are still 
using an old method of making up the tax which goes back to a period 
shortly after the Revolutionary days. There have been no improve- 
ments since. 

From my studies, I find that many thousands of acres of land in the 
county are not on the assessment roll at all. This is disclosed by the 
fact that calculation of the area as determined by the county planning 
board from our own studies, differs from the report of the State tax 
commission as to the acreage of the county that is on the tax list. 



POSTWAR ECONOMIC POLICY AND PLANNING 1837 

The Chairman. You said that some people up in Orange County 
do not have to pay taxes ? 

Mr, Bush. Yes. I would say they are not paying taxes, but I am 
paying the tax they should be paying. For that reason, I think this 
map is a very important requirement for the county. It should be 
based upon a survey, with suitable ground control, in order to insure 
its accuracy for the purpose for w^hich it is intended. 

The Chairman. Just a minute, if you please. Of course, you realize 
that we are on the subject of public works. Now, as a good Democrat, 
I myself think that those tax rolls up there ought to be revised in order 
to include everybody, because we down here hate to see these Repub- 
licans absent from the tax rolls. 

Mr. Bush. Maybe there are a few of the Democrats that are not on. 

That is the first consideration, as I said. It w^ould be built upon the 
basis of an adequate survey and map. It would very readily be done 
by tracing each individual parcel of land for the simple reason that all 
of our titles originate from the colonial clays. These were subsequently 
divided up into so-called farm lots and larger tracts. Those farm lots 
were fenced and those fences still show. That is the frame work and 
it could be done very accurately. 

The Chairman. Wliy is that a matter of Federal aid? We are 
trying to keep this down to the question of public works, and whether 
or not there should be Federal aid in connection with planning for 
public works and ultimately in the construction of public works. 

Mr. Bush. This is part of the planning for that purpose. I will 
bring it out a little later in my statement. 

The Chairman. Very well. 

Mr. Bush. We are confronted with other problems in the county. 
Let me first say that Mr. Taft brought out the needs of agriculture, 
which is the largest industry in the county for a soil survey project. 
Such a survey is based upon this so-called tax map which would 
be a survey map of the county showing each individual field, the type 
of soil in that field ; and what that soil is best adapted to raise. This 
cannot be done under the present method of soil survey which is shown 
simply on the United States geographical map. It does not show 
where the man's property is located. 

If you own a farm, or Jim Jones owns a farm and he is planting, 
it may or may not be adapted for that crop. He could increase the 
revenue from his farm, and the same would apply throughout the en- 
tire county. That is a basis for the project. 

The other project which Mr. Taft mentioned is an economic geo- 
logical survey of the county. All of that would be very readily shown 
and detailed. We have no map of that kind nor a soil survey map 
of the county at the present time. 

I am trying to show you, Mr. Chairman, that this is a basic need 
for the other projects which are planned. It would serve the pur- 
pose in the case of highways, flood control, recreation — in other words, 
it is the basis of all of the planning we wish to have done in the 
county, as well as serving as the tax map. 

For crop control, the difference in altitude of the terrain can just 
as readily be shown by the use of the stereoptic method which is now 
used. There have been so many advances made in aerial surveys 
and maps that a very accurate job could be accomplished. 



1838 POSTWAR ECONOMIC POLICY AND PLANNING 

Now, we have three other projects which are related and which 
might be classified as under one head. Those are flood control, re- 
creational facilities, and reforestation, which Mr. Taft mentioned in 
liis talk to yon a short time ago. 

Now, we have an area of land where there are a lot of crops, the 
principal one of which is onions. This area has been improved to a 
certain extent by Federal grant and completed within the last three 
or 4 years. 

There is one area in the county that is much below the rest of the 
county in financing and prosperity. By the development of recrea- 
tional facilities in that area, a certain measure of funds could be made 
available to the people of that area, and bring a certain amount of 
prosperity, which they do not enjoy. In that program should be 
included reforestation. 

I noticed that some of the speakers todav referred to our forest 
reserve, the use of wood in construction. By reforestation, we as- 
sure the people in Orange County — it might only be a small matter 
as related to the Nation as a whole yet the principle Avould be the 
same — a crop maybe 25 years from now. If there was another war, 
we would need more forest products. 

Another need that we feel is airports. Air transportation is un- 
doubtedly becoming active which calls for better facilities for pas- 
senger, mail and handling of merchandise. Now, in our study of the 
need of airports in the county, we first feel there should be what they 
ordinarily term the feeder type of airport, that is, a type of airport 
which feeds into the major commercial lines. 

Some time ago, before the war, I had some correspondence with one 
of the commercial operating lines. They had about concluded tliat 
they would establish an airport simply for that purpose. Anything 
we might do along the line of developing air transportation and pro- 
viding airports in the county would be done in cooperation with the 
Port of New York Authority, the Regional Planning Association, and 
also the Planning Commission of the State of New York. 

Of course, now, the costs of these projects which I am submitting 
for your consideration would undoubtedly be beyond the means of the 
county itself, were it all to come at once. I think Mr. Shipp stated 
the case very well when he said that ; Mr. Sheridan, also, as I recall, 
made the same statement that funds for the planning of these things 
should be made available now from some source. 

Under present conditions of the ordinary taxpayer, witli his burden 
of income tax, land tax, and similar taxes, the local community may 
not be able to afford that fund at the present time, but probably could 
absorb it later. That is in conformity with some statements that it 
might be taken up later through long-term borrowing or through a 
long-term bond issue at a low percentage rate. But, as Mr. Shipp said, 
the financing of these things is still an unsolved problem. 
' If we are to create a reservoir of work, as Sheridan brought to your 
attention, we certainly should have plans ready to put in action when 
the time demands those plans, so that the public-works program can 
go into effect. 

The Chairman. You do not agree with Commissioner Catherwood, 
of the State department of commerce, that there is no present need of 



POSTWAR ECONOMIC POLICY AND PLANNING 1839 

Federal aid, either in planning or in the ultimate construction until an 
emergency arises? 

Now, it seems to me that the emergency might also be said to be 
around the corner, depending on the date of victory and the demobili- 
zation of the troops. It seems to me ^Ye ought to get ready, but that is 
contraiy to the opinion of the department of commerce of the State. 
Do you agree wih the department of commerce ? 

Mr. Bush. I still maintain the attitude that there should be some 
source from which funds can be made available now for this planning. 
If the State is not going to do it, then the Federal Goverimient should 
do it, because these small communities, as I see it, haven't the money to 
invest at this time in that type of project. 

The Chairmax. Mr. Bush, do you think that we are in a position 
to rely upon the statement that, insofar as New York is concerned, 
there is no need of Federal aid ? 

Mr. Bush. I think that I am too small in caliber to oppose an opinion 
stated by Mr, Catherwood. 

The Chairman. The reason that you are here to testify is to give 
us the viewpoint of the people in the rural communities or the small 
towns. 

Now, we have had the mayor of the city of New Rochelle ; we had 
Commissioner Moses in liis various capacities; and we are trying to 
get the thought of a cross section of the people. That is why we 
had some of the supervisors and count}' representatives down here. 
That is why, I assume, you are here — to give your viewpoint on 
whether or not Federal aid is necessarj^ or desirable. That is the only 
thing that we have before our committee, and that is Avhat we would 
like to have answered by you and every other witness who appears 
here, not so much with respect to the particular projects that you have 
in mind, but more particularly with respect to the broad principle as 
to whether or not you v^'ill be able to carry out those projects, either 
with or without Federal aid. 

Mr. Bush. I sa}^ it is a matter of financing the program. 

The Chairman. It is a question not only of financing but also a 
question of stimulating the planning in the first instance, and then 
perhaps, if the occasion requires, to finance it later on either by direct 
grants or by long- or short-term loans. 

Having already received the opinion of the people from the large 
cities, we are now trying to learn tlie opinion of those from the rural 
communities as to whether or not they can carry out their proposed 
planning with or without Federal aid. 

Mr. Bush. Well, now, Mr. Chairman, may I refer you to Mr. Shipp's 
opinion on that same question, which was stated very clearly. 

The Chairman. If you will adopt Mr. Shipp's opinion, that is fine. 

Mr. Bush. I completely agree and concur in what Mr. Shipp said 
on that point as to the financing of these projects. You will recall 
that Mr. Shipp also said there should be a fund available somewhere 
now to do this planning. I might say in that connection that a great 
deal of work has been done in Orange County by the Orange County 
Planning Board, and we have all of the basic material available upon 
which definite and detailed plans can be made. It is a question of 
where the funds are coming from for the making of those detailed 
plans and specifications. 



1840 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Sheridan, who preceded me, expressed it as simply creating a 
reservoir. You may have a reservoir and you need a certain body 
of water. When the emergency comes and you have a fire, you have 
to draw a kjt more water than under ordinary conditions. We should 
be prepared to meet it. 

The Chaikman. Let me say that you and I agree 100 percent. 

Dr. Kaplan has a few questions he would like to ask you. 

Dr. Kaplan. May I ask Mr. Bush whether his OAvn section has taken 
full advantage of the matching privileges of the State, how far he 
feels his community has gone, and whether he wants grants beyond 
that, or is it true that the community has not yet taken full advan- 
tage of the matching opportunities in the State arrangements with 
is municipalities? 

Mr. Bush. I should say, so far as our county is concerned, the mu- 
nicipalities — and I am now referring to cities and villages — have sub- 
mitted preliminary plans, and in some cases completed plans, to the 
State planning commission, who has asked for plans concerning 
projects which these municipalities have in mind and wish to complete. 

Now, I have done just that work, as village engineer, and made up a 
set of plans for various types of projects which have been submitted 
to the State. As I understood it, at this time, the State would bear a 
certain cost of it — 2 percent, or some such figure — the total not to exceed 
4 percent of the cost of construction. This, in my opinion, is too low. 

The Chairman. It ought to be 6 percent in any event. 

Mr. Bush. No suitable set of plans in detail, and I am speaking 
now as an engineer, can be made for 4 percent on small jobs say, jobs 
ranging from $50,000 to $60,000 or $100,000. It cannot be done for 4 
percent and be adequate to serve the purpose. 

Dr. Kaplan. You are giving us the information that the matching 
arrangement which the State has is insufficient to justify you in going 
forward with the planning? 

Mr. Bush. Well, we have gone forward so far. That is up to date. 
But whether more money will be available for plans, I could not say. I 
do not know. But, we have done the original work. 

If money is not made available by the State, then, in my opinion, 
it should be made available by the Federal Government; say to the 
State, so that the State can distribute it to the municipalities through- 
out the State. 

I am not so much concerned as to who is going to furnish the money, 
as that it should be furnished from some source and made available 
where it will throw the least burden on the communities. 

Mr. Taft. May I just add one word, Mr. Chairman? 

The Chairman. Yes. 

Mr. Taft. In reference to the questions just asked Mr. Bush, there 
are some exceptions regarding the type of work for which the State 
will pay part of the cost for the survey and plans and estimates. One 
exception is the railroad crossing. Also, those State funds, as I 
understand it, are only available for villages and municipalities, 
whereas the open country areas cannot avail themselves of those things. 

Now for instance, in our county, as I stated earlier, there are 60,000 
of the people who are urban and 80,000 rural. All the projects that 
would apply to the 80,000 rural people would be exempt from State 
aid. 



POSTWAR ECONOMIC POLICY AND PLANNING 1841 

The Chairman. When you say that you do not get any aid from the 
State, you mean outside of the mcorporated villages? 

Mr. Taft. That is right, because under the laws, as I understand 
it, it has to be prepared and presented by a corporate body. They 
pay half of the cost of the preliminary plans and estmiates, and the 
State pays the other half, up to a total of 2 percent. In other words, 
as Mr. Bush said, 4 percent is all that is allowed. Our village has 
presented plans to the State and they have received their money. But 
outside of the village, the rest of the town can do nothing. 

The Chairman. Now, with respect to gra^le crossings, doesn t the 

Mr. Taft (interrupting). For a number of years, the State voted 
$300,000,000 dollars for the elimination of grade grossings. A good 
deal was expended on Long Island out at Atlantic Avenue. Last year 
there was an amendment appropriating it for other purposes. 

Now, the State law which we refer to, 2 percent of it, because of 
that fund for crossing eliminations, is not applicable to crossing elimi- 
nations. We made an application for that and we were turned down. 

The Chairman. You mean to say, although the people m the refer- 
endum voted the $300,000,000 for grade crossing, that the legislature 
last year, in spite of the vote of the people of the State, turned that 
money over for other purposes? ,, ^ 

Mr. Taft. That was amended by reference to allocate a certain 
amount of that for other purposes. It was referred back to the people 
at the last election. I can illustrate it best this way : We made an 
application for money for a preliminary survey for crossing elimi- 
nations. We have four crossings within half a mile and they are 
very dangerous. There have been a good many fatal accidents there, 
lliey say that is taken care of under other departments of the State, 
so they won't appropriate any money or pay any cost of the survey 
and plans. Although the village authorities have been corresponding 
for 6 weeks now, they haven't funds for that survey. 

We want to have plans and estimates and everything necessary to 
start that work after the war in case there is need for that type ot 
employment ; but the village does not feel that it can pay the expense 
of this survey and preparation of plans. As a result the thing is 
temporarily stalemated. 

Mr. Bush. What Mr. Taft said in regard to the money available 
for the State, you realize that it is not covering these projects which 
I specifically mentioned. 

Now, as I understand it, Mr. Chairman, you are not so much inter- 
ested in what the projects are but whether they are worth-while 
public projects. 

The Chairman. That is right. ^ t a 

Mr. Bush. It seems to me from the questions you have asked, and 
the replies given, that you are primarily interested in the question as 
to whether or not Federal aid is needed. I mean, that is the crux 
of the matter from my point of view. 

The Chairman. I think you are right. . . 

Mr. Bush. I would not take it upon myself to express an opinion 
how the voters of the county would vote if a referendum were held as 
to how they would wish that money to be sent into the county. It 



1842 POSTWAR ECONOMIC POLICY AND PLANNING 

would be merely a statement of my own personal opinion of the 
matter and nothmg more. 

It might be, if a referendum were taken in Orange County, that 
the people would be in favor of having that money made available 
from Federal sources either direct or through the State. As Mr. 
Shipp and Mr. Taft said, the local communities would not be finan- 
cially able to do these projects I mentioned at one time. Of course, 
that means that aid would be required from some source. 

The Ctiaikman. Do you think, if a grant was made to the State 
by the Federal Governiiient, that the State would do any better in 
connection with handing out the Federal money than it has done in 
connection with handing out its own money ? 

Mr. Bush. Don't you tliink that is an unfair question ? 

The Chairman. No. I think that is what we are trying to get at. 
We have a difficult task here to determine— to what extent we should 
go and how we should do it. 

Mr. Bush. I realize that, Mr. Chairman. 

The Chairman. The thought has occurred to us — as a matter of 
fact, it has been suggested to me by Dr. Kaplan, who is very much 
interested m this matter— as to whether or not, even if the Federal 
Government gave money to the State, it would finally go down into 
the towns and villages. 

Mr. Wolcott spoke this afternoon about a roads appropriation. I 
understand that only a small percentage of the money which the 
Federal Government has appropriated for roads to go through the 
States has filtered down into the actual construction of roads. 

I am wondering whether or not it would be more advisable to have 
the projects right from the States, if thev are State projects; the 
cities, if they are city projects; or counties, if they are county projects; 
thus go through Federal works, without first going through the State, 
and then from the State back down to the Federal works. 

Mr. Bush. Well, now, Mr. Chairman 

The Chairman. Excuse me, Mr. Bush. I do not want you to feel 
that I am asking any questions that are intended to be embarrassing 
at all. ^ 

Mr. Bush. I realize that, and there are no political implications. 

The Chairman. Of course not. 

Mr. Bush. I realize that. But in answering that question, if I 
should give an opinion that is adverse, that would be criticizing my 
own State in favor of the Federal Government. Insofar as the Fed- 
eral funds granted, or so-called Federal aid for the construction of 
highways was concerned, that question should be addressed to the 
State department of public works, division of highways. 

Insofar as I know from my association with the division of high- 
ways, department of public works in the State of New York, the Fed- 
eral funds have been spent on the construction of State highways 
in the State of New York. 

The Chairman. Mr. Bush, there is no doubt that these funds have 
been spent on highways. I do not mean to infer for a moment that 
they have been spent on other things. My ]3oint was that both the 
testimonies, I think, of Mr. Moses and somebody else here, were to 
the effect that the full appropriation to which the State was entitled 
out of the Federal funds — this applies not only to New York but to all 



POSTWAR ECONOMIC POLICY AND PLANNING 1843 

the 48 States, so far as I recall — the full appropriation that the Fed- 
eral Government has made for road construction on a matching basis 
has not been met, except to a comparatively small amount. 

Mr. Bush. Is that a question? - 

The Chairman. Yes. '. 

Mr. Bush. I feel that I am not qualified to answer that question, sir,, 
because the administration of those funds is in the hands of the State 
department of public works. How they have been expended, I would 
have no means of knowing. But I can say that, from my knowledge 
of wliat has been done, I know that some of those funds — at least T 
could not say all or what part — have been expended for the purpose of 
highway construction. 

The Chairman. I hope that Orange County got its share. 

Mr. Bush. We feel that it has. 

The Chairman. That is fine. 

Mr. Bush. I might say that insofar as Orange County and our 
planning board for the county is concerned, we have very complete 
cooperation; and the State department of public works, through the 
division of highways who do the construction work of highways, have 
given a great deal of consideration to suggestions which our board has 
made concerning where these highways should be located in Orange 
Count J^ I think that any member of our board could say the same as I 
am saying, that we have had very hearty cooperation and a good deal 
of information. 

There seems to be some confusion on the through way and the Rocke- 
feller Parkway, which I heard discussed here before, and perhaps I 
might clarify it a little bit. The Rockefeller Highway, as laid out 
by the plans of the Palisade Interstate Park Commission, extends from 
the George Washington Bridge to what is Iniown as Queensborough 
Traffic Circle, which is about 2 miles west of the Bear Mountain 
Bridge, and there it terminates. 

On their map, they show that this parkway is to extend westwardly. 
from that point by the State of New York Parkway. I might say that 
aerial surveys have been made by the State of New York from which 
plans will be made to show where the highway will run. 

I might also say, as Mr. Taft I think, mentioned before, that the 
planning board and the State department of public works have given 
very serious consideration and thought to local suggestions. Their 
attitude is although it is a through route, it does affect the local people 
and they are the people who have to live with it when it is completed. 

So long as poor engineering is not in the picture, as I might term 
it, they will give consideration to suggestions. 

The Chairman. Does that complete your statement, Mr. Bush? 

Mr. Bush. Insofar as I have anything further to say, I mentioned 
very briefly the projects we have as it seemed to me that was not basic 
at this hearing. It is a method of financing. 

The Chairman. We want to thank you for your testimony here. 
The next witness will be Mr. Oscar J. Heins, staff supervisor, Rock- 
land County Planning Board, Rockland County, N. Y. 

Do you want to submit a statement ? 

Mr. Heins. We were called over here at the very last minute. 

The Chairman. Do you wish to make a statement, or do you pi'efer 
to file or submit a written statement ? 



1844 POSTWAR ECONOMIC POLICY AND PLANNING 

First of all, please give your full name for the purpose of the record. 

Mr. Oscar J. Heins. Oscar J. Heins. 

The Chairman. As I understand it, Mr. Heins, you prefer to file a 
statement with the committee, and of course that will be agreeable to 
us. You may send it to the committee in Washington at your con- 
venience, which. I hope, will be within the next week or 10 days. 

Mr. Heins. Yes. 

The Chairman. Thank you. 

Mr. Heins. We will send that direct to Washington. 

The Chairman. The next witness is ]\Ir. Richard F. Ambi-ey, mem- 
ber of the board of supervisors, Rockland County. 

What township are you from, Mr. Ambrey ? 

Mr. Richard F. Ambrey. Stony Point. That is near Bear Moun- 
tain. 

T he Chairman. May we have your statement, Mr. Ambrey ? 

STATEMENT OF RICHARD L. AMBREY, MEMBER OP THE BOARD OF 
SUPERVISORS, ROCKLAND COUNTY, N. Y. 

JVjir. Ambrey. I want to go on record as approving of the parkway. 
We met with Mr. Moses and the State commissioner of parks in Bear 
Mountain in the spring. We went on record at that time as being 
in favor of the parkway. We feel as though we have enough park- 
ways on the other side of the river, and we are entitled to some. Bear 
Mountain means a lot to Rockland County. I believe they are doing 
a lot of work up there in postwar planning. We are going along with 
Mr. Morgan and Mr. Moses 100 percent. 

So, anything that you can do for us along those lines will be of 
great help to us. 

The Chairman. We will certainly try to do whatever we can for you. 

Mr. Ambrey. Outside of that, Mr. Heins will have everything in 
his report. 

The Chairman. Thank you very much, gentlemen. 

There being nothing further before us, the hearings are concluded. 



POSTWAR ECONOMIC POLICY AND PLANNING 



TUESDAY, MARCH 13, 1945 

House of Representatrtes, 
Special Committee on Postwar Economic 

Policy and Planning, 

Washington., D. G. 

The committee met, pursuant to notice, at 10 a. m. in room 1304, 
New House Office Building, Hon. William M. Colmer (chairman), 
presiding. 

Present: Representatives Colmer (chairman), Cooper, Walter, 
Voorhis, Murdock, Lynch, O'Brien, Fogarty, Worley, Gifford, Reece, 
Welch, Wolverton, Hope, Wolcott, Le Fevre, and Simpson. 

Also present : Dr. A. D. H. Kaplan, consultant to the committee, and 
Marion B. Folson, staff director. 

The Chairman. The committee %vill come to order. 

As the committee and most IMembers of Congress well know, after 
the adjournment and break-through of the bulge, we have been trying 
for psychological reasons to keep this committee's activities, at least 
the publicity part of it, to a minimum. 

We feel, however, that it is just as essential to be prepared for this 
postwar period as it is for the war itself, and we feel that we can 
afford to go ahead with some of these public hearings. 

When this committee was first organized it was divided into a num- 
ber of subcommittees dealing with various phases of the postwar prob- 
lems. Among them was the Subcommittee on Public Works and 
Construction, of which Mr. Lynch is the subcommittee chairman. We 
thought it necessary to resume the hearings on that subject, and we 
thought further that in view of the fact that we were not having any 
other subcommittee hearings, it would be very desirable to have those 
hearings before the full committee, with which position Mr. Lynch very 
wholeheartedl}^ agreed. 

We are glad to have Mr. Ruml with us this morning, who will make 
a statement on that subject. 

Mr. Ruml, do you have a prepared statement? 

Mr. Ruml. Mr. Chairman, I have a two-page statement that I should 
like to make, and the two-page statement contains one important 
sentence which I will refer to when I get to it. 

May I just read this? 

Mr. Lynch. Before we go on with Mr. Ruml, I might say in dis- 
cussing this matter with the subcommittee, it was the opinion of the 
subcommittee that to round out the record in better fashion, it would 
be better to have Dr. Kaplan propound questions before the members 
of the committee took the matter up. 

1845 



1846 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Mr. Lynch spoke to me about this matter and, of 
course, it is perfectly agreeable to me. It was my purpose, Mr. Lynch, 
to submit to the full committee when we got around to questions. 
I would like to suggest, though, that Mr. Rurnl be given the opportunity 
to present his statement first before we interrupt him with questions. 

STATEMENT OF BEARDSLEY EUML, CHAIRMAN, NPA BUSINESS 

COMMITTEE 

Mr. RuML, I appreciate the invitation to discuss the views of my 
associates on the National Planning Association's Agriculture, Busi- 
ness, and Labor Committees, on the subject of public works and 
conservation as a factor in stabilizing the postwar economy. 

The National Planning Association recently issued a report. Sta- 
bilizing the Construction Industry, by Miles L. Colean, accompanied 
by a supporting statement which presented recommendations for 
action by the agriculture, business, and labor committees. Mr. Batt, 
who at that time was chairman of the National Planning Association, 
has already explained to this committee how these committees of the 
National Planning Association operate, but I will be very glad to 
answer any questions you may have. 

That report was prepared in an effort to see what policies are re- 
quired to assure that construction and conservation activities are 
integrated with all the elements that make up a healthy national 
economy. 

Our studies clearly show the close relationship of construction 
and conservation policies to such other important phases of national 
fiscal policy as taxation and social security. An attempt to depend 
on public and private construction as the sole means for stabilizing 
the whole economy will not only fail in that purpose, but will result 
in disastrous instability in the construction industry itself. 

What we in NPA believe should be done is to plan public works 
and conservation, and time them so that the activities of the con- 
struction industry are evened out to maintain a satisfactory level of 
construction, consistent with the needs of American life, throughout 
the year and over the years. 

Now that sentence I have just read is the sentence to which I re- 
ferred. For at least 20 years now we have been thinking about the 
use of public works and conservation for the purpose of evening out 
the business cycle, for the purpose of filling in the valleys and cutting 
off the peaks, and now we have come to feel, I think, in the course 
of the last 3 years, that that is too ambitious a thing to try to attempt. 
It is too vague an objective. It doesn't lend itself to real programing, 
real study, and real operation. Therefore, we felt we must shift the 
-emphasis to say "Let us not try to even out the business cycle; but 
let us try to take the construction industry — this very volatile element 
in the business cycle — and see what we can do to make its operation 
more regular." 

Now, from our point of view, all policies, in a sense, and all pro- 
grams relating to public works and conservation flow from that very 
small distinction. It is like the watershed that makes the river run 



POSTWAR ECONOMIC POLICY AND PLANNING 1847 

east or west, and I urge that the committee recognize that dechara- 
tion as being a matter of the greatest importance for the future of all 
public works and conservation planning. 

If this is accomplished the gains toward stabilizing the whole 
economy obviously will be considerable, since the construction in- 
dustry — including maintenance and repair w^ork — alone accounts over 
the last 20 years for around 15 percent of the Nation's total income. 

Three important gains to the economy which would result from a 
public works and conservation program directed toward the stabil- 
ization of the construction industry are : 

1. For fiscal policy, timed disbursements for public construction 
and conservation to stabilize the construction industry will regular- 
ize one of the most fluctuating elements in the whole economic picture, 
public construction being increased proportionately as private con- 
struction decreases, and vice versa. 

2. A stable construction industry will benefit all parts of the in- 
dustry. 

3. Higher efficiency and lower costs will result from the reduction 
of idle labor and plant expense and from the correction of restrictive 
practices which have grown up in the industry. 

To achieve such a public-works program, a study of the construc- 
tion industry should be made to see how it could be stabilized; and 
how to assure that the Government gets its fair money's worth for 
public expenditures, and citizens benefit in the lower cost of private 
■construction. 

The business committee accepted our suggestion and asked Mr. 
Colean to try to find the answers to such questions as : 

1. Why is stabilization of construction activity desirable? 

2. What amounts of construction year after year would be required 
to maintain a desirable level of activity? 

3. What contribution can public works make to stabilization? 

4. What aids in addition to public works may be required to pro- 
duce a more orderly flow of construction activity? 

Mr. Colean submitted last October a report on these questions to 
the business committee and to subcommittees of the labor and agricul- 
ture committees. Out of their work developed the joint statement, 
unanimously endorsing the Colean report. 

Mr. Colean is here and is prepared to answer the questions which 
have been asked by the committee and to discuss other matters con- 
tained in his report. 

Now, Mr. Chairman, if Mr. Colean could answer the questions that 
the committee has put to him, then we would perhaps be available, 
or, if you prefer, I would be glad to answ^er questions in advance of 
that. 

The Chairmax. We will leave that to you, Mr. Ruml. If you 
would prefer Mr. Colean to take over now, that w^ill be perfectly all 
right. 

Mr. Ruml. His statement is only a short one and then the whole 
subject matter would be before the connnittee, and I would make that 
suggestion. 

The Chairman. All right. 



1848 POSTWAR ECONOMIC POLICY AND PLANNING 

STATEMENT OF MILES L. COLEAN 

Mr. CoLEAN. Mr. Chairman, my statement is also brief and it is 
directed in the first instance to the questions asked in Mr. Lynch's 
letter of February 21 to Mr. Ruml, The first question was : 

What should be the division of responsibility between Federal and State-local 
agencies in the financing, planning, timing, and administering of public-works 
projects? 

There would appear at tliis time to be no reason for diminishing 
local responsibility for the planning, financing, and administering of 
the type of public works, such as streets, sewers, sewage disposal, 
water supply, schools, hospitals, and so forth, ordinarily conducted by 
local authorities. Nor does there seem to be an immediate necessity 
for expanding Federal public works beyond those ty})es in which the 
Federal Government customarily engages, or for Federal financing 
of local public works. 

The Federal Government might, however, at this time consider the 
planning of future comprehensive regional development projects which 
lie outside any particular local jurisdiction and which would both 
serve to expand the national economy and to provide employment in 
off-peak periods. 

The Federal Government should definitely attempt to work with 
States and local bodies to secure coordination in the timing and volume 
of the Nation's total public works program. One verj^ important 
means of accomplishing this would be to provide for loans to State 
and local authorities for the advance planning of needed projects. 
Without such advance planning, it is impossible to time the initiation 
of public works so they may effectively contribute to the general 
stability of the construction industry. 

It goes without saying that the Federal Government should adopt 
a policy of advance planning and optional timing of its own con- 
struction work, irrespective of the agency having jurisdiction over it, 
and that some means should be provided for coordinating the opera- 
tions of the several Federal agencies that carry on construction work. 

Mr. Lynch's second question, and to my mind the most significant of 
all, was : 

How far should public works be employed to lessen the cyclical fluctuations in 
.employment? Should public works be used to stabilize total employment or 
employment in the construction industry alone? 

Any attempt to stabilize total employment by public works or other 
forms of construction would create problems as serious as those it 
seeks to cure. It would mean building up the construction industry 
during depressions to a point that could not be sustained over a long 
period, and would consequently residt in a liquidation of manufactur- 
ing facilities, distributing facilities, and construction organizations 
and a dispersal of trained construction labor when the crisis was past. 
It would mean attempting to cure instability in one part of the 
economy by creating it in another. ]\Ioreover, it is extremely improba- 
ble that, without the grossest sort of waste, inefficiencj^, and extrava- 
gance, the construction industry ever could be built up so as to balance 
unemployment such as for instance we had in the early thirties. 

It is, however, feasible to use public works as one of the means for 
moderating the violent fluctuations of the construction industry itself. 



POSTWAR ECONOMIC POLICY AND PLANNING 1849 

The broad result would be to prevent the effects of instability from 
multiplying as they spread from construction to other areas of busi- 
ness. A stable construction industry would be a stabilizing influence in 
the economy as a whole. And this should be considered an important 
element in the general situation. 

The third question asked in Mr. Lynch's letter was : 

What changes in fiscal policy would be desirable in order to facilitate the 
sound financing of public works (a) at the Federal level, (&) at the State level? 

The most important changes both in Federal and local fiscal pol- 
icies would be (1) a separation of the financing for planning and for 
acquisition of land rights for public projects from the financing for 
their actual construction, and (2) the authorization of expenditures 
in such a way as to permit variation in the timing of work so as to 
achieve a better accommodation to general construction conditions. 

As I understand the recent Public Roads Act, the Public Roads 
Administration is granted certain discretion in the timing of opera- 
tions without endangering its total authorizations. This policy 
should be adhered to in other public-works programs. 

Since States and municipalities frequently find it impossible to 
provide funds separately from and in advance of a bond issue covering 
project construction, the provision of Federal loans for planning and 
moreover for site acquisition would not only serve to tie local bodies 
into a national policy, but would permit a flexible timing of local 
works. Such loans, of course, should be made only for projects for 
which the need within a reasonably short time was clear and should 
be repaid out of construction fimds when the projects were under- 
taken. It should be particularly noted that because of local fiscal 
limitations, these Federal loans should provide full coverage instead 
of being on a matching basis. 

The final question asked by Mr. Lynch was : 

Should the public works program be carried out independently of pi-ivate con- 
struction or as a remainder item after private construction and public mainte- 
nance work have been cared for? 

Public works can neither be carried on wholly independently of 
private construction nor can they be considered simply as a remainder 
item. Many public projects are dictated by needs of the most pressing 
nature. In ordinary times, for instance, a river improvement may be 
required to meet an immediate flood danger rather than to serve a 
long-range economic program. The need for schools and hospitals is 
related to population growth. Street and utility extensions must 
keep up with urban expansion. Sanitary improvements may have 
more vital considerations than the movement of the construction cycle. 

Moreover, the need for public works is not constant, but varies 
greatly with unusual changes in the social and economic fabric of the 
country. When great demands for public works suddenly occur — as 
they did with the rapid growth of cities and the rapid development 
of the automobile after the last war — they may materially, and un- 
avoidably, affect the total volume of construction. 

Public construction has to be considered from its own viewpoint as 
well as that of the industry as a whole. At the same time, it cannot 
be considered apart from its influence on the whole industry, for when 
large public demands coincide with imusually heavy demands for 

99579 — 45 — pt. 6 10 



1850 POSTWAR ECONOMIC POLICY AND PLANNING 

private work, the combination may produce a volume of construction 
that is unsustainable over a long period as was the case in the twenties. 

It is in connection with situations of this sort — and we probably face 
one again — that the element of timing is especially important. The 
time-lag between the date of decision and the beginning of construc- 
tion is, it must be emphasized, one of the most serious obstacles to 
stabilization. Included are the processes of obtaining public recog- 
nition of the need, financing, planning, and site acquisition, taking 
bids, awarding contracts, and so forth. Depending upon the nature 
of the project, these may extend over several months to several years. 
The result is that, at a time of increasing activity, public construc- 
tion tends to mount the peak of a boom instead of to get in and out 
before a boom is present. For the same reason, public works in the 
past have been a ponderous instrument for making up deficiencies as 
private activity declines. 

These situations were present in the last cycle. Although the causes 
that ultimately produced the unusual postwar need for public con- 
struction (increase in urban families and automobiles) should have 
become evident in 1919 and 1920, public works programs necessary to 
meet the need lagged as much as 4 and 5 years, and did not reach 
their peaks for nearly 10 years. The great highway building years 
were 1925-31 ; sewage disposal and water-supply improvements, 1924r- 
31; public buildings, 1925-31. 

Had it been possible, as a result of competent information and ad- 
vance planning, to have got the essential parts of these programs 
under way — and to some extent out of the way — promptly after the 
last war, much of the unsoundness of the boom, as caused by excessive 
overtime payments and other inflated costs, might have been amelio- 
rated. 

Having followed the boom to its peak, public construction fell off 
rapidly as the depression deepened. A low point was reached in 
1933, which was also the low year for all construction activity. The 
capital market for improvement bonds had almost completely disap- 
peared even for those cities which were still within their debt limits. 
The major burden for financing public works fell upon the Federal 
Government. New financial machinery had to be devised, and, after 
that, the actual plans had still to be made. Consequently, it was not 
until 1936 that public construction reached and passed the previous 
peak volume, and then only with a strong infusion of work relief 
projects. Lack of assured sources of funds and failure to have plans 
ready in advance prevented public works from effectively serving 
the purposes of stabilization. 

On the basis of our past experience we make the following four spe- 
cific proposals, which in our opinion are urgent in considering our 
postwar public-works programs: 

1. The Federal Government should plan now and acquire sites for 
those projects for which it seems an immediate postwar need. Along 
with these short-term plans, consideration should be given also to 
those comprehensive conservation projects which will be needed in the 
long pull. 

2. States and locnl bodies should be encouraged to follow this sort 
of vigorous planning progi-am, though it may mean Federal loans to 
accomplish it. 



POSTWAR ECONOMIC POLICY AND PLANNING 1851 

3. The most needed work should be initiated immediately as the 
military situation permits. Where possible, preference should be 
^iven to types of projects which will be stimulative of private work. 
It should, however, be the policy of the Government to taper off public 
works whenever and wherever strains occur as evidenced by sharp price 
rises or labor shortages, and to withhold additional operations until 
proper adjustments had taken place. A sustained construction pro- 
gram can be maintained only through increasing ei clency and lower- 
ing unit costs. During the last boom, public works, coming late as 
they did, were in large part responsible for the distorted cost structure 
of that period. 

4. In order to effectuate these policies, the Congress should make 
funds available to Federal agencies and local bodies for the prepara- 
tion of plans ready for construction. It should provide in its con- 
struction appropriations some leeway in timing. It should designate 
some agency as a control authority for the coordination of the timing 
of construction done by the Federal bureaus and, insfar as consistent 
with our Federal system, by the States and localities. Finally, Con- 
gress should immediately provide facilities for closely and constantly 
checking the over-all demands for construction so that this control 
authority would have a sound basis for action, and, so, even more 
important, private operators would have a sound basis for this decision. 

In conclusion, a well-designed, wisely controlled public-works pro- 
gram is essential to a healthy construction industry and therefore to a 
healthy economy. In the past, public works have not served this end, 
but have instead, by compounding booms, deepened depressions. We 
are not so ambitious as to expect now to invent a perfectly working 
relationship between public and private works, but we do have the 
basis for greatly moderating the violence of the construction cycle and 
for helping the construction industry, after its postwar recovery, take 
its proper place in the total economy. 

The Chairman. Was there any further statement from either of 
you gentlemen ? 

Mr. RuML. Nothing further. 

The Chairman. Then, in line with the suggestion made by the 
chairman of the subcommittee, Mr. Lynch, without objection, Dr. 
Kaplan may proceed with his questions as he sees fit to propound to 
the witnesses. 

Dr. Kaplan. Mr. Chairman, the purpose of my comments will be to 
try to get from Mr. Ruml and Mr. Colean an elaboration of some of 
their remarks, so we may have the benefit of their views in the record. 

In speaking of a goal for construction that we can tie to for a long- 
term program, I wish that either Mr. Euml or Mr. Colean would give 
us some idea of the size of a construction program that they have in 
mind and how soon we can reach that, and perhaps some idea of how 
much of it will be in the province of the Federal and State govern- 
ments and how much in private construction, but some idea of the 
over-all size of the construction program that you have in mind. 

Mr. Ruml. Let me take the first part of the question and Mr. Colean 
the second part. 

I will address myself to the general question of the over- all magni- 
tude of the construction industry public and private, and how we view 
that question. 



1852 POSTWAR ECONOMIC POLICY AND PLANNING 

First of all, it seems to us more important to determine the goal 
that we are shooting at rather than what the particular goal is. 
There is a great deal of leeway for difference of opinion and dilference 
of judgment as to whether the goal should be $12,000,000,000 a year or 
$15,000,000,000 a year, or $18,000,000,000 a year. We thiiik that the 
total volume at present price levels lies some place within that range, 
but it is a very large range and hardly satisfactory as a basis for 
planning. So, as I say, it is more important to decide on something 
than it is to decide on a particular figure. 

Now, the second point I would make is this, that when we talk about 
a figure of that kind we are not thinking of a rigid strait-jacket into 
wliich Ave are tliinking of putting the construction industry. In the 
first place, it must have room to breathe a little bit in any figure that is 
taken ; and, in the second place, over a period of years, no matter what 
figure you take, you will have to make some adjustment. It may 
well be that new inventions coming along will make it necessary to 
step up by several percent the amount of construction required by 
the economy. On the other hand, it may well be that the increasing 
efficiency of the industry coming out of stabilization will make it 
unnecessary to devote such a large amount of the national income to 
construction. 

So we approach the matter with a good deal of flexibility within the 
general framework of trying to even out this very unstable industry. 

I would suggest that Mr. Colean take up the question that Dr. 
Kaplan asked as to how long it might take to get to such a level and 
what the relative components in such a level might be. 

Mr. Colean. I would like to elaborate just a bit on the statement 
made as to total volume. We used in our own calculations, as a provi- 
sional basis, the relationship between construction and the total econ- 
omy during the last 20 years, which was 11 percent of the national in- 
come for new construction and about 15 percent for all construction, 
including maintenance. 

On the basis of the assumption of $140,000,000,000 postwar net in- 
come, tliat would run your new construction program up around 
$15,000,000,000. But that same relationship applied to the last boom 
period Avoukl have reduced the boom peak from over 10 billion to 
around 8 billion and there would not have been produced a boom situa- 
tion. So the figure does not seem to be an extravagant one if we reach 
such a level of income as has been estimated. 

As to the time it would take to reach such a volume, it is a pretty 
tougli tiling to guess, but I can't see that it could be done in less than 
3 years, and maybe 4 years. 

We are down to a depression level at the present time. Our con- 
struction industry is rapidly being disorganized and dispersed. All 
of our distributing channels are empty and our manufacturers have 
no products. So we have the problem of starting from scratch back 
at the manufacturing level, filling our distributing channels and 
reorganizing a construction industry that is now down, I suppose, to 
around three billion a year up to the figure that we are talking about. 
It can't happen overnight. I think it does mean tliat we ouglit to 
think about reconversion at the manufacturing level just as rapidly 
as we can have the excuse for doing so. 

Dr. Kaplan. Mr. Colean, will you convert your $15,000,000,000 or 
$18,000,000,000 into manpower equivalents for us? 



POSTWAR ECONOMIC POLICY AND PLANNING 1853 

Mr. CoLEAN. Well, that again is pretty hard to do. In 1089 one 
man engaged at the site produced about $4,000 worth of work. On 
the basis of today's prices that would probably be $5,000 at least. 

Dr. Kaplan. That is on the site? 

Mr. CoLEAN. That is on the site. 

Dr. Kaplan. What do you estimate off the site? 

Mr. CoLEAN. I think the BLS figure is something a little more than 
one off-site to one man on the site. That is tl^^best estimate we have. 
So including related activities, we have in all at least twice as many 
engaged as we do on the site. 

The Chairman. Would j'ou gentlemen lift your voices a bit so we 
can all hear? 

Dr. Kaplan. You were saying, then, Mr. Colean, that at today's 
prices for every $5,000 worth of projects you would probably have 
one man employed on the site and a little more than one man employed 
off the site for a whole year, full employment for a year? 

Mr. Colean. That is right. 

Dr. Kaplan. Mr. Colean, you said something about the percentage 
of "the total national income that construction would account for, 
something like 11 percent for new construction and up to 15 percent, 
including maintenance. I would like to have you give the commit- 
tee, if you will, the benefit of your analysis of how that construction 
will divide between Federal and State and local projects. I have 
in mind that from 1920 to 1930 the Federal Government accounted 
for only about 10 percent of all public works, the State and local 
governments accounted for 90 percent. In the 1930's, partly due to 
relief, that jumped so that the Federal Government took over about 
50 percent of all public works. 

Now, in this decade, of course, with the war effort to consider, the 
Federal Government has gone up to as much as 94 percent of all 
public works, leaving the State and local governments 6 percent. 

Now, what do you see as the postwar trend; what is going to be the 
relative responsibility of the Federal, State, and local governments 
with public works in the future? Is it going to be closer to the 10 
percent of Federal Government in the 1920's or closer to the 90 per- 
cent we are getting now ? 

Mr. Colean. I would hope it would be the former. Most public 
works are local. They have always been conducted by local govern- 
ments up until the last decade. Undoubtedly the Federal Government 
will have a bigger job to do than it had in the past, but I would cer- 
tainly expect the trend to be back toward a relationship in which the 
great bulk of work was done locally. 

Dr. Kaplan. With your permission, I will ask one more question 
before the members of the committee take over. 

The Chairman. Go ahead. 

Dr. Kaplan. Reference was made in the formal statement to the 
desirability of setting up some control authority within the Federal 
Government that would not only tie in the work of the Federal con- 
struction agencies but that would attempt to see the whole public- 
works picture. Along with that was tied the idea of fitting in the 
more intensive or the tapering-off programs in the public works with 
cyclical changes; the ups and downs of ihe business cycle. 

Can you offer any suggestion as to how an authority of that sort 
could exercise some influence, in indicating when to taj)er off and 



1854 POSTWAR ECONOMIC POLICY AND PLANNING 

when to call on the public works, so as to help, within the limits of 
the soundness of the construction industry itself, to iron out the 
business cycles ? 

Mr. CoLEAN. Well, obviously, we need some machinery that we don't 
have at the present time. We need sources of information as to trends 
in the construction market that we don't have, but we do, in your 
recent Roads Act, have a model to work to. You have given the road 
authorities there someJeeway in the timing of their work, and the 
Public Roads Adminisfration, as I understand it, has been setting up 
a formula, or is attempting to, which would help to guide the timing 
of work on the basis of rising material prices, labor shortages, and 
so on, so that when the danger signals were raised they could advise 
States to Taper off their programs. 

In this program that we have had in mind we don't consider coercion 
by Federal Government either on the activities of States or on the 
activities of private enterprise, but we do think the Federal Govern- 
ment can assist, through information, in giving local governments and 
private operators the basis for sound decisions, and we have faith 
enough in the common sense of the country as a whole to believe that 
by and large such information would be made use of. 

Mr. RuML. I would like to elaborate one point I made in my state- 
ment that is relevant in this connection, namely, that if we are think- 
ing about achieving and maintaining a high level of employmet over 
the years, we have to think of more than simply public works and 
conservation in connection with our over-all seal policy, and I men- 
tioned, for example, that tax policy and social-security policy are 
equally important contributing factors to the over-all. 

Agreeing with Mr. Colean, I would go on to say that we also need 
some type of machinery that would take into account at least three 
great areas in which the Federal Government can exercise its influ- 
ence and see that these three horses, if you please, are being driven 
as a single team. Unless they are, no one of them alone can carry the 
load. 

And so again I would urge that in considering construction and con- 
servation as a means of stabilizing the construction industry, we also 
see that that activity, insofar as over-all policy is concerned, as to 
aggregate sums used, is tied in to whatever the tax policy may be and 
whatever the policy of social-security financing may be. 

The Chairman. Anything further. Dr. Kaplan? 

Dr. Kaplan. No. 

The Chairman. With the permission of the committee and with- 
out objection, I am going to make another innovation this morning. 
Instead of following the usual rule of seniority, I am going to defer 
to the chairman of the subcommittee first. 

Mr. Lynch. Thank you very much, Mr. Chairman. 

Mr. Ruml, you reduced your statement to one sentence. In going 
over it I have reduced your statement to three words, which could, in 
fact, be reduced to one word. I think that the gist of your statement 
has to do with timing of contruction work. Am I right in that? 

Mr. Ruml. I would say that is 80 percent of it, timing, but against 
what objective ? Now, the point I tried to make is^that if the objective 
is to even out the whole business cycle, the problem is too difficult. If 
the objective is to help stabilize the construction industry throughout 



POSTWAR ECONOMIC POLICY AND PLANNING 1855 

the year and over the years, then I think tmiing, though difficult, is 
practical and realistic. 

Mr. Lynch. Don't you think the purpose ought to be to stabilize the 
industry rather than to try through public works to stabilize the 
economy of the country? 

Mr. KuML. I do, sir, but I want to stress that this is such an impor- 
tant distinction from what we have been talking about for 20 years 
that it ought to be emphasized, because if we all agree that this is the 
practical objective, then, the whole direction of our thinking takes a 
different turn. 

Mr. Lynch. I think you are perfectly right in your statement. But 
there is one thing I would like to have you bring out, if you could, and 
that is, how do you suppose that the Federal Government can control 
the timing of public construction by the States and the municipalities? 

Mr. ErnviL. Mr. Lynch, I make two statements about that. 

No. 1, if the Federal Government itself is reasonably flexible, one of 
the most important things will be to help the States and municipalities 
stabilize rather than time their own activities. There is so much work 
that needs to be done continuously for public safety, public welfare, and 
the maintenance of plants, that great stabilit}' would come to State gov- 
ernments if they would only set up from month to month and year to 
year a regular budget of construction. 

The second thing that can be done is this : If there is some agreement 
or some consensus as to an aggregate, it then becomes possible for the 
Federal Government, in cooperation with the States and cities, to 
think of rather large-scale programs for the maintenance and preser- 
vation of the national domain itself, whether it be urban or whether 
it be rural or semiurban. And these large programs can be divided as 
between the States and the cities and the Federal Government, but the 
Federal Government, through its financial power, could be correlating 
it with the general fiscal policy, indicate the times at which it would be 
appropriate to move into these rather large projects. 

So, I have two answers : No. 1, if we can stabilize the ordinary ex- 
penditures of cities and States, it will be a great thing; No. 2, the co- 
operation of the cities and States in the preservation of the national 
domain. In that way you could get a considerable amount of flexibility 
and timing. 

Mr. Lynch. Now, we have only gone so far in the Federal Govern- 
ment as to provide for loans for planning. Does your statement indi- 
cate that it would be your thought that the Federal Government should 
go beyond making loans for planning and making advances for the 
actual construction or even go so far as to make grants-in-aid? 

Mr. RuML. I think it will depend upon the particular project. Now, 
obviously, in parts of the country and in areas where the Federal 
Government is still the landowner, it is perfectly appropriate for the 
Federal Govermnent to make expenditures. There are other places, 
I have no doubt, where there are matters certainly vested with Federal 
interest in one form or another. 

It would seem to me as time goes on we should be quite realistic as to 
the allocation of those expenditures and not start off with a formula 
that will tie our hands too much from A^ear to year and decade to decade. 
Public opinion will doubtless change, and we should be prepared to 
change with public opinion. 



1856 POSTWAR ECONOMIC POLICY AND PLANNING 

That is my long-time view about the matter. I can't set down a 
formula today that would make a specific division of burden for all 
cases between Federal, State, and local. 

Mr. Lynch. What we are trying to get at, Mr. Ruml, is this : We 
are now trying to plan for the future, and in planning for the future 
we have the same objective in view, and that is to stabilize the construc- 
tion industry, which is so important in the national economy. How- 
ever, to stabilize the industry is easy enough, so far as the Federal 
Government's own construction planning is concerned. How can we 
as a Federal body bring to the States and the municipalities the idea 
that we don't want them to be going into competition with private 
industr}^ at the same time so that they are going to drive the cost of 
operation higher and higher? That is the point I am trying to get at 
and I would like for you or Mr. Colean, if you could, to elaborate on 
that. 

Mr. Colean. I think there are three possibilities. As I said before, 
we don't believe there ought to be any coercion or control over Slate 
activity by the Federal Government. However, the example of the 
Federal Government would, I think, have influence on the Slates. If 
the Federal Government would get its own public-works house in 
order and agree on the principle of a timed program in relation to 
the total cycle, that would be bound to have some influence on State 
policy. 

The second thing is the Federal Government can supply information 
as to the trends in the market and point out that the time is or is not 
right for an economical job. I think that would help. 

The third thing is providing for loans to States for advance 
planning. As I pointed out, State governments have great diffi- 
culty in separating their planning funds from their construction 
funds because of the practice of financing public improvements by 
bond issues. They get their funds only when they are ready to go 
ahead and then they have to start planning because the planning 
is includ3d in the construction cost. If they could borrow from 
another sounce to get the planning done they could then have more 
flexibility in their policy and they could repay those loans when they 
got their construction bonds. But that loan power would also be a 
means of tying in the local governments with the national policy. 

The Chairman. Mr. Lynch, if I may, I think I might throw a 
little light on that subject. You will recall that you and I were 
particularly concerned, as well as other members of the committee, 
about the insufficient appropriation that the Appropriations Com- 
mittee of the House brought in for this planning, and we talked 
with numerous key men in the House concerning that matter, and 
followed it up in the Senate. 

I am informed by the clerk of the Senate Appropriations Com- 
mittee that while the Senate has not voted on it, the Senate Appro- 
priations Committee has revised that and made $35,000,000 avail- 
able on a matching basis, which would give a total of 70, and the 
Budget recommended 80. 

Mr. CoLEAN. Mr. Chairman, may I comment there ? 

The Chairman. Yes. 

Mr. Colean. Loans on a matching basis are no better than no 
loans at all. 



POSTWAR ECONOMIC POLICY AND PLANNING 1857 

The Chairman. That is not a loan ; it is a grant. 
Mr CoLEAN. It is this matching basis that is difficult. 1 his prob- 
lem of separating funds for planning from the funds for construc- 
tion is the fiscal problem that the States have. Now they are not 
ready to put through public-improvement bonds for construction itselt 
because they are not decided as to timing, and we don t want to be 
fixed as to timing. Unless they do that they have no means m most 
cases for getting the funds for planning, feo, m this case the h ederai 
Government is really acting as a bank— providing a temporary ac- 
commodation and giving the localities a source of getting funds to 
take care of the part of the job that they have great difliculty m 
working out otherwise. ... i <• • ^ xi j- 

The Chairman. It wasn't my purpose to inject myself into the dis- 
cussion except to give some information. I do have some decided 
views on that question myself, but I shall not follow them. 

Mr Lyxch. I have one more question ro ask Mr. Colean. As i 
understand your point of view, when you referred to fiscal difiiculties 
and suogested the 100-percent loans to the States m order that they 
mio-ht go forward with the work of planning, you took into consid- 
eration, did you not, that if there is a grant-in-aid to the State by the 
Federal Government, that grant-in-aid, as such, for planning purposes 
alone, amounts to nothing because the State is in just the same posi- 
tion with respect to its fiscal difficulties as it was before the grant-m- 
aid w^as made ? • • i i, ^ t 
Mr. Colean. That is right. This is my own opinion only, but i 
don't see the need for grants. I do see a gTeat need for loans to get 
around that financing problem. 

Mr. Lynch. It will be that many States will not even need a loan 
from the Federal Government insofar as planning is concerned; isnt 

that true ? 

Mr. CoLEAN. That is right. Some States, I understand, do have sur- 
pluses that can be used, but in many localities, many cities and counties, 
sanitary authorities, school authorities, and so on, don't have surpluses 
and have to look to public -improvement bonds to get the money they 

Mr. RuML. I might make it vivid, I think, by saying this: That a 
loan of 100 percent, which the Federal Government would get back, 
would help more than a 50-percent grant-in-aid that it would not 
get back. 

Mr. Lynch. I can see the point very well. 

Thank you, Mr. Chairman. . 

The Chapman. The House is in session this morning, and 1 hope 
the Members will bear that in mind so we can get around. 

Mr. Gifford, do you have any questions ? 

Mr. Gifford. Mr. Euml, I read your article m Fortune, and 1 was 
greatly intrigued with several things in it. Why do you say this is 
tied up so mucli wdth social security and taxes ? 

Mr. RuML. I say it for this reason, sir. that we have a problem, as 
we all recognize, of getting the standards of living of the American 
people up by some very large percentage shortly after the end ot 
reconversion, and to do that we need to use all the tools that we 
legitimately have in our tool box. If we try to use one tool alone, we 
probably will bend it and break it. 



1858 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. GiFFORD. Is social security a tool? Do you want to enlarge 
the amount per week? 

Mr. RuML. The thing I am talking about is the financing of social 
security, and not the benefits, as to how big they are or who gets them. 
The difticulty has been, sir, in the past that we have been financing 
our social security on a deflationary basis ; we have been taking out of 
the stream of purchasing power more than we have been putting back, 
and as long as we continue to do that we are going to have grave 
difficulties in maintaining high employment and raising the standard 
of living even with public works or consei-vation. So the thing I am 
suggesting for study, but I am making no recommendation, is how we 
can get the deflation out of social security. That is why I say that 
social security is important, not because of any specific benefits or any 
specific beneficiaries but only the way we finance it. 

Mr. GiFFORD. Does that 11 percent mean 11 percent of 60,000,000 
jobs ? 

Mr. CoLEAisr. Eleven percent of the total national income. 

Mr. GiFFORD. Do you include the labor procuring the raw products 
ready for construction ? 

Mr. CoLEAN. That 11 percent figure is the final construction cost. 

Mr. GiFFORD. It seems to me 11 percent is rather small. I would 
like to see a table. What makes up 100 percent ? Eleven percent seems 
small to me. 

Mr. CoLEAN. Farming, mining, manufacturing, service, and so on. 

Mr. GiFFORD. Farming and mining would furnish the raw products 
for construction. 

Mr. CoLEAN. I don't have that break-down. Dr. Kaplan may have 
that break-down. 

Mr. GiFFORD. If you have it, I would like to have it. 

One other thing strikes me. You say you can't keep this industry 
stable unless you have more efficiency and lower cost. You forget, 
don't you, that this country is unionized and 15 are employed where 
only three are necessary sometimes. 

Mr. RuML. Wlien we talk about lower cost, we are talking about 
the lower cost of the thing that is built, not about rates. In the in- 
dustry that I know something about, namely, the retail industry, the 
great reduction in cost comes from the elimination of idle plants and 
excess overhead through the application of the same dollar cost over 
a larger product. 

Mr. GiFFORD. A sustained construction program can only be con- 
tinued under those conditions, and I hope that is true, but I see higher 
costs, higher demands, in the future, a constant rise, and more men 
to do less work. Jurisdictional disputes will give us somewhat of a 
headache. 

Mr. Colean is an old friend of mine. He know^s I am looking after 
the Federal Government. My State has invested about all their sav- 
ings in the Federal Government. Are they to cash those bonds to 
get funds for construction? We might pursue that point but this 
is no time to make pessimistic suggestions. 

Just now on account of hurricane damage we are getting help in 
planning from the United States Army engineers. That is a custom 
of many of our branches of government. It is suggested here that we 
should loan the entire amount, not only for the planning but to acquire 



POSTWAR ECONOMIC POLICY AND PLANNING 1859 

the site, and that the loan should be paid out of construction loans. 
You have got me confused there. 

Mr. ColSan. Mavbe I can straighten that out a little. The ordinary 
public improvement issue, as you know, covers the cost ot land, cost 
of planning, and cost of construction If ^^^^^re gmng.to have a 
timed program, ^Ye have to have the plans on the shelf and it is fre- 
quently difficult to plan unless you know specifically m respect to what 
sites vou are going to put the project on. So, if yow are going to have 
a perfectly timed program so that you can start constTUCtion wheii you 
want it, it is advisable and would be very helpful to have not only the 
plans but the land in your pocket. _ fl„o,.nicl 

Mr GiFFORD. I have one other thing. You state new financial 
machinery is to be devised. I wonder what you mean by new finaiicial 
machinery. We now guarantee loans sufficiently to suit me. Fei- 
hans that'taxation idea of Mr. Riiml means something on that, ihere 
are a lot of questions involved here that I will not take the time to 

pursue. n • ^ TO 

The Chairman. Have you finished « 

Mr. GiFFORD. Yes, sir. .- o 

The Chairman. Mr. Walter, do you have any questions i 
Mr Walter. Mr. Ruml, as I view it, the ideal situation would be 
to have ready on the shelf, as you put it, projects to take up this lag. 
I am thinking of the period of hesitancy these experts have told us 
about that follows every war. I am also mmdf ul of the fact that 
there will come a time when in certain sections public works are no 
lon-er needed. How can you control the carrying out of needless 
woSi unless the Federal Government participates, not only by loan 
and grant but perhaps as to supervision of the work itselt { . 

M?. Ruml. I think, as Mr. Colean pointed out, m the initiation ot 
■ projects a large part can be properly done by the Federal GoveTii- 
ment for a grSit deal of which it will be reimbursed. I think, as Mr. 
Colean has also pointed out, there will be more difficulty m restram- 
m<r States and cities from going ah^ad on top of a boom simply be- 
catise everybody else is doing it. But I believe that the States and 
cities woidd be^guided by the example of the Federa Goyeniment 
and the fact that the Federal Government furnished them informa- 
tion and statistics that costs were rising. After all, a manufacturer 
can aiford sometimes to pay through the nose m order to get an 
operating facility ready, but the taxpayer, unless it is a measure that 
ii needed for public welfare or public health, can wait until there 
is less pressure, both on the material market and labor market. 

Mr AValter. You are overlooking one consideration, namely, that 
the State and political subdivisions doing this work will be under 
terrific pressure from people who want the work completed 1 am 
afraid the example of the Federal Government, or merely the sub- 
mission of statistics, will not act as a deterrent. 

Mr Ruml. I agree with you that I don't see any utopia or any per- 
fect blueprint, but it does remain true that the time when they should 
slow down or taper off will be the time when costs are rising and the 
taxpayer ought to have something to say about it. So there will be 
a conflict of interest in the States and local governments between the 
people who are specifically profiting from the undertaking and the 
people who are specifically paying for it. I think, to a certain ex- 
tent, that one will temper the other. 



1860 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Walter. I am afraid I can't agree with you, because I went 
hrough this period of PWA and I found that the people in my home 
town were very ],nuch opposed to public works in Bethlehem and vice 
versa. 1 am afraid the same situation is going to apply unless the 
Federal GoyernmejU can not only lead the wav but exlvL^nhfol^H 
control, ana we will hnd ourselves in the position of paying more for 
pub he works than necessary and will engage in continuing public- 
works programs that are not necessary. 

Mr. RuML. That is a matter for the future. I would give my own 
view as tins, that the most important thing that we have before us 
is the problem of stabilizing the construction industry as part of the 
over-all economy If we can do that with the maximum of freedom 
as tar as the .States and municipalities are concerned, that is the ffoal 
eminently desired to be reached. If we can't do it, then we will have 
conTror ^'■''^'"^^^'''^^y ^« ^^oi'e ^^^^ "^ore central fiscal and economic 

The Chairman. Mr. Reece^ 

aUh^ u^r- ^ ^^^^i'^ ^'i V"'^ Dr Kaplan, if I may, what percentage 
of the total represents public building in normal times 

IJr Kaplan. I think between the wars you had about 70 percent of 
private construction to 30 percent of public construction 
qo np.'-f ^f ""^^ }^ ^' w"i "^"^d that public construction represented about 
fh}ZlT *. '" total construction. Then I would like to ask one of 
the other gentlemen if, m your study to determine what should be 
our policy with reference to public construction, vou studied means 

tllatt"whrtr''r''"''™'*r ^?"^? ^' 1^'^P^ ''' ^^ reasonable W 
that IS, what the Government could do to encourage private construe 

pZSon ? ^" ^"''^'^''^' ^^'""^ '^''' ^'''' ^'^^ ^'' -hich^vou are makmg 

Mr. CoLEAN. There are several things that can be done, I think 

we can do to keep private construction, private works, from slow i 
down so that the necessity for this public works will not arise at leSt 
m exaggerated degree. To what extent do you think thl^onSee 
might go, and to what extent the Government might go, tlpreven? 
co^Itiucdonr "'^ '''""^^' ^^""" '^ ''''''' necesSty foi!^public 

Mr. CoLEAN. Our statement was concerned primarily with the nues- 
tions Mr. Lynch had asked, which all dealt with public works in^hs 
field and didn't cover private construction. 

Mr. Reece. That is true, but the two are very closely related and 
public woijs represents only 30 percent of the total. So the move 
ment can be kept steady without keeping private construction at a 
reasonably normal level. ^ t-onsi ruction at a 

r^vi"* ^'''^''f ""•• "^he first thing that would be helpful that the Federal 

We s[mX dl^f {"^' "°"'^^ ^' ''\ ^T'"^' sound^market information 
vve simply don t know very much about the construction market or 
anything that has to do with it. We don't even know posithelv how 

Si^^Thf is'rrtr^-^" %' r"^*^-^ --^ yearrwh^t^thelT 
olt othe^i^hlngsTeX^^^^ ^ ^^-^' ^"^ - -- 



POSTWAR ECONOMIC POLICY AND PLANNING 1861 

Public works can be used to stimulate private construction. The 
extension of streets, sewers, and so on, can be helpful in increasing 
the amount of houses that are built, the amount of commercial work, 
and so on. Our tax policy is very important in that connection. 

