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America's Town Meeting of the Air - "Which Way Industry - North or South, " Jacksonville, FL, May 25, 1954
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America's Town Meeting of the Air - "Which Way Industry - North or South, " Jacksonville, FL, May 25, 1954
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The original documents are located in Box D14, folder "America's Town Meeting of the Air
- "Which Way Industry - North or South, " Jacksonville, FL, May 25, 1954" of the Ford
Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential
Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D14 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
INTRODUCTORY REMARKS BY CONGRESSMAN GERALD R. FORD, JR.
REPUBLICAN, 5th DISTRICT, MICHIGAN
AMERICA'S TOWN MEETING OF THE AIR, JACKSONVILLE, FLORIDA, MAY 25, 1954
"WHICH WAY INDUSTRY - NORTH OR SOUTH?"
The real question, as I see it, is not whether American industry
should be located in the North or South, but rather where it can best be
situated to serve the interests of the Nation as a whole.
For historical, political and economic reasons American industry
to a major extent concentrated in the northern part of our country. Some of
the reasons for this pattern no longer exist. I am in sympathy with the desire
lete.
of the South to diversify and expand its economic activity, and to obtain the
benefits which would result from increased industrialization. In this process,
however, due consideration must be given to what is best for the entire country,
and it must not be carried out solely on the basis of regional or local interests.
This contest between the north and the south for greater industrial
development is at best extremely negative. Most of the competition results in
language and articles de:rogatory to both sections of the country, encourages
false claims and otherwise serves to the detriment of the industrial progress
and expansion of the United States.
GERALD FORD LIBRARY
For all concerned the positive approach is by far the best. We
-2-
in the north should not disparage any advantages the south may have. Our
sales technique in the north should emphasize our advantages which are many
and unique. First and foremost we have a large resevoir of competent executives,
skilled craftsmen, and highly trained production workers. In addition the north
as a whole has well-developed communities with most of the necessary facilities
such as schools, roads, and public utilities already in existence. Furthermore,
and this will surprise many, local taxes in the north which must enter into
in many instances a
the cost of production are not X disadvantage. It should be noted in this
connection that any alleged immediate local tax advantage in the south may
well disappear with the need for new schools and other community facilities.
The north should emphasize the benefits from a four-season year. In many
industries certain weather conditions are vital in the processes of production
and the health and welfare of the employees. Last but not least, there are
certain advantages for the north which are now appearing on the horizon. The
construction of the St. Lawrence Seaway and Power Project will give many areas
in the north new transportation and electrical energy possibilities. We in
the north are alert to such advantages that will definitely accrue from
-3-
utilization of atomic research and development. Many areas in the north are
devoid of natural sites for cheap hydroelectric power but our industrial leaders
are taking steps to compensate for this handicap by leading the fight for
civilian use of nuclear power so that we can have relatively cheap electrical
energy from this unlimited source.
Finally, I believe that the growth of industry in the Nation must
be achieved within the framework of our system of free enterprise. It is the
responsibility of our business executives, after taking into account the
national interests and the interests of their industries and companies, to
build their factories where they think they can do the best job, and their
judgment must not be influenced by artificial and temporary incentives. Such
practice is contrary to the economic principles which made this country great,
and in the long run will lead to inefficiency and dislocation in our long-
range overall industrial development.
FORD i LIBRARY GERALD
INTRODUCTORY REMARKS BY CONGRESSMAN GERALD R. FORD, JR.
REPUBLICAN, 5th DISTRICT, MICHIGAN
AMERICA'S TOWN MEETING OF THE AIR, JACKSONVILLE, FLORIDA, May 25, 1954
"WHICH WAY INDUSTRY - NORTH OR SOUTH?"
The real question, as I see it, is not whether American industry
should be located in the North or South, but rather where it can best be
situated to serve the interests of the Nation as a whole.
This contest between the north and the south for greater industrial
development is at best extremely negative. Most of the competition results in
language and articles derogatory to both sections of the country, encourages
false claims and otherwise serves to the detriment of the industrial progress
and expansion of the United States.
For all concerned the positive approach is by far the best. We in
the north should not disparage any advantages the south may have. Our sales
technique in the north should emphasise our advangates which are many and unique.
Forst and foremost we have a large resevoir of competent executives, skilled
craftsmen, and highly trained production workers. In addition the north as a
whole has well-developed communities with most of the necessary facilities such
as schools, roads, and public utilities already in existence. Furthermore
FORD i LIBRARY GERALD
&
and this will surprise many, local taxes in the north which must enter into the
cost of production are not in many instances a disadvantage. It should be noted
in this connection that any alleged immediate local tax advantage in the south
may well disappear with the need for new schools and other community facilities.
The north should emphasise the benefits from a four-season year. In many
industries certain weather conditions are vital in the processes of production
and the health and welfare of the employees. Last but not least, there are certain
advantages for the north which are now appearing on the horison. The construction
of the St. Lawrence Seaway and Power Project will give many areas in the north
new transportation and electrical energy possibilities. We in the north are
alert to such advantages that will definitely accrue from utilisation of atomic
research and development. Many areas in the north are devoid of natural sites
for cheap hydroelectric power but our industrial leaders are taking steps to
compensate for this handicap by leading the fight for civilian use of nuclear
power 80 that we can have relatively cheap electrical energy from this unlimited
source.
Finally, I believe that the growth of industry in the Nation must
FORD is LIBRARY GERALD
-3-
be achieved within the framework of our system of free enterprise. It is the
responsibility of our business executives, after taking into account the national
interests and the interests of their industries and companies, to build their
factories where they think they can do the best job, and their judgment must
not be influenced by artificial and temporary incentives. Such practice is
contrary to the economic principles which made this country great, and in the
long run will lead to inefficiency and dislocation in our long-range overall
industrial development.
BERALD FORD LIBRARY
STATEMENT OF D. R. (BILLY) MATTHEWS, MEMBER OF CONGRESS
EIGHTH CONGRESSIONAL DISTRICT OF FLORIDA
"AMERICA'S TOWN MEETING OF THE AIR"
May 25, 1954 - Jacksonville, Florida
The great Southern orator, Henry W. Grady, in a talk in 1889
described the funeral of a poor "one-gallus" fellow he had attended in
Pickens County, Georgia, as follows: "They cut through the solid marble
to make his grave, and yet a little tombstone they put above him was
from Vermont. They buried him in the heart of a pine forest, and yet the
pine coffin was imported from Cincinnati. They buried him by the side
of the best sheep grazing country on the earth, and yet the wool in the
coffin bands, and the coffin bands themselves, were bought from the
North. They buried him in a New York coat, and a Boston pair of shoes--
and a pair of breeches from Chicago, and a shirt from Cincinnati. The
South didn't furnish a thing on earth for that funeral but the corpse
and the hole in the ground!"
It was insvitable that industry would nove South, and that some of
Temprany.
it will continue to move South. Available raw materials, good markets,
adequate labor, superb climate, electrical power, and water-these are
the priceless resources that industry needs, and these resources are
abundantly manifest in the South.
The relocation of plants has been a pattern in only those industries
R
where due to the raw materials the plant should have been located in
delete
the South-the source of these raw materials--in the first place. This
is true, particularly, in the case of textiles, where at the turn of the
FORD & LIBRARY GERALD
century 70% of the spindles were in the New England states, whereas
79% are now in the South. This change has resulted in eliminating high
transportation costs on the shipments of raw materials hundreds of
miles away to be made into finished products, and then shipped back to
be sold.
The rapid increase in the population of the South has caused
industry to realise that it needs these home markets. The labor supply
is eager, cooperative, and abundant. During the past ten years, at
least one million laborers of the South have had to move to the North
to find industrial jobs. Still the supply is 80 abundant that industries
coming to the South have many more applications than jobs. The small
farmer, under-employed, is one of the chief sources for industrial
employment. The wage differential in the South is getting less all the
time, and in some industries, especially in the pulp mills, the wages
are comparatively higher than they are in the North.
4
The Federal Government should not interfere with the industrial
Certificates s 1
progress of the South. There is room for industrial expansion in all
sections of the country. Just as cotton has gone from the South to the
a).Tates
so some industry will come from the North to the South. Research,
community initiative, good labor-management relations, the development
of natural resources--these are the factors in any section of this great
country that becken industry, and the South possesses these factors.
FORD & LIBRARY GERALD
(Not printed at Government expense)
Congressional Record
PROCEEDINGS AND DEBATES OF THE 83ᵈ CONGRESS, FIRST SESSION
The Economic Problems of New England
A Program for Congressional Action
REMARKS OF SENATOR JOHN F. KENNEDY,
OF MASSACHUSETTS,
IN THE SENATE OF THE UNITED STATES
TABLE OF CONTENTS
SPEECH NO. 1. MAY 18, 1953-PAGES 3 TO 35
Page
I. INTRODUCTION
3
Organization of New England Delegation
9
II. INDUSTRIAL EXPANSION AND DIVERSIFICATION
11
Regional Development Corporations
11
Tax Amortization Incentives
17
Job Retraining
19
Aids to Small Business (RFC, SDPA)
19
Natural Resources
22
General
22
Interagency Survey
26
Passamaquoddy Study
27
St. Lawrence Power
28
Connecticut River Flood Control
30
Water Pollution Control
31
Aid to Fishing Industry
33
SPEECH NO. 2. MAY 20, 1953-PAGES 36 TO 62
III. PREVENTION OF FURTHER INDUSTRIAL DISLOCATION
36
Labor Costs
36
Fair Labor Standards Act
36
Walsh-Healey Act
38
Administration
39
Child Labor
40
Learner Permits
40
Puerto Rico
40
Taft-Hartley Law
41
Minority Exploitation
46
Old Age and Survivors Insurance and Pensions
47
Unemployment Compensation Standards
47
Tax Abuses
49
Municipal Securities
49
Capital Gains
50
Charitable Trusts
51
Puerto Rico
51
Certificates of Necessity
52
Federal Incentives
54
Government Contracts
54
Government Projects
56
Tax Amortization Certificates
257478-40779
GERALD 2. 66 0 LIBRARY
2
Page
III. PREVENTION OF FURTHER INDUSTRIAL DISLOCATION-Continued
58
Transportation Costs
59
Trucking
59
Railroads
60
Speeches of Senator John F. Kennedy, of Mass.
