CONGRESSIONAL RECORD -- SENATE

June 25, 1964

Page 15076

AREA REDEVELOPMENT HELPS MAINE AND THE NATION

Mr. MUSKIE. Mr. President, in an article entitled "Is This the Way To Fight the War Against Poverty?" the Reader's Digest recently criticized severely the activities of the Area Redevelopment Administration. As a member of the Committee on Banking and Currency, which has legislative jurisdiction over the ARA program, and as an early and consistent supporter of ARA, I was deeply concerned over the article's allegations of ineffectual and improper activities by ARA.

In response to my inquiry, the Administrator of ARA, William L. Batt, Jr., provided a factual reply which pinpoints several errors of fact and conclusions in the article. Because I believe that the Senate should have both sides of the story, I ask unanimous consent that the ARA reply may be printed in the RECORD at this point in my remarks.

There being no objection, the reply was ordered to be printed in the RECORD, as follows:

THE AREA REDEVELOPMENT ADMINISTRATION REPLIES TO READER'S DIGEST ARTICLE

(NOTE.-- The Reader's Digest in its May 1964 issue made a series of allegations regarding the Area Redevelopment Administration in an article entitled: "Is This the Way To Fight the War Against Poverty?"

(ARA has received many inquiries from Congressmen, newsmen, and interested citizens, and this paper has been prepared to provide a point-by-point, factual reply to the allegations in the article. The reply follows.)

Allegation: That ARA loaned money for the Schweitzer Basin ski resort at Sandpoint, Idaho, when two local men were about to open a ski run on nearby Baldy Mountain.

Facts: The Schweitzer Basin project had been under consideration by the local community leaders long before the Baldy Mountain project. The two local men mentioned in the article had sought support from the Sandpoint Chamber of Commerce and other community leaders, but were unable to obtain it.

The community itself, financed a professional survey which showed the Schweitzer Basin site superior to the Baldy Mountain site. The community leaders applied for an ARA loan which was granted after careful consideration. The ARA loaned $320,000 on the $530,000 project. Some 700 Sandpoint residents -- more than half of the wage earners in the town -- bought stock in the venture and in all about $200,000 in private funds were invested by local sources, including the city of Sandpoint itself.

The Schweitzer Basin ski resort opened for business last December and enjoyed a successful first season. More than 2,500 skiers visited the slope one day at Christmas time last year. Besides the scores of jobs the ski lift provided, it also had an impact on the local economy. The January 1964 issue of the Idaho Labor Market Report said: "The opening of the new Schweitzer Basin ski area in December boosted employment in the trade and service areas to near summertime levels."

A local certified public accountant, Ronald L. Hall, in a front-page reply to the Reader's Digest article in the Sandpoint News-Bulletin, predicted that the success of Schweitzer Basin ultimately, "could be the making" of another ski resort on nearby Baldy Mountain.

Allegation: That an access road to the Schweitzer Basin ski area at Sandpoint, Idaho, was built "despite Idaho Health Department warnings that this could contaminate the municipal watershed." And that Sandpoint's water supply ultimately was condemned.

Fact: Dr. T. 0. Carver of the State health department states that not only has the water supply of Sandpoint not been condemned, but that at no time within the last 2 or 3 years has the State health department ever warned Sandpoint about its water supply, or contemplated any sort of condemnation.

Allegation: That an ARA loan to Technical Tape Corp. had resulted in the firm's moving a division of its operation from Beacon, N.Y., to Carbondale, Ill., where the ARA had helped the community to transform a city owned warehouse into a factory building which Technical Tape took over. The allegation involved a gift-wrapping division of the firm and it quoted the Beacon Chamber of Commerce president as saying that the gift-wrap division was moved out because of the Carbondale development.

Fact: Mr. Paul Cohen, president of Technical Tape, in a sworn statement to ARA says Technical Tape never considered a gift-wrapping division for Beacon because there was not enough space available in the Beacon plant.

As to the allegations that the "Government induced an industry to expand in one depressed area at the expense of another" (namely, Beacon), Mr. Cohen says employment at his Beacon plant has increased steadily from 85 employees in 1961 to 358 employees presently. He says production in other facilities the firm has in New York and New Jersey are up 20 percent over 1961 figures and employment has remained constant despite technological improvements. He says the 428 persons working at the Carbondale, Ill., facility, which was assisted by ARA, "represent new additional jobs and payroll for the company and the community."

Mr. Cohen says he learned before publication that Reader's Digest intended to quote the Beacon Chamber of Commerce president as they did, and that the Reader's Digest was told that the statement was inaccurate before publication.

Allegation: That ARA staged a stepped up campaign to pull other areas into the program in this election year, pointing specifically to the fact that seven major U.S. cities -- Philadelphia, Cleveland, Toledo, Buffalo, Newark, Miami, and Oakland -- were made eligible for assistance under ARA.