At the present time, I think it can be said that our Federal corporate 
income tax is a very strong deterrent to the ]:>roduction of income- 
producing property, and it might be worth while looking into that. 
Such measures as tlie FHA have been definitely helpful in increasing 
the amount of private construction, and I think they will continue to 
act in the same way again. 

The wdiole problem of getting obsolete buildings off the market 
would be helpful. We are now beginning to talk about urban rehabili- 
tation largely from the social point of view, but it does have very im- 
portant economic relationships in this business. A constant turn- 
over of old buildings is necessary so that replacement can take place. 

Another thing that would be helpful and which the Federal Govern- 
ment might do, I believe, would be to provide more thorough technical 
research in the field. We have an industry here that is distinctly a 
small-business proposition; the people in it cannot afford to do the 
research they need for themselves, as General Motors for itself. The 
manufacturers, so far as their research is concerned, are pretty largely 
limited to product research rather than to construction research. The 
Federal Government might be of assistance here as it has in agricul- 
ture and aviation. 

I think all of those things would be helpful in increasing the amount 
of private construction and in keeping it steady, and on top of that 
a statement of a national policy that the Federal Government and 
local governments would step in in time of lag would, I think, be very 
helpful in keeping that lag from happening. 

The Chairman. Mr. Fogarty? 

Mr. FOGARTY. No. 

The Chairman. Mr. Wolverton ? 

Mr. Wolverton. Mr. Colean, I do this with hesitancy because I 
should know the answer, but it is always hel])ful in these hearings if 
we know who the witness is. I am not privileged to know your back- 
ground. Would you object to telling the committee your background ? 

Mr. CoLEAN. Not at all. 

I was trained in the profession of architecture and practiced it in 
Chicago up until 1934, when I came here to be a technical director 
and later assistant administrator of FHA. In 1940 I left the Govern- 
ment to undertake a study of the housing industry for the Twentieth 
Century Fund. That was published in 1942. During the war I have 
handled problems in Washington that the Metropolitan Life Insurance 
Co. was having in connection with its war projects, and since the first 
of tlie year I have been practicing as a consultant in construction 
problems here in Washington. 

Mr. Wolverton. It is not necessai*y to ask who Mr. Ruml is. 

Mr. Colean. He is a little bit better known. 

The Chairman. You referred to Mr. Kuml. Would you let me inter- 
rupt there? Mr. Ruml, as we all recall, pulled a rabbit out of the 
hat a while back and saved us a year's income tax or something to that 
effect. I am just wondering when we are worrying about this $300,- 
000,000,000 debt we are going to have at the end of this war, if he is 
going to have another rabbit to pull out of his hat. 



1862 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. RuML. I don't know but there are a lot of good people thinking 
about it. 

The Chairman. We are going to need a lot of good thinking on 
that thing. 

Mr. WuLVERTON. The other question I would like to ask is this: 
What was the percentage of private construction as compared with 
public construction during the depression period^ 

Mr. CoLEAN. Do you have that figure, Dr. Kaplan? 

Dr. Kaplan. If you will ask another question, I believe I can get the 
chart around here. 

Mr. CoLEAN. We have the chart here if you could defer the question. 

Mr. WoLVEKTON. The question has been asked as to what the relative 
percentage was in normal times and I thought I would like to have the 
figures with respect to the period of depression. 

Dr. Kaplan. For what year did you want that ? 

Mr. WoLVERTON. Whatever you wish to use. 

Mr. CoLEAN. I would say during the thirties. 

Dr. Kaplan. In 1930 the total public new construction was two and 
three-quarter billion dollars; total private construction was a little 
under five and one-half billion; total new construction, eight and a 
quarter billion. 

Taking the worst depression year, 193o, total public was one billion 
and a quarter, and total private went down to its lowest figure, one 
billion and a quarter. It was in the worst of depression years that 
private construction got down as low as public construction. 

Mr. WoLVERTON. My other question relates to the discussion that 
we have had with respect to grants or loans. Wlien you advocate loans, 
do you do it from a standpoint of necessity on the part of the States 
or local governments or from a standpoint of incentive ? 

Mr. CoLEAN. I speak of it first as a problem of a necessary banking 
accommodation which the States do not have. They don't have flexible 
financing facilities in that respect. 

I think, in addition, it would be a very strong incentive to the 
States to tie into a national policy. 

Mr. WoLVERTON. The conditions that exist now, comparing Federal 
Government, State and local, are so different than during the depres- 
sion years, where the Federal Government was the stronger and the 
other much weaker — the grants were made not merely as incentive 
but also because they were necessary, as a help. Now, I am wonder- 
ing, in the period ahead, which we hope will be normal, at least, as to 
whether the objective is an incentive or whether it is help. I don't see 
it so much from a standpoint of necessary help. 

Mr. CoLEAN. It isn't help in the sense that the States are broke. It 
is help in the sense that the banking facilities the States have are in- 
adequate. These short-term loans would help them to get some flexi- 
bility in their fiscal procedures. 

Mr. WoLVERTON. There has been some evidence introduced before 
this committee — I think it was General Fleming, or maybe it was 
another witness — that left this impression upon my mind, that even 
the Federal Government was not doing what it should in preparation 
for the future ; in other words, there was a lack of blueprinting even on 
the part of the Government. The question of loans doesn't enter into 
that. 



POSTWAR ECONOMIC POLICY AND PLANNING 1863 

Now, under those circumstances, would the loans create this tendency 
to blueprint and be ready to proceed ? 

Mr. CoLEAN. I think they would be helpful but we do have to estab- 
lish a general policy and a general attitude, and we are gradually get- 
ting into that position with the roads bill and harbors bill, but it needs 
to be sold a little more, I think. 

Mr. WoLVERTON. If we summarize the statements that have been 
given this morning, it is just as Mr. Lynch said, timing seems to be a 
very important feature of the views you are expressing. I would 
like to ask a question on that from the practical side, as to how 
timing could be done, but we won't go into that now. 

The Chaikman. Gentlemen, I am sorry, but there is a call of the 
House and it will be necessary for us to adjourn this meeting. I hope 
that meets with the approval of you gentlemen whom we haven't been 
able to reach, unfortunately. 

The committee is very grateful to Mr. Ruml and Mr." Colean for 
their appearance here this morning and their contribution to our 
thinking on these important subjects. 

The Chair is happy to announce the return of our colleague and 
member of this committee, Mr. Fogarty, who has been on active duty 
in Uncle Sam's Navy. We are also happy to announce the presence 
here this morni]ig of Mr. LeFevre of New York, who succeeds Mr. 
Fish on this committee, and Mr. Simpson, who succeeds Mr. Dewey. 
We are glad to have you gentlemen with us. 

Tomorrow the committee meets at the same time in this room for the 
consideration of the testimony of Mr. Thomas S. Holden, president 
of the F. W. Dodge Corp., and Mr. E. P. Palmer, member of the firm 
of Senior & Palmer, New York City. 

Without further announcements the committee will stand adjourned. 

(Whereupon, at 11 : 20 a. m., the committee adjourned, to reconvene 
at 10 a. m. Wednesday, March 14, 1945.) 



POSTWAR ECONOMIC POLICY AND PLANNING 



V/EDNESDAY, MARCH 14, 1945 

House of Representatives, 
Special Committee on Postwar 
Economic Policy and Planning, 

Washington^ t). 0. 

The committee met, pursuant to adjournment, at 10 a. m., in room 
1304, New House Office Building, Hon. William M. Colmer (chair- 
man) presiding. 

Present: Representatives Colmer (chairman), Zimmerman, Lynch, 
O'Brien, Gifford, Reece, Wolverton, Le Fevre, and Simpson. 

Also present : Dr. A. D. H. Kaplan, consultant to the committee. 

The Chairman. The committee will come to order. 

We ai'e honored this morning with the presence of JNIr. Thomas S. 
Holden, president of the F. W. Dodge Corp., who will make a further 
statement in the subject matter which we are discussing now, public 
works and construction. 

I\Ir. Holden, I see you have a statement there. You may use the 
time as you see fit. 

Mr. Holden. Thank you very much. 

The Ciiairjnian. You may proceed. We will be very glad to hear 
you. 

STATEMENT OF THOMAS S. HOLDEN, PRESIDENT, F. W. DODGE 

COEP. 

^Ir. Holden. Mr. Chairman, and members of the committee, I am 
Thomas S. Holden, president of F. W. Dodge Corp. Our company 
furnishes business information and business services for the construc- 
tion industry. We have been in that business for over 50 years. I have 
also been personally active in organization v ork. I am a past presi- 
dent of the New York Building Congress, a board member and post- 
war committee member of the Commerce and Industry Association of 
New York, a member of the Committee on Government Expenditures 
of the National Association of Manufacturers, and active in other or- 
ganizations. However, I am not here today as a spokesman of any of 
those organizations. 

The Citairman. We are glad to have your background, sir. 

Mr. Holden. I have spent much tijne in the study of the problems 
you are considering. 

Mr. Reece. Other than business information, what kind of busi- 
ness service do j'ou operate? 

Mr. Holden. Our basic service is a system of daily reporting of 
specific construction projects. We have a news-gathering staff which 

99579 — 45 — pt. 6 11 _ 18g5 



1866 POSTWAR ECONOMIC POLICY AND PLANNING 

covers all of the territory east of the Eocky Mountains getting ad- 
vance information on specific projects that are planned, and later 
getting progress reports; we issue reports to our subscribers when 
plans are completed, when they are ready to take bids, when the con- 
tracts are awarded, and so on. 

Mr. Keece. I thought it would be interesting to kno^^ that 

JVIr. HoLDEN. We also, on the basis of those reports, compile statis- 
tics of current construction activity, which are generally used by the 
press and by a number of departments of Government. 

We also conduct a service of compiling, assembling, and distribut- 
ing manufacturers' catalogs. We publish an architectural magazine, 
Architectural Record. 

So, we have information, news, and sales-promotion services which 
are used by people in the industry and have been for over 50 years. 

The Chairman. Thank you. You may proceed with your state- 
ment. 

Mr. HoLDEN. Yes. 

Most effective method of assuring that the actual construction needs 
of the country will be met Avith reasonable continuity of construction 
operations is to provide an adequate flow of private and public invest- 
ment funds. If this can be done in a sound and comprehensive man- 
ner, I believe the Congress of the United States can be relieved of 
the supposed necessity of approving or rejecting a multitude of speci- 
fic piecemeal programs. 

Such programs are usually at best mere palliatives treating the 
symptoms of a disease without going to the root of the trouble; at 
their worst they are mere pet schemes of pressure groups. 

For a basic job to accomplish the desired results I see a need for 
action on two fronts, over-all postwar tax polic}'^ and postwar Fed- 
eral fiscal policy. 

Committees of Congress, the Treasury Department and many pri- 
vate groups are industriously studying the postwar tax problem. I 
have the distinct impression that concentration of these groups on 
the subject of Federal taxes is causing them to neglect the vitally im- 
portant problems of State and local taxes. Yet a member of this Con- 
gress has said, correctly I believe, that — 

the formation of new Federal tax policies is in many instances threatening the 
very existence of local governments whose con'inned functioning is essential 
in the national emergency and in the return to normal economic life thereafter. 

He further stated that — 

no really satisfactory tax reform can be achieved without readjusting the Fed' 
eral, State, and local fiscal relationships. 

The quotations are from the proposed House Joint Resolution No. 
326, introduced in the second session of the Seventy-seventh Congress 
by Representative John M. Coffee, of Washington. His resolution 
proposed the creation by Congress of a national commission on tax 
integration. Similar resolutions have been introduced in previous 
Congresses and in this one by Representative Homer D. Angell, of 
Oregon. Congress has thus far taken no action on these proposals. 



POSTWAR ECONOMIC POLICY AND PLANNING 1867- 

Others are aware of the urgency of this problem. Seventeen State 
leo-isL^tures have approved resohitions calling for a constitutional, 
amendment which would set a definite limit on the peacetime taxing 
power of the Federal Government. This effort for solution of the 
problem may not succeed. It is conceivable that the right kind of 
commission study may produce a better solution. ' 

The fiscal problem of the local governments is more acute than that 
of the States, whose finances are generally in excellent shape today, 
actually much better than those of the Federal Government itself, 

relatively speaking. . -, , ^ ^ j ^i 

Local government are expected to provide the greater part ot tiie 
community facilities and public improvements most needed and most 
constantly used by the people. To preserve our governmental system 
it is imperative that our local governments be solvent, with ample 
revenue sources to provide all the services and facilities their people 
can properly demand of them. . . 

To do this by revising as a permanent policy the depression emer- 
gency system of Federal doles would be to court great political and 
financial dangers. It is, I believe, an established historical fact that, 
in both pre-Iascist Italy and pre-Nazi Germany growing concentra, 
tion of fiscal power in the hands of the central government, based oii 
deficit spending, undermined the solvency and autonomy of local gov; 
ernments and created opportunities for totalitarian regimes to seize 
control of the government. ,o c^ . 

In this country our local governments are creatures ot the 4b states, 
not satellites of 'the Federal Government. It is important that they 
remain so. The methods we use to solve the fiscal problems of local 
governments will affect in large degree the kind of economy and the 
kind of society we shall have ; they will also affect the kinds of com: 
munity-improvement programs that will be worked out and the types 
of public-construction projects executed in the future. 

My first recommendation, therefore, has as a principal aim the 
future solvency and autonomy of local government. ^ 

The second line of action I would recommend is in the field .of 
postwar Federal fiscal policy. . , r^ 

In determining what postwar fiscal policy is going to be, Congress 
will almost certainly be obliged to make a study of the existing lend- 
ing, mortgage-insuring, and other fiscal agencies of the_ Federal Gov- 
ernment, reviewing their purposes, functions, administration, and 
relation to the long-term credit needs of our postwar economy. 

Such a study should include consideration of the question whether 
there is a need" for some kind of capital-credit or banking facility for 
State and local governments. Rudimentary banking functions were 
performed jointly by the PWA and the RFC in connection with 
PWA prourams of the 1930's ; bonds accepted by the Public Works 
Administrator to secure loans to municipalities for public-works 
projects were sold to RFC, which in turn sold them at favorable times 
to private investors. That was a banking operation. 

Again, I see this not as a piecemeal study covering a particular 
phase of long-term credit but as an over-all study to determine the 



1868 POSTWAR ECONOMIC POLICY AND PLANNING 

proper relationship between the various departments of public and 
private investment, between long-term credit and short-term credit, 
between both of them and the fiscal operations of the Federal Govern- 
ment. I would suggest as the most satisfactory machinery to accom- 
plish this purpose the creation by Congress of a national long-term 
credit connnissipn, to be patterned after the National Monetary Com- 
mission of 1908, which is generally remembered as the Aldrich 
conunittee. 

It will be recalled that the Aldrich committee was created to deal 
with problems dramatized in tTie'financial crisis of 1907. That crisis 
resulted from inadequate supplies of currency and bank credit to meet 
the requirements of American business, industry, and agriculture. 
The commission's studies of central banking systems all over the world 
became the foundation of our Federal Reserve System. Since that 
system was created in 1912, there has been no major depression occa- 
sioned by stringency in the money supply or in short-term commer- 
cial credit. 

The long depression that started in 1929 involved a crisis in long- 
term credit, and the situation was dealt with, partly on an emergency 
piecemeal basis and partly on a long-range basis, with a number of 
long-term credit devices. Principal one was deficit spending, a device 
for using Govermnent credit. Another emergency device for use of 
Government credit was the RFC, originally created for salvaging 
operations in the long-term credit field. It has becouie a kind of 
capital-credit bank operating under a vague sort of cliarter with 
little in the way of rules, regulations, or controls. It lends Govern- 
ment credit, not money, having never had a nickel of anybody's 
savings in its till. Other Government corporations with practically 
unregulated lending powers were created. Emergency powers have 
been perpetuated and increased. Is Congress going to review and 
regularize them? 

In one field of long-term credit, the home-mortgage field, a thorough 
job was done. 

'Congress created the Federal Home Loan Bank System in 1932 
and the Federal Housing Administration in 193-1. 

These two home-financing systems have opened up new private 
sources of mortgage money, liberali; ed interest rates and terms of 
payment, and made home-mortgage lending procedures uniform 
throughout the country. 

They literally transformed a ])awnbroking system into a long-term 
credit system. The influence of these operations in the home-mortgage 
field has spread into the whole field of mortgage finance. Few mort- 
gages are made today without provision for periodic amortization. 

This enlarged and improved dual home-loan system carries within 
itself its own checks and balances, its own stabilization mechanism, 
its own power to maintain continuous flow of investment funds. The 
typical home-mortgage lending institution has today a practically 
continuous inflow of amortization payments available foi- continuous 
reinvestment. There is a responsibility upon local institutions and 
iipon the FHA and the FHLBA to v>atch local real-estate conditions 



POSTWAR ECONOMIC POLICY AND PLANNING 1869 

with exireine care in order to avoid speculative production of unman- 
ageable housing surpluses. _ 

I may say that when the question of the banking facilities for State 
and local government is explored, it will be interesting to note that 
in France, the long-established home-mortgage system, the Credit 
Foncier, dealt not only in home mortgages but in loans to munici- 
palities. The home-mortgage banking system was empowered to 
make loans to municipalities. That relationship, I think, might fur- 
nish a pattern of some interest to us in developing any credit system 
for local governments. 

Another sector of private long-term finances has been provided 
with a set of brakes to guard against speculative excesses— the field of 
security issues. In the field of public investment and spending, the 
tremendous motive power of public credit is being used practically 
without brakes or governing mechanism. . 

It is time that our experiments in new uses of long-term credit be 
put on a sound, permanent basis; that they be so systematized and 
codified that their legitimate uses can be distinguished from their 
potential abuses. Inflationary uses of private long-term credit, which 
previously brought financial disasters to the country, have been effec- 
tivelv curbed. . , 

While our Government is not likely to stimulate a disastrous in- 
flationary boom through excessive issues of printing-press money, it 
may achieve the same result through inflationary expansion of public 
long-term credit. 

My second recommendation is, specifically, a commission to study 
this subject of long-term credit, and has as one of its principal aims 
the provision of whatever credit facilities States and local govern- 
ments may need in the future. . 

These two basic programs I have recommended cannot be effected 
quickly. I feel that the need for starting them is urgent, in order that 
they may prepare us adequately to meet the needs of the future. How- 
ever, I am convinced that we are faced with no emergency requiring 
more hasty action on the basis of immature consideration. 

It seems to me the Government's immediate job, and principal oiiei, 
is to liquidate our war economy as quickly as reasonable, the war econ- 
omy understood as including war taxes. 

The construction outlook for the early postwar years is very good, 
indeed. A healthy revival of private building activity was in progress 
when the necessities of war caused its curtailment in the latter part of 

1941. 

Since that time every day of curtailed civilian construction has" 
seen an accumulation of deferred demands, covering practically every 
important classification of building, engineering, and maintenance 
work. 

My company's field staff has accumulated, since September 1942, a 
list of 56.371 'specific projects contemplated for postwar execution, 
their aggregate estimated cost being $13,764,623,000. Of these, nearly 
half, bv number and value, have advanced to the designing stage. 
These projects are all located in the territory comprised within the 



1870 POSTWAR ECONOMIC POLICY AND PLANNING 

37 States east of the Rocky Mountains, which is the territory regularly 
covered by our field staff. If we had the same job-by-job coverage 
of the 11 Western States, at least 20 percent could probably be added 
to these figuies. 

Our total figure for postwar projects in the design stage is $6,684,- 
844,000. This should be compared, not with over-all estimates for the 
United States as compiled by the United States Department of Com- 
merce but with the factual records of construction contracts in these 
same 37 States as regularly tabulated by ourselves. 

The Department of Commerce includes estimates of farm building, 
certain types of small construction, and noncontract construction that 
are not included in our factual reporting. 

This volume of design-stage postwar construction is a little over the 
recorded contract volume of the highest peacetime year on record; 
it is more than double tlie contract volume of the year 1038, 90 percent 
over the 1939 volume, and 07 percent over the 1940 volume. 
' It represents, I believe, something near double the volume of work 
tliat can' actually be started in the first 12 months after X-day, in 
view of tlie bottlenecks that will have to be overcome in that period. 
I should point out that these figures include TiOthing on deferred 
maintenance and repair work, which is bound to be very large in 
volume. People do not make advance plans for such work, so that 
maintenance and repair projects cannot be recorded in advance in the 
same way that new construction is. 

I have attached a couple of appendixes to tlie statement. The first 
is a table giving in detail the figures I have summarized in tlie state- 
ment, which may be of some interest to you. 

In addition to contacting the regular planning sources from whom 
we get information on current projects, we circularized in 1940 some- 
thing over 300,000 owner groups, owners of industrial plants, chain 
stores, chain filling stations* and so on, to get information from them 
as to their project plans, all resulting in this tabulation, which does not 
purport to be a complete picture of all the planning work that has 
been going on. 

■ I have attached this second appendix for the benefit of the chart 
that you will see there, which shows a larger circle indicating the 
amount of planned work that we have reported, compared with the 
smaller circle, which is the actual contract volume of the year 1938. I 
don't know how important those are for your records, sir, but I thought, 
'as illustrations, they misht be of interest to you. 

Private construction projects, for various reasons, show up less well 
than public projects in this tabulation; they represent a less complete 
sampling of the actual postwar construction market. 

The CiTAiRMAX, Pardon me, will you? You referred to these ex- 
hibits. Would it be practical to make some of them, at least one of 
them, a part of your remarks ? Was that your purpose ? 

Mr. HoLDEN". I think that is as you and the committee wish, sir. 
■The text of my statement is complete without it. If you consider it 
valuable for illustration, it can be done. 

The Chairman, Mr. Reece thinks it might be well to have it. 



POSTWAR ECONOMIC POLICY AND PLANNING 1871 

Mr. Eeece. I had particular reference to this single sheet. I am 
glad to see somebody giving some consideration to private construc- 
tion. Since this emphasizes that fact, I think it might be desirable 
to have it in the record. . , ., , 

The Chairman. Then, without objection, the table will be included 
in the record at this point. 

(The table referred to is as follows :) 



1872 



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1874 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. HoLDEN. Yet tlieir total of $2,148,811,000 is immeasurably 
greater than the recorded private contract total of either 1938 or 1939. 
In the year 1938 we were still relying very considerably on public 
works. 

Since the middle of 1944, private postwar projects have been accu- 
mulating in the record at a relatively faster rate than have public proj- 
ects. At the present time, planning activities are slowed up by short- 
ages of architectural and engineering draftsmen ; for this reason, many 
private architectural and engineering offices state they are at present 
unable to take on any additional work. 

Manpower shortages, particularly in skilled building labor, will be 
one of the bottlenecks to construction revival in the first 12 months 
after X-day, or at least in the early part of that period. 

The others will be Government controls, price problems, and ma- 
terial supply problems. Even the materials for such heavy construc- 
tion as highAva^^s may be difficult to procure in adequate amounts, not 
in their case on account of shortages but by reason of transportation 
difficulties. 

These will be the problems of the early transition period ; there will 
be neither lack of demand nor lack of purchasing power. In view 
of pressing private building, engineering and deferred maintenance 
demand, and of the serious but temporary limitations on actual con- 
struction in the early postwar months, 'it can be readily seen that 
overstimulation of public works at that time would intensify compe- 
tition with necessary private construction for manpower and ma- 
terials and greatly strengthen the inflation threat. 

My estimate is that the volume of new construction that it will be 
posible to get started in the first 12 months after X-day will be about 
equal to the new construction volume of the year 1938, estimated by 
the Department of Commerce to have amounted to $5,248,000,000, ex- 
clusive of work-relief projects. 

In that year, according to the National Industrial Conference 
Board, a total of 1,875,000 people were employed in construction. 

The United States Bureau of Labor Statistics has estimated that 
at the end of the war there will be 1,120,000 construction mechanics 
in civilian life in this country — that estimate was made at the begin- 
ning of last summer and it may change now in the drive to get more 
men in war production — together with 440.000 helpers and experienced 
laborers. It states that there should be added to these another 400,000 
inexperienced persons capable of doing construction laborers' work, 
to bring the group into balance with the mechanics. An indefinite 
but large number of all these workers are now engaged in war in- 
dustries. 

That was so stated last year, and probably the number is greater 
today. 

This indicates a total of 1,960,000 construction men who may be 
seeking work in that 12-month period, a number only slightly in ex- 
cess of the number actually employed in 1938. If materials are 
available, deferred maintenance and repair work may greatly exceed 
the 1938 total of such work plus 1938 work relief. My estimate is for 
12 calendar months, that is an estimate of volume possibly equal to 
that of 1938, assuming a slow start in the first half and a fairly rapid 
acceleration in the second half; this would mean that in the 12 



POSTWAR ECONOMIC POLICY AND PLANNING 1875[ 

month, the rate of contract -letting would be several times that of 
the first 2 or 3 postwar months. 

Construction workers engaged in war industries will not all be let 
out at once. These rough figures indicate the likelihood that con- 
struction workers will be employed on construction jobs almost if not 
quite as fast as they are released from other work. 

Today it is very difficult to get construction men for ordinary re- 
pairs, or for every sort of maintenance work practically everywhere. 

If this does not happen, it will not be due to lack of construction 
demand or to lack of purchasing power, but to slowness in over- 
coming the revival bottlenecks previously mentioned. It is estimated' 
that for every six on-site construction workers, there are normally 
seven off-site workers engaged in production and supply of materials.. 

The speed of revival of construction work in the field will be con- 
ditioned by the speed of reemplo3^ment of men in the logging camps, 
the factories which produce construction materials and building equip-' 
ment and in the wholesale and retail material distribution outlets. 
At some stage of construction revival, perhaps the second or third 
year, I expect to see an acute shortage of skilled building labor. In- 
formally in conversation, an important man in the building trades, a 
labor leader, has confirmed that view of mine. He expects to see the 
same thing. 

Partly on the basis of our accumulated data on planned postwar 
projects, which have been heretofore presented, and partly on the 
basis of analysis of over-all economic factors, my company's Com- 
mittee on Postwar Construction Markets has prepared estimates oi 
postwar construction volume. We estimate that total construction 
volume in the first 10 years following the war will, after making, 
due allowance for a changed price level, average at least double the, 
average annual volume of the 1930-39 decade, which was a decade of. 
depression, as we all remember. 

In figures comparable to the United States Department of Com- 
merce's over-all estimates of total new construction in the United 
States, this would mean an average annual total of $9,623,000,000 in 
terms of the dollar values current through the 1930's; this would be 
equivalent to about $10,800,000,000 in terms of 1940 costs, or some- 
thing like $12,000,000,000 in terms of present costs. This, like all ad- 
vance estimates we make, is a conservative business estimate, made, 
on the basis of preferring that the actual volume realized should ex- 
ceed rather than fall short of the volume estimated in advance. When, 
we are obliged to talk futures, we prefer to do so in terms of what 
seems almost certainly attainable rather than in terms of the maximum 
amount imaginable. 

In tliis estimate we made a deliberate hedge which I will explain, 
a hedge for uncertainties of the future. After World AVar I, construc- 
tion revival was based largely upon accumulated deferred demands^ 
as we expect it to be in the coming years, wliich constituted the prin- 
cipal demand factors until alout tlie end of 1921. 

Following 1924, when deferred demands had been largely taken care 
of, construction did not decline, as many people expected, but increased 
greatly, developing in the succeeding 5 years into the biggest peacetime 
construction boom in the country's history. Although marked by; 
speculative excesses that brouglit serious trouble later on, this booror 



1876 POSTWAR ECONOMIC POLICY AND PLANNING 

was based upon the solid foundation of a genuine economic expansion, 
the most conspicuous factor of which was the great development of 
the automobile and allied industries. 

The prosperity previously generated by the large-scale deferred 
buying of the earlier revival period had laid a firm foundation for 
this phenomenal expansion that followed. It is an open question 
whether a similar expansive develo])ment may follow the coming post- 
war revival. I believe this is unpredictable at this time ; I do not think 
we can definitely map such expansion in advance, though I believe 
Riuch can be done to free our economy of obstacles to such expansion 
and to open up opportunities for it to take place. The two major 
proposals I made earlier in this statement have to do with opening up 
these opportunities. When our postwar estimates were published, we 
stated that they would probably need to be revised upward whenever 
it should become clearly evident that a genuine expansion of our whole 
economy was in progress. 

I do not subscribe to the currently fashionable theory which holds 
it possible and desirable, in a free-enterprise economy, to set advance 
quotas for construction volume in the United States, either on the basis 
pf a desired number of jobs or of a desired percentage of hypothetical 
future national income. 

A sound construction program is one which currently fills the coun- 
try's actual construction needs; it remains sound just so long as it 
continues to fill actual needs ; it becomes unsound when it is forced, 
either by private speculation or by artificial Govermnent stimulation, 
to produce beyond those actual needs. 

It has thus far not been possible in peacetime to measure accurately 
in advance all the construction needs of the country ; nor do I believe 
it will be possible to do so in the future, if we continue to have a genu- 
inely free economy .^ The reasons for this are basic to the very con- 
cept of free enterprise. 

Construction deman.d arises from two important sources : 

(1) Needs for maintenance, repair, modernization, and replacement 
of existing structures. This category of needs exists continuously, 
even in a static economy or a depression period. It employs the con- 
struction industry on a moderate scale only. 

. In theory, such needs might be measured in advance, making it 
possible to predict the volihne of activity they would engender; in 
actual fact, the volume of activity they require tends to fluctuate with 
the general prosperity of the country. This kind of construction, like 
all the rest, is, to a considerable degree, postponable. 

(2) Needs for new facilities. This second category of needs accom- 
panies economic expansion — the emergence of new economic activities 
and factors which encourage vast investments of new capital in all 
sorts of new facilities— facilities for transportation, industrv, and 
trade, for family, cultural, and community life. In our experience it 
has not heretofore been possible to gage accurately in advance the 
forces of economic expansion or to predict with exactitude their results 
or the volume of construction activity they would create. We have 
construction demands today that, stem from the railroad building of 
a hundred years ago— demands that stem from the popularization of 
the automobile, which was such a dominant expansion faclor in the 



POSTWAR ECONOMIC POLICY AND PLANNING 1877 

When Alexander Graham Bell took out his first patents on the tele; 
phone, no one could have predicted that in early 1945 the American 
Telephone & Telegraph Co. would announce a billion-dollar postwar 
plant-expansion program. We do not know today how far air trans- 
portation or various other factors will in the future transform our 
habits or how much construction it will influence directly and indi- 
rectly. 

The unpredictable construction needs frequently turn out to be the 
most important ones. 

New construction is not itself the prime creator of economic expaii- 
sion; its essential function is to embody expansion factors in physical 
form. There is a vast difference between encouraging construction 
activity by creation of broad opportunities for economic expansion 
and a boot-strap-lifting procedure of stimulating construction merely 
for the purpose of attaining large volumes of activity, irrespective of 
actual needs. 

The American construction industry is necessarily the most adapt- 
able and most flexible of all our industries. This was amply demon- 
strated in the year 194^, when needs for war facilities of every kind 
required completion of the biggest construction program of all history 
in record-breaking time. Even after the shrunken activity of a 10- 
3-ear depression, no industrial conversion was called for in order to 
produce in a single 12-m()nth period new construction valued, accord- 
ing to the over-all estimates of the United Siates Department of Com- 
merce, at $13,549,000,000, being 21 percent greater than the previous 
record peacetime volume of $11,144,000',000, recorded 15 years before — 
in the year 1927. 

There are at least three highly significant facts about that record- 
breaking war construction program. 

In the first place, it was based upon specific needs — the canton- 
ments, flying fields, war plants, shipyards, and war housing required 
for a specific program of armament, military training, and global 
strategy for conduct of the war. 

Secondly, it involved no direct financial problem. 

In the tiiird place, it brought forth entirely spontaneously an e:^- 
pansion of the construction industry's capacity entirely adequate tO 
meet the situation without any over-all planning hy government to 
effect this purpose. 

If this recorded experience points any moral for the future, it 
is that the construction industry's organization and potential ca- 
pacity will b3 ample to take care of any program required to meet 
the country's peacetime needs, provided there is adequate financing 
for the needs to be translated into demands. 

We seem to have provided entirely adequately for financing pri- 
vate home building. We have tested home-financing machinery, an 
abundance of mortgage money, and, in the savings accounts of hun- 
dreds of thousands of prospective home owners, abundance of down- 
payment funds. To these factors the Congress added in 1944 special 
loan guarantee privileges for war veterans desiring to acquire new 
homes. 

Principal postwar danger in the home-building field is, I believe, 
the danger of a speculative house-building boom. I think we have 
minimized for the future the danger of any general freezing on 



1878 POSTWAR ECONOMIC POLICY AND PLANNING 

home-mortgage credit, thus correcting a basic instability in private 
finance as it operated in the past. 

Mortgage insurance provisions of the National Housing Act cov- 
ering investment housing projects achieved somewhat meager results 
m the prewar period. I consider the principal reason for this to 
have been meager demand for this class of private housing; resi- 
dential rents were too low in relation to capital costs to attract in- 
vestments on a large scale. The same situation prevailed to an 
even more marked degree, in commercial-t;ype investment building: 
all through that period there were enormous vacancies in office build- 
ings throughout the country for which no mortgage-insurance stim- 
ulus was offered. 

, I anticipate for the postwar period new levels of residential and 
commercial rents, and new levels of land and construction costs, 
probably in relationships which will encourage investment building. 
While private finance did not, in the depression period, devise aiiy 
new type of equity financing for investment building projects, I 
:Would say that there was not at the time any incentive for such 
action. 

Principal questions for the future, in my opinion, relate to whether 
such incentives will exist under postwar tax laws, corporation taxes 
especially. Speculative excesses in future issues of real-estate securi- 
ties would presumably be kept in check by the Securities and Ex- 
change Commission. 

It has long been the hope of people in the construction industry 
that a practical way could be found for timing public works in rela- 
tion to private activity so that the industry's operations could be 
more clearly continuous, so that extreme fluctuations could be re- 
duced. Such a result would benefit the industry and the whole 
economy. 

; Wi^l^ respect to Federal public-works projects and such Federal-aid 
projects as the national highway program, the responsibility can 
clearly be placed upon the Federal agencies responsible for the pro- 
grams. It is distinctly in order to provide for advance planning of 
such programs on a large scale and to charge the agencies with the 
duty of timing their execution as opportunely as administrative judg- 
ment will permit. 

It should be entirely possible and practical, without creating un- 
desirable Federal controls over State and local activities, to provide 
for cooperation between these governments and the Federal Govern- 
ment on policies of providing comprehensive information on con- 
struction activity, of advance planning of public-works projects, and 
of controlled timing of the initiation of projects to meet the objectives 
of a stabilization program. 

Such cooperation might be worked out with the Council of State 
Governments and either the Municipal Finance Officers Association 
or the United States Conference of Mayors. 

If the long-term credit study I have advocated should result in 
creating within the KFC or elsewhere, banking facilities for State 
and local governments, such banking administration would have a 
clear responsibility for passing judgment on the timeliness of expendi- 
tures made from the advances it would authorize. 

Timing of ordinary local public works would have to be done with 
reference to local market conditions, which are most immediately and 



POSTWAR ECONOMIC POLICY AND PLANNING 1879 

most intimately known by local people, and incidentally, vary con- 
siderably from place to place at the same tune. 

For example, we had larjre construction activities going on m 
southern California and the Houston area, right through the depres- 
sion, giving those areas very different conditions from the rest of the 

""Tocal lending institutions are being urged by the National Housing 
\o-encv and its constituent agencies, particularly FHA and J^HmiA, 
to%rovide for maintaining kx^al real-estate and construction market 
statistics, in order to guide their lending policies m the private build- 

■fill 

"^ There Should be and frequently is, interchange of this kind of in- 
formation between the lending institutions and public ofiicials. 

Local ffovernments should be encouraged m eveij way to lay out 
]ong-ran|e capital budgets and to provide amply for advance planning 
of public-improvement projects. ,. .■ . ^ „ , 

We have in this countrv today, all the known ingredients of a gi^eat • 
and sustained prosperity. I think we can realize that prosperity it 
the as yet unmeasured forces of economic expansion can be released, 
if the/ can be permitted to function without being unduly restricted 
by repressive Government action. ' ^ ^ ^. • -^ i 

For an adequate and sustained volume of construction principal 
things needed are provisions to encourage and regularize the flow ot 
investment funds into the facilities, private and public, required tor 
such an expanding economy. . 

I believe, if these things can be managed properly, there will be 
no need for artificial stimulation of the construction industry, no 
need to initiate programs on any basis other than their actual merits 
as genuine additions to the country's wealth. 

Mr. Zimmerman. May I ask a question ? 

The Chairman. Yes.' Mr. Zimmerman. .• ^ . 

Mr Zimmerman. At the conclusion of your very interesting state- 
ment vou made some remark about repressive government action. 
Would you care to elaborate on what actions on the part ot govern- 
ment vou regard as being repressive? x ^i • i --p i n..o 

Mr"^HoLOEN. The principal one would be taxes. I think it we have 
taxes that discourage private investment, either very high income 
taxes or very high corporation taxes, so that people cannot earn an 
attractive return on investment, they will discourage investment 

building of all kinds. ... . 

Mr Zimmerman. I think we should adjust our tax program to en- 
courage what we call risk capital to embark on different enterprises. 

Mr. HoLDEN. Yes. . , . . , i . i ^ 

Mv. Zimmerman. Do you have anything else m mmd along that 
line? Other than taxes, what else would you suggest? 

Mr Holden. I think we have the whole field of regulation ot busi- 
ness in various aspects, various types of Government^controls. Many 
that exist today are necessary for the prosecution ot the war, but it 
they are continued in great degree in peacetime, it they are more 
stringent than they were in the prewar period, I think those things 
tend 1o discourage venture capital. , , ., 

Mr Zimmerman. I think we all hope that when the war is ovei 
and we can emerge into a peacetime era of production, these restric- 
tions that are incidental to a war such as we are engaged m, will be 



1880 POSTWAR ECONOMIC POLICY AND PLANNING 

removed. Of course, most of the acts provide for their elimination 
1 want to get back a little further than that, back into peacetime eri 
before the vrar came upon us. 

As an expert in this field, can you think of anything else that 
should have the mnnediate attention of Congress? 

Mr. HoLDEN. I think there is a question— I won't make a direct 
statement, because I am not sufficiently well informed— I think there is 
a possibility of the rules and regulations of the Securities and Ex- 
change Commission being a little overdrastic. I don't say that is a 
fact. I say that as a question that might be asked. 

Mr. ZiMMKKMAN. In other words, you are suggesting Congress 
should give that some consideration. 

Mr. HoLDEX. I tliink in a general review of our financial situation 
the matter of whether those controls are too stringent is one of the 
questions that should be explored. 

It is to be hoped that this country will settle down to a fairly stable 
labor situation. The labor movement has resulted in many great con- 
troversies involved in the establishment of different types of legisla- 
tion and controls. And I don't think we have yet lived throuoh all 
those things, that we have yet got the labor relationships of the 
country on a stable basis, enough to quiet people's fears in that 
direction. 

The whole range of controls includes manv not directly connected 
with construction, but they are connected with the future expansion 
ot the country's industrial and commercial activities and national 
well-being, and therefore affect the demand for construction. 

Mr. Zimmerman. I take it you, of course, admit that during this war 
emergency we must have certain governmental restrictions which 
would not operate in peacetime. 

Mr. HoLDEN. Certainly. Everybody admits that, I am sure. 

Mr. Zi.^iMERMAN. But your view is now that Congress should give 
attention to, first, the question of tax relief, to encourage risk capital 
to go out and seek new enterprises. 

Mr. HoLDEN. Yes. That is right. 

Mr. Zimmerman. In order to get into business. 

Mr. HoLDEN. And improving the situation of local government, 
which is a basic problem in the countrv, the financial situation of local 
governments, and their power. 

Mr. Zimmerman. You realize that when Congress goes to dipping 
into local government, we might be getting a little out of our coii^ 
stitutional powers? 

Mr. Hdlden. My thought is not that Congress would legislate what 
local governments would do, but i)rovide a commission to study the 
tax problem, in which local government would be represented. 

Mr. Zimmerman. I get that. 

Mr. HoLDEN. They could give consideration to problems of local 
government without legislating for local government. 

Mr. Zimmerman. I see. You think this, that Congress should make 
a study in relation to municipal and State governments? 

Mv. Hjlden. That is right. 

Mr. Zimmerman. That will affect the entire situation? 

Mr. HoLDEN. That is right. We have 165,000 public agencies with 
authority to collect taxes in this country, which is a pretty complicated 



POSTWAR ECONOMIC POLICY AND PLANNING 1881 

system. Today, the grand total of taxes that people have to pay is 
very considerable. If one agency of Government, out of 165,000, is 
collecting the vast bulk of the taxes and leaving the others poor, there 
is a problem there calling for study and, we hope, adjustment. 

I have cited one example of a very successful commission which re- 
sulted in the Federal Reserve System ; a body of Senators and Con- 
gressmen which made a thorough and comprehensive, objective study 
of a major problem and achieved results of tremendous importance to 
the country, which are of benefit to us today. I think that method 
of dealing' with an over-all problem, one that is more than the ordi- 
nary legislative problem, is one of the best ways of doing the job. 

^lv. ZiM^iERiHAN. Now, I take it, then, that you would put first in 
importance of these three recommendations you have made, the 
question of taxes? 

Mr. HoLDEN. Yes, sir. 

Mr. ZiMMERMAX. That supervision of the Securities and Exchange 
Commission, or rather revision of some of its rules and practices are 
more or less incidental ? 

Mr. HoLDEx. That is right. 

Mr. Zimmerman. The labor adjustments that must take place you 
regard as incidental, too? 

Ml". HoLDEN. Yes. If those things are out of balance, they are 
disturbing factors. If vre have gone too far in a certain direction,, 
we believe in checks and balances. We want to correct things that 
get too far out of line. ■ 

My thesis is not so much that I am attacking certain ideas of Gov- 
ernment control, and so on, but it is that the removal of controls 
does free our system so that private enterprise will go ahead, that 
private construction demands will be encouraged. I think it entirely 
possible to avoid for quite a long time in the future any really 
serious unemployment problem and any major economic crisis. 

But I think the essential first things are to lic|uidate our war econ- 
omy and liberate the economy to the extent it is possible. 

Mr. Zimmerman. Of course, we must all be realistic and practical, 

]\Ir. HoLDEN. Surely. 

Mr. Zimmerman. AVe do know we are going to have to pay taxes f or 
a long time. 

Mr. HoLDEN. Certainly. It is a problem. It is not a simple thing. 
I realize that. 

Mr. Zimmerman. AVhen you talk about tax adjustment, we have to 
take into consideration a great many problems that are incidental 
to it. But I do think there is something to what you have stated. 
It is important to give industry a chance to move. In other words, 
we will never keep up our national income, we won't pay taxes, we 
won't go on, unless we do that. 

Mr. HoLDEN. I don't believe there has ever been a time in our his- 
tory when there has been such an accumulation of demand for all 
the civilian products of industry or so much saved up purchasing 
power. 

jNIr. Zimmerman. Yesi I thank you for your very ifine statement. 

The Chairman. In line Avith a policy adopted here yesterday, the 
special consuhant to the subcommittee. Dr. Kaplan, will take over 
and propound such questions as he sees fit. « 

99579 — 45 — pt. 6 12 



1882 POSTWAR ECONOMIC POLICY AND PLANNING 

Dr. Kaplan. Mr. Holclen, I would like to open up with an attempt 
to clarify a few points in your testimony for the record, if you don't 
mind. 

You indicated that in the estimates of the Dodge Corp. there seemed 
to be about $13,000,000,000 of deferred new construction available for 
the immediate postwar period, of which about 2 billion, I think you 
said here $2,M8,000,000, would be for private construction. That 
would indicate a ratio of about 6 to 1 of public to private. Did you 
intend that to represent a normal picture? 

Mr. HoLDEN. No; that is not. The 13 billion, if you will take this 
sheet (see table, pp. 1872-3), represents— you will see the figure at the 
bottom of the column headed "Preliminary stage"— a listing of actual 
projects, not vague, general programs, but projects in early stages 
before we have had a report indicating that any actual designing had 
started. '^ 

Now under that heading, the private work amounts to $3,335,000,000. 
Over in the right-hand column you will find the designing stage, indi- 
cating that architects or engineers have been selected and work has 
actually been progressing on making plans, sketches, blueprints, and so 
on. There the total of all projects in the designing stage is the last 
figure, $6,684,000,000, out of which $2,148,000,000, or about one-third, 
is private. 

Of course, a reason why this preliminary stage contains such a great 
volume of public work, the planning of them started early. Public 
officials were encouraged to think there would be loans and grants 
from Congress; also, most of the public planning agencies had staffs 
that they could put to work on developing plans and they were anxious 
to publicize them. So that there is a great overbalance of public 
works in this tabulation. 

It has been very difficult to supplement our customary coverage of 
private sources, owner sources, to get anything reasonably complete. 
Take the matter of private small-house building, single-family houses. 
Most of those are not planned much in advance. We have contacted 
the savings banks, work with them. They have circularized their de- 
positors to find out which depositors plan to build homes, and so on, 
sampling the field in this way. But the volume that we show of 
private residential building is only a fraction of the potential demand. 
I would say the volume of public work is a great deal more than the 
actual needs, because they padded those programs. Information on 
the private work is harder to ^ei. Therefore it represents a fractional 
sample of the market. 

Dr. Kaplan. That is what I wanted to point out. You weren't in- 
tending apparently to indicate the relative importance in a possible 
forecast of public and private construction. 

Mr. HoLDEN. This would be very misleading if interpreted in that 
manner. 

Dr. Kaplan. Obviously, as you know better than any of us. in the 
1920's private new construction averaged about $7,000,000,000 a year ; 
when you talk about $2,000,000,000 as a backlog, that doesn^t seem 
correct. 

Mr. HoLDEN. It covers only a portion of the country and only a 
portion of the backlog. 

Di-. Kaplan. Thank you. 



POSTWAR ECONOMIC POLICY AND PLANNING 1883 

There was another aspect of your testimony which I would like to 
have you elaborate. On page 10 of your testimony you said : 

I do not snbsci'ibe to the currently fashionable theory which holds it possible 
and desirable, in a free-enterprise economy, to set advance quotiis for construction 
volume in the Unitt^d States, either on the basis of a desired number of jobs or of 
a desired percentage of hypothetical future national income. A sound constru<,'tion 
program is one which currently tills the country's actual construction needs. 

Then you went on toward the end, of course, indicating that there 
are things that can and should be done to siabilize construction such as 
a practical way for timing public works in relation to private activity 
and, of course, your organization in itself is one of those upon which 
we deijend very largely for estimating and forecasting building needs. 
I would like to reconcile those two things in your testimony. You 
eivdently do believe that it is possible to do something about stabiliz- 
ing the construction industry by dovetailing the private with public 
construction. 

Now if you want to know how much is left for public construction, or 
how far it should dovetail with private construction, don't we have to 
have some goals as to the maximinn amount or minimiun amount of 
construction that we should be thinking about for the construction in- 
dustry ? Otherwise, what are your measures for knowing whether we 
are forcing too much public construction in competition with private 
construction or not feeding in enough public construction along with 
private construction ? 

Mr. HoLDEN. Well, I think you should be able to know in accord- 
ance with what is currently going on. Of course the situation may 
vary, it may be spotted throughout the country, when very active areas 
would enjoy conditions which vrould be diiferent from less active 
ones. But we know when we begin to get shortages of skilled labor — 
we will be getting tli(jse when we have our revival. Labor, I think, will 
be the principal question. I think there will be ample materials after 
we have gotten into production. 

Dr. Kaplan. What about apprentice training? Musn't that be in 
anticipation of demand? 

Mr. HoLDKN. Yes. One of the reasons I anticipate a shortage of 
skilled labor is that during the depression period there was practically 
no apprenticeship training. That is, the labor people are very fearful 
of getting too many trained mechanics at a time when there isn't much 
activity going on. Interest in apprenticeship training is reviving. 
There is a Government committee cooperating with an industry group. 
The idea of reviving apprenticeship training is being promoted in 
Xew York. There was an apprenticeship training program in opera- 
tion there for a good many years. It was organized under the general 
sponsorship of the New York Building Congress, a private industry 
organization there, and worked in cooperation with the trades, the 
employer groups in the various trades, and with the public schools. 
It worked very successfully until the depression came, when there was 
no opportunity to place the apprentices in jobs after they had gotten 
their training. So that program simply faded out. 

The committee has been revived, a joint committee of employers 
and the labor group, which is studying the problem of reinstating 
that apprenticeship program. 

Dr. Kaplan. How do you know how many to retrain, except in 
terms of some notion of how it will go ? 



1884 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. HoLDEN. You have to make estimates, that is right. I will say 
this, to put it in bald terms, you can't say how many houses are needed 
in my town by making a census of car])enters. We can't predicate the 
number of houses to be built or the number of anything else by the 
number of people who happen to be equipped to build them. You have 
got to check. ^laybe you have got to estimate. I live in a suburban 
community out of New York. You haye to estimate the rate of migra- 
tion from the city out to where I live ; you can get the real-estate people 
to give their best guesses as to the rate of growth, based on previous 
rates of growth and other factors, and try to make a reasonable guess 
as to what you are likely to require in the next 10 years. 

I did mention in the latter ])art of my statement the need for local 
governments to nuike up 6 year capital budgets. I think the early 
activities of the National Resources Planning Board and general 
public opinion and the example of certain communities have all pro- 
moted the idea of long-range planning. The New York City charter 
requires that a 6-year capital budget be made. 

That doesn't mean that everything that is first laid down on the 
G-year plan is going to be built. At any rate, there is a list of projects 
to be done. There should be some judgment as to what ones are the 
most needed and what ones are the most innnediately needed. Then 
the actual timing of the projects can be made in accordance with the 
current budget, and in accordance with the time limits of actually 
getting the work done. 

I think the only gage is, if you are getting too much activity, you 
strain the capacity of the industry, ])articularly in terms of skilled 
manpower. This constitutes a signal that it is time to slow down. Of 
course, many projects once started, couldn't be easily slowed down. 
But you can slow down the letting of new contracts. Of course, we 
talk of the construction industry as if it were a national entity. We 
talk of the construction industry in the United States as if it were a 
unified activity. It is really a statistical aggregation of lots of local 
activities. Many of those things have to be determined locally. 

Dr. Kapl^an. I want to ask one more question in regard to a iK)int 
early in your testimony. That is, you believe that the local govern- 
ments have a lack of resources in tax revenues for getting their con- 
struction activities done, and that there is need for some kind of 
financing agency that will take care of their needs. Does that trans- 
late itself in your mind into the necessity for some interim direct hel]) 
from the Federal Government to local governments, in order to enable 
them to get their postwar programs going? 

Mr. HoLDEN. I think they can take care of their immediate necessi- 
ties, mostly. They have had to curtail their expenditures for these 
purposes just as all private people have, just as I have had to wait a 
number of months to 2:et my house painted. 

Dr. Kaplan. The States do have. 

Mr. HoLDEN. Most of the States have reserve fimds. New York 
State will have at the end of this year over $800,000.00:1. and most 
of the States are in good financial condition. Even local govern- 
ments, I would say most of them, can take care of their inunediate 
needs. Of course, the problem of the local government is basic. I 
recall in 1938 some figures on the combined tax collections and ex- 



POSTWAR ECONOMIC POLICY AND PLANNING 1885 

peiulitiires of all the cities of 100,000 and up in tliis_ country ; 44 
percent of the expenditures were for social services of one sort or 
another. About 78 percent of their revenues were from property 
taxes. 

In other words, property taxes originally took care of the actual 
expenses of the government and administration, protection of life 
and property and so on. We added, or public demand called upon 
the local governments to furnish all manner of social services, health 
services, increased school facilities, and so on; all to the good. But 
we reached a point where real 'estate values just didn't keep on in- 
creasing as they previously had for a century. Real estate couldn't 
be taxed at increasing rat'es to take care of these needs. So, if you 
look back over the past 15 years, the total tax collections of local 
governments have been practically stable. The tax collections of the 
States have risen and the tax collections of the Federal Government 
have, and yet the people keep demanding more and more in the way 
of social services from their local governments. The local govern- 
ments have resorted to certain devices, such as sales taxes, and this, 
that, and the other special tax, to try to eke out their funds to meet 
these demands. 

So it seems to me that the basic thing is the tax study I have rec- 
ommended. What can we do? If local governments are gomg to 
have mounting obligations for services, they have got to have mount- 
ing revenues from some source to take care of it. Basically, what 
are their tax resources going to be in the future ? 

in the second place, and in addition, there may be emergency sit- 
uations in which local governments may need some credit facilities. 
So I suggest for both of these problems, for which— I don't have 
answers, the problem is too big for me— I suggest a commission of 
experts representing the points of view on the problems of all these 
levels of government— Federal, State, and local. I suggest that a 
commission making an objective study might make recommendations 
of extreme value to the countrv. 

Dr. Kaplan. You think that in the next 2 or 3 years, if I got your 
testimony right, that Federal aid is not going to be necessary in order 
to ffet State and local construction going ? 

Mr. HoLDEN. I think Federal aid for strictly State and local proj- 
ects would probably be a bad thing in the first 2 or 3 years of revival. 
I think certainly iiithe first year or so there are going to be shortages 
of material. There are going to be difficulties in getting enough 
skilled building labor and the other types of bottlenecks I mentioned 
briefly here are going to make it very difficult to meet the construction 
demands. I think that for the most part the private demands are 
more pressing and that if we have stiff competition between private 
and public projects when the ceilings go off, there will be very strong 
inflationary pressures on material prices and building labor wages. 
Such competition would be a bad thing, probably, in the first 2 or 3 
years of revival. 

The Chairman. All right, Dr. Kaplan. 
Mr. Gifford, do you have any questions? 

Mr. Gifford. Yes. In rather a small way I have been in the real- 
estate business for about 40 years. I ought to be somewhat familiar 



1886 POSTWAR ECONOMIC POLICY AND PLANNING 

in a small way with its problems. I want to ask you, do you tliinkt 
that if this proposed tax of 90 percent is placed on business, do you 
think that business transactions would increase ? I would be dis- 
couraged. You say it would take 3 years before we get back to normal 
conditions, and then we will have only 2,000,000 men employed in 
construction out of those 60,000,000 for which we will have to provide 
jobs. We are told that construction work is the greatest hope we have 
to pull the load. 

Mr. Holder. I didn't say it would take 2 or 3 years. Last summer, 
when Mr. Nelson was Chairman of WPB, he intimated that after 
Germany surrendered we would have a 40-percent cut-back in war 
production. Since that time all of the estimates of the General Staff 
and everybody else as to the war production needs have been changed. 
In recent discussions it has been stated that we may have a 10-percent 
cut-back at first, and maybe reach 20 percent in the first 12 months. 
That IS why I, say we can't do much construction in those first 12 
months, because we have got to get supplies of pipe and radiators and 
lumber and all of those things. The principal bottleneck is going to 
be materials. The demand is there, sir. 

Mr. GiFFORD. You have proved your case. I simply quoted you in 
that we must not expect to move forward quickly. 

Now, Mr. Ruml was here yesterday. I have been considering his 
ideas about taxation and social security. Have you been informed of 
the ambitious schemes of Congressmen and Senators to loan a lot of 
money for repairing to corporations and individuals on long-term 
basis ? ^ 

Mr. HoLDEN. I am not familiar in detail with the current proposals 

Mr. GiFFORD. The New York Times had a statement on that, which 
was denied by the Public Housing Authority. Seemingly this public 
housing versus private housing war will be continued, that is what 
IS worrying some of us that want to get our Government out of busi- 
ness. Would private housing activities be sufficient if public housing 
was discontinued ? 

Mr. HoLDEN. I don't think private housing can ever take care of 
people whose incomes are below the level where they can pay economic 
rent. "^ 

_ Mr GirroRD. That is the point. We want to get out of public hous- 
ing ; but if we do, they want to pay social-security funds to all of those 
people who cannot afford to pay a proper rent. Is that feasible ? 

Mr. HoLDEN. Yes. I think they want to go mucli too far. I think the 
matter of public housing is not principally a construction industry 
matter. The construction industry builds houses. I think it is purely 
a question of whether we are going to continue public housing as a 
social measure. 

Mr. GiFFORD. We have already gotten into that. It appears to me 
that labor, which now has control of the Nation, will insist on those 
types of methods and the Government will still be subsidizing. 

I am on a taxation committee. I have been for a long time on the 
Banking and Currency Committee. We set up the OPA and we have a 
tremendous amount of complaints that come to us because of rent con- 
trol and it shows that government seems to have failed to recoo-nize 



POSTWAR ECONOMIC POLICY AND PLANNING 1887 

the practical situation. We have found all these things we have 
done have met with great resistance on the part of the public. 

Going back to taxation, I pa}^ taxes in four municipalities. As you 
told us, water, light, and all public conveniences are paid to the local 
governments, and real estate paj^s practically all of those taxes. Very 
little revenue from other local taxes is received. 

I have fiftj^-odd town reports that have come to my office. They are 
coming in now daily. Our towns are all in rather good financial shape 
in my section, that is the local communities. But they are beginning 
to realize that they owe the Government, if the Government debt was 
apportioned, more than three times their entire assessed values. I 
ask you a direct question. We made some statements about tax on 
i-peculative profits, of 90 percent. I had a house I bought last year. 
If I have to turn back 90 percent of the profits, would I buy any more 
houses ? 

Mr, HoLDEN. I don't think so. There seems to be a strong body of 
opinion in this country that it is a sin to make money. 

Mr. GiFFORD. That is true. That is why I am trying to bring out 
the fact that while taxes perhaps will be reduced in some quarters, 
they seem to intend, don't they, to tax only the hen that lays the eggs? 

Mr. HoLDEN. It looks very much that way to me. 

Mr. GiFFORD. Anybody who makes money or who has it will have 
to pay the taxes. Isn't there a feeling that they will relieve all others, 
practically ? 

Mr. HoLDEN. There seems to be ; yes. 

Mr. GiFFORD. What is there to induce construction? Should I invest 
any more in houses to be sold? I thought I was patriotic to fix up 
tenement houses so people could get rental. If I should sell, which 
would only be accidental, 90 percent of that profit would go to the 
Government. 

Mr. Hoi DEN. That seems excessive. 

Mr. GiFFCRD. Would you like to say that for the record? Would 
you say that if that isn't stopped, we will be unable to get new invest- 
ments in new construction, if they are going to be compelled to turn 
back 90 percent of the profits from construction ? 

INIr. HoLDEN. I think that is right. 

Mr. Gefford. Governor Eccles often appeared before my committee. 
Do you see my point? 

Mr. HoLDEN. May I make one observation, sir, relative to this 
gentleman's question? 

The Chairman. Yes. 

Mr. HoLDEN. It seems to me our economy was sick back in the 1930's. 
We liad to adopt all kinds of emergency remedies. There seems to be 
today on the part of many people a general feeling that we are going 
to be sick again ; that our economy is going to be sick again ; that we 
are going to have all kinds of troubles. A lot of planning seems to be 
planning for depression. I think we should plan for prosperity. I 
think we have got the makings of it. I don't think we have to take 
the patent remedies of the kind we used when we were sick, and use 
them in a time when there is every prospect of our being in a highly 
healthy and prosperous state. I think there is a hangover psychology 



1888 POSTWAR ECONOMIC POLICY AND PLANNING 

from that depression period that is clouding many people's thinking. 
Mr. (tiffoud. They take the profit motive out of evervthinir we do. 
Why shouldn't Ave? 

Mr. HoLDEN. If you take a hundred billions of saved-up purchasing 
power in this country, and you take the enormous deferred demand 
for everything in the world that people need, you have the makings of 
prosperity. And I think it is unhealthy to eternally have in our minds 
fears of grave troubles of this, that, and the other possible future 
disaster. We can meet our troubles when we come to them, if we 
keep our minds on the goal of reaching prosperity and expanding pros- 
perity in this country. 

Mr. GiFFORD. I agree with that.. I was talking about the con- 
struction end. I agree with you on that. 

The Chairman. We have used about three-quarters of our time 
lierethis morning with Mr. Holden. We have another witness. It 
is going to be essential, if we finish, to hasten along. Mr. Lynch? 

Mr. Lyxcii. In view of the fact I was called away from the meeting, 
I waive my questions so my colleagues who were here during the 
entire session might interrogate, if they so desire. 

The Chairman. Mr. LeFevre ? 

Mr. LeFevre. I have one observation to make. First of all, I want 
to congratulate Mr. Holden on his pa])er. In a small way, I have been 
in the building business myself. I know what these Dodge reports 
mean to contractors around my coihmunity. I think it was stated here 
yesterday that we were trying to keep the building program in the 
limit of $15,000,000,000. My great fear is that unless we have some 
very strong authority to work in cooperation between your Federal 
building plans and your State and county building, and your private 
building, there is going to be a jealousy between these three, rather keen 
com])etition to get their projects going. I w^as wondering whether 
the Federal Government or what sort of authority should be built up to 
control this building program for the future. 

Mr. Holden. My suggestion is — it was more or less hinted at here — 
that if Congress determines that there is a need for some kind of 
banking facility to make loans on proper occasions, that such agency 
would naturally have to keep track of all the trends in determining 
when to extend credit and when not to, and that that would probably 
be your central agency for coordination. That is a suggestion. 1 
do not say that is exactly the right answer to your question, but it is 
a suggested answer. 

The Chairman, Is that all, Mr. LeFevre? 

]Mr. LeFevre. Yes. 

The Chairman. Mr. Holden, on behalf of the committee, I want to 
thank you for your appearance here. There are a number of ques- 
tions I would like to propound myself, because your statement has 
been most stimulating. But time will not permit. 

Mr. Palmer, we will be glad to hear from you now. I hope you 
will make a short statement about your background, your connections, 
and so on, for the benefit of the record. 

Mr. Palmer. Thank you. 

The Chairman. You may proceed. 



POSTWAR ECONOMIC POLICY AND PLANNING 1889 

STATEMENT OF EDWARD P. PALMEE, CHAIRMAN, CONSTRUCTION 
AND CIVIC DEVELOPMENT DEPARTMENT COMMITTEE, CHAMBER 
OF COMMERCE OF THE UNITED STATES 

Mr. Palmer. I am Edward P. Palmer, chairman of the construction 
and civic development department committee, Chamber of Commerce 
of the United States. I am an elected director of the chamber alid 
appointed to the chairmanship of this committee by the president of 
the chamber. 

The CoeAiRMAX. What is your business? 

Mr. Palmer. My business is that of a construction contractor in 
New York City. 

The Chairman. You have a prepared statement, do you? 

Mr. Palmer. I have a prepared statement ; yes. 