Ocean Carriers
61
Speculation-Wool Futures
in the Senate of the U.S., May 18, 20, and 25, 1953
SPEECH NO. 3. MAY 25, 1953-PAGES 63 TO 85
63
Speech No. 1-May 18, 1953
South and West. Likewise, each Sena-
IV. REDUCTION OF ECONOMIC HARDSHIPS
63
tor can point to examples in his own
Unemployment
63
THE ECONOMIC PROBLEMS OF NEW
State of communities overly dependent
General
Reinsurance of State Funds
64
ENGLAND-A PROGRAM FOR CON-
upon 1 or 2 industries, just as so many
66
GRESSIONAL ACTION
New England towns found economic ex-
Supplementary Benefits
67
I. INTRODUCTION
istence hanging upon the survival of the
Old Age
67
textile and shoe industries. The South
General
67
Mr. KENNEDY. Mr. President, I wish
and the West, as well as New England,
Old Age and Survivors Insurance
68
to address the Senate today in the first
are concerned about fair and equal
Old Age Assistance
69
of a series of speeches concerning the
Private Pensions and Employment
transportation rates. New York, as well
70
economic problems of New England and
Middle-Income Housing
as Rhode Island, is interested in safe-
73
the role of the Federal Government in
guarding its State unemployment-com-
V. OVER-ALL OBJECTIVES
73
the solution of such problems. I want
pensation fund. Similar examples could
Economy
74
to make it clear from the outset, how-
International Trade
81
be pointed out for each of the problems
ever, that neither the problems which I
Antitrust Laws
82
and proposals which I shall discuss in
Anti-inflation and Antirecession Policies
shall discuss nor the congressional meas-
82
this series of three talks.
ures which I shall propose are peculiar
Agricultural Programs
84
in their application to the New England
In short, although I shall use the
VI. CONCLUSION
86
economy. They apply in some measure
needs of the New England economy to
EDITORIAL AND PRESS COMMENT ON THE KENNEDY PROGRAM
to the Middle Atlantic States and to the
point up the needs of the economies of
257478-46779
East North Central States, and to a
our Nation and other great regions and
lesser degree to all other regions of the
States, these are not matters of interest
United States.
to New England alone. As the Senator
As a Senator's responsibility is not
from New Hampshire [Mr. TOBEY] has
only to his State but to his Nation, I
pointed out with respect to the economy
think that it is proper to point out that
of New England:
even though many of the recommenda-
Its problems are those of the oldest eco-
tions I have made are of special impor-
nomic region in the country. They deserve
attention on their own merits, but have the
tance to New England, nevertheless,
additional value of serving as prototypes of
none is contrary to the national in-
problems facing regional economies as they
terest, but rather would, if enacted, be
grow older.
of benefit to all of the people wherever
they may live. Serious areas of labor
As Secretary of Labor Durkin recently
said in a Lawrence address:
surplus exist not only in such New Eng-
land communities as Lawrence and
These islands of surplus labor in an other-
Lowell, Mass.; they also impair the pros-
wise prosperous Nation pose a national prob-
lem. Unless corrected, they act like a
perity of dozens of other areas, including
brake on the growth and expansion of our
Tacoma, Wash.; West Frankfort, Ill.;
entire national economy.
Durham, N. C.; Atlantic City, N. J.;
Terre Haute, Ind.; and Scranton, Pa.
Thus, of the three dozen or more legis-
Unfair competition from depressed wage
lative measure which I shall propose or
areas is a problem to the textile industry
discuss in this series, none concerns or
in New Jersey and in North Carolina as
applies to New England alone, with the
well as in Massachusetts. Moderniza-
possible exception of those problems of
tion of equipment and managerial tech-
resource development and area trans-
niques are needed by small-business men
portation rates which necessarily in-
in all sections of the country, not merely
volve the attributes of a particular
in New England. A declining textile
region.
industry has affected the manufacturers
Moreover, I need not labor the point
of Virginia, North Carolina, and Ten-
that even if such a program were con-
nessee, as well as New England and the
cerned with and applied to only the New
Middle Atlantic States, to say nothing
England region, its importance to the
of the cotton and wool producers of the
rest of the Nation could not be over-
257478-46779
(3)
4
5
stated. We know too well in this coun-
times in this series the theme of fair
cial bank deposits have shown a large
These problems have been analyzed in
try that a serious economic recession
competition; and fair competition is just
rise since 1933, except for a slight hitch
intensive studies. I doubt that the eco-
in one part of the Nation will eventually
as important to the South and its in-
in 1937 and a serious decline once again
nomic problems of any region have been
take its toll in other sections. This Na-
dustries as it is to any other section of
in the 1947-48 period. Personal liquid
SO thoroughly and so frequently studied
tion's challenge to meet the needs of
the United States. On the basis of the
savings have held fairly steady, while re-
as have those of New England. The
defense mobilization and to achieve na-
recent New England address by the Gov-
tail sales have risen markedly. Invest-
number of such studies began to rise as
tional and international economic sta-
ernor of Mississippi, the Honorable Hugh
ments in equipment, machinery, and new
far back as 1920. Their intensity has
bility and development cannot be fully
White, I am certain that unfair prac-
construction are better than generally
increased in the past 5 years. Studies
met if any part of the country is un-
tices encouraging the abandonment of
assumed.
have been made by regional and State
productive and unstable economically.
existing plants are not a necessary part
At present, defense activity has stimu-
groups, on both a private and public
Other areas depend upon New England
of the South's industrialization program;
lated economic progress in New England
level. The President's Council of Eco-
as a market for their raw materials and
that their aim is rather one of new in-
and has given the regional economy an
nomic Advisors initiated a study which
as a source of manufactured products.
dustrial development. "Our industrial
opportunity to make longterm adjust-
was published in July 1951. The Joint
New England accounts for over 20 per-
concept," said Governor White, "is not
ments for future years. Since 1939, the
Congressional Committee on the Eco-
that of robbing Peter to pay Paul."
cent of the Nation's textile manufac-
number of manufacturing establish-
nomic Report is currently sponsoring a
turing, well over 50 percent of the Na-
Moreover, the South, which more than
ments and employees in New England has
study, through the National Planning
tion's textile machinery, and approxi-
any other region has benefited from
increased by better than 50 percent; the
Association. The New England Gover-
mately 50 percent of this country's nails
assistance by the Federal Government as
value of our manufactured products has
nors, the New England Council, and
and spikes, typewriters, hardsaws,
well as by the free market, has recog-
nearly tripled. Employment in Decem-
various economists have all made studies.
lathes, and ball and roller bearings. It
nized by its own experience that the role
ber 1952 was the highest in the region's
And the studies have been studied. But
provides a very substantial part of our
of the Federal Government in develop-
history, with a gain of approximately
no definite, comprehensive legislative
ctrical machinery and appliances, air-
ing the resources of a region is great;
1 million jobs since 1939. Our financial
program has been submitted to Congress.
craft and aircraft engines, machine tools,
and I am sure the South will not object
institutions had a higher proportion of
The time has come now to act positively
shoes and rubber products, hardware,
to having similar aids extended to other
assets, and our workers a higher take-
and decisively.
wiring supplies, and other important
regions.
home pay and standard of living, than
In addition to these analyses, in the
goods. War supply prime contracts of
Secondly, I wish to stress that my con-
those in other regions throughout the
past 2 years I have traveled up and down
nearly $18 billion, or 9 percent of the
stant reference to the problems of New
Nation. In terms of savings accounts,
the State of Massachusetts, and, to a
national total, were fulfilled in New
England is not intended to convey a
purchases, life insurance, home owner-
lesser extent, other parts of New Eng-
England in World War II.
pessimistic exaggeration of those prob-
ship, and telephones, radios, and televi-
land. I have discussed these problems
lems, or to echo the prophets of doom
sion sets, New Englanders as a whole are
with workers in the plants, fishermen on
New England does not seek regional
who have been talking about the decline
the piers, bankers, businessmen, and
advantages which are contrary to the
in a most fortunate position. For nearly
of New England for the past 30 years,
national interests. It does not call for
20 years, New England has shown the
others. I am convinced that the prob-
or, indeed, if we examine the statements
special attention or favors which disre-
lowest annual total of man-days lost be-
lems which I shall discuss in this series
of some of our earliest citizens, ever since
cause of strikes. Our educational insti-
of addresses are very real problems in-
gard or discriminate against the needs
the establishment of the New England
tutions and industrial research labora-
deed. They deserve our immediate and
of other areas, but this Nation cannot
community.
tories are famous throughout the Nation
serious attention as a matter of national
afford to ignore the economic problems
New England has much to be proud of
and the world. Our New England Coun-
interest.
of an area SO vital to our national pros-
and much for which to be grateful. With
cil, chambers of commerce, and local in-
It is not my contention, Mr. President,
perity and well-being.
only slightly over 2 percent of the Na-
dustrial development groups have active-
nor is it the contention of the great mass
Finally, with respect to the question
tion's land area, it has 6.3 percent of the
ly championed new industries and aided
of New Englanders, that the sole an-
as to whether this is a national or re-
population, 6.7 percent of the individual
old ones. In short, the economy of New
swer to all these problems lies in the
gional problem, I want to say this to my
money-income payments, and about 10
England on the whole is neither de-
Federal Government. The recommen-
friends in the South. There is no ques-
percent of the Nation's manufacturing
pressed nor undeveloped. All in all, we
dations I intend to propose fall within
tion, and I shall not attempt to conceal
employment. In terms of per capita in-
have every reason to be optimistic, and
the legitimate functions of the Federal
the fact, that much of New England's
come and standard of living, New Eng-
few to be pessimistic; we have little rea-
Government because they involve prob-
loss of industry has been to the South.
land is one of the more prosperous areas
son to complain, and many blessings for
lems national in scope and character.
But it is not my intention to attempt to
of the country. It has an energetic cli-
which to be thankful.
Although I shall deal primarily with leg-
penalize the South for this or to give to
mate and an intelligent and independent
But, Mr. President, I believe we must
islative matter, an equally large area of
New England or the North any unfair
citizenry. It is highly industrialized and
speak frankly with respect to the very
work on these problems is dependent
advantages in the normal competition
highly productive. In absolute terms,
real problems which threaten the pros-
and commerce between the States. On
largely upon administrative action by
its economy has continued to expand
the contrary, I firmly believe that the
perity I have already discussed, and
the executive branch. I limit myself to
throughout the years, despite the prob-
which already, in particular communi-
recommendations of action on the Fed-
proposals which I shall offer will be of
lems I shall outline. In terms of 1952
ties, have damaged the economic wel-
eral level only because that is the limit
tremendous benefit to the South, to raise
price levels, the buying power of the re-
fare of our citizens. We speak frankly
of my jurisdiction as a United States
its standard of living and level of wages,
gion has increased steadily since 1940,
to stimulate industrialization, to improve
in order to realize what the problems of
Senator.
except for the 1947-49 period which I
its markets, to prevent unjust discrimi-
the region are, and in order to deter-
No Federal program can solve prob-
shall discuss shortly. Population, in-
nation and unfair competition against
mine what solutions for such problems
lems of the New England economy with-
come, and employment have similarly in-
its industries, and in many other ways
are needed. Regionwide statisties do
out action on the State and local level.
to help the economy of that region. This
creased, and the present number of man-
not reveal the suffering of individual
Indeed, no governmental program can
also helps New England, which needs to
ufacturing employees is little less than
communities. Defense prosperity con-
do the job without assistance from pri-
sell to the South. I shall stress many
at the wartime peak in 1943. Commer-
ceals long-range declines.
vate agencies, organizations, and indus-
257478-46779
257478-46779
6
7
tries. The primary responsibility for
problems of New England, without Fed-
upon outmoded methods and customs of
the past. Its principal natural resources,
other activities resulting from mobiliza-
the economic development of any area
eral assistance.
rests with the people of that area, act-
However, the proper role of the Fed-
such as fisheries and forests, are being
tion cover up the static position of the
ing both through their State and local
depleted. The center of population is
private civilian economy of the region.
eral Government cannot be denied. By
moving away. The fast-growing basic
Without the aircraft and electrical ma-
governments and through the utilization
this I do not mean, nor will I call for,
the expenditures of large Federal grants
industries of the country are located
chinery industries employment, New
of their own private initiative. As the
New England Council has often pointed
or the establishment of new, large bu-
elsewhere, for reasons of economic geog-
England hard goods showed a decline in
raphy and resource development.
1952. Soft-goods employment increased
out, and as experience has shown, com-
reaucracies to handle these problems. As
munity leadership and community spirit
Many communities have relied entirely
only nominally, with serious decreases in
I shall discuss later, New England has a
upon 1 or 2 industries, whose decline
particular industries, such as textiles.
are of the utmost importance in main-
very vital stake in economy in the Na-
in the world or national market could
The problems of the textile industry,
taining the economic prosperity of an
tional Government. New England does
area. The structure of State and local
not ask for unjustified grants for itself
not be prevented. Machinery is old;
employing some 250,000 workers in New
taxes is one of the most important fac-
or for any other region. The overall
management is old; methods are old.