Fact: These seven cities became eligible to qualify for ARA assistance under a new formula for measuring unemployment within the city limits, and this had nothing to do with politics. The move was prompted primarily by the interest which the cities themselves had expressed in the program. These cities, suffering from high unemployment within city limits, had been unable to qualify because they were included in a larger labor market area whose unemployment was not serious enough to bring them under the ARA act. Thus, ARA was faced with the irony of denying its aid to large blocks of jobless persons in the big cities while making it available to smaller blocks of unemployed in the smaller cities and rural areas.

Allegation: That "ARA has built a 72-room luxury motel" in Woodville, Tex., which is threatening the existence of a nearby 24-room motel owned and operated by a widow. Also, that "there is not much reason for Woodville except the old courthouse and some lumber mills."

Fact: ARA did not build the motel. It loaned $420,000 of a $700,000 project to build it, but it was the community itself, which came forward with the desire and the plan to build the motel.

The motel, known as the Woodville Community Inn, was not built with an eye to competing with the widow's motel. Local leaders planned it as a means of helping to build up the town, itself. Some 100 Woodville residents bought stock in the motel, providing $130,000 of the total investment. Two local banks also participated in the financing.

The East Texas Tourism Association endorsed the facility because of its proximity to the McGee Bend Dam which is expected to generate tourism business in the area. The Inn is located at the juncture of three main highways in the commercial center of Tyler County (population 10,700). It is equipped to handle sizable meetings and small conventions, and community leaders are of the opinion that as the economy of the area grows the Inn will actually prove beneficial to the 24-room motel which the article said was threatened.

The article also referred to a sign erected at the project during construction identifying a Texas congressman with the venture. The ARA, of course, had nothing to do with the sign.

Allegation: That jobs constitute the reason for ARA's existence but that ARA provides brazenly inaccurate figures and refuses to make reports on current employment figures available to the public.

Fact: The ARA does, of course, receive regular reports on employment from the projects it is interested in. But it does not make this available to the public on a regular basis because this is, in a sense, private information. Any reporter wishing to know how many people are employed by a certain business is free, however, to check with that business.

The ARA does publish regularly a record of approved projects and lists an estimated projection of employment expected after 1 year of activity. These are based on estimates provided by the applicants, who, as might be expected, sometimes miss the mark. There is no effort to mislead, however.

The ARA recently made a survey of 57 plants which had been in operation for at least a year to determine employment results and to see how the estimates of employment were holding up. This survey showed the 57 plants were expected to have employment of 8,543 after 1 year. Actual head count showed 9,376 employees. In 20 of the plants, employment was higher than anticipated; in 23, it was lower, and in five plants it was approximately as estimated and published in the ARA Directory of Approved Projects as of March 31, 1964.

Through March 1964, ARA has approved 459 loans and grants which will, when the projects are fully operational, help create an estimated 105,000 direct and indirect jobs.

The article cited as one example the North Vernon Processing Co.'s burned out forging plant in North Vernon, Ind., in an effort to prove faulty reporting on employment. It said the ARA claimed to have saved 60 jobs and created 40 new ones as a result of its post-fire help. The article claimed only 50 persons were working there -- 15 more than before the fire. An ARA field check showed 92 persons working at the North Vernon plant, right in line with the original estimate on employment.

Another claim of faulty employment reporting was made concerning a co-op grain feed mill which an ARA loan helped get underway at Wetumka, Okla. It said the ARA, in lending $68,000, said the project was expected to create 20 jobs. The Reader's Digest reporter found only six men working and little prospect of any more jobs because the operation was highly automated. This is the most accurate report in the entire article. There will be six full-time and two part-time persons employed at the mill when it reaches peak operation in June 1964. The original job estimates were in error.

Allegation: That 75 county agricultural agents in Texas quit in disgust over the past 2 years because they were being used to organize communities to prepare to apply for ARA assistance.

Fact: A check with the U.S. Department of Agriculture and officials in charge of county agents at College Station, Tex., shows there was a turnover of 75 agents in the 2-year period. But only one had resigned because of dissatisfaction with his assignment. The others either retired, went to other jobs in the USDA or to better paying jobs in private industry.

Allegation: That "less than $2 out of every $5 from ARA" goes into areas of highest unemployment.

Fact: $165.5 million or 81.9 percent of all ARA funds for approved financial assistance projects went into areas which are officially classified as areas of substantial and persistent labor surplus. That's $4 of every $5. These projects, incidentally, are creating an estimated 80,253 jobs.

Allegation: That Gregg County, Tex., dissatisfied with being classified as a redevelopment area, had to struggle 2 years to get the classification removed.

Fact: Gregg County originally was classified under detailed standards set forth in Public Law 87-27. After the chambers of commerce of the cities of Longview, Kilgore and Gladwater passed resolutions requesting redesignation, county officials wrote a letter on December 11, 1962, asking termination of the designation. ARA files show action to terminate the designation was taken on March 29, 1963, to be effective 10 days later. That's a spread of a little over 3 months -- not 2 years.

The article also cited Gilpin County, Colo., as a horrible example of a county designated for ARA assistance as a low-income farm area. It noted that the county was high up in the mountains with few farms.