The construction and civic development departm'ent committee, of 
which I am chairman, is one of nine department committees of the 
Chamber of Commerce of the United States which are broadly repre- 
sentative of major fields of business interests. 

The Chamber of Commerce of the United States is a federation of 
businessmen's orfjanizations, including both trade associations and 
chambers of commerce. It has niore than 2,000 orp:anization members. 
These organizations have an underlying- membership of 761,000. 

The construction and civic development department committee of 
the national chamber is composed of representative men from the 
major fields of construction — designing, contracting, and building, 
manufacture and distribution of materials and equipment, mortgage 
finance and real estate. 

Through the deliberations and recommendations of this committee, 
the construction industry has been able in recent years to develop con- 
structive leadership in working out solutions to the problems which 
affect the common interest of professional and business interests in this 
field. 

In considering the part of construction in our national economy, it 
is important to keep in mind that privately financed construction has 
heretofore made up the larger part of our construction activity. In 
the twenties, when total new construction ran to an annual volume 
of 10 billion or more, privately financed construction made up two- 
thirds of more of that volume. Publicly financed construction, com- 
monly known as public woi'ks. made u]j the other third or less. 

Public works, so defined, included all construction financed by Fed- 
eral, State, county, and municipal funds. This relationship changed 
during the early depressions years but, by the latter part of the 
thirties, privately financed construction still accounted for 60 percent 
of the total. 

Important as the contribution of public works has been and will be 
to the industry, and hence to the national economy, it is evident that 
measures to encourage privately financed construction are even more 
important to any forward-looking ]:)ublic policy having to do with 
this industry. Recommendations in this regard are included later in 
this presentation. 



1890 POSTWAR ECONOMIC POLICY AND PLANNING 

NoAv, what are the reasonable expectations as to construction's part 
in our postwar economy ? 

It appears that permanently, that is to say after the urjjent work 
necessarily postponed durin<? the war has been done, we should not 
count upon tlie industry to provide more than 10 to 15 percent of the 
total national income and em]:)]oyment. Traditionally, this means 
public work at ^y^ to 5 percent of the total national income and employ- 
ment. There is a dancrer that ex])ansion beyond the limits mentioned 
will lead to pyramid buildin<>: for which older civilizations have been 
so universally condemned. Obviously, we must look beyond construc- 
tion for the ^reat bulk of postwar employment. 

What I wnll now present to you are the recommendations of the 
national chamber's construction and civic development department 
committee with respect to the handling- of public works, and their 
relation to the rest of construction. 

While these proposals are in general accord with present chamber 
policies in this field, it is our intention to present them in the near 
future to the chamber's organization membeis for their further consid- 
eration and action. 

The recommendations have been grouped under seven headings, as 
follows : 

1. Responsibilities of Federal, State, and local governments. 

2. Achieving State and local government liscal Independence. 

3. Improving pnblic-works appropriation and other procedures. 

4. Obtaining economy in public-works construction. 

5. Ailvance planning of needed public works. 

6. Measuring construction activity. 

7. Revising Federal tax policies to stimulate private construction. 

1. Responsibilities of Federal, State, and local governments. — 
Traditionally we have financed our public works through the tax 
power of that government agency administering the completed project. 
But, as a result of various stresses and pressures, we have lately modi- 
fied this traditional rule in two directions. Local government juris- 
dictions have tended to look more to State governments for assistance 
in financing their public works. States and localities have tended to 
look more to the Federal Government for aid. 

We have drifted so far in these directions that it is time to take 
our bearings. This is especially true of Federal aid to State and local 
undertakings. 

We should improve our procedures for determining what public 
works we need and can afford. In that connection, we need to estab- 
lish rules defining which government level should finance each of the 
various classes of public works essential to an active economy. It is 
as necessary for the States and communities to agree to these rules as 
it is for the Federal Government. 

To take our bearings we must have some guiding principle. This 
should be based on our traditional practice. 

It is suggested, therefore, that we accept this basic principle : 

The Federal Government will finance only those public works Avhich 
lie within its jurisdiction or fields of direct responsibility. All other 
public works will be financed by State and local governments. 

I recognize that there is nothing absolute about this principle. Ma- 
chinery for impartial and careful ascertainment of the facts will be 
necessary to make it workable. What constitutes the responsibility 



POSTWAR ECONOMIC POLICY AND PLANNING 1891 

of. the Federal Government and the responsibility of the States and 
localities is a relative matter and can be resolved only in the light of 
reasonableness. 

Congress shonld have at its disposal objective analyses before it 
embarks upon any public-works grant-in-aid program. The only 
way a democratic society can prevent the settlement of important is- 
sues by pressure groups or through just plain drift, is to provide the 
means' for public discussion and debate on the basis of impartially 
ascertained facts. 

Congress should set up machinery for this purpose. This might 
possibly be set up cooperatively with the States and communities in 
connection with some appropriate agency to advise Congress on Fed- 
eral-State-local jSscal relations. 

2. Achieving State and local government fiscal independence. — 
There are many things which the Slates and comnumities can do to 
plan their fiscal policies and administer their financial affairs so as 
to be in a position to meet their responsibilities. The most effective 
postwar plans consist primarily of present efforts and accomplish- 
ments in reducing State and local debts, establishing cash reserves, 
strengthening administrative organizations, and surveying State and 
community needs. 

There has been commendable and encouraging activity along these 
lines. The States and their local governments are in a better position 
today than tliej^ have been in several j^ears to resume the time-honored 
practice of financing their own public works. 

But over and abo\'e what the communities and States can and should 
do themselves, there is another need. It is for cooperative considera- 
tion and action in dealing wisely with Federal, State, and local fiscal 
relations. 

Congress should, thei'cfore, take steps now to revise our tax struc- 
ture so as to insure that the policies of the Federal Government do 
not unduly hamper the ability of the States and local governments 
to achieve fiscal independence. Progress toward this important goal 
can only be made step by step. It w411 require public education as well 
as the development of new attitudes on the part of both Federal officials 
and State and local oflicials. 

The impartial assembly and study of the facts is as necessary for 
effective action in obtaining better intergovernmental fiscal relations 
as it is in determining the responsibility for financing needed public 
works. The tw^o matters are closely related. For that reasoUj a 
recent recommendation of the JMimicipal Finance Officers' Association 
is of great interest. It should be given careful consideration by 
Congress. 

These finance officers of cities urge that steps should be taken now 
to create some Federal agency for the primary purpose of advising 
Congress on Federal, State, and local fiscal relations. Tliey further 
urge that this same agency should be used to coordinate the many 
Federal grants-in-aid and shared taxes already in effect, as well as to 
leport upon new proposals. 

The American Municipal Association and the Council of State Gov- 
ernments have both also recognized the need for some appropriate 
organization to cope with the troublesome but highly important fiscal 
relations of the Federal and State and local orovernments. In addi- 



1892 POSTWAR ECONOMIC POLICY AND PLANNING 

tion, tliis whole problem was carefully analyzed by the Committee on 
Intergovernmental Fiscal Relations, which submitted a lengthy report 
to the Secretary of the Treasury in 1948. What is now needed is 
action by Congress. 

3. Imjwoving fiiblic-worJcs appropriation and other procedures. — 
Connnittees of Coiigress within their staff resources are making pains- 
taking study of proposed appropriations for Federal public works. 

Congressional scrutiny of separate proposals for Federal expendi- 
tures for public works should be broadened to include careful con- 
sideration of the over-all relations between ])roposed Federal expendi- 
tures for public works and total expenditures and revenues. 

A major reform which Congress could effect in this connection would 
be to improve its appropriation procedures so as to insure in every 
case, not only careful scrutiny of separate proposals but also carefiil 
consideration of the over-all relations of the sum total of proposed 
expenditures to the sum total of anticipated tax revenues. There is 
great need for appropriation procedures which will require consid- 
eration of the whole budgetary situation. 

In the field of Federal public works, the President has taken an 
important step which Congress should follow up. He has requested 
the Federal agencies to submit their proposals for public works to 
the Bureau of the Budget for scrutiny before their submission to 
Congress. The Budget Bureau, according to the Director's state- 
ment to the Colmer committee in May 1944, has not at present the 
staff, funds, and machinery to examine critically the proposals sub- 
mitted to it in accordance with this Presidential' oixler. This should 
be corrected. 

It is important that there should be a central place in the executive 
branch of Government for consideration of the over-all relationships 
of proposed Federal expenditures for public works before their sub- 
mission to Congress. 

If this were matched by similar over-all consideration by Congress, 
with the help of a joint staff for its Appropriation Committees, we 
would be better assured than we are at present that needs and costs 
and taxpayers' ability to pay were being given the consideration they 
deserve. 

Finally, the example of the Public Roads Administration, in its 
insistence upon the determination of needs and costs through traffic 
and engineering surveys before it will approve the expenditure of 
Federal highway funds, should be more widely followed by other 
Federal agencies. 

In this highway field we have an additional check of the utmost 
importance. The States must match the Federal-aid funds dollar 
for dollar which places a responsibility on them also for the efficient 
expenditure of highway appropriations. 

4. Ohtaining economy in pnhlic-ivorl's construction. — Competitive 
contracts should continue as the accepted basic procedure for secur- 
ing economy in public constrution and should be more widely used. 

Over the years, we have learned that economy in public "construc- 
tion can best be secured through competitive contracts with private 
construction enterprise and not through hiring day labor or resorting 
to work-relief methods. Experience has denionstrated that this pro- 
cedure secures better performance in shorter time and at lower cost. 



POSTWAR ECONOMIC POLICY AND PLANNING 1893 

It has the great advantage of enabling Congress, or a State legisla- 
ture, or a city council, to lind out just how nuich the improvement has 
cost. It puts the whole operation in a goldfish bowl and is thus an 
automatic brake on extravagance in design or wastefulness in con- 
struction methods. 

The Federal Government should set an example to the States and 
localities by the more general adoption of the contract method of 
public construction. 

5. Advance planning of needed piihJic works. — There was recent 
authorization by Congress in the War Mobilization and Reconversion 
Act of Federal' loans or advances to local and State governments to 
finance surveys and preparation of plans and specifications for needed 
public works. The purpose is to insure that this work will be ready 
to let by contract promptly as soon as the materials and labor become 
available. 

These loans or advances must be repaid when the construction w^ork 
is undertaken. It is not contemplated that there will be any Federal 
funds later for this construction work. There is no present intention 
to revive as a permanent activity the Federal Government's emergency 
public works program of the' thirties. On the contrary. Congress 
has expressly declared that tlie making of these advances does not "in 
any w^ay commit the Congress to appropriate funds to undertake any 
of the projects so planned." 

This policy should be adhered to by the Federal Government and 
accepted by the States and communities. 

These authorized Federal advances for blueprinting State and local 
public works should be made the basis, as is contemplated by the 
Federal Works Administrator, of a cooperative undertaking wnth the 
States to prepare a shelf of useful public works for the transition 
period. 

I think we can agree that the Federal Government and the various 
State and local governments should plan ahead as far as practicable 
the engineering and financing of their own proper public works. 

I think we can further agree that they should schedule their ex- 
penditures for these needed improvements over a period of years. 
Finally, they should release these public works, as far as practicable, 
at times when private construction work is slack. 

Each State could and should assemble material from its various 
local government agencies and take leadership in encouraging advance 
blueprinting and timing of needed public works. The Federal Gov- 
ernment in turn could clear information with the -18 States and pro- 
vide additional leadership for forehandedness in this field of public 
works administration. 

Congress has already placed the responsibility for this forward 
public-works planning in the Federal Works Administrator. Con- 
gress has also provided for rigid exclusion of "made w^ork'' projects by 
requiring that no advances may be made except for projects which 
conform to an over-all State or city plan approved by a competent 
State, local, or regional authority, covering a metropolitan area. 

This cooperative Federal-State-local experience with planning 
ahead for the transition period of public works ought to throw valu- 
able light on the future possibilities of timing public works so as to 



1894 POSTWAR ECOXOMIC POLICY AND PLANNING 

release them, as far as practicable, when private construction work 
is slack. 

In this connection one difficult problem of timing local public works 
should be mentioned. It is the problem of timing the financing as 
well as the execution of public works. It deserves thoughtful study 
on the part of the States and communities and the Federal Govern- 
ment. If slack work in private construction, for example, requires 
the compression of a blueprinted public-works program of a com- 
munity from 5 years into 3 or 2 years, the city, or State, may find 
itself unable to finance the speeded-up program because anticipated 
revenues cannot similarly be telescoped, or debt be wisely undertaken. 

6. Measuring constncction activity. — The problem of getting a 
reasonably stabilized construction activity in an expanding economy 
reaches far beyond public works. Two-thirds or more of the con- 
struction volume in an active period is private work. It will not be 
possible to develop and to agree upon practical activities looking to 
stabilization of construction unless we have currently available basic 
data regarding construction activity, both private and public. 

The Federal Government should assemble this information in one 
place, without duplicating tlie functions now ];erformed by other 
Government agencies or seeking to monopolize the gathering of in- 
formation now reported by private agencies and by trade associations. 

The information required covers the total volume of construction 
and of construction employment from month to month and also the 
totals classified according to the type of construction— private, public, 
commercial, farm, industrial, residential. 

This information would be obtained as at present, from the con- 
struction industry and from Government agencies. It should include 
analyses of the prospective volume of construction, vrhich may be indi- 
cated by the permits and the construction contracts which have already 
been executed. The information should be broken down by individual 
areas and localities. 

An immediate use of construction market data is to enable the 
diverse elements which make up the construction industry, from pro- 
ducer of raw materials, nianufacturer, and distributor to designer, 
contractor, builder, and financing agency, to plan wisely and ag- 
gressively to provide needed civilian construction as fast as war pro- 
duction is curtailed. 

A long run use of construction market data is to assist the business 
concerns in this field progressively to expand their markets and to 
do so, as far as practicable, with a view to mitigating the extreme 
fluctuations of construction activity. 

The vrar has brought about considerable improvement in the prompt 
reporting of construction data. This information has been prepared 
primarily for use of the War Production Board in administering 
various construction and related control orders. This activity will, 
no doubt, be sharply curtailed during the transition period and elimi- 
nated \vith the end of the war. 

The Bureau of Foreign and Domestic Commerce of the Depart- 
ment of Commerce proposes to set up a construction division to as- 
semble in one place basic construction industry data. This division 
F-hould become an impartial source of information both for the con- 
struction industry and for Federal and State and local government 



POSTWAR ECONOMIC POLICY AND PLANNING 1895 

agencies concerned with construction. It should be of help to both 
legislative and executive agencies in dealing with the complex problems 
of advance planning and timing of useful public works. 

7. Revising Federal tax policies to stimulate frioate const niction.— 
Kevision of the Federal tax structure should incorporate provisions 
which take account of private construction as a great potential force in 
obtaining economic, expansion and stability. 

The heart of the problem of private construction, as of the other 
capital goods industries, is found in deterrents to investment. One 
of the important obstacles to a freer flow of savings into productive 
enterprise and investment in homes is likely to be found in the tax 
laws. 

Specifically, as far as the Federal Government is concerned, we urge 
that provision should be made for accelerated depreciation, for de- 
ferred maintenance, and for the reserves needed for the postwar 
period. 

Provisions for the carry-forward of net operating losses and other 
suitable recognition of the principle of averaging incomes over a 
period of years, say at least 5 years forward, can make an important 
practical contribution to effecting more reasonable stability in con- 
struction activity. That is a highly important objective. Congress 
should give consideration to the extension of the carry-forward pro- 
visions of the tax laws, and provide for speedier grants of refunds. 

After the war, substantial reduction of the burden of taxation 
will be more conducive to employment and economic development than 
any elaborate system of partial or complete exemptions or other un- 
usual incentive devices. We must face the fact, however, that if high 
rates by reason of absolute Government necessities^ are to continue in 
the postwar period, some expedients may be necessary as, for instance,, 
preferential treatment of new capital investments. 

One important means to stimulate immediate planning on the part 
of private investors has been pointed out by the American Society of 
Civil Engineers, the American Institute of Architects, and other pro- 
fessional and busiess organizations in the construction field. 

It is that provision be made for clear recognition of the costs of 
planning for postwar construction as current operating expenses. 
This would tend to overcome a natural hesitancy on the part of private 
capital to spend money for planning at this time for construction 
which cannot be undertaken until some future date. 

The American Society of Civil Engineers estimates that the plan- 
nmg now of $5,000,000,000 of private construction work might in-^ 
voive an early loss in Federal taxes of not more tJian $75,000,000.. 
That amount of construction, if carried out in a period of 1 year, 
would furnish employment for approximately 2l^ million men on 
the site and in the manufacture and distribution of needed building 
materials and equipment. The immediate tax loss is small in compari- 
son with tliese gains and would be more than offset by new taxable- 
income created. 

Mr. Gilford. I want to leave. I would like to ask one question. 
Do you want us to vote FHA more authorization under title 6? 

Mr, Palmer. FHA ; yes. 

Mr. GiFFORD. You want the Government to stand back of more; 
private building under title G? 



1896 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Palmer. Yes. 

Mr. GiFFORD. You think that is necessary ? 

Mr. Palmer. Yes, 

The Chahoiax. Dr. KapLan, do you have any questions? 

Dr. Kaplax. I have one short question. I realize the time is short. 

Mr. Holclen, in his testimony, mentioned the necessity for some 
agency to iron out the difficulties of the taking over of a tax progi^am 
by the Federal Government which crowds the State and local govern- 
ments. There is a reference in this statement of Mr. Palmer's to it, 
but Mr. Palmer's statement calls attention to the fact the committee 
on intergovernmental fiscal relations, which was appointed for that 
purpose, did submit to the Treasury a very comprehensive report on 
this verj^ question. 

Now I notice that ]Mr. Palmer's report says what is now needed is 
action by Congress. I wish Mr. Palmer would elaborate on that, and 
perhaps Mr. Holden, as to just what action is expected of Congress 
at this tinie in connection with the recommendations that have been 
made on intergovernmental fiscal relations, particularly as it may 
affect the construction program ? 

The Chairmax. All right, Mr. Palmer. 

Mr. Palmer. The recommendation of that report is along the same 
line that we recommend, namely, a joint effort on the part of the 
Federal Government and State governments to accomplish the result of 
achieving fiscal independence on the part of State and local govern- 
ments. 

In other words, what we have suggested is substantially what that 
committee on intergovernmental fiscal relations thought should be 
done. 

Dr. Kaplax. You are not suggesting a specific program of what 
Federal taxes you want lowered or eliminated in order to make room 
for State and local taxes? 

Mr. Palmer. No, sir; we are not submitting a tax law here. 

Dr. Kaplax. This report you have referred to is probably the most 
comprehensive report that has been made so far on the question of 
intergovernmental fiscal relations. 

We are vrondering whether your chamber of commerce committee 
has studied those and would indicate what it regards as immediate 
steps that Congress might take. Which of those recommendations 
you would pull out for congressional action in order to make it easier 
for the local governments to go ahead with their louij-tei-m programs 
of public works ? 

_Mr. Palmer. There is in the chamber another committee dealing 
with Government financing. I think that that committee might have 
some recommendations as to which pi those specific proposals should 
be folloAved. Our suggestion is that Congress set up machinery in 
cooperation wnth the States and cities to work out and agree upon 
specific proposals for impi-oving Federal-State-local fiscal relations. 

The Chairmax. Is that all, Dr. Kaplan? 

Dr. Kaplax. Yes. 

Mr. Lyxch. Mr. Palmer, will you be good enough to refer to page 
9, paragraph No. 4? 

Mr. Palmer. Yes. 



POSTWAR ECONOMIC POLICY AND PLANNING 1897 

Mr. Lynch (reading) : 

Competitive contracts should continue as the accepted basic procedure for 
securing economy in public construction and should be more widely used. 

I take it your association is of the opinion that Senate bill 2030 
is not a bill that would secure economy in public construction, because, 
as I understand that, the bill has to do with negotiated contracts rather 
than with the competitive bidding system. 

Are you familiar with that bill? 

Mr. Palmer. I am familiar with the general purpose of it and I 
don't believe that that question has ever been discussed by my com- 

mit^'ee. t • r. 

However, I wish to give my personal opmion. It is that greater 
economy will be achieved by continuing the practices of the past m 

that respect. . i -v i.i, 

Mr. Lynch. As I understand it, the purpose is to try to stabilize the 
construction industry. If you are going to do away with the competi- 
tive system of bidding, do you think that would be toward stabilization 
of the industry? , -i j. i. 

Mr. Palmer. I do not see how that change would contribute to 
stabilization at all. It is simply another method of letting the work 
which the owner has decided to "do. I don't see how it would tend to 

Mr. Lynch. I don't see it either, so we are quite in accord. In try- 
ino- to work out a plan for war construction, we are confronted with 
thTs legislation that misht disturb this stabilization of postwar con- 
struction. I thought it might be advisable to get your opinion on 

that point. ^ . 

I iust have one more question. You take the position, as 1 see it, 
that' you do not believe that the Federal Government should under- 
take any financing except that which lies within its jurisdiction or 
fields of direct responsibility. . i , . x- 

I am in no wise a pessimist. I agree with the witness who has testi- 
fied here previously this morning, that we can look forward with a 
<Tveat deal of confidence in the next few years to construction work. 
But what do you consider is the direct responsibility of the 1^ ederal 
tJovernment? We will assume that there should be after 3 or 4 or 
5 years a depression where the municipalities and States could not take 
care of the unemployment. Would you then consider it would be 
part of the direct responsibility, within your statement, for the Fed- 
eral Government to come into construction and aid in the construc- 
tion field? , . • ^^ ^ -n 

Mr. Palmer. I think the greatest danger there is that we will over- 
estimate the contribution which construction can make to a stable 
economy. I think the experience in the thirties, of pushing hundreds 
of thousands of men into construction from other industries, was only 
a stopgap and a form of relief. I think there is a danger of attempt- 
ing too much construction under the guise of relief. 

Mr Lynch. Of course, there is a point where you can t get real 
construction, because you can't get the type of labor that is iiecessary 
for real construction. As I recall, I think that at the height of WPA 
there was only something like 900,000 men directly employed in con- 

99579 — 45— pt. 6 13 



1898 POSTWAR ECONOMIC POLICY AND PLANNING 

struction work. And at the outside, I don't believe that you can pos- 
sibly get more than a few million employed, even with the verv best" 
ot plans. Do you agree with that? 

Mr. Palmer. Tw^o million men, you mean ? 

Mr. Lynch. Yes, 

Mr. Palmer. I think that is probably the limit. 

Mr. Lynch I think we are all agreed construction in itself is not 
gomg to stabilize the economy. I think what we are looking forward^ 
to IS a stabilization m the construction industry as part of the general 

Mr. Palmer. I think in the earlier part of this statement, on pages 
a;xl 5 you will find there our recommendation for fact finding to 
guide the Congress m such an instance. The mere fact that a citv 
comes down here and asks you for a grant, calls for a good deal of 
investigation on your part of whether that is good policy to give that 
city that grant You need fact finding within your own Government 
departments. That is what we recommend be done here 

^i^'^' ^u^'T' ^'^ ''^^''''' T^''^^^ ^^^ establishment of a credit agency- 
such as has been suggested by Mr. Holden, that would have the neces- 
sary data to know when to extend credit and when to restrict credit 

Mr. Palmer. Eight. 

Mr. Lynch. To municipalities. 

Mr. Palmer. In the middle of page 5 appears this statement- 

Mr. Lynch. Thank you. 

The Chairman. Mr. Zimmerman « 

Mr. Zimmerman. You only talked about public works in a general; 
Sness?'''' ^''^ ^''^^^ "' ^ "" construction, or the construction; 

Mr. Palmer. I don't quite hear you, sir 

Mr Zimmerman. There is a go6d deal of talk about Federal con- 
struction m general terms. Now at the present time, I think I u-' 
derstand the situation the Government, of course, embarks oi a pro-' 
gram as we have m the past, of building public buildings like post 
offices, and the necessary buildings to carry in the govermnental fine ^ 
tions. Of course, that is a program that should always be carried^ 
that ^ the Government. I don't think there is any question about 

Mr. Palmer. No. 

Mr. Zimmerman. Then we have the participation of the Federah 
Governmen m our road-building program, where the Federal funds 
are allotted to match State funds. You would not suggest anv 
change m that program, would you ? ^"bge^t any 

Mr. Palmer. No, sir. 
, Mr. Zimmerman. Then we have the Federal Government encracred^ 
m construction of flood -control projects under the supervisio f of a 
Corps of Army Engmeers Then the rivers and ha4ors pmc^rain 
calls for the constriction of projects in your rivers and harbo£ wh ch 
is carried on by the Federal Government. Outside of those 'ok es 
abhshed Ime^ of public construction, about the only other innovation" 
has been the Federal housing, isn't that so? lnno^atlon, 



POSTWAR ECONOMIC POLICY AND PLANNING 1899 

Mr. Palmer. Well, I think we should mention reclamation as one 
of those fields in which the Federal Government has had jurisdiction 
traditionally, and in my opinion should retain it. 

Mr. Zimmerman. That is right. I omitted reclamation. That is 
one of the big governmental activities of our country. But when you 
come down to construction in terms of what we usually think of as 
construction, Federal housing is about the only new field of con- 
struction, apart from the WP A— which I don't think we ever want 
to get back into again, I think it did some good, but that isn't the kind 
of construction we are thinking about. Can you think of any other 
field that the Government might enter, other than the housing field, 
in addition to these other established lines the Government has been 
engaged in for years? 

Mr. Palmer. No, sir; I cannot. O course, I am one of those who 
doesn't look with enthusiasm upon the Federal Government participat- 
ing in the local housing field. 

Mr. Zimmerman. I just wanted to get the scope of the program, 
something concrete, if I may, about what the advocates of public 
construction might want to go into, or what field they might want to 
go into. I have been unable to think of any other field, other than that 
of Federal housing, which is now one of our bigger enterprises for 
Government and has been, especially during the war emergency. And 
I think it is going to be a great field in the future. I know in my 
gtate — Missouri — we adopted a new constitution the other day and 
it carried a provision for a housing program in our cities, where they 
might carry on. So I think that idea is pretty well true over the 
country. 

Other than that, you don't know of any other field now that we 
might think about 'i 

Mr. Palmer. No, sir. 

Mr. Zimmerman. Of course, when we think of supplementing our 
private industry with public works, we have in mind flood control, 
road building, rivers and harbors improvement, reclamation, and then 
the building of Government buildings, as we have done in the past ? 

Mr, Palmer. Of course, those functions you have mentioned are 
federally financed public works. 

Mr. Zimmerman. And Federal housing? 

Mr. Palmer. Yes. There are many public works financed by the 
local government, those that you have not mentioned, for example, 
water supply and sewerage. 

Mr. Zimmerman. We are talking about peacetime now. 

Mr. Palmer. Yes. You are talking about Federal Government, 
only federally financed projects? 

Mr. Zimmerman. That is right. We are thinking about the peace- 
time economy, when we are going to be out of war and we are dealing 
with a peacetime program which we hope will lead us forward. That 
is the thing we are thinking about, that this committee is set up to do, 
you know, develop a peacetime economy to keep us going, to keep our 
national income, to keep prosperity, to keep jobs. In other words, to 
keep going. 

So I have been a little confused about a lot of talk about what do we 
mean by Federal construction in aid of private industry. I have been 
a little confused about those terms. What does it mean ? That is all. 



1900 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. Mr. LeFevre? 

Mr. LeFevre. No questions. 

The Chairman. Mr. O'Brien? 

Mr. O'Brien. No questions. 

The Chairman. Mr. Simpson ? 

Mr. Simpson. No questions. 

The Chairman. Mr. Pahner, we are grateful to you for your appear- 
ance here this morning. I would just like to say for the benefit of 
the record, that I think this committee is prett-y largely in accord with 
the views expressed by you and Mr. Holden as far as public works as 
such is concerned. I mean to say thereby, that this committee doesn't 
want any public works that can be avoided, that are not essentially 
along the line that Mr. Zimmerman has just spoken. But we feel that 
it is our duty to prepare for such eventualities, that we don't want to 
be caught like we were with the WPA and have a lot of useless leaf- 
raking, and so on, going on. I have been impressed here this morning 
by the statements of both of you gentlemen, which are in accord with 
others given here, to the effect that you do not apprehend that there 
will be any necessity for pump-priming or stimulation of construction 
in the construction field for the first few years. We want to find out 
the best method of having a useful shelf of j^ublic works, in the event 
it does become necessary. 

We are very grateful to you. The committee will stand adjourned 
until tomorrow at the same hour. 

(Whereupon, at 11 : 50 a. m. the committee adjourned, to reconvene 
at 10 a. m., Thursday, March 15, 1945.) 



POSTWAE ECONOMIC POLICY AND PLANNINCt 



THUBSDAY, MARCH 15, 1945 

House of RE^RESENTATI^^:s, 
Special Committee on Postwar Economic 

Policy and Planning, 

W ashington^ D. G. 

The committee met, pursuant to adjournment, at 10 a. m., in room 
1304, New House Office Building, Hon. William M. Colmer (chair- 
man) presiding. 

Present: Representatives Colmer (chairman), Cooper, Lynch, 
O'Brien, Fogarty, Gifford, Reece, LeFevre, and Simpson. 

Also present : Dr. A. D. H. Kaplan, consultant to the committee. 

The Chairman. The committee will come to order. 

Resuming these hearings on public works, we have this morning 
Mr. Edward J. Cleary. 

Mr. Cleary, for the sake of the record, would you identify yourself ? 

Mr. Cleary. I am a graduate civil and sanitary engineer and a regis- 
tered professional engineer. 

For about 7 years 1 was engaged as a construction engineer, working 
for municipalities, private utilities, on various types of public-works 
construction. . 

For the last 10 years I have been a member of the editorial staff 
of Engineering News-Record, with specific assignments relating to 
public-works construction throughout the United States. 

Engineering News-Record is the weekly civil engineering and con- 
struction journal of the McGraw-Hill Publishing Co., and it has been 
in existence for almost 75 years. This journal reports news, technical 
developments, and maintains continuous statistics on construction 
activity through the medium of 12 editors and more than 100 corre- 
spondents throughout the country. 

The Chairman. All right. You may proceed. 

STATEMENT OF EDWARD J. CLEARY, MANAGING EDITOR, 
ENGINEERING NEWS-RECORD 

Mr. Cleary. Gentlemen, on requesting me to participate in these 
hearings on postwar public works, your chairman set forth several 
questions on which my views were desired. 

The answers to these questions are best formulated, perhaps, in a 
brief statement related to past performance, present activity, and 
future prospects of public-works construction. Some of the conclu- 
sions reached from this analysis, it will be noted, are not fully in accord 
with those generally expressed. 

1901 



1902 POSTWAR ECONOMIC POLICY AND PLANNING 

First, as a basis for common understanding, I believe there is general 
agreement that public works constitute only a portion of the activities 
of the construction industry. The industry engages in the construc- 
tion of both private and public works, the latter accounting for only 
about 30 percent of the volume of activity. Actually a ration of 71 
percent private work and 29 percent public work was the average for 
the two decades prior to the war. 

Thus, when we talk about a 16 billion annual construction budget 
for the postwar years, this does not mean that public-works construc- 
tion alone will constitute this volume of work. If past performance 
is any guide, public-works construction should account for a volume 
of 41^ to 5 billions. 

But where do we get the estimate of 16 billion as an annual con- 
struction budget figure ?^ This, too, has historical background for 
its validity. If we examine the relation between net national income 
and new construction, we find that in the two decades prior to the 
war, it averaged 10.7 percent; the maximum was 14.4 percent in 1927 
and the minimum ratio was 5.7 percent in 1933. 

Consequently, if we accept the estimates of economists that the na- 
tional income in the postwar years will be 150 billion, total new 
construction should account for 16 billion volume of business. 

Comparison with other estimates indicates that this 16 billion figui-e 
is a fair assumption. 

For example, Maj. Gen. Philip Fleming, Administrator of the Fed- 
eral Works Agency, estimates a 15 billion budget; S. Morris Liv- 
ingston, Chief of the National Economics Unit, United States Depart- 
ment of Commerce, a 17.7 billion budget; Miles L. Colean, who ap- 
peared before this committee earlier this week. National Planning 
Association, cites 15.4 billion; and Engineering News-Record estab- 
lishes a range between 12 and 18.7 billion for new construction. 

Therefore, in answer to one of the questions posed by your chair- 
man, namely, how large a volume of public-works construction may 
be expected to develop in the postwar period, I am led to the con- 
clusion that it will be within the 4i/^ to 5 billion range annually if 
public-works activity follows the established pattern. 

It might be pointed out, however, that at no time in the prewar 
period did public-works construction reach such a high volume. 

In fact, a perusal of the data shows that the highest volume, ex- 
cluding work relief funds, was 2.8 billion in 1930; even with work 
relief the greatest volume was only 3.4 billion, reached in 1939. 

Therefore, what justification, aside from juggling figures and using 
an assumed national income, is there for estimating the postwar volume 
at 41/2 to 5 billion ? 

In part, this justification rests in the knowledge that during the 
•war years this country has accumulated a vast backlog of deferred 
public-works needs. These needs include maintenance of existing 
works as well as new construction to meet growth demands and to 
provide improved service. 

Unfortunately, there are few estimates of how much money must 
be spent for the correction of obvious public-works deficiencies. 

One index of the volume of deferred maintenance is found in a 
recent study made by the American Water Works Association. 



POSTWAR ECONOMIC POLICY AND PLANNING 1903 

This organization lias determihed from its records that the 4-year 
backlog of accumulated deficiencies amounts to $960 per 1,000 persons 
"served, or approximately $1 per person served from a public water- 
•supply system. Since there are 85,000,000 people dependent on such 
service, the aggregate volume of 85,000,000 makes a respectable total. 

Another index is established by the Federal Public Roads Adminis- 
tration, which points out that the cumulative wartime arrearage of 
highway maintenance may be reasonably approximated as the dif- 
ference between work perfoi-med in those years immediately preceding 
the" war and the work actually performed during the war. 

This arrearage of maintenance for 1942, 1943, and 1944 is stated 
to be 1.3 billion, or an average of $419,000,000 per year. 

The PRA, in an interpretation of these estimates, states that — 

-perhaps half of the maintenance arrearages represent either work foregone, for 
which eventually reconstructton will substitute, or merely a reduction in the 
standards of service rendered, the effect of which would be erased upon resump- 
tion of normal maintenance. 

But even if we were to ignore the backlog of normal maintenance, 
.probably the strongest support for estimating an annual public-works 
budget of 4:^2 to 5 billion comes from an examination of postwar 
planning data ; projects represented by these data reflect accumulated 
needs as well as future OTOwth requirements. 

The source of this inlormation is the published construction reports 
of Engineering News-Record. Here it is shown that at the end of 
1944, plans had been started or were already completed on public- 
works projects totaling 5.4 billion. This figure is no estimate; it 
represents a compilation of identified projects actually being planned 
and designed for Federal, State, and local governments. 

This work must not be confused with projects that are simply 
^'proposed" for the postwar period, and I might define "proposed 
projects as those established on the basis of stated needs, but on which 
enffineerine: designs or financing have not been undertaken. If the 

t I'll 

J)roposed projects are added to those on which plans are already 
under way, the total is an impressive 15.3 billion. That is, at the 
end of 1944. I may add, parenthetically, by checking the figures at 
the end of February, the total was 19.1 billion. It is accelerating at 
9 very fast rate. 

In other words, not only are the public-works authorities in this 
"country engaged on designs for projects totaling more than a year's 
estimated budget, but they are "proposing" enough work to cover 3 
postwar years at the rate of 5 billion a year. 

If it is granted that the 4i/2 to 5 billion annual public-works budget 
is correct, we are brought to another question raised by your chair- 
man, namely, How well prepared is the construction industry to move 
into an expanded volume of activity? It is one thing to have plans 
'on the shelf, and quite another to execute them. 

To analyze this question we must revert to consideration of the 
industry as a whole, which engages in both private and public-works 
construction. It was stated earlier in my remarks that the total 
private and public-works postwar construction budget, based on a 
150-billion national income, might be 16 billion. Is the industry, 
as we know it, capable of doing this much work in a single year? 



1904 POSTWAR ECONOMIC POLICY AND PLANNING 

I believe the answer is "Yes". lu 1942, the highest year on record, 
the vohime of domestic construction was 13.8 billion. 

But this does not include an undisclosed amount of strategic con- 
struction on foreign shores, carried out by American contractors using 
much American equipment and materials. 

If the volume of this foreign work were added to the 13.8 billion 
of domestic construction, the over-all total would be substantially 
higher. Therefore it is my conclusion that we need not have any 
qualms concerning the ability of the construction industry to handle 
a greater volume than has been heretofore recorded. 

But what I do question is the probability of the industry being 
able to mobilize materials, manpower, and machines fast enough to 
undertake a lf)-billion program in the first postwar year, or even in 
the second and third postwar years. 

My reasoning is based on this fact: At no time in its history has 
the construction industry been able in one'year to expand its annual 
rate of productivity by more than 62 percent. Most recently, under 
the extreme urgency of wartime preparations in 1941, when nothing 
except the availability of engineered designs stood in the way of 
construction expansion, annual volume was jumped from 7.8 billion 
to 11.7 billion, a total of 3.9 billion, or 50 percent. 

Now, what does this analysis of rate of increase mean in terms of 
postwar construction? 

Simply this: With the construction industry now operating at the 
very low output of about 3.3 billion annually, probably the best per- 
formance that could be hoped for a year hence, if all restrictions on 
manpower, materials, and equipment were removed today, would be 
a 62-percent increase, or 5.3 billion. 

Optimistically assuming that the 62-percent rate of increase could 
be consistently maintained — actually it never has, but the postwar 
situation may be different, because a large volume of project plans are 
now being prepared in advance — but assuming this rate could be 
maintained, 2 years later the volume output could be expected to be 
about 8.6 billion, and at the end of the third year it would show a 13.9 
billion production. 

Thus, not until after 3 years had elapsed would the industry be 
ready to operate above the 14 billion range, which is still short of the 
desired annual goal of 16 billion. 

It appears, tlierefore, that our immediate attention so far as post- 
war public-works construction is concerned should not be related 
solely to the creation of a backlog of planned projects. Rather, we 
are challenged to determine how fast the resources of the construction 
industry can be mobilized and expanded so that it will be able to 
undertake speedily a large volume of essential postwar work. With 
the industry geared to its present low rate of performance, it could not 
execute even half the anticipated 16 billion annual budget of con- 
struction. 

Among other things, the situation, in regard to building costs would 
become chaotic. A parallel to this circumstance exists in regard to 
the pent-up demand for consumer goods — too many will want too 
much, too soon. 

All of this discussion leads to the third and final matter regarding 
which your chairman asked for my viewpoint, namely, the practica- 



POSTWAR ECONOMIC POLICY AND PLANNING 1905 

bility of Federal legislation to stimulate either public- works planning 
or private construction. . ^i -i 

In reo-ard to private construction, I have little comment other than 
to sav that there are few data available regarding the extent to which 
postwar planning of such work has advanced. This lack of announce- 
ment and details of work contemplated by private enterprise to pre- 
sumed to result from the fact that such matters are generally regarded 
as confidential up to the moment construction begins, because ot com- 
petitive conditions. . • i , • i i 

But fragmentary reports on identified private industrial ami com- 
mercial building projects, compiled by Engineering News-Record, 
show that plans have either been started or completed tor slightly 
more than a half-billion dollars of work, and that proposed work 
totals almost another half billion. .• t 

Because of the short notice received in advance ot this meeting i 
am not prepared to comment on the role of Federal legislation tor 
stimulating private construction. 

Obviously, however, any Federal tax or regulatory measures that 
would tend to increase the hazards of long-term capital expenditure^ 
in fixed facilities, such as commercial and industrial buildings, would 
discourage private investment. , , . , .i t 

In regard to the stimulation of public-works planning by the use ot 
Federal funds, as proposed in title V of the War Mobilization and 
Reconversion Act of 1944, it is my opinion that there should be no 
Federal aid for such purposes at this time. A concise expression ot 
mv views appears in an editorial written for publication m last 
week's— March 8— issue of Engineering News-Record, from which 
I quote : 

AN OPENING WEDGE 

Stronger iustification than now exists wonld seem to be necessary for the 
appropriation of $75,000,000 of Federal funds to aid States and local govern- 
ments in planning postwar public works. When this appropriation was recom- 
mended in 1944. the end of the war with Germany seemed imminent and theie 
was some question of the preparedness of local governments to resume postwar 
construction of public works. . 

Months of time have elapsed, however, during which those local government 
units that had the will to do have made substantial progress in planning, de- 
signing and otherwise implementing their postwar construction plans. 

Co-nizance of this fact was shown by the House when, on February 8, it 
reduced the appropriation from $75,000,000 to $5,000,000. Now the matter is 
before the Senate Appropriations Committee. „ ^-r , i- • 

It is our hope that this body will go even further than the House and elimi- 
nate everv penny of Federal planning aid. At this late date, authorization of 
such aid will favor those who have delayed their planning waiting for a Federal 
hand-out Once the precendent of Federal aid for local-works planning is set, 
the next' move will be for the appropriation of Federal funds for construction 
The Congress now faces an issue far greater than the appropriation of 
$75 000 000 If the decision is in favor of the planning appropriation, an opeii- 
ing' wedge will have been driven for billion-dollar obligations to construct the 
planned pro.iects. 

It might be added that the frantic pleas of some of our local gov- 
ernments today for a Federal hand-out are poorly timed and not too 

realistically appraised. , , , , • i .• ^ ^i 

I am thinking specifically of the Federal debt m relation to the 
debt burden carried by our States and municipalities. The ratio is 
about 234 to 17. And what is more, in contrast to the Federal debt 



1906 POSTWAR ECONOMIC POLICY AND. PLANNING 

Situation, the local governments during the last 2 years have been' 
reducing their total indebtedness by about 1 billion annually 

Une matter bearing on Federal regulation, which is respectfully 
recommended for tlie attention of this subcommittee, is an explora^ 
tion of tiie possibility of increasing the present low rate of domestic 
construction activity The higher this rate is when our wa? effort 
ends, the greater wi 1 be the ability of the industry to expand and 
cope with the demands made upon it. J' i<^ '^ ^"a 

The modus operandi for increasing the annual rate of activitv in- 
volves the removal of War Production Board construction restrictions 
as fast as manpower, materials, and machines can be made available 
Apparently nothing can be done about this now, but when the war 
witli Germany ends, construction work should be encouraged to o-et 
under way as fast as military commitments will permit ^ 

, In other words, no time should be lost in gearing up construction 
industry facilities to meet the tremendous demands that will be made 
when complete victory is achieved. 

These facilities-consisting of staff organizations, adequately 
trained technicians and labor crews, as well as the assemblage of ma 
cation ^^^ equipment— require time for their effective appli- 

How completely these facilities are deactivated at present can be 
appreciated by the fact that output today is geared to a 3.3 billion 
tempo as contrasted with 13.8 billion in 1942. 

I see no better way of gearing up the industry than to provide the 
opportunity for contractors to bid on work and start constructin<T 
>.-ir 'Vn'^'"'"^' """"f waiting and ready for bidding— almost a half- 
billion dollars worth-and this does not take into account an undis- 
closed amount of deferred maintenance 

But under present WPB restrictions on the use of certain material's, 
tor construction, and considering the severe shortage of manpower 
the construction industry is without the means now to increase th- 
tempo of its operations, 

^n suinmary, my major conclusions are these: 

(1) The volume of public-works construction that may be expected, 
to develop m the postwar years will be within a four and a half to five 
billion range annually. 

aJV. The construction industry could be expanded to undertake 
an annual 16 billion volume of building-both private and public. 

rnl^r 7'l.Vr^^"'^^ th ^^^^^ ^ y^^^'^' however, for the industry to 
mobilize facilities enabling it to reach an annual production of 16. 
billion, considering the extremely low rate at which it is now op- 
erating. ^ 

(4) Attention should be focused on the desirability of stimulatine: 
the production rate of the construction industry through the removal 
ot restrictions on materials and manpower as quickly as militarv com- 
mitments will permit. ^ j y ^^"i 

The Chairman. Mr. Kaplan, do you have some questions you would 
care 10 propound to the witness ? ' j u ^ 

^V. Kaplan. Thank you. 

Mr. Cleary, I would like to ask you whether you would enlarge on 
the point of view you expressed in your editorial that those commu- 
nities that have had the will to go ahead with planning have done so, 



POSTWAR ECONOMIC POLICY AND PLANNING 1907 

and don't need Federal aid, and that there is no point in pampering or 
giving special help to those communities that have not presumably 
had the will to do so ? 

How would you feel about the question of punishnig tho_se com- 
munities that happen to exist in States where it is impossible for 
them to allocate funds for planning, except as they already have 
complete bond issue authorizations for the entire job, and that can 
be saved, perhaps, the lag of 12 or 18 months between the initial 
planning stages in construction by having loans made to them which 
they can repav when they get their construction started? 

Mr. Cleary. I don't feel any punitive measures should be involved. 
Those local communities in States that did not have adequate legisla- 
tion to permit advance of planning funds might have brought action 
to secure enabling legislation, as was done in several States. 

There are still other means of getting around that. I happen to 
live in a small community of 2,500 in a State that did not make 
provision for advance of planning funds. It was found possible, 
however, to include a small amount of the capital budget for our 
planning work. 

I think there are ways and means. I feel strongly, however, that 
all the ways and m.eans haven't been fully explored. 

Dr. Kai-lan. I think that is perfectly true. There is a question 
in our minds, at least certainly in my own, as to whether the fact 
that administration procedures and legal restrictions, all the other 
factors that exist in communities, of which, naturally, the average 
citizen is totally unaware, should prevent us from doing what is 
necessary in the' interest of the common welfare to getting those com- 
munities ready while we are in the process of reforming some of that 
legislation. 

Where are you going to put the emphasis ? On the f a,ct it is about 
time those communities got wise to their deficiencies in respect^ to 
legislation, or on the fact that here are communities that are going 
concerns, that we have to retain as going concerns, and that they 
should be helped in every possible way to do what they ought to be 
doing, short, of course, of the hand-outs which most of us might agi'ee 
would be unnecessary ? 

It is a question we are trying to clear up. What is the Federal 
Government's responsibility for looking over the entire employment 
picture, or, particularly, the entire construction-need picture and 
filling in gaps that as a realistic matter may not be filled in otherwise 
during the next year or two or three, or whatever the transition is ? 
We are trying to get your views on that. 

Mr. Cleary. It must have been 18 months ago that a great deal of 
emphasis was placed on the necessity of postwar planning. The 
Federal Works Agency, in the person of Major General Fleming, 
particularly, stumped this country from end to end pleading with 
communities to get under way. Eighteen months ago such action 
for the correction of legal restrictions might have been taken by 
those who I said might have had the will to do. You raise the ques- 
tion. Should we make up for this deficiency by Federal appropriations ? 
Dr. Kaplan. On planning. 

Mr. Cleary. On planning. That involves the whole philosophy of 
whether we are going to commit ourselves to Federal subsidy of local 



1908 POSTWAR ECONOMIC POLICY AND PLANNING 

public-works planning and then appropriations for construction. 
That is a very broad question. 

I think it is a dangerous precedent to make funds available now for 
planning, because the next move will be for funds for construction. 

Dr. Kaplan. I wasn't trying to change your mind. I was merely 
makmg sure we got your view correctly in the light of the whole 
situation. 

In respect to this matter of timing, when you start out with a jump 
from three and a half billions to five and a half billions, or 5.4 billions 
of new construction for public works, is that first increase going to be 
after Japan, or do you think we can move in during this interim 
period ? What did your figure mean ? 

Mr. Cleary. Using historical background as my reference, and I 
think that is all we can safely use, the best annual increase would 
be G2 percent. We may hope, however, that future performance might 
be better. 

Dr. Kaplan. I was trying to relate your figures. Are you going 
to begin with the war with Japan ? 

Mr. Cleary. Even with the war on we should start construction 
program activities moving up. We are now operating at the low vol- 
ume of 3.3 billion dolkrs. If we can increase the rate by 62 percent 
we might get construction volume up to 5.3 billion dollars 1 year 
later. The important thing is to get annual volume started above the 
present low rate of activity at which we are now operating. 

Dr. Kaplan. Mr. Chairman. 

The Chairman. Yes? Have you finished? 

Dr. Kaplan. Yes. I was going to ask you gentlemen, in view of 
the fact that the next witness is going to present a statement bearing 
on exactly the same question and that some of your questions may bear 
on the two together, whether you might want the second statement to 
be presented before you go into your questions here. 

I am wondering how you would rather do it. 

The Chairman. I think, in the interest of orderly procedure, it 
might be better if we would interrogate the witnesses when they have 
finished. It certainly would be more fresh in our minds. 

Mr. Cooper? 

Mr. Cooper. Mr. Chairman, let me ask a brief question, if I may. 
Mr. Cleary, on the statement you made with respect to Federal aid 
for planning, you stated that communities in States where they had 
not done so could get their State laws changed. Was that aboiit the 
efff^ct of your statement? 

Mr. Cleary. Yes. 

Mr. Cooper. Aren't you aware of the fact that some States have 
constitutional limitations that prevent that? 

Mr, Cleary. I believe New Jersey, my home State, is one of these. 
I am not familiar with all the States. 

Mr. Cooper. I just recall when we considered the demobilization- 
reconversion bill in the House and also in Congress, as I happened to 
be one of the House conferees, it was brought to our attention that some 
States had constitutional limitations that were such that they couldn't 
go forward with this work. 

Mr. Cleary. They couldn't make funds available at all to aid com- 
munities ? 



POSTWAR ECONOMIC POLICY AND PLANNING 1909 

Mr. Cooper. That is right. 

Mr. Ci^EAKY. I didn't know that existed, in view of what happened 
in California, New York, and Michigan. 

Mr. Cooper. You are not familiar with that phase of it, are you? 

Mr. Clear Y. No ; I am not. . 

Mr. Cooper. Our information was because of constitutional restric- 
tions some States and local communities couldn't advance funds for 
planning until they had had bond issues floated for construction. But 
if they could get this advance to help them in making their plans, they 
could then repay the advance made by the Federal Government when 
the bond issue was floated and the bonds were sold. 

Mr. Cleary. I believe Ohio has such a restriction. 

Mr. Cooper. I don't recall now just all of them. My recollection is 
that Senator George, of Georgia, who was one of the Senate conferees, 
called attention to some situation similar to that in his State. 

Mr. Cleary. We had the same situation in New Jersey. However, 
communities were permitted to put in their capital expenditures 
budgets a small amount for advance planning of definite projects. 

Mr. Cooper. Of course, that situation does exist with respect to cer- 
tain States that have a constitutional restriction. Obviously, some 
attention along that line would have to be given in order to enable 
them to have plans made and arrangements completed to the extent 
that they would be ready to go forward when the bonds were sold and 
construction could be started. Wouldn't that be true, Mr. Cleary? 

Mr. Cleary. I am not too sure. At least 24 States ha\^e already 
enacted laws authorizing municipalities to set up reserve funds for 
postwar improvements. 

Mr. Cooper. With all due deference, I don't think you have looked 
into it quite fully enough. 

That is all, Mr. Chairman. 

The Chairman. Mr. Gifford. 

Mr, Gifford. States that liave a constitutional requirement that they 
can't do these things should try to keep within their means. I don't 
believe we ought to encourage them to go into debt for public things if 
they don't want to, do you? Many States have their constitutional 
requirements. They can't get hito debt, you might say, for these 
things. Why force a State or encourage them to ao what they don't 
really want to do ? 

Have you read the testimony given here the last few days, sir? 

Mr. Cleary. Yes, sir. 

Mr. Gifford. Most of them want this planning, don't they? And 
recommend it? 

Mr. Cleary. I hadn't reached that conclusion. 

Mr. Gifford. You are the first witness to want to do away with 
Federal planning. I am very proud of you for your view. I want 
to keep the Federal Government out of it because we owe so much 
money. 

Have you read in the papers this morning or the last day or two, 
what certain Senators are advocating, $7,000,000,000 to do away 
with slums, for instance? 

Mi". Cleary. In connection with housing? 

Mr. Gifford. Yes. 

Mr. Cleary. I haven't followed it. 



1910 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. GiFFORD. It was backed by the Federal Government. 

Mr. Cleary. I haven't noticed it the last few days. I saw the 
proposal of a few days ago that was aired in the New York Times, 
later denied by various people. 

Mr. GiFFORD. I gather from j^our testimony you have the opinion 
that the Federal Government had better keep out of this for a while. 

Mr. Cleary. That is my honest conviction, sir. 

Mr. GiTTORD. It is strictly in accordance with mine, also. 

I am a little Avorried because they keep telling me that the Federal 
Government is in such bad shape compared to States and munici- 
palities. My State and the municipalities have set aside consider- 
able mone_y for public works, sewerage, expansion of water supply, 
public facilities, and so on. What worries me is that they invested 
all of those savings they have set aside in the Government. They 
have bought Federal bonds. We have got to cash them. I will call 
the attention of the committee again, here, that these members go 
around telling everybody that the Federal debt or the Federal bond 
is the best possible investment that could be made. You have heard 
that. And when I learn of others who had, in the last war, these 
4I/2 percent bonds, and I had wanted to invest in real estate — for 
instance, I bought two $1,000 bonds and cashed them in for $1,600. 
I began to think that the Federal debt was about the poorest kind 
of debt in those days. I am wondering whether I should go out in 
an oratorical manner and tell my people the Federal bond is the 
best investment you can make? We all have to do it. 

I am trying to explain to you why, after all, I feel kindly toward 
you if you want to keep the Federal Government from going further 
into debt. Have you got my point ? 

Mr. Cleary. Yes, sir. 

Mr. GiFFORD. I hope you can stick to it, but you haven't read this 
$7 000.000,000-a-vear program the Senators want to put over. 

Mr. Cleary. No ; I have not. 

Mr. GiFFORD. Do you think title VI of the FHA should receive con- 
sideration ? Are you familiar with that ? 

Mr. Cleary. No ; I am not familiar with title VI. 

Mr. GiFFCRD. That is where we guarantee loans for private housing. 
And they are long term. I am trying in my poor way to hint that we 
had better reduce rather than increase the participation of the Fedei'al 
Government in these private activities. Do you get my point there? 

Mr. Cleary. Yes, sir. 

Mr. GiFiORD. I am a little surprised that you will express your 
attitude as strongly as you have in that matter. 

The whole construction business is so highly interesting to me. I 
think for a long time we are going to have a shortage of material and 
manpower. As far as I am concerned, I think that public works 
doesn't need capital at the present time to carry on. It needs some- 
thing more than capital. 

I will ask this one question : You don't think the Federal Govern- 
ment should be expected at the present time to get back of any more 
of these construction things than they are already back of, do you? 

Mr. Cleary. Not local Government projects; no. 

Mr. GiFFORD. You don't recommend any definite bill that this com- 
mittee or the Federal Government should act on or encourage to back 
up construction ? 



POSTWAR ECONOMIC POLICY AND PLANNING 1911 

Mr. Cleary. That is a pretty broad statement, sir. 

Mr. GnTORD. I don't mean rivers and harbors, that sort of thing. 

Mr. Cleary. That is Federal. That is an entirely different matter. 
I am talking now purely about local Government aid. 

Mr. GirroRD. You don't want to encourage those municipalities who 
won't do anything for themselves, to come to the Federal Govern- 
ment ? 

Mr. Cleary. Precisely. 

Mr. GiFFORD. You happen to remember PWA? 

Mr. Cleary. I am not recalling PWA. 

Mr. GirroRD. You remember that program they had of building 
these schoolhouses all over the country with money from the Federal 
■Government. I come from a State that contributes so much more 
than she gets anyhow. There are so many States that do not. They 
vote the money, because they don't pay for it. I happen to be on 
guard, that is all. 

I am glad to hear you say you don't want hand-outs to those 
municipalities who haven't had the will to comply. Some of their 
Senators would like to build their houses over for them and make 
them live better. We don't want to. It is getting to be a world idea — • 
everybody that lives in an unhappy condition ought to be forced to 
want something better. I am old-fashioned, don't you see? I hope to 
remain so, or to be on guard. I tell these boys I am going to be in 
the procession when they go by. I must get my share, if you vote it. 

That is all. 

The Chairman. Mr. Lynch, the chairman of the Subcommittee on 
Public Works, I am sure would like to ask you some questions. 

Mr. Lynch. Mr. Cleary, on page 5 of your statement there is an 
article which appears in the Engineering News-Record. 

Mr. Cleary. Yes; an editorial. 

Mr. Lynch. An editorial. So in addition to it being your own 
opinion, it is the opinion of your publication? 

Mr. Cleary. That is right, sir. 

Mr. Lynch. That the appropriation for postwar planning tliat was 
provided in our recent bill should be entirely eliminated? 

Mr. Cleary. That is right. 

Mr. Lynch. You have stated to my colleague, Mr. Gifford, that 
you don't believe that postwar planning of public works is a matter in 
which the Federal Government should inject itself, insofar as aiding 
States or municipalities. 

Mr. Cleary. That is right; not at this time. 

Mr. Lynch. If it is dangerous for the Federal Government, in your 
opinion, to give aid for postwar planning to States, don't you think, 
following that to its logical conclusion, it would likewise be a viola- 
tion of the home rule of cities for the States to likewise contribute 
from their funds to the cities' fund for construction? 

Mr. Cleary. Not if the cities express themselves in favor of that 
sort of thing before their State legislatures. 

Mr. Lynch. Assume they do not express themselves to their State 
leo:islatures except by the way of appropriations which might be made. 
What is the difference in principle between your fear that if the Fed- 
eral Government aids the States, it will be injecting the Federal Gov- 
ernment into State government, but if the State aids the cities, it will 
not be injecting the State government into the home rule of cities? 



1912 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Cleary. As I undersand it, the State governments are already 
injected into the home rule of cities. 

Mr. Lynch. So has the Federal Government somewhat injected 
itself into State affairs by these appropriations. That is the same 
way that the State is injecting itself into the affairs of cities by ad- 
vancement from State funds for city construction. 

Now, I assume that you would be opposed to that in principle, just 
as you are opposed in principle to the injection by the Federal Gov- 
ernment into State affairs ? 

Mr. Cleary. No ; I am not. But I can't tell you precisely why with- 
out a discussion of State and Federal obligation. 

Mr. Lynch. Of course that is a rather inadequate answer, sir. 

Mr. Cleary. I am tliinking in terms of this 

Mr. Lynch. I guess I will have to be satisfied with it. 

Mr. Cleary. I am thinking in these terms : The cities and munici- 
palities derive their powers from the State and have a large claim 
for State aid that is more aj^parent than a claim for Federal aid. 

Mr. Lynch. Assume that to be the fact. I wonder if your theory 
isn't based on this somewhat. I am trying to find out the basis of 
your reasoning. Do you think that unemployment aid is strictly a 
local proposition and must be taken care of by the local community? 
Isn't that the basis of your thought ? 

Mr. Cleary. No; I didn't include unemployment in my thinking 
at all. 

I am not thinking in terms of construction and unemployment as 
such. 

Mr. Lynch. Are you thinking in terms of stabilizing the construc- 
tion industry? 

Mr. Cleary. I am afraid not. 

Mr. Lynch. Just in what terms, then, if you are not thinking of 
unemployment, if you are not thinking of stabilizing the construction 
nidustry, just what is the principle behind your statement here this 
morning ? 

Mr. Cleary. That the execution of public-works facilities for 
which need has been created locally can be satisfied by existing con- 
tracting or construction facilities. The need for public works is an 
expression of something within a community. It needs a new sewer 
system for health reasons, let us say. To recognize that need and 
execute the construction of it can be done by means that already exist, 
provided these means are put into motion. 

Mr. Lynch. If you are not thinking of stabilizing the industry, 
the construction industry, I assume that you feel that the construction 
industry does not need stabilization. 

Mr. Cleary. No. The reason I am not thinking about stabilizing 
the construction industry is because I am not entirely clear on how 
it can be done. 

Mr. Lynch. Because you are not entirely clear on how it can be 
done? Would you say that the stabilization of industry is not needed 
or is unimportant at this time ? 

Mr. Cleary. I would say it was unimportant at this time. Regard- 
ing the future need, I don't: know. 



POSTWAR ECONOMIC POLICY AND PLANNING 1913 

Mr Lynch. We are looking into the future, trying to work out a 
plan for the future as regards postwar economies and from your 
experience in the past, would you say there was a need for a stabiliza- 
tion of the construction industry m the future? 

Mr Cleary I am very much intrigued by Mr. Ruml s statement m 
that reo-ard. Yes ; the possibilities should be explored. As to whether 
there is" a need for it, I am not prepared to say. I think the challeng- 
mo- possibilities that Mr. Ruml points out are worthy of exploration. 

Mr Lynch. Besides the intrigue, do you see anything m your own 
thought with respect to the need for the stabilization of the construc- 
tion industry in the future? ^ • , , 

Mr Cleary. I think it might be desirable. 

Mr Lynch. I just want to make sure we are right on tins, because 
there has been some discussion about it before. It is only with the idea 
of trying to get clearly your own contrary view to those who have 
preceded vou that I am trying to bring this fact out ; because, after all, 
we are trying to find out what the best thought of the country is and 
you have been recommended to us as one of those who think deeply on 
matters of this kind, and your opinion is quite at variance, if 1 mig|it 
say so In fact, I agree with Mr. Cooper m the conclusions that he 
drew from the testimony of preceding witnesses. I am trying to bring 
out whether or not you can, as an expert in your field, or cannot see or 
believe that there is necessity for the stabilization of the construction 
industry in the postwar period, from the experience that we have had 

in the past. , , . ■, ■ , •■,•, £ 

Mr Cleary. Yes. I will agree that there is a desirability for some 
form of stabilization. What form that might take, I am m no position 
to state. The ideas set forth by Mr. Ruml and Mr. Colean are entirely 

new to me. . -, -, i it 

Mr Lynch. How could it be a new idea, because we know, and i am 
no expert on it, but I know from friends in the industry that one time 
they are on top of the world in the construction field and the next time 
there is no construction for them to do for years and years. 

Now, it seems to me that that is a pretty unstable business to be m. 
You must have had that experience from your contacts. These con- 
tractors go along for a long period of time without getting any work, 
and that causes the unsettled condition in the construction industry, 
and that unsettled condition in the construction industry is reflected 
in the Avhole ocean of the national economy. , . m^ ^ 

Mv. Cleary. Isn't it the other way around, Mr. Lynch i 1 hat the 
unsettled condition in the whole field of economics is reflected m the 
construction industry ? I am inclined to that view. 

Mr. Lynch. If you are inclined to that view, that is all right. I had 
the other point of view. Our discussion on that point won't change 
the opinion of either of us. 

Mr. Cleary. The reason I say that is because construction represents 
only about 10 percent of our national income. It seems there are 
factors far greater than the construction industry at work. 