England, are not primarily regional
tors affecting economic growth in New
effectiveness of the three dozen or more
Too often government, management,
problems, but their effect is felt heavily
proposals I shall make will not depend
and labor have resisted new ideas and lo-
in New England because of that indus-
England and elsewhere. State and local
programs for manufacturing, commun-
upon the public expenditure of large
cal initiative. Products of New England's
try's importance to the region.
ity public works projects, State and local
outstanding universities and research
Although at present levels of activity
sums of money. But I firmly believe that
surveys, and public and private educa-
New England can no longer attempt to
laboratories-Massachusetts alone has
the labor-force requirements are higher
tion all play a large part. Labor and
32 institutions of higher learning-have
than ever, experts agree that New Eng-
solve its national problems on a local
level. It can no longer pour tax funds
frequently been rejected unwisely by
land industry is operating below capac-
management can, by their wise conduct
and concern for the problems of the com-
into the economic development of other
New England business. What Professor
ity. Even now soft spots in the econ-
munity and the individual, contribute
Seymour Harris calls economic arterio-
omy are developing, defense plants are
regions, without receiving from the Con-
much to the solution of such problems.
sclerosis has set in, in too many com-
completing orders and are laying off
gress fair consideration of its own prob-
Above all, it has often been said that
lems. In recent years New England has
munities and industries.
workers, and large-scale unemployment
contributed to the Federal Government
These are, of course, generalizations,
continues in particular communities. A
New Englanders must have faith in New
far more funds than those which have
which are equally as dangerous as the
disproportionately large percentage of
England. They must modernize and
expand their manufacturing plants in
been returned to it in Government serv-
overall regional statistics which conceal
the group IV areas of substantial labor
the expectation of, and as a contribution
ices or expenditures. It is not my
the problems of particular communities.
surplus were in the six-State New Eng-
There are in the region many firms and
land region, according to the latest
toward, a region whose prosperity will
thought that New England's interest is
continue to grow. In the important
best served by opposing Federal pro-
many areas which are realizing the needs
classification Labor. by the Department of
textile industry, for example, new in-
grams which contribute to the well-being
and opportunities before them. There
vestments, intelligent handling of labor
of the country, particularly when those
are government officials who realize that
Such problems have plagued our re-
relations, merchandising techniques,
programs increase the purchasing power
an older economy must be revitalized if
gion since the elose of World War II, and
new product development, and new en-
of New England's customers. Where Fed-
it is to compete successfully with other
to a lesser extent since World War I.
gineering methods are several important
eral action is necessary and appropriate,
regions and if it is to continue its eco-
Between 1929 and 1950, New England
fields in which, according to the Report
it is my firm belief that New England
nomic growth. Various parts of New
textiles lost 149,000 jobs; and the leather
on the New England Economy, a con-
must fight for those national policies.
England are far more prosperous, or face
industry, 44,000. In Lawrence, for ex-
siderable segment of management in
Besides aiding the national interest, such
far different problems, than other sec-
ample, so dependent upon textiles, ap-
New England has room for improvement.
policies are of importance to New Eng-
tors. But, for the most part, the general
proximately one-fifth of all workers have
New investment per textile worker lags
land's prosperity, and particularly if it
description I have given is at the root
been without jobs continually since
in New England, as compared to other
acts to obtain its fair share of the serv-
of New England's troubles, just as it is
1947-this during the greatest prosperity
regions. Yet the New England mills
ices and programs for which its tax
at the root of the troubles of many in-
in American history. Even after the Ko-
which have developed and made new
funds are expended.
dustrial communities elswhere in the
rean boom, nearly 40 percent of Massa-
products and have modernized their
What are the problems of the New
United States. Unless important basic
chusetts' 100,000 textile workers were
machinery and have accepted new ideas
England economy? Why is it necessary
adjustments in the economic structure
jobless, and yet they constituted less
that the Federal Government devote at-
of the area are undertaken, the end of
than one-half of the State's unemployed.
have continued to prosper.
Such matters are of concern to others
tention to that area? What are the eco-
our present defense-inspired prosperity
Instead of deelining during the heavy
than textile owners. An abandoned tex-
nomic ills which in the past have ham-
will accentuate what has been called the
mobilization year of 1951, unemployment
tile mill means lost skills, welfare pay-
pered the economic growth of that area,
decline of New England. Its economic
increased 150 percent in Fall River, 103
ments, and a loss of income not only
and are equally dangerous to other areas
growth, industrialization, population, per
percent in Lawrence, and far more in
to the worker, but to his grocer, his doc-
all over the Nation? In the first place,
capita income, manufacturing employ-
Nashua, N. H., and in the Rhode Island
tor, and all others in the community.
New England is the oldest regional civil-
ment, and share in particular industries
textile mills. These unemployed workers
It is thus the business of all citizens in
ization and economy in the United
have not kept pace with the rest of the
are the concern of their communities
a community to consider the problems
States. It has not yet reached its limit,
country. From 1919 to 1950 the Nation
who suffer a double economic loss in the
and means of assisting not only new in-
as some would have us believe; nor is it
gained 46 percent in manufacturing
incomes of the workers and those who
dustries, but also those now providing
without new industries, new develop-
jobs, while New England lost 6 percent,
serve them. They are of concern to the
their economic lifeblood. Ingenious and
ments, and new ideas. But as an older
although much of this was prior to 1939.
State and to the region, where the im-
alert industrialists, with the aid of re-
industrial community with long-estab-
Today defense contracts in the aircraft
sponsible labor and understanding gov-
lished industries and traditions, too
and electrical machinery industries and
pact of such unemployment is felt and
ernment, can do much to solve economic
much of New England is still dependent
the inflated Government payrolls and
they are of concern to the entire United
States, whose economic welfare and mo-
257478-46779
257478-46779
8
9
bilization productivity is harmed by such
sequently; but suffice it to say at this time
Officials of one Massachusetts town have
misfortunes in its midst.
that New England is not opposed to the
Third, we must lend our efforts toward
stated that 50 percent of that commu-
The 1948-49 recession hit New Eng-
industrial development of any other area
nity's jobs have been moved elsewhere.
the reduction of those hardships caused
land much more severely than the rest
of the country, nor do New England in-
by unemployment, dislocation or reces-
Such dislocation is not only taking
of the country. The decline in manufac-
dustries shrink from competition with
place in Massachusetts, but all over New
sion. This would include improvement
turing employment was earlier and
their competitors in other areas. But we
England; and indeed throughout the
of our unemployment compensation pro-
greater in each of the six New England
believe that such competition should be
Middle Atlantic and other regions. It is
gram; provision for a more adequate
States and in the region as a whole than
fair; and we cannot approve the aban-
not only taking place in textiles, but also
program for our older citizens; and
for any other State or region or the Na-
donment of plants and thousands of
in shoes, electrical goods and numerous
establishment of a genuine middle-in-
tion as a whole. Throughout 1949 and
workers for what we consider to be the
other industries. I am certain that near-
come housing program.
during the recovery in 1950, between
exploitation of unfair methods of com-
ly every other Senator can point to simi-
Finally, I shall set forth other over-
one-fourth and one-half of the Nation's
petition. Nor can we sit idly by and not
lar situations in his own State. I ask,
all legislaitve objectives affecting these
areas of critical unemployment-meas-
take whatever legitimate paths are open
therefore, that before our mobilization
problems, including economy in the Na-
ured only by those covered by unemploy-
to prevent such improper dislocation
economy has terminated and a more
tional Government; cautious wisdom in
ment insurance-were located in the
and migration and its ill effects. Since
serious recession is upon us, and before
international trade policies; effective
New England region. In September
1946, in Massachusetts alone, 70 textile
spot unemployment and industrial dis-
anti-inflation, antideflation, and anti-
1949, 16 of the 30 critical areas sur-
mills have been liquidated, generally for
location and migration undermine the
trust programs; and a review of our
veyed were in New England. The work-
migration or disposition of their assets
orderly maintenance of our prosperity,
present agricultural programs.
ers of New Bedford, Fall River, Law-
to plants in other sections of the country,
we give special attention to these prob-
I want to stress that the presentation
rence, Lowell, Worcester, and North
in the following communities: New Bed-
lems.
of these problems and proposed solutions
Adams, Mass.; Danielson, Conn.; and
ford, Fall River, Holyoke, Lawrence,
It is my intention to outline in this
is only a foundation-a beginning in
Providence and Woonsocket, R. I., for
Fitchburg, Taunton, Lowell, Worcester,
series of addresses a comprehensive leg-
outline form. My approach is, of course,
example, cannot yet fully forget the
Brockton, Haverhill, Peabody, Norwood,
islative program to meet these problems.
only one approach. I shall offer it as a
meaning of long-term unemployment,
Walpole, Waltham, Canton, Wollaston,
After long and serious study, I have con-
basis for further consideration and fur-
when benefits have been exhausted and
Maynard, Hudson, Andover, Newton
cluded that action by the Federal Gov-
ther suggesitons and legislation by the
governmental action is sporadic and su-
Lower Falls, Clinton, Easthampton,
ernment in the following areas and in
Congress, the Federal agencies involved,
perficial. New responsibilities and new
Fisherville, Lynnwood, Turner Falls,
the following ways is both necessary and
and the people of New England and the
opportunities were presented by the cur-
Millbury, North Adams, Rochdale, Gard-
desirable.
United States. I have no doubt that
rent defense program, but unemploy-
ner, Manchaug, Auburn, Webster, West
First, we must lend our efforts toward
there will be many in New England who
ment in many of these areas continue
Medway, Gleasondale, Graniteville,
the diversification and expansion of
will not agree with one or more of the
just as it has continued in areas outside
North Oxford, North Dighton, Bonds-
commercial and industrial activity in
solutions offered to these problems. In-
of New England, such as Scranton, Pa.
ville and West Warren.
these problem areas. This may be done
deed there are many who are unwilling
A 1951-52 textile slump hit New England
Within these past few weeks, we have
through assistance to State and local
to admit that such problems and such
particularly hard, with a loss in jobs of
heard rumors of further liquidations and
community organizations engaged in
needs even exist. But I am hoping that
over 50,000. A large share of those who
migrations on the part of the American
stimulating activity; through tax incen-
this program will contribute to the pres-
kept their jobs worked less than 4 days a
Woolen Co., the biggest woolen manu-
tives to industries expanding in labor
ent consideration New England, the Na-
week. Although the business outlook
facturer in the country, with 18 mills and
surplus areas or replacing and modern-
tion, and Congress are giving these
seemed generally improved in 1953, tex-
many thousands of workers in New Eng-
izing equipment; through establishment
problems, and facilitate appropriate ac-
tile employment continued to decline.
land. The migration in woolens is more
of a job retaining program; through as-
tion to meet these needs.