Fact: Gilpin County became classified because of a statistical error. When it was discovered, the classification was removed.

Allegation: That Rice County, Kans., is an example of a prosperous area which has been declared "a depressed area" by ARA.

Fact: Rice County came under the Department of Agriculture's Rural Areas Development program back in the administration of President Eisenhower. The Congress directed that these counties be brought in under ARA as a means of taking advantage of this kind of experience. The county obviously wanted to participate in the ARA program, for it filed an overall economic development program, as required by the act, and at least one ARA project has been approved there.

Allegation: That ARA is "dressing up" 5,000 acres of eastern Oklahoma land with a "palatial" State-owned resort, without its "costing the State a penny."

Fact: ARA loaned $9 million to a State agency, the Oklahoma Lake Redevelopment Agency, on this project. The $9 million is repayable with interest. This could hardly be described as not "costing the State a penny."

This is a $10.3 million project to create a State-owned recreation center at Lake Eufaula, a 143,000-acre lake being created by the U.S. Army Corps of Engineers; $1.3 million of it was financed by a public facility grant from the ARA.

It is designed to attract tourists to the area and help rebuild and diversify the economy which has been suffering from high unemployment and low incomes. Unemployment has been running from 8.4 percent to as high as 18.7 percent of the workforce.

The site is close to 2 important highways -- interstate 40 and the Tulsa-to-Texas turnpike -- and the tourist facility being created is expected to provide jobs for 1,500 workers -- 500 at the resort center and an additional 1,000 at private cabins, boat sales and service centers, sporting goods firms, and other tourist services.

Allegation: That ARA went far beyond the original plan for the "40 single-industry regions" which were intended to receive assistance, and "dragooned or enticed" a third of the Nation's counties into "accepting the label of poverty to be showered with largess."

Fact: A total of 581 areas or 55 percent of all ARA areas meet the specific criteria specified by Congress in the act to identify areas of substantial and persistent unemployment. The remaining areas which were designated for eligibility meet standards for underemployment which were established by ARA and which are based largely on low average incomes for those living in the area.

As for "dragooning and enticing" areas into the program, the ARA early this year notified 152 areas that they would be dropped unless they expressed a firm desire to participate within a 1-month deadline. Only 15 of the 152 areas failed to respond

ARA receives many requests every day from counties and areas wanting to know how they can qualify for assistance under the act. ARA applies strict statistical standards to all these requests, and only those areas which truly qualify on the basis of unemployment or underemployment are designated.

One reason more areas qualify for the act than were known about when the act was first passed is that unemployment statistics were not made available for many very small labor markets prior to 1961. It was only after the Area Redevelopment Act was passed that the Labor Department began providing this information.

Allegation: "The agency flouts the law under which it was created." The article cites four "examples" of ARA loans made to organizations able to make reasonable financial arrangements elsewhere.

Fact: Three of the four examples cited involve loans made, not to large corporations but to local development companies created under State law and promoting industrial development with local resources. The three large companies in question (Melpar Corp. a subsidiary of Westinghouse Air Brake; Rawlings Manufacturing Co., a subsidiary of A. G. Spalding & Bros.; and American Optical Co.) were all tenants of these local development companies and had no direct financial dealings with ARA.

The loan allegedly made to "the Howard Johnson chain together with a local concern" was in fact a loan made exclusively to the new business concern, which had a franchise from the Howard Johnson chain and was thereby entitled to use the Howard Johnson name. ARA's investigation of the availability of other financing to the concern disclosed that two large insurance companies had already declined to make a loan to the project. To confirm the fact that other financing was not available, ARA sought participation unsuccessfully from three other insurance companies. However, a local bank and the Government Development Bank of Puerto Rico both participated significantly in the project.

The article further charges that ARA by its policies has failed to keep faith with the statutory requirements pertaining to community participation in projects. The reference is apparently to ARA's policy of not restricting an industrial applicant from participating in community fund-raising efforts provided that the community group does not simply use such a source of funds as a substitute for other reasonable potentials for raising funds on a broader base.

Other State and Federal programs have by tradition recognized the right of local development corporations to finance participating requirements by acquiring needed funds from industrial concerns benefitting from a project. The Area Redevelopment Act does not by its terms limit the source of the community funds. However, in keeping with the objective of developing a sense of local responsibility and a capacity for local initiative, ARA has required that communities make first resort to obtaining funds from diversified and independent sources.

The third allegation in this connection is that ARA assisted the Technical Tape Corp. to close down its plants in New Rochelle and Beacon, N.Y., and to relocate its operations at Carbondale, Ill.

The plant referred to in the article was leased from the city of New Rochelle. The city subsequently objected to the normal noise resulting from Technical Tape's machine operations.