Mr. Lynch. I don't deny that at all, Mr. Cleary, that there are fac- 
tors far beyond that. But can't you project yourself back into the 
1920's, when the construction industry had overexpanded far beyond 

99579 — 45 — pt. 6 14 



1914 POSTWAR ECONOMIC POLICY AND PLANNING 

the expansion that was in other lines? In other words, if I recall 
correctly about 1926 or 1927, the decline started in private construc- 
tion. It had been overbuilt. The cities had been overbuilt. That is 

A?"^ unstable condition of the industiy is, I think 

Mr. Cleary. Looking at some figures here, Mr. Lynch, instead of a 
decline there was an increase in total new construction 

Mr. Lynch. When? 

Mr. Cleary. In those periods you cite, right at that time. 

Mr. Lynch. I said up to about 1925. That was when it was very 
high, I think. -^ 

Mr. Cleary. It was about 10 or 10.3 billion. It continued to go up. 

JNlr. Lynch. Until about 1928 ? ^ ^ 

Mr. Cleary. Until 1928, and then in 1929 it started to go down 

Mr. Lynch. It dropped ? 

Mr. Cleary. That is right. 

Mr. Lynch. In other words, the effect of the unstable condition in 
in A'u^ustT929" "'"^"'^''^ '''^^ ^^^^ ^"^^^^^ ^^'^ ^''^^ general depression 

Mr^CLEARY Was it the effect of the construction industry, or the 
reflection of factors arising in investment markets and other eco- 
chSi^ c^^^ditions that caused the construction industry to exhibit this 

Mr. Lynch. Well, of course, I don't know except I have my own 
opinion. 1 suppose you have your opinion on the same subject. But 
Condition? '' •^'''''' opinion as to that or my opinion, it is an unstable 

Mr. Cleary. Yes. 

Mr Lynch. Now what have we got for the future to correct that 
unstable condition? You don't want any aid from the Federal Gov- 
ernment, according to your editorial, and so believe that the States 
can take care of themselves. Now assume the States can't take care 
of themselves. Would you think it would be desirable for the Federal 
iTOvernment to assist m planning of public works so that in the event 
ot an extremely unstable condition, they would have plans upon which 
to proceed ? x i ^ 

Mr. Cleary. It might help, but remember that public works con- 
stitutes only one-third of the total activity. 

tion^?" ^^^^'^' ^ ^''^''® ^^^^^ "' "'"'^5 one-third of the total construc- 

Mr. Cleary. Yes. You have still 70 percent more to concern your- 
self with, and It IS a question of whether that would swing the balance. 

Mr. Lynch. Back m 1930 or 1933, the whole construction field 
went down to its lowest level, practically, since 1915. So the whole 
industry, eve^ the 70 percent of the private construction, and 30 
percent of public construction was down to a minimum 

Mr. Cleary. Yes. 

Mr. Lynch. That is all, Mr. Chairman. 

The Chairman. Mr. Eeece? 

Mr. Reece. I have no questions. 

The Chairman. Mr. O'Brien? 

Mr. O'Brien. No questions. 

The Chairman. Mr. LeFevre? 

Mr. LeFem?e. No questions. 



POSTWAR ECONOMIC POLICY AND PLANNING 1915 

The Chairman. Mr. Fogarty ? 

Mr. Fogarty. No questions. 

The Chairman. Mr. Simpson? 

Mr. Simpson. No. 

The Chairman. Mr. Cleary, if not clarifying, your statement has 
been most interesting. It is really refreshing. And I shall not at- 
tempt to get in an argument with you about it. I am rather hopeful. 
I would like to be hopeful that your conclusion is correct. I think 
I can safely say, and if I am incorrect in that assumption, I am sure 
some member of the committee will correct me, that this whole com- 
mittee, without exception, would like to join with you in the objective 
of getting this construction industry stabilized without the necessity 
of the contribution of one Federal dollar. 

On the other hand, we feel a responsibility and we feel it is one of 
the duties of this committee to explore this field and to endeavor to 
stabilize the construction industry as one of the elements of a stable 
economy in the postwar period. 

Now,' if we assume that everything was going along very nicely, 
that we were going to have this 150 billion national income to which 
you alluded without any Federal planning or recommendation from 
the Federal Government or contributions from the Federal Govern- 
ment, I think we would all be most happy and we would be attending 
to other duties, rather than trying to make some concrete recommenda- 
tions to the Congress of the country on this subject. 

But isn't there a danger that your assumption or philosophy might 
be in error, and we would get into the throes of a postwar depression 
and in that event would we not have failed in our duty as a committee 
of this Congress ? 

Mr. Cleary. I agree with you, sir, that we should have some prep- 
aration. Whether they should be activated at the present time, that 
is another matter. 

The Chairman. You believe there should be a shelf for public works 
which should become activated if necessary ? 

Mr. Cleary. By all means. 

The Chairman. The only thing you disagree with is whether there 
should be any Federal coiitributions. I have made my own state- 
ment about that. I hope I have made myself clear. Personally, I 
don't want to see any Federal contributions. In my position, I don't 
think I can afford to take the chance of having several million war 
workers, returning soldiers going up and down the dusty highways 
and streets of the metropolitan centers seeking jobs that can't be 
found. I think we must make some preparation for that. 

If there are no further questions, we thank you again for your 
statement. We appreciate your appearance. 

Who is the next witness. Dr. Kaplan ? 

Dr. Kaplan. Mr. Dick, president of the Associated General Con- 
1^1*3 ctors oi A.iii'8ric&' Xnc, 

The Chairman. Mr. Dick, will you come around ? Do you have a 
prepared statement, sir? 

Mr. Dick. Yes, sir; I have. 

The Chairman. For the benefit of the record, will you identify 
yourself, your background and so forth ? 



1916 POSTWAR ECONOMIC POLICY AND PLANNING 

STATEMENT OF HAREY A. DICK, PEESIDENT, THE ASSOCIATED 
GENEEAL CONTEACTOES OF AMEEICA, INC. 

Mr. Dick. I am a contractor on the Pacific coast. I have been in 
business out there for some twenty-odd years, engaged in dock, bridge 
building, river and harbor work, and such allied construction. 
The Chairman. All right, sir, will you proceed ^ 
Mr. Dick. The Associated General Contractors of America is the 
Nation-wide trade association of general contractors. It has more 
than 3,100 members, and 90 chapters and branches throughout the 
country. Its members perform all types of construction. They ex- 
ecuted the majority of war construction performed by contract in the 
continental United States, possessions ancl overseas. 

Of the industry's war record, I want to say only this: Hid the con- 
struction industry failed in any of its $52,000,000,000 program of 
construction and installation of facilities during the past 41/2 years^ 
if it had not built with unprecedented speed the camps, air fields, ship- 
yards, munitions plants, naval bases, highways, pipe lines, railroadSj 
and thousands of other structures, the entire war effort Avould have 
been hampered, perhaps fatally. 

Mr. Chairman, you wrote to the association stating that the sub- 
C(;mmittee would hold hearings on the subject of public works as a 
factor in stabilizing the postwar economy. You asked particularly 
for our views on the state of preparedness 'in the construction industry 
to undertake postwar expansion, and on what are the essential factors 
to be watched in connection with the planning of a postwar public 
works program. 

M?mbers of our association have done much thinking on postwar 
construction, both because from it we will make our living, and also 
because we foresee ourselves doing work which will be of tremendous 
value in building a greater nation. I would like to present to you the 
results of some of our thinking. 

We prefer to emphasize different factors from those suggested by 
tlie subject of the committee's hearings. We know that public works 
are legitimate, valuable, and necessary contributions to our national 
welfare. We know that their construction provides work opportuni- 
ties for thousands, and that during depressions their stimulation tends 
to stabilize our national economy. 

But at the present time we feel it is more important to plan for the 
development of the Nation after the war to the fullest extent of its 
potentialities, through individual initiative. Under such circum- 
siances the volume of privately financed construction will be so great 
that there will be little need to undertake public works for otherlhan 
their normal utility or cultural value. 

Our association believes that after the war the Nation can experience 
the greatest period of construction activity it ever has known, surpass- 
ing that of the war years, when a new peak was attained. We believe 
we should strive for that goal of continued growth of the Nation 
through private enterprise. We believe it offers the greatest oppor- 
tunity to the Nation, to each individual, and to the construction in- 
dustry. 

The United States Department of Commerce, in a booklet Markets 
After the War, by S. Morris Livingston, has estimated the volume of 



POSTWAR ECONOMIC POLICY AND PLANNING 1917 

-sYork which might be undertaken, on the basis of past experience, by 
various industries if the Nation were developed to a point of high- 
level employment by private enterprise. 

In this project, the volume of construction was estimated at $17,- 
700,000,000 a year shortly after the end of the war. Of this amount, 
the volume of private residential construction was estimated at $7,003,- 
000,000; other privatelv financed construction at $0,700,000,000; and 
public works at $4,000.00(1000. 

Our association believes that the Nation has the need and the in- 
dustry has the capacity to attain an annual volume of $12,000,000,000 
in construction by the end of the first year after the war and an annual 
volume of $20,000,000,000 5 years later. 

Our association believes that it is far sounder at the present time 
to be aiming at such goals as those outlined above than to be consid- 
ering an annual construction volume which would be supported prin- 
cipally by public works. The industry does not believe that the full 
potentialities of our national economy can be attained by a system in 
which the Federal Government would take the leading part in the 
Nation's development. 

Construction is closely identified with the growth and progress of 
the Nation. Much of our material and cultural progress is expressed 
in work of the construction industry. There cannot be a full develop- 
ment of the Nation and all of its potentialities without a large volume 
of construction in the future. 

Our association looks forward to the industry performing a vital 
service to the Nation in the transition period from the end of the war 
in Germany until the time when all business, industry, and other parts 
of the economy can be operating on a peacetime basis. 

Construction has no major reconversion problems. The amount of 
vital construction postponed for the past 4 years has built up a great 
demand for new work. As soon as the war ends in Germany, or other 
conditions permit, construction can immediately go ahead providing 
those facilities which are needed, and at the same time can be provid- 
ing an increasing amount of employment when work opportunities 
decrease in other fields. 

In this work the construction industry will be pioneering the return 
to peacetime conditions. Much of the success of our entire reconver- 
sion work will depend on the success of the construction industry in 
bridging that gap between war and peacetime work. 

This places a great responsibility upon the industry to do its job 
well. But it is a responsibility we are willing to accept. We were the 
first to engage in war work on a large scale, and believe that we have 
the capacity, ingenuity, and experience to drive ahead in the future. 

Recently there has been criticism of some efforts to plan for the 
future on the grounds that the war is not yet won. Those of us in 
construction have a war record which clearly indicates that we will 
continue to do our part in the war effort. But our association believes 
that we would be subject to severe criticism if we were to be slack in 
our efforts to plan for reconverting our economy to a peacetime basis 
and for providing work and business opportunities for those return- 
ing from the armed services and war industries. Too much is at stake 
for the future of the Nation for us to fail to be prepared. 

In order that tliere shall be a substantial future construction pro- 
gram, our association believes that it is our first task to stimulate the 



1918 POSTWAR ECONOMIC POLICY AND PLANNING 

advance planning to the contract-letting stage of needed, necessary,, 
and worth-while construction projects which can get under way as- 
soon as conditions permit. In fact, we know that unless this is done 
the industry will not be able to do its share in providing worth-while 
work and business opportunities. 

Our association has taken the stand that so much worth-while con- 
struction will be necessary that money and manpower should not be 
wasted on projects which do not have a utility or cultural value. It 
has taken the stand that necessary projects should be planned so that 
they can be undertaken when needed and soundly planned to fit their 
objectives most effectively and to permit efficient and economical con- 
struction. 

Our association in December 1943 undertook an advertising pro- 
gram which emphasized this need for planning with the theme "Thi& 
Is 'Blueprint Time'." Its cliapters and branches and members have 
been active in their communities in stimulating the planning of proj- 
ects to the contract-letting stage. 

The second factor needed for a large construction volume is the 
timely and orderly lifting, when possible, of Government regulations 
now restricting the civilian activities of construction. 

The longer the war lasts the greater will be the national and inter- 
national problems which it creates and the more difficult will be the 
problem.s of reconversion. This association has taken the stand that 
it should work closely with Federal agencies which are responsible 
for present regulations and should make use of its knowledge of the 
industry to point out how the restrictions can be lifted to the best 
interest of the public and the industry. 

Our association already has been working, in cooperation with other 
organizations in the industry, with Government agencies for that pur- 
pose. It offers its services to this committee in further considering 
the subject. 

A third factor necessary for a large construction volume is the incen- 
tive to public and private organizations to invest in construction. 

Here I do not want to enter into a discussion of taxation other than 
to recommend to the attention of this committee one proposal which the 
association has made during the past year for the stimulation of pri- 
vately financed construction after the war. 

Our association has recommended that legislation be enacted to 
permit the accelerated depreciation of structures and production facili- 
ties. The association's specific recommendation is that the owner be 
permitted the alternative of depreciating half the cost of the structure 
or facility m the first quarter of its estimated useful life. This would 
permit the owner to secure the return of half his investment during the 
period of greatest earning power and during the period when he could 
most clearly foresee its value. 

Such a proposal has been made by the President and also by Justice 
Byrnes, of the Office of War Mobilization and Reconversion, in his 
report to Congress on January 1. 

The fourth factor essential to a sustained high level of construction 
activity throughout the country is a continued raising of the standards 
of living and continued growth and development of the Nation. 
^ With construction accounting for 10 to 15 percent of the national 
income, it cannot alone solve our employment problems or prosper to 
the fullest extent, independent of general business conditions. When 



POSTWAR ECONOMIC POLICY AND PLANNING 1919 

the volume of construction is greatest, approximately 75 percent is 
privately financed. A high level of construction activity cannot be 
sustained without this large percentage of privately financed work. 
This emphasizes the dependence of prosperous conditions in construc- 
tion upon the properity of all industry. 

These facts suggest to our association that our efforts should be 
devoted more strongly to the attainment of general conditions through- 
out the Nation in which all forms of our economy will flourish, rather 
than to thinking of how public works could be stimulated to a greater 
volume during periods of declining construction activity. The volume 
of public works never could be expected to attain the volume which an 
active economy would develop with private finances. 

Our association recommends to the committee for its consideration 
two points with respect to public works. They are 

1. The need for the Federal Government to define as soon as possible 
the scope of what it will consider public works after the war. 

2. The need for the Federal Government to establish as soon as 
possible its policy with respect to aiding States and local communities 
in the preparation of plans for their public works, and with respect 
to aiding their construction. 

Our association believes that one factor retarding the preparation of 
plans for both privately and publicly financed construction projects is 
the lack of a clear-cut definition by the Federal Government of what 
it considers the scope of Federal public works after the war. 

Our association recommends a definition that the Federal Govern- 
ment does not intend to engage in public works which directly or indi- 
rectly compete with the proper functions of private enterprise, or the 
proper functions of State and local government. 

Alembers, chapters, and branches report to the national association 
that one of the greatest hindrances to the planning of public works by 
State and local communities is uncertainty as to future policj^ of the 
Federal Government with respect to aid in the preparation of plans 
and in actual construction. 

Our association cannot recommend too strongly that Congress adopt 
a policy on such aid as soon as possible. 

Many communities which have funds available are waiting to see if 
Federal funds will be provided before they plan public-works projects. 
It is understandable and natural that this should happen, since loans 
and grants have been available for the past 10 years 

Our association has supported the appropriation recommended by 
the Federal Works Agency for loans, to be repaid, to States and local 
governments for planning of their public works as authorized in title 
V of the War Mobilization and Reconversion Act. This would stim- 
ulate planning by communities which, by reason of local laws, or 
otherwise, do not have funds immediately available for the purpose. 

That legislation, while it specifically did not commit the'^Federal 
Government to aid in financing construction of the projects, did not 
settle the question of whether or not such aid would be provided sub- 
sequently. The association hopes that Congress can establish its 
policy in this respect soon. 

Our association has by resolution specifically stated that it favors 
financing of the construction of local public works by those who receive 
the benefits from the projects. 



1920 POSTWAR ECONOMIC POLICY AND PLANNING 

Flexibility and the capacity for rapid expansion are two character- 
istics of the construction industry. Our association is justified in 
stating- that there need be no concern over the capacity of the con- 
struction industry to undertake the amount of construction which this 
Nation Avill need after the war. 

The Bureau of Labor Statistics in Bulletin No. 779 has stated 
that— 

the productive capaoity of the construction industry can expand rapidly and, 
within a year after the end of the war with Japan, can reach an annual rate 
of $11,000,000,000 at the 1040 level of building costs. The characteristic flexibility 
in organization and methods of operation of the construction industry permit a 
rapid expansion in the volume of work; members of the industry are accustomed 
to starting work in short notice and to expanding their operations rapidly. 

The fact that the industry executed the war construction ]:)rogram 
on time is proof enough of its capacity to do work. Rear Admiral 
Ben Moreell, Chief, Bureau of Yards and Docks, United States Navy, 
wrote to the association in July 1943 : 

During the 12 months ended January ,31, 1043, the peak period, the dollar 
volume of construction contracts awarded by the Bureau was almost 75 times 
as great as for the calendar year 1938. In other words, during this period 
contracts equaling the entire volume for the calendar year 1938 were awarded, 
on the average, every 5 days throughout the year. 

Lt. Gen. Brehon Somervell, Army Service Forces, in 1942, wrote 
to the association that — 

There was a time when there were more men working for the Army under 
general contractors than there were men being drilled under general officers. 

The stand of the Associated General Contractors of America on the 
future of construction can be summarized as follows : 

There is an almost unlimited future for the construction industry 
in providing the projects which will improve the standards of living 
of the Nation. 

The leading part in the future development of the Nation should 
be taken by individual initiative, which means for construction that 
the majority of its volume will be privately financed. 

The emphasis in construction and other industries should be upon 
opportunity above security. 

Public works should be undertaken primarily for their utility and 
cultural value. Sa much needed and necessary work remains to be 
done that money and manpower need not be wasted on projects which 
do not contribute to the national welfare. Projects undertaken for 
these reasons will help provide the volume of work opportunities 
necessary. 

Public works of a local nature should be financed by those who 
benefit from the projects. 

Construction should be looked upon to furnish its share of future 
work and business opportunities, but it should not be expected to care 
for the unemployed of other parts of the national economy. 

The flexibility and capacity of the industry for tremendous expan- 
sion, such as was necessary to execute the war construction program, 
should not be impaired. 

The ability of the industry to mobilize immediately for any local or 
national emergency, such as floods, fires, other disasters, or war, should 
not be impaired. 



POSTWAR ECONOMIC POLICY AND PLANNING 1921 

Construction work should be carried on through the normal channels 
of the industry, which has demonstrated the ability to execute the 
work with greater efficiency and economy than is possible by any other 

means. 

Operations of the industry must be such that there are opportuni- 
ties in it, as workmen, or as heads of new business enterprises, for 
veterans, war workers, and others. 

The Associated General Contractors of America during its second 
quarter of a century will continue to operate as an organization for 
self-government within the industry so that the public is given assur- 
ance'^of a continually greater value for its investment in construction. 

The Chaikman. thank you, Mr. Dick. 

Mr. Kaplan, do you have questions? 

Dr. Kaplan. Mr. Chairman, Mr. Dick has indicated that he is very 
optimistic about the capacity ot the industry to move forward im- 
mediately after the war. 

He mentioned as a possible retarding factor Government regula- 
tions that he feels ought to be released as soon as possible. 

I wonder if Mr. Dick would care to spell out some of the Govern- 
ment regulations he feels might hamper the industry ? . . 

Mr. Dick. At the present time construction, as you know, is hmited, 
very much restricted by materials, the use of materials. These re- 
strictions that are now upon us, which are necessary due to the war 
effort, must necessarily be taken away before the industry can expand 
to its full ability to take care of the work that is now waiting to be 
done. . 

Dr. Kaplan. You are thinking of emergency war measures being 
released when the war emergency is over. You are not thinking ol 
any difficulties that are inherent in Government regulations that you 
are trving to see eliminated ? 

Mr."^ Dick. No, I am satisfied that when the restrictions are lifted 
from not only our industry but of all industries so there will be avail- 
able materials of all kinds and manpower, of course, we can get back 
to what we had before it was necessary to impose restrictions due 
to the war. Then we will be free to proceed. 

Dr. Kaplan. In your suggestion, Mr. Dick, the possibility of niovmg 
into a $12,000,000,000 annual level of construction from the $7,000,- 
000,000 within 1 year after the war. Were you intimating that the 
contractors themselves had the capacity, or were you intimating that 
all the components necessary to do that, including materials and man- 
power, are also available? 

Mr. Dick. The others must be available. The construction industry 
would be in a position to take care of that much expansion, with all 
other things normal. 

Dr. Kaplan. That is our question. So far as you know, are all 
the other things along with what the contractors— in other words 
materials, number of skilled workers available— all the other factors, 
are they all in the bag, as it were, so you think you could go ahead 
with a $5,000,000,000 expansion within a year after the war, or are 
you merely saying that if the other things were available, the con- 
tractors would be ready ? 

Mr. Dick. That is right. I can't speak for the other industries. 



1922 POSTWAR ECONOMIC POLICY AND PLANNING 

Dr. Kaplan. I wanted to ^et that distinction between your feeling 
.you were ready and the possibility that other things may not be ready 
Ihere is another point— this will be the last one as far as I am con- 
■cerned— on which we would like to get your views. We would like to 
get your views as to whether you, as a contractor, feel it would be 
practicable to program construction so as to make possible an animal 
-wage or a yearly work program as against the current methods of 
wage setting m the industry, and Avhether you think that that is a 
lactor m the stabilization of the industry in the postwar period? 

Mr. Dick. Personally, I can\ connect an annual wage with the con- 
struction industry. Possibly I have proceeded under our present 
method too long to appreciate such a situation. However, I do not 
think you could apply an annual wage to such an industry. It doesn't 
tit. It is different from a business that has a factory and has employ- 
ment, so to speak, I mean a regular force of employees who possibly 
are with them year m and year out. 

The construction industry, of course, does vary. We know it has 
some peaks and valleys and I can't see how we could apply an annual 
•wage to our industry and do it effectively and satisfactorily 

Dr. Kaplan. That is all. 

The Chairman. Mr. Lynch, chairman of the subcommittee, would 
like to ask you some questions. 

Mr^ Lynch. Mr. Dick, in your statement on page 3, the first para- 
graph, I would like to refer to that sentence, and I quote : "The indus- 
^^y does not believe"— and so forth. Do you see that point ? 

1 he Chairman. The top of the page. 

Mr. Lynch. I will read it to you : 

The industry does not believe tliat the full potentialities of our national 

"SprJifv^" ^"f -^^1 K^ '^^'^"^ *" ^hi^'h the Federal Government w?ufd 
take the leading part in the Nation's development. 

In the letter you received from the committee, was there any indica- 
tion that^ we thought that the Government should take the leading 
part m the construction field? 

Mr. Dick. No, I think not. Most likely this is a thought that of 
■course, the construction industry, the association believes in. I don't 
know that your letter did so indicate. 

J- j^^' ^J^^^' ^ ^^^^^ i^ it did, I just wanted to let you know that we 
■didnt have any such thought in mind; that we were submittino- 
■questions for the purpose of getting the views of industry and not with 
the idea that the Government would take a leading part in the con- 
rstruction industry. 

On page 4 of your statement, the second paragraph from the end : 

Our association has taken the stand that so much worth-while construction 
-will be necessary that money and manpower should not be wasted on proiects 
which do not have a utility or cultural value. It has taken the stand "that 
necessary projects should be planned so that thev can be undertaken when 
needed, and soundly planned to fit their objectives most effectively, and to permit 
«fncient and economical construction. 

Of course, you understand, Mr. Dick, that the very purpose of this 
committee is to look forward so that projects might not, in the future, 
be constructed which have no utility or cultural value 

Mr. Dick. Yes. 
_ Mr. Lynch. In other words, I think we are all well set in our opin- 
ion that we don't want any more WPA. 



POSTWAR ECONOMIC POLICY AND PLANNING 1923 

Mr. Dick. That is exactly it. 

Mr. Lynch. That is in line with your thought ? 

Mr. Dick. Exactly, sir. 

Mr. Lynch. When you refer to planning so as to fit their objectives 
most effectively, when you take into consideration the other aspects 
>of your statement, which as I infer from them, you are not in accord 
with Federal aid in planning, how, without Federal aid, could you 
plan most effectively ? «. • i o 

Mr. Dick. How, without Federal aid could we plan effectively i 

Mr. Lynch. Yes ; as far as public works are concerned. 

Mr. Dick. We are very much in favor of Federal aid in the pre- 
aration of plans. We are agreeable to that and we feel that t\v<\i. 
should be. This appropriation should, by all means, be made avail- 
:able to States and municipalities to aid in preparing their plans to the 
contract-letting stage and it should be available to those who wish it. 

Mr. Lynch. x\nd for the aid to cease at that point, at the point of 
planning and not to go into construction ? 

Mr. Dick. Not to go into construction at the present time, at any 

Mr. Lynch. Of course; don't you feel this way about the general 
-construction field, that actually at the present time, or perhaps the 
first year after the war, there will be no need of real Federal aid, 
"insofar as construction is concerned, in any event? 

Mr. Dick. I think even for possibly a longer period than that. 

Mr. Lynch. Probably 4 or 5 or 6 years ; would you go as long as 

i:hat? " . ■, t n 

Mr. Dick. I don't think so. I don't say quite so long. I would say 
possibly 2 or 3 years, at any rate. . , , 

Mr. Lynch. Let me see if I get your point. You think that after 
■2 or 3 years you may need Federal aid for construction ? 

Mr. Dick. No ; I say at that time it may be necessary that there be 
■some Federal aid to assist a program. . 

Mr. Lynch. Are you referring now to planning or are you referring 
■to construction? 

Mr. Dick. I am referring to planning. 

Mr. Lynch. Don't you think now that there is any need for i< ed- 
eral aid with respect to planning, so that there will be a shelf of 

blueprints? , . . t, v ^^ 

Mr. Dick. Oh, indeed, yes. We are very much m favor of a tuU 
shelf of blueprints that are ready to the contract-letting stage. 

Mr. Lynch. Don't you think that when the Congress declares m its 
statement in this legislation, which we passed recently, that there 
was to be no feeling that Federal aid would be given to construction 
as such, that we had gone as far as we possibly could to tell the States 
and municipalities that for the immediate future, the most they 
could expect would be a loan for planning? 

Mr. Dick. Apparently so, yes. 

Mr. Lynch. In your statement, however, you ask that there be a 
further definition by the Congress as to how far they would go. How 
far do you think the Congress should go at this time in declaring that 
no aid should be given for actual construction, even if this Congress 
could bind a future Congress? 

Mr. Dick. That I don't know. I would hesitate to say ]ust what 
they should say or how far they should go at the time. 



1924 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Lynch. I judge, from your statement, that you weren't quite 
satisfied with what we have done insofar as declaring that there should 
be no immediate prospect of aid for actual construction? 

Mr. Dick. I think what we tried to bring out was that the country^ 
the States and numicipalities, and so forth, are possibly waiting to be 
told just what they can expect in the future, based on their experience 
of the last 10 years that we have referred to. 

Mr. Lynch. On page 7 you state this, the third paragraph : 

Members, chapters, aud branches report to the national association that one 
of the greatest hindrances to the planning of public works by State and local 
communities is uncertainty as to future policy of the Fedei-al Government with 
respect to aid in the preparation of plans and in actual construction. 

Our association cannot recommend too strongly that Congress adopt a policy 
on such aid as soon as possible. 

Now, the Congress has adopted a policy on that aid in respect to 
preparation of plans, has it not ? 
Mr. Dick. That is correct. 

Mr. Lynch. So, insofar as your association is concerned, you could 
very well say that your recommendation has been carried out ? 
Mr. Dick. Yes. 

Mr. Lynch. As far as aid for actual construction, Congress, in 
this hist bill we passed, likewise declared that no inference could be 
drawn that any actual aid for construction would be given in the 
future. Now, what more can we do beyond that ? 

Mr. Dick. Nothing. If that is their feeling and they have so 
passed. I wasn't aware of that. If they have, then that would take 
care of it. 

Mr. Lynch. That is what we have done. Now it is right back to 
the States and municipalities. 
Mr. Dick. That is right. 

Mr. Lynch. In spite of what we have done in this last Congress, if 
the States and municipalities think we will change our mind in the 
future, Congress can't help that, can they ? 
Mr. Dick. No. 

Mr. Lynch. If these States and municipalities just are going to sit 
back, then they won't have any plans ready at all; isn't that correct? 
Mr. Dick. They may not have sufficient plans. There aren't very 
many places that won't have some plans. 

Mr. Lynch. As I recall the statistics some months ago, there were 
very few plans that were actually ready to be put into operation. 
Somethmg, I think, like 5 or 10 percent. 

Dr. Kaplan, do you recall the amount of actual plans that were in 
the blueprint stage ready to go to work within 6 months and let con- 
tracts and the like? 

Dr. Kaplan. Those give us the lowest figure. In taking complete 
plans the figure comes down as low as $300,000,000. Those who were 
willing to include plans on which a start had been made built the 
estimates up to about $5,000,000,000. What Mr. Holden gave us yes- 
terday represented plans to make plans, which could be built up to 
about $13,000,000,000. 

Mr. Lynch. Most of it was all in the idea stage ? 
Dr. Kaplan. That is right; a great part of it. 

Mr. Dick. I think that is true. You can get varied figures and they 
are all estimates or guesses, because there is no telling how far the 
plans have progressed to the completed stage. 



POSTWAR ECONOMIC POLICY AND PLANNING 1925 

There are lots of instances, I am satisfied, where much work under 
contemplation is on the board, being drawn, plans in various stages 
of completion, yet possibly very little that is ready to be let, that 
could be let within a month or two or three months' time. 

Mr. Lynch. Mr. Dick, you of course appreciate that the commit- 
tee understands that after all, public works is only a third of the 
real construction work of your industry ? 

Mr. DiGK. Yes ; that is right. 

Mr. Lynch. That we don't look upon it as a panacea for the ills 
of the industry. But isn't it true that there has to be a certain per- 
centage, or should be a certain percentage, of public works that go 
hand in hand with private construction ? 

Mr. Dick. I think there always is, 

Mr. Lynch. And when private construction falls down to the low 
level, say, of public construction, then you would state that your in- 
dustry was not in a stable condition; isn't that correct? 

Mr. Dick. Yes. 

Mr. Lynch. What would be your suggestion as to stabilizing in- 
dustry under those conditions? 

Mr. Dick. The stabilization of the construction industry is a big 
problem. It is a subject that you can get very far afield in, I am afraid. 
However, unless all industries are stabilized, I don't know how you 
can stabilize the construction industry and work from that on back 
thrmigh the other branches of our economy, I don't think that 
stabilization of the industry is going to cure the various peaks and 
valleys that we do experience in our business. 

I am afraid that stabilization might hold to a point that when we 
needed to expand very rapidly, we would not be in the position to do so. 

Mr. Lynch. Mr. Dick, this is my thought: It would be the worst 
thing in the world to have the Government competing with private 
industry at the time when there is great need for private construc- 
tion. In other words, I wouldn't want the Government to be utiliz- 
ing the material and labor that should be utilized by private industry. 
But there comes a time when private industry, with respect to private 
construction, has reached its saturation point. Then it is my point 
that the program of public construction should commence as far as 
possible, with respect to needed or cultural projects. Now is that a 
sound theory ? 

Mr. Dick. I think so. Our feeling is, of course, we would like to 
see the construction industry in private financing of those projects 
taken care of in that mannerfirst. And if possible, to take care of all 
such construction except those public works that are and have been in 
the past usual and always public projects. 

Mr. Lynch. That is all, Mr. Chairman. 

The Chairman. Mr. LeFevre? 

Mr. LeFevt^e. Mr. Chairman, I want to congratulate Mr. Dick on 
his statement. I think from the little I know of the construction in- 
dustry, it has done a marvelous job throughout the whole war period. 
I agree with you, too. The industry is very flexible and provided 
you have manpower and materials, you are ready to go to work in 
pretty short order. 

Don't you think that the question of manpower will be much easier 
to handle than the matter of materials? From what I know of the 
War Production Board and the huge allocations for materials that we 



1926 POSTWAR ECONOMIC POLICY AND PLANNING 

know are being shipped and going to be shipped to the other side^ 
don't you, yourself, think that is going to be the worst bottleneck? 
Mr. Dick. Yes, I do. There is no question but what we will even- 
tually have the manpower. And it will be necessary to take care cj 
that manpower. 

But if we are not in a position so that materials and supplies needec 
in connection with our industry, are not made available, then we are- 
going to have a bottleneck. There is no question about that. 

Mr. LeFevre. There is a great question in my own mind as to just 
how far this country should go in continuing present materials billed 
to the European area? 

Mr. Dick. That is what we had in mind by urging the relaxation of 
Government regulations and restrictions of materials and supplies- 
to us. If, as you say, they would 1)0 sent overseas or other places,, 
and not released for and made available to us for the construction of 
these local projects, and so forth, then our manpower would naturally 
be waiting for work and for jobs. 
Mr. LeFevre. That is all. 
The Chairman. Mr. O'Brien, any questions? 
Mr. O'Brien. No. 
The Chairman. Mr. Foo^arty? 

Mr. FoGARTY. Mr. Chairman, one thing I am interested in. When: 
this war is over, where are we going to get the materials and supplies 
for construction? 

Have you any definite suggestions as to any priority basis on the 
buildings that will be built, what materials shall be given in that 
category? 

Mr. Dick. No; I haven't given it any thought, that is, as to how 
or whether or not there will be any priority after the war, or how 
they would be regulated if it were necessary. There will be some neces- 
sity, of course, for a gradual relaxation. But T am not prepared tO' 
say just what we could expect or do expect in that relation. 

Mr. FoGARTY. We are probably going to be called upon to furnish 
a great deal of material and supplies to foreign countries in re- 
building projects? 

Mr. Dick. That is true. 

Mr. Fog ARTY. Do you think we should do that before we take care 
of our own needs ? 

Mr. Dick. I think we very definitely have an obligation to the re- 
turning men and women in the armed services, and through indus- 
try, both construction and others, we must be prepared to take care 
of those people with work. If we are going to allow all of our ma- 
terials to go elsewhere, then most certainly our own people are going- 
to sutfer. And then I am afraid if that" condition comes about, we 
certainly are going to be in a chaotic situation, and our country— I 
don't know what will happen to it. 

Mr. FoGARTY. You think Ave should take care of ourselves and give 
these returning men the jobs before we send any of this material" 
abroad ? 

Mr. Dick. I think that is most necessary and vital: yes. 
Mr. Fog ARTY. That is all. 

The Chairman. Mr. Dick, on behalf of the committee, I want to= 
thank you for making the journey here, and giving us the benefit of 
your views on this question. 



POSTWAR ECONOMIC POLICY AND PLANNING 1927 

Time won't permit any further questioning. The House will be in 
session in a minute or two. I do want to say, though, with due def- 
erence to my distinguished subchairman, Mr. Lynch, that I have som© 
sympathy with your recommendation here that the industry should 
know just what part Federal Government is going to play in tliis 
program with as much definiteness as possible. 

Everything Mr. Ljnich said is true about that. And yet I think 
that there is some hesitancy on the part of these various municipalitie& 
and other subdivisions of Government. I used this argument in dis- 
cussing this question once before, that a subdivision of Government was- 
very much like an individual. The individual is going to construct a 
house, he would want to know first where he was going to get tlie 
money to construct the house, as well as where he was going to get 
the money to plan the construction of the house. 

And I think if that situation could be clarified, that doubt could be 
removed with some degree of certainty. It would be very helpful in 
these plans. 

We are very grateful to j'ou for your appearance here this morning. 
The committee will stand adjourned until tomorrow morning at the 
same hour, when we will hear from the representatives of labor who- 
have been invited to appear here on this subject. 

(Whereupon, at 12 : 05 p. m., the committee adjourned, to reconvene 
at 10 a. m., Friday, March 16, 1945.) 



POSTAYAE ECONOMIC POLICY AND PLANNING 



FRIDAY, MARCH 16, 1945 

House of REriiESENTATivES, 

Special Comimittee on 
PosT'.vAR Economic Policy and Planning, 

Washington^ D. C. 

The committee met, pursuant to adjournment, at 10 a. m. in room 
1304, New House Office Building, Hon. William M. Colmer (chair- 
man) presiding. 

Pi-esent: RejH-esentatives Colmer (chairman), Murdock, Lynch, 
Fogarty, Gifford, Reece. Wolverton, LeFevre, and Simpson. 

Also present : Dr. A. D. H. Kaplan, consultant, and M. B. Folsom, 
director. 

Tlie Ciiair:man. The committee will come to order. 

We have resumed this morning to conclude, at least temporarily, 
our hearings on the question of public works and the part they will 
play iri the postwar economy. 

]Mr. Kaplan, whom do you have this morning? 

Mr. Kaplan. M. H. Hedges, director of research of the Interna- 
tional Electrical Workers, and he will explain his position for the 
labor organization. 

The CiiAiRoMAN. For the benefit of the record, Mr. Hedges, will you 
identify yourself, please? 

STATEMENT OF M. H. HEDGES, BIRECTOE OF RESEAECH, INTERNA- 
TIONAL BROTHERHOOD OF ELECTRICAL WORKERS 

Mr. HEDfiES. I am M. H. Hedges, director of research, International 
Brotherhood of Electrical Workers, and official representative of the 
building-trades department of the American Federation of Labor, of 
which Mr. Herbert Rivers is secretary. 

We regret, Mr. Chairman, that we have not a formal statement to 
file with the committee, but wliat I have to say has been arranged by 
consultation Vv-ith the department and other members of the A. F. of L., 
and it may be looked upon as an official statement. 

I would like, first, to talk about some general matters in this field, 
if I may, and then make some running comments upon more specific 
matters that lie within the purview of your committee. 

The Chairman. You may use your time as you see fit. 

Mr. Hedges. We found, we believe, a good many favorable factors 
in the situation. The building-construction industry on which you 
must be experts by now, is a strange kind of industry. In one sense 
it is no industry at all. It lacks integration and coordination. It 
has been described as a national industry on a local basis and that is 

99579 — 45— i)t. 6 15 1929 



1930 POSTWAR ECONOMIC POLICY AND PLANNING 

a pretty good description because it is greatly decentralized and does 
not head up into any central trade association or central council. 
Perhaps that is a faulty situation as far as our purposes go. 

On the other hand, I believe there is more agreement in the industry 
at present than at any time I have known in about 25 years. It looks 
as though there may be a great deal of confusion but I have been in 
contact with a number of groups that have worked in this field and 
I think there is a considerable agreement about basic things. 

First, I think everybody wants to see the industry put on a more, 
I will use the term, "dignified basis." We have always been used as an 
industry in times of depression as a kind of catch-all scratch heap 
for the unemployed of other industries. You know how that is. The 
depression comes, jobs have to be found, public-works programs are 
advanced and we get the men who are unemployed in other indus- 
tries thrown into this industry. We are also the prey. 

The Chairman. Pardon me, are you speaking about construction 
now? 

jNIr. Hedges. Construction as a whole, not housing particularly. 

The Chairman. Construction? 

Mr. Hedges. As a whole. 

These people come in and are often not qualified as workers. We 
also feel the periodic rises and falls of business much more than any 
other industry. The building construction industry has always been 
considered a pivotal industry, we register more quickly the declivities 
of business than perhaps any other industry and we feel that in a 
sense we are the victims of this periodic rhythm we get in our eco- 
nomic system. 

Now^, everybody in the industry would like to see that cured, if it 
could be. We would like to have more facilities and integration in 
the industry. 

Mr. IMuRDocK, May I ask a question ? 

Mr. Hedges. It does not disturb me, please ask questions as I go 
along. 

Mr. ISIuRDOCK. Would you define what you are covering by the term 
"construction industry" ? 

Mr. Hedges. Well, I use the phrase construction to cover all types 
of construction in the field, highways and commercial structures and 
housing, a broad generic term. By housing or building I mean par- 
ticularly that segment that we usually tliink of as building. 

Mr. iluRDOCK. You are talking about both private and public con- 
struction? 

Mr. Hedges. Absolutely, for the present, 

I merely want to lay oif what seems to me this broader area and 
I will get to the more specific things in a moment, if I may. 

Now. as I have been in contact with the research people of the Com- 
mittee for Economic Development, which you know is a group of 
businessmen interested in planning; and as I am in touch with the 
National Planning Association which operates in three great com- 
mittees, business, labor, and agriculture ; as I have been in touch with 
the postwar planning committee of the A. F. of L., I think I can 
state, generally speaking, that these groups agree that we should have 
about $16,000,000,000 a year of construction, maybe more, but the 
minimum is $16,000,000,000 a year. I believe, too, that the producers 



POSTWAR ECONOMIC POLICY AND PLANNING 1931 

council, which is an active jrroup of people that manufacture building 
goods, agree upon this goal of about $16,000,000,000. I think it is a 
happy circumstance looking toward getting something done that these 
groups looked upon often as in conflict, have reachied this status, that 
they agree that we must have some figure within sixteen or twenty 
billion dollars for construction. 

Another point of perhaps both agreement and difference is the goal 
that we should seek in regard to total employment. The Committee 
for Economic Development has set the goal for about 55,000,000 wage 
earners for the whole country and that is in all industries. It is not 
merely in construction, of course. The postwar planning committee 
of the American Federation of Labor is inclined to accept that figure. 
The National Planning Association sets the figure around 00,000,000. 
The point I wish to make is that as far as the things go, that we have 
to do, it makes little difference whether we accept 55 or 60 million, it 
is not worth fighting for because whether we accept the minor maxi- 
mum or the larger we have got to do certain things to get this job done. 

Now, one of the things we certainly have to do is to determine what 
should be the outlay to purchase, I use that phrase advisedly, to buy 
60,000,000 jobs or 55,000,000 jobs. I will hereafter use the minimum 
figure. That national income must be around one hundred and sixty 
or one hundred and seventy-five billion dollars. That looks like a 
colossal sum and it would discourage us if we were talking in the 
year 1939 when we had about $70,000,000,000 in the nationarincome, 
but under this war effort we have already developed between $140,- 
000,000,000 and $150,000,000,000 and it is possible, most economists 
agree, to develop happily an income much greater than what we now 
have and provide the ready funds to purchase 55,000,000 jobs. 

Now, I believe that most groups about which I have spoken agree 
in the main on this figure, and if you break down that figure in terms 
of items of a national budget you will again get the figure I mentioned 
a while ago of about $16,000,000,000 for construction. 

Now, labor's interest in this particular situation is threefold. I 
would like to mention labor's interest. In the first place, labor's 
interest is in getting houses to live in. You know the old wisecrack 
that the shoemaker makes shoes but never has any, the tailor makes 
clothes and never has any, and often building tradesmen say they build 
houses but they have never had any to live in, and labor is a consumer 
and as a consumer has a deep, abiding interest in this whole problem 
of getting high-standard houses for wage earners to live in. 

Then labor has an interest as a producer, labor frankly wants jobs. 
I think possibly many of the unpleasant things we have in the rela- 
tionship of labor and management go back in the end to the question 
of unemployment, the lack of jobs, those long periods of pounding 
pavements, when men grow to hate because they have not got enough 
to eat and do not know where they are going to turn for habitation 
and food and those things. We certainly would have a corrective of 
that if we could pass into this regime where we could provide jobs for 
people who wanted them. So, labor is deeply interested in this pro- 
gram in order to have jobs and lessen the friction between economic 
groups. 

I would just like to call your attention to what the annual wage 
of the electrical workers was over a period of 12 or 14 years. This 



1932 POSTWAR ECONOMIC POLICY AND PLANNING 

is based upon rather accurate reportings that our union has made. 
Now, the electrical workers are a skilled group. They liave been 
classed very highly and often close to a professional group of people 
because they have to know, and technology has cheapened the jobs 
of other men in this class but it has not cheapened the job of the 
electrical workei-s. The electrical worker has to know more rather 
than less, because of the great developments in the field of electricity 
and in the electronics field, and otherwise. 

Now, in 1931 the electrical workers made $1,007; in 1932, $634; 
in 1933, $541; in 1934, $696. Now, these people have often been 
called the aristocrats of labor. Maybe that is a just phrase, I do 
not know, but that is not a pay for an aristocrat, $54l a year. In 
1935 it was $989; 1936, $1,570; 1937, $1,846; 1938, $1,537; 1939, 
$1,650; 1940, $1,900; 1941, $2,623. Now, you can see why we are 
interested in this. That was when the war took hold, and we 
began to get this remarkable drive for construction; 1942 was the 
greatest construction year in the country's history, and the aver- 
age annual income was $3,280, that is for the electrical workers, 
and as that peak construction fell off in 1943 we made $3,071. Now, 
we AYould be awfully glad, as you may suspect, to live in an economy 
where we could make around $3,000 a year and actually be the aristo- 
crats of labor, not to be content just with the phrase but get that 
kind of paj^ So you see we have a great stake in a program such 
as is beginning to be visualized for the construction industry. 

Now, those are pretty accurate figures. We get them by contacts 
with our local unions each year through what we call our research 
reports, and I think they are very interesting and important. 

So, labor is interested as a consumer and labor is interested as a 
])roducer, but lal)or is interested in a third way, and that is to do a 
job for the industry. We believe that we have a definite function to 
perform, and that is to bring skilled people in the right numbers 
as the industry needs them. I would like to s])eak a little in that 
direction to show you we are trying to perform a job. 

We have under the Federal Apprenticeship Service of the United 
States Government a labor-management committee called the Federal 
Apprenticeship Committee for the Construction Industry. That is 
made up of employers and unionists. That committee is not a creature 
of an agency; it is not an advisory committee; it is a participating 
committee, and we lay out policies that are followed by the Federal 
Apprenticeship Training Service. We have lately had charts brought 
in to that committee, based on census reports, to show that nearly 
every craft in the building trades is dying from attrition. At one 
time, for instance, the Electrical Workers Union was called a young 
union because our average was around 34. Now, due to the fact of 
the war, the depression, we have not fed in from the bottom young 
men on the ap]irenticeship basis to take the place of the natural 
separations from the industry, and so our age has gone up to 44 years 
in 4 or 5 years, Avhich is quite a liigh age. Now, that is probably true 
in every craft, probably more true for the bricklayers, for instance, 
than the electrical workers and the carpenters. 

We are not feeding into the industry the needed young men to 
supply the field on a basis of a natural separation by retirement and 
hj death. Figures vary somewhat but experts in the field think we 



POSTWAR ECONOMIC POLICY AND PLANNING 1933 

ought to have 5 percent, 4 to 5 percent new people every year to take 
care of the losses by natural causes and we have not done that well. 
You can blame us for that but you cannot train an apprentice if you 
do not have employment. The apprentice learns on the job. He 
cannot be trained from some books, he has to be trained on the job. 
If there are no jobs for him we cannot school him. 

Now, we are trying to ascertain right now in this committee, the 
cost per worker in each division of the industry to employ a worker 
full time per 3^ear. In the electrical construction industry it takes 
around $10,000 to buy a full year's employment for an electrical 
worker. That is a ver}^ convenient term because you see under the 
decimal system j'ou can run that through a million dollars or a bil- 
lion dollars' construction and ascertain just how many men you are 
going to need in a $12,000,000,000 construction year. We know actually 
how many people we will need for a $12 000,000,000 construction year. 
Now, this committee is trying to get ready on that basis. We are now 
in touch with the employers in each segment of the industry, each 
craft, to work out this figure of how much it costs per worker to get a 
full year's employment and we are going to estimate the niunber of 
men in each craft we are going to need for each job, if it is $12,000,- 
000,000, $14,000,000,000, or $16,000,000,003. Then we are going to do 
everything we can to induct these apprentices, these younger people, 
in the industry to fill up the ranks. 

Now, you say, ''Well, it is too late." It is not too late, gentlemen. 
You have heard Miles Colean. Miles Colean in his studies of the 
building industry has discovered a principle. He has discovered that 
we never have been able in the whole history of the building construc- 
tion industry to do better than a 50-percent increase over a given year. 
It seems to be the law tliat we cannot spend more in tlie succeeding 
year than 50 percent of a year just preceding. For example, we are 
doing now about $3,500,000,000 worth of construction. The first year 
after the war when we start we won't be able to do much better than 
$5,000,000,000 and the second year $7,500,000,000 and the third year 
10 or 11 billion dollars and the next $16,000,000,000. So, we can 
start our apprenticeship program immediately or the first year after 
the war and have a completely new group of skilled workers before 
you reach the maximum of the building construction that we think 
we are going to need to fit into this program. 

So, labor's interest in this field is threefold and I want you to know 
we are trying to do a job. 

Now, we have a feeling that some place in the Government there 
should be a sympathetic interest in this industry and in this program 
and we think it is in Congress and we think it is your committee. We 
think you can help greatly because there is always opportunity for 
coordination in an industry as widespread as ours and as unintegrated 
as ours. We have got to have a sympathetic understanding and direc- 
tion from a group of people that have power because there will be 
obstacles to be ironed out and there is coordination that needs to be 
done. We have the temerity to suggest that maybe you would help us 
and would do this job for us. 

We know you could not have listened to these remarks of many- 
experts for these weeks without running into certain problems. We 
think that the official point of view of the building-trades department 



1934 POSTWAR ECONOMIC POLICY AND PLANNING 

is that this work can be clone best by contractors and the union work- 
ing in private enterprise. But we think that we reflect not only our 
own best thinking but the thinking of people that are employees in 
this field, that conditions do not wait, events do not lag and that if 
private enterprise is not enabled to do the job that has to be done, 
then it will be done by Government intervention. We believe that 
it should be done by private enterprise and be effectively done by them, 
but that certain things must be done first before private enterprise 
is able to do it. 

We naturally believe in all branches of the industry the prevailing 
wage should be paid. We think that over a long period of years, 
the average hourly wage as developed in the open market has reached 
a point now that if you had full employment in the industry you 
would get about the average figure of $3,000 a year for skilled people, 
using the prevailing wage as it now exists. We average about $1.57 
an hour for the whole country and that would produce about the 
$3,000 under full employment conditions. 

We think you are going to have a problem at once in seeing to it 
that materials are ready on V-day. That is surely going to be a 
bottleneck and I think Congress has an obligation to authorize some 
competent group in the Government to see that those materials are 
ready and released to the proper people at fair prices, not at specula- 
tive prices. 

One of the failures of the industry has been due to our disintegra- 
tion or unintegration. Mr. Colean's proposal, recent proposal, I think 
we could warmly concur in, to have a clearing liouse of information 
in the Department of Commerce so that we would all have access to 
figures so we would know more about our industry and we certainly 
believe there should be attached to that a chance for market research 
studies and reports so that we will know from week to week where 
we are. 

I do not think that the situation is dark or one for pessimism but. 
I think I have said enough to show you it is a problem in integration, 
of coordination. We cannot do the job we have to do without co- 
operation. That means cooperation between labor, management, and 
government, between businessmen and labor and government. 

I think you have a great opportunity, if I may say it, to drive us 
along into this direction. That is a simple statement about our 
position. Of course, I will answer any questions you care to ask. 

The Chairman. We were glad to liave this statement representative 
of labor. We have been hearing from industry and experts in the 
various fields and we are very grateful to you for being here this morn- 
ing and giving us a point of view of labor. 

Mr. Kaplan, do you have any questions? 

Mr. Kaplan. As the chairman has just indicated, Mr. Hedges, we 
have been hearing testimony from experts who have been interested 
in the construction field, from the employers of construction labor, 
from those who are interested in investment in construction. In view 
of the fact that you are representing the viewpoint of labor today and 
are qualified to' do it, we should like an expression from you on a 
subject to which previous witnesses have addressed themselves rather 
pointedly — construction costs. I think the committee will find it 
helpful if you do. 



POSTWAR ECONOMIC POLICY AND PLANNING 1935 

In testimony that we have had previously there has been some ref- 
erence to the necessity of reducing construction costs, if people are 
going to buy houses or commercial buildings or if people are going to 
invest in construction. Now, I take it from your testimony that 
despite the fact your people are supposed to be "aristocrats" of labor — 
I suppose that means they have hourly rates from $1.50 to $1.75 or 
thereabouts — nevertheless the facts are that their total incomes in a 
depression year averaged $541 annually, and later $600 to $800, and 
so on, whereas in 1942 they were earning $3,280. 

One of the differences, perhaps, is that when you had the $3,280 
annual figure you had a war customer in Uncle Sam who was not 
particularlj^ interested in what he was being charged so long as the 
construction was needed. In the earlier years the costs of construction 
were too high for some consumers who would like to have housing. 
You mentioned in your testimony the fact that your construction 
people, despite the fact that they work at construction, cannot afford 
houses. May I ask you to vrhat extent you feel that labor will become 
interested in reducing building costs to the point where the construc- 
tion workers can afford the houses that they build? 

Mr. Hedges. I should say beginning with that figure $3,280, there 
was a good deal of overtime in it and I do not think the working force 
in the building construction industry can go on working overtime 
in the same rate they did during the war years under the pressure of 
getting the war job done, and that automatically would lower the 
annual income. 

I suppose a direction of your remarks, Mr. Kaplan, leads us to 
the question of prefabricated housing, doesn't it ? 

Mr. Kaplan. I was giving you an opening so you could go ahead 
in your own way. 

Mr. Hedges. We have faced that problem and I understand from 
people who are very much in that field of the fabricated house that 
they do not look toward reducing labor's prevailing wage at all in that 
field because they expect to have enough savings by adapting the as- 
sembly line production principle to housing, and make enough saving 
there to pay the prevailing wage and that is where we should accumu- 
late our interest in that particular field. 

You know, if you look through the history of the last 30 years in 
American industry that labor has not always cashed in on the advances 
of technology by an increased wage. The theory is that it should be 
cashed in as a consumer but the study Brookings made several years 
ago showed prices did not fall rapidly enough to give the consumer 
his dividend in our technological advances. Labor thinks it ought to 
be collected at both ends, both in a better wage and in lower prices and 
then we would get the right kind of economy. 

Now, labor believes, I believe I am reflecting the right position — 
it is confused at the present time — that that whole problem of the 
manufactured housing is going to lie in the main between the con- 
sumer and the manufacturer and if the customer elects to want that 
kind of house he certainly ought to have it and that labor should not 
intervene and say he should not have it. But I think that the customer 
should not want that kind of house at the expense of labor; that he 
should want labor to have the kind of income so he could buy a house, 
too, that is, a laboring person. It is an easy formula, you cannot 



1936 POSTWAR ECONOMIC POLICY AXD PLANNING 

produce the kind of economy we are talking about Avithout money 
in the consumers pocket and Libor is a consumer, too. So Ave do not 
want to lessen labor's wage to reduce building costs and you will not 
need -to if I am to believe the people in the Producers Council, to whom 
I talked, who are interested in this whole field of manufactured 
houses. 

Have I answered the question ? 

Mr. Kaplan. Yes; I think except perhaps every member of the 
committee would agree we are trying to see labor -get a high, as high 
an annual intake as possible. But there is the question as to whether 
either the rules of the labor oi"ganization or the prevailing situation 
in building is such that the consumer does not get enough out of an 
hour's labor — I do not mean there are no phases on the building ma- 
terial aid, too — but he is not getting enough out of an hour's labor so 
as to bring housing and other construction costs down to the point 
where the consumer can use it. If you get $12,000,000,000 or $16,000,- 
000,000 a year, will that volume be reassuring enough so that we can 
consider the problem of reducing construction costs? 

Mr. Hedges. Well, labor certainly will have to make adjustments 
it seems to me as it always is prepared to make adjustments and does 
to new conditions. If I would now offer a criticism of labor I would 
say labor has not set up a department of adjustments in its own insti- 
tutions, but other groups have failed to do that, too. 

I would like to make a general comment, Mr. Chairman, that Amer- 
icans cannot afford to be conservative because we live in an era of 
change and that change is not dictated by men but by our own techno- 
logical genius. It is the electronic machine that is destined to de- 
termine the kind of life we live. So Americans cannot afford to be 
conservative. We have to be people who adjust and adjust and adjust 
to change all the time. Labor is just as much at fault as other groups 
in not realizing that fact and setting up institutions for change. 

I think where labor will have to make adjustments will be on the 
kinds of jobs they do. If we go into the prefabricated housing field 
perhaps we will have to work in the factory part of the day and out- 
side for the other part of the day. That can be done. If it is done 
in an orderly way by a collective agreement, and so on, it can be done. 

The Chairinian. Mr. Lynch would like to ask you a question. He 
is chairman of the subcommitee. 

Mr. Lynch. Insofar as labor is concerned it appears to be a ques- 
tion of feast or famine, isn't that so? 

Mr. Hedges. That is right. My figures showed that, $541 to $3,200. 
That is a vast difference, almost six times. 

Mr. Lynch. That $3,200 you say included overtime? 

Mr. Hedges. That is right. 

Mr. Lynch. So actually on an 8-hour-day basis that would amount 
to considerably less? 

Mr. Hedges. That is right. 

Mr. Lynch. If j^ou have an expanded program of up to $16,000,- 
000,000 do you anticipate that it would be overtime that would bring 
the wages up or is your anticipation toward the regular union hour 
day? 

Mr. Hedges. The regular union hour day, possibly 40 or 35 hours a 
week. 



POSTWAR ECONOMIC POLICY AND PLANNING 1937 

Mr, Lynch. When you ari'ive at the figure of $10,000 you have given 
in construction to give employment to one man, are you not a little 
high on that ? 

Mr, Hedges. Well, Mr. Lynch, that is not my figure. That is the 
figure that our employers have set up. We got that from the em- 
ployers. They find over a period of years if they can keep one man 
at work, pay for materials, the overhead, all the other things, that 
it takes about $10,000 a year for an electrical worker to make $3,000 
a year. 

Mr. Lynch. How much do jou estimate the construction work was 
in 1914? 

Mr. Hedges, 1914— last year I think around $3,500,000,000. I have 
not looked at the figures latel3^ I think it is about that. 

Mr, Kaplan. That is about right for new construction and about 
the same for maintenance. 

Mr. Lynch. Is it reasonable to suppose that that $3,500,000,000 
will probably further decrease in 1945 as the result of the cessation 
of camp construction and war construction? 

Mr. Hedges. That is right. 

Mr. Lynch. So that you are liable to get considerably below that 
figure when the war terminates? 

Mr. Hedges. That is right. 

]Mr. Lynch. The lower we get from that figure the longer it is go- 
ing to take us to pick up that 50 percent year after year. 

Mr. Hedges. That is right. 

Mr. Lynch. How m.any men do you estimate to be engaged in the 
building-industry trades ? 

Mr. Hedges. At a peak year — say 1942 ? 

Mr. Lynch. Take the normal and then take the peak if you can 
find a normal year back in those 1930 years. 

Mr. Hedges. I would not know what the normal would be, Mr. 
Lynch, but I would say that in 1942 there were in the building in- 
dustry about 2,200,000 workers at work. 

Mr. Lynch. That was a peak year, 1942? 

Mr. Hedges. Yes. 

Mr. Lynch. How many would you say were engaged in the build- 
ing trades in this past year when we only had $3,500,000,000 of new 
construction and $3,500,000,00 of maintenance work? 

Mr. Hedges. About one-fourth of the 2,200,000. 

Mr. Lynch. So actually, when the war ends, we have got to pick 
up that slack insofar as labor is concerned ? 

Mr. Hedges. You see, the building trades may have now in service 
possibly 400,000 men, in armed services of all forms, soldiers, seabees, 
and other types. Tliey are out of the current business ability. Many 
of them are in war industries, airplane plants, shipping, a great many 
of them are in shipping. They are here but they have gone into war 
work. 

Mr. Lynch. Going back to that $10,000 of construction for one 
man in employment, you have in mind one man in the building 
trades ? 

Mr, Hedges. Electrical construction and I only used it as an ex- 
ample. Now, we are seeking to get that from other estimators in 
every field, what it costs for a bricklayer to work, a steamfitter, a 



1938 POSTWAR ECONOMIC POLICY AND PLANNING 

painter. We have not yet completed the gathering of those figures^ 
we are in the process of gathering them. 

Mr. Lynch. Have you any knowledge whether or not the figures 
for carpenters and bricklayers and the like would vary greatly? 

Mr. Hedges. I think they would and I think they would be less 
than $10,000. That is a guess. 

Mr. Lynch. If that were so, if they were less than $10,000, that 
may take up the difference between the 1,600,000 that might be em- 
ployed and the 2,200,000 which is the peak of labor output. 

Mr. Hedges. That is right. 

Mr. Lynch. That is all, Mr. Chairman. 

The Chairman. Mr. Gilford would like to ask the witness some 
questions. 

Mr. GiFFORD. I would like to ask this: How do you tliink we can 
recover jobs when production costs are so high that it is rashness to 
invest ? Will the time ever come when the carpenters and electricians 
and masons will lower their wage in depression times, or will they hold 
on or even have higher wages, no matter whether there is a depres- 
sion or not ? 

Mr, Hedges. Well, that goes back, does it not, to the question of 
whether you think the hourly wage is the right index to produce the 
right yearly wage for the craftsman. Is that your question ? 

Mr. Gifford. Perhaps so. 

I have seen no indication of the aristocrats, as you call them, aristo- 
crats of labor — and I am not criticizing the A. F. of L. ; I think they 
are a good organization — but when my neighbor cannot afford to do 
a thing and pay the price per day, how can my neighbor who receives 
$4 a day pay his neighbor who is no higher in the social scale $9 or 
$10 a day ? How can he do it ? 

I want to say I live in a rather small community, but I have done 
rather a lot of work in building and repair work. I will use myself 
as a guinea pig, as you might say. I bought a house last year. I had 
it painted and papered inside, every room, by women of the commu- 
nity, and they did a good job. It was painted by some of our older 
men who did not know how to paint too well, but were fairly satis- 
factory. I did not dodge paying the regular jDrice, but I could not hire 
experts; they were not available. I employed anybody I could get to 
do the work, 

I want to bring out the point that people who cannot qualify among 
the aristocratic workers, as you call them, may be fairly good work- 
men. They are gradually increasing their ability and they may be in 
pretty heavy competition now with the trades who demand such a 
high rate of wage. I want a high wage rate. I Avant a high wage 
rate for myself. But how can I get it if my neighbor cannot afford 
to pay me? Are you willing to come down in the scale so that they 
can afford to pay for work in times of depression? 

Mr. Hedges. May I make a comment on that ? 

Tlie Chairman. He asked for it ; yes, sir. 

Mr. Hedges. I know it is a problem, and, of course, you would not 
want me to underwrite the principle of engaging occasional labor for 
these jobs. I do not think it would solve the problem if you reduced 
the scale, the present average scale of $1.50 an hour, to 75 cents; I do 
not think you would solve the problem. It might seem to do it, but I 



POSTWAR ECONOMIC POLICY AND PLANNING 1939 

do not think it would, because you would at once reduce tlie market 
for houses by the return that the worker gets. 

Now, I agree with you that is a maladjustment in the industry, and 
I have told the labor-management committee of the electrical construc- 
tion industry that that problem is an industry problem. It is not the 
problem of labor or of management but labor and management 
together. 