As a result of these trends, my own State
recent; in cotton manufacturing it has
sistance to small business; through the
of Massachusetts has consistently since
been underway for 25 years. Then New
I know, of course, that there is a long
fullest utilization of natural resources;
World War II exceeded the national
England had 80 percent of the industry;
road between the presentation of a pro-
and through assistance to industries
gram and its final enactment, and that
average in unemployment rates. Ac-
now it has 20 percent.
which are specially depressed, such as
we cannot expect favorable or imme-
cording to Department of Labor classi-
The impact of such industrial disloca-
our fishing industry.
fications, in March 1953, of the 11 Mas-
diate action upon all of these proposals.
tion cannot be underestimated. When
Secondly, we must lend our efforts to-
Nor would even the enactment of such
sachusetts labor markets, 9 were in
the Kilburn Cotton Mill in New Bedford
ward the prevention of further business
group III or IV areas of labor surplus;
a program provide a panacea for all of
was partially liquidated and moved to
decline and dislocation. We can do this
as were Portland, Maine, Providence,
the economic ills of New England and
Tryon, N. C., 1,000 workers lost their
by taking measures to equalize the cost
the Nation. But I believe it to be a start
R. I., and Manchester, N. H.
jobs. The American Woolen Co. has al-
of labor, through equalizing unioniza-
The proportion of official unemploy-
in alleviating the present and long-term
ready shut down its Assabet mill in
tion, wage rates and non-wage-payroll
ment in Lawrence, Mass., in January of
situations which I have outlined to you.
Maynard, Mass., in preference to its new
costs; by equalizing the distribution of
1953, well over 20 percent, was practi-
mill in Tifton, Ga., at a cost of 1,500 jobs.
Federal business incentives such as de-
ORGANIZATION OF NEW ENGLAND DELEGATION
cally equivalent to the proportion
The liquidation of the Arlington mills
fense contracts and tax amortization
The implementation of any effective
reached in that city in January of 1934
in Lawrence of William Whitman, Inc.,
privileges; by eliminating the competi-
program for the benefit of New England
at the height of the great depression,
added 4,000 to the unemployment rolls.
tive abuses of tax privileges which have
will require, of course, the united efforts
and more than twice as great as the fig-
In all, liquidations and migrations in the
contributed to such industrial decline
of the entire New England delegation
ure for 1930.
textile industry alone since 1946 have re-
and dislocation; by giving attention to
for the purpose of promoting these and
Moreover, another disturbing factor
moved from 1 State-Massachusetts
the need for eliminating discrimination
other bills for the benefit of New Eng-
has entered the New England scene-
over 28,000 jobs. Plants stand idle,
in transportation costs; and by prevent-
land, for reviewing general legislation
that of industrial dislocation. I shall
nearly 5 million square feet of industrial
ing harmful speculation in certain com-
affecting beneficially or adversely the
discuss this matter in more detail sub-
plant being empty in Lawrence alone.
modities.
New England economy, and for coordi-
267478-46779
nating information on Federal adminis-
257478-46779
10
trative action affecting New England, in-
and the present overall advantages of
cluding a check on funds expended and
New England are in themselves evidence
II. INDUSTRIAL EXPANSION AND DIVERSIFICATION
derived by the Federal Government in
of those assets, both human and mate-
Fifth. Liaison between various Federal
rial, which can overcome the problems
Mr. President, the most important
agencies and those interested in, or in
that area.
which I have previously discussed. The
step which can be taken to alleviate the
need of, the contracts or services of such
This delegation has always in the past
role of the Federal Government is only
economic stagnation which mars the
agencies, including RFC loans and cer-
worked harmoniously for the best in-
terests of our region. I believe, however,
a limited role in the solution of these
otherwise healthy economy of our Na-
tificates for rapid tax amortization;
that it is of the utmost importance that
problems, but it is an important one.
tion, in partieular areas of New England
(c) To provide particular assistance
To many in New England, a Federal pro-
and elsewhere, is to bring about the di-
and analyses to the appropriate State
this cooperation be placed on a more
gram for even a partial alleviation of
versification and expansion of commer-
and local organizations, and make rec-
formal basis and that we should meet
their problems will require an adjust-
cial and industrial activity in those areas.
ommendations to the appropriate Fed-
periodically to discuss these and other
New industries, new products, new firms,
proposals, to consider in fact all govern-
ment in attitudes. But we in New Eng-
eral agencies, with respect to any area
mental matters affecting the New Eng-
land have too long sat on the sidelines
and new markets will remove labor sur-
within the region which has been desig-
while our tax funds solved the problems
pluses, invigorate the economy, and
nated as a labor surplus or distressed
land economy. Other State and re-
stimulate economic growth. Similarly,
area.
gional delegations have similar meetings
of other areas. Now we are beginning
new plants, new machines, new technical
with considerable effectiveness, and I
to act. By facing facts, by uniting our
Congress should also consider the pos-
developments and new techniques of
congratulate them. Despite differences
efforts, by contributing our utmost on all
sibility of enabling such regional bodies
management and marketing are needed
to make loans, and in some instances
in the type and intensity of problems
levels of government and in all walks of
to cure the ills of an economy suffering
grants, to the local groups, and insure
affecting the various sectors and States
life, our regional and national prosperity
from old age. In textiles particularly,
or guarantee the industrial development
of New England, I am confident that we
will continue to grow, our employment
such new approaches are available but
can unite in order to cooperate in the
loans of such groups and possibly com-
levels will increase, and our industries
need to be put into effect.
mercial banks. Moreover, if present
interest of the Nation and our region.
and workers will prosper. The time for
REGIONAL DEVELOPMENT CORPORATIONS
RFC and SDPA direct-loan authoriza-
In summary, Mr. President, I wish to
say only this: Our national prosperity
such action is now.
As the first and basic step in enabling
tions are not expanded, as I shall discuss
local communities and industries to
shortly, or if the Douglas-Flanders or
257478-46779
bring about such changes through their
Sparkman bills for small-business fi-
own efforts, I am introducing proposed
nancing are not accepted, Congress
legislation which would enable the estab-
should further consider the addition of
lishment of regional industrial develop-
that function to the powers of the Re-
ment corporations. Such corporations
gional Development Corporation. Such
would have the following functions:
legislation would authorize the estab-
A. To provide technical assistance to,
lishment of such corporation with a Fed-
and otherwise encourage the formation
eral charter under the auspices of the
and growth of, State, and community
Federal Reserve bank in the region in
industrial or credit development agen-
question whenever two or more State or
cies, foundations, corporations, or sim-
local industrial development corpora-
ilar organizations formed for the purpose
tions join in establishing such a regional
of stimulation and expansion of new and
body under the conditions to be set forth
diversified commercial and industrial
in this legislation. The initial purchase
activity and productivity;
of stock in such a corporation could be
B. To provide technical assistance and
made in whole or in part by the Federal
informational and consultative services
Reserve bank of the district, with the
to such organizations or agencies, and to
provision that the stock would be sold
educational or other appropriate public
to the organizations for, with, and
agencies, to aid in the initiation or de-
through which the regional corporation
velopment of-
works. State industrial development
First. Industry advisory committees
agencies would similarly be eligible to
and technical conferences;
purchase stock in, or make annual con-
Second. Community and area surveys
tributions to, such regional agency. The
of-
regional agency, in turn, would be em-
(a) Private industrial production and
powered to purchase a specified mini-
distribution potential, market analyses,
mum proportion of the stock in any com-
and plant space surveys, and
munity industrial development corpora-
(b) The need and possibilities of Fed-
tion in that region.
eral public works projects;
Such a corporation shall have a board
Third. Labor mobility and retraining;
of directors, all of whom are selected
Fourth. Business adaptability to new
from the region in question and a full-
lines of production, and productivity gen-
time technical staff. In general, the
erally; and
philosophy of such a program will be
257478-46779
(11)
13
12
well over one-quarter of the labor force
tive services and technical assistance
neither the establishment of a new su-
England, in Maine, New Hampshire, and
was unemployed in July 1952, a total of
in the area has been restated many
pernational or regional bureaucracy du-
Rhode Island. Vermont and Connecti-
some $5 million in capital investment,
times by such reports. The emphasis
plicating the present industrial develop-
cut are working toward such corpora-
initially utilized in the bonds of a local
here is not only upon new industries,
ment programs and bringing large Fed-
tions and there have been several pro-
industrial development corporation at a
but is likewise upon showing the same
eral grants or Federal intervention; but
posals, including that of Governor Her-
per capita investment of $41, when sup-
enthusiasm and consideration to exist-
instead shall be to help, encourage, and
ter, for establishment of a similar or-
plemented with capital investment rais-
ing industries in an effort to retain and
prod such State and local organizations
ganization in Massachusetts. There are
able from insurance companies and the
expand the status of those industries.
to help themselves in their own manner
more than three dozen local industrial
investment provided by a new industry
In general, the functions suggested
by providing to them the technical as-
foundations in cities and towns through-
for its machinery, would provide the
sistance and other resources mentioned
out New England whose work, which I
for the Regional Industrial Development
number of manufacturing jobs required
shall describe shortly, has recently been
Corp. are those which have time
above which will enable them to perform
to balance the labor force in that area.
and time again been recommended as
their functions more adequately. Such
praised by the National Planning Asso-
In this same area, over $11 million annu-
a regional corporation should not be a
ciation's Report on the Financial Re-
necessities for the New England econ-
ally was being paid out in unemployment
omy. They emphasize the need for using
promotional agency advertising the ben-
sources of New England. Many other
insurance benefits.
New England agencies, New England fa-
efits of such region or particular States
communities have other types of devel-
In August of 1952, the Arthur D. Little
cilities and sites, New England invest-
or communities therein, or exercise di-
opment organizations. Practically all of
Report on Industrial Opportunities in
ment capital, and New England person-
rect efforts to attract specific firms to
these have limitations in scope or financ-
New England was published. The objec-
nel. The Federal Government cannot
such regions or States. Interstate co-
ing. To provide further assistance of
tive of this report was to discover new
and should not attempt to take over all
operation, not rivalry, would be its ob-
the type I have mentioned to these local
markets for products now made by New
of the functions necessary to maintain
jective. Federal enabling legislation is
groups would be the chief function of
England companies, opportunities for
the economic prosperity of New England
necessary primarily only to define the
the regional bodies I am proposing.
introducing newly developed products,
or any other region. But, through en-
role of the Federal Reserve banks and
Such an organization would also pro-
and opportunities for establishing new
abling legislation for regional agencies
to establish conditions for tax exemp-
vide an invaluable function in coor-
industries suitable for New England, with
of the type described above, it may pro-
tion; in all other respects, such a project
dinating on a regional and local level,
emphasis principally on growth indus-
vide assistance to the State and local
would be local in its entirety.
and providing local interests with liaison,
tries and technological advance. The
organizations to enable and encourage
Such a corporation would be granted
the present activities related to those
report emphasized the many products in
them to help themselves. That is to
exemption from Federal, State, and
problems now conducted by the Depart-
which New England's share of the mar-
say, help themselves with respect to
local taxes, although it would be estab-
ments of Commerce, Labor, Defense, the
ket is underdeveloped, the possibilities
those functions not strictly a matter of
lished on a basis making possible a small
RFC, SDPA, and other Federal agen-
of diversifying New England industry
Federal legislation-promotional organi-
profit to those State and local industrial
cies. Perhaps more important, it could
through new products and new firms,
zations, industry censuses, industrial re-
development groups who hold stock
coordinate the activities of the various
and the basis for establishing indus-
search and development, technical and
therein. The efforts of such regional
State and local groups, the desirability
tries new to the region or new in a tech-
managerial services to small business,
agency on behalf of State and commu-
of which was recently pointed out by the
nologic sense. The establishment of a
analyses of regional economic needs and
nity industrial development organiza-
National Planning Association's Commit-
nonintegrated steel mill, an oil refinery,
capacities, encouragement of diversifi-
tions will not be exercised on behalf of
tee of New England.