As a result of frequent police summonses for creating a nuisance, the plant ceased manufacturing in May 1961 and was converted to a warehouse and research facility. Manufacturing operations were transferred to the Beacon plant. When Technical Tape's lease expired in 1963, the city

refused to renew. However, it is presently considering an offer from the company to reopen the plant as a research laboratory. Thus, the Technical Tape "factory" was closed down at the instance of the city 2 years prior to the date alleged in the article, and negotiations are now going on for a renewal of the lease from the city.

The implication that Technical Tape ever had a gift-wrap division in Beacon, N.Y., or intended to move one there, is incorrect. It is answered elsewhere in this paper.

Allegation: That ARA "bludgeoned" votes by letting a "political friend" make a project announcement involving an $884,000 ARA loan to help modernize an abandoned pulp and paper mill in New York Republican Representative CLARENCE E. KILBURN's district, the political friend being KILBURN'S Democratic opponent.

Fact: Notification of approval of the project in Congressman KILBURN's district was advanced from the scheduled release date because the mayor of Norfolk warned ARA that unless ARA gave its decision immediately, the project would fall. When this became known, a wire was dispatched to the president of the local development corporation, informing him of ARA's decision to approve the project. No authorization was given for public release. Unfortunately, word was leaked to the press prematurely through no fault of ARA.

Allegation: ARA advanced money to reopen one, and expand a second coal mine in Carbon County, Utah, "where demand for increased coal output is just not present."

Fact: Both applicants for ARA assistance submitted to ARA letters from dealers, distributors, and private users requesting additional sources of coal, to meet their expanding demand.

Many of the mines in the area are "captive" and their entire output is consumed by their owners and is not for public sale. ARA verified the claims of the applicants with experts, including the U.S. Bureau of Mines. The financial soundness of these two loans also was ascertained. The coal mined in Carbon County is among the highest in quality in the United States.

Allegation: That ARA helped the Salem, Ind., Redevelopment Corp. provide a plant and other facilities for the "foreign controlled" Bata Shoe Co., and that firm was pouring 40,000 pairs of shoes a week on the abundantly supplied shoe industry.

Fact: Bata Shoe Co., Inc., is an American corporation chartered by the State of Maryland. It does have plants in many sections of the world, but it employs some 3,000 workers in factories located in the United States.

The Salem plant manufacturers canvas and vulcanized footwear only, and this segment of the shoe industry has been growing at the rate of some 10 percent a year with 60 percent of the total U.S. market now being supplied by imports,

Bata Shoe is expected to export a significant part of its production, thus affecting the Nation's balance-of-payments problem.

Bata Shoe currently is employing about 250 workers and expects the payroll to grow to around 500 when the plant reaches full production.

The article also charged that Bata Shoe could pull out of Salem any time it wanted. The firm has signed a 20-year lease on the facility.

Allegation: That the president of the Bata Shoe Co., Augustin Dolezal, told reporters that his firm had decided to locate a plant in Salem, Ind., long before it heard of ARA. It quoted Mr. Dolezal: "We would have built in Salem anyway."

Fact: In a letter to ARA dated May 4, 1964, Mr. Dolezal says: "I want to assure you that I have never spoken to any correspondent and told him we would establish a plant in Salem without ARA help. Contrary, it was the first condition that we stipulated . . . that they must procure the assistance of ARA.

"I am sure that this is a great contribution to the community and they are thankful to the ARA who made this project in their community possible."

Allegation: That ARA is financing new enterprises in industries already beset by overcapacity, thus jeopardizing existing jobs.

Fact: Since its inception, ARA has continuously considered the potential impact of its loans. Procedures have been developed to make sure that ARA funds will be used to create job opportunities in our expanding economy.

Industrial experts in the Department of Commerce supply ARA with information on the national capacity of a particular industry, the extent to which the industry is utilizing such capacity, the relative efficiency of existing capacity and, in appropriate cases, the impact of imports on the market.

Industrial market trends are analyzed for ARA by the Small Business Administration and by private marketing experts. The Department of Agriculture provides information on all agricultural and forest products proposals. The Department of the Interior reports on mineral-based industries. Other agencies and experts are used in special cases.

ARA has made public its concern for existing businesses and for the workers who depend upon these enterprises for jobs. A series of policy guidelines published and circulated nationally contain clear-cut criteria for use by ARA in the various circumstances involved in project consideration.

Policy guideline No. 13, for example, states that projects may be declined if "there is an oversupply of the particular product, either locally, regionally or nationally."

Policy guideline No. 26 provides that "ARA will not finance new capacities in industries experiencing a long-run gap between production and capacity except under these circumstances:

The excess capacity must be obsolete or outmoded, or the new capacity must compete with imports, or there must be an identifiable regional insufficiency of productive capacity, or such excess capacity must be only temporary because of a strong, growing demand for the product, or the new capacity must be capable of developing new markets for the industry."

These guidelines are constantly utilized by ARA, interested State and local agencies, and prospective borrowers.

Allegation: That ARA helped finance a 432-room luxury hotel in Detroit, Mich., even though existing hotels suffered from the lowest occupancy rates of any city in the United States.