I have suggested, and I have received some favorable reaction, 
that an agency be set up by the employers and the union in any given 
community to give better and cheaper service to the consumer through 
this cooperative agency that the employer and union sets up, and that 
would take some of the curse off repair bills that you chafe under in 
the case of a plumber or an electrician. I chafe under them, too; I 
have repair bills once in a while that make me sizzle, 

Mr. GiFTORD. I have a neighbor and he has plenty of money. He 
told a carpenter that he had a lot of work that he did not need, but 
would have done if at a price of $5 a day, that he could work every 
single day as long as he wanted to. He would not pay him $8, it was 
not worth it to him. That fellow was glad enough to get $5 as social 
security had not reached him at that time. 

I am not interested in your average. You so easily get an average 
but when the wages went down they worked only a few weeks out of 
the year because there was nothing to do. You do not want to tell 
me they loafed the rest of the time? 

Mr. Hedges. I do not know, they may have driven taxicabs, I do not 
know, 

IMr. GiFFORD. A man could make money other ways, he could add to 
bis annual income. Those figures you gave us are simply income for 
that particular kind of work, 

Mr, Hedges. That is right, it was measuring the return of the in- 
dustry to that worker in the industry. 

Mr, GiFFORD. When he came down to that $900 a year he might 
have acted as a chauffeur a little while, couldn't he? 

Mr. Hedges. Some of them may have gotten extra jobs but many 
of them were on their uppers, too, that I know, when it was very wide- 
spread, you see, 

Mr. GiFFORD. I live in a community where we often like to say that 
when hard times comes we live off each other. 

Mr. Hedges. If that were possible within the industrial set-up we 
have, that would certainly be one solution, but it does not work out for 
many thousands of people that way. 

Mr. GiFFORD. I would like to build some more, but I cannot pay 
your prices, because those to whom I want to rent cannot pay the rent, 
and I cannot get any return. It is foolish, silly, for me to do it. When 
that condition exists, would you recommend the Government to come in 
and for us to indorse the Wagner bill ? 

Mr. Hedges. The Wagner bill for housing? 

IMr. GiFFORD. We would repair everybody's house, clear up the slums 
with Government money, long-term money ; would you like to see the 
Government go into it? 

Mr. Hedges. What I have suggested is an attempt to prevent a 
condition where you need that kind of solution. If we once get into 
this tailspin nothing will prevent it. 



1940 POSTWAR ECONOMIC POLICY AND PLANNIXG 

Mr. GiFTORD. You say we cannot be conservative any longer. I am 
trying hard to be conservative. Perhaps you are right; we cannot 
keep it up. I am trying to keep it up lest t be led astray by putting 
the Government in bad financial shape. I am interested in the Wagner 
bill where we would get social security so that when a man is out of 
Avork, like some electrician, he would not have to work at something 
else. He would not have to be a chauffeur. The Government will take 
care of him and still he will keep his high wages. Those are happy 
dreams. I recall a story about dreams. The man dreamed he was 
dead. He woke up suddenly and someone asked him what woke him 
up, and he said it Avas too damn hot. I could make it apply here.. 

I try to be conservative. I realize your position and your research 
work, but when you cite to me tables of averages, you do not fool 
me any. 

Mr. Hedges. Well, you have heard of the old crack about the com- 
parison of the w^ord lie, lies, damn lies, and research. 

Mr. GiFFOED. I was on another committee where the OPA wanted 
us to see statistics and I want to make it plain, 5^ou can make statistics 
attractive if you start on the sickest day you have, then your average 
is so much better. All New Dealers begin with 1933 to get their 
average. Statistics are something you can talk about with exactness 
on a §ubject you know nothing about. 

Mr. MuKDOCK. Mr. Chairman, I do have some questions here but if 
I may take just a minute I have been glancing at this chart at the 
same time that I have been looking at the figures j^ou gave me. I 
marked two of these years that you indicated out of about a decade. I 
marked 1933 and 1937. This chart shows me that the lowest point 
in recent years in both public and private construction Avas the year 
1933 and I notice that you have indicated that the average salary of 
these electrical workers was $541 that year. Whether we quibble al30ut 
the matter of averages or not, I think it is a truism that this must 
conform to the general economic conditions of the country, and our 
national income in 1933 was at a very low ebb. 

Mr. Hedges. That is right. 

Mr. MuRDOCK. That probably explains the situation. 

Mr. Hedges. Our figures dovetail with this chart. I have it. Is 
that your point ? 

Mv. MuRDOCK. Yes. 

Of course, I am looking now at the year 1937 which you indicated 
furnished an average wage of $1,846. That was before tlie war and 
before the smaller depression, I notice a drop in the following yeav. 
But that was the thing that had been running through my mind. 

Now, if I may, Mr. Chairman, I would like to say this. We speak of 
full employment. We all hope for full employment in the postwar 
period. You have said as much and we have all said that. I believe 
you indicated that you hoped the major part of that employment 
would be in private hands, private employment, but you are also 
willing that any necessary part may be in public employment. 

Mr. Hedges. It will work out that way inevitabl}^, you cannot stop it. 

]\Ir. MuRDOCK. I have the same feeling although I have the hope that 
these 55,000,000 jobs or a large ])art of them might be with private 
employment. 

Mr. Hedges. That is rieht. 



POSTWAR ECONOMIC POLICY AND PLANNING 1941 

Mr. MuRDOCK. Private employment, I fear, cannot possibly furnish 
all of those jobs. You would favor public employment coming to the 
rescue and fitting into the picture to the point necessary to give us 
full employment. 

Mr. Hedges. I think everybody in the industry does think that. It 
has been the history — there is nothing radical or revolutionary about 
that. When private industry fails to move fast enough or in that direc- 
tion, there will be a supplementary effort by public works. It is an 
old theory, and happily many cities in the United States have gone far 
now in making out such a program. Portland, Oreg., as you know^ 
hired Robert Moses, and they have their plan, and Louisville has its 
plan. I have been told there are more than 1,000 cities that have pre- 
pared a shelf of public works. I do not see anything radical or revo- 
lutionary or antagonistic to the private-enterprise system in that 
program. 

Mr. MuRDOCK. I think all witnesses have indicated about the same 
view, as I remember hearing them. This is what I am leading up to. 
Is there not a danger that the governmental agencies, national and' 
local, having made a shelf and made preparations for public employ- 
ment, will tend to overdo it and compete with private employment in. 
order to carry out their public construction? 

Mr. Hedges. Well, that would have to be a prediction. My feeling: 
would be if it is moved to the municipal level there would naturally 
be checks on that from the people themselves that are going to bet 
served by the unions and by the employers in that field. It seems to 
me in this whole question of the relationship of central planning to the 
locality, as you move the operation down to the lower level, I mean the 
basic level or the municipality, you are going to wash out many of the 
faults in such a system. I would like to see the thing move down to 
the municipal level. There you get the kind of family economy that 
this honorable gentleman described to act as a check upon bureaucrats 
at the central level. 

Mr. MiTRDOCK. We cannot legislate private employment. We may 
enact legislation so as to give encouragement to private employment 
but we cannot legislate it. The only legislating of employment we 
can do, tlien, is for public employment, as I see it.' Now, if we should 
pass any legislation looking toward postwar employment, do you think 
it would be wise for us to write in some safeguards in order" to insure 
that the public employment shall follow private employment and 
supplement it? 

Mr. Hedges. Well, conditions might arise when you would not want 
it to proceed that way. You might want it to proceed anyway. I wouM 
hesitate laying down too rigid a program because conditions have a. 
habit of surprising j^eople, and you always want public works to sup- 
plement private employment. Now, it might well be — suppose we don't 
get materials for our private enterprise. There might be a period of ^ 
year when you could do some public works to get the thing started^ 
Public works should be thought of, it seems to me, as a ballast, as sa. 
governor and not as a competitor to private enterprise. 

Mr. MuRDOCK. That is well stated. 

I notice in this very chart tfiat private employment goes down during: 
the war period and public employment goes way up. That is a case 
of war necessity. 



1942 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Hedges. That is right. 

Mr. MuRDocK. I am talkino- now of a time after the war when we 
will not have that situation. We want private enterprise to give all 
the employment that our economy can sustain or demand. 

I have just been turning this o-ver in my mind. In case we pass some 
bill that will provide for public employment, not made work, but use- 
ful, wealth-producing necessary public employment, would it be well 
for us to write into the law that this construction shall not be begun 
until there is a certain degree of unemployment? 
, Mr. Hedges. Well, I would hesitate, I would be a little afraid of that. 
I would not be afraid of it in your principle. I see your principle but 
I am afraid tliat you' might face a situation where you would not 
want that to happen. I mean you might want to precede the great 
private enterprise projects by some public works until they could get 
ready to do it. They are all busy too and they are doing war work, 
they have got to have a change-over. Materials have to be found. 

Mr. MuRDOCK. I am thinking out loud, too, on the matter and I just 
want to arrive at this idea, that }3ublic employment must supplement 
private employment and I want that to be done in such a way that 
governmental agencies will not say they have got a beautiful scheme 
here — we have got our plans all cut and dried, and regardless of what 
private employment needs w^e are going ahead with this whether it is 
useful or needed or not. 

Mr. Hedges. When they do that, they do harm. When they act as 
competitors they do harm. When they act as supplementary to or a 
governor of the situation they do good. Now, couldn't you write that 
principle into your bill rather than to say just when the time should 
be when they should proceed because you might want that hour 
changed ? 

Mr. MuRDOCK. That is exactly it. 

I think that is all. Mr. Chairman. 

Mr. LeFevre. Mr. Hedges, as I recall your figures just prior to the 
war your average income was between $1,500 and $1,600 for workers 
in the electrical construction field and you would like to see that in- 
creased to remain at $3,000? 

Mr. Hedges. Only if our national income reaches $150,000,000,000 or 
$160,000,000,000. 

Mr. LeFevre. I know your reason is perfectly good. I think every 
American citizen should own his own home and things of that sort 
and we are all striving for that. With this increased percentage, 
what percentage of the cost of construction is for labor, let us say in a 
$50.,000 project what would be the cost of labor ? 

Mr. Hedges. It changes a great deal. It has been put at 50-50 
for material and labor, tliat is 50 for labor and 50 for material. In our 
particular segment, the electrical segment, it used to be written oif at 5 
percent for electrical but now it has increased to 10 percent due to the 
rapidly increased use of electricity and electrical equipment, such as 
electrical kitchens and those things. About 10 percent goes into 
electrical construction of any given job. That is for the total con- 
struction, 10 percent of the total construction. 

In our industry we used to write off 50 percent for labor and 50 
percent for material. That has changed to about 63 and 37 for labor — 
63 for other things, 37 for labor. That is due to the fact that the 



POSTWAR ECONOMIC POLICY AND PLANNING 1943 

building inc^ustry has seen mechanical changes taking place in that 
field — the kind of thing Mr. Kaplan has mentioned. Mechanization 
has gone forward. Labor takes about 37 cents over against 63 when 
we used to take 50 over against 50. I could speak w4th more assur- 
ance as to electrical construction than I could as to other things. 

INIr, LeFevre. I was interested when you mentioned the falling 
off of skilled mechanics. I know that is true. I agree with you as 
to the fact that most of the men in the trade are old men. Wliat is 
your union going to do to help this situation in the way of appren- 
ticeships? 

Mr. Hedges. We have a top committee in our industry, that is a 
labor-management committee. We are now trying to set up a local 
joint committee that is labor-management. Appenticeship is con- 
trolled jointly between employers and the union and we are now 
going to supply them with this analysis of the industry and even 
try to prorate for that particular locality the number of apprentices 
per year that should start into the industry. You see, w^e cannot 
dictate to them, we hope to guide them. 

Mr. LeFevre. What are the wage rates of these apprentices 2 

Mr. Hedges. That is set down so they take about 25 percent the first 
year, 50 percent the next year and 75 the next year and the full wage 
the fourth year. That is about how it runs. That is often set up by 
collective agreement between the employer and the union. 

Mr. LeFevre. I think it is an awfully good move, something that 
ought to be paid a lot of attention. 

Mr. Hedges. We have to do it. 

Mr. GiFFORD. I want to ask a question that is interesting to me. 

A young man appealed to me. He went to school, he wanted to be a 
master plumber and he passed the examination and they told him he 
could not come in, that there were too many master plumbers now. 
There are two boys who went 40 miles to school, worked for a plumber, 
passed the examination but they were not allowed to become master 
plumbers because there were so many plumbers a year only. 

Mr. Hedges. Well, the doctors do that, you know, the certified public 
accountants do it, the engineers do it, the architects do it. I admit it is 
a rule-of-thumb method of doing something that has to be done. I 
think we can improve upon the method and we are trying to improve 
upon the method. 

Mr. Giffgrd. Your question brought that out. You know perfectly 
well they are limiting the number in these crafts and they are not 
taking them in. 

Mr. LeFevre. They are going to need them. 

Mr. Fogarty. Mr. Hedges, this annual wage you have in 1942, I 
would like to make it clear as to that $3,280. The only reason that it is 
up that high is because of the tremendous amount of overtime that 
was worked in the construction field. 

Mr. Hedges. That is right. 

Mr. Fogarty. Men were working 70, 80 hours a week on these con- 
struction projects. 

Mr. Hedges. That is right. 

Mr. Fogarty. If it had not been for overtime they would not have 
received anywhere near the annual wage shown because the wages, the 
rate has not gone up verj^ much in the construction game. 



1944 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Hedges. Practically nothing in the war years. 

Mr. FoGARTT. I was very interested in listening to my good friend 
from Cape Cod, my fellow New Englander, Mr. Gifford, and some of 
his remarks as to coming from a small town. 

Mr. Gifford. He wants to bring out that the town I live in is in a 
very sparse section and I am not familiar, you see, with these problems. 

Mr. Hedges. And a very delightful section it is. 

Mr. FoGARTY. I happen to live in a smaller town, Mr. Gifford, than 
you live m. I live in a small country town. I laid bricks 12 yeai's 
before I came to Congress. 

Mr. Gifford gave an example of one of his neighbors making $4 
a day and he could not afford to pay $9 a day for mechanics. Well, 
I do not believe anybody should be made to ^'ork for $4 a day in the' 
first place. He has given you a few examples, and I will give you 
an example now from experience. 

I live in a small country town of about seven or eight hundred, 
and about 8 years ago there was a new house being built about a half 
a mile from where I lived. The contractor asked me if I would build 
a chimney for him. He asked me how much I got, and I told him I 
got $1.50 an hour, which was tlie union wage at the time. He thought 
that was an awful lot, it was awfully high, he had already been to 
someone else and they had given him a figure of $20 to build the 
chimney. I said I would build it for him for $20. I went up that 
morning to do it, and the chimney was done at 1 : 30, and so I made 
$8 over tlie $1.50 hourly wage. 

Mr. Gifford. They do not let you lay as many bricks these days. 

Mr. FoGAKTY. Don't tell me that the bricklayers union has' any 
such rules, because I happen to know what I am talking about in 
that instance. You cannot show me any job anywhere in the country 
where there is a limitation put on the work of any of these construction 
building-trades industry. 

Mr. Gifford. I liave been so informed. 

Mr. FoGARTY. You have been misinformed. 

Mr. Gifford. It is generally known to be true. 

Mr. FoGARTY. You lay as many bricks as you can lay, and if you 
do not keep up with the next guy, you are on the road. 

JMr. Gifford. I am here to watch out for my Federal Government. 
If all these dreams of public spending are put through, my Govern- 
ment will soon be in a hot place. That is what I referred to when I 
said the man was dreaming that he was dead and he was awakened. 
That is what I tried to bring out. 

Mr. FoGARTY. Mr. Hedges, I cannot see any way possible at all for 
the reduction in the wages of the building-trades men even though 
they get $1.50 an hour. I thought I was very fortunate in Rhode 
Island. I was president of the bricklavers union for 4 years, and 
1 worked as steadily as anybody did in Rhode Island, and I was get- 
ting $1.50 an hour and my annual wage was never over $2,100, $2,200 
a year— that was at $1.50 an hour. You have to take into considera- 
tion the lack of materials, and when the job is finished you are looking 
for another job. There is no possible way of gaining an average 
wage from the construction industry because you have the weatlier 
to contend with, lack of materials, you have the waiting time between 
jobs, looking for another job, and it brings your annual Avage, if you are 



POSTAVAR ECONOMIC POLICY AND PLANNING 1945 

lucky, to about $40 a week, I cannot see how anybody in the world, 
and especially the families of building-trades men because most trades 
men, most building-trades men, are married and have families of four, 
five cliildren, can get along on any less than that minimum. My 
father happened to be a bricklayer, and most fathers who lay bricks 
do not want their sons to become bricklayers because they cannot make 
a livable Avage. That is the main reason why we do not have an 
overabundance of mechanics in the building-trades industry today. 

I think those facts are something I know quite a little about. I 
just wanted to make that observation. 

Mr. OiFFORD. I ask you if there is a month or two when there is no 
no bricklaying to be don.e if you do anything else? 

Mr. FoGARTV. I can chop wood and nuike $1.50 a day chopping wood. 

jMr. GiFFORD. I want to say this off the record. 

(Discussion off the record.) 

Mr. Hedges. Mr. Chairman, I do not think anybody within the in- 
dustry has seriously contemplated lowering either the hourly scale or 
giving labor less income within the industry. To my knowledge I do 
not know anybody that has made that proposal. It is wholly outside 
tlie framework of this new program. This program, for its success, 
depends on putting money in the consumer's envelope and labor musti 
be regaided as a consumer and it will not operate unless we look 
toward a greater income for every citizen. 

Mr. Beardsley Ruml has said the standard of living will have to be 
raised 40 percent and other people have said as high as 50 percent if 
we make this thing go. We should make it go, that is our business. 
We are the kind of people tliat make the impossible go. That is what 
the spirit of private enterprise is and when private enterprise apostles 
say to me we cannot do this, I say they are not private enterprise 
people any more, they have gone over to the other side. 

The CuAiRMAisr. We are glad to have this very illuminating disus- 
sion here. I just wanted to comment briefly on the fact that we are 
glad to know that we have a former craftsman here on the committee 
and I judge from his remark, and he need not answer this question, 
that bricklaying pays very poorly as compared with being a Member 
of Congress and that therefore he is not a very warm advocate of 
raising the salary of IMembers of Congress. They are doing pretty 
well comparatively. 

Mr. FoGARTY. There are a lot of times when I would like to be laying 
brick instead of having tliis job I have. 

The CiiAiRAiAX. IMeaning thereby you were not on the spot when 
you were laying bricks. 

Mr. FoGARTY. I was a free man. 

Mv. Simpson. I would like to ask a question, 

ISIr. Hedges, are the electrical workers employed at the present time 
by the REA and if so to what extent ? 

Mr. Hp:d(;es. Well, electrical workers are employed by the REA but 
our membership in that field is low. We have a top agreement, an 
arrangement with the Administration setting up labor standards but 
our luck M-ith the cooperatives has been pot luck. We have about 60 
contracts out of 800 REA cooperatives. Shall I stop there before I 
get into something else? You know what that is. 

99579 — 45 — pt. 6 16 



1946 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Simpson. Maybe that is going to be changed. I heard in a few 
instances it has. 

Mr. Hedges. We hoped that it might be changed. 

Mr. Simpson. But it would be a very virgin field for your people, 
wouldn't it? 

Mr. Hedges. That is right and we have tried to make the arrange- 
ments so we can live with that kind of economy. It is not the same 
kind of economy you have in an industrial set-up at all. 

Mr. Simpson. After the war that would he new construction for 
your people which would not involve the building of houses — homes — 
because the homes are already built and they are using coal-oil 
lamps. 

Mr. Hedges. That is right. 

Mr. Lynch. May I make one inquiry to clear up the matter? 

Mr. Hedges, referring back to the question asked by my colleague, 
the gentleman from Arizona, about the possibility of public construc- 
tion competing with private construction, experience shows that there 
is or has been very little actual competition between the two; isn't 
that correct? In the boom period of 1925 there was very little public 
construction although private construction increased enormously so 
that actually if public officials keep their eye on the barometer of 
conditions there is very little likelihood of real competition. Don't 
you think that is so ? 

Mr. Hedges. There will be little competition. My feeling about it 
is that there are zones of activity for various kinds of capital and that 
we have not yet, as citizens and economists, seen clearly enough these 
zones of activities and the relationship to each other. They are not 
competitors ; they supplement each other. 

Ml'. Lynch. As I understand it, in the ordinary times we may look 
forward to about 70 percent of private construction and possibly 30 
percent of public construction ordinarily ; isn't that so ? 

Mr. Hedges. Well, I have seen those figures, $10,000,000,000 for 
private and $5,000,000,000 for public works. I have seen those figures, 
too. I have never made a definite study of that over the years to see 
how it works out but I have seen those figures. 

Mr. Lynch. I think your idea is the same, perhaps, as ours, that 
the purpose of looking forward into the future with respect to public 
construction is that public construction should be in the nature of 
supplementing private construction so as to keep the building industry 
in a stabilized condition. 

Mr. Hedges. That is right. 

Mr. Lynch. You would agree with that, would you? 

Mr. Hedges. That is right. 

The Chairman. JSIr. Hedges, I am sure that I speak the sentiments 
of this committee when I state the fact that you have made a very in- 
telligent contribution to the thinking of this committee in its efforts 
to arrive at the proper conclusion of what part public works shall 
play in the postwar period. I like your frankness and your broad- 
minded approach to these problems. I wish all of our labor leaders and 
industrialists were as frank. 

I was just a bit concerned about your figure though for the post- 
war economy, the national income. I believe you have gone a little 
more optimistic than any witness we have hacl when you talk about 
$160,000,000,000 or $175,000,000,000 economy. 



POSTWAR ECONOMIC POLICY AND PLANNING 1947 

Mr. Hedges. Mr. Chairman, could I make this observation? I lag- 
behind Henry Kaiser, he says $200,000,000,000. 

The Chairman. If I may make a comment on that, sir, by way of 
digression, I am sure if Henry Kaiser continued to have the Public 
Treasury behind him he could make it $300,000,000,000. But I am 
talking about a private economy, the economy we have been accustomed 
to. I do not see how we are going to go on spending public funds. 

Now, I agree with what has been said, I agree with what you said, 
sir, to the effect that private employment should be given the first 
opportunity. That should be accentuated. The emphasis should be 
placed upon private employment. But in the final analysis you know 
and I know, we all know, that if private employment does not provide 
its full share, then we are going to have public employment or public 
works to some degree. But, we just raised the national debt to $300,- 
000,000,000 the other day. The chances are we are going to raise it 
again before we get through with this war. Now, there is bound to 
be a limit beyond- which we cannot go insofar as that is concerned. 
What was the highest national income we had prior to this artificial 
situation ? 

T^Ir. Hedges. About $70,000,000,000. 

The Chairman. Do you think it is plausible, feasible, to expect 
more than a doubling of that after the war ? 

Mr. Hedges. I think it is not only possible, it will be necessary. You 
will never get rid of your national debt unless you increase your 
production to that figure. The only hope of our paying our debt off 
is the kind of income I described. 

The Chairman. I agree with you in principle as to that. Wliile I 
think you have our objectives high, I do not think we ought to kid 
ourselves to the point of becoming unrealistic. Frankly, I do not 
believe that we can reach that peak in a postwar economy. I hope 
1 am in error ; I hope you are correct. My own thought is if we could 
get up to $125,000,000,000 or $140,000,000,000 we are going to be doing 
pretty well. 

I am just wondering now, agreeing with you, if you are going to 
get rid of that national debt, retire it, it will take you 100 vears on the 
basis of $3,000,000,000 a year, assuming we held it to $300,000,000,000. 

What do you base your hopes on for that other, a desire or what you 
think is necessary ? 

Mr. HJEDGES. The accomplishment during the war period. It is not 
a theory any more, it is a fact. 

The Chairman. Isn't there a difference? Isn't there a difference, 
Mr. Hedges, between a Government-financed economy under the lash 
of war necessity and the ordinary peacetime economy? 

Mr. Hedges. It appears to be, but it seems to me our opportunity is 
what might be called a historical opportunity. AVe have a world trade 
opportunity that we never had before. We have got the capital. 

The Chairman. May I interrupt you right there ? We have a world 
trade opportunity we never had. Meaning again that there is a 
demand ? 

Mr. Hedges. That is right. 

The Chairman. What about the ability to pay for it? 

Mr. Hedges. Well, that will be part of our job, to devise the system 
by which they can both pay and trade with us. 

The Chairman. I am just thinking out loud. 



1948 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. Hedges. I am, too, this is outside of the particular subject, it 
touches on the larger view. 

The Chairman. Do you think, for instance, we should follow the 
precedent set after the last war and loan those people money with 
which to purchase our goods, our products? 

Mr. Hedges. I certainly would say at once we should not loan any 
Fascist country money. The loan should be to a democratic country 
and if we can find it pays us to make that kind of loan, that should be 
the guide, not the theory. 

The Chairman. I think you will find we will loan to the Fascist 
country if we think it could pay us back. 
Mr. Hedges. It did not pay us to loan money to Germany in 1918. 
The Chairman. For that matter we loaned it to our present allies 
and we did not get it back. 

^yiiat I am trying to get at is. Would that be sound economy for 
us to loan money to these countries with which to buy our products 
without some reasonable assurance we were going tc^get it back? 

Mr. Hedges. I think if it were and you were to put it on a dollar-and- 
cents method, we should do it but we should perhaps devise other 
systems, maybe a system of barter will be set up, I do not know. I am 
not an expert in export trade but my plea here today is, here is an op- 
portunity and let us not be tied down by our own ideologies. Let us 
be free now, let us be engineers and not ideologists and do the job that 
the opportunity lies before us to do. 

The Chairman. But at the same time let us be realists alono' with 
it. ^ 

Mr. Hedges. That is what I am saying, not ideologists, realists then. 
The Chairman. Well, now, let us go to something else. 
You made some reference to CED, the Committee for Economic 
Development. Did I get the proper inference from your statement 
that you thought that committee of businessmen is doing a splendid 
job? 

Mr. Hedges. I have spoken for them ; surely I do. I was up in New 
York 3 weeks ago with a group of their research people. We did not 
have a great deal of difference of opinion. I would not underwrite 
everything they did, but I certainly think they have played a great 
part in this era and have a great many communities ready for this 
change we need to make. 

The Chairman. I am glad to hear you say it, sir. I think they are 
making a substantial contribution. 
Mr. Hedges. That is right. 

The Chairman. You spoke of this committee helping with that job. 
Of course, that is what we are trying to do. But I wanted to be a 
little more specific. If we are going to expect private enterprise to 
take up this job and do get anything like the national income we have 
been discussing; I take it you have in mind there must be some incen- 
tives to private enterprise to encourage them to go on. Do you have 
anything particular in mind about that, sir? 
Mr. Hedges. No ; I had not ; not concretely. 

The Chairman. Would you care to say anything about the question 
of taxation ? We hear a great deal about the necessity for reducing 
taxes in the postwar era in order to stimulate private" enterprise, to 



POSTWAR ECONOMIC POLICY AND PLANNING 1949 

make the venture attractive. Do you have anything to say about 
that? 

Mr. Hedges. Well, I could make some comments. I think incentive 
taxation is going to be used in this era, but the mere fact that you 
lower taxes might not produce better business at all. 

Now, this whole program depends on keeping money moving. Sav- 
ings, that is collective savings, is a menace in this kind of a program. 
A man who has a million dollars and wnll not use it is a menace to this 
kind of society. If you can use your taxation system to get the man 
to use his money for the economic good, that is the only reason he 
should have it, his use of it, that would be something else. That is 
the kind of tax system I think you will have to have in this program. 

The Chair3han. But also would you not agree that the man who is 
the owner of $1,000,000 who would be taxed 90 or 05 percent of what- 
ever profit he might make from an investment of that capital might 
be very slow to make the gesture, to go into such a venture ? 

Mr. Hedges. Well, that might be, that would all depend on what 
you think a fair profit is. I do not know, I have never found out. 

The Chairman". I do not know either, except that I know it is a 
matter of common sense that a man who has money is not going to 
risk losing it unless there is some profit to be gained as the result of 
taking the risk. 

Mr. Hedges. I have always had a feeling that the man who invested 
the capital of $100,000 by means of stock dividends boosted that to a 
capitalization of $5,000,000 was not quite on the side of the public 
or society. If that is what you mean, I would be against it. But I 
think every servant is worthy of his hire and a capitalist is a neces- 
sary person in our society and he should have a proper return for the 
services performed. 

The Chair]sean. What I meant to say was, in my humble judgment 
and I was in hopes I could find you in accord, that capital, if it was 
going to take the risk, it would also have to have the opportunity of 
making a profit. 

Mr. Hedges. You would have to define risk, Mr. Chairman. 

The Chairman. Well, that would be a rather difficult thing at this 
time. I would be willing for you to define it. 

Mr. Hedges. I could not. I think we greatly overrate risk. Some 
of the biggest profits have been in public-utility fields. Is there any 
risk in it ? 

The Chairman. Well, since we cannot agree on what is risk and 
neither of us undertakes to define it, I will not go into this further. 

Is there anything else, Mr. Hedges? 

Again, Mr. Hedges, on behalf of the committee we want to thank 
you for your appearance here this morning. 

Mr. Hedges. You have treated me very nicely and I am grateful. 

(Wliereupon, at 11 : 50 a. m. the hearing was adjourned.) 



POSTWAK ECONOMIC POLICY AND PLANNING 



WEDNESDAY, APRIL 4, 1945 

House or Representatrt;s, 
Subcommittee ox Public Works and 

Construction of the Special Committee on 

Postwar Economic Policy and Planning, 

Chicago^ III. 

The subcommittee met pursuant to notice, at 9 : 30 a. m., Hon. Walter 
A. Lynch (chairman) presiding. 

Present : Hon. Waher A. Lynch, New York ; Hon. John E. Fogarty, 
Ehode Island; Hon. John E. Murdock, Arizona; Hon. Jay LeFevre, 
New York ; Dr. A. D. H. Kaplan, consultant ; H. B. Arthur, consultant; 
Winifred G. Osborne, secretary of the committee. 

Also present: Hon. A. J. Sabath, Chicago; Hon. Martin Gorski, 
Chicago ; Hon. Edward A. Kelly, Chicago ; Hon. William A. Kowan, 
Chicago ; Hon. T. J. O'Brien, Chicago ; Hon. W. W. Link, Chicago. 

The Chairman. Gentlemen, this is a meeting of the Subcommittee 
on Public Works and Construction of the Special Committee on Post- 
war Economic Policy and Planning of the House of Kepresentatives. 
The purpose of these hearings is to get a broad picture of the need of 
public works so that this committee may report back to its full com- 
mittee and give to the full committee the facts which we have developed. 

As you probably know, there are some people who feel that public 
works, or rather the construction of public works, will be the cure-all 
of the economic depressions that may come in the future. I say that 
the viewpoint of the committee is that we look upon construction of 
public works as only a part of the great scheme that we must develop 
if we are going to keep the income of the country up to that high 
standard which is necessary to give jobs to the people of this country. 

We have invited here this morning several of the distinguished peo- 
ple from the Middle West, and the committee is particularly pleased 
that the mayor of this great city has consented to come here this morn- 
ing to give the committee the benefit of his views. 

Mayor Kelly. 

STATEMENT OF EDWARD J. KELLY, MAYOR OF CHICAGO 

Mayor Kelly. If it will please the chairman, I would like to read 
the statement and then that can be placed into the record so that there 
will be no question of what I said here this morning, not because of any 
desire to do it but sometimes because of error. 

I am happy, today, for two reasons, namely : 

(1) That the National Government honors Chicago by sending this 
august committee to our city ; and 

1951 



1952 POSTWAR ECONOMIC POLICY AND PLANNING 

(2) That the National Government, by so doing, evidences its 
interest in the postwar economy — in useful employment, if you please. 

We, in Chicago, have been concerned for some time about Jobs for our 
returning service m.en and women. 

The National Government, and rightfully, took these Chicago boys 
and girls from their homes and jobs, some 425.000 of them, and put 
them into uniform as the war clouds gathered. We, in Chicago, their 
fathers and mothers, brotliers and sisters, husbands and wives, and 
sweethearts, are proud of their war record. 

We are glad to leani, from time to time, that the National Govern- 
ment is concerned and is definitely planning insurance for families 
covering those who aren't coming back, increased hospitalization for 
the injured, financial aid to continue veterans' education, or to go 
into business, or to buy a home, and so on down the line. 

We, in Chicago, want the record to show that we heartily endorse 
every move of our National Government to ease the return of our 
veterans and to adjust them, once again, to their place in our national 
economy from whence the National Government took them. 

We concur that this is strictly a function of the National Govern- 
ment — and just as much a war cost as the cost of bombs and bullets and 
bandages. 

Chicago has just one question. 

What is the National Government going to do for the thousands 
and thousands of returning veterans who only ask jobs to support their 
families? We, in Chicago, believe this is urgent. Two weeks ago we 
read in our local papers a quotation from Selective Service — 

That more than 100,000 Illinois men, most of them from the Chicago area, have 
already come marching home again as discharged veterans. 

Will there be jobs at good wages for them? 

Gentlemen, I submit that employment, in all its varied and sundry 
ramifications, is a matter that can best be handled by the National 
Government and its agencies created for this very purpose. Local gov- 
ernments can only assist in such things — and that's what we are trying 
to do here in Chicago. 

Industry in Chicago tells me it is going to do its level best to provide 
employment for all who want to work in Chicago. That's a big order. 
There may be change-over gaps — delays in retooling. 

May I give to you gentlemen a brief insight into what happened tc 
Chicago emplojanent as a result of the war, as follows : 

(1) There are now more than 835,000 persons employed in the manu- 
facturing establishments in the Chicago area; 320,000 of these are 
women. 

(2) This is 385,000 more than in 1940. 

(3) In addition, 425,000 answered the call of the Nation and are in 
the armed services. 

^4) In all there will be more than 800,000 seeking employment. 

(5) I have received literally hundreds of letters from service men 
and women who were entertained in Chicago's servicemen's centers, in- 
dicating that they expect to make Chicago their home after the war. 

In a nutshell, that is the problem which I, as mayor of Chicago, 
want to present to this committee having to do with national postwar 
economy. It is a tough one. Where are all of these people going to 
find jobs? In my opinion, the National Government will not have 



POSTWAR ECONOMIC POLICY AND PLANNING 1953 

discharged its complete war duty until it solves tliis postwar employ- 
ment problem — not only in Chicago but also in every other metro- 
politan city in the country. It is in these congested manufacturing 
areas where unemployment is first felt and is the hardest to combat. 

Without, for a moment, losing sight of the fact that this is a na- 
tional problem, Chicago offers the following possible solution: 

Chicago believes that whatever jobs industry does not provide. Gov- 
ernment should — and the^e at prevailing wages — and quickly. To 
that end, Chicago has prei)ared a postwar public-works program 
totaling $937,000,000. The list has been checked and double-checked, 
not only by the city's engineers and department heads, its engineering 
board of review, its plamiino; commission, but also by Chicago's 
Postwar Economic xVdvisory Committee, made up of representatives 
of manufacturers, business, finance, and labor. In summarized form, 
the list is attached. 

I do not want you gentlemen to infer that Chicago taxpayers can 
shoulder this added financial load, this $937,000,000. Quite the con- 
trary is true. If there is a shrinkage in employment after the war, 
Chicago will have difhculty securing from its taxpayers the funds to 
pay for the maintenance of its garbage collection, its police and fire 
service, its health and recreation, and other local essentials. Decreased 
income does not spell increased taxes. 

Permit me to give you one illustration. Chicago has some slum 
districts and some blighted areas as do all other metropolitan cities. 
Those areas should be rebuilt. In addition, Chicago urgently needs 
more housing. In our $937,000,000 program we have labeled $100,- 
000,000 for housing. The city's income is not sufficient to appropriate 
much money for housing. We have decided to raise $5,000,000 on this 
housing project. We are asking the State to contribute another 
$5,000,000, a total from local funds of only one-tenth of the total im- 
mediately needed. Now assume, if you will, that $100,000,000 is 
provided somehow or other; how many dwelling units will it pro- 
vide? Under the Chicago Housing Authority, nine housing projects 
have been built. These provide 7,265 dwelling units, with a total of 
30,160 rooms at an aggregate cost of $28,214,557. At the average cost, 
the $100,000,000 would provide 25,753 dwelling units, with 106,837 
rooms, which could be rented overnicrht. 

This $937,000,000 program admittedly includes projects which 
would have been built by now had not the war intervened, together 
with those which we believe will be built in normal operation of the 
city in 10, 20, 25, or 30 years. Chicago's taxpayers might pay for them 
if given that long to pay — but the debt service over so many years 
would be far too excessive. In ordinary practice, Chicago would 
build at a lesser rate and more or less pay as it went. 

AVhat we propose, however, is to compress the program into 3, 4, 5, 
or 10 years — whatever time is required to provide enough emplo^^ment, 
in addition to that provided by industry, so that everyone' who needs 
and wants to work in Chicago can have jobs at god wages. I have 
no hope that the collection of local taxes can be so accelerated, regard- 
less of the emergency. 

Gentlemen, may I be pardoned for interjecting here a personal 
opinion of many, many years standing? It is that any questions of 
economics can be answered completelv by providing jobs for all at 
good wages and doing needed and worth-while work. 



1954 POSTWAR ECONOMIC POLICY AND PLANNING 

Along this line of reasoning, recently I caused a letter to be sent to 
some of the heads of schools of economics of some of the universities. 
My query was: "How much of every dollar spent for public works 
accrues to labor?" I haven't the complete answer for you yet, from 
these sources, but what I have is both interesting and thought-provok- 
ing. For example : Normally, on heavy construction in metropolitan 
areas, the division between on-site labor and materials seems some- 
thing like 35 percent labor, 65 percent materials, equipment, and other 
things. 

But, consider a 20-ton structural steel member for a bridge in 
Chicago. It is high in material-percentage cost. It doesn't take 
very long for the steel workers to rivet or bolt it into place on site. 
But, before it reached the site there was the labor of transportation 
by truck and rail. Also, it provided work for the rolling mills 
possibly at Gary, Ind., or at Pittsburgh, Pa. And before this there 
was the labor at the Bessemer furnace smelting the ore into the steel 
and the transportation of the ore from the upper Great Lakes region, 
until we finally come back to the ore in the ground which, obviously, 
is relatively a very small proportion of the total costs. 

The point I wish to make is that $3 spent in Chicago for heavy 
construction means about $1 in labor for Chicago, and the other $2 
might be spread over a large area, away from Chicago. Particularly, 
Chicago taxpayers should not be asked to provide labor and material 
moneys which will add to the reemployment in, for example, Gary 
or Pittsburgh or the upper Great Lakes region. Neither should any 
other communities be charged with giving aid to Chicago. If there 
is postwar unemployment after the war it will be general, not a 
problem to be solved by individual communities but one requiring 
Federal action. 

Consider lumber. Much of this comes from the Pacific Northwest. 
For every single dollar that comes into the hands of the laborer in 
Chicago possibly $2 finds its way to the laborers around Seattle or 
Tacoma, Wash., or the railroads between there and Chicago. 

My point is, gentlemen, that full employment in Chicago has quite 
a little to do with the employment elsewhere in the United States. It 
can influence it either upward or downward. Employment is truly 
a national problem, not one which a mayor of one city can solve, even 
thought he comes face to face with it. I insist it is largely your prob- 
lem, and I can only offer you Chicago's help in solving it. 

Chicago has what we believe is the vehicle — our $937,000,000 needed 
public- works program. The program falls logically into two cate- 
gories : 

Part one of this program is what you might call self-liquidating proj- 
ects; that is, if spread over a long enough period and if the interest 
rate is low enough, the local taxpayers might repay the cost. I doubt 
if a statement of these abilities to pay would be considered a good 
enough risk for bond houses. Their funds might better be put to 
use financing private endeavors. 

Among the self-liquidating projects which Chicago is hopeful in 
launching early in the postwar period is the modernization of the local 
transit lines in Chicago. The city of Chicago and the State of Illinois, 
as represented by the Governor and myself, have agreed to support 
the enactment of legislation, promptly, creating a Chicago Transpor- 



POSTWAR ECONOMIC POLICY AND PLANNING 1955 

tation Authority to acquire and operate the local transportation facili- 
ties in that part of the metropolitan area within the boundaries of the 
county. The initial expenditures under this plan, assuming favor- 
able legislation and referendum, will approximate $130,000,000 for the 
surface and elevated lines alone. 

The other part of the program consists of projects which are not 
self-liquidating — the creation of parks, recreational features, and the 
insurance of the continued health of the community. 

Chicago must have the unstinted help of the Federal Government 
if her postwar public works construction program is to operate fast 
enough to take up whatever slack there is in unemployment — locally, 
in Chicago, and as unemployment here affects the Nation. May I sug- 
gest, in closing, that it is the taxpayers who pay the costs and receive 
the benefits from added public improvements, irrespective of whether 
the money for the cost comes through the National Government or the 
local government — the self-same taxpayers pay in either case, if you 
please. 

Theoretically, at least, postwar public works construction could be 
financed solely by outright grants from the National Government to 
local government. If, for example, each city, village, and rural area 
were granted amounts in proportion to the proportionate taxes they 
pay to the National Government, no injustice would be done any tax- 
payer. Every community, then, would be doing its fair share of 
providing national reemployment. But as a practical matter I feel 
constrained to advocate, instead, that the National Government make 
long-term loans at little or no interest on such of the projects as are 
deemed self -liquidating. This is to prevent local comnmnities from 
spending more than they should or exceeding their rightful share or 
need of the national public works postwar construction program. 

As to the other group, the non-self -liquidating projects, I advocate 
close study by the National Government to see that each and every one 
of these are worth while and needed and are in nowise boondoggling 
and, such as meet these requirements, be financed by outright grants 
by the National Government to local governments, so distributed that 
justice is done to all taxpayers. 

Plamiing is an essential prerequisite. Without plans the needed 
and urgent construction cannot be built. As insurance against the 
possibility of widespread unemployment on a national scale, I feel 
that this should be a prime and immediate concern of the Federal 
Government. I therefore strongly advocate that the National Gov- 
ernment make outright grants now to expedite the planning for the 
construction later contemplated. The cost of planning alone on the 
program of the city of Chicago needed immediately to start the work 
is $19,000,000. 

In conclusion, may I respectfully suggest to your honorable com- 
mittee that this whole matter of national postwar economy-— national 
postwar public works, construction to provide jobs — be considered not 
as an aftermath of war, not as w^ar connected, but as part and parcel 
of our war effort and cost. The national war effort should rightfully 
begin with the taking of young men and women from their homes 
and jobs and continue until they are so returned to homes and jobs. 
The National Government supplied the funds at the beginning, con- 
tinued to do so while the war was being brought closer to a successful 



1956 



POSTWAR ECONOMIC POLICY AND PLANNING 



cessation of actual ho.stilities, and should continue its responsibility 
until all who want jobs and need jobs can get jobs at makino- the 
things a Nation at peace wants and needs. "^ 

A summary of Chicago's public-works program follows : 





Non-self- 
liquidating 


Self-liquidat- 
ing or where 
present laws 
provide for 
funds ill the 
future 


Total 


Subway and transit facilities . 




$175. 200, 000 
57, 000, 000 
77, 730, 000 


$175,200,000 

57, 000, 000 

77, 730. 000 

10, 204, 000 

101,225.514 

167,317,000 

53, 256. 000 

26. 000. 000 

26,000. ir.i; 

30, 000. 000 

9. 124. 000 

77,111,000 

18, 285, 000 


Water purification . 




Extensions and improvements to water facilities 




Sewage treatment and disposal 


$10, 204, 000 
101, 225, 514 


Sanitary and storm sewers 




Expressways 


167, 317, 000 
14, 000, 000 
13. 000, 000 
26, 000, 000 
30,000,000 


Grade separations 


39, 256, 000 
13, 000, 000 


New municipal airport 


Do 


Parking terminals 




Waterway improvements 


9,124,000 
77,111,000 
18, 285, 000 
16, 699, 363 
11,277,000 
30. 202, 000 

2, 547, 750 
16, 495, 000 
25, 416, 000 


Parks and playgrounds.. 




Boulevard.'^ and parkways 




Municipal buildings ..., 




Street lighting 




n! 277.' 000 

30, 202, 000 

2 547 750 


Schools 




Libraries 




Bridges 




16, 495, 000 
57, 316. 000 


Major thoroughfares and secondary streets 


31,900,000 




Total.. 


370, 842, 627 


592, 147, 000 


962, 989, 627 





I would like to submit that as part of the evidence I am presenting 
to you here this morning. 

the Chairman. Mr. Mayor, I desire to thank you on behalf of the 
committee for the very fine statement that vou have made and also to 
congratulate the people of Chicago for being so forward looking. 

Now it is customary for the committee to further obtain informa- 
tion by submitting questions to those appearing before the committee, 
and the policy of this committee has been to have the economic adviser 
of the committee, Dr. Kaplan, interrogate for us so there will be no 
duplication on the part of the members afterward. 

Dr. Kaplan. In the mayor's statement he indicated that Chicao-o 
had plans for $962,000,000 program, which included such immediately 
necessary city services as sewage, street lighting, traffic lighting, et 
cetera, and then went on into parks, recreation, and boulevards. I 
wonder whether Mayor Kelly could give the committee some idea 
as to what budget plans have been made along with the total con- 
struction plans. That is, the mayor indicated, for example, that the 
city has in mind a 10-year program for housing and other construc- 
tion which it may have to telescope and contract into 3 years, and it 
may be necessary to get Federal or other outside funds iii the way of 
advances because the city could not possibly pile up its funds in a short 
time for what is intended to go over a long period. 

However, on one side of that you have the items that the citv would 
normally spend, regardless of Federal aid, and then at the other end 
you have the items that the city might not undertake except through 
Federal aid. Do you have such a break-down, Mayor Kelly? 

Mayor Kelly. We have the self-liquidating and we also have those 
that are not self-liquidating. Most of these things are stimulative 
items. In other words, as I said before, they would be done over a 



POSTWAR ECONOMIC POLICY AND PLANNING 1957 

long period of years, but it would just put the city and the Nation 
tliat much ahead of time and also put the men to work. 

Many of these things might be delayed, as are done in most cities, 
and done at a loss really because of the upkeep of the older improve- 
ments. Now you are talking about housing, for example. In our 
slum areas we have now a vehicle by which we can borrow money 
through the FHA, or at least I think we can, but it ought to be empha- 
sized by Congress. If we put up, say, $10,000,000, we believe we 
should be allowed to borow $90,000,000, which, of course, is paid back, 
and it is self-liquidating. 

Not that we may get by with our slum clearance, because each time 
we would have to put up some money and I think we should be required 
to do tliat. We have not a very large bonding ability, and we would 
eat it up in a very short time if we were to go into this plan. I think 
we have $180,000,000 now with our present valuation, which is subject 
to being cut almost any time by the legislature or otherwise. 

Now all of these we are going to issue bonds on, or endeavor to 
issue bonds for recreation to the extent of some $24,000,000 at the next 
election which is in June. Tl'^at will cover a period of maybe 4 or 
5 or 6 years, but if that was augmented with Government money it 
would be done in a much shorter period of time and cover more area. 

In our sewers and storm sewers we are in very bad shape. They are 
too small. Tliey were built in the early times of Chicago. Of course, 
it is sort of revolutionary for the city to tear up its sewers and 
rebuild, but it would riot be if they were helped by the Government, 
and we would be killing two birds with one stone. 

As you know, one of the "most important things connected with a 
city is airports. We will have to build two or three airports here in 
Chicago, which will run into at least $25,000,000 each. That is the 
cheapest possible cost. Also, it is very hard to educate people to the 
fact that air is so necessary. All the run-of-the-mine people know 
about air travel is what they see in the air, and many of them would 
be afraid to go into the air. We have got to educate them and we have 
got to build more airports to keep our city where it belongs. 

Everything in here is absolutely necessary, school development, 
libraries, bridges, et cetera, but, as usual, in a city like Chicago any- 
how where our taxing ability or taxing laws are chaotic and old, 
it is difficult to make the cloth fit. We do not seem to find any way 
in which it can be remedied by law to suit all parties concerned, and 
we have a fight on everything we start to do with reference to taxes. 

We do want to take the load off the real-estate taxes if we can in 
every possible way. We do not ex]:)ect that the Government is coming 
in here as Santa Claus and build all of these things that we have men- 
tioned, but we do think if they are going to do anything toward stim- 
ulating work for the returning soldiers, that that is the way to do it, 
and at the same time it will be pay dirt for the people, not only here 
but throughout the entire country or wherever any part of this work 
touches. 

I do not know what the policy of the Government is going to be 
with reference to giving money to cities or villages, but we are ready 
for it and we believe in it. We are willing to take any heat that might 
come on so-called charges of boondoggling. We are willing to take 
any kind of heat for that boy who is coming back here, the boy who 
was willing to give his life for us; the boy who is coming back here 



1958 POSTWAR ECONOMIC POLICY AND PLANNING 

with his soul full of hope, thinking that he is coming back to a real 
country that is remade because of what he has done. 

It is going to be an awful sight if he comes back here to another 
depression which might happen because of the retooling and the time 
intervening between the closing of the war work and the beginning of 
the ordinary normal work. I suppose the men in Washington, you 
men and others, have given this more study, more intelligent study, 
than we have here, but I find that many times an idea comes from those 
who do not know so much and just accidentally mention something 
that might be considered afterward as being all right. 

None of us here are experts and none of us are gazing at the stars. 
None of us knows what is going to happen. 

Dr. Kaplan. Do you realize the connnittee has to translate its sym- 
path}^ for this program into total dollars and the difficulty that we 
have is in finding out how nmch of these programs for postwar public 
work's the various cities have budgeted with the use of their own 
funds ? 

Mayor Kelly. None of it is budgeted now. 

Dr. Kaplan. None of it is budgeted as coming out of your own 
funds ? 

Mayor Kelly. No. I thought you were going to say all you had 
to think about was dollars, and I think we have been thinking too 
much about dollars and too little of the man. We speak of dollars 
now, but it is just peanuts compared to what we spent in this war. 

Dr. Kaplan. However, you cannot have an open-end appropriation. 
We have to have some idea of what it will take. We do have to ap- 
propriate a fairly definite amount, and we have to have an idea as to 
whether the city can carry a fourth, or a third, or a half of the burden, 
or just how much of a program of that sort the city regards as its 
obligation. 

]\Iayor Kelly. Well, in this statement I read, as I said, all of these 
self-liquidating items could be repaid and the others could not. That 
gives you the information, I believe. 

Dr. Kaplan. How much is your normal year-to-year capital ex- 
pense ? 

Mayor Kelly. None of it is. 

Dr. Kaplan. Do vou have a year-to-year capital expenditure pro- 
gram in addition to the $962,000,000? 

Mayor Kelly. We have our regular budget for which we have taxes. 

Dr. Kaplan. In which you have included the capital expenditure 
program, but none of which is part of the $962,000,000 ? 

Mayor I^lly. That is right, none of it is. 

The Chairman. Mr. Fogarty, do you have anything that you would 
like to ask the mayor ? 

Mr. FoCxARTY. I think, Mr. Mayor, one of the toughest things we 
are going to run up against in this postwar period is material. Have 
you given any thought to when this material will be available or how 
we are going to get it, or when we are going to get it when it does 
become available? Are we going to keep it in this country or are 
we going to send it to England and Italy to rebuild those countries? 

Mayor Kelly. I think that your last few words answers your own 
question. The question is, Who are you going to give the preference 
to? It seems to me as though we ought to take care of our own people 



POSTWAR ECONOMIC POLICY AND PLANNING 1959 

first and see that they are taken care of before we start to take care 
of anybody else. 

Mr. FoGARTY. I agree with you on that. 

Mayor Kelly. That was your question, wasn't it? 

Mr. FoGARTY. Yes. 

Mayor Kelly. Now, if you do that, you are going to have material 
here. 

Mr. FoGARTY. How soon are we going to have it ? 

Mayor Kelly. I do not know how soon they can retool, but now is 
as good a time as any to start retooling in some places that are being 
shut down. For instance, the Pullman Co. has shut down for want 
of orders, or did not want any other orders. I do not know what it is 
all about, but that is one factory and there may be several of them 
throughout the country that may be used to start remaking normal 
production. 

Mr. FoGARTY. Have you any idea on the local scene what plans have 
been made by local builders in housing units at the present time ? 

Mayor Kelly. We have a building organization, a benefit organ- 
ization, which have great ideas on what could be done in the way of 
building. There is no end to the amount of building that could be 
done, and done by private ownership. We do not want to compete 
with private ownership. 

Our whole object is to clear the slums and we think if we can clear 
the slums we will also clear up a lot of misunderstanding between 
certain peoples that might save a lot of trouble, both in an economic 
way and also in our civic life. We have to get at these slums and the 
quicker we get at them the better it will be for all concerned. I think 
that is the sore spot in all big cities, discontented people. 

Mr. FoGARTY. The thing I was getting at is, a great many people 
think it is best to let private industry go ahead and have public projects 
ready to move in, provided they do not compete with private industry 
for the employment of the men coming back. 

Mayor Kelly. Well, as I say in here, if you do not get some build- 
ings for the Gary plants out here in Indiana, they will not make any 
steel. We think this all ties into that. Wherever you start activity, 
whether it be public work or private work, it fills the factories in the 
far distant cities. That is a very important thing to think about ; that 
is, whether you are going to favor public works as against private 
work. 

Of course, if industry can absorb all of these men we are not worried. 
We can just as well let this go if the people are working, but we are 
trying to work with the Government in finding work that private 
industry may not be ready for. 

Mr. FoGARTY. What you want to be able to do is to be ready to take 
up that slack when that time does come ? 

Mayor Kelly. That is right. 

Mr. FoGARTY. And have it in the planning stage, and have it all 
ready to go, is that right ? 

Mayor Kelly. Absolutely, and we want to make it pay dirt. We do 
not want anything else. Of course, I was for the WPA and I have no 
apologies to make for the WPA. It did a lot of good work, regardless 
of all of the criticism it received, but it did not do our citizens any 
good. It made them believe that they were on relief and it did not 



1960 POSTWAR ECONOMIC POLICY AND PLANNING 

do them any good because they did not have the feeling of American- 
ism, such as they would have with work of this kind. 

The questions are so perplexing that I have not the ability to 
diagnose them successfully, and I do not have anybody at my command 
who can. We are just doing the best we possibly can. 

Mr. FoGARTY. How far have you gone with the planning of any of 
these programs, or projects? Have you any plans drawn or sites 
chosen ? 

Ma^^or Kelly. Just a rough estimate of all of them. That is why 
we think the planning bill in the House should be passed and we 
would get our portion of that, then. Comparatively speaking, I be- 
lieve that we ^youkl get only about $5,000,000, but that is $5,000,000 
and that would probably take us over at least a year's work. 

The Chairman. Do you have any questions, Mr. LeFevre? 

Mr. LeFevre. Mayor Kelly, Mv. Fogarty asked a (question that I 
had in mind, and thai was whether or not you have made a survey, and 
what could be accomplished in Chicago through private industry'in the 
way of building ? 

Mayor Kelly. Of course, one hand waslies the other. Congressman. 
If the shops are not working, the men are not working and there will 
be no private building. The people will move out in that case and 
they will not want homes and you are going to lose some of your 
citizens in that case. It is just one of those things. If all of the 
mills are working full blast, and all of our factories are working full 
blast here, then you need a lot of private building, together with the 
slum clearance which is necessary, because you have to keep the rents 
down in those districts. However, you won't need any public building 
if you do not have any work. 

Mr. LeFevre. Well, from what we have heard at the hearings in 
Washington so far, it seems that there is such a backlog of private 
building that we do not need any public building at the present time, 
except in extreme cases, such as sanitary cases and health cases. 

Mayor Kelly. I hear all about that, too, but I do not see these fac- 
tories getting ready for normal work. Around here we do not find, 
any of them that are retooling or getting ready. They are all still 
full blast on war work except the one place I spoke of before, the 
Pullman Co., which is a very big company, but they are not doing 
anything, just closed down their shop. 

There is a controversy on now in the Pullman Co. as to whether 
they can be in two different kinds of businesses, manufacturing, and 
the sleeping-car business. I do not know whether they are getting 
ready to get out of the manufacturing business by closing down. I^ .- 
so, then someone should take hold of that factory and start building 
for the needs of ordinary times. I imagine there are several of those 
factories throughout the country that have been shut down. 

Mr. LeFevre. From your remaiks you seem to think th*at the Fed- 
eral Government should come in and make grants to go on with the 
project? 

Mayor Kelly. Well, I mean this. Congressman : I mean the Federal 
Government should be ready to make grants if private industry does 
not take up the slack. 

Mr. LeFevre. That is the point, if? You have to realize we already 
have a national debt of $300,000,000,000. 

Mayor Kelly. You have $300,000,000,000, but who is going to save 
you from having a national debt of $600,000,000,000? These kids are 



POSTWAR ECONOMIC POLICY AND PLANNING 1961 

coming back home and you are not going to see then^ starve, are you? 
You are not going to bring them back here in a panic, tlie same as you 
had in '29 ^ That is one thing that you have to think more of than 
the dolhirs. 

Mr. LeFevre. I think you will find, if a survey were made, there 
is such a great demand waiting for private industry, so far as building 
is concerned, that it will take up the slack. 

Mayor Kelly. Except in the slums; they cannot construct buildings 
so that they can rent them at the rate that the man living in the slums 
can pay. That has to be done by public money. We feel now that 
if the FHA continues on and has the authority and will to do it, we 
can carry that on. We are having laws passed now giving us the right 
of eminent domain which would clear up our situation pretty well 
here on the slum housing. 

Ori, the other hand, I believe most of it should be private capital. 
I do not want to compete with the man owning a two-flat or a three- 
flat building, or put them out of business, because of money that the 
Government would spend in the way of building public houses, et 
cetera. I am not in favor of 100 percent public housing. I am, how- 
ever, in favor of it in the slum area, and that is all. 

The Chairman. Mr. Murdock, do you have any questions of the 
mayor ? 

Mr. IMuRopcK. Mayor Kelly, I want to say that I think you made a 
splendid statement. I folloAved it very carefully, and I know that 
three things were mentioned in which I am absolutely in agreement, 
and -particularly one of the three things. You indicated the great 
diversity of our country and how $3 spent in Chicago will mean $1 
spent here really, and $2 spent in some distant part of the country. 

Mayor Kelly. That is right. 

Mr. Murdock. I wish this mutual interdependency of this great 
country of ours could be brought home to all of us more forcefully. 
You have expressed that very well, and you stressed it, too. 

Another thing that you stressed was the fact that any public works 
recommended should be public works needed, and not just made work. 

Mayor Kelly. That is right. 

Mr. Murdock. And I was delighted to hear what you said about 
public works that are self -liquidating, which would represent an in- 
vestment in the expenditure. 

Mayor Kelly. That is right, two-thirds of this is self-liquidating. 

Mr. Murdock. Of course, there are some needed public works that 
are not self-liquidating, and there might be a border line there as 
regards parks and recreational facilities and that sort of thing. 

Mayor Kelly. That is right. 

Mv. Murdock. And I was particularly delighted in the way you 
put this up to us as a war-cost program. 

Mayor Kelly. That is right. 

Mv. ]\IuRDOCK. Uncle Sam took our young men at great expense, 
trained them to fight to save this country, and he is now at great ex- 
pense training them on the battlefields, and those are only two parts, 
and the third part is when he brings the boys back home and they 
return to their jobs. 

Mayor Kelly. That is right, the jobs that they left. 

jNIr. Murdock. Yes; the jobs that they left, and any cost regardless 
of what the debt limit is, or the increasing of the indebtedness, that is, 

99579—45 — pt. 6 17 



1962 POSTWAR ECONOMIC POLICY AND PLANNING 

directly or indirectly traceable to this ^Yar, is a part of the war cost. 

Mayor Kelly. That is right. 

Mr. MuRDocK. I come from the far West. I look at this matter from 
an entirely diti'erent standpoint from that which most of you have. 

The Chairman. Let the record show that it is from Arizona. 

Mayor Kelly. That is a pretty good State. 

Mr. MuRDCCK. I agree with you thoroughly, Mayor Kelly, that the 
desirable thing is for private employment to meet all of the needs of 
employment after the war, if possible. I hope for such a thing to 
happen but I do not expect it. For that very reason I think we would 
be negligent in our duties if we did not prepare accurate blueprints 
of needed public works to supplement and give the boys full employ- 
ment which is demanded for the returning soldiers. 

Out in the far West where I come from, the raw producing section 
of the country where the grain and the cattle and the mineral wealth 
has its origin, we send it to Chicago to be processed. And, by the 
way, I would like to see the Gary steel mills and all of the other steel 
mills at work furnishing finished machinery for the development in 
irrigation, reclamation, and that sort of thing in my part of the coun- 
try. I want to stress, Mr. Chairman, what has been sard by Mayor 
Kelly, which as I see it is the full employment program wliich we are 
striving for, and that is that every part of the country shall be fur- 
nished that employment. Every time you build a dam on the Colum- 
bia River or the Colorado River, or any other river, more money is 
being spent east of the Mississippi than is being spent west of the 
Mississippi River, and much of it right here, in Gary, in Pittsburgh^ 
or some place else. 

Gentlemen, I want to thank you for listening to my remarks and I 
want to thank Mayor Kelly for his splendid presentation, and I beg 
that the records show that we are committed to a Nation-wide inter- 
dependent program of public works that will be self -liquidating. 

Mayor Kelly. All of this money backwashes all over the country. 

Although self-liquidating projects are the best type to have on the 
shelf, I would like to call your attention to the fact, and I think you 
are aware of it, that with all of this, unless you have recreation for 
the man who is working, and his children, you have nothing. You 
have to have a light mind and a light heart and a true feeling of 
partnership for every citizen of this country, and I think recreation, 
playgrounds, and parks will do much in that direction. We always 
feel that is a part of the expense and realize that it is actually a divi- 
dend going to the public, rather than money going into an outlet for 
their feelings and a development of their bodies and minds. 

Therefore, I would like to present, and I will make it available to 
you, a copy of that report. I just pulled out that sheet which will 
show which is self-liquidating, and I would also like to have it under- 
stood that I am emphasizing the other things as being just as im- 
portant from the governmental viewpoint. 

Mr. MuRDOCK. I recognize those intangible values which are greater 
than those expressed. 

Mayor Kelly. It is just as necessary to have a park here as it is 
to have a Yellowstone Park, except that the poor people get the bene- 
fit of the park here and the rich people get the benefit of the Yellow- 
stone Park. 



POSTWAR ECONOMIC POLICY AND PLANNING 1963 

The Chairman. Without objection, you will be given permission 
to file that amendment to your statement. 
Mayor Kelly. Thank you very much. 
(The report referred to is as follows:) 

Report by Illinois Postwar Pt^anning Commission 

postwar public works — plan preparation 

Te7i million dollars State aid for local governmental units recommended in Illinois 
State government postwar capital improvement report 

Public works are those fixed facilities constructecl for public use that are 
required to meet the needs incident to the American standard of living and 
efficiency. Public works are a part of and closely allied with the construction 
industry, and employs more people, directly and indirectly, than any other 
activity in which governmental units can engage. 