or a cement plant have long been con-
cation of industry and products, promo-
those organizations who are engaged in
The fact is, I believe, self-evident that
sidered desirable objectives for the New
tion of the retraining and mobility of
the extension of public credit, tax privi-
New England and certain areas therein,
England economy. To these, the Little
labor, analysis of labor force and unem-
lege, tax loopholes, or other outright
with their economic growth retarded and
report added many others. It empha-
ployment statistics, encouragement of
public subsidy to new industries, who will
certain of their industries being lost to
sized, however, as so many other reports
venture capital, establishment of steel
still be expected to pay their fair share
other regions, are in need of new ex-
on the New England economy have em-
and other required industries, and sim-
of State and Federal taxes on all sites
panded and diversified commercial and
phasized, that further efforts and in-
ilar functions-all of the foregoing being
and buildings involved, nor will its ef-
industrial activities and products. It is
vestigation were necessary with respect
listed as important steps for New Eng-
forts be exercised on behalf of those in-
likewise self-evident that important in
to the establishment of each such indus-
land in the report on the New England
dividuals and firms whose objective is
the attainment of such objectives are
try or product. Such a task might well
economy, which has high praise for the
primarily one of profit making rather
the utilization of technical assistance,
be undertaken by the organization I am
work of the State and local industrial
than the community interest, although
community surveys, job retraining, labor
proposing.
development organizations.
those community industrial development
mobility, business adaptability, liaison
The most recent report of the Massa-
corporations which have a possibility of
with the Federal Government, and the
The praises of State and local indus-
chusetts Industrial and Development
trial and credit development founda-
earning profits will not be excluded. To
other factors envisioned in the program
Commission, the report of the Massachu-
tions, corporations, and agencies have
the extent possible, considerations in the
proposed.
setts Special Commission on the Textile
extending of such efforts by the regional
According to Department of Labor
been sung many times. The results of
Industry, the testimony of labor and
estimates last year, a total of $11 million
their efforts on a statewide basis, as in
group will be toward stimulating new in-
other representatives before that com-
of investment from local industrial de-
New Hampshire, or on a local basis, as
dustries, not enticing old ones, and giv-
mission, the report of the New England
ing fair consideration to the competitive
velopment corporations would provide
in Lawrence, Lowell, and New Bedford,
Governors' Committee on the Textile In-
position of industries presently estab-
the nearly 14,000 jobs in manufactur-
have often been cited as examples of
dustry, the report of the Council of Eco-
what could be done if proper funds and
lished in the area.
ing necessary at that time to balance
nomic Advisers' Committee on the New
assistance were available. The Federal
Ideally, the initiative for industrial
the labor force in Massachusetts. This
England Economy, and others have all
Reserve Bank of Boston, through its
development and most of the funds and
amount may be compared with the
emphasized the effect upon New England
Monthly Review, has commended the es-
effort should come from the local com-
annual cost of unemployment insurance
industries of technological and mana-
tablishment and activities of industrial
munities. There are at present three
benefits in the State of nearly $30
gerial changes. The need for consulta-
foundations. The definition provided by
State development corporations in New
million. In the city of Lawrence, where
257478-46779
257478-46779
14
15
a Monthly Review article is an excellent
A particular booster of such organiza-
measures taken by the New England
of new and useful products, services, or tech-
summary of the work of such founda-
tions is the New England Council. The
groups during the 1948-49 recession were
niques by providing for limited financial
tions:
council's publication New England
called a hopeful sign of community
participation in such corporation," by pur-
Industrial foundations are privately spon-
Newsletter in January 1953 stated that
interest, but not proportionate to the
chasing the capital shares of any such cor-
sored community agencies which make in-
37 relatively new community agencies in
industrial decline during that period.
poration up to 5 percent of its capital and
New England had attracted at least 300
Again, the value of a regional organiza-
surplus.
vestments out of their own funds, bring en-
terprises in need of capital to sources of
firms, 27,000 new jobs and a total annual
tion with more adequate and more per-
Such corporations were to be formed by
funds seeking investment, or otherwise aid
payroll of around $75 million. The Re-
manent resources is seen.
private individuals acting under the auspices
business in obtaining money. For the most
port of the New England Governors'
In summary, it is submitted that a re-
of the Federal Reserve System, with shares
part, they are nonprofit organizations
of stock in the corporation being eligible for
set up to carry on and extend the services
Committee on the Textile Industry also
gional industrial development corpora-
purchase by member banks of the Federal
customarily provided by chambers of com-
praised the efforts of State and commu-
tion, with the functions suggested, could
Reserve System and initially by the Federal
merce in the industrial development of their
nity organizations to attract new indus-
make an invaluable contribution to the
Reserve banks themselves. Provision was
communities. The primary purpose of the
try, without use of tax funds and sub-
battle for the expansion and diversifica-
also made for technical assistance, coordina-
industrial foundation is to bring new indus-
sidies. The Third District Federal Re-
tion of the economies of New England
tion with other agencies and tax exemp-
tion, etc.
trial enterprises into the community, al-
serve Bank of Philadelphia is similarly
and other regions through providing
though it may also be interested in assisting
a great supporter of community indus-
technical assistance, coordination, and
In the first session of the 81st Congress a
local manufacturing firms. It achieves its
purpose primarily by financing requirements
other services to those properly qualified
comprehensive bill intended as a furtherance
trial development organizations as a
for factory space (or) buying and
means of improving and diversifying the
State and community industrial and
of or a substitute for the Employment Act
of 1946 was introduced in the Senate by 17
building plants for lease or sale It
local economy in Pennsylvania's many
credit development organizations who
Democrats and 2 Republicans. Shortly
may also furnish other aid by leasing or sell-
labor surplus areas.
are in the forefront in this battle.
thereafter I introduced the same measure
ing industrial sites at or below cost, by loans
The Department of Labor has also
Mr. President, I ask unanimous con-
in the House. This bill, although not in-
or other financial aid, and by providing man-
publicized and boosted the efforts of
sent to have printed at this place in the
tended to operate primarily on a regional
agerial assistance
(including) engi-
community industrial development or-
RECORD a memorandum setting forth the
level, provided through the utilization and
neering and other counseling services to
ganizations, and states in a recent re-
precedents for such a regional agency as
expansion of existing facilities and agencies
small business subsidies such as free
I am here proposing.
for a large number of the items discussed
rent or land, and exemption from property
lease that far more promising in the
above and others generally included in our
taxation. The fundamental objective of an
long run than Government contracts,
There being no objection, the memo-
New England program. It specifically pro-
industrial foundation, therefore, is to in-
"particularly in one-industry towns, is
randum was ordered to be printed in
vided that "the President, through the Ten-
crease the payrolls of the community by de-
helping small businesses expand and
the RECORD, as follows:
nessee Valley Authority and any other such
veloping the community industrially.
bringing in new industries."
PRECEDENTS FOR REGIONAL INDUSTRIAL DEVELOP-
regional agencies as may be established and,
MENT CORPORATION LEGISLATION
for those regions of the country for which
New England foundations have not
Particularly successful community in-
utilized outright subsidies and tax
A. PRECEDENTS FOR SIMILAR REGIONAL BODIES IN
no such agencies exist through such admin-
dustrial development organizations
FEDERAL LEGISLATION OF PROPOSALS
istrative mechanisms as he may designate
exemption. Funds are usually raised on
which have received justified public
Although a program of the exact nature
or create, shall provide for continuing re-
a broad base of solicitation; the average
commendation include Pittsfield, Mass.,
gional surveys of developmental needs
foundation is a nonprofit corporation.
Industrial Development Co.; Holyoke
described above has not previously been pro-
and opportunities for private business enter-
posed to my knowledge, similar programs,
Such organizations have neither con-
Industries, Inc., Massachusetts; North-
prise, particularly new, small, and competi-
containing parts of the above outline, have
tive business enterprises, including market
flicted with other community groups
ampton, Mass., Industrial Realty De-
previously been incorporated into bills or
analyses and distribution potentials
such as the chamber of commerce, nor
velopment Corp.; Lowell, Mass., Indus-
suggested by various studies as appropriate
competed with private enterprise such as
for Federal action.
needs for resources development and public
trial Corp., Danbury, Conn., Industrial
works projects: And provided further, That
local banks, but have worked in coopera-
Corp.; Pottsville, Pa., Development Fund;
A recent article in the Harvard Business
in making such surveys the facilities of State,
tion with both. According to a Tulsa
Lebanon, N. H., Industrial Development
Review gives a full discussion of the growth
local, and regional planning and develop-
study quoted in Monthly Review, there
and value of industrial foundations in New
Association; Laconia, N. H., Industrial
ment agencies and of universities and col-
England and concludes with a discussion of
were 72 industrial foundations operating
Development Corp.; Ware, Mass., In-
leges shall be utilized to the fullest practi-
the need of such funds for outside assist-
in the United States in 1948 while an-
cable extent. The results of such surveys
dustries, Inc.; Knox Industries, Inc., of
ance:
shall be made promptly available to appro-
other 32 cities had similar but less for-
Rockland, Maine; Belfast, Maine, Indus-
"What communities need from the outside
priate Federal, State, and local agencies."
mal community industrial financing
trial Building Association; Louisville,
is neither leadership nor funds, but know-
Ky., Industrial Foundation; Scranton,
how. While the United States Government
It also provided for loans to State agencies
plans. In the past 5 years, this type of
and subdivisions for surveys, economic inves-
financing program has grown tremend-
Pa., Planning Corp. and Industrial De-
is currently furnishing significant tech-
ously, partly due to their amazing suc-
nical and soientific aid overseas under its
tigations and analyses, and advance planning
velopment Co.; Amoskeag Industries,
of resources development and public works
point 4 program, let us not overlook our
cess in attracting new industries and
projects. Special assistance to distressed
Inc., of Manchester, N. H., Greater Law-
own 'underdeveloped' communities. They
financing the expansion of enterprises
rence, Mass., Industrial Corp.; Nashua,
also deserve something akin to point 4-
areas, provisions for labor restraining and
mobility, and industrial advisory commit-
already located in the community.
N. H., Foundation; Portland, Maine, In-
when their business leaders have organized
in a manner to profit from such aid."
tees were all included. Apparently no hear-
Their ork has been compared to "the
practical neighborly interest in a local
dustrial Program; and many others.
ings were held on this legislation.
In 1950, Senator O'Mahoney introduced S.