Fact: The Downtown Investment Corp., in cooperation with civic and business leaders, developed the proposal to construct a $9.1 million hotel (the Pontchartrain Hotel), directly across from Cobo Hall which is the focal point of a $70 million convention center recently constructed by the city in an effort to diversify its economy through convention and exposition business.

Civic leaders reported that Detroit was losing conventions and failing to utilize Cobo Hall and its facilities to the fullest because of the lack of a modern, high quality motel convenient to the convention center. No new hotels had been built in the city for more than 35 years. Marketing experts analyzed the quality and quantity of hotel accommodations and reported to ARA that the Pontchartrain project was economically viable and merited approval.

A combination of private lenders and investors, including the Detroit Metropolitan Industrial Development Corp., raised $7.2 million (approximately 80 percent) for the project. The ARA loaned the remaining 20 percent at 4 percent interest.

Mr. MUSKIE. Mr. President, another example of inaccurate reporting concerning ARA is an article which was published in the June 5 issue of Time magazine. Entitled "Hope in Appalachia," the article describes the remarkable community effort which has revitalized Hazletonton, Pa. The thrust of the article is that this recovery was a strictly local effort accomplished with a minimum of Federal help. Nowhere does the article mention ARA, and conveniently overlooked is the fact that ARA has invested some $2.6 million in Hazleton, resulting in the creation of over 1,700 jobs. In order to set the record straight, I ask unanimous consent that the Time article, a letter from the Administrator of ARA to Time, and a listing of ARA projects in Hazleton May be printed in the RECORD at this point.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

HOPE IN APPALACHIA

If it ever gets serious, Lyndon Johnson's war on poverty might be waged all around Hazleton, Pa. (population 32,500), which is perched amid deserted coal mines high on Spring Mountain in the heart of depressed and desolate Appalachia. But Hazleton has already fought a valiant antipoverty war of its own. Moreover, it has done so with a minimum of Federal help.

For years, the town lived respectably if not richly from coal mines and textile plants in the area. But after World War II, Hazleton found itself on the skids. One after another, the mines shut down. Between 1946 and 1958, coal-mine employment plunged from 14,000 to 1,750; young people began leaving town at the rate of a thousand a year. In Hazleton it became the rule rather than the exception for wives to plod off to work at sewing machines in the textile and garment plants while listless, jobless husbands stayed home to keep house.

EXPENSIVE EXPERIENCE

Desperately, the Hazleton Chamber of Commerce worked to keep the community alive. When a local silk plant announced that it would move to cheaper labor markets in Mississippi, 70 Hazleton businessmen signed mortgages totaling $50,000 to keep the factory in town. Within 3 years the plant moved south anyway -- putting 2,000 people out of work. Refusing to give up, the chamber formed the Hazleton Industrial Development Corp., raised $650,000 in bonds and contributions its first year, offered to donate $500,000 as a no-strings down payment on a $1,600,000 plant built to any prospect's specifications. The Electric Auto Lite Co. (now the Eltra Corp.), accepted the offer, but created fewer than 300 new jobs after the community thought it would employ at least 1,000. It was an expensive, disillusioning experience.

In 1955, hurricane Diane crashed through, flooding and wrecking the few coal mines that remained. It was almost the death blow. Most of the mines never reopened, and 16 percent of Hazleton's working force was unemployed. But the next year proved to be Hazleton's turning point -- for the better.

CAN DO

Dr. Edgar Dessen, now 47, a physician, had been president of the chamber of commerce during the darkest days. Under his determined guidance, a 550-acre site near town was bought for $10 an acre as an "industrial development park." Not long after, the Pennsylvania State Legislature passed a law providing loans to towns that could scrape up outright contributions from townspeople -- as well as bank loans -- to attract new industry. Dessen got a local organization going to get the money, dubbed it "CAN DO," then spent 3 weeks trying to dream up some words to fit the initials. Finally he came up with the coherent if colorless label, "Community Area New Development Organization."

Goal of the first "CAN DO" drive was $500, 000 -- a part to be acquired by selling 15-year 8 percent debenture bonds, the rest from donations. Dessen's group put on heavy pressure, had every single contributor listed daily in the Hazleton Standard-Speaker, and classified the lists so that all lawyers or all employees of one factory were together -- making for easy (and occasionally embarrassing) comparisons. To keep the pressure up, Dessen went on the radio every noon to read the names and amounts contributed. Within 3 weeks "CAN DO" was well over its quota, with $200,000 in cash and $540,000 in bond purchases.

THE ROAD BACK

Then the town began to improve its "industrial development park," building roads, sewer and water systems, and a 60,000-square foot, $160,000 "shell plant" on sheer speculation. The General Foam Corp. moved in almost right away, has since enlarged until its investment is almost $5 million. About the same time the Beryllium Corp. was persuaded by Hazleton citizens to take a look at an abandoned locomotive roundhouse built in 1918. Said Dessen: "I was ashamed to show it to them. It was built with reinforced concrete, but it was in a mess. Every window had been broken; there was soot all over everything. They said they had looked at 30 or 40 sites all over the Eastern United States and Puerto Rico." But Beryllium bought the roundhouse because it was a good building for a bargain price, now employs 400 people, has an $8 million investment. Later the Sekisui Corp., which makes plastics and is the first Japanese-financed factory built in the United States, put up a $1,750,000 plant.