Extensive surveys made by the United States Bureau of Labor Statistics indi- 
cate that each dollar spent on public works construction represents approxi- 
mately 1 man-hour of employment required on the construction and away from 
the site producing incidental material and equipment. 

Postwar unemployment can be materially lessened by developing adequate 
plans for an extensive program of essential and useful public works to be con- 
structed when jobs will be most needed during the transition period until 
private enterprise can provide employment for those returning from our armed 
forces and for those now engaged in war-effort activities, whose employment 
will be terminated. 

To be of the greatest use in the postwar situation, public works should be in 
the "blueprint" stage ready to start construction when needed to provide em- 
ployment. The important lesson learned through the last depresssion period 
program of public works and work relief was the serious impairment of the 
effectiveness, because of the lack of advance investigations and planning. Work 
had to be provided within a short period, and as most governmental units were 
without adequate plans, every conceivable kind of '"made work" projects were 
hurriedly developed. Illinois should not be confronted with a similar situation 
at the end of the war. 

This commission has previously transmitted its report to the Governor and 
general assembly covering the Illinois State government postwar capital im- 
provement program, dated February 1945. 

A State-wide survey by this commission discloses that most local governmental 
units have contemplated postwar public works projects of various types, but 
the large percentage of the projects are only in the idea stage. It is recognized 
that the counties, municipalities, school districts, and other local governmental 
units do not have sufficient available funds for adequate postwar public works 
plan preparation and that financial assistance by the State must be provided to 
stimulate and aid the local governmental units to proceed now with the develop- 
ment of detailed plans, specifications and studies for specific public works projects. 

Most local construction projects will be financed through some type of bond 
issue that cannot advantageously be consummated now for construction to be 
started at some future undetermined time and the expense of plan preparation 
normally is included in the amount of the issue. Consequently the local taxing 
units, while desirous of developing detailed plans now for needed community 
public works to be constructed after the war, are handicapped because of limited 
available funds. 

An analysis of the postwar public works programs submitted to this commis- 
sion reveals that outside financial assistance in the form of a grant for partial 
payment of the cost of preparing detailed plans and specifications for specific 
projects is essential to 6-i percent of the reporting counties, 94 percent of the re- 
porting municipalities, and 92 percent of the reporting school districts. 

Reports from 13 of the larger sanitary districts (28 districts in Illinois), includ- 
ing the Chicago Sanitary District, indicate that three districts are not contem- 
plating postwar construction and that three districts, including he Chicago 
district, can develop their project plans without financial assistance. 

Only seven park district (83 special taxing districts in Illinois) have reiwrted 
programs and each has indicated that major outside assistance will be required 
on the construction of their contemplated projects in addition to plan 
preparation. 



1964 POSTWAR ECONOMIC POLICY AND PLANNING 

The providing of this State financial assistance is for the benefit of the State 
of Illinois because of the State-wide need for an increase of coordinated com- 
munity facilities; including public water supply, sanitation, educational, trans- 
portation, and other essential public works and, also, as a part of and incidental 
to the furtherance of the State government's plans to provide employment (luring 
the period of economic readjustment upon the termination of the war. 

The need for State aid to provide financial assistance for plan preparation of 
specific postwar public works pi-ojects has been emphasized by the local govern- 
mental units throughout the State and the granting of such State aid would make 
funds available to every comnumity in the State that wished to benefit by the 
financial assisance. 

Postwar public works program, staff report, Feb. 15, 1945 

RECAPITULATION 

state level : 

Constitutional offices, code departments, boards, and com- 
missions : 

Building and utilities $299,413,830 

Highways and highway structures 209, 4;^G, 000 

Total noS. 849,830 

County level : 

101 counties of the total of 102 counties : 

Highways and highway structures 110, 955, 598 

Public buildings, etc 2, S67, 750 

Total 113, 823, 348 

liOcal level : 

City of Chicago: City departments and bux'eaus and other 

governmental units, report of November 1944 950, 000. 000 

Downstate : 

Municipalities, sanitary districts, park districts, school 
districts, and townships : 

Street improvements 51, 774, 888 

Sanitary sewers and storm-water drains 66,131,583 

Sewage treatment works 19, 078, 240 

Water supply and distribution IS, 073, 425 

Water treatment 1, 526, 698 

School buildings 41, 455, 110 

Other public buildings 20,398,076 

Bridges and grade separations 36,037,390 

Parks and recreational facilities 10. 125, 179 

Airports and airfields 5, 837, 800 

Electric generating plants and distribution 10.376,000 

Other 11, 074, 645 

; ,' Total 292,487,634 

PROJECT STATUS, LOCAL GOVERNMENTAL TAXING UNITS 

[Except city of Chicago] 
Counties : 

Detailed plans and specifications completed or in progress 

(43 percent) $19,272,148 

Sketch plans completed or in progress (23 percent) 25, 396, 300 

Surveys completed or in progress (8 percent) 9, 671, 000 

Preliminary estimates only (26 percent) __ 29, 483, 900 

Total - 113,823,348 

Mimicipalities, school districts, park districts, sanitary districts: 
Detailed plans and specifications completed or in progress 

(IS percent) 53. 070, 435 

Sketch plans completed or in progress (22 percent) 65,472, 513 

Surveys completed or in progress (10 percent) 28,412,702 

Preliminary estimates only (50 percent) — 145. 531. 984 

Total 292, 487, 634 



POSTWAR ECONOMIC POLICY AND PLANNING 



1965 




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PERCENTAGE REPORTED 



1966 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. We have with us here this morning one representa- 
tive from Chicago who is not a member of our committee, but I think 
it would be rather interesting to see a representative from Chicago in- 
terrogate the mayor of Chicago. 

Mayor Kelly. I think he is very capable. He was one of our leading 
aldermen here for many years, and he has interrogated me before and 
I welcome him to do it again. 

The Chairman. Mr. Rowan, do you care to make any statement at 
this time? 

Mr. Rowan. It is not necessary for me to interrogate Mayor Kelly 
because I served on the finance committee of the city council for a 
good many years during the time that he was mayor, and I am con- 
versant with the problems that he has presented to 3^ou. 

I might say in supplementing what the mayor has said in regard to 
private capital, that private capital in this city is prepared to spend 
vast sums of money in improvements, but before these improvements 
can go forward it is necessary to have a great many municipal im- 
j^rovements, as he set forth in the statement, such as highways, recondi- 
tioning of sewers, and many other things. Those improvements can- 
not go forward, particularly in the way of housing, unless those facili- 
ties are provided, and that is the problem of the city. The city has no 
means of acquiring money because the special assessment plan was 
jDi'actically eliminated when the depression came in. So, we have the 
city-wide municipal improvement to go ahead with at this time in 
connection with this very extensive program. 

Now, in regard to slum clearance, that is something that is absolutely 
necessary in Chicago, and it is of benefit to the Nation. There are 
certain conditions arising because of the manner in which people are 
herded together, due in a large manner to the fact that hundreds of 
thousands of people have been attracted to Chicago because of the 
great industries here during the war period. The housing is inade- 
quate to take care of them. 

As to private housing and public housing, I was astounded about 
a year ago to hear one of the leading realtors and one of the leaders 
in the housing movement say that he was converted to public housing 
because he was convinced that the lower income bracket wage earners 
cannot be provided with suitable habitation without some sort of 
subsidy. So he became a last minute convert and is now advocating 
that there be some sort of governmental participation in the con- 
struction of housing for those in the lowest income bracket. That is 
one of the jDroblems that we have to contend with in the cit}' of Chicago. 

I heard Eric Johnston, the president of the United States Cliamber 
of Commerce, say when he was appearing before a Subcommittee on 
Public Buildings and Grounds sometime ago, that while he was 
opposed to public moneys being expended for local municipal improve- 
ments, he felt that there were three ty^^es of public improvements in 
which the Government should participate No. 1 was highway's, be- 
cause they are beneficial to the Nation and not to the local connnuni- 
ties ; then waterways, and then airways and the construction of airports. 

Now Chicago is a focal point in transportation of all sorts of 
highways, waterways, and airways. We clo not Avant to take any- 
thing away from the seaboard, from your State, but we do look to the 
time when Chicago will be the great hub and one of the greatest 



POSTWAR ECONOMIC POLICY AND PLANNING 1967 

inland hubs of air transportation. It is now the hub of the raih'oad 
transportation. 

The people who want to get to Chicago w^ill want to travel by air, 
and we should have a sympathetic consideration of the construction 
of airports. As the mayor said, there are municipal airports pro- 
vided and there are three or four others needed, and we are going to 
need that many in Chicago. Those airports will be primarily for 
the benefit of people in the 48 States rather than the people in the 
city of Cliicago, although the people will derive a great deal of benefit 
from them. 

Chicago also suffers from an archaic constitution which does not 
permit us to have access to State funds, and Chicago is hog-tied in 
the manner of initiating improvements. I know tl^ mayor and the 
city council of Chicago Planning Commission have given a great deal 
of thought to the question. There are ways in Avhich many of these 
things can be made self-liquidating, but some of them cannot be 
financed by the city of Chicago because it has not the finances nor 
has it the opportunity to acquire the needed funds or the necessary 
funds to go ahead with this type of work. 

However, if you provide for some of these major improvements 
which are Nation-wide in their scope, you can be assured that a great 
deal of public money will be expended in private improvements of all 
sorts and particularly housing. So unless we get some assistance, you 
tire going to tie up vast sums of money that would go into private 
construction. 

The Chairman. Mr. Mayor, what part of that $962,000,000 is in the 
blueprint stage? 

Mayor Kelly. None of it is in the blueprint stage. It is all just 
general lay-out planning. Of course, that makes it necessary to tap 
that $75 000,000 fund you are talking about down there in Congress. 

The Chairman. That was reduced, you know, to $5,000,000 and then 
raised up again to $35,000,000. 

Mayor Kelly. Yes; I understand. Well, I always speak of the 
higher number. 

The Chairman. I was optimistic. 

Mayor Kelly. But $5,000,000 is practically nothing. It is a ques- 
tion of whether you have it or whether you do not have it. That, of 
course, would start the wheels going here and we would be ready that 
much sooner if we had some money to use for that particular purpose. 

I would like to emphasize the fact that we think that is very neces- 
sary. I appeared before the Senate committee on that together with 
other mayors and they all seemed to feel the same way about it. "We 
are not begging and we are not trying to get the best of the Govern- 
ment, but if we just have the money to do the things that should be 
done, we could make it the greatest city in the world. 

We are always handicapped by the heavy real-estate taxes and the 
ceiling on rents, which make it impossible for some people to make 
both ends meet. We do not want to compete with them and we do 
not want to force them out. We cannot do that even if we wanted to, 
because the State legislature would not allow us to do it. 

We are trying to have a new constitution enacted here and get the 
legislature to enact it, giving the people the right to vote on whether 
they will or will not. Up to now, we are not satisfied as to whether 



1968 POSTWAR ECONOMIC POLICY AND PLANNING 

it will pass or it will not pass, but the money for planning is needed 
first and then this other work would come afterwards. We have several 
subdivisions of Government here, some of whom have their own taxing 
ability and they are represented, I believe, although most of their 
work is covered by my summary. I would like to have the record 
show, however, that they did attend this meeting. There is a man 
here form the Sanitary District, I believe, isn't there? This is Mr. 
J. M. Mercer. 

The Sanitary District is the sewerage commission which builds the 
activated sludge plants and things of that kind and the main sewers. 
I think the Chicago Park District is represented also by George T. 
Donohue, general superintendent of the Chicago Park District. Mr. 
Donohue, will you tell thse gentlemen quickly of the general program 
that you have laid out in the Park District to take care of all of the 
various districts? 

The Chairman. Before you get on to that, may I ask you a question ? 

Mayor Keij^y. It will just take him about 1 minute, that is all. 

The Chairman. All right, go ahead. 

Mr. Donohue. It is a boulevard extension and park program, new 
parks; rehabilitation of existing facilities, plantation, bathing beaches, 
bringhig the parks to the people rather than making the peoj^le come 
to the parks. In other words, we are locating the parks in the slums 
and in the congested areas and making them more accessible. I think 
that that is about a 1-minute outline. 

Mayor Kelly. If the chairman will allow me now, I can get through 
in a few moments. Is somebody here representing the school board? 
(None.) The county highway department is represented and Con- 
gressman Rowan exfDlained that. I do not think we should take up 
the time of the committee by going into any details on it. I think 
that that is about all we have to submit. 

The Chairman. Mr. Mayor, how will this appropriation that we 
expect to get through say of $25,000,000 or $35,000,000 help Chicago 
in its planning? As I understand it as the present time you have no 
money to go ahead with the planning of these public works that you 
have outlined ? 

Mayor Kelly. That is right. 

The Chairman. Under the present law, if the Federal Government 
advances the moneys to the communities for planning, those moneys 
must be paid back out of the first moneys appropriated for construc- 
tion. If the construction moves ahead, I mean, that is to be paid 
back, but if the plans do not go into actual construction, the money 
does not have to be paid back. I just do not know how that got into 
the law. I was opposed to it very much myself, but that is the situa- 
tion. How would that help Chicago in its planning if you had to 
pay back out of the first moneys appropriated the cost of planning 
that the Federal Government has loaned to you ? 

Mayor Kelly. Well, in the first place, I do not see why anybody 
who would make plans unless they were sure they were going to go 
ahead with those plans. They should not charge the Government 
with phony plans. Secondly, if they were self-sustaining, bonds 
might be issued, or paid out of the money which the Government 
would give to pay it back and afterwards come into the city pocket- 
book. 



POSTWAR ECONOMIC POLICY AND PLANNING 1969 

The Chairman. In other words, you would have to get the money 
for the plans and have the plans fully prepared before you could issue 
bonds against the improvement ; is that the point ? 

Mayor I^elly. No ; you would have to have the money first. In the 
first place, you issue bonds, and you have got to be sure you have the 
money. There is no sense in issuing $2,000,000 worth of bonds if you 
have a $10,000,000 job. Now the plans would be built and presented 
to the Government as to whether it was reasonable work and whether 
it should be done or not, and then afterwards, paid back to the Gov- 
ernment, but that Avould be a detail that would have to be worked out 
later. I believe all cities are in the same category. I know that this 
city has not the kind of money necessary to hire a lot of draftsmen and 
engineers and men of that type to go ahead and lay out this work. 
However, we could issue bonds against all of these self-liquidating 
projects if we had the money to start with. 

The Chairman. I take it, Mr. Mayor, if you could get the money 
from the Federal Government for the planning, that you would prob- 
ably go ahead with the plans for these various projects and then 
hold the plans in abeyance so far as actual construction is concerned 
until there developed a need for the construction in order to give 
employment or in order to do some necessary public work; is that 
correct ? 

Mayor Kelley. Well, it would seem to me as though this is very 
imminent now. You could tell very quickly before you start your 
plans almost as to whether you wanted to do this or you did not want 
to do it. I imagine a general survey would be made by the government 
on all of this work to ascertain how quickly we are going to get into 
the normal production of material again. lit looks like it is going to be 
a year or two off. But we ought to be ready as you say with our plans 
to go to work on this if necessary. If we are not ready, then I suppose 
that is the reason for that clause in your law that if we do not do 
public work, the money is just lost so far as pay dirt is concerned. 

The Chairman. Well. I think we are pretty well agreed that the 
important thing is to have the plans ready, so that when the need ar- 
rives, you will be able to go forward, because a complete system of 
sewage disposal might take probably a year or two actually to work 
out. 

Mayor Kelley. That could be done quicker than some of the other 
projects suggested. Some of that is pretty near ready. Take our 
water filtration and things of that kind. They need a lots of planning 
work, and the building and buying of airports also needs a lot of 
planning. I think you and I agree as to the reasonableness of having 
everything ready to shoot if we have to and not just lie back waiting 
for another year to get our plans out for public work, with private 
industry ready to retool and in the meantime, the boys are walking the 
strets. 

The Chairman. Mr. Mayor, we want to thank you for your expres- 
sion of opinion here and I am sure it has been most instructive to the 
committee. Again we want to congratulate the people of Chicago on 
having a ]Drogressive mayor. 

Mayor Kelley. What about the two or three progressive Congress- 
men we have here ? 



1970 POSTWAR ECONOMIC POLICY AND PLANNING 

Tlie Chairman, The four progressive Congressmen, as we have- 
Congressman Kelly here with us. 

Congressman Kelly. Mr. Chairman, and honorable members of 
the committee, I know after hearing the testimony of our mayor,, 
who is a very great progressive and constructive mayor in the building 
up of Chicago and the welfare of the city of Chicago, I am going to ask 
permission, not now in taking up the time of the people who you are 
accomodating here, to appear before the committee when you get 
back into Washington and make a statement myself as a former 
member of the Chicago Planning Commission, who has sat in with 
the members of the city of Chicago in formulating and laying some 
of these plans for the postAvar planning to make Chicago one of the 
greatest cities in the world. I say that in all due respects to the Bronx. 

The Chairman. Yes. to the Bronx. 

Congressman Kelly. I am' sorry at this time that I have another 
appointment and I will have to see you later on. It is very nice to 
be here and I am glad that you gave me this opportunity to say these 
few words. I know the statement that the mayor made has been very 
helpful and I know the committee has appreciated it very much. 

The Chairman. I want to thank you gentlemen for listening to us 
and, Mr. Mayor, we appreciate your coming here very much. 

INIayor Kelly. Thank you very much. 

The Chairman. The next witness to be heard will be Mr. Donald C. 
Weeks, director of the Michigan Planning Commission. Mr. Weeks, 
jT^ou may make your statement without interruption if you so desire 
and at tlie end of your statement, the members of the committee will 
probably have a number of questions to ask you. 

STATEMENT OF DONALD C. WEEKS, DIRECTOR OE THE MICHIGAN 
PLANNING COMMISSION 

Mr. Weeks, This statement is intended to discuss local postwar 
public- works programs in Michigan and the financial capacity of their 
sponsors. Available information indicates that Michigan will be con- 
fronted with a severe unemployment problem during the transition 
from war to a peacetime economy. Plans and specifications for an 
adequate public-works-construction program will be completed as a 
result of the cooperative effort of the State and local units of Govern- 
ment. However, if this construction program is to be financed entirely 
by local government units it will be spread over at least a 10-year 
period. 

Only a few municipalities in the potentially critical areas have the 
financial resources to provide employment through public works for 
more tlian a small fraction of the need should a greatly expanded con- 
struction program be required as an employment measure in the post- 
war period. 

Earh^ in 1943, Gov. Harry F. Kelly and the Michigan Legislature 
began working actively on the State's prospective postwar problems. 
It was rapidly becoming evident that with one-eighth of the Nation's 
war production concentrated in Michigan, bringing an influx of more 
than 300,000 people from other States and many population shifts 
within the State, any postwar employment emergency in Michigan 
would be especially severe. As a steo in preparing to meet this and 



POSTWAR ECONOMIC POLICY AND PLANNING 1971 

other postAvar problems, the legislature, by passing act 100, public 
acts of 1943, amended the State Planning Commission Act to provide 
for broader functions of the connnission and to strengthen its mem- 
bership. 

The commission, soon after its reorganization in June 1943, pro- 
ceeded to canvass local units of Government to learn the extent of post- 
war planning. The results were not encouraging. Little beyond an 
inventory of public works needs prepared with the assistance of public- 
works reserve engineers was available and practically no plans were in 
process of preparation. This information indicated a need for some 
means of stimulating both public-works planning and the preparation 
of actual project plans. To stimulate local planning, seven planning 
institutes were held during October and November 1943. The first 
was held in Lansing, in cooperation with the American Society of 
Planning Officials. 

Largely as a result of these institutes and follow-up by the State 
planning commission, 204 local planning commissions and committees 
are organized by cities, villages, counties, and a few semiurban 
townships. 

It became evident from discussion periods held during each plan- 
ning institute that many local units of government were not in posi- 
tion to finance the preparation of plans and would postpone the 
preparation of plans indefinitely unless some method of encouraging 
them could be found. Largely as a result of this finding, the legisla- 
ture, upon recommendation of Governor Kelly, established the 
Michigan public improvement program, providing $5,000,'000 for 
reimbursing local units of government for not to exceed one-half 
the cost of preparing complete plans for postwar public works. The 
act provided for the apportionment of the money to local units on a 
population basis to pay grants-in-aid on applications of record Novem- 
ber 1, 1944, and for reapportionment of funds not applied for by that 
date among those requiring additional money to meet 50 percent of 
their planning costs. 

The piiblic wiprovem^ent needs of the cotmn/imities 

In the Michigan public improvement program, the basic immediate 
needs of the communities are well established by the applications filed 
with the planing commission for planning aid grants. 

That the projects listed with the commission represent basic needs 
is indicated by each applicant's willingness to finance one-half the 
cost of plans and prepare completed plans within the next few months. 

A summary of the planning aid program on April 3, 1945, follows : 

Number of projects 2,708 

Total estimated construction cost $477, 9G7, 367 

Total cost of planning documents $15, 249, 709 

50 percent of cost of planning documents $7, 624, 854 

Planning aid available tbrough act 57 $5,000,000 

Excess of requests over appropriation $2, 624, 854 

The applications received under this program represent an expan- 
sion and improvement of all tjqoes of municipal facilities. In the 
opinion of the planning commission and appropriate State depart- 
ments assisting with the review of applications, these projects are 
worth while and needed public works. 



1972 POSTWAR ECONOMIC POLICY AND PLANNING 

The following table presents the principal types and estimated 
construction costs of the projects in the program: 

Estimated 
Type of project : construction cost 

Sewers and sewage treatment $113, 571, 081 

Schools 91, 816, 448 

Street improvements 78, 533, 908 

Buildings, other than schools 60, 722, 813 

Water systems and purification 40, 942, 239 

Parks and recreation facilities 15,163,140 

Agricultural drains 10, 224, 114 

On the basis of the estimates submitted by the applicants covering 
the length of time necessary for the completion of plans and taking into 
consideration those projects under the program for which plans are 
already complete, it is indicated that $101,384,000 of public- works 
construction will be in the completed plan stage by August 1, 1945. 
It is judged that by early 11)40 plans will have been completed for 
about $200,000,000 of potential construction. 

There is no quick, accurate yardstick for measuring the fiscal ca- 
pacity of local units of government insofar as the financing of public- 
works programs is concerned. A complete financial analysis of each 
local unit of government would be required. Such an analysis has 
been completed for 17 of the larger cities in Michigan and a summary 
of the findings for those 17 cities is included in the individual city 
reports. 

The Michigan Planning Commission intends in the near future to 
make a detailed analysis of the ability of all local units of government 
to finance the construction of projects submitted in the planning-aid 
program. However, on the basis of- available figures to date and 
studies of the financial history and condition of local government in 
Michigan which are available, some general observations may be made 
to outline the problem faced by the State. Most of the public works 
need is concentrated in the 16 heavily populated counties of the State; 
$358,460,000 of the total construction program of $413,116,000 or 87 
percent has been submitted by units of government within these coun- 
ties. This program consists"^ of 1,182 projects with a total planning 
cost of $10,738,000. Within these counties are located the 20 largest 
cities in Michigan with 52.01 percent of the State's population. The 
16 industrial counties and the cities, villages, and townships within 
their boundaries account for 73.7 percent of the population, 83.6 
percent of the State's valuation, and 96 percent of the outstanding 
municipal debt. It is estimated that approximately 85 percent of 
the welfare burden of the 1930's was found in these industrial counties. 

The city problem 

Of the 171 cities of Michigan, 123 submitted a total construction 
program of $237,927,000. Of this total, $202,000,000 was submitted 
by the 20 largest cities. 

An analysis of all material available indicates that of the 20 largest 
cities, 14 will be unable to finance a construction program of sufficient 
size to cope with anticipated unemployment with funds available or 
expected to become available. Five cities, Lansing, Dearborn, Kala- 
mazoo, Bay City, and Port Huron, have indicated that they are in 
position to finance sufficient construction to take care of their expected 
unemployment, should the period be of short duration. Should their 



POSTWAR ECONOMIC POLICY AND PLANNING 1973 

total unemployment load exceed their expectations or extend over a 
period of several months they, too, will require additional finances. 
Highland Park, one of the 20 largest cities, has very few public-work 
needs; therefore, would be unable to provide any great amount of 
employment. 

The next 20 largest cities, those with a population of 9,000 to 17,000, 
have submitted a construction program totaling $18,245,000. Infor- 
mation available indicates that about half of these cities can finance 
their total program over a 3- to 5-year period. The balance will 
require a longer period. The majority have indicated their inability 
to finance sufficient construction quickly, should an unemployment sit- 
uation develop. 

The majority of the cities having less than 9,000 population appear 
to be able to finance the major portion of their construction program; 
over a 3- to 5-year period. 

At the request of the Michigan Planning Commission, officials of 
several cities have submitted information regarding their financial 
situation and the problem of financing their proposed public improve- 
ment program. The following section includes excerpts from tha^ 
statements received from 19 cities. 

Glenn C, Richards, commissioner of public works, Detroit, was con-- 
tacted. Detroit population, 1,623,452, has applied for State planning 
aid for postwar public works estimated to cost $130,259,730. INlr. 
Richards made the following observation to be included in this state- 
ment : 

Detroit has a good postwar public-works program. Tlie plan preparation was 
started 2 years ago and a large shelf of plans are now completed and ready 
for construction. Over 100 designers and draftsmen have been employed by the 
city engineer's office for 2 years and funds are set up to keep this group on the 
preparation of postwar plans for at least another year. 

City departments, such as street, board of education, water department, and 
several small departments, are also preparing plans for their particular depart- 
ment. Detroit has a planned program approved by the common council for ap- 
proximately $250,000,000. These do not include our transportation system for 
which plans are in the preliminary stage. 

Wayne County, of which Detroit is a big part, has also completed plans for a 
great deal of work and has many plans now on tlie drafting board wliich are to be 
ready for the postwar period. Tliese plans for the city and county are very di- 
versified, consisting of roads, bridges, sewers and water mains, pumping stations, 
schools, libraries, recreational facilities, fire stations, police stations, parks, and 
numerous other similar projects. 

Financial arrangements can be made by the city and county to build many of 
these projects. However, it is anticipated that many more will not be built for 
20 years if local government is to finance them out of local taxes. Detroit 
would prefer a more equitable distribution of taxes which would permit us to 
finance our own program. However, until the redistribution takes place, we will' 
no doubt need Federal aid. 

It is anticipated that the Detroit industrial area will be one of the hardest 
hit in the country in the change-over from war to peace. Local government wilh 
not be able to finance any program that would do much to relieve an unemploy- 
ment situation such as might exist. Hundreds of thousands of people have beera 
brought in by the Federal Government to build war equipment. We cannot 
take care of this increase in the immediate postwar era. None of us want made- 
work programs. It seems only fair that the Federal Government should assume 
its responsibility for the employment of these people that were brought to 
Detroit. 

By July 1, 1945, Detroit will have $20,000,000' accumulated reserves earmarked 
for postwar construction. In addition, a small amount of construction can be 
financed by revenue bonds to be issued by the water board or the Detroit street 



1974 POSTWAR ECONOMIC POLICY AND PLANNING 

railway. A program which can be financed by these funds will not provide suflB- 
cient construction to take care of our anticipated unemployment. 

Floyd Jennings, director of the city planning commission, Grand 
Rapids, was contacted. Grand Rapids, population 164,292, has ap- 
plied for State planning aid for postwar public works estimated to 
cost $6,274,107. Mr. Jennings made the following observation to be 
included in this statement : 

We have a "must" public-works program of $6,000,000 for which plans are 
being prepared by the city engineering department with the assistance of State 
funds. Of the total program, the city of Grand Rapids can finance in the im- 
mediate postwar period approximately $700,000 worth of construction. The 
balance must be financed by either general obligations bonds or special assess- 
ments which means that they must be constructed over a period of years, if at 
all. We will require some type of assistance if any unemployment situation 
develops. 

In addition to the $6,000,000 program filed with the Michigan Planning Com- 
mission, we have approximately $10,000,000 of public-works needs for which 
we have not even considered preparing plans due to lack of finances. 

George Gundry, city manager of Flint, was contacted. Flint, 
population 151,543, has applied for State planning aid for postwar 
public works estimated to cost $17,056,261. Mr. Gundry ' made 
the following observation to be included in this statement : 

We have over $17,000,000 worth of needed projects listed with the Michigan 
Planning Commission of -which we hope to prepare plans for $4,962,000. We 
have available for postwar construction in the neighborhood of $240,000 and 
have no other sources to which to turn tor additional money other than a very 
small amount of waterworks construction which can ba financed with revenue 
bonds. Tliat is the sum and substance of our postwar program. We expended 
more money for current operations than we received from all sources of revenue 
last year and the same is true this year. 

The people of Flint have refused on one occasion to vote additional millage 
for operating the schools and twice have refused to vote additional millage to 
meet increased city operating costs and to create a reserve for postwar con- 
struction. The referendums were defeated 4 to 1. 

Carl H. Peterson, city manager of Saginaw, was contacted. Sagi- 
naw, population 83,794, has applied for State planning aid for post- 
war public works estimated to cost $8,526,470. Mr. Peterson made the 
following observation to be included in this statement : 

We are preparing plans for an $8,500,000 program in addition to $300,000 of 
construction for which plans were completed prior to the inception of the Michi- 
gan public improvement program. We have no funds available for postwar con- 
st rui-tion and with expenditures running as they are now, we will have to oper- 
ate with an approximate deficit of $150,000 per year beginning June 30, 1946, 
unless additional sources of revenue are somehow made available. 

The committee for economic research of the board of commerce, city of Sagi- 
naw, has asked us to prepare a public-improvement program which would em- 
ploy 500 men for 1 year, the approximate cost of which would be $2,000,000. 
These 500 men will be in addition to our regular employees and would include 
some 60 former city employees returning from the service. The city's share in 
such a public-improvement program would amount to over $500,000. With our 
present income, the city will not be in position to finance this program. Money 
must come from some other source if we are to put men to work during the re- 
conversion period. 

Ralph W. Crego, mayor of Lansing, was contacted. Lansing, pop- 
ulation 78,753, has applied for State planning aid for postwar public 
works estimated to cost $6,866,400. Mr. Crego made the following 
observation to be included in this statement : 

The problem of postwar employment is one with which our community is very 
much concerned. The present employment in our city is nearly double the normal 



POSTWAR ECONOMIC POLICY AND PLANNING 1975 

■peacetime capacity ; therefore, it would be possible for Lansing to be the home of 
many thonsand unemployed during the change-over. We are j>reparing plans for 
a rather large public-improvement program and have about $1,000,000 in i-eserves 
available for inunediate postwar construction and expect to construct the balance 
over a period of years. However, our reserve would be but a drop in the bucket 
should we be forced to employ even a thousand more people on our public pay roll. 

George Bean, city manager of Pontiac, was contacted. Pontiac, 
population 66,626, has applied for State planning aid for postwar 
public works estimated to cost $3,197,615. Mr. Bean made the fol- 
lowing observation to be included in this statement: 

The city of Pontiac believes that there is insufficient tax base at the local level 
to support a major public works program and that, therefore, the Federal Gov- 
ernment will have to provide some means of carrying out this program either on 
a matching basis or a grant basis or a combination of the two. 

We are going along pretty well on financing plans. We have already let con- 
tracts on quite a bit. With the planning help that we are getting from the State, 
we can set up a pretty healthy program, but we will have to have some method of 
•quick financing. 

Fred Storrer, city engineer, Dearborn, was contacted. Dearborn, 
population 63,584, has applied for State planning aid for postwar 
public works estimated to cost $4,280,000. Mr. Storrer made the fol- 
lowing observation to be included in this statement : 

We could probably finance about 60 percent of our work without any financial 
assistance although if it became necessary to telescope our program in order to 
provide employment we would need assistance. We have approximately $700,000 
on hand now and will have about $1,000,000 available by 1946. Whether or not 
we will need assistance depends on the amount and duration of unemployment. 
"We will want our share if funds are available, but would prefer a division of 
taxes based on percentage paid in order that we could finance our own public- 
works program. 

Edward Clarke, city manager of Kalamazoo, was contacted. Kala- 
anazoo, population 54,097, has applied for State planning aid for 
postwar public works estimated to cost $2,369,700. Mr. Clarke made 
the following observation to be included in this statement : 

While the city of Kalamazoo is in as good a financial condition or better than 
the average city of our population and would be able to carry on a construction 
■program for a short period of time during an unemployment period, we could not 
continue to do so because our city is financed on the policy of annual taxation for 
carrying on current pro.1ects. In my opinion, we could carry on an expanded 
program of revenue-production projects and a normal program of non-revenue- 
producing projects, but we could not cope with any gi*eatly expanded program 
which would normall.v be constructed over a period of years without outside 
assistance. It is also my opinion that any greatly expanded program designed 
to provide employment may cost more money because labor is used in excess. 
UMany times suflicient equipment is not available or is not used in order to keep 
the unemployed occupied. However, again in my opinion, the unemployed man 
is better off by being employed and busy even if it costs more to accomplish it. 

A. J. Koenig, city manager of Jackson, was contacted. Jackson, 
population 49,556, has applied for State planning aid for postwar 
public vv'orks estimated to cost $2,987,500. Mr. Koenig made the 
following observation to be included in this statement : 

The city of Jackson operates under the 15-mill tax limitation and is therefore 
drastically limited in the amount of financial support for municipal operations 
that may be derived from tax sources. From a total of 1,5 mills assessed, Jack- 
son in 1944 received the highest allotment ever, 5.92 mills, of which under charter 
provisions 1 mill is earmarked for the city hospital. 

Upon the basis of a true assessed valuation of $73,152,820 on real and personal 
properties in 1944, the 4.92 residue of millage has provided only $360,400.57 
'toward the financing of a limited operating budget of $791,407.01. For the first 



1976 POSTWAR ECONOMIC POLICY AND PLANNING 

time in recent yeai's the city will have a deficit of approximately $80,000 at the 
close of its fiscal year on June 30. 

The city of Jackson is in a very desperate financial situation and there is no 
prospect of any substantial improvement in its finances in the foreseeable future. 
It has no money on hand or in reserve for the financing of a postwar public- 
improvement program. 

Harry Nelson, city manager of Bay City, was contacted. Bay City, 
population 47,956, has applied for State planning aid for postwar 
public works estimated to cost $1,170,065. Mr. Nelson made the 
following observation to be included in this statement : 

It is my personal opinion that Bay City will be able to provide its share of the 
funds necessary to give employment during the immediate postwar period. We 
have several sinking funds set up for postwar projects, those for general city use 
being transferred from the earnings of our electric distribution system. We 
have enough street-improvement work alone to take care of the expected unem- 
ployment situation. 

Roy Winters, city manager of Muskegon, was contacted.. JNIiiskegon, 
population 47,697, has applied for State planning aid for postwar 
public works estimated to cost $2,414,000. Mr. Winters made the 
following observation to be included in this statement : 

There are 31,000 persons employed in the Muskegon area today as compared 
to 14,000 in 1939. A survey conducted by the Committee for Economic Develop- 
ment indicated that 6 months following the end of the war, industry and the 
services can employ but 27,501) and that there will be a minimum of 8,000 persons 
in the area without employment. To provide employment for 8,000 people means 
a potential $9,000,000 pay roll alone on the basis of $100 a month per person. 
To meet the situation, we have a water and sewer program of $1,000,000 of 
which only $300,000 is within the bonding ability of those departments. We 
hope by rate revisions to increase the bonding ability of the water and sev/er 
departments to $750,000. The balance of our public-works program must be 
financed either by general obligation bonds or by special assessments which at 
present cannot be financed except by pledging the full faith and credit of the 
city, neither of which would be approved by the voters. If a severe unemployment 
situation should develop, the city of Muskegon could not begin to finance a 
public-works program of sufficient size to furnish the employment necessary. 

Howard E. Wilder, city attorney of Battle Creek, was contacted. 
Battle Creek, population 43,453, has applied for State planning aid 
for postwar public works estimated to cost $2,887,171. Mr. Wilder 
made the following observation to be included in this statement : 

The city of Battle Creek can by issuing revenue bonds finance a portion of the 
cost of the addition of a water-conditioning system to our municipal water plant. 
This project is expected to cost $101,000. Aside from this possibility, we can 
furnish no other public-works projects if we must finance any part of the cost 
from present sources of revenue. The small amount of sanitary sewer and other 
special assessment projects that we would be able to finance for the period neces- 
sary to collect the special assessments would be too small to classify as a postwar 
employment project. We can offer nothing further in the way of construction 
for this area. It is not that there is no need for construction, but rather a total 
inability to finance any part of the cost of planning or construction other than 
the small amount which can be done by the city engineer's office. Twice we have 
attempted a referendum to vote additional millage to create a postwar public 
improvement fund, but the vote was unfavorable despite our best efforts. It is 
apparent some source of revenue other than the real-estate tax must be found. 

Leonard Howell, city manager of Port Huron, was contacted. Port 
Huron, population 32,759, has applied for State planning aid for 
postwar public works estimated to cost $2,615,065. Mr. Howell made 
the following observation to be included in this statement: 

The city of Port Huron has developed a postwar-construction program esti- 
mated to cost between 3 and 4 million dollars. This is a large program for a city 



POSTWAR ECONOMIC POLICY AND PLANNING 1977 

of 33,000 population. We are in a position to finance this program ourselves, 
possibly, over a period of from 2 to 3 years whicli would not begin to provide 
enough jobs to meet a serious postwar employment crisis. 

Ed Shafter, city manager of Royal Oak, was contacted. Royal 
Oak, population 25,089, has applied for State planning aid for post- 
war public works estimated to cost $3,609,236. Mr. Shafter made 
the following observation to be included in this statement: 

Fortunately we are in a position to finance our share of the cost of plans for 
our $3,000,000 postwar construction program. However, there are other projects 
in this area of major importance to our community which have not been sub- 
mitted ; for example, the $2,000,000 outlet drain in southern Oakland County. 
Neither we nor the Oakland County Drain Commission are in position to finance 
the preparation of plans for this project. 

Insofar as the construction of the program for which we are preparing plans, 
we are in position to go ahead with only a small percentage of the work within 
the next year or two with available funds. By the time we are ready to let a 
contract for our first project, a $125,000 job, we expect we will have the funds 
available, but would have very little additional to proceed with other projects. 
AVe could provide very little employment unless funds are made available for our 
street, sewer, and other projects for which we are preparing plans. The plans 
will be ready, but construction must of necessity be spread over a number of 
years if financed by the city of Royal Oak. 

Arthur Jennings, city superintendent of Monroe, was contacted. 
Monroe, population 18,478, has applied for State planning aid for post- 
war public works estimated to cost $981,900. Mr. Jennings made the 
following observation to be included in this statement : 

We have a total postwar public-works program of about $1,200,000. We have 
funds available to finance only a small amount of these improvements and our 
tax rate at present is at the legal limit. It will be impossible for the city of Monroe 
to finance these improvements without Federal aid or general obligation bond 
issues and we have tried twice to vote additional millage. 

Roy Miles, city manager of Muskegon Heights, was contacted. Mus- 
kegon Heights, population 16,047, has applied for State planning aid 
for postwar public works estimated to cost $700,409. Mr. Miles made 
the following observation to be included in this statement : 

We must have help from somewhere, both for the preparation of plans and for 
construction. I think the job should be done on a local level and the State of 
Mic'f igan should recognize that and broaden the tax base to enable us to do it. 
We may be able to finance our sewage-treatment plant with revenue bonds, but 
have no funds available for street projects which constitutes the bulk of our 
program. 

C. A. Miller, city manager of Traverse City, was contacted. Tra- 
verse City, population 14,455, has applied for State planning aid for 
postwar public works estimated to cost $745,500. Mr. Miller made 
the following observation to be included, in this statement : 

We can handle the preparation of plans for our program and some construc- 
tion ; but if there is no Federal aid, our available funds will be exhausted very 
shortly. We could finance 50 percent of an $80,000 water-supply program and, 
$100,000 lighting and power expansion, and would have some additional funds 
available for streets and sewers. We are willing to spend all the money we 
have, but are against the made-work type of program. The type of program 
we prefer would provide for grants-in-aid, with local control of construction by 
either force account or contract method. 

Don Oakes, city manager of Alpena, was contacted. Alpena, popu- 
lation 12,808, has applied for State planning aid for postwar public 

99579 — 45 — pt. 6 18 



1978 POSTWAR ECONOMIC POLICY AND PLANNING 

works estimated to cost $823,574, Mr. Oakes made the following 
observation, to be included in this statement: 

I don't see a thing that we could start building immediately if the war would 
end tomorrow unless we get additional funds from some source. We are in good 
shape financially in that we are able to operate within our income, but we have 
no reserves available and have a rather large bunded indebtedness. If additional 
funds do not become available, it may take 20 years to replace our leaky wooden 
watermains. I do not know when we would be able to construct our sewage- 
disposal plant. 

Harold Corson, city manager of Birmingham, was contacted. 
Birmingham, jwpidation 11,196, has applied for State planning aid 
for postwar public works estimated to cost $464,350. Mr. Corson 
made the following observation, to be included in this statement: 

The city of Birmingham has filed with the State planning commission a total 
of 27 projects for assistance in cost of preparing plans, with a total construction 
cost of $404,350. 

Were the city of Blrmingliam to be called upon to start construction of any con- 
siderable portion of this program on short notice, I doubt if we could find finances 
enough to construct more than 15 percent of our entire program without outside 
ielp in the financing thereof. About 75 percent of the total shown above repre- 
sents costs of projects tliat would not necessarily have to be delayed by the 
formation of special assessment districts, but could go into the construction 
stage as soon as the city commission so desired once they were assured that the 
money would be available to pay the cost of construction. 

Should Federal assistance be available to cities in the future in lieu of work 
relief, should such be required, some arrangements similar to the PWA or 
matching of municipal funds would, in my estimation, be nmch more desirable 
than the work relief as prosecuted under WPA or CWA, as the value obtained 
per dollar expended was much greater in the first case than under the latter. 

The county problem 

At the county level of government population density in metropoli- 
tan counties like Wayne, Oakland, and Macomb create problems of 
health, sanitation, and police protection entirely different from the 
problems of rich agricultural counties in the middle of the State or 
the forest and tourist counties of the north. Likewise, a comparison 
oi townships shows that wide differences exist between the large group 
of sparsely populated rural agricultural townships — many of which 
levied no property taxes in 1943 — and the relatively small number of 
densely populated townships in the industrial areas of the State where 
township officials are attempting to furnish the kind of police* and fire 
protection, water and sanitation facilities, and other municipal serv- 
ices ordinarily found within the corporate limits of cities and villages. 

Sixty-four counties have submitted a total construction program of 
$26,000,000. This is in addition to 777 applications, with a total con- 
struction cost of $04,850,000, submitted by county road commissions; 
$16,000,000 of the county program consists of drains of which approxi- 
mately $10,000,000 can be financed and constructed during the imme- 
diate postwar period. The balance consists of the Saginaw Valley 
flood-control and drainage project and the Red Run storm-sewer proj- 
ect in ]\Iacomb County. It is doubtful if eitlier project can be con- 
structed for several years without Federal assistance. 

The balance of the county program consists chiefly of courthouses, 
hospitals, and infirmaries. Many of the counties have postwar re- 
serves built up and the prospects are excellent that the majority of 
them will be constructed witliin the next 5 years, although probably 
-very few during the immediate postwar period. 



POSTWAR ECONOMIC POLICY AND PLANNING 



1979 



The milage and towTiship 'problem 

Villages and townships submitted applications with a total con- 
struction cost of approximately $57,373,000. Approximately GO per- 
cent of this total was submitted by villages of the Detroit metropolitan 
area and semiurban townships. No definite information is available 
regarding the ability of these units of government to finance their 
construction program. However, we estimate a majority of the total 
can be constructed within the next 3- to 5-year period. Should an 
unemployment problem develop, these semiurban townships and vil- 
lages in the Detroit metropolitan area particularly will require some 
additional source of revenue. 

P'uhlic-school problem 

In the field of education many striking differences are found which 
makes it especially difficult to draw any conclusions regarding the over- 
all ability of school districts to finance their postwar construction 
programs. The following discussion taken from the Michigan Public 
Education Study Commission report completed a few month ago may 
be helpful to a better understanding of the financing problems of school 
districts : 

There are 6,298 school districts in Michigan, although 753 of this total do not 
operate schools but transport their pupils to neighboring school districts. Oae- 
fourth of the total school membership in Michigan is accounted for by the Detroit 
city school district. An additional 24.8 percent are accounted for by the 40 largest 
city and urban districts, exclusive of Detroit. Another 16 percent attend schools 
in improved rural agricultural and large suburban districts. There are 4,604 
school districts in Michigan whicii have populations of less than l,OfK) and only 
123.000 children out of the total of approximately 1,000,000 school children in the 
State attend these 4,694 districts. The Michigan Public Education Study Com- 
mission reports that of the 6,294 school districts in IMichigan, 6,021, or fJS.T p3rcent, 
are classified as submarginal or incapable of providing at the local level at least 
50 percent of the educational services. 

A special study of school debt was also made by the Michigan Public 
Education Study Commission in 1943. That study clearly indicates 
the effect of debt, the burden it imposes, and the difference which debt 
has made on postwar problems of 1945, as contrasted with the postwar 
l^roblems of World War No. 1. Selected figures from the school study 
are reported below. 

PuMic school honded indebtedness 



Year 


Gross debt 


Per capita 
wealth 


Per pupil 
wealth 


Per capita 
debt 


Per pupU 

debt 


1920 

1930 - --- 


$39, 234, 780 
184,101,866 
174, 885, 257 
132, 872, 516 


$1,212 
1,747 
1,185 
1,196 


$4, 551 
6,206 
4,093 
4,784 


$10. 70 
38.02 
36.22 
23.99 


$40.16 
135. 04 


1936 -- 


125. 13 


1942 


95.97 







The 1942 debt is 238.66 percent higher than 1920. The per capita 
property valuation figures are almost identical for 1920 and 1942, the 
latter being only 1.32 percent less. The per pupil wealth is up slight- 
ly, 5.12 percent, but the 1942 per caj^ita debt is 124.21 percent and the 
per pupil debt 138.97 j^ercent higher than in 1920. Irrespective of 
further debt reduction between 1942 and the close of the war, it is ob- 
vious that the unpaid debt burden with which schools will start the 
postwar period will be roughly double the amount outstanding in 
1920. 



1980 POSTWAR ECONOMIC POLICY AND PLANNING 

The school districts in Michigan have submitted projects totaling 
$91,816,000, Based on our experience in administering the Michigan 
Public Improvement Program and the report of the Michigan Public 
Education Study Commission, we estimate that an additional $10,- 
000,000 of construction is needed to bring our school plants up to 
reasonable standards. The financing of these projects was determined 
by local boards of education to be so doubtful that applications were 
either not filed or liave been withdrawn. 

Wilfred F. Clapp, chief of the school plant division of the Michi- 
gan Department of Public Instruction, stated recently : 

It is our opinion that unless some additional means of financing the public 
school construction projects submitted to the Michigan Planning Commission 
are obtained over and above those now existing in Michigan, only a compara- 
tively few of these projects will actually result in construction. Michigan is 
not meeting the problem and probably will not be in shape to meet the problem 
when postwar unemployment makes public works desirable. I cannot say hon- 
estly that Michigan is unable to finance its school-building program. I believe 
that the wealth is here, but under our existing tax laws which prevent financing 
school projects for a period longer than 5 years, it is almost impossible ta 
finance new construction. 

Regarding the administration of any Federal-aid program whick 
might materialize, Mr. Clapp made the following observation : 

Any Federal program to supply aid for the construction of schools should be 
tied in with the regularly established education agencies. Projects should be 
approved only after surveys have been made by educational agencies to deter- 
mine the need both as to the size of building, placement of building, and kind of 
program to be offered. Federal aid for school construction can be a stimulation 
toward more effective school district organization. On the other hand, if direct 
contacts are made between Federal public-works agencies and the applicant, 
it will result in many districts building overambitiously the kind of schools 
which they cannot operate and should not try to operate. 

The Upper Peninsula problem 

The problem in the Upper Peninsula differs from that of the in- 
dustrial areas in that it depends mainly on the production of raw 
materials — timber, copper, and iron ore. The postwar employment 
prospects of the area are therefore difficult to measure. There is at 
present no great shortage of labor despite the fact that the population 
in some counties has decreased as much as 31 percent since 1910 with 
an average decrease of approximately 19 percent. Should a majority 
of its migrants to the Lower Peninsula industrial areas return along 
with its returning war veterans, a serious unemployment situation 
would quickly develop. 

A survey of 12 communities in the Upper Peninsula whose public- 
works programs aggregate $7,900,000 out of a total of $12,000,000 for 
the entire Upper Peninsula, was made recently. This represents 03 per- 
cent coverage of the planned construction in the Upper Peninsula. 
The results of the survey indicate local financing is possible for $2,- 
100,000 of the $7,900,000,' or about 27 percent, and this over a period of 
years. 

Fiscal capacity 

The success of any program of public works ultimately depends 
upon whether it can be financed. The question at once arises whether 
a unit of government which is to have further capital improvements 
has sufficient fiscal capacity to complete its proposed projects. Al- 
though it is very difficult to measure fiscal capacity, its general meaning 
is fairly well understood. To most persons, it means simply the- 



POSTWAR ECONOMIC POLICY AND PLANNING 1981 

amount of funds a governmental unit can provide to finance its ex- 
penditures. There are thousands of different tax-raising and tax- 
spending units of government in Michigan. In addition to the State, 
there are 83 counties, 173 cities, 305 incorporated villages, 1,2G5 town- 
ships, and some G,274 school districts, a total of 8,100. In addition, 
there are an unknown number of special districts. 

In Michigan local units of government are restricted to the degree 
to which they may utilize their primary source of revenue, the prop- 
erty tax. In 193^2 the people of this State placed in the constitution 
the so-called 15-mill property tax limitation amendment, article X, 
section 21. This provides that, with certain exceptions, the total of 
the combined taxes levied for all purposes shall- not exceed an over-all 
rate of 15 mills per dollar of the assessed valuation of the property. 
By virtue of a State supreme court decision in 1933, School Distnct 
of Pontiac v. City of Pontiac (262 Michigan 338) the 15-mill limita- 
tion does not apply to taxes levied for municipal purposes by cities and 
incorporated villages unless the latter vote specifically to be included 
within the 15-miH maximum. There are 11 cities which have voted to 
come under the constitutional limitation and are referred to as the 15- 
mill cities. In these, the total taxes levied for county, school district, 
and city purposes must, with exception, be confined within the 15-mill 
total rate. In all other cities and incorporated villages, the county 
and school taxes, but not the municipal tax, are subject to the 15-mill 
limit. The charters of these cities and villages, however, limit the rate 
which may be levied for municipal purposes. In the townships, the 
15-mill limit includes county, school district, and township taxes. _ 

Tlie constitution provides that property taxes levied for debt service 
on debt contracted prior to December 8, 1932, shall not be included 
within the 15-mill limitation. It also provides that the electors of any 
taxing unit may vote to levy taxes in excess of the 15-mill over-all 
maximum, but it requires a favorable vote by a two-thirds majority to 
authorize such additional taxes. Furthermore, taxes to be levied in 
excess of the 15-mill limit can be authorized for a period of not more 
than 5 years at any one election. 

The constitution is often a formidable barrier to the financing of 
capital improvements. It is difficult, if not impossible, to sell bonds 
when the taxes to provide the debt service on the bonds can be author- 
ized for a period of not more than 5 years. Prospective purchasers of 
such bonds realize the high degree of uncertainty as to whether the 
necessary two-thirds majority vote can be obtained again periodically 
to enable the borrowing unit to continue payments for debt service. 
School districts and the 15-mill cities, particularly, have been handi- 
capped in financing the cost of new buildings and other capital im- 
provements. With this situation in mind, the recent report of the 
Michigan Tax Study Advisory Committee recommended that the con- 
stitution should be amended to provide that to finance capital improve- 
ments, additional taxes above the 15-mill maximum may be authorized 
by a simple majority vote and may be voted for a period as long as 15 
years. 

At the election on April 2, 1945, the people of Michigan voted upon 
a proposed amendment to the constitution which would permit some 
degree of liberalization in the 15-mill limitation so far as concerns 
taxes specially voted for capital improvements. The maximum 
period for which such taxes may be voted would be extended to 15 
years, but the privilege of voting such additional taxes would be 



1982 



POSTWAR ECONOMIC POLICY AND PLANNING 



limited to persons, and tlieir wives or husbands, owning property in 
the taxing district. This proposed change in the 15-mill limitation 
of the constitution was defeated. 

As tliere is so much empliasis upon the tax rate, particularly since 
the adoption of the 15-mill amendment, it is only natural to think 
of the property tax rate as indicating the existing tax burden when 
considering the fiscal capacity of local units. Tax rates per $1,000 of 
assessed valuation can be seriously misleading, however, because of 
the high degree of variability in the level of assessments in different 
taxing jurisdictions. For this reason, it is unsafe to draw conclusions 
concering the burden of taxation by comparing the actual tax rates 
on ]:!roperty in the various local units. 

This may be illustrated by a table presented herewith showing for 
the 20 largest Michigan cities (a) their actual over-all tax rates per 
$1,000 of assessed valuation in 1944; (b) the ratio of the assessed value 
to the full value of property, and (c) the equivalent tax rate or what 
the rate would be upon a uniform basis using the full value of property. 
During the last year, the State tax commission has made a compre- 
hensive investigation in which the assessed values of thousands of 
pieces of real estate were compared with the prices received when 
the property was sold. In the accompanying table it may be observed 
that although Royal Oak has a tax rate of $40.33, the level of assess- 
ment is so low that this is equal to a tax rate of only $20.29 upon full 
value. On the other hand, the level of assessment in Detroit is high and 
the equivalent tax rate on full value would be $29.80, on which the 
actual tax rate is $33.11 per $1,000 assessed valuation. The tax rate 
of Jackson, a 15-mill city, is $21.70, while that of Kalamazoo, which is 
not a 15-mill city, is $25.18. When the comparison is made upon the 
basis of full value, however, we find that the equivalent rate in Jackson 
would be $18.94, while the equivalent rate in Kalamazoo would be only 
$17.52. The table follows : 

Property tax rates in Michigan's 20 largest cities, 19Jt4 





Over-all tax rate per 




$1,000 valuation 


Population, 






1940 


Actual rate 


Equiva- 
lent rate on 
full value 




on assessed 

valuation 

1944 


1, 623, 452 


$33.11 


$29.80 


78,753 


32.11 


21.96 


63, 684 


28.92 


17.93 


54,097 


25.18 


17.52 


50,810 


33.72 


27.35 


49,839 


35. 73 


27.19 


47. 956 


37. 03 


28.88 


32, 759 


28.94 


20.98 


30, 618 


28.60 


15.73 


29,815 


2.3.96 


14. 33 


25, 087 


46.33 


20.29 


22,523 


41.93 


21.22 


18,478 


30.64 


20.44 


164, 292 


18.75 


13.91 


151, 543 


20.66 


17.09 


82, 794 


17.68 


14. 34 


66, 626 


22.64 


14.60 


49,656 


21.70 


18.94 


47, 697 


21.95 


15.91 


43, 453 


19.80 


13.31 



Ratio of 
assessed to 
full value 

of prop- 
erty,' 



Detroit 

Lansing 

Dearborn 

Kalamazoo 

Highland Park 

Hanitramck 

Bay City 

Port Huron 

Wyandotte 

Ann Arbor 

Eoyal Oak 

Ferndalc 

Monroe 

15-mill cities: 

Grand Rapids 

Flint 

Saginaw 

Pontiac 

Jackson 

Muskegon 

Battle Creek.. 



Percent 
90.0 
68.4 
62.0 
69.6 
81.1 
76.1 
76.0 
72.5 
55.0 
59.8 
43.8 
50.6 
66.'7 

74.2 
82.7 
81.1 
64.5 
87.3 
72.5 
67.2 



> Assessment ratios estimated by the Michigan State Tax Commission upon basis of sales data. 



POSTWAR ECONOMIC POLICY AND PLANNING 1983' 

In addition to the restrictions in the constitution and in city charters 
with respect to tax rates, there are certain potent economic limitations 
as to the amount of taxes that can be collected on real property. Al- 
though the tax is levied upon the valuation of the property, the tax 
usually is paid out of somebody's income, either the income from the 
property itself or income from some other source. During- the great 
depression of the 1930's, property tax collections as well as the income 
of property owners shrank heavily. In many communities, less than 
half of the current levy was collected. Tax delinquencies mounted 
to an alarming degree and thousands of parcels of real estate reverted 
to the State of Michigan because of failure to pay the taxes and 
special assessment levied upon them. 

Fiscal capacity is affectecl not only by the general economic situa- 
tion, depending upon the business cycle, but also upon the nature of 
the economy of the community. The finances of a single industry 
town are particularly affected by the degree of prosperity of that in- 
dustry. In a community of diversified industry, on the other hand, 
there is more stability in its fiscal capacity. The financial situation 
is likely to be particularly serious in a community with a declining- 
industry, such as certain copper-mining towns in the Upper Peninsula 
of Michigan. 

There are psychological and political limitations that often are more 
evident than the economic limitations of fiscal capacity. For practical 
purposes we must recognize the willingness as well as the ability of a 
local unit to impose taxes upon itself. As mentioned previously, it 
has been extremely difficult in this State to secure the necessary two- 
thirds majority vote to authorize the levy of property taxes above the 
15-mill maximum. In the cities and villages where the tax for mu- 
nicipal purposes is not subject to the 15-mill limitation and taxes 
could be increased by the governing body, there is usually strong pres- 
sure against the levying of higher taxes on property. It is significant 
that the fiscal problem is often most serious in some of our larger 
cities where wartime wages and incomes are high and general pros- 
perity is evident on every hand. The people of such cities have the" 
capacity to pay more toward the support of their local government, 
but it may not be feasible to attempt to raise very much more from 
the property tax. 

Some cities are utilizing service charges such as special charges for 
garbage collection and the use of sewers. This is one means of pro- 
viding additional funds, but, of course, the field is rather limited in 
which service charges may be considered to be practical. 

Local horrowing 

Borrowing is usually a necessary part of any program of financing 
capital improvements. Usually the cost of the improvement is too 
large to permit a local unit to pay the cost out of current tax revenues 
and accumulated reserves. Local borrowing is a highly useful fiscal 
instrument, but it should be used with care. During the period of 
prosperity following World War I, many local communities borrowed 
so much and so unwisely that they were in an unsound financial con- 
dition. The record of defaults on local bond issues during the subse- 
quent depression is not one which should be repeated. 

The Michigan Constitution, article III, section 4, was amended in 
1932 to restrict the privilege of voting on bond issues to those electors 



1984 



POSTWAR ECONOMIC POLICY AND PLANNING 



who own property in the district. Certain local debt limitations are 
provided by the constitution and others are prescribed by statute. 
The amounts of debt that local units may contract are limited to 
various percentages of the assessed valuation of property. In addi- 
tion to the legal restrictions, another important limitation is the ability 
to sell bonds in the market. Even though a local unit remains within 
its legal debt limit, circumstances may be such that it would be unable 
to sell bonds bearing a reasonable rate of interest. Because of the 
record of defaults on special assessment bonds, this type of security is 
still difficult to sell. 

Revenue bonds are Jiot included within a local unit's legal debt limi- 
tation. There has been a notable increase in the use of revenue bonds 
for self-liquidating projects. Opportunities to issue revenue bonds 
are limited, however, since most public capital improvements do not 
produce revenue. 

Gross debt of 20 largest Michigan cities 





United States 
census 


Gross direct debt 


Per capita gross 
debt 


Percent 

gross 

debt to 

assessed 

valuation 




1930 


1940 


1930-31 


Jan. 1, 1944 


1930 


1944 


1930 


1944 


Detroit. . 


1, 568, 662 
168, 592 
156, 492 
80,715 
78, 397 
64, 928 
50, 358 
54, 786 
52, 959 
56, 268 
55, 187 
47, 355 
41,390 
43, 573 
31, 361 
28, 368 
26, 944 
22, 904 
20, 855 
18,110 


1, 623, 452 
164, 292 
151,543 
82, 794 
78, 753 
66, 626 
63, 584 
54, 097 
50,810 
49, 839 
49, 656 
47, 956 
47, 697 
43, 453 
32, 759 
30, 618 
29,815 
25, 087 
22, 523 
18, 478 


$378, 599, 541 
26, 422, 300 
13, 344. 549 

7, 593, 000 
7, 044, 300 

8, 748, 700 
14, 845, 275 

1, 175, 587 
4, 282, 126 
4,215,933 
3,713,104 
2, 227, 000 
3,111,700 
1, 967, 000 
2, 073, 010 
2, 872, 695 
1.447,512 
6. 804, 000 
2,241,200 
1, 525, 000 


$296, 178, 652 
8, 056, 320 
5, 274, 000 
2,116,700 

839, 000 

4,878,000 

8, 537, 637 



889, 000 
4, 196, 623 
2, 126, 000 
1,312,000 
2, 076, 000 

414, 000 

544, 837 
1, 139, 648 

625, 000 
5,257,612 
1, 510, 683 

814, 000 


$241.35 
156.72 
85.27 
94.07 
89.85 
134. 74 
249. 79 
21.46 
80.86 
74.93 
67.28 
47.03 
75.18 
45.14 
66.10 
101.27 
53. 72 
297. 07 
107.47 
84.21 


$182.44 11.27 
49. 04 9. 62 


10.60 


Grand Rapids 


4.08 


Flint 


34.80 
25.57 
10.65 
73.21 

134. 27 


17.50 
84.20 
42.81 
27.36 
43.52 
9.53 
16.63 
37.23 
20.96 

209. 58 
67.07 
44.05 


5.92 
7.69 
4.55 
8.41 
5.95 
1.42 
3.23 
3.61 
4.09 
4.67 
4.70 
2.74 
5.32 
5.72 
2.70 
18.09 
11.39 
4.04 


2.37 


Saginaw 


1.97 


Lansing 


.75 


Pontiac .- . 


6.01 


Dearborn 


3.50 


Kalamazoo 





Highland Park 


.95 


Hamtramck.. . ., 

Jackson _ . 


5.16 
2.96 


Bay City 

Muskeeon_, 


2.76 
3.63 


Battle Creek 


.59 


Port Huron 


1.52 


Wyandotte 


2.32 


Ann Arbor 


1.39 


Royal Oak 


20.00 


Ferndale 


7.44 


Monroe 


2.87 






Total 


2, 668, 204 


2, 733, 832 


494, 253, 532 


346, 785, 712 


185. 24 


126. 85 




7.77 







Dr. Kaplan. I would like to ask Mr. Weeks whether under the 
15-mill limitation that you have mentioned you would not have the 
same difficulty in repaying Federal advances as you have in getting 
your bonds of the local government acceptable on public-works proj- 
ects. 

Mr. Weeks. I think the answer to that question as stated is "Yes." 
Dr. Kaplan. Does that mean then that aid from the Federal Gov- 
ernment to do those communities any good would have to come in the 
form of outright grants? 