The structure and functions of the above
2975 establishing regional corporations with-
The report of the Joint Committee on the
venture that used to develop spontane-
Economic Report on the Economy of the
ously in a more simple structure of an
vary, but they have been uniform in
in the Federal Reserve System subject to the
earlier period," while at the same time
their success.
supervision of the Board of Governors of the
South stated that if some form of Federal
Federal Reserve System, with authority,
aid is needed to provide capital funds for
recognizing the fact that technical ex-
It has been pointed out, however, that
among other things, "to encourage the
full development and employment in the
pertness and respected judgment, as well
such local initiative is to no avail if it
growth of local industrial development cor-
South, then "such aid might take the form of
as sources of capital, are necessary to
attempts to raise funds and enthusiasm
porations formed for the purpose of sup-
a Regional Industrial Investment Fund set
plying venture capital for the development
up by the Reconstruction Finance Corpora-
supplement community enthusiasm and
after the disaster has struck and the
tion or some other similar agency."
goodwill.
area has become distressed. Thus, the
257478-46779
257478-46779
16
17
The report of the Committee on the New
of industrial development. In March 1949,
into operation to provide financial assist-
may otherwise face the possibility of a
England Economy prepared for the Council
the six New England Governors, under the
ance in the form of venture capital or
postwar loss in the value of plants and
of Economic Advisors was even more specific
chairmanship of Governor Pastore of Rhode
long-term credit to new and small manu-
equipment currently deemed necessary
in its recommendation:
Island, drafted a plan calling for an organi-
facturers on a statewide basis. Proposals
to the defense effort. As of December
"It is desirable that the Congress take
zation "to plan and develop for 10 years com-
to establish somewhat similar agencies under
action to provide for the establishment of
mon economic interests for a greater New
State government auspices in Massachu-
1952, a total of 15,000 applications for
regional privately owned investment corpo-
England." This was to be in the form of an
setts and Rhode Island were defeated in
facilities valued at $25 billion had been
rations which shall have the support of re-
interstate compact for a New England De-
their respective State legislatures in 1952.
certified for rapid amortization, of which
gional Federal Reserve banks. Such a pro-
velopment Authority to survey the natural
This year, a privately financed industrial
$14.5 billion was permitted a fast write-
posal was before the last Congress in the
and economic resources of New England, to-
development corporation is certain to be
off. A large portion of such expansions
form of Senate bill 2975. Adoption of such
gether with the resources of adjacent areas
established in Rhode Island under bipartisan
is for the purchase and installation of
a proposal would greatly expand the total
which affect the economy and development
support in the State legislature, and a re-
new machinery and equipment, which is
of funds available for equity financing. It
of New England. The emphasis appears to
vitalized State department of commerce is
would bolster the operations and funds of
have been primarily upon development of
being studied by the Massachusetts Legis-
so badly needed in the textile mills of
private and State-sponsored development
water and other natural resources; but the
lature, as well as the Governor's recent
New England and in other industries and
corporations. It would continue to use the
survey was also to include, but not be limited
recommendation for a State-sponsored credit
areas. Similar programs have been
personal contacts, information, and advice
to, an investigation, study and comprehen-
development corporation.
used during World Wars I and II. Dur-
of local banks, which could assume owner-
sive report upon the importation of natural
ship and control as soon as they wished. It
gas by pipeline, the establishment of a steel
Mr. KENNEDY. Mr. President, in
ing World War I, an estimated $650
would greatly stimulate the formation of
industry, the promotion and development of
passage of a bill enabling the establish-
million worth of facilities were granted
new enterprises and the modernization and
ment of regional industrial develop-
these privileges and during World War
the textile, the electrical, the brass and the
growth of small established firms.
It
shoe industries, and the conservation and ex-
ment corporations may be the most im-
II, certificates of necessity were issued
is recommended that the regional invest-
pansion of marine fisheries, agriculture, and
portant step we can take to maintain and
for a total of $7.3 billion of which about
ment banks, suggested above, have on their
timber and mineral production. The Au-
improve the growth and vitality of our
$5.7 billion were reported for tax pur-
staff full-time personnel to guide and assist
thority was directed to determine the avail-
national and regional economies.
poses.
community groups that are interested in the
ability of Federal grants-in-aid for develop-
As a means of further stimulating for
establishment of industrial foundations."
ing such projects as it might recommend;
TAX AMORTIZATION INCENTIVES
civilian purposes new investment and
The report also recommended that the
and take steps to procure such funds.
Mr. President, there is a second im-
Department of Commerce use some of its
The President of the New England Coun-
modernization of plant, a necessary pre-
portant way by which the Congress can
research and development funds to work
cil, in calling attention to the significance
requisite for continued economic growth
take action to stimulate the expansion
through educational and community groups
of the proposed compact, stated:
in all parts of the country and partic-
to provide technical and managerial assist-
of commercial and industrial activity in
"To a much greater degree than we have
ularly in New England, it is my intention
ance to small-business men.
the declining companies, industries, and
been able to bring about, it proposes to
to introduce legislation to provide sim-
The Committee for Economic Develop-
bring to bear upon some of the problems
communities in New England and the
ilar tax amortization incentives to indus-
ment has proposed, and the Smaller Busi-
with which we are and have been concerned,
United States. This is through the
tries expanding in labor surplus areas
ness Association of New England is inter-
the powers and resources of the States. It
enactment of Federal income-tax legis-
ested in, the establishment of capital banks
and to older industries seeking to replace
would unite the States much more firmly in
lation which would provide incentives
on a regional basis, with a private, profit-
and modernize equipment. Permit me
support of regional development, and rein-
for new activity, expansion, and mod-
making status (although at least related to
force their commitments to joint endeavors.
to discuss briefly each of these pro-
the functions of the Federal Reserve banks)
ernization. All of us recognize that the
Presumably the proposed authority could and
posals:
for the purpose of providing for the long-
high-tax levels under which we now
term financial and equity capital needs of
would require greater cooperation of agen-
exist are not the most desirable for
With respect to the proposal that such
small business. The committee states that
cies of State government on a regional basis
small business, investments, or new
incentives bé given to those business con-
than the council's persuasions have been able
a form of this type of bank is successfully
to achieve.
enterprises; and I shall discuss the
cerns expanding existing facilities or lo-
operating in Canada. A similar proposal
"In addition to the above, the compact ex-
desirability and means of effectuating
cating new facilities in labor-surplus
was made in 1945 by the Committee on Small
general tax reductions, when possible,
areas, a proposal which Secretary Durkin
Business of the Investment Bankers Asso-
presses an intention to secure larger alloca-
ciation. In 1943, representatives of the pri-
tions of Federal funds to New England, and
in a subsequent part of this series. I
and the Office of Defense Mobilization
vate New England Industrial Development
to bring about greater activity of Federal
wish to speak now of a particular part
are initiating on a limited scale, one must
Corp. recommended to the Senate Small
agencies in the region than has characterized
of our tax laws which can be used with
first think of the vicious circle of fear
Business Committee the establishment of a
the Council's policies and objectives."
a most beneficial effect upon these prob-
and inertia which strikes down the in-
holding company for investments and small
Although the Rhode Island Legislature
lems of which I speak. That is the part
vestment opportunities in an area hard
firms backed by Government guaranties.
promptly and unanimously ratified the com-
relating to the depreciation or amortiza-
hit by recession and unemployment.
The recent report of the NPA committee of
pact, rejection by one State under its terms
Psychologically, a town with large empty
New England made a similar recommenda-
nullified the entire undertaking, and Ver-
tion of new plants and equipment.
The Revenue Act of 1950 permits the
plants with broken windows and rusty
tion.
mont, by a fairly close vote, rejected it short-
All are, of course, aware of the existing
1y thereafter. A resolution adopted by the
portion of the cost of facilities attrib-
padlocks, and with large numbers of idle
utable to the defense program, after
men roaming the streets, is not looked
agencies such as the Reconstruction Finance
Ninth Eastern States Conservation Confer-
Corporation, Federal Reserve bank, Small
ence proposed later in 1949 that an effort be
allowing for postemergency usefulness
upon as the ideal location for new busi-
Defense Plants Corporation, Council of Eco-
made to redraft the terms of the compact.
and other factors, to be written off for
ness expansion. Such scenes raise fears,
nomic Advisers, and others. Most of these
As has previously been mentioned, all six
tax purposes over 5 years instead of the
not only of the present, but also of the
have regional offices. A more regionalized
New England States have State government-
normal depreciation period. This pro-
future. Some special inducement is
approach has been used in the power and
sponsored industrial development agencies
needed to provide new investment or
water resources field, where a separate body
vides a great incentive for the construc-
of varying types. Not empowered to pro-
tion of such facilities because of the high
new industries or new machinery in such
(TVA, SEPA, SWPA, BPA, etc.) has been es-
vide financing, they work both independ-
tablished for a particular region.
deductions permitted during these
a community. Our experience during
ently and with private and community
times of high tax levels. The effect of
World War II and at the present time
B. PRECEDENTS FOR SIMILIAR REGIONAL BODIES IN
development corporations, and carry on
REGIONAL COMPACTS OR PROPOSALS
research, surveys, and promotion. Maine
this 5-year amortization is to allow a
with the 5-year amortization program
There have been previous proposals in New
in 1951 and New Hampshire in 1952 also
quick tax-free recovery of capital to
shows that a powerful stimulus is pro-
England for uniting the region on problems
put statewide development corporations
those engaged in defense production who
vided by accelerated amortization. The
257478-46779
257478-46779
18
19
investor or prosperous businessman sees
which could be used during depressed
Since World War II, Canada has had
would be through amendment of the
a chance of getting his investment back
times for expansion or replacement of
particularly favorable results from its
present basic vocational education laws,
over a short period of time and is will-
old equipment.
policies of granting special depreciation
primarily the George-Barden Act. The
ing to take a chance he might otherwise
Because of the serious need for tech-
allowances for new investment. Pro-
funds appropriated under this law are
be loathe to take. The businessman
nological improvement and moderniza-
posals of this nature have been suggested
presently allocated on the basis of State
whose own concern is in a slump has no
tion in the textile and other industries
and under study for a great many years,
population. It is my intention to intro-
income against which to write off the
in New England, the Committee on the
as the Treasury rulings became more
duce legislation expanding the authority
extra depreciation, and finds it better
New England Economy recommended in
complex, less realistic, and the cause of
of such programs, and providing for
to defer depreciation deductions. How-
its report that the Congress, along with
unnecessary redtape and litigation which
special allocations to job retraining pro-
ever, where his slump is only temporary,
the Bureau of Internal Revenue "review
plagues small-business men in particular.
grams in labor surplus areas. Provisions
as is frequently true in the seasonal
the problem of asset depreciation for the
I am hopeful that on the limited basis
should also be included for establishing
fluctuations of the textile and other in-
purpose of making tax revisions that
respecting labor-surplus areas and the
training facilities and equipment where
dustries, the deficit created by such large
would stimulate industrial plant and
outmoded equipment of older industries,
such training resources are not avail-
depreciation allowances for expanding
machinery modernization by older con-
a program of tax-amortization incentives
able. Financing would continue to be
his productive capacity would create a
cerns, whether or not they are directly
may be begun shortly.
on a matching basis with the State, in
net loss for income-tax purposes which,
engaged in defense work." The textile
order to insure local responsibility, and
JOB RETRAINING
under our present tax laws, may be set off
committee report recommended more
whenever possible the particular indus-
against the income of the previous year
The next step, Mr. President, in aid-
specifically that some such tax incen-
try involved should be encouraged to
and tax refund obtained, or carried for-
tives be provided as a stimulus to the
ing the diversification and expansion of
underwrite at least partially some of the
ward and set off against the income of
industry in the problem areas of New
construction of new plants and machin-
cost of training if facilities are made
the 5 succeeding years. Thus, new firms
England and elsewhere is the establish-
ery, which would be "especially helpful
available. Such special training pro-
and new commercial operations would be
ment of an adequate program of job
for an older region which tends to have
grams would be geared to the needs of
attracted to distressed areas.
retraining.
excessive numbers of outmoded plants
a particular industry after a firm com-
On March 24, of this year, the Massa-
To direct such incentives toward the
and equipment." The textile industry is
mitment by the industry is made to es-
chusetts State Division of Employment
needs for new or expanded industrial ac-
being completely changed by new ma-
tablish a plant in that area when a speci-
Security announced that it had 8,000
tivity in labor-surplus areas would con-
chines and new products. New Eng-
fied number of skilled employees are
job opportunities open, but could find
fine their use, and the subsequent loss of
land's woolen and worsted industry in
available. Such training would start
few qualified takers among the 40,000
revenue to the Federal Government, to
particular faces competition from new
with the breaking of ground SO that
persons drawing unemployment-com-
those areas where the need is greatest
fibers and processes. Cotton, too, is be-
the work force would be ready upon com-
pensation checks.
and where the Federal and State gov-
ing pushed aside by the so-called miracle
pletion of the plant. All available
ernments are losing revenues or other-
blends. New precision machinery, auto-
The Department of Labor has recently
trained personnel, including older work-
wise being harmed by lack of employ-
matic winding, quality testing, electronic
pointed out in a memorandum to my of-
ers, women and handicapped workers,
ment opportunities. Clearly, such a law
controls and new plants generally are
fice that among the many measures that
and minority groups would have their
would need to be most carefully drafted.