Now, with "CAN DO's" fund-raising drives (collected so far: $2,200,000) keeping the State loans flowing, the once-dying town has, since 1956, attracted 15 new industries with payrolls totaling $13 million a year. No fewer than 11,000 new jobs have been created in the last 5 years.

Hazleton has its own airport, with daily flights from Washington and New York, a new 175-acre park with a manmade lake, an active arts council; and early this spring ground-breaking ceremonies were held for two new Federal superhighways nearby. Nearly all of this has been done without Federal funds. And even though unemployment in Hazleton is still at an unsettling 7.8 percent, Edgar Dessen, for one, is not waiting with outstretched hand for poverty-war funds from Washington, Said he: "Federal programs will never rebuild towns that just aren't capable of helping themselves. Some towns should be allowed to become ghost towns -- they did in the West. We should not try to create a vast WPA that will make people dependent on the Government forever."

JUNE 11, 1964.

LETTERS TO THE EDITOR,

Time Magazine,

Time and Life Building, Rockefeller Center,

New York, N.Y.

TO THE: Editor of Time: My nomination for the non sequitur of the month goes to Time, June 5, 1964, for the following juxtaposition of thoughts in an article (Hope in Appalachia) about Hazleton , Pa., and my good friend, Dr. Edgar Dessen. The Time story said "early this spring groundbreaking ceremonies were held for two new Federal superhighways nearby. Nearly all of this has been done without Federal funds."

Ninety percent of the cost of the highways comes from the Federal Interstate program. The Area Redevelopment Administration has invested more than $2,500,000 in helping to solve the unemployment problem in Hazleton. Over $150,000 of this amount was a grant, the balance loans. Said Dr. Dessen when ARA announced approval of its most recent Hazleton project, "ARA hits Hazleton like a breath of spring."

All praise to Ed Dessen, Lou Feldman. and all the other hardworking intelligent community leaders who have helped Hazleton back to economic stability. But let's not forget that their work could not have been accomplished without considerable aid from the State of Pennsylvania and the Federal Government. Which is as it should be. Local communities, State governments, and Federal agencies such as ARA must form solid working partnerships in order to lick area unemployment.

Sincerely,

William L. BATT, Jr.,

Administrator.

ARA IN HAZLETON, PA.

ARA has approved a total of seven projects in the Hazleton area for a Federal expenditure of $2.6 million. These projects have created 1,706 jobs and have trained 90 workers for available jobs in the area.

The projects are:

Hazleton City Water Development Authority: Extension of water system to industrial park, $200,000 loan, $158,000 grant; 500 jobs.

Sekisui Plastics: Manufacturer of polystyrene paper. Two loans, one for $340,000 to the local development authority for construction of the building; the other for $585,000 to Sekisui for machinery and equipment; 106 jobs.

Hazleton Weaving Corp.: Loan of $650,000 to Hazleton development authority for construction of building. Loan of $605,000 to firm for machinery and equipment needed in connection with expansion; 428 jobs.

Training: 40 welders; 50 stenographers; cost to Federal Government, $58,000.

These seven projects have created 1,034 direct jobs, plus 672 additional jobs in trades and services.

Mr. MUSKIE. Mr. President, I feel that some mention should also be made of the positive side of ARA's activities. Recently, in a newsletter to Maine citizens, I explained why I support ARA, and detailed ARA's job-producing activities in Maine. I ask unanimous consent to have a copy of that newsletter printed in the RECORD.

There being no objection, the newsletter was ordered to be printed in the RECORD, as follows:

LETTER TO MAINE FROM SENATOR ED MUSKIE

U.S. SENATE,

Washington, D.C., June 1, 1964.

DEAR FRIENDS: One of the great men in Maine history was Joshua Chamberlain, military hero at the Civil War Battle of Gettysburg, president of Bowdoin College, Republican Governor of Maine from 1867 to 1871. In his first inaugural address, Chamberlain outlined his philosophy of government in these eloquent words: "A government has something more to do than to govern, and to levy taxes to pay the Governors. It is something more than a police to arrest evil and punish wrong. It must also encourage good, point out improvements, open roads of prosperity, and infuse life into all right enterprises. It should combine the best minds of the State for all the high ends for which society is established and to which man aspires. That gives us much to do."

Today, nearly 100 years later, we still have much to do. In March of this year, unemployment in Maine was 23,100, or 6.8 percent of the work force. This is above the national average, and must be reduced.

I believe, with Joshua Chamberlain, that government, at all levels, has an obligation to help create the climate within which our free enterprise system can prosper. It was this belief that provided the motivation for the legislation which created the department of economic development and the Maine Industrial Building Authority while I was Governor. And it is that same belief that is the basis for my continuing support of the Area Redevelopment Administration (ARA).