Mr. Weeks. I believe it does, but I would not say "any good." 
Dr. Kaplan. What does that 15-mill limitation actually mean in 
terms of how big a capital program you can expect to be carried out 
from the funds of States and local government ? 
Mr. Weeks. Within a short period? 



POSTWAR ECONOMIC POLICY AND PLANNING 1985 

Dr. Kaplan. Yes; within their limitation. Have yon any fignres 
in terms of a proposed annnal expenditure of State and local funds 
or in terms of 5- to 10-year outlay ? 

Mr. Weeks. We have not completed the financial analysis to which 
I referred and which is now being started and until we do, I do not 
think we can answer that question specifically. 

Dr. Kaplan. Well, in your own mind, how much of this $200,000,000 
chunk of completed projects do you expect to have in the blueprint 
stage by the end of 1946? 

Mr. Weeks. By early 1946, all of it. 

Dr. Kaplan. By early 1946 do you think you will be capable of 
financing in your own State? 

JNIr. Weeks. I could not answer that in figures. 

Dr. Kaplan. In your own mind, do you think of it all as Federal 
aid projects ? 

Mr. Weeks. No; of course not. We have been quite careful in 
preparing the information that we submitted to you and when I 
said at the conclusion of my statement that we believe the program 
as now filed with us by local'units of government throughout the State 
is at least a 10-year program, I think is a very sound statement. We 
believe, in other words, that Michigan communities will rather largely 
be able to finance their public improvement needs oyer a period of 
some years. If, however, public works construction is needed in the 
immediate postwar period as an employment measure, then we believe 
that Federal financing or Federal grants, if you please, of some per- 
centage will be necessary. 

Dr." Kaplan. Now in your $200,000,000 program, do you have in 
mind what your State and local governments are going to need for 
running purposes or do you have in mind this special backlog that 
you are talking about that might develop if unemployment becomes 
heavy and you have to look to special work? Is that a special work 
program or a regular work program that you have in mind in that 
$200,000,000? 

Mr. Weeks. First, let me say, Dr. Kaplan, that we do not think 
of our $5,000,000 plnnning-aid "program as providing a $200,000,000 
program, but rather as providing probably a $350,000,000 to $400,000,- 
000 program. At the present time, grants have been made from the 
$5,000,000 fund for approximately $3,400,000. 

Our computation of $200,000,000 in the completed planned stage 
by early 1946 is based on IBM tabulations which we have just com- 
pleted from the information submitted to us by applicants on projects 
for which grants have thus far been made. 

In the next few months, the remainder of the $5,000,000 will be 
allocated by the State administrative board upon the recommendation- 
of the State planning commission in each case. We believe when 
the entire $5,000,000 has been allocated, that we will liave a public 
works construction program of $350,000,000 to $400,000,000. 

Dr. Kaplan. Do you ask that the method of financing the con- 
struction be suggested along with the plans? 

Mr. Weeks. Along with the application we ask that the method 
of financing be. indicated. In many instances, the applicant has said 
in all honesty, as we would want him to do, "None." Now the ob- 
jective of this program is, of course, the same objective as Congress 



1986 POSTWAR ECONOMIC POLICY AND PLANNING 

had in establishing in title V of tlie Eeconversion Act the program 
for Federal loans for public works planning. The objective is a shelf 
■of blueprints. If we have a shelf of blueprints for $350,000,000 to 
$400,000,000 of construction, while we feel that we must know as soon 
as we can determine it how much of that construction can be financed 
reasonably soon and how much can be expected to be built within 
a reasonable time, the development of that information is the second 
phase of our w^ork. Thus far we have been extremely busy with the 
first phase of our work in this program which is to get the shelf of 
blueprints there ready to go. 

Now there are several representatives from Michigan municipal- 
ities here today and I understand that you expect to hear from repre- 
sentatives of municipalities this afternoon. I am certain that Glenn 
Eichards, for instance, the public works commissioner of Detroit, 
who is liere today, can give you some very illuminating information 
as to the possibility of early construction of any sizable part of the 
Detroit public works program. 

We expect soon to have rather complete information on the financ- 
ing program that goes along with the blueprinting program. As soon 
as Ave do have that, we of course, want to put that in the hands of your 
committee if you wish to have it. 

We w^ant to make the information available among other things to 
the applicants themselves. We know that many applicants in JVlichi- 
gan have only very vague ideas of their financing possibilities, but 
we are not at the point at which we can answer with figures such ques- 
tions as you just asked. 

The Chaikman. Mr. Fogarty, do you have any questions to ask? 
Mr. Fogarty. Kone. 
Mr. LeFevre. I have none. 

Mr. MuRDocK. You spoke of the lack of adecpate public school 
buddmgs. Assuming that an adequate financing plan was adopted, 
what part of the $400,000,000 do you expect to have devoted logically 
to public school buildings? 

Mr. Weeks. I hope you will let me explain just a little further what 
I mean by that. The total program as we have shown it here goes 
beyond the $5,000,000 which would pay 50 percent of the planning 
construction. I gave as one figure a total of approximately $7,600,000 
in applications. In other words, the demand exceeds the supply in 
this planning aid program. The demand for money exceeds the 
supply of money as a 50-50 matching fund plan preparation by about 
$2,500,000. ^ 

The figure that I gave of $91,000,000 in school construction repre- 
sented by applications in this program is the figure within the total of 
$7,600,000 ai^plied for in planning aid. 

The Chairman. Mr. Weeks, what part of that large program that 
jou have announced would be ready to go in, sav, a year after the war 
terminated? 

Mr. Weeks. Well, when will the war terminate ? 
The Chairman. Well, we are now planning for after the war. We 
do not know when the war will terminate, but you are getting ready 
a shelf of blueprints with the idea that some time after the war has 
terminated, there may be need for these blueprints to put into actual 
construction certain work. 
Mr. Weeks. That is right. 



POSTWAR ECONOMIC POLICY AND PLANNING 1987 

The Chairman. Now, supposing the war were to end within 18 
months. What proportion of these projects you mentioned would be 
in readiness for construction within a period of 2 years from now or 
6 months after the war ends ? 

Mr. Weeks. It is my belief that within 18 months from now, $10,- 
000,000 worth of blueprints will be on the shelf, the State having 
paid $5,000,000 and the local units of government having paid $5,000,- 
000. That should represent about $350,000,000 in construction. 

On the basis of information submitted to us by our applicant, as I 
mentioned in this statement, we find that by July 1 of this year, $101,- 
000,000 will be in the completed plan stage and by early 1946, we 
believe that approximately $200,000,000 will be in the completed 
plan stage, and by 18 months from now, our entire program should 
be in the completed plan stage. 

The Chairman. When you speak of "the completed plan stage," 
do you have in mind that the property, the land has already been 
acquired for these blueprints? 

Mr. Weeks. By completed plan stage we mean ready for bids to be 
taken for construction. We are inventorying the program on the 
question of property, but for the most part, the property is either 
in the hands of the municipalities or there is no problem about getting 
the property. 

Now, without asking anybody to say a word at this time, I would 
like to tell you before you get into your afternoon inquiry, who the 
men are from Michigan who are present. In addition to Glenn 
Richards, commissioner of the department of public works, Detroit; 
■we have Ed Clark, city manager of Kalamazoo; George Bean, city 
manager of Pontiac; Leonard Howell, city manager of Port Huron; 
Herman Crow, city manager of St. Joseph, and Robert Cross, of the 
University of Michigan's bureau of business research, who has been 
working for several months with the State planning commission ; and 
I am sure any one of these men can contribute much more of value 
to this hearing than I have been able to contribute. 

The Chairman. Mr. Weeks, I want to thank you in behalf of the 
committee for your expression of opinion here. It has been very 
illuminating and if we may, we will keep in touch with you so that 
Ave can get further information from you. Dr. Kaplan has spoken 
very highly of your efforts in the past, and I am sure that the commit- 
tee is very grateful to you for your appearance here today. 

Mr. Weeks. Two other State planning boards knowing that I was 
going to be here asked me to present their statements to you. This is 
a letter from James W. Clark, executive secretary of the Minnesota 
Resources Commission, and it reads as follows : 

March 28, 1945. 
Mr. Don C. Weeks, 

Director, Michigan Planning Commission, 

State Office Building, Lansing IS, Mich. 
Dear Mr. Weeks : At the request of Mr. Blucher, I am writing to you to ex- 
press tlie attitude of the Minnesota Resources Commission as applicable to the 
hearing on postwar economic policy and planning to be held in Chicago on 
Wednesday, April 4. 

In general we feel that the State of Minnesota does not wish to have any feeling 
of dependency upon Federal appropriations for postwar employment. Situa- 
tions may develop requiring the expenditure of large sums to relieve unem- 
ployment, but the people of this State are not sympathetic toward the creation 
of jfederal agencies to be principally responsible for this work. 



1988 POSTWAR ECONOMIC POLICY AND PLANNING 

The establishment of a central clearinghouse for information and guidance 
in Washington might be desirable but no large appropriations or extensive 
authority should be granted to such. 
Very truly yours, 

James W. Clark, Executive Secretary. 

The other statement that I was asked to read is dated March 28, 1945, 
and it is from Mr. Torkelson, director of regional planning of Wis- 
consin. His statement reads as follows : 

March 28, 1945. 
The Honorable Walter A. Lynch, 

Chairman, Suhroinniittce on Public Works of the House Special Committee on 
Posttvar Economic Policy and Planning, Chicar/o, 111. 

Gentlemen : The writer has been invited to attend a hearing to be held by 
your committee in Chicago on Wednesday, April 4, the purpose of the hearing 
being to gather information regarding the extent to which the Federal Gov- 
ernment should Iielp localities with the financing of public works througli capital 
grants or loans and grants. The writer lias further been advised that he may 
file a statement on the needs of the localities in Wisconsin with your committee 
through Mr. Don C. Weeks, director of the Michigan Planning CJommission. 
Since he will be unable to attend the hearing on that date, the statement is ac- 
cordingly being filed through Mr. Weeks. 

Thcjugh efforts have been made to collect information regarding the extent 
to wliich a public-works program designed to provide postwar employment in 
Wisconsin has been planned by local governing bodies, the information available 
is not sufficient to warrant a definite conclusion. A questionnaire which was 
sent twice to the governing bodies of all counties, cities, villages, and towns 
in the State and 422 superintendents of city school systems and high school prin- 
cipals, a total of 2,287, indicated that up to February 1, 1945, 314 of such taxing 
units were planning or programing public-works programs, whose estimated 
cost, exclusive of land, was estimated to be approximately .$105,000,000, of which 
approximately $8,000,000 represented projects for which the plans liad been com- 
pleted. In addition to the 314 which were planning, about 300 more reported 
that they were not making plans. The rem'»inder did not report. 

There is no doubt in tlie writer's mind that preparation of plans for a program 
of public works to be constructed during the postwar i^eriod is a vital neces.sity. 
Our board has held itself out as being willing to assist local governing bodies 
in setting up public-works programs according to procedures similar to those 
originally formulated by the public works reserve, and in the comprehensive 
city planning basic to the formulation of such a program on the soundest bases. 
There lias been a considerable response, and many indications that interest in 
planning public works programs is on the increase. The writer believes that 
the demand for a public-works program to provide employment will literally 
explode whenever in the future there are indications of unemployment on an 
extensive scale. 

The writer is not prepared at this time to make any statements regarding 
the extent to which the Federal Government should aid localities in the financing 
of public works through capital grants or loans and grants. There is no doubt 
in his mind that the planning of public works will be greatly stimulated if there 
should be a program of Federal aid for the planning of public works, and like- 
wise that the execution of a public works program during the postwar period 
will be greatly stimulated through grants in aid from the Federal Government, 
and possibly through loans by the Federal Government, especially if the 
interest rate is very low. 

As stated earlier, the writer is not prepared to make statements regarding the 
extent to which public sentiment in Wisconsin would favor aid from the Federal 
Government to the localities in the financing of public works through capital 
grants or loans and grants. He has no doubt that if it should be deemed 
necessary for the Federal Government to engage in a program of such capital 
grants, or loans and grants, and such a program be instituted, the State of 
Wisconsin and the local governments of its various subdivisions would desire 
to participate in such a program to the extent of obtaining the greatest possible 
benefits that might become available through it. 
Yours very truly, 

Wisconsin State Planning Board, 
M. W. Torkelson, 

Director of Regional Planning. 



POSTWAR ECONOMIC POLICY AND PLANNING 1989 

The Chairman, The dean, not only of the Illinois deleoation but the 
dean of the House, Mr. Sabath, is with us this morning and I wonder 
if you desire to make a statement? I know that you have been very 
helpful to this connnittee thus far in Washington and I would like to 
have you make a statement if you will. 

We will now hear from Congressman Sabath. 

STATEMENT OF CONGRESSMAN A. J. SABATH, CHICAGO, ILL. 

Mr. Sabath. I was not prepared to say anything, but I merely want 
to be aware of your activities. Being responsible for the committee, I 
feel it is absolutely necessary that we be prepared for any eventuality 
after the war. I believe that a committee of this kind should be of 
great assistance in preventing any unemployment after the war. 

Now, I do not fear great unemployment after the war, because I be- 
lieve that after the war is ended — wliich I hope to God will be soon — 
that there will not be any large amount of unemployment. I say that 
in view of the scarcity of civilian goods throughout the Nation. I 
think there will be a terrific demand upon our production and not only 
in the United States, but from other countries as well. Our exports 
will increase tremendously as the demand will be made upon our coun- 
try for many, many things; also demand for manufactured articles, 
and I hope and actually believe that there will be no scarcity. Fur- 
thermore, I feel that the people of this country should not relax and 
rely upon government for reemployment. It will be their duty to 
do their part and see to it that they continue their ellorts to the best 
of their ability. 

I know and perhaps most of you gentlemen know that there is some 
reconversion going on at the present time in many of the plants, and it 
will not take long before they are ready to go on their normal-time 
production, and many of them- can start to produce civilian goods 
within a very short space of time. 

I am not going to detain you gentlemen any longer, but I do want to 
say that I hope you w^ill bear in mind the fact that the greatest needs 
confronting us will be the supplying of jobs to those boys who are 
coming back. The large cities are the ones who are going to have the 
greatest amount of unemployment. It is unfortunate that the large 
cities have grown tremendously vast at the expense of the older citizens. 
In other vrords, the new sections in all of the larger cities have been 
developing at the expense of the old sections, and the old sections 
should be given some consideration. Consequently, due to the tre- 
mendous amount of new construction, we have had many so-called 
blighted areas where people have invested their whole life's savings 
for 10 or 20 years in a two-story building, or a three-story building, 
and they did not leave enough air space as is now required. Conse- 
quently, many of those people feel that that should be remedied in 
some way. 

I have recommended and urged for the last 4 or 5 months that be- 
fore we encourage and appropriate large funds for the construction 
of additional living quarters and homes out on the outskirts, far re- 
moved from the heart of the city, that an eifort should be made on the 
part of every municipality and the State's cooperation obtained, for 
the passing of legislation that would give the blighted sections some 
assistance. 



1990 POSTWAR ECONOMIC POLICY AND PLANNING 

There are many old buildings and vacant lots tlmt are filled with 
rubbish which are not conducive to health nor to the appearance of 
that particular section. I believe if we were to start reconstructing 
some lof those old sections it would be to the advantage of the city. 
and to the laboring people as well, and to the business people as well, 
because those sections are close to the heart of the city, and they will 
save time in transportation difficulties in reaching their places of 
employment. 

I feel that that should receive your first consideration, because the 
health and the future of not only the cities of the State are confronted 
with that problem, but there is a health problem involved also, and 
it will not require as much money as some of the projects that are 
being talked of here. So for that reason I am taking the liberty and 
the advantage of your kind suggestion to bring that home to you, and 
I hope that when the entire committee meets you will insist upon those 
improvements to which I have called attention, because I feel they are 
of the utmost importance. 

Naturally, as one who has seen Chicago go from less than half a 
million population to over 4,000,000, and who has helped in a small 
manner to develop and bring about improvements, I am vitally inter- 
ested in the people who have everything invested in a two-story build- 
ing or a three-story building that might go to ruin unless something is 
done to rehabilitate those sections which will not bo only to the benefit 
of those property owners but also to the businessmen in that district as 
well. Therefore, I beseech and urge you and ask you to give consid- 
eration to those people, and I shall be after you and the entire com- 
mittee to do that until such program is developed and carried out in 
the interest of humanity and health of our citizens. Thank you very 
much. 

The Chairman. I just want to say that you have pointed out some- 
thing that I think we should make very plain. I think it is the view- 
point of the committee that there is not going to be any handing out 
of Government funds indiscriminately. We expect, first, industry 
to do its part and develop along lines that industry ordinarily does 
develop in days of prosperity. While we look for a period of pros- 
perity when the war has terminated, we are still not certain of it; and 
what we are trying to do now is to build up a little insurance against 
that unemployment. After industry has done its part, we expect the 
States and municipalities to do their part; and only as a last resort — 
and I think I speak for the entire committee on this — do we expect 
the Federal Government to give out any aid. 

Mr. Sabath. I am in full accord with that. I think frequently the 
industry and private capital really rely too much on Government, and 
then they charge the Government with giving out money. I feel that 
every opportunity should be given to private industry, and they should 
be urged to provide all of the necessary work for those who are coming- 
back and wdio may seek employment. I think they can do it, too. 
However, in regard to the Government dissemination of funds, I fully 
agree with you that we should cooperate and aid wherever necessary 
so that we can provide an insurance for unemployment in order that 
prosperity will be ours for many, many years. 

Naturally, I know from my experience in the House for many, many 
years 



POSTWAR ECONOMIC POLICY AND PLANNING 1991 

The Chairmax. How many years ? 

Mr. Sabath. For 39 years, with which we are confronted. I am 
celebrating my seventy-ninth birthday today and I hope to be wdth 
you for a long time yet. 

The Chaiem.vn. I want to call the attention of the committee to the 
fact that we have an appointment wnth Congressman Sabath because 
we have a letter from him saying he would like to know w^hen w^e 
reacli town so that he can show us the city hall and the Federal 
buildings. 

Mr. Sabath. I will do anything to make your stay pleasant and I 
hope that j^ou w411 have a pleasant stay here. 

The Chairman. I am sure that we will. 

Mr. Sabath. From time to time we are criticized because w^e are 
appropriating too much money, but invariably the people from every 
section of the country demand and urge appropriations for their sec- 
tions or for the things in which they are interested, but the moment it 
does not interest them directly they are willing that that appropriation 
should not be made. I presume that we will have these demands and 
requests for large appropriations and expenditures, but I believe that 
municipalities and the States should not really rely completely upon 
the Government, which has been fair and very liberal with them. 
However, from now on, I think, due to the great prosperity they have 
all enjoyed, they should be able to finance to a great extent all of their 
needs. 

The Chaikjian. Congressman Gorski has a statement that he would 
like to make. 

STATEMENT OF CONGRESSMAN MARTIN GORSKI, CHICAGO 

Congressman Gorski. I think, Mr. Chairman, this is a very timely 
investigation and a great deal of good can be accomplished from such 
hearings. We know that there are about 11,000,000 men and w^omen 
in the services of our country, and if these men and Avomen are not 
discharged all at one time we probably will not have much of an 
unemplo3anent problem. I think that there is a vast amount of private 
business which is waiting to get started. Therefore, if the reconver- 
sion program does not come too suddenly, we probably wall not have 
any unemployment. 

There are now, I believe, being discharged around 400,000 men every 
year from the armed forces. When the war is over in Europe, I think 
that that probably will be increased considerably. Many of the cor- 
porations are today gradually reconverting so that as they are able to- 
get material they will be able to take on other work and make goods 
for civilian consumption. 

If by our planning we can bring that about so that the reconversion 
does not come too suddenly and the corporations which are now^ en- 
gaged entirely in making war munitions and war materials will be 
given the chance to reconvert, I think that a lot of unemployment can 
be avoided. 

We know right here in Chicago, Mr. Chairman, that there is a vast 
pentup demand for buildings. I believe it would run into the hun- 
dreds of millions of dollars. This cannot be accomplished at this 
time, but when these men who go into the building industry can get 



1992 POSTWAR ECONOMIC POLICY AND PLANNING 

the material, they can go ahead immediately. Your investigation in 
that behalf can help considerably in promoting that work. I say 
that because we want to be ready and be able to know what we want 
to do before the time comes when we will be confronted with unem- 
ployment. We do not want to have to be confronted with the possi- 
bility of having conferences and investigations to find out what can 
be done to overcome the unemployment that is confronting us and I 
think that that is where this inquiry can help business considerably by 
having plans all ready so that when the time does come, we will have 
our blueprints ready and be all ready to go, 

I agree with what Congressman Sabath has said, too. I do not 
think any of us favor the dealing out or giving away of public money. 
We want to leave all enterprise to private business and I am satisfied 
that private business can do a good job and will do a good job. I 
think they should only call upon the Government when they cannot 
fulfill their obligations, but I believe for many years to come, there 
will be enough business to keep everybody employed. I think that 
your committee here by this investigation can help private business 
considerably when the time comes if there should be any unemploy- 
ment. 

The Chairman. We will now hear from Congressman Link. 

STATEMENT BY CONGEESSMAN WILLIAM W. LINK, CHICAGO, ILL. 

Congressman Link. Mr. Chairman, I believe in this planning be- 
forehand. I think that is one of the best things started at this time 
because*!-' ^(''--esident r^' the board of local improvements at the start of 
the last,'<^^ression, t had very few plans. We started practically 
from sci-at .x, and \i ' works went up that could have waited for a 
ninnberf:o ■years, bu' j had to make work immediately. 

Of cour:-^, as we ker-t going on, we got into better planning; we had 
tune to ' a littlf er and we put up some very useful improve- 

ments. ■ "■ "■ 1 aid, but the city paid its share and those 

impro. ve p .j are some of the finest improvements that we 

have i) icago. However, as I said before, there was 

quite ;■ noney wasted because we were not prepared 

to star inemployment was confronting us. I be- 

lieve f' - . . ^ thing to do at this time. It should be done 

at this 3 so tl -. Q prepare and build intelligently for the 

future. "^i 

The ^^ /Airman, vv p - " " jw hear from Mr. Bonner of Minneapolis, 
Minn. ''' 

STATE]\.-i^:NT BY JOnxJ BONNER, ASSISTANT TO THE ATTORNEY 
OE MINNEAPOLIS, MINN. 

Mr. Bonner. I am the assistant to the attorney of Minneapolis, 
Minn., and I am representing the city of Minneapolis. Mr. Chair- 
man and members of the committee, the city of Minneapolis is in dire 
need of a Federal grant in the sum of $141,000,000, which may be 
reduced by $25,000,000, depending on whether or not our present 
program of slum clearance will get through the legislature. The 
city of Minneapolis is the largest city in the State of Minnesota and 



POSTWAR ECONOMIC POLICY AND PLANNING 1993 

it is situated in a central part of the State and contains a population 
of close to 500,000 people. 

Minneapolis has in its immediate vicinity several war industries, 
such as the Minneapolis Honeywell, the Twin City ordnance plant, 
the Kosemount plant, which employs a large number of people, some 
of whom live in tlie city of Minneapolis. After the war these indus- 
tries will not employ the same number of people that they do now 
em])loy. There will be the problem of some people wanting to stay 
in Minneapolis and there will be the problem of some of them going 
on relief and we will be confronted with the necessity of supporting 
them in Minneapolis. In addition, after the war there will be a relief 
problem which probably will be as bad as it was in Minneapolis before 
the war. 

The city is not interested in a loan. The city wants a grant of 
these Federal funds. Breaking this sum down, the city wants a grant 
of $75,000,000 for highways and grade separations. The highways 
involve modernization of our streets and highways and the elimina- 
tion of railroad grade crossings over a large area in the southern part 
of Minneapolis. The railroad grade crossings have been a festering 
thorn in the city of Minneapolis for something over 60 years. The 
Milwaukee Railroad runs a grade along a large part of the southern 
part of Minneapolis and the city by ordinance attempted to make 
them separate the grade, and the railroads went into the legislature 
and threw the whole thing into a controversy, and many, many hear- 
ings were held between the railroads and the warehouse commission 
over the question of whether it should be a depi>-ssion or f p^.-vation 
of the grade crossing, and the railroad and a'rehouse ...-.ii\ussion 
decided that there should be an elevation an 1 .'j^laced r>>!^- ilurd of 
the cost on the city. That amount at that . ^ was estiiniited at 
$1,400,000. At this time it probably would co55,o .closer to jy,O00,O00, 
that is, the city's share of the grade separation. '' . ■ ■• . r 

The city has appealed to the circuit court of L '^f^alf -Vrrhat has 
been carried along hoping tliat the Federal GoV ^ .janei :^ come 

in and assist both the railroads and the city, i- ■^■^ ^VVPA 

was in existence we had an arrangement which\ \ ';.,prac- 

tically made. The railroads agreed to it and thW^ • .agreed 

^o it, and then came an order suddenly out of th^Qro*^ roject 

would be apj^roved unless it could be completed v^'^ ,n a ye. 

I believe that that was back in 1935 and this r ., d not p Ibly be 
completed within a year and so that went by. ']^^ j^ourd. Ho- ver, we 
very much need Federal aid on this grade- don proj^L.. We 

have to have that aid because the city is in no >n to pay ^ nillion 

dollars or any part of that sum for that purpc vd ^-^""^ '" j I 

Our streets and highways are entirely inadequate to carry what we 
predict will be the postwar traffic. We have a very complete system 
of plans draw^n and these plans have been put up before the city coun- 
cil and they have passed the blueprint stage and they show various 
superhighways and other technical means of meeting this traffic con- 
gestion which is sure to come. 

Our public buildings are entirely inadequate, too. We have a court- 
house that was built in 1895 and it is a combination city and county 
courthouse. The city occupies one side and the county occupies the 

99579 — 45— pt. 6 19 



1994 POSTWAR ECONOMIC POLICY AND PLANNING 

other side. The courthouse is overcrowded. It is one of the oklest 
architectural monstrosities, built with brownstone with a lot of open 
wells and waste spaces, and consequently the board of public welfare^ 
has to rent a l)uilding outside of the courthouse. Therefore, we 
uro-ently need that building and we need a new public library. Our- 
public lilirary was built in 1889 and it is inadequate and we need fire 
stations and garages, et cetera, to house the city-owned vehicles. We^ 
need new schools, both new construction and deferred maintenance. 

We have been letting the schools go because we have not had the 
money to keep them up ]jroperly and they are inadequate. Most of 
the school buildings are antiquated. We need a building if we don't 
get a city and county building big enough for the board of public 
welfare. It is unsound for the city to pay rent for office space for 
our public welfare. 

The Chairman. Do you think it is sound for the Federal Govern- 
ment to come in and pay the cost of that ? 

Mr. Bonner. I think that probably under ordinary conditions with 
the normal tax situation, it would not be, but I think in view of our 
financial condition which I intend to develop, it is quite sound and if 
I may be permitted, I should like to continue. 

The Chairman. Well, continue by all means, but I would just like- 
to have you keep that point in mind. 

Mr. Bonner. I will take up the next point of storm drams and 
water mains. Our storm drains and water mains have been built a 
long time ago and they are entirely inadequate, especially with our- 
increase in population. 

During the spring of the year when the water gets high, the storm 
drains back up and there is constant flooding and discomfort. The- 
sewage pipes are not adequate either. The city engineer has recently 
placed before the council a postwar project of storm drains and water 
mains involving the expenditure of $13,000,000. 

The park boards need additional recreational facilities. The park: 
board has been operating on a shoestring with a maximum limit of 
3i/> mills which we hope the legislature, which is now in session, will 
increase by 2 mills, but it has not had enough money to keep its parks-, 
up properly and provide proper recreational facilities for a city of 
nearly 500,000 population. 

The last item is the reconstruction of blighted areas and slum clear^ 
ance. At the present time, we have no legal authority for engaging in 
reconstruction of blighted areas or slum clearance on the scale which 
is necessary to remove these large areas and to rehabilitate them. 
There are several bills that have been presented to the legislature which 
are now in the legislature and one is the bill which permits us to get 
aid from the Federal Housing Administration, but we have not liked 
that bill for many years and we do not like it now. I doubt very much 
if the bill will pass. 

However, there is a bill before the legislature which has been passed 
on by the Illinois Urban Redevelopment and that bill permits private 
capital to go in and aid in the redevelopment of blighted areas and 
slum clearances. That bill has a great deal of sentiment in favor of it 
and I believe it has a reasonable chance of passing, but as I say, if that 
bill or something like it does not pass, you can clip $1^,000,000 off that 
$141,000,000. 



POSTWAR ECONOMIC POLICY AND PLANNING 1995 

The next item is the question of the city's financial position which 
the chairman indicated as being of good deal of interest to the com- 
mittee. Now the city for many years, as a matter of fact since 1912 
has sat supinely by and let the State take most of its money away from 
It. In 1912 the legislature took the gross earnings of the railroad com- 
panies, the telephone companies, and other public utilities away 
from us and deprived us of $2,500,000 a year in property taxes for 
those utilities. I liave endeavored with tlie aid of others interested 
throughout the State to get the legislature to recognize the injustice of 
that and pass a bill giving the municipalities and counties 40 percent 
of the gross earning taxes, which so far as Minneapolis is concerned, 
would give us about $900,000 or $950,000 a year. However I am vio- 
lating no confidence when I say that the people in the statehouse have 
turned a rather deaf ear to that plea, so we have lost that money and 
we will probably continue to lose it. 

Then we pay around $7,000,000 to the State, that is, the citizens of 
Minneapolis pay $7,000,000 to the State per year in automobile li- 
cense fees and gasoline taxes. We are trying to get $40,000 for Min- 
neapolis rebates on taxes that are exemiDt, motor vehicle taxes that 
are exempt and we are having a tough time and tough sledding in the 
capitol at the present time on that. 

The city's tax rate for many years has been held by sort of a gen- 
tlemen s agreement at 100 mills because that is the property tax The 
income tax which we hoped to be a replacement tax was knother tax 
that built up a surplus in the State. It was allocated to the schools 
for debt retirement and there it stays with about a $2^,000,000 sur- 
plus now m the treasury which we cannot get any portion of, al- 
though the city of Minneapolis and the citizens pay a substantial por- 
tion of that. '■ 

Our experience has shown if you run over 100 mills tax on your gen- 
eral property, you have a lot of tax delinquencies and vou have 2 000 
or 3 000 answers filed in tax proceedings every year and your take is 
less than if you kept it down to 100 mills. 

Now in regard to our bond, our bond is only $11,000,000 and when 

$iQ mn^nnn /p^^^' ^^'''^"^!'- ^^'^ ^^^'^^ ^ ^^''''^ '^ ^i^l be cut down to 
^,000,000. If we get a relief problem back on our hands, the relief 
load IS going to take that amount away from us. So to finance this 
matter which I presented to you ourselves will take probably, if it 
can be done at all, around 25 years and in the meantime, the city ig 
gomg downhill and it is going down without needed improvements 
It is^ becoming less and less a place in which to live and to bring up 
children m. So we feel very strongly that in order to do this type 
of work and I believe it is absolutely essential and necessary that 
that work be done and not bypassed, we need a grant from the Federal 
Government to finance it. We cannot do it our^selves 

I am told by competent authorities that probably within the next 
year there will be a couple of months of pay less paydays for the city 
employees, and I am not heartily in favor of that sort of a pro-ram 
So in order to keep the city solvent, the tax money must be devofed to 
the bare necessities. We have lost revenue in several instances We 
hacl a parking meter ordnance and we got money from the parking 
meters, but then due to the fact that the automobiles are not bein? 
driven as much today as in former years, that has dribbled dowS 
considerably, and our revenue has been going down all the time 



1996 POSTWAR ECONOMIC POLICY AND PLANNING 

Therefore, we are up against ithe demand for the same municipal 
services as in the past with a steadily declining income. 

The Chaikman. Mr. Fogarty, do you have anything to ask? 

Mr. Fogarty. It seems to me that you are having a tough time with 
your State legislature. 

Mr. Bonner. I agree with you. 

Mr. Fogarty. A lot of your problems could be solved if you got 
something out of the Statehouse ; isn't that correct ? 

Mr Bonner. They could be solved to some extent through the di- 
versification of this tax; that is, 40 percent of the gross earnings based 
on a $14,000,000 gross earning tax for tliis last year. That would 
bring us in probably $950,000. The gas refund tax does not amount 
to very much. That is a tax on motor vehicles owned by the city and 
used to repair the State highways and that amounts to only about 
$40,000. 

However, I assure you that I have not relaxed any effort to get this 
money from the State legislature. I have been over there continuously 
every day since the start of the legislature with the exception of the 
last few days when I have been down here. But the farm bloc over 
there just gang up and tell us that we cannot have it. We have got 
to have it and they will not give it to us and they control the legis- 
lature owing to the inequality of representation. 

Mr. LeFevre. You spoke of $70,000,000 or $75,000,000 project for 
your roads ? 

Mr. Bonner. Yes. 

Mr. LeFevre. Have you checked on the Federal road bill that was 
passed at the last session as to what aid you will get from that for 
the city and State high v/ays? 

Mr. "Bonner. I think we would get some State and some Federal 
aid there. 

Mr. LeFevre. Has your State passed a law as to what percentage 
they would give to get'^some Federal money on that ? 

Mr. Bonner. I do not think that they have. I do not think they 
have gone that far, but I will check that. 

Mr. LeFevre. Getting your aid in that way, I believe you will find 
you will get something. 

Mr. Bonner. Certainly there are trunk highways which we get same 
small amount of State aid on and I think the State gets some Federal 
aid on the trunk highways, but there are other highways in that city 
that are not trunk highways and then there are bridge constructions 
over the Mississippi. One of our bridges has been condemned and 
it will be necessary to put in at least two more bridges; if we can 
get one of those bridges designated as a trunk highway, that will be 
an advantage. 

Mr. LeFevre. That bill will go a long way toward helping your 
grade crossings, too, I am sure about that. 

Mr. Bonner. That grade crossing has been a tremendous problem 
that we have had over a period of years. 

Mr. LeFevre. Is that on a through highway? 

Mr. Bonner. No ; that is the trouble with the grade crossing, men 
the Milwaukee Eailroad was built 75 years or more ago, they just 
went straight along a grade and cut through the heart of Minneapolis 
and most of that is at grade. So it crosses all sorts of streets. In 



POSTWAR ECONOMIC POLICY AND PLANNING 1997 

fact, it crosses every street from about Sixth Avenue or Washington 
Avenue clear through ahnost to the city limits of the city of Minne- 
apolis and the only way we could possibly figure to get any aid from 
the Feoderal Government prior to this time was to make a WPA 
project out of it. We had hoped that w^e would be able to do some 
work on it in that way and then at the last minute that was limited 
to a 3'ear. 

The CiiAiRMAX. Mr, Bonner, we want to thank you for presenting 
your sad picture here today. I think that probably Mr. Fogarty has 
suggested your real difliculty, which is with the people of your own 
State, the State legislature. Frankly, I am rather aghast at the pic- 
ture that you have painted and at the same time I think it is fair to 
warn you that the present disposition of this committee is not to go 
along on making grants for construction. At the most, we might do 
this : We might consider grants-in-aid for planning, as we have done 
under the Reconversion Act which was passed last year and for which 
the appropriation now is $35,000,000. 

Plowever, it does not seem to me as though there is any chance 
within the immediate future of the Federal Government coming to 
the aid of a city to the extent that you have suggested. As a matter 
of fact, we are receiving complaints about the high taxes. Of course, 
we want to do everything we can, but we do not intend to have the 
Federal Government run the business of the various municipalities. 
So I think we all sympathize with your position and respectfully refer 
you to your State legislature. 

Mr. BoxxER. As I understood this letter which I received, it is a 
subject matter to be dealt with to the extent tliat the Federal Govern- 
ment must help the localities with the financing of public works 
through capital giants or loans and grant. This should not be con- 
fused with the Federal appropriation for Federal granting of public 
works. I thought that that possibly indicated that you woulcl help 
our city out in this respect. 

The CHAiK:\rAX. We are glad to have your suggestions, but I think 
I am expressing the opinion of the committee that at the present time 
I do not think there would be a possibility of getting through the 
House any aid for actual constructiom " What we are trying to do is 
to get the cities and the States to see their responsibilities, stimulating 
them a little by giving them some cash, if necessary, for planning. I 
do not think we contemiDlatecl very much beyond that. 

Mr. BoNXER. Then, our plea should be for money for advance 
planning ; is that correct ? 

The Chairman. Well, we are taking in the broad picture and while 
taking in the full picture, I am still giving you the present opinion 
with respect to whether or not vre will start right in after the war and 
give grants-in-aid for actual construction. I do not think it is in the 
cards at the present time. I do not think it would get through the 
House and I do not think it would get through this committee." 

We do not want to give the impression that there is any likelihood 
of the Federal Government giving aid or grants-in-aid for actual con- 
struction. We want to limit such aid as may presently be given as 
aid for planning purposes. 

Mr. BoxxER. Just for the drawing up of blueprints ? 



1998 POSTWAR ECONOMIC POLICY AND PLAXNIXG 

The CiiAiRMAX. That is right. We appreciate your position and I 
hope that you will be able to straighten it out, because it looks as though 
Minneapolis is sure sliding. 

Mr. BoxxER. May I quote you to the legislature on that? 

The CuAiRMAX. You certainly may. 

Congressman Sabath. AVhat applies to ^Minneapolis applies to many 
other nuniicipalities as well where the State discrimination is against 
the municipalities Avho invariably pay most of the taxes. 

The CiiAnniAx. That is true also in New York. 

Mr. BoxxER. Is that true in New York ? 

The CHAIR3CAX. Yes, it is. Of course, my friend, Mr. LeFevre, 
from upstate would not agree with that. 

Thank you very much. Mr. Bonner, and we appreciate your com- 
ing down here and giving us that statement. 

(See also exhibit 7, p. 2065.) 

We will now hear from Mr. Anderson, superintendent of public 
works of Winnetka. 

STATEMENT BY ROSEET L. ANDERSON, SUPERINTENDENT OF 
PUBLIC WORKS, AND VILLAGE ENGINEER OP Vv^INNETKA, ILL. 

Mr. AxDERsoN. The village of Winnetka, 111., which I represent, is 
a residential suburb of Chicago having a population of 12,600. 

It is my conviction and that of our village manager and village 
council that the fundamental course that will prove the best for our 
country's future lies in the redevelopment of a sense of individual 
responsibility among our people. Our present place in the world has 
been achieved from the first by a self-reliant, independent enlightened 
citizenry. Collective action has been taken for the purpose of ac- 
complishing objectives beyond the abilities of individuals rather than 
to concentrate control in the hands of a few. 

Translated to the municipal level, this means that each city and 
village in the country should be encouraged to determine for itself 
what its collective needs are and to rely upon its own resources to pro- 
vide them on such a scale as it can afford. Grants of money by the 
Federal Government for city hJills, water supplies, park developments, 
local pavements, and similar pul)lic improvements of purely local im- 
portance are neither equitable, justifiable, nor desirable in the long 
run. Inherenth\ because of the increased overhead involved in col- 
lection, redistribution, and supervision of the funds, the cost is higher 
to the public as a whole, although the incidence may be shifted some- 
what. 

Federal assistance on the system of trunk highways within cities 
is quite another thing, however, since the transportation system is of 
national significance. It would seem a similar argument might be 
applicable to airports and water transport facilities, although de- 
velopments primarily to advance one city's position in competition 
with others could lead to wasteful expenditures. Any such develop- 
ments should be integral parts of an over-all transportation plan. 

The location of a war plant or camp in a locality might well neces- 
sitate public improvements justifying Federal participation, but in 
the postwar period such cases should largely cease to be a factor. 
Needs brought about by permanent shifts in population, whether 
occasioned by war industry or not, would seem to me to be responsibili- 



POSTWAR ECONOMIC POLICY AND PLANNING 1999 

"ties of the locality involved. If the shift is a permanent one, the local 
responsibility falls on the new residents. 

Federal taxation and the public debt are now at the highest points 
in our history as the result of prosecution of the primary and proper 
-Federal function of national defense. For years, perhaps generations, 
the liquidation of this debt alone will require heavy Federal taxation. 
The integrity of our credit and the welfare of our entire economy de- 
mand that all nonessential Federal activities be eliminated. The re- 
turn of local responsibilities to the cities is one such move that can be 
made with good results all around. 

I believe it is now generally agreed that widespread unemployment, 
be it caused b}' war reconversion, demobilization, or as a phenomenon 
t)f the economic cycle, is a condition requiring action on a national 
scale. The tax base reserved to cities is too restricted to permit their 
assumption of any great portion of this load. Should the alleviation 
of sui h a condition lead to a program of Federal-aid public works, I be- 
lieve the projects undertaken should be carefully picked to consist of 
improvements of more than purely local usefulness. Types of w^ork 
prilicipally of general benefit, although involving an element of local 
benefit, such as railway-highway grade separations or drainage basin 
flood-control improvements, could be justified, but the Federal assist- 
ance should in any case be set up to promote the maximum amount of 
work with the minimum of Federal funds, through provision for 
matching local contributions. 

In our town we are engaged in planning both psysically and finan- 
cially for needed improvements in our sewerage system, municipal util- 
ities, steet system, and parks. Federal assistance is not being consid- 
ered as a factor in any case. Funds are at hand or available for some 
of the projects as soon as construction may be resumed, while other 
parts, such as some of the sewerage improvements, are envisioned as 
a long-range plan. Some of this work will involve jurisdictions of 
greater extent than our local municipality, but I fail to see where any 
of it is of a scope to justify Federal participation, with the possible 
exception of certain flood-control aspects of the sewerage problem. 

It is our hope that the Congress will find the views herein expressed 
of wide enough acceptance among the cities to indicate that the ma- 
jority of our people are sincere in their belief that Federal activities 
and expenditures should be curtailed, and that the example set in 
refusing to request Federal financial aid may be of assistance in re- 
ducing Federal activity and expense in other fields, as well. 

The Chairman. Dr. Kaplan, do you have any questions? 

Dr. Kaplan. No ; I have not. 

The Chairman. Mr. Fogarty, do you have any questions? 

ISIr. Fogarty. Nothing at this time. 

INIr. LeFevre. Nothing. 

The Chairman. Thank you very much, Mr. Anderson. 

Now, I want to call the attention of the committee to the fact that we 
are indebted to Mr. Carl Chatters, executive director of the Municipal 
Finance Officers Association, who has niade all of the arrangements 
for use here today and tomorrow, and in case you do not know Mr. 
Chatters, he is the gentleman sitting over here, and I would like to 
have you meet him afterward. 

This hearing will now stand adjourned until 2 o'clock. 

(Whereupon, at 12: 30 p. m., the hearing adjourned until 2 o'clock.) 



2000 POSTWAR ECONOMIC POLICY AND PLANNING 

AFTERNOON SESSION 

The Chairman. The committee is very glad to see our former 
colleague, Congressman Raymond McKeough, present. It is always 
a great pleasure to meet him any place, and especially in Chicago. 

We also have with us this afternoon a member of our committee. 
Congressman T. J. O'Brien. Congressman, you were unavoidably 
detained this morning, but I would like to get a statement from you, 
if I could, with respect to your views on postwar planning in public 
works. 

STATEMENT OF CONGEESSMAN T. J. O'BRIEN, CHICAGO 

Congressman O'Brien. As a member of the Postwar Economic 
Policy and Planning Committee, I wish to join with the other Con- 
gressmen from Chicago who appeared before you this morning and 
endorse 100 j^ercent the plan Mayor Kelly presented to you on postwar 
planning, and I will file a further statement later. 

The Chairman. Without objection, a statement will be filed with the 
committee later by Congressman T. J. O'Brien. 

The first witness will be Mr. James G. Wallace, city manager of 
Kenosha, Wis. 

STATEMENT OF JAMES G. "WALLACE, CITY MANAGER, 
KENOSHA, WIS. 

Mr. Wallace. I might say that Kenosha, Wis., is a city located 
between Chicago and Milwaukee on the lake shore, very highly indus- 
trialized, and, therefore, we know something about the unemployment 
situation from more angles than one. 

Personally, it is our opinion that wdien it comes to local projects 
a city should maintain, support, and build these itself. If it is not 
in a position to do that, it should not look elsewhere for help. How- 
ever, in the case of projects that pertain to community-wide travel or 
things of that nature, like Federal highways, bridges, lake-shore proj- 
ects, grade separations, then I think the community should have the 
benefit of grants from the Federal Government or from the State. 
Inasmuch as our city is very highly industrialized, and after talking 
with officials of our manufacturing plants within the last week, we have 
come to the conclusion that unless w^e are hamstrung by Government 
regulation or restrictions our plants can convert very easily into civil- 
ian production within a matter of 2 or 3 weeks, with the longest being 
3 months. So we are not worrying so much about unemployment in 
our particular section at the present time. 

Coming back to what we started out to say, our feeling is that no city 
should saddle itself with any expensive project that would be a luxury 
for it to maintain in the future and it should stick, as strictly as pos- 
sible, to local projects that it can maintain itself, and not try to take 
on other big projects under the disguise of solving unemployment. 

That is about all I have to say. Thank you very much for giving 
me this opportunity of presenting this to you. 

The Chairman. Thank you very much, Mr. Wallace. 

The next witness is Mr. Rhomberg, city manager of Dubuque, Iowa. 



POSTWAR ECONOMIC POLICY AND PLANNING 2001 

STATEMENT OE A. EHOMBEEG, CITY MANAGER, DUBUQUE, IOWA 

Mr. RiioMBERG. Mr. Chairman and gentlemen, our city has a popu- 
lation of 45,000 and it has postwar plans prepared with the amount 
of one-half of the dollar value represented already in blueprint form 
and in sucli shape that the proper names can be inserted on the bidding 
blanks as, if, and when the need for them develops. 

We are not asking for any funds for planning. We propose to pay 
for the planning and specifications and engineering out of our current 
funds. This plan is intended to be financed over a period of years 
and it is within the resources of the community to pay for the Work 
in its entirety. 

However, should the need come about to compress these needed 
public works within a much more limited period of time, then it would 
not be possible for the community entirely to finance the program. 
Our estimates in that regard amount to something like tliis : Should 
this 7- or 8-year program, based upon the physical requirements as 
well as the financial requirements of necessity, be compressed to, let 
us say, a 3-year period following the end of the hostilities, then we 
would be able to finance about GO percent out of our own current 
resources and our bonding ability, leaving the 40-percent tag end 
to be developed by other means. 

The Cptairman. Do you anticipate going into your projects imme- 
diately after the war, regardless of whether private industry has gone 
mto construction generally? In other words, do you think that your 
community, your municipal government, will in anywise complete 
either in labor or material with private industry after the war? 

Mr. RiTOMBERG. Well, perhaps in some measure they would, Mr. 
Chairman, in this respect : Represented in this total, of necessity, are 
some things that would have been done already had it not been for 
the war, such as a sewage-treatment works, a water-treatment facility, 
and an extension of certain sanitary facilities. Those would have 
to be done even though they might compete for materials and man- 
power with private industry. However, it is not the policy of the 
administration to attempt to make work to use manpower and" thereby 
compete with private industries who are productive of natural wealth. 
We only propose to do such things that the community cannot afford 
to do without. 

The Chairman. In other words, if, after the war, you have a period 
of real prosperity, your community would probably undertake only 
those public works that were necessary and e&sential at the time and 
which probably have been deferred on account of the war. Any other 
public works would be deferred probably until either the labor market 
or material market got a little lower, so that you would not be spiraling 
both wages and material upward; is that correct? 

Mr. Rhomberg. That is correct, sir. 

The Chairman. For those particular things? 

Mr. Rhomberg. That is right. 

The Chairman. Do you have anything ? 

Mr. FoGARTY. I have nothing. 

Mr. LeFevre. I have nothing. 

Mr. Arthur. I would like to ask one question. In connection with 
your statement that you have these projects in blueprint stage, the 
advance planning of these projects involves, of course, the architec- 



2002 POSTWAR ECONOMIC POLICY AND PLANNING 

tural blueprint stage. But there is also, I presume, a management 
planning, a counterpart of that, and a scheduling of how soon you 
would have the work under w^ay, as well as an analysis of what ad- 
justments in other community activities would be necessary in con- 
nection with the execution of that project. Have you done anything 
in that field ? 

Mr. liiiOMBERG. Yes, we have. We have not only attempted to have 
the architectural and structural features taken care of, but we tried 
to ascertain the impact that this would have on other phases of com- 
munity living. We have gone as far as purchasing real estate upon 
which some of these structures would be erected. We have attempted 
insofar as we could in advance to acquire the necessary rights-of-ways^ 
and easements and the like. 

Mr. Arthur. That is very helpful, thank you. 

Mr. RiioMBERG. Does that answer your question? 

Mr. Arthur. Yes, it does. 

The Chairman. Thank you very much. 

We will now hear from Mr. Glenn C. Richards, Director of Public 
Works of Detroit, Mich. 

STATEMENT OF GLENN C. RICHARDS, DIRECTOR OF PUBLIC WORKS, 

DETROIT, MICH. 

Mr. Richards. I want to concur in the statement made by Mr, 
Anderson, the speaker just before lunch. We feel in Detroit the same 
as Mr. Anderson does in Winnetka. We are a home-ruled city and 
we believe in it. We believe in doing all of the things we can do for 
ourselves first and if we have to call for aid, then it is time to call 
for it. We have great confidence in industry and labor in Detroit and 
we feel that they can do as good a job in returning to peacetime 
economy as they did in getting ready for war, when we hurriedly 
changed from automobile production to airplane and tank production. 
We think we can go back to peacetime production without too much 
trouble and we do not expect very much unemployment. Our mayor 
feels that we won't have any unemployment, but many authorities in 
the city, the chamber of commerce, the War Production Board and 
many othei-s tell us a different story. 

I would like to read a statement from our mayor. Mayor Jeffries, 
who would have liked to have been here and talked to you gentlemen 
to give you our picture, because he is very much interested in a public 
works program for Detroit. 

When I heard Mayor Kelly talk to you this morning about Chicago, 
all he needed to do was leave out the word "Chicago," and he would 
have been talking about the city of Detroit. We need everything that 
Chicago said it needs and maybe more. We did not get a subway and 
many of the things that Chicago got during the depression days. 

I would like to read this statement and then I would like to talk to 
you as the president of the American Public Works Asociation for 
Michigan. They have asked me to speak on their behalf and I am 
also speaking on behalf of the Michigan Municipal League. 

From the beginning of the present defence program, mobility of labor was 
encouraged by the Federal Government. From September 1940 to November 
1913 the labor force in the Detroit area increased from 960,000 to 1361,000, 
although during this period 217,000 entered the armed forces. This was a net 



POSTWAR ECONOMIC POLICY AND PLANNING 2003 

increase of 41 percent. From November 1943 to November 1944 the labor force 
decreased to 1.260,000, a large part of this decrease being due to the entrance of 
workers into the armed forces. 

In November 1940, when the labor force amounted to 960,000, there were 
126,000 unemployed. When the number of Detroit men in the armed forces is 
added to the present labor force, it appears that Detroit will have approximately 
703,000 more potential workers than were employed in September 1940 which 
might be considered a normal year. The War Manpower Commission estimates 
that on the basis of a reduction of the work week to 40 hours and the return of 
some inmigrant workers to their former communities, there may be some 
temporary unemployment. 

Detroit is well aware of the situation that is facing it. Detroit is making or 
has completed plans for $270,000,000 of capital improvements and $56,000,000 of 
rehabilitation of the present facilities. Not all of these plans are for construc- 
tion of an emergent nature. It is our belief that the normal improvements, 
excc^^pt for highways, airports, and harbors can be financed on a local and State 
level exclusively if there is a proper distribution of State-collected locally levied 
taxes and some changes in the local tax base. It is also our belief that during 
any i)eriod of protracted unemployment, such as we might experience during the 
reconversion period. Federal aid should be given to public-works programs. Since 
it is nationally desirable that there exist a mobile labor force, the costs of un- 
employment among this labor force should be borne by the Federal Government 
rather than by any one community. 

In view of the increasing prices and increased demands for Government services 
due to the defense program, Detroit, as well as most industrial cities, has not 
been able to provide adequate reserves under its reveniie sources to finance a 
large postwar iniblic-works program. The general property tax which is the 
chief source of revenue on the city level has not enjoyed the increases of the 
sales or income tax, the main support of Federal and State activities. 

The Federal Government normally collects about $400,000,000 in gasoline and 
oil taxes. In addition, during the past 2 years, it has been making sizable profits 
on air mail and it appears that these profits will continue. It is our belief that 
these funds should be returned to the localities to finance highways and air- 
ports. The local taxpayer .should not be asked to pay additional local taxes to 
finance these activities while the Federal Government is reaping a profit on them. 
These items are important instruments of interstate commerce and of the national 
defense system and we believe the Federal Government has a direct responsibility 
here. 

It is recommended that Federal aid should be given as a means of providing 
employment during periods of extended unemployment. It has been shown in 
the past that the localities cannot cope with any extended unemployment. We 
intend that except for normal improvements which should be financed from cur- 
rent State and local revenue, the bulk of our program will be held in reserve to 
take up any slack in private employment. We do not believe that the city should 
enter into competition for men and materials during prosperity periods. As an 
example of this, it should be cited that during the prosperity days of 192.5 to 
1929, State and local exjpenditures for public works construction averaged $2,- 
100,0r;0,000 per year. Yet, in 1933, a depression year when public works should 
have been used to provide employment, the construction amounted to only $700,000- 
000. thus adding to the deflationary trend. This curtailment was not due to the 
wishes of the local units, but the property tax revenues fell and it was impossible 
to even carry on normal improvements. 

We believe that with the above program of having normal improvements financed 
by the State and local units and having improvements of interstate nature and 
during periods of protracted unemploj-ment financed by the Federal Government, 
we can provide for the ordinary needs of Detroit and also make the city a more 
desirable place in which to live, and at the same time maintain the autonomy of 
the States and home-rule cities. 

Several years ago, Mayor Jeffries appointed a capital improvement 
committee to canvass all of the city departments to decide what they 
acttially needed in the way of improvements. Although we have very 
limited taxes from our real estate, we started in 1941 to set aside $6,000,- 
000 a year to be used for postwar capital improvements. On Julv 1 
of this year we will have $23 000 000 in the bank ready to be used for 
these improvements which we need. 



2004 POSTWAR ECONOMIC POLICY AND PLANNING 

The public works oflficials of Michigan look backward with regret at 
the depression days when we had these make-work programs. As was 
said this morning, we had no plans ready for public works programs in 
those days. The cities in Michigan joined with the State planning 
commission in starting preparation for plans for necessary future im- 
provements about 2 years ago. Detroit, as mentioned here, has a large 
postwar program. I would like to leave this brochure as a record of 
what has been planned for Detroit. I would like you to note the diver- 
sified plans that we have made for Detroit and I would like also to leave 
for the record our financial statement and a report of the money we 
have set aside in recent years and which we propose to set aside in 
future years which we call our G-year capital-improvement program; 
$28,000-000 is on deposit in the bank for a construction program now. 

We have a large reserve of needed projects as the mayor stated. We 
may not be able to build these for 15 or 25 years, but we hope to be 
able to build a number of them during the postwar era. 

The Chairman. Pardon me, Mr. Kichards, but would you identify 
those ? 

Mr. KiciiARDS. This is our postwar public improvement plan for 
Detroit and I will identify that as Detroit — A and this is our capital 
improvement 6-year and reserve program and I will identify that as 
Detroit— B. 

The Chairman. Without objection, they will be filed with the 
committee. 

Mr. Richards. In Detroit, we have had as high as 100,000 men at 
one time unemployed. We do not think that we will have this condi- 
tion when the war is over and during the reconversion period, but 
some people say we will have it because of the large number of in- 
migrants that have come from all over the country to fill our war 
factories for the making of bombers and the other war materials we 
are making in Detroit. 

However, if we do have an average of 100,000 men unemployed for 
1 year, it would cost $200,000,000 for take-home pay and another 
$200,000,000 for material and equipment, or $400,000,000 total cost, 
and no city can finance that kind of a. work program. 

We may need that and, if we do, we tliink the Federal Government 
will see the need and come to our assistance, but until that time comes, 
if we have our just share of the taxes, we can carry on our needed 
program in Detroit. 

Our director of the State planning commission, Mr. Weeks, out- 
lined our program in Michigan and we think we are doing a good 
job. We have done much to get all cities in Michigan to recognize 
the need of having a good shelf of plans whether they build them next 
year or 5 years hence. It is a good idea to have plans and have them 
thought out as to just what is needed. And like Detroit, the other 
cities of Michigan have gone far in developing the program of plans 
and they will be ready if we have an unemployment period so that 
we will not have to go to leaf -raking jobs in Detroit and in Michigan. 

I think ]\Ir. Weeks pretty well covered that part of our program. 
Other cities are setting aside what money they can, many of them, but 
we are hoping that the State government will realize that they have a 
responsibility in this continuous tax problem and will give back to 
the cities those taxes which we think we deserve and then we will all be 



POSTWAR ECONOMIC POLICY AND PLANNING 2005 

in a shape to carry on a constructive program of worth-wliile projects 
in Michigan. 

The Chairman. Mr. Fogarty, do yon have anything? 

Mr. FoGATKY. Nothing. 

Mr. LeFevre. In regard to Mr. Richards' report, I think Michigan 
should be congratuhited for the fine start they have made on this whole 
postwar plan. 

Mr. Richards. Thank you very much, sir. 

The Citair:man. Do you have any questions, Mr. O'Brien ? 

Mr. O'Brien. No, sir. 

The Chairman. I am very much interested in the statement that 
you made here in reading from the mayor's remarks, that the city 
should not enter into competition for men and material during pros- 
perity periods. I think if we bear that in mind, we will })robably be 
able to continue the prosperity era a good bit longer than if the oppo- 
site takes place, where the cities and States are competing with in- 
dustry during prosperity periods on works that are not essential. 

I realize, as you do, there must be a certain amount of competition, 
but not to the extent that it would cause an inflationary spiral either 
of materials or of labor. I think that is a very fine statement that has 
been submitted. 

Mr. Richards. I wonder if I might take about 2 more minutes. 

The Chairman. Certainly, go ahead. 

Mr. Richards. I mentioned the airport program. I appeared be- 
fore a committee of the House m Washington about 2 weeks ago to 
discuss the national airport plan and airport financing which is a part 
of our need in this country. As Mayor Jeffries mentioned in his paper, 
there is a big profit coming back to the Federal Government from air 
mail and this year I think it will be fairly close to $50,000,000. When 
you consider that they have raised the rate on the letters and they have 
cut the rate to the air lines on what they pay them for carrying the air 
mail, they are going to make a tremendous sum this year. In the past, 
all forms of transportation have been subsidized in their early stages 
of development by the Federal Government. We think that this is a 
very important form of transportation and if there is a subsidy need, 
it should be furnished by the Federal Government. We do not believe 
it should be expected of the cities who have been doing the subsidiz- 
ing so far. 

Detroit has furnished an airport for air transportation up to the 
present time and now we have got to build a new airport for scheduled 
lines. We haven't received any Federal assistance for airport con- 
struction and we feel that this is a responsibility of the Federal Gov- 
ernment. They have always subsidized all forms of transportation 
and we do not think that the present set-up in which cities do the 
subsidizing is right. 

You gentlemen will be voting on that bill, no doubt, and I would 
just like to bring it out, that some legislation should be set up and I 
think soon, because it is very important to the development of our air 
transportation system for the financing of the key terminal facilities 
that we are going to be needing. The present bills being considered 
are not adequate for large airports that are going to be needed on our 
interstate and international transportation systems. I am hoping 
that you are giving that a lot of thought in Washington now and that 



2006 POSTWAR ECONOMIC POLICY AND PLANNING 

you will come out with better legislation than that proposed and 
something that will really do a job. 

The Chairman. Is your airport in Detroit operated at a loss ? 

Mr. Richards. Every airport in the country is operated at a loss 
if you take into consideration the amortization of that airport. No 
airport that I know of, and I have checked into all of them, except 
one privately owned airport in California which is subsidized by an 
aircraft company — no airport in the country does more than pay the 
day-to-day operation of that airport. 

The Chairman. I think that is all, Mr. Richards. Thank you very 
much for your presence here today. 

We will now hear from Mr. H. Dale Bossert, director of planning, 
Illinois Postwar Planning Commission. 

STATEMENT OF H. DALE BOSSERT, DIRECTOR OF PLANNING, 
ILLINOIS POSTWAR PLANNING COMMISSION, CHICAGO, ILL. 

Mr. BossERT. Mr. Chairman and gentlemen, long-range programs 
for postwar public works construction have been submitted by the 
State of Illinois, by all but 1 of the 102 counties, and by municipalities 
and other local governmental units representing a large majority of 
the population. 

Are you interested in the State postwar plans, or just local plans ? 

The Chairman. Yes, we are interested in any plans. 

Mr. BossERT. The long-range State program totals some $300 000,- 
003 for buildings and utilities. Approximately one-third of this 
amount, plus an item of $10,000,000 for State aid to promote local 
public works planning, is proposed for the biennium commencing July 
1, 1945. State surplus funds are available to construct all of this pro- 
posed biennial program. Any expansion or speed-up of the State pro- 
gram would probably require Federal grants. 

The long-range State program for highways and highway structures 
totals approximately $210,000,000, of which about one-half is expected 
to be activated during the first postwar biennium. With revenues 
from State motor-fuel and vehicle taxes, plus scheduled Federal aid, 
this long-range highway program should be accomplished within the 
first decade after the war. 

The public works program contemplated by the State of Illinois 
can be financed to the extent of some $200,000,000 in the next biennium 
by State funds plus existing Federal-aid highway funds. 

The long-range county program totals some $114,000,000, of which 
$111,000,000 is for highways and highway structures and $3,0;)0,000 is 
for public buildings, et cetera. Over half the counties, representing 
about three-fourths of the total construction program, indicate that 
they will require outside financial aid for their postwar public works. 
Less than one-third of the counties say they will not require such aid. 

At the end of 1944, Illinois counties had a balance in the State treas- 
ury of 12% million dollars representing their share of m. f. t. — motor- 
fuel tax. The Federal Aid Highway Act authorizes appropriations 
for secondary and feeder roads which will amount to about 4.% million 
dollars annually for Illinois. The motor-fuel tax funds must be 
spent on the State-aid system, 21,637 miles out of the 104,924 miles 
of county highways, first for maintenance and then for imj)rovements 
as funds are available. 



POSTWAR ECONOMIC POLICY AND PLANNING 2007 

The need for county road improvements is large in most counties 
and funds available for such improvements are extremely limited 
after maintenance expenditures are met. In order to permit the coun- 
ties of Illinois to continue their essential improvement programs and 
make up construction schedules lost during the war, despite the loss 
of funds through motor-fuel tax reduction due to travel restrictions 
and despite higlier post^Yar costs compared to prewar levels, Federal 
aid will be necessary. 