needed if the individual company is to
should be taken to rehabilitate areas of
skills utilized by a realistic training pro-
The primary purpose of such incentives,
stay economically healthy. But such
unemployment, training and retrain-
gram tailored to actual needs. The
which are actually a form of Federal as-
million-dollar investments require the
ing of the work force are of prominent
funds necessary for such a program, now
sistance, should be to stimulate indus-
encouragement of a tax program such as
importance. The skills available in an
being encouraged under Defense Man-
trial activities in labor-surplus areas;
this. The cost of replacement may be
available work force may be a deciding
power Policy No. 5, would be more than
and not to prop up industries whose de-
several times the value of existing ma-
factor, and certainly should be a major
repaid by the resulting decrease in un-
cline is inevitable because of technical
chinery. Present Treasury depreciation
inducement, in an industry's decision to
employment and relief payments and in-
obsolescence or other reasons; to bail
allowances of 25 years for spinning and
expand or establish in the area. Most
crease in purchasing power and taxable
out failing industries who have negli-
weaving machinery, for example, do not
areas of unemployment have a skilled
revenues.
gently failed to keep pace with develop-
provide any encouragement. With such
work force, however, that is not auto-
Such a job retraining program, which
ments in their own field; or to encourage
a program as I have outlined, it would be
matically adaptable to the activities that
would provide specific authority and fa-
local industries to postpone investments
necessary to devise methods to prevent
can be expanded in the area. There is
cilities for this important work, is essen-
until their area becomes one of labor
investment from being accentuated in
urgent need for assistance in these areas
tial to the fullest utilization of our man-
surplus.
times of prosperity, but abnormally de-
for a job training or retraining program
power.
With respect to the second recommen-
creased during hard times.
to convert or adapt the skills of the work
AIDS TO SMALL BUSINESS
dation that the Internal Revenue Code
I have long believed that tax amorti-
force to the requirements of the new ac-
The next step, Mr. President, in aiding
be amended to provide tax amortization
zation or depreciation incentives for
tivity. To initiate a program of this na-
a diversified and expanding economy is,
incentives to older industries or con-
private enterprise were a beneficial
ture requires funds and facilities not
I believe, aiding small business. New
cerns seeking to replace or modernize
means of bringing economic expansion
readily available in areas hard-hit by un-
England, which has a higher proportion
equipment, much of what is said above,
through private investment, production,
employment. Present Federal programs
of independent business enterprises em-
likewise is applicable. A method by
and employment. The Senator from
do not directly meet this problem, and
which this may be accomplished, pro-
Indiana [Mr. CAPEHART] and many other
the need for their improvement was
ploying less than 500 persons than any
vided adequate safeguards are estab-
Senators have been pressing for similar
pointed out by President Eisenhower in
other region in the United States, is par-
lished, and which I commend to the
action. Nearly 4 years ago, I introduced
his opening message to Congress.
ticularly dependent for its economic
Joint Committee on Internal Revenue
a bill providing for such incentives with
Although job training programs would
growth upon such small businessmen.
respect to the development of facilities
be facilitated by the work of regional
They are the lifeline of our free com-
Taxation for consideration, is to permit
a business to set aside during prosperous
which added to or improved the efficiency
industrial development corporations, as
petitive economy and our total national
times tax-free depreciation reserves
of this Nation's productive capacity.
already mentioned, the best legislative
product. During World War II, 32 per-
approach for provision of such a program
cent of this Nation's defense produc-
257478-46779
257478-46779
20
21
tion came from small business. During
work of each of these agencies very
bureau more concerned with other
contracts to small-business men, is
the first 3 months of this year, loans to
briefly.
duties. Instead of being abolished, the
ample evidence of the continued need
New England firms through SDPA-RFC
Since its initiation under Herbert
RFC needs a liberalization of its lending
for such an agency. The Smaller Busi-
facilities enabled small business pro-
Hoover over 20 years ago the RFC has
facilities to enable more long-term loans
ness Association of New England during
duction of such items as weapon parts,
made 126,835 loans for a total of about
to new and growing enterprises, not
its January 1953 monthly meeting dis-
jet engine parts, military snowshoes and
$13 billion. More than 90 percent of
merely rescue-type loans.
cussed this record, determined that the
bomb parts; and certificates of compe-
RFC loans are small-business loans,
Surely it is not economy to liquidate
SDPA had accomplished a great deal of
tency enabled defense procurement con-
amounting to less than $100,000 each.
an earning organization. In the two
real help for small business in the New
tracts to go to small New England firms
By making credit available through the
decades of its existence, the RFC has
England area, and that these accom-
making raincoats, metal parts, webbing,
RFC on sound credit terms we have been
paid a billion dollars into the Federal
plishments far outweighed the small cost
cable, and cotton overcoats. Only
able to assist our small and independent
Treasury, including its initial capital of
to the Government. The association
through full and free competition can
businessmen to put their concerns on a
$100 million and its earnings on loans
unanimously adopted a resolution that
free markets, free entry into business
sounder financial basis, to expand their
and liquidations of assets. It pays in-
"in view of the consistent, dynamic, ef-
and opportunities for the expression and
developments, or to convert their plants
terest on the money it borrows from the
fective record of the aid to small business
growth of personal initiative and indi-
to urgently needed defense activities.
Treasury and gets no appropriation from
of the Small Defense Plants Administra-
vidual judgment be assured. It is prop-
These needs of small business are not
the Congress to pay its employees or
tion, the Smaller Business Association of
er that the resources of the entire United
being met by any other Government
other of its operating expenses. It is
New England feels strongly that this
States acting through the Congress and
agency or any private source. I have
an entirely self-sufficient Government
agency should be continued."
the Federal Government be utilized to
been in touch recently with a large num-
Corporation which pays a net return
During 1952 the Small Defense Plants
encourage and develop our small business
ber of Massachusetts firms whose valu-
back to the United States Treasury.
Administration helped 300 smaller firms
enterprises and preserve and expand the
able contribution to our economy and
Whether it be in the form of a reorgan-
secure defense expansion financing;
competition which is SO basic to our eco-
defense effort was made possible by RFC
ized RFC or a program of regional banks,
aided in the establishment of critical
nomic well-being.
loans after they could not obtain financ-
an independent agency for loans which
materials hardship reserves which aided
In a growing economy, it is the small
ing elsewhere, particularly in their form-
small business cannot obtain elsewhere
1,000 firms; assisted in the formulation
businessman who SO frequently leads the
ative or temporarily distressed years
is an absolute necessity for a strong and
of 21 small-business production pools
way with new products, new enterprises,
prior to their establishment of an earn-
growing economy.
covering 500 firms; issued hundreds of
and new job opportunities. We should
ing record attractive to private financing.
For the same reasons, this country
technical and managerial assistance ma-
neither give unfair advantages to small
According to the National Planning As-
needs an independent agency-and I
terials; certified the competency of 45
business nor condemn big business. But
sociation report, between January 1948
stress the word "independent"-to
smaller firms to work on defense con-
small businessmen, in an economy which
and March 1952 business loans in excess
handle the problems of small business
tracts; and secured the earmarking of
has become not only tremendous in its
of $164 million were authorized by the
with respect to Government contracts
$218 million of defense contracts for in-
size but dominated by giants in particu-
RFC for New England, 5.2 percent of the
and technical assistance. The experi-
dividual firms. In my own State of Mas-
lar industries, are in need of help simply
national total. The same study indicated
ence of the Small War Plants Adminis-
sachusetts, it has recommended 19 loans
to obtain equal opportunity to exist and
that it was long-term loans for small
tration when placed under the Depart-
totaling close to $3 million; and granted
compete. They need long-term loans
firms for which the greatest need existed
ment of Commerce, and the lack of ac-
5 certificates of competency enabling
and equity investment, technical assist-
unfulfilled by private sources; that "cap-
ital investment in New England must be
complishment of the so-called Small
the awarding of contracts worth nearly
ance, consultative managerial services,
Business Unit of that Department may
$1.7 million. Eighty-three percent of the
availability to new research techniques
larger if the region is to maintain or in-
be contrasted with the operations of the
loans it has recommended have gone to
and a fair share of Government con-
crease its competitive strength"; and
tracts.
that the RFC was making an important
Small Defense Plants Administration
companies employing fewer than 100
Specifically, experience has demon-
contribution to the financing of many
during its first full year as ample dem-
persons. The agency has the over-
onstration of the need for such inde-
whelming support of the small business
strated that an expanding competitive
middle-sized New England companies.
pendence. In proposing a permanent,
community in this country, from whom
economy is in need of two types of dif-
Of course, corruption and abuses in
independent small-business agency to be
it has been estimated have come over
ferent Federal functions or agencies aid-
such an agency must be curbed; and, of
known as the Small Business Adminis-
110,000 various requests for assistance.
ing small business: First, a source of
course, its functions which are no longer
tration, which would broaden the scope
It needs more support from Congress
long-term loans; and secondly, a source
necessary should not continue. But it
of the Small Defense Plants Administra-
and a strengthening of its authority.
of technical assistance, both in produc-
is absolutely essential to the vitality of
tion to include other than strictly de-
Small business needs an independent
tion and in utilizing the opportunities
our national and regional economies
fense activities, the Senator from Min-
advocate in the executice branch of the
presented by Federal contracts and fa-
that the Federal Government continue
nesota [Mr. THYE] stated:
Government. Unless the vital impor-
cilities. Such functions could be com-
to make possible a source of capital to
tance of small business in our economy
Our experience with the Small Defense
bined in a single independent agency
our small-business men. The RFC
Plants Administration has taught us how
is fully recognized in Government poli-
along the lines of the Small Business Ad-
lends money only to those who could not
effectively a small agency organized effi-
cies and operations, we will be unable
ministration proposed by the able chair-
get the funds from private sources, and
ciently can be in seeing that small business
to prevent the deterioration of small
man of the Senate Committee on Small
its impressive record of repayment is
gets serious consideration in the formulation
business and competitive enterprise in
Business [Mr. THYE] and recently en-
due to the caution with which applica-
of Government policies.
our national economic structure.
dorsed by the New England Smaller Busi-
tion for such loans is accepted. To re-
The record of the Small Defense Plants
At this time, I would like to congratu-
ness Association; or they could be carried
place this independent agency by a unit
Administration, is more than paying for
late the members of the Senate Select
out by two separate, independent agen-
in some other department of the Govern-
itself through the savings to the Govern-
Committee on Small Business and urge
cies working along lines similar to the
ment, as has been proposed, would be to
ment on defense bids, and in aiding on
that they continue their active and vig-
tasks now performed by the RFC and
turn the problems of small business over
the meager scale permitted by its appro-
orous work along these lines. Only by
the SDPA. I would like to discuss the
to an insignificant and unsympathetic
priation the fair distribution of defense
protecting and aiding the small and
257478-46779
257478-46779
FORD
22
23
independent enterprises of this Nation,
state commerce which are part of any
development of hydroelectric power may
the large difference in power costs,
and this is particularly important in New
major river basin development, are con-
properly include participation by the
which, among other things, motivated
England, can we expect to strengthen
stitutionally within Federal jurisdiction.