As a member of the Senate Banking and Currency Committee, which has legislative jurisdiction over ARA, I am proud to have played a part in establishing this program. In the 3 years of its existence, ARA has played an important role in bringing new industries and new jobs to Maine, and strengthening existing industries. Without ARA, our unemployment rate would be even higher than it is, and many major projects of the future, such as our new sugarbeet refinery, would not have been possible.

This letter describes ARA and its activities in Maine and across the country. I hope you will find it stimulating and informative. Sincerely,

EDMUND S. MUSKIE.

WHAT IS ARA?

ARA is primarily a program of long-term, low-interest loans to private industry to develop long-range job opportunities in those parts of our Nation which have the highest rates of unemployment. In close partnership with private industry, State, and local government, ARA helps local communities to help themselves by making capital and technical assistance available for job-creating industries.

WHEN DID IT BEGIN?

On May 1, 1961, when President Kennedy signed the Area Redevelopment Act, the first major piece of legislation of his administration.

HOW DOES ARA WORK?

ARA has four major tools. Most important are:

Loans to private industry to establish or expand in redevelopment areas, bridging the gap between what financing is available from conventional lending facilities, and what is needed to create new job opportunities.

In addition, there are:

Loans and grants to provide for new or expanded public facilities, such as access roads, industrial water systems, industrial sewage treatment systems, and railroad spur lines, so that industry will be encouraged to establish in these areas.

Technical assistance to communities to enable them to plan their economic development intelligently and to explore methods of expanding their industrial resources.

Worker retraining to equip the labor force with new and improved skills for expanding industries.

WHAT AREAS ARE ELIGIBLE?

Any area which: (1) has an unemployment rate consistently higher than the national average; (2) formally requests designation; (3) prepares an acceptable overall economic development program which must be approved by the State.

WHAT ARE THE LIMITATIONS?

ARA can be used only if private financing is not available. This provision insures against competition with banks and other lending institutions.

For industrial projects, ARA can provide no more than 65 percent of the total project cost. At least 10 percent must come from a public or semipublic agency, such as a local development company. The balance usually comes from banks and other private lenders who cannot finance the entire project.

ARA funds cannot be used to assist a business in relocating from one area to another. This prohibition makes it clear that the act was designed to create new jobs, not just to transfer them from one area to another.

IS ARA A GIVEAWAY PROGRAM?

No. About 75 percent of the funds disbursed by ARA are in the form of loans, repayable with interest to the U.S. Treasury. In addition, when new jobs are created, income taxes paid by the new employees and their employers usually offset the initial investment within 2 years, giving the Government a double return.

HAS ARA WORKED?

Yes. In Maine, and across the country, ARA has brought new hope and new jobs into economically hard-hit areas. When all of the projects which had been approved by ARA as of May 1, 1964, are completely underway, an estimated 110,000 new jobs will have been made available throughout the country, including approximately 6,000 in Maine.

ARA IN MAINE

Through a wide variety of projects, from York County to the northern tip of Maine, ARA has stimulated local economic development. Six entire counties -- Aroostook, Piscataquis, Washington, Hancock, Knox, and Lincoln -- and parts of two others -- York and Penobscot -- have been designated eligible for assistance under the ARA program.

Approved projects in Maine include:

Industrial loans: To date, ARA has approved 15 industrial loans in Maine, for a total of almost $10.3 million. They range in size from $19,000 for an expanded boatyard facility in York County to $6.9 million for a sugarbeet refinery in Aroostook County. Approved projects also include establishment of a lumber processing plant, and expansion of an apple warehouse in York County; a cedar fencing plant, a lumber mill, four potato warehouses and expansion of a potato processing plant in Aroostook County; a granite processing facility in Hancock County; a lime manufacturing plant in Knox County; a new ski resort area in Piscataquis County; and a peat moss operation in Washington County.

Public facility loans and grants: In June 1963, the Sanford Water District received a $83,000 grant to expand its water system. This has been the only public facility project approved under ARA to date, although a $4.3 million loan for construction of a deepwater pier and marine terminal in Rockland is nearing the final stages of processing.

Technical assistance grants: Six technical assistance grants totaling $125,000 have been approved. These include funds for a study of the shellfish industry, a study to evaluate the possibility of establishing a plant to process marine clays, an inventory of forest resources in Washington County, and a study to determine the economic and agricultural feasibility of a sugarbeet refinery in Aroostook (this study formed the basis for Maine's request for a sugarbeet acreage allotment).

Training projects: Sixteen training projects calling for the training of nearly 500 workers, have been approved by ARA. They range from the training of nurse's aides in Lincoln County to the training of stenographers and sewing machine operators in York and Aroostook Counties.

THE ACCELERATED PUBLIC WORKS PROGRAM

In addition to its regular program the ARA administers the accelerated public works program (APW), which has been in effect since September 1962. It provides increased Federal grants for necessary public works projects in areas of high unemployment. In Maine, all ARA areas plus the Lewiston-Auburn area are eligible for APW grants.