The postwar public works programs contemplated by the counties 
in Illinois to the extent of some $114,000,000 cannot be financed for 
construction within what may be a desirable short period of time — 
that is, within the short time that may be desirable in order to expend 
employment — unless Federal aid, preferably in the form of grants 
of at least 35 percent, is made available. 

Ngtk. — Approximately half of the people of Illinois live in Chicago, whose 
■consolidated postwar public-works program for city departments, bureaus, school, 
park, and other special districts has been reported to the extent of some 
$946 000,000. The question of financing the Chicago program is being discussed 
by others here today and is, therefore, omitted from this statement. 

The total postwar public-works program reported by down-State 
local governmental units — exclusive of counties- — amounts to some 
$292,000,000. This is known to fall short of total needs in several 
phases. For example, only $41,000,000 has been indicated for new 
school construction, whereas the long-range junior college program 
alone would require the major part, if not all, of this amount. Again, 
only $20,000,000 has been indicated for water-supply treatment and 
•distribution, whereas it is estimated that to meet the needs for public 
water-supply facilities in Illinois would cost over $90,000,000. 

Although the municipalities' share of MFT funds and the use of 
special assessment and revenue bonds will permit the financing of a 
•considerable part of certain types of local ])roject£ — types which com- 
prise about two-thirds of the total down-State local program — the 
•entire cost cannot be borne locally. The bonding povcer of local gov- 
•ernmental units in Illinois is too small to permit general boul fiTaiic- 
ing. Furthermore, per capita costs in the small communities, even 
aside from the factor of increased prices, tend to prohibit certain de- 
sirable improvements. For example, waterworks projects for com- 
munities under 500 cost an average of $84 per capita, according to 
an analysis of PWxl contracts from 1933 to 1939, whereas in commu- 
nities of 1,000 to 10,000, the average per capita cost was only $45. 

Note. — It is estimated that these costs will be approximately 50 percent higher 
in the early postwar years compared to 1934—40. 

The postwar public- works programs contemplated by local govern- 
mental units in Illinois, excluding the city of Chicago and excluding 
the county programs, to the extent of some $292,000,000, cannot be 
financed for construction within what may be a desirably short period 
of time unless Federal aid is made available, preferably in the form of 
grants of at least 35 percent plus; in addition, loans for certain types 
of self-liquidating projects. With such aid, probably a program con- 
siderably larger than $292,000,000 could be justified. 

A total postwar public-works program in excess of 406,000.000 could 
!)€ sponsored in Illinois by local governmental units, exclusive of the 
program of the city of Chicago, if sufficient Federal aid in the form 
of grants and/or loans were to be available. It is believed that a 



2008 POSTWAR ECONOMIC POLICY AND PLANNING 

grant of at least 35 percent Avill be necessary if the objective is to 
maximize emplojanent in public works during the first few postwar 
years, and that additional loans will be desirable for certain types of 
j)rojects. 

In order to avoid setting or perpetuating undesirable and inefficient 
patterns in the provision of public facilities, it is essential that safe- 
guards be established and maintained as to the use of Federal aid 
for local public works. 

The provisions of the Hospital Construction Act now before the 
Congress, S. 191, Hill-Burton, with respect to clearing through a 
central State agency for approval of hospital projects, are excellent. 
Similar provisions should be established in regard to other projects, 
especially those for the construction of new school facilities. 

The Chairman. You spoke about a $10 000,000 State aid for gov- 
ernmental units that contemplated a 10-year period? Did I under- 
stand you to say that ? 

Mr. BossERT. I did not make that clear. The Illinois Postwar Plan- 
ning Commission has drafted a bill, which has not yet been acted upon 
by the general assembly, calling for an appropriation of $10,000,000 
for aid to the local governmental units during the next biennium in the 
preparation of plans for postwar public works. 

The Chairman. You mentioned a long-range plan. Did you have 
reference to the local governmental units in that long-range plan or 
did you have reference to the State program ? 

Mr. BossERT. The larger State program of some $500,000,000 would 
be a long-range program of perhaps 10 or 15 years, and so would the 
$406,000,000 local public-works program — that likewise would be a 
long-range program. The $104,000,000 State program is an immedi- 
ate 2-year program. 

The Chairman. And it would be that long-range program that 
would have to be compressed into a shorter period of time in the 
event there was any extensive unemployment? 

Mr. Bossert. That is correct. This $10,000,000 for aid to local 
public- works planning would be expendable within an 18-month 
period or some short specified period of time and would be matched 
with local funds. 

The Chairman. For planning? 

Mr. Bossert. For the preparation of local plans. That is divided 
up something like this : Three percent for administration, $6,475,000 
for the municipalities, $1,500,000 for the counties, $1,250,000 for the 
school districts and the rest for the sanitary and park districts. 

Most local construction projects will be financed through some type 
of bond issue that cannot advantageously be consummated now for 
construction to be started at some future undetermined time. The 
expense of plan preparation normally is included in the amount of the 
bond issue. Consequently, the local taxing units, while desirous of 
developing detailed plans now for needed community public works 
to be constructed after the war, are handicapped because of limited 
available funds. 

An analysis of the local postwar public-works programs submitted 
to the Illinois Postwar Planning Commission reveals that outside 
financial assistance in the form of a grant for partial payment of the 
cost of j)reparing detailed plans and specifications for specific projects 



POSTWAR ECONOMIC POLICY AND PLANNING 2009 

is essential to 64 percent of the reportino; counties, 94 percent of the 
rei^orting municipalities, and 92 percent of the reporting school 
districts. 

Reports from 13 of the larger sanitary districts, 28 districts in Illi- 
nois, including the Chicago Sanitar_y District, indicate that 3 districts 
are not contemplating postwar construction and that 3 districts, in- 
cluding the Chicago district, can develop their project plans without 
financial assistance. 

Only 7 park districts — there are 83 such special-taxing districts in 
Illinois — have reported programs and each has indicated that major 
outside assistance will be required for the construction of their con- 
templated projects as well as for plan prepai-ation. 

The need for State aid to provide financial assistance for plan 
preparation of specific postwar ])ublic-works projects has been empha- 
sized by local governmental units throughout the State, and the grant- 
ing of State aid would make funds available to every community in 
the State that wishes to benefit by such financial assistance. 

Contemplated postwur puhlic-ivorks progmui, Illinois local yovcntniental 

u)iits, Marcli 10'i5 

BEC^VPITULATIO'N 

Couuty government — 101 counties, including Cook County, of the 
total of 102 counties : 

Highways and highway structures $110, 955, 594 

Public buildings, etc 2, 807, 750 

Total 113, 823i 348 

Detailed plans and specifications completed or in progress (43 per- 
cent) 49, 272, 148 

Sketch plans completed or in progress (23 percent) 25, 390, 300 

Surveys completed or in progress (8 perceut) ._ 9,671,000 

Preliminary estimates only (26 percent) 29,483,900 

Total (100 percent) 113,823,348 

Down State — municipalities, sanitary districts, park districts, 
school districts, and townships : 

Street improvements 51, 774, 888 

Sanitary sewers and storm drains 60, 131, 583 

Sewage-treatment works 19, 078, 240 

Water supply and distribution 18, G73, 425 

Water treatment 1, 526, 698 

School buildings 41, 455, 110 

Other public buildings 20, 396, 676 

Bridges and grade separations 36, 037, 390 

Parks and recreational facilities 10, 125, 179 

Airports and airfields 5, 837, SOO 

Electric generating plants and distribution 10, 376, 000 

Othea- 11, 074, 645 

Total 292, 487, 684 

Detailed plans and specifications completed or in progress (18 per- 
cent) 53, 070, 435 

Sketch plans completed or in progress (22 percent) 65, 472, 513 

Surveys completed or in progress (10 percent) 28, 412, 702 

Preliminary estimates only (50 percent) 145,531,984 

Total (100 percent) 292,487,634 

99579 — 45— pt. 6 20 



2010 POSTWAR i^^CONOMIC POLICY AND PLANNING 

Contemplated postwar puUic-works program, Illinois local governmental 
units, March 1945 — Continued 

RECAPia ui>AiioN — con t i nued 

-Chicago, city departments and bureaus and other local administra- 
tive bodies (Chicago Plan Commission's report) : 

Health ^f)^ Srg. 401 

Water 134^ 730^ O^q 

Sewage HI, 42y, 514 

Fire 5, 166, 831 

Police 2, 077, 532 

Municipal buildings 9- 455, £oo 

Parks and playgrounds 77, HI OOq 

Boulevards and parkways 18, 285, 500 

Schools 30- 202! 000 

Libraries 9, 547, 750 

Rapid transit I75, 200, GOO 

Expressways 167, 317, 000 

Major thoroughfares 31, £63, OOO 

Street lighting and traffic control ll| 277] 000 

Secondary streets 25, 45o', 000 

Grade separations 53,' 256,' 000 

Bridges 16, 495, 000 

Parking 30,000,^000 

Water improvements 9, 124, OOO 

Airports 26,' OCO,' 030 

Total 946, 799, 528 

Note. — Status of plan preparation on specific projects was not included in the Chicago 
^•eport. 

Mr. Arthur. Would that money be paid out as grants or as loans 
that are repayable ? 

Mr. BossERT. The $10,000,000 for plan preparation would be paid 
out as grants by the State to the local governmental units. 

The Chmrman. On a matching basis? 

Mr. BossERT. Yes; except for the very small communities. They 
would be permitted to use State akl, without matching, for two kind's 
of projects only, and those two are water and sewerage projects. We 
feel that public health is a State-wide problem which justifies those 
exceptions. 

The Chairman. We want to thank you very much, Mr. Bossert, for 
your very fine statement. 

We will now hear from Mr. Kinsey, president of the Board of 
Public Service of St. Louis. 

STATEMENT OF MILTON M. KINSEY, PRESIDENT OF THE BOARD OF 
PUBLIC SERVICE OF THE CITY OF ST. LOUIS, MO. 

Mr. Kinsey. Mine is rather an unusual title and perhaps I had 
better explain it to you: I am the chief engineering executive of the 
city and in addition, I preside over the board which supervises all of 
the executive departments of the city with the exception of the legal, 
financial, and tax assessing and collecting. With those exceptions, our 
board supervises all executive offices of the city. 

The city of St. Louis is justly proud of the Nation-wide acclaim 
which we have received for our leadership in postwar planning and 
construction. That we are far ahead of most every other city of the 
United States is almost universally conceded. 



POSTWAR ECONOMIC POLICY AND PLANNING 2011 

For example, the Engineering News-Record in its issue of October 
19, 1944, under the title of "St. Louis Shows the Way," published an 
editorial in which it was stated that St. Louis can claim, and I quote: 

The national championship in postwar public works planning. 

Ajid again, the Construction Methods magazine in its February 
1945, issue states, and I quote : 

By virtue of its initiative, integrity, and independence in facing facts and 
taking a i-ealistic action to meet them, St. Louis has entered the front rank of that 
select group of cities which have both blueprinted postwar public improvements 
^nd provided the funds to pay for them. 

These quotations are typical of many which might be given from 
other magazines and periodicals published in various parts of the 
country. You gentlemen might be interested in a brief resume of the 
theories that our city has followed in attaining this enviable record 
and you may wish also to be advised of our recent progress in making 
our program a reality. 

We started out by requiring each city department head to prepare 
ii list of postwar projects for his department together with their esti- 
mated cost and to file these lists at a central point. Simultaneously, 
our fiscal department commenced a study of our financial program 
and they prepared estimates of the additional bonded indebtedness 
which the city might safely carry. At this point we had recommenda- 
tions for several hundred projects totaling approximately $165,000,000. 

On the other hand, we had a statement from our comptroller that no 
more than §35.000,000 of new bonds could be issued, to wliich there 
might be added approximatel}^ $20,000,000 of various funds authorized 
or on hand. 

The $lio5,C00.0C0 figure therefore had to be cut to approximately 
$'55,000,000. This was done by a very small group of high city of- 
ficials who rated all of the proposed projects based on their knowledge 
of the city's needs and having in mind a formula which gave high 
priorities to projects using a high percentage of local labor and mate- 
rial and low priority to projects which would have a tendency to 
increase future city operating expenses. 

That formula was not rigidly adhered to in all instances, but it was 
kept before us as a guiding principle. Toward the last of this weed- 
ing-out process, numerous projects were arbitrarily dropped in order 
to make the program fit our financial ability. About this time, our 
mayor appointed a large committee of outstanding citizens who were 
charged with the duty of investigating each of the projects and make 
recommendations as to their suitability. 

A list of our proposed projects were given to the committee which 
included some 165 items totaling, as I said before, approximately $55,- 
COJ,000. Due to the size of the task, the 165 projects were divided into 
11 main groups and the subcommittee of the citizen's committee was 
assigned to each of these groups. Each of these committees reported 
on the group or project assisoied to it and in most instances, recom- 
mended changes in the list which had previously been proposed by the 
city officials. In fact, they added projects so that the total reached 
$63,000 000 and the bankers on the connnittec also assisted in a restudy 
of the bond situation, tb.e final decision being that we could stretch the 
.bond issue to ^3,500,000. 



2012 POSTWAR ECONOMIC POLICY AND PLANNING 

While this procedure was being carried out, the hiwyers prepared 
the bond issue procedure, the ordinances and the proposals to be 
voted upon. Last Au<iust, the voters carried this bond issue of $43,- 
500,000 by a majority of more than 5 to 1. Now in St. Louis we have 
a program and we have the money to pay for it. 

I would like to leave for your record what I will mark as "St. Louis 
Exhibit A," which is 'a detail of the program showing all of the 
})rojects and also how each of the various 11 groups is financed. (See 
exhibit 8, p. 206G.) 

Briefly, I might say that the program includes hospitals and insti- 
tutions, $3,350,000; parks and recreation, $4,150,000; fire protection. 
$800,000; fire and police, telephone and telegraph system, $2,200,000; 
sewers, $8,000,000; bridges and viaducts, $2,285,000; street openings 
and widening and improvements, $8,600,000 ; zoological park, $750,000 ; 
airport facilities, $14,000,000; city art museum. $250,000; and water 
system, $19,000,000, making a total of $63,385,000. 

Since the passage of the bond issue, we have been energetically pro- 
ceeding with the preparation of plans and specifications to the end 
that we will have actuallj^ blueprinted a large portion of our program 
by the time that hostilities cease. Thus we will be prepared to let 
contracts and place work on the market if employment conditions 
require. 

At the present time, we have more than 10 percent of the total pro- 
gram blueprinted and on the shelves ready for the taking of con- 
tractor's bids. Another 15 ])ercent is in tlie final stage of design and 
will be totally completed within the next 2 or 3 weeks. 

An additional 25 percent of the program is on the drafting boards 
and is scheduled for early completion. Preliminary work for the 
remainder is well under way. To accomplish this result we have 
utilized private engineering and architectural talent as well as all of 
the forces employed by the city. This use of outside technical serv- 
ice is rapidly expanding so that we now feel confident that our entire 
program of $63,385,000 can be placed under actual contract and con- 
struction work started, as rapidly as the construction industry in 
St. Louis can absorb it. This is true even though the war may end 
within the next few weeks; 

You will note that our program as it is now adopted does not de- 
pend upon any Federal assistance. It stands on its own feet. How- 
ever, as I have previously stated, many meritorious projects were 
eliminated because of the inability to provide financing. St. Louis 
enjoys perhaps the best credit rating of any of the larger cities of the 
United States. Our securities sell on the open market on a more 
favorable basis than those of the United States Government itself. 
Yet, we found it necessary to cut our program to approximately one- 
half the size of what was originally contemplated. 

We in St. Louis are rather proud of what we have accomplished and 
yet we earnestly wish we could do more. In spite of the reports of our 
local Committee for Economic Development, we are unable clearly to 
see what the future holds. If the more optimistic predictions of 
prosperity actually materialize our program may be sufficient for our 
local needs. 



POSTWAR ECONOMIC POLICY AND PLANNING 2013 

I might say, too, that our local Committee for Economic Develop- 
ment predicts unprecedented prosperity for St. Louis immediately 
following the war and it also predicts a very short period of conversion 
from war industry to peacetime industry. 

If on the other hand if we find ourselves in the throes of a de- 
pression which is greater than is now foreseeai)le, we should have a 
much larger program ready. We appreciate like most other people 
that Government or public spending cannot, over a long ]:)eriod of 
time, guarantee economic stability. Nevertheless, we do believe that 
during a short period following cessation of the war and before in- 
dustry returns to normal, public construction may be provided of 
sufficient magnitude to prevent total disaster. 

To this, however, all public agencies must be ready to swing into 
action the very minute the war ends. It is axiomatic that public 
works alone cannot suppoi-t even the construction industry of the 
United States, and it is equally plain that the Federal Government can 
spend itself into bankruptcy and still fail to save our national 
economy. 

All this is not to say that the Federal Government should restrain 
or refrain wholly from extending financial assistance to local agencies 
for public improvements. Our primary purpose, of course, is to 
provide jobs for people and prosperity for our community. We have 
found that private enterprise has and will respond nobly. 

However, there is still the possibility that cities may be faced with 
depression conditions beyond their power to cope with, and at the 
same time the National Government may feel that it is able to assist. 
It is, of course, the Congress of the United States who has the national 
view and it has as well the ability to determine to what extent the 
Federal Government can and should render assistance. We, in St. 
Louis, wish to pay our own way so far as we are able. We are not 
here requesting funds as a mere handout. 

However, if Federal funds are available, we in St. Louis wish to, and 
we will, participate if the Government is disposed to, and finds itself 
capable of, making grants. Our existing program represents only a 
minimum of what we need, but it also represents a maximum of what 
we are able to afford. 

We have, therefore, prepared a supplemental program which re- 
quires funds far beyond our debt limit, but which we are ready, 
willing, able, and fit to participate in if the Federal Government em- 
barks on a program of financial assistance. 

Remember, when I say tliat we are able and willing to participate, I 
mean that we have the funds actually on hand approved by the 
electorate and the bonds sitting there waiting. If then, the Congress 
should decide to extend Federal assistance for local public improve- 
ments, I Avish to indicate the ability of St. Louis to participate in such 
a national program and to match the Federal funds. 

In brief, it may be stated that if the Government should provide 
approximately 55 percent of the total construction cost, we could and 
we would enlarge our program from its present $63,385,000 level to a 
total of $137,685,000. Here, I would like to supply the reporter with 



2014 POSTWAR ECONOMIC POLICY AND PLANNING 

a list which I will call St. Louis Exhibit B, showing the details of 
that expanded program. (See exhibit 9, p. 2070.) 

This differential of $74,374,000 would be spent briefly as follows: 
Hospitals and institutions, $3,150,000; parks and recreation, $950,000; 
fire protection, $400,000; fire and police, telephone and telegraph 
system, $2,250,000; sewers, $7,150,000; bridges and viaducts, $2,050,- 
000; street openings, widenings, and improvements, $19,150,000; 
zoological park, $250,000; airports, $13,800,000; police department, 
$800,000; water system, $500,000; and city-plan commission projects, 
$23,850,000 ; making a total for all projects of $74,300,000. 

Each of the individual projects included in this total are both 
essential and meritorious. In fact, the whole plan is what might 
well be labeled a "bread and butter"' program. There are no spectacu- 
la.* projects and no projects deliberately manufactured merely as a 
basis of making a showing of need or for the claim of funds. 

In many of these cases, considerable })reliminary investigation and 
general over-all planning has already been carried out to ascertain 
the need for the improvement and the probable extent and cost de- 
finitely determined. 

We in St. Louis have always had a policy to which we will adhere 
in the future and that is not to make any needless improvements. 
We have learned from experience with past Federal programs that 
some projects fall into disuse or are abandoned entirely after they 
are completed. Oftentimes, the projects in a community add, in 
perpetuity, large maintenance costs. We have no such projects on 
this list. All of our projects are of the type that we would build 
with oui- own money if we had money to spend and that I think, 
after all, is a good test. 

There is now in this Nation a tremendous backlog of private con- 
struction. Private^ enterprise should be given a free hand to get 
these projects under Avay as soon as labor and material and no longer 
needed for national defense. In St. Louis alone plans for private 
postwar construction totaling in excess of $300,000 OW are in the ad- 
vanced stage and already publicly announced. Most of this is now 
ready for actual construction. No doubt there is at least an equal 
amount on the drafting board and as yet unannounced. 

We believe that any Government, or any city program for that mat- 
ter, should be coordinated with the private programs to the end that no 
action will discourage the use of this vast store of private funds 
which can be made available. We should set u]) some sort of ma- 
chinery to regulate the advancing of funds for public works so that 
such works will not be in competition with private enterprise for 
materials and labor. 

In other words, our program should be flexible. We should per- 
mit the extension of funds only at such times and in such quantities 
as economic conditions demand. I believe that such a procedure right 
at this time might be practical on a national scale because of the 
Federal Government through the United States Employment Service 
has available a continuing national survey of the labor market and 
can determine where and when constructive programs are needed. 

We therefore believe that any program should be on a cushion basis 



POSTWAR ECONOMIC POLICY AND PLANNING 2015 

and not on a competitive basis. By that we mean that assistance 
should be available to protect us and provide a cushion against undue 
dips in the curve of business activity so that construction projects 
wisely chosen may be placed on the market when they are needed. 

The Chairman. Mr. Murdock, do you have any questions ? 

Mr, JMuRDCCK. Having been born in the State of Missouri, I am a 
good deal like yourself in regard to needing proof. I like that last 
statement you made that you have planned nothing that you would 
not build yourself. 

JVIr. KiNSEY. With our own money. 

IVIr. Murdock. Yes ; and you prefer that private enterprise be given 
first chance and any public construction come in as a cushion. 

Mr. KixsEY. That is right. 

JNIr. JNIrRDOCK. How positive are you that there are $300,000,000 
worth of construction, private construction ready to go? 

Mr. KiNSEY. We are quite positive of that. We maintain at all 
times a file in my office in which we keep track of all projects for which 
architects prepare plans, the name of the company, et cetera. We 
interview the company and find out what their program is and we 
feel that that is a rather conservative estimate. 

IVIr. Murdock. I notice you said it might be doubled. 

Mr. KiNSEY. I merely speculated. From what we know, there is 
possibly an equal amount that has not yet been publicized or publicly 
announced. The figure of $300,000,000 includes, for instance, one large 
program of a big department store who intends to decentralize and 
l3uild four or five big stores; utilities that are planning to do certain 
things, and the railroads. 

The Chairman. Is there anything else ? 

Mr. LeFe\t?e. You made a very fine statement and I am wondering, 
don't you feel one of the greatest problems we are going to have is 
that of getting materials as soon as we want them to go on with the 
projects all over the country? 

Mr. KiNSEY. I do not know that I ever thought of that point as 
being a special problem ; no, sir. Maybe I do not see all of the angles 
to it. 

Mr. LeFevre. Well, of course, your building progi'am is at a stand- 
still now except for Government work. 

Mr. KiNSEY. Yes, but there is a tremendous amount of raw materials 
of all kinds being produced for the Government. 

IMr. LeFevre. And we are shipping tremendous quantities to the 
other countries. 

Mr. KiNSEY. If the Government determines on a policy of sending 
material to Europe, I cannot tell you what would happen in that case, 
I don't know. 

Mr. LeFevre. That is one of our big problems, to know how to take 
care of the material for our own country. 

Mr. KiNSEY. That may well be. 

The Chairiman. Do you have anything, Mr. Link ? 

Mr. Link. Nothing. 

Mr. Arthur. I have one question. Have you made any studies in 
St. Louis as to the readiness of the construction industry itself to un- 
dertake this sort of work ? 



2016 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. KiNSET. Yes. 

Mr. Arthue. Of course, manpower is the key to the situation, isn't 
it? You will not start the project until the manpower is available, 
presumably. I am thinking of the construction projects, however, at 
this time. 

Mr. KiNSEY. Yes; we just completed a rather detailed study of 
that very point. 

Mr. Arthur. Does that lead you to expect any delays or bottlenecks 
in that area? 

Mr. KiNSEY. It leads to this conclusion: That if we could secure 
priorities at this time, we could build almost anything. We have 
discovered that the employment in the construction industry does not 
follow the usual trend and that there is now in St. Louis free con- 
struction labor, not only skilled but unskilled, in ample quantities. 
However, I believe that when all of these private projects get on the 
market, assuming that the war were over, we would probably have 
great difficulty in carrying out our postwar program. Further, we 
have no intention of throwing it on the market, with the exception of 
just one or two projects, and one of them is the airport and another is 
a bridge which is very badly needed. Other than that, our policy 
will be to hold back and feed projects into the market when the labor 
situation does get loose. 

The Chairman. Mr. Kinsey, I am very much intere.sted in your 
statement that you are in readiness to proceed as soon as the war is 
over, that is, that you have issued your bonds. 

Mr. Kinsey. That is correct. 

The Chairman. I was under the impression from something that 
was said on the floor of the House some weeks ago that St. Louis 
was having a difficult time in its program for the reason that they 
could not issue the bonds until they had their plans in readiness and 
they could not get their plans in readiness because they did not have 
any money from their bonds. Is there anything in that? 

Mr. Kinsey. I do not know who made such a statement. I think 
that you are probably referring to something someone might have 
said with reference to the George bill. Is that right, money for plan- 
ning? 

The Chairman. That is right. 

Mr. Kinsey. Our situation is this : As a practical matter we find it 
somewhat difficult to sell bonds in very small total sums. To make 
my statement clear, I will use an example. Supposing we are going 
to issue a $10,000,000 bond issue for airports. We would like to have 
some money to do the engineering design and preparation of our plans 
for that airport. That may cost $50,000, we will say. Our comp- 
troller says that it is impossible to sell $50,000 worth of bonds, because 
such a small sale is impracticable. But if we sell $10,000,000 worth 
of our bonds, our interest starts immediately on the total sum, and we 
have that money lying there idle and since this is admittedly a postwar 
program and we won't know when we will need the money, the cost 
for interest may be improvident. 

Therefore, the point that was being made, I am sure, that j^ou are 
referring to, is that this George bill which gives these temporary loans 
M ould be very advantageous to us in St. Louis. 



POSTWAR ECONOMIC POLICY AND PLANNING 2017 

To get around that situation on tlie postwar program, we had the 
board of aldermen pass an ordinance guaranteeing to the comptroller 
that they would provide out of bonds, or reimburse him out of bonds, 
money that he might advance for postwar planning. Of course, the 
ordinance has a lot of limitations in it, what the money shall be spent 
for and all of that. In that way we have borrowed from the general 
revenue money to keep us going on this j)rogram with the guaranty of 
the board of aldermen that it will be returned when the bonds are 
sold. 

We have done that only to a limited extent and on a piecemeal basis 
from time to time to keep our plans going. At the same time vre 
thought if the George bill did pass, it would be a big help to us under 
that difficult practical situation. Not that we do not ultimately lack 
the money, because the bonds are already voted by the people, but it 
is mereh" a technical detail of how to get the money free. 

The Chairman. I happened to be on the floor speaking on the bill 
at the time when the interruption came and I had received information 
about the situation which I had mentioned. Then one of the Congress- 
men from Missouri seemed to indicate that you could not go ahead 
because you could not get the money for the plans. I can see your 
point, however. 

Mr. KiNSEY. That is just as I explained, it was difficult until we 
found this way around it. There is going to be some limit to how 
much we can get the comptroller to lend us. I do not think we can 
get all the money we need that way. You will appreciate on a $63,- 
000,000 program, our engineering alone is up over $2,000,000 and to 
get the comptroller to loan us that much money is xevy difficult. That 
is why we thought the George bill would be advantageous to us. 

The Chaiiiman. A\nien you were discussing the amount of public 
construction that you are planning in St. Louis, I stated there was 
about $63,000,000. I believe that that is the figure you mentioned, isn't 
it? 

Mr. KiNSET. Yes, $63,385,000. 

The Chairman. How much do you estimate the amount of private 
construction will be in St. Louis during the same period of time that 
you cover with your $63,000,000? 

Mr. KixsEY. Well, as I explained in the first place, we have no time 
element in our program at all. Our policy is going to be to have 
as many jobs blueprinted and specifications written and on the shelves 
as we can have, and then the actual letting of the contract will be de- 
pendent a great deal upon the economic conditions. 

The Chairman. Well, you have to have a certain amount of public 
construction going along with private construction in any event, won't 
you? 

Mr. KiNSEY. Yes ; I think that is true. 

The Chairman. That is schools, et cetera ? 

Mr. KiNSEY. There is some deferred construction and there are a 
few other items such as the airport, tliat we feel we would have to go 
ahead with. I merely inferred that I did not think it would be our 
policy to throw our Avhole program on the mai'ket suddenly and thus 
compete with the private construction which we feel is going to 
develop there. 



2018 POSTWAR ECONOMIC POLICY AND PLANNING 

The Chairman. We want to thank yon very much, Mr, Kinsey, for 
jonr vei-y fine statement here today, and we are certainly glad to 
know that St. Louis is so far out in front. 

Mr. K1N8EY. Thank you very rnucli. 

The Chairman. We will now hear from Mr. V. H. Hurless, of 
Milwaukee. 

STATEMENT BY V. H. HUELESS, CONSTRUCTION ACCOUNTANT AND 
AUDITOR, MILWAUKEE, WIS. 

Mr. Hurless. I have here a statement prepared by Mr. W. H. 
Wendt, our city comptroller, who regrets his inability to be here; 
I would like to read it to you. 

The city of Milwaukee has a continuing G-year program of public iiupi-ove- 
ments which provides for expenditures of .$6,500,000 annually. 

Our ijrograin is not fundamentally an unemployment relief undertaking. The 
number aud character of the projects included in the 6-year program are limited 
to our most urgent needs and to the city's ability to finance, without Federal 
assistance, on a cash basis and without the issuance of other than revenue bonds. 

The city of Milwaukee oijerates on a cash basis, paying for all capital improve- 
ments from current tax revenues and special assessments. No general obli- 
gation bonds have been issued since 1932. These policies are quite firmly 
•established. 

Our programing committee has a listing of reserve projects aggregating 
^75,000,000 in addition to the .$39.000,0fM) of projects actually scheduled for the 
ensuing 6 years. If Federal aid is made available for the pui-pose of increasing 
employment in the postwar period, projects presently scheduled through 1950 
■could readily be advanced in the program and replaced with othei'S from the 
reserve list. The I'ate of this rescheduling would necessarily be in proportion 
to the amount of grant funds received. 

The resources and taxing power of local governments are limited. It is 
generally agreed that if non-Federal public worlvs are to provide any substantial 
Tiumber of jobs in the postwar period. Federal grants-in-aid are mandatory. 

If the Congress decides that Federal financial assistance should be invoked 
to support large local public-works programs to sustain the national economy 
during the conversion and postwar period, we recommend that it be done on 
an outright grant basis, with the Government matching dollar for dollar the 
expenditures of local government. 

The Federal Bureau of Labor Statistics finds that public-works projects provide 
^bout 1 hour of employment for every dollar expended. This takes into account 
its theory that for every man-hour worked at the site, tvi'o and a half hours have to 
be worked in mines, forest, mills, and on railroads to produce, fabricate, and 
transport needed materials. 

On that basis, the dollar-for-doUar formula would permit our city to expend 
$13,000,000 annually on public improvements and provide full employment for 
6,500 to 8.600 persons, depending upon whether a 30- or 40-hour week were 
established. 

It is our considered opinion that although local public-works programs are not 
the solution to widespread unemployment, they can provide substantial employ- 
ment which is reflected in both the building trades and industry. 

The advance programing of public works has become recognized as a standard 
procedure at all levels of government. Federal, State, and local. The advantages 
of an orderly long-term program are so obvious as to need no justification. 

On .lune 30, 1941, the common council appointed a five-man permanent impi'ove- 
ment program technical committee consisting of the deputy comptroller, planning 
director, city attorney, commissioner of public works, and municipal reference 
librarian. 

Preparing a program 

First, the technical committee requested the various departments, bureaus, 
boards, and commissions under control of the common council to submit lists of 



POSTWAR ECONOMIC POLICY AND PLANNING 2019 

the iiiiprovements they judged to be needed, arranged in order of preference, 
together with estimates of cost. 

Second, the financial resources and commitments of the city were analyzed to 
determine the funds which would probably be available, or could be provided 
within safe limits without disrupting our policy of operation on a cash basis 
and without the issuance of other than revenue bonds. 

Third, the committee then sent to the common council its proposed first 6-year 
program. The program included those projects which, after comprehensive 
review and evaluation in the light of over-all community need were selected for 
construction in order of their urgency or relative desirability and in relationship 
to the funds indicated to be available for the purpose. 

Scope of Milwaukee's program 

Our permanent improvement program is not basically an unemployment relief 
understanding. The number and character of the projects included in the 
6-year program are limited to our most urgent needs and to the city's ability to 
finance, without Federal assistance, on a cash basis. 

During the period 1956-43, our capital improvements were based upon the 
amount of $5,501,000 paid for bond retirement and interest in the year 1936. 
As the annual amounts for debt retirement decreased below this sum, the dif- 
ference each vear was appropriated for permanent improvements. These appro- 
priations were as follows: 1936, $400,000; 1937, $l,223,4ri6; 1938, $1,642,804; 
1939, $1,500,000; 1940, $1,900,000; 1941, $2,100,000; 1942, $2,260,000, and 1943, 
$3,035,000. 

A summary of the program as adopted by the common council on May 15, 
1944, is attached hereto. (See schedule A, p. 2020. ) 

The total estimated cost of the long-term program is $75,552,473. The actual 
xind recommended appropriations are as follows : 1944, $3.249,093 ; 1945, $3,800,- 
000; 1946, $3,800,000; 1947, $3,800,000; 1948, $3,800,000; 1949, $3,800,000; 1950, 
83,800,000. 

The reserve listing of future projects totals $49,504,380. In the event that 
Federal financial assistance is made available in the postwar or conversion 
period, projects presently scheduled through 1950 could readily be advanced in 
the program and replaced with others from this reserve list. The rate of this 
rescheduling would necessarily be in proportion to the amount of grant funds 
received. 

It should be noted that the foregoing 6-year program does not include capital 
additions to our water utility, which are ordinarily paid from its own revenues. 
It is estimated that additions and improvements aggregating $4,200,000 are re 
quired. If the city is to proceed without Federal assistance, this program would 
probably be scheduled over six postwar years at the rate of $700,000 annually. 

Street and alley paving work is also excluded from the 6-year program. It 
has been customary for many years to provide the necessary funds for this type 
of work in the current departmental budget. However, the city has recently 
recognized that the benefits to be derived from long-term programing and 
financing of other i^ermanent improvements are also applicable to the long- 
term programing and financing of street construction. 

Accordingly, a tentative 6-year program has been arranged calling for annual 
appropriations of $1,000,000, which supplemented by special assessments of a 
like amount, and forthcoming Federal assistance, under the Federal Highway 
Act of 1944, will permit a street-construction program of about .$3,000,000 annually. 

In addition, interest is being revived in the construction of the proposed civic 
center including buildings and improvements. This project contemplates con- 
struction estijnated to cost, in the aggregate, from $25,000,000 to $33,000,000. 
(See schedule C, p. 2021.) 

Of the $21,109,353 appropriated for permanent improvements during the period 
1936-45, approximately $7,656,000 has been spent on planned public works. It 
has been impossible, because of the scarcity of materials, overburdened trans- 
portation facilities, manpower shortages, et cetera, to do any great amount of 
construction during the war period. However, our unexpended appropriations 
have been carried forward from year to year. On .January 1, 1945, the city 
had in excess of $3,452,000 available for the carrying out of its current and 
deferred capital improvement programs. 



2020 POSTWAR ECONOMIC POLICY AND PLANNING 

Schedule A 



Department 



Estimated 
cost 



1944 



Fire department 

Harbor commission .. 

Health depart ment ._ 

Illinoi.; Steel Co. contract 

Land-purchase fund 

Library board 

Museum board _._ 

rdice department 

Public land commission: 

Lake-front development (partial estimate) 

Playgrounds 

Street openings and widenings (partial estimate) 

Public worlcs department: 

Bureau of bridges and public buildings.. 

Bureau of electrical service 

Bureau of engineers, grade separations (partial estimate) 

Bureau of garbage collection and disposal 

Bureau of municipal equipment. 

Bureau of sewers- -_ 

Bureau of street construction and repairs 

Bureau of street sanitation (partial estimate) 

School board 

Sealer of weights and measures 

Miscellaneous projects... 

Total 



$6, 053, 000 
7, 305, 000 

400, (m 
1, 440, 648 

120,000 
2, 025, 000 
l,r,89, 200 

214, 000 

13.000,000 
5, 055, 000 
3, 025, 552 

20, 770, 000 

1,295,000 

628,000 

37, 500 

393, 800 

11,317,780 

67, 000 

405, 000 

213,093 

37, 900 

(I) 



$251, 328 
20,000 



50, 000 

500,000 
200, 000 
242, 872 

520, 000 
190, 000 
50, 000 



43,800 

900, 000 

67, 000 



213, 093 



75, 552, 473 



3, 248, 093 



$45,000 
255, 000 



246, 840 
20,000 



500,000 
300,000 
380, 160 

680, 000 
135, 000 
143,000 



1, 050, 000 
" "45,'666 



3,800,000 



1946 



1948 



Fire department 

Harbor commission. 

Illinois steel company contract 

Land-purchase fund 

Library board 

Public land commission: 

Lake front development (partial estimate). 

Playgrounds 

Street openings and widenings (partial estimate) 

Public works department: 

Bureau of bridges and public buildings 

Bureau of electrical service. 

Bureau of engineers, grade separations (partial estimate) . 

Bureau of municipal equipment 

Bureau of sewers 

Bureau of street sanitation (partial estimate) 



$20, 000 
100, 000 
242, 352 
20, 000 



$237, 864 
20, 000 



500, 000 
250, 000 
572, 648 

660, 000 

155, 000 

50, 000 

165, 000 

1,050,000 

15, 000 



500, 000 
250, 000 
567, 136 

770, 000 
155, 000 
100, 000 
135, 000 
1, 050, 000 
15, 000 



Total. 



3, 800, 000 



3, 800, 000 



$233, 376 

20, 000 

200, 000 

600, 000 
250, 000 
636, 624 

615, 000 

155, 000 

50, 000 

10, 000 

1, 100, 000 

30, 000 



3, 800, 000 



Fire department 

Harbor commission .... 

Health department .... 

Illinois Steel Co. contract 

Land-purchase fund 

Library board 

Museum board 

Police department 

Public land commission: 

Lake front development (partial estimate) 

Playgrounds 

Street openings and widenings (partial estimate) 

Public works department: 

Bureau of bridges and public buildings 

Bureau of electrical service 

Bureau of engineers grade separations (partial estimate). 

Bureau of garbage collection and disposal 

Bureau of municipal equipment 

Bureau of sewers 

Bureau of street construction and repairs 

Bureau of street sanitation (partial estimate) 

School board 

Sealer of weights and measures 

Miscellaneous projects 



Total. 



$228, 888 

20,000 

200, 000 



500, 000 
250, 000 
626, 112 

560, 000 
155, 000 
140, 000 



40, 000 
1, 050, 000 



30,000 



3, 800, 000 



Total pro- 
gram 



$65, 000 
355, 000 



1, 440, 648 
120, 000 
400, 000 



3, 000, 000 
1, 500, 000 
3, 025, 552 

3, 805, 000 
945. 000 
533, 000 



393. 800 

6, 200, 000 

07, 000 

135, 000 

213, 093 



22, 248, 093 



Reserve 



$5, 988, 000 

7, 010. 000 

400, 000 



1,625,000 

1, 689, 200 

164, 000 

10, 000, 000 
3, 555, 000 



16, 965, 000 

350, 000 

95,000 

37, 500 



5, 117, 780 
""'276,666 



37, 900 



53, 304, 380 



' No estimate. 



POSTWAR ECONOMIC POLICY AND PLANNING 2021 

ScHEDtJLE C. — Esthnat^e. of cost of hiiildinffs and other improvements of civic 
center, as shoirni on Mihoaukce Journal sketch, Mar. 18, 1945 

Buildings : 

1. Public library addition : 100 by 300 by 100 feet high— 3,000,000 

cubic feet, at 75 cents $2,250,000 

2. Museum : 200 by 670 by 100 feet high— 13,400,000 cubic feet, 

at 75 cents 10, 050, 000 

3. Memorial fine arts cultural center : 200 by 570 by 75 feet high — 

8,550,000 cubic feet, at 75 cents 6, 412, 500 

4. Twin safety building: 235 by 270 feet— 5,660,705 cubic feet, 

at 75 cents (plus appurtenances) 4,245,530 

6. Overhead ramp connecting auditorium and parking area: 

100 bv 70 by 20 feet high— 140,000 cubic feet, at 50 cents 70, 000 

7. Auditorium addition: 390 by 380 by 75 feet high— 11,115,000 

cubic feet, at 75 cents 8,336,250 

8. Parking area : 710 by 420 feet— 298,200 square feet, at $3.35— 998, 970 

Total buildings (not included in 6-year program) 32, 363, 250 

Street improvements : paving, sewer, water, road drainage, lighting, 
and landscaping on West Kilbourn Ave. and appurtenant streets 
(included in 6-year program) 530, 500 

Total estimated cost to city _ 32,893,750 

University of Wisconsin — State funds : 

5. 1 by 80 bv 120 by 90 feet— 864,000, at 75 cents $648, 000 

2 by 75 by 180 by 135 feet— 7,290,000, at 75 cents— 5, 467, 500 

Total, State 6,115,500 

NoTE.^The foregoing is a tentative estimate prepared by the department of 
public works ; it is presently in process of revision. 

Tlie Chairman. Are there any questions ? 

Mr. MuRDOCK. I would like to ask you a few questions. Do I under- 
stand now that you have a $39,000,000 plan for a 6-year period ? 

Mr, HuRLESs. That is right. 

Mr. MuRDOCK. I did not understand about the $75,000,000. 

Mr. HuRLESS. This is a continuing program, Mr. Chairman. In 
other words, each year 1 year is added to the program by drawing from 
the $75,000,000 listing of "reserve projects." The actual scheduling 
began in 1940 and covered the years 1944 to 1949. On January 1 of 
each year we add another year so that we always have a 6-year program. 

Mr. INIuRDOCK. You join with others in the feeling that private enter- 
prise sliould furnish the employment just to the extent that it is possible 
to do so ? 

ISIr. HtTRLESS. Yes ; that is correct. 

Mr. MuRDOCK. And public construction should come along and sup- 
plement only to the extent necessary to cushion against unemploy- 
ment ? 

Mr. HuRLESS. That is right. 

Mr. JMuRDOCK. By a matching basis you prefer that such stabilizing 
as is done by the Federal Government should be by outright grants 
matched perhaps 50-50 with the localities? 

Mr. HuRLESS. That would be an equitable arrangement; yes. 

Mr. MuRDOCK. Thank you very kindly. 

Mr. Arthur. In your (3-year plan you have indicated that you would 
be able to accelerate the program and thus take on a larger dose in 
any given year. Do you also have provision in your plan for defer- 
ment of a portion of the program in cases where employment is high 
in the community or when you would be competing for labor and mate- 
rials with a fairly active construction industry ? 



2022 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr, HuRi.Kss. Tlie program as set up contemplates about tlie mini- 
mum of public-works construction required by our city. 

Mr. Arthur. The program as scheduled is a very stable [)rogram, 
is it not, and running about the .same from one year to the next? 

Mr. HuRLESS. Yes. It contemplates an expenditure of $6,500,000 
annually and will go ahead whether or not we have Federal assistance. 
If we get Federal assistance, our program is so constructed that we 
can advance projects within the schedule and provide more work. 

Mr. Arthur. Well, you have naturally deferred certain undertak- 
ings during the war period. Has that accumulated to provide any 
substantial backlog that is rather urgently needed at the present time"? 

Mr. HuRLEss. It has. We have included a paragraph on that in our 
detailed statement. I would like to read that last paragraph again. 

Of the $21,100,353 appropriated for permanent improvements during the period 
1936-45, approximately $7,656,000 has been spfiir on planned public works. It has 
bepn impossible, because of the scarcity of materials, overburdened transporta- 
tion facilities, manpower shortages, et cetera, to do any great amount of con- 
sti'uction (iui'iiig the war period. However, our unexpended appropriations have 
been carried forward from year to year. On January 1, 19-15, the city had in 
excess of $13,-I5-',00U available for the carrying out of its current and deferred 
capital improvement programs. 

Mr. Arthuk. That is included in the $39,000,000 that you spoke 
about earlier? 

Mr. riuRLEss. Not all of it. You see some of this planned construc- 
tion goes back further than the 1944 program. 

Mr. Arthur. The thing I am trying to get at is that you would be 
in a position to put into operation fairly promptly if transitional un- 
employment should accumulate to a substantial amount, a fairly sub- 
stantial volume of city projects? 

Mr. HuRLESs. That is right. I would estimate that we have $10,- 
000.000 of public works in the contract stage of plan completion and 
we have the money to accomplish the construction. We have the cash 
on hand. 

Mr. MuRDOcK. May I ask one more question before you go? A 
witness this morning, and I think it was Mayor Kelly himself, said 
something like this: For every dollar spent in the city of Chicago, 
$2 will be spent some place else. You said about the same thing. 
Would 5'ou amplify that just a little bit? For every dollar that you 
spend in Milwaukee in this public works program, how much do you 
expect to be aiforded in employment elsewhere? 

Mr. HuRLEss. A dollar spent in Milwaukee would provide 1 hour 
of employment at the site and then the Federal Bureau of Labor Sta- 
tistics estimates 2i/2 hours elsewhere. Some of that would be in Mil- 
w^aukee and some in Pittsburgh, California, or Louisiana perhaps. 

Mr. MuRDOCK. Furnishing the raw material? 

Mr. HuRLESs. Yes; furnishing the raw material, et cetera. 

Mr. MuRDOCK. That is a point that I am anxious to emphasize all 
the way through here, that the thing reaches out all over the country 
and the effect of the employment in this spot is felt at different parts 
of the country. 

Mr. HuRLESS. That is correct. 

The Chairman. Thank you very much, Mr. Hurless, for your very 
fine statement. 

We will now hear from Mr. Ames, city manager of Ames, Iowa. 



POSTWAR ECONOMIC POLICY AND PLANNING 2023 

STATEMENT BY JOHN AMES, CITY MANAGER, AMES, IOWA 

JNli'. AiMES. I have a very brief statement that I would like to make 
for the benefit of the committee. I come from a small town represent- 
ing 13,0C0 population which is located approximately in the geogi-aphic 
center of Iowa. It is largely an agricultural community. We started 
in about the time that we got into the war to develop a postwar con- 
struction program. We have now^ com})leted plans for about $750,000 
worth of woi'k. That is in the blueprint stage and contracts for that 
could be let in, say, 90 days. 

In addition to that we have about $250,003 worth of additional 
construction work which is in the process of being brought to the 
blueprint stage. We believe that will take care of any possible war 
unemployment problem which we have. 

During the last depression w^e suffered very little from imemploy- 
ment. In other words, we were able to take care of our owai local 
unemployment with our own funds. We believe we can do that in any 
depression of reasonable extent that is apt to occur following this war. 

So there is no need so far as the city of Ames is concerned for any 
Federal assistance, either for planning or for construction with one 
possible exception. Like the other communities, we are in the process 
of developing an airport and we do not under the State laws have 
financial abilit}' to construct an airport such as we believe the com- 
munity should have. If Federal assistance can be provided to match 
State and local funds for that utility, that will take care of any need 
that we can see for Federal assistance. 

The Chairman. Are there any questions ? 

Mr. MuRDOCK. Are you limited by bonded-debt limitations in regard 
to the airport? 

Mr. Ames. It is a bonded-indebtedness limitation, yes. We are 
limited in the amount of bonds that we can issue which I believe our 
total limit amounts to around $150,000. That is insufficient to develop 
an airport adequately for our needs there, we believe. 

Mr. MuRDOCK. I wonder if that condition does not prevail in a good 
many other places? 

Air. A.JEs. It does in many communities of like size in Iowa. 

Mr. MuRDocK. That is the shoe that pinches the foot and hampers: 
development. 

Mr. Ames. That is correct. 

The Chairman. Are there any other questions? If not, I want to 
thank you very much, Mr. Ames, for your very fine presentation. 

We will now hear from Mr. Ludwig, secretary of the League of 
Minnesota Municipalities. 

STATEMENT OF C. C. LUDWIG, SECRETARY OF THE LEAGUE OF 
MINNESOTA MUNICIPALITIES, MINNEAPOLIS, MINN. 

Mr. Ludwig. I have no figures for our Minnesota cities generally, 
such as the figures that have been given to you from Minneapolis. I 
am not authorized to speak for our league of municipalities either. 
It has no official commitment on this particular subject; should there 
or should there not be a postwar program, and how big should it be. 
However, I would like to make a personal observation if I may. 

The Chairman. We will be glad to have you do so. 



2024 POSTWAR ECONOMIC POLICY AND PLANNING 

Mr. LuDWiG. Mr. Bonner of Minneapolis painted what yon tlionght 
was a pretty dark picture of our largest city in Minnesota this morn- 
ing and he did not overdraw that picture. I believe that if St. Paul 
were represented here and Duluth were represented here, they would 
tell you virtually the same story. 

The Chairman. They ought to combine against the legislators. 
Mr. LuDwiG. I have just returned from our legislative halls, which 
are still in session, and must, on behalf of all of tlie cities of Minne- 
sota, acknowledge again, as we have so many time in the past, another 
defeat in trying to do what you have urgad us to do, and that is to 
go to our State legislators. 

It is my judgment that of the Spates which have over half of the 
people living in cities — I am not speaking of completel}^ agricultural 
States, but States like Minnesota, Wisconsin, Michigan, ancl Illinois — 
that of those States, probably Minnesota is the most rurally domi- 
nated, so far as legislatures are concerned, and its laws and constitution 
probably reflect tlie greatest amount of discrimination against the 
cities, and particularly the large cities. 

Our cities generally are facing a revenue dilemma and the larger 
the city the more acute its revenue dilemma. I do not need to explain 
what I mean by revenue dilemma of the large cities. They are "in 
the middle" between the increases that their people are asking for 
and needing in the way of services and a constantly shrinking tax 
base — limited mostly to the property tax. Generally the legislatures, 
rurally minded, have refused, first, to extend additional tax.ng power 
to the cities which they can exercise themselves, or second, to share 
in any substantial way the centrally collected taxes. 

For the last few sessions our organization of cities has askeci our 
legislature to do the latter thing. This time, as Mr. BDnner has told 
you, we have asked for a modest share of one of our State taxes, the 
gross earning tax on railroads and telephone utilities. They pay no 
property tax and make no contribution to local government. Our 
legislature is turning a cold shoulder to our plea of help and we have 
been again defeated as we have been defeated before when we have 
asked for a share in the proceeds of the gasoline tax. 

I have just completed an argument which will be heard before one 
of our committees Friday morning in favor of a proposed constitu- 
tional amendment under which the gross earnings taxes, gasoline taxes, 
and the motor-vehicle taxes in our State would be shared to some 
extent with the cities. Now, I have said in that argument that the 
justification of our asking for this amendment is the increasingly 
weaker financial position of the cities of Minnesota. That is my 
honest judgment. 

The Minneapolis picture, of course, is the worst one in our State 
because it is the biggest city, and the bigger the city the worse the 
dilemma, but the picture is not overdrawn. Our legislature's tax 
committee, Friday, is not going to permit the people of Minnesota to 
vote on this amendment which we would like them to vote on. They 
are going to deny us the right to appeal directly to our people for 
an amendment which would do some justice to the cities. But this is 
not a new experience. We have been defeated many times in the past 
and the prospects are not very good for success in the near future. 

Now, in view of that picture, I cannot blame municipalities or mu- 
nicipal officials, particularly in the larger cities where they feel this 



POSTWAR ECONOMIC POLICY AND PLANNING 2025 

])incli the most, for runnino; to you folks in Washington for relief. 
I liave heard many municipal officials argue that since our State legis- 
latures are not proportionate as the constitutions require and they 
refuse to reapportion, the cities are justified in running to Congress 
where the urhan populations are more fairly represented and urban 
needs more appreciated. 

The Chairman. I think the answer also is that we have probably 
more progressive Congressmen from rural communities. 

j\Ir. LuDwiG. In spite of our bad record vrith our legislature, I think 
some of our ^Minnesota rural legislators are gradually becoming edu- 
cated where they will admit that we have a just cause, but when that 
will be translated into action I cannot say. While it may sound 
like a counsel of despair, at least as far as our large cities are con- 
cerned, I Avant to express my own belief, mj^ own theoretical conviction, 
that we should not go to Washington for the solution of our local 
problems. In my judgment, that is the wrong thing to do, and I per- 
sonally am disturbed over the prospects that you may proi^ose a large 
over-all public-works program on the part of the Federal Government. 

The CiiAiRM.AN. I do not think you need to be disturbed about that. 

Mr. LuDWiG. I am one of those old-fashioned people Avho was brought 
up on the idea of a balanced budget and that debts were something to 
Avorry about and problems to amortize. 

In the local government field, aac talk about limiting debt in relation 
to the A'aluation of the property. Debt limits usually A'ary from 5 to 
15 or 20 percent of the full A^alue of the property. 

Now, it is true, of course, that the Federal Government cannot appro- 
priatel}^ be measured in the same Avay because you do not rely on the 
propertv tax and a'Ou have much broader taxing powers, but I read 
the other day that the Federal debt, soon to be $300,000,000,000, is not 
50, not 60, not TO percent of the taxable valuation of the property of the 
countrj', but 200 percent of it. The debt has grown tremendously and 
in all of the estimates Avhich I haA^e seen of possible Federal Budgets 
for the next 50 or 100 A'ears, I have not seen one tliat has estimated that 
more than $6,000,000,000 a year of that $300,000,000,000 is going to be 
Avhittled down in the postAvar period. 

NoAv if this is to be done, it Aviii mean 50 years and I am sure Ave 
haA'e accepted this theory: That if Ave have another war, the balanced 
Budget or the debt-reducing budget is out and if Ave have another de- 
pression, it is out also. So it means 50 years without a war and with- 
out a depression, or certainly a generation or two. 

Frankly, the "soft tax policy" followed by the Congress during the 
war and the present state of the Federal debt worries me as a citizen. 
And I Avould counsel very great care and con.sideration before you au- 
thorize easily a tremendous postAvar public-works program, especially 
if you are thinking of including localized projects Avhich ought to be 
planned, managed, and financed by the State and nuuiicipal goA'ern- 
ments. 

I do not belieA'e that public works will soh^e unemployment, unless 
we are forced to a fundamental change in our free-enterprise economy ; 
and it seems to me there has been an OA^eremphasis on the part of 
some of your committeemen on the part which municipal public Avorks 
can play in the employmeiit picture. We have always counseled the 
proper "timing" of municipal construction, so as not to interfere Avith 

99579 — 45 — pt. 6 21 



2026 POSTWAR ECONOMIC POLICY AND PLANNING 

the war effort or to compete unduly with private industry or to encour- 
age inflation. However, we must realize that the basic purpose of 
municipal construction is not to provide employment, or "make work" ; 
it is rather an adjunct of the carrying on of an essential community 
service which the people of the community believe can be most ap- 
propriately done by their municipal government, and for the most part 
financed directly by themselves. From this point of view, there is an 
inherent loss or waste if projects are constructed when they are not 
essential; likewise there is a loss when necessary construction — or* 
maintenance — is deferred for war or business cycle reasons. 

In our State when we talk about cities in relation to the State gov- 
ernment we do have some differences of opinion about the policies, but 
it is my position that in the relation of the cities to the State the best 
way for the State to assist cities is to give them adequate taxing power. 

The next best way is for the State to share some of its centrally col- 
lected taxes with the cities, and the third way, and least desirable 
way, is the giving of direct aid to the cities. 

In my juclgment the same policy or priority applies in the case of the 
Federal Government. The best way in which the Federal Government 
can aid the municipalities, in mxy judgment, is to let the cities, and that 
means the States, have a substantial amount of taxing power, without 
encroachment by the Federal Government. 

The Chairman. How do we stop them? 

Mr. LuDWiG. Lay off the motor vehicle and gasoline taxes, for ex- 
ample. That, in my judgment, would be the best way to cooperate in 
the taxation field. 

The second way would be the sharing of a federally collected tax. 
One of my colleagues at the University of Minnesota has made a novel 
proposal with which he is coming out shortly, which I think has a 
good deal of merit, too. It is the idea that after the war is oyer the 
Federal admissions tax be continued, but that in place of putting the 
proceeds of it into the Treasury, it be allocated dire'^tly back to the 
communities where collected. In other words, a local-shared federally 
collected tax. 

The Chaieman. You want to put the burden on us. the Ways and 
Means Committee, of taxing the people, and you get the money i 

Mr. LuDwiG. You talk just like our State legislators. Don't you 
realize that local administration of some taxes is infeasible, and higher 
governments should be willing to act as collecting agents for local 
authorities? 

The Chairman. If you collect it, you can have it. 

Mr. LuDwiG. I expressed my judgment that the best way is to give 
us the taxing power to tax ourselves and I agree with Professor 
Groves, of Wisconsin, in saying that that is better than any other 
way because it makes us local officials face up to the problem of tax- 
ation. In other words, it is easy to want appropriations and not to 
want taxes. 

I think all officials, Federal, State, and local ought to face up to 
the problem that taxation and appropriation is the same thing, and 
the citizens should have to realize if they want service and appro- 
priations they should be willing to tax themselves for them. I agree 
that the local tax is the preferable way. Nevertheless, there are many 
practical arguments in favor of the second method, namely the sharing 
of centrally collected taxes. The least desirable method is an out- 



POSTWAR ECONOMIC POLICY AND PLANNING 2027 

right aid program, and that is what you are discussing here. I think 
State and local planning can he better done than on the Federal level ; 
it is more adaptable to local conditions and closer to home, and if it is 
coupled with having to pay for it out of our own pockets through 
our own tax levies, we are going to be sure that we absolutely need the 
projects and that they are not just made work. 

I recently received from our national office this testimony of the 
Chamber of Commerce on the Federal airport aid bill. As you know, 
there is nov.' a dispute about vrhether the Federal Government should 
make the plans for, and finance half the cost of, the (3,000 airports 
which it is assumed our country needs. The Chamber of Commerce 
has said here, and I agree with it, that the chamber wants — 

the proposed Federal-aid program to get away from the tendency toward main 
reliance on Federal funds for civil airport construction and place tlie major 
responsibility upon the States and their political subdivisions, but to retain 
sufficient Federal participation to provide reasonable stimulation and coordina- 
tion of airport development through a cooperative arrangement, generally par- 
alleling the successful experience with highways, but adapted to the particular 
problem of airports. 

From my own observation I think the relation of the Federal Gov- 
ernment to the State and the localities in the highway field has worked 
well and it is an excellent pattern to follow. 

The Chairman. Isn't that a little contradictory of your main state- 
ment, though? 

Mr. LuDwiG. In v.diat way ? 

The Chairman. You say the Federal Government has aided in high- 
way and that has worked out very well, and yet if your theory were 
followed you would have the taxing power of the municipalities in- 
creased so that they would be able to build these highways themselves. 

Mr. LuDWiG. That would be preferable. 

The Chairman. It may be preferable, but it is not practical. 

Mr. LtJDwiG. Perhaps not. 

The Chairman. I mean for years and years the municipalities aiid 
the counties and what not had the taxing power and they never did 
develop roads until the Federal Government started to give aid. 

Mr. LTiD\\aG. Well, the Federal highway aid has been a great stimu- 
lus and I am sure it has been appreciated. However, most of the 
money for highways is State and local money. I am saying that, with 
respect to postwar works programs, we should follow the same pattern 
as we did with highways, which does not place the main burden on the 
Federal Treasurj^ for financing or on the Federal officials for planning. 

The Chairman. I think you have made a very fine statement, Mr. 
Ludwig, and I note particularly the recognition by you of the fact 
that the greater the city the greater the financial dilemma of the city. 
That has been expressed this morning by Mayor Kelly when he spoke 
about the need of the city of Chicago for all of the Federal funds for 
local improvements. The same expression was given in New York 
by Mayor La Guardia, and the contrast is with the testimony from 
those who represent the sm.all communities here this afternoon. 

With respect to the taxing power of the Federal Government and 
this program of public works, let me say this : There is no program of 
public works that the Federal Government, so far as we hi Congress 
have anything to do with, is contemplating in the future other than the 
ordinary public works that the Government itself constructs, such as 



2028 POSTWAR ECONOMIC POLICY AND PLANNING 

post offices, and the like, highways, airports, and rivers and harbors. 
HoweA^er, it is not the purpose of this committee to recommend that 
there should be immediate grants-in-aid by the Federal Government 
to States, counties, and municipalities for local public works until such 
time comes as there is extensive unemployment. I think my col- 
leagues will fairly well agree with me on that proposition. 

Mr. LuDwiG. I would concur in that, too. 

The Chairman. So we want to make that very clear to those who 
represent municipalities, that the present thought of this subcommittee 
is that, and I think probably of the full committee as well. 

Mr. MuRDOCK. I felt, Mr. Ludwig, that I could not have predicted 
what you were going to say from the first 5 minutes of your remarks 
because you spoke of the dilemma that your cities are in because of 
a I'ural-minded legislature, and that they will not give you more 
taxing power. I imagine there are a good many other cities ham- 
pered in this same way. 

I agree with you that any grant of funds from the Federal Gov- 
ernment apportioned among the States might help some States that 
really need it, and be an unusual inducement for some States that do 
not need it to go into sort of a spendthrift planning. Therefore, I 
agree with you in the sentiment you expressed. 

I am wondering about one or two things, however. What federally 
■collected taxes ought to be shared other than the proposal 3^ou say 
comes from the University of Minnesota^ The gasoline tax? Do 
jou have a feeling that that ought to be shared ? 

Mr. LuDAViG. No; most of the States have their own and I tliink 
they do an acceptable job of administration and collection. It would 
be better for the Federal Government, after the war, to repeal the 
gasoline and auto-use taxes, and leave these sources to the States. 
It would also be better not to think of encroaching on the States in 
the field of aviaton taxation, provided the States will act reciprocally 
and on a fairly uniform basis as is proposed by the Federation of 
Tax Administrators. 

Mr. MuRDOCK. There is some demand in various parts of the country 
that the gasoline tax be shared with the municipalities.. I did 
not know but that might be in your mind. 

Mr. Ludwig. No ; it is not. 

The Chairmak. Thank you very much. 

We will now hear from Mr. Leonard Howell, city manager for 
Port Huron, Mich. 

STATEMENT BY LEONAED HOWELL, CITY MANAGER, PORT HURON, 

MICH. 

Mr. Howell. The statement you just expressed a few moments ago, 
Mr. Chairman, makes almost unnecessary the statement that I had 
intended to make. That statement was to the effect that unless there 
is a very definite program for unemployment the Federal Government 
does not expect to participate in Federal Government projects. 

The Chairman. I said that was the opinion of our connnittee but 
not of the Federal Government. I appreciate the promotion. 

Mr. Howell. However, even though I have promoted you, I think 
there are certain observatio