APW works by permitting an increase in Federal grants under existing programs. For example, the Water Pollution Control Act of 1956 provides for Federal grants of 30 percent of the total cost for the construction of sewage treatment facilities; the balance is put up by the State and local governments. Under APW, the Federal share can be increased to 50 percent in areas of high unemployment (in a few very hard-hit areas, the Federal share may go as high as two-thirds; in Maine, only Washington County and the Fort Kent area qualify for two-thirds).

Under the APW program, 55 out of an eligible 56 projects were approved in Maine, calling for a total investment of $12.6 million, over $4.6 million of which was in Federal funds. Nineteen of the projects were for improved municipal sewage and water systems, four for major hospital construction (including one completely new hospital in Machias), six for needed municipal buildings such as libraries and fire stations, and six were for highway and street improvements, the rest were for a wide variety of projects such as improved recreational facilities at national parks in Maine.

Besides providing these much-needed facilities, APW will provide a year's work for about 625 unemployed persons, and the economic benefits of the construction will spread through the entire economy of the State.

DOES MAINE NEED AN "APPALACHIA" PROGRAM?

President Johnson has proposed a comprehensive program to provide assistance for the long-depressed mountainous Appalachia region. Federal aid based on self-help and local community effort would include funds for road construction, health, education, and resource development. In a recent editorial, the Bangor Daily News suggested possible application of a similar program to Maine. When Senator MUSKIE was asked about the News proposal, this was his reply:

U.S. SENATE,

Washington, D.C.,

May 13,1964.

Mr. JOHN MORAN,

Managing Editor, Bangor Daily News,

Bangor, Maine.

DEAR JACK: I was pleased to receive your inquiry regarding possible Federal assistance for economic development in Maine along the lines of the President's Appalachia program. As you know, I have consistently supported the view that the Federal Government has a legitimate role to play in stimulating State and local, public and private, economic development programs. This stimulation can be provided through technical assistance, loans, and public facility grants.

In a sense, Maine now has its own Appalachia program under Area Redevelopment, Accelerated Public Works, and the Manpower Development and Training Act. These programs have been applied in the areas of Maine where poverty is most serious. A survey published in the Federal Reserve Bank of Boston's April 1964 New England Business Review points out that Washington County, among all the counties in New England, has the largest percentage (over 34 percent) of families living on an income of $3,000 or less. In Aroostook, Hancock, Piscataquis, Franklin, Waldo, Knox, arid Lincoln Counties, over 25 percent of the families have incomes of $3,000 or less. All of these counties, except Waldo and Franklin, have been designated as eligible for assistance under Area Redevelopment and accelerated public works programs.

The Appalachia program advocated by President Johnson involves a broadened application of the lessons learned from these programs in Maine and in other States. The geographic spread and the intensity of poverty in Appalachia is far greater than that in Maine or the rest of New England, but it is not different in kind. We have found these programs to be valuable in Maine; they should be continued here and elsewhere.

UNEMPLOYMENT

A comparison: Maine Appalachia, the United States (1960): National average, 5.6 percent; Maine, 6.5 percent; Appalachia, 7.1 percent.

WHERE AND WHAT IS APPALACHIA?

It includes portions of the States of Pennsylvania, Maryland, Ohio, Virginia, Kentucky, North Carolina, Tennessee, Georgia Alabama, and the entire State of West Virginia It is an area long affected by persistent unemployment and continuing poverty.

Maine ranks second in the Nation in the total amount of commercial and industrial loans extended under the area redevelopment program. The total of loans authorized for Maine is $9.8 million. This includes a $6.875 million loan for the construction of the Maine sugarbeet refinery, a $1 million loan to Potato Service, Inc., of Presque Isle, loans for forest product operations, a granite quarry loan, and two loans for the construction of potato packing and grading warehouses for Limestone and Crouseville which should have a profound effect on the industry's marketing program. In each case the capital made available un der ARA has stimulated more effective use of our resources

Over $4.6 million in accelerated public works (APW) grants have been extended to Maine communities for the elimination of unemployment and construction of needed public works. APW funds for highway and street construction in eastern and northern Maine were made to Mount Desert in Hancock County and to Eagle Lake, Wallagrass and New Canada in Aroostook County. Retraining of over 2,400 Maine workers have been conducted under the area redevelopment and the manpower training programs.

The job is far from complete. The area redevelopment and accelerated public works program have proved themselves and should be extended. Bills to accomplish this objective are pending in Congress. Action is being blocked in the House of Representatives. In fact, a major harbor development project in Rockland has been blocked by the House of Representatives' vote against extension of the Area Redevelopment Act. A comprehensive plan for the economic development of northern New England makes good sense. The Governors of Vermont, New Hampshire and I have discussed such a proposal.

As a cosponsor of the President's antipoverty bill, I will see that attention is focused on the need for highway construction funds in all redevelopment areas. Your support in this objective is appreciated.

Sincerely,

EDMUND S. MUSKIE,

U.S. Senator.