Federal Government. It is simply a
his move from New England. To locate
our economy for years of either mobili-
The long-term billion dollar capital nec-
matter of interest for New England com-
the cotton mills of the South in New
zation or recession.
essary to replace our obsolete installa-
munities and New England industries, of
England, he stated, would cost an addi-
I am hopeful that the Congress will not
tions, and the authority necessary to
reducing the drudgery of the New Eng-
tional $27 million in power costs.
permit the small business functions of
construct multipurpose projects, are not
land housewife and farmer. of saving
Census figures show costs of power per
either the RFC or the SDPA to expire,
available to private or even State groups,
consumers and businesses millions of
unit to be 52 percent higher in New Eng-
but will instead strengthen and expand
nor do they make good business risks.
dollars in electric bills which could go
land than in the country, 80 percent
those activities in either one or two inde-
Finally, the Federal Government has a
for higher wages and better living. It
higher than in North Carolina, and 246
pendent agencies protecting the interest
role in the water-resources development
is simply a matter of the Federal Gov-
percent higher than in Tennessee; and
of small business.
in New England because such develop-
ernment taking action where, as stated
if the proposed limitation on the im-
NATURAL RESOURCES
ment is a Federal problem; because the
earlier, the States are not equipped to
portation of residual oil, which I have
The next important step in the ex-
pollution of our streams affects the
take such action either alone or jointly.
vigorously opposed is enacted, the cost
pansion of commercial and industrial
health of the Nation; because the de-
Waterpower, decades ago, made New
will be even higher. Thus, in woolens
England great; but I know of no study
activity in New England is the fullest
struction caused by our floods impairs
and worsteds, the weighted average cost
the productivity and safety of our Na-
of the New England economy, including
of purchased electric power in Massa-
utilization of our natural resources, in-
tion; because the lack of an adequate
those conducted by private business
chusetts and Rhode Island was 75 per-
cluding the development of hydroelectric
supply of low-cost power in one region
groups or which interviewed industry
cent in excess of the weighted average in
power and flood control and prevention
affects the products it buys and sells to
leaders, which has not indicated that the
the Carolinas and Georgia.
of water pollution. The importation of
others.
high cost of power is at least one factor
Mr. MORSE. Mr. President, will the
natural gas, the wise management of our
forests and other items which are of im-
The Federal Government has made
which today hampers the economic
Senator yield?
portance to the New England economy
tremendous expenditures for the devel-
growth of our region, encourages at least
Mr. KENNEDY. I yield.
opment of the water resources of other
some industries to move to other areas,
Mr. MORSE. I am asking my ques-
come within the heading of natural re-
areas of this country and indeed of other
and discourages others from locating in
tion only for information. First, how-
sources development, but they are not
countries. Its expenditures for such
New England.
ever, I wish to compliment the Senator
at this time, in my opinion, questions for
purposes in New England, whence a large
The recent report of the New Eng-
from Massachusetts for delivering what
congressional consideration.
share of the tax funds supporting such
land Governors' Committee on the Tex-
I believe, from the standpoint of care-
Proper utilization of our water re-
projects have come, have been almost
tile Industry pointed out that the higher
ful analysis and penetrating content, is
sources, on the other hand, necessarily
nil. For example, of the 156 hydroelec-
power costs and relatively small develop-
one of the most able speeches I have
and properly requires at least some par-
tric-power developments in the United
ment of hydroelectric power were among
listened to during this session of Con-
ticipation by the Federal Government.
States, not a single one is located in any
the many factors causing the decline of
gress, and I congratulate Massachusetts
This is true for several reasons. A part
of the six New England States. I fail to
the textile industry in New England and
for the able presentation of the New
of New England falls within the St. Law-
see any basis for disagreeing with the
in the lack of new industry. According
England problem as set forth in the
rence watershed and another part faces
conclusion of the Report of the Com-
to the Arthur D. Little Survey of Indus-
Senator's very enlightening treatise.
Passamaquoddy, which are international
mittee on the New England Economy,
trial Opportunities in New England, this
Mr. KENNEDY. I thank the Senator
in their effects. Part of New England
which, I believe, has stated a principle
region's higher power costs are a factor
very much.
is in the watershed of rivers lying en-
upon which all New England should
in the selection of industrial oppor-
Mr. MORSE. The Senator's discus-
tirely outside New England, such as the
unite:
tunities. Specific industries pointed out
sion of the power problem and the fig-
Hudson, of New York. Our great rivers,
by the report which normally require
ure which he has cited, if I understood
such as the Connecticut and Merrimack,
In those cases where multipurpose projects
will provide for the development of our re-
large amounts of power include ground-
him correctly, namely, that the cost of
are interstate, on which neither the in-
sources, including waterpower, at a lesser
wood pulp, newsprint, electrochemical
electric power is 52 percent higher in
dividual States nor a regional compact
cost than would a series of alternative single-
products, electrolytic products such as
New England than in other areas of the
can act with the same flexibility or au-
purpose projects, the multipurpose projects
tin, aluminum, and magnesium, and ma-
Nation, causes me to ask for information.
thority as Congress. State laws, such as
should be developed.
Since the social
terials made in electric furnaces such as
Are there not in New England sites
the Fernald law of Maine, restrict inter-
costs and social gains of multipurpose water-
alloys and abrasives. Consumption of
where substantial multipurpose hydro-
state development by those other than
control development are beyond the imme-
power in New England is less for the
electric dams could be built, which would
the Federal Government. Such a law
diate commercial interest of private enter-
housewife as well as the manufacturer,
prise, and especially since waterpower proj-
produce not only power but which would
may seem desirable where power devel-
ects, not otherwise feasible, may be provided
and the Little report points out that
be of assistance, as the Senator has sug-
opment is on a catch-as-catch-can basis;
through multipurpose projects, we think it
lower cost power, by stimulating domes-
gested, in the matter of flood control
but with a comprehensive plan for de-
likely that community welfare in the long
tic consumption would also have sec-
and possibly with respect to agriculture,
velopment of the region's natural re-
run will be found to require cooperative
ondary effects on the demand for elec-
too, somewhat comparable to some of
sources, the necessity for such a law as
efforts between Federal and State govern-
tric applianees. The Committee on the
the multipurpose dams which have been
the Fernald law will cease to exist.
ments, on the one hand, and private enter-
New England Economy also discussed the
built by the Federal Government else-
State actions are almost inevitably ham-
prises, on the other.
effect of high-cost power on New Eng-
where in the country?
strung by the veto power of one or more
land's inability to attract certain indus-
Federal projects are not, and cannot
Mr. KENNEDY. Mr. President, in an-
men temporarily in office in a single
tries. Some members of the Senate will
swer to the Senator's question, I would
State. Indeed, various State commis-
be, an adequate solution to New Eng-
recall the evidence presented in the in-
say, yes; I believe there are such sites
sions and interstate conferences have
land's power problems in themselves; but
vestigation of the abandonment of the
available. Obviously, our water re-
tried unsuccessfully for over 25 years
I believe that the principles stated by
Textron Mills of Nashua, N. H., in which
sources are not comparable to those of
through legislative resolutions to have
the Committee on the New England
the Textron representative emphasized
the Southeast or the Northwest.
action taken. Navigation and inter-
Economy amply demonstrate that the
257478-46779
257478-46779
24
25
Moreover, we have the problem of a
dustries which have a substantial part of
Mr. HOLLAND. Mr. President, will
The most heartening thing I have seen
comparatively small land area and
their cost represented by power.
the Senator from Massachusetts yield for
in this field in recent years is the recent
flooding the land, as well as other prob-
I wish to emphasize two points. First,
a question?
compact between the States of Vermont,
lems and difficulties.
we do not have, and we can never have,
The PRESIDING OFFICER (Mr. LONG
New Hampshire, Massachusetts, and
I believe that our waterpower re-
the great waterpower resources which
in the chair). Does the Senator from
Connecticut, relative to control of the
sources could be developed to a far great-
are found in the State so ably repre-
Massachusetts yield to the Senator from
flood problems of the Connecticut River.
er extent than they are at the present
sented by the Senator from Oregon. I
Florida?
which indicates that those States have
time. We have also other potential re-
believe New England itself is partly to
Mr. KENNEDY. I yield.
gone a long way toward doing their full
sources. I intend to speak briefly about
blame for the situation, because con-
Mr. HOLLAND. I wish to compliment
part not only in cooperating with each
Passamaquoddy and about the desira-
sistently groups in New England, which
the distinguished Senator from Massa-
other, but also in making it possible for
bility of New England sharing in the
have exerted great influence, have
chusetts. I believe he is rendering a fine
the Federal Government very properly
development of the power resources of
blocked the legitimate interests of people
service not only to his region but also
to help solve that problem in a much
the St. Lawrence.
who are genuinely interested in power
to the Nation, for I am one of those
fuller way than it has done heretofore
In 1950 there was created by Execu-
development. To some degree, therefore,
who feel that the Nation is no stronger
I want my friend, the Senator from
tive order an interagency survey of the
we have only ourselves to blame. But
than all its regions, and that difficulties
Massachusetts, to know that the prob-
waterpower resources and other natural
we are moving forward. The inter-
which affect any region, to the same de-
lems of which he speaks affect the pros-
resources of New England. That survey
agency survey will give us the best evi-
gree impair the strength of the Nation.
perity of every part of the Nation. For
should be completed before we embark
dence of what can be done. So I hope
I desire to say to the Senator from
instance, many of the fine people who
on any major program for the develop-
the survey will be completed as soon as
Massachusetts that I particiularly ap-
now live all the year around in our State
ment of our waterpower resources.
possible, so we may begin to do some-
prove of what he has said with refer-
of Florida formerly lived in New Eng
It is a source of regret to me that the
thing about the power problem which is
ence to his desire that New England
land; and they are among our very best
program, which should have come to
of such tremendous importance.
share more generously and more actively
citizens. Every year we are honored by
fruition in 1952, because of lack of funds
Mr. MORSE. If the Senator from
in the program of Federal public works.
having tens of thousands of persons
has been stretched out to 1954. I un-
Massachusetts will permit me to make a
I have served now for approximately
come to our State from New England
derstand that under the proposals set
brief observation, I wish to say that I
6 years on the Senate Committee on
When prosperity in New England is great
forth by the new administration, the
happen to be one who believes the de-
Public Works. I believe there has been
a greater number can come; when pros-
program will be further stretched out
velopment of the electric power poten-
no New England Senator upon that com-
perity is less, a smaller number can
until 1955. So there will be a further
tial of our country is essential, not only
mittee until recently, when one of the
come. So we are affected in a very
postponement of the development of our
from the standpoint of our domestic
new and able Senators from New Eng-
direct way by the prosperity of New
resources. However, I would say that
economy, in providing cheap power in
land did go upon the committee. We
England.
while certainly we do have such re-
every region of our country for the de-
repeatedly have had before us the sub-
Moreover, we love to go to New Eng-
sources, they are not on a scale com-
velopment of our domestic economy, but
ject of waterpower.
land, and we love to find New England
parable with those in other sections of
also from the standpoint of the national
I have always felt there was a missing
prosperous when we go there. We re-
the country.
defense.
value there, that New England needed to
gard New England as one of the foun-
Mr. MORSE. Mr. President, will the
realize; and I have been somewhat non-
I wish to say to the Senator from
tain sources of freedom in our country.
Senator from Massachusetts yield fur-
plussed by the very factor the Senator
ther?
Massachusetts, as I have said to other
from Massachusetts has just mentioned,
Certainly every section of the Nation,
Mr. KENNEDY. I am glad to yield.
Senators in the past, that it does not
namely, that in New England itself there
as represented in Congress, will be de-
Mr. MORSE. Would I be correct in
make a bit of difference to me where the
has been diversity of opinion as to the
lighted to do everything within its power
concluding that the maximum electric
power project is located. As the Sena-
need for the development of its water-
in collaborating in the public-works pro-
power potential of the hydroelectric re-
tor from Massachusetts has indicated,
power. I believe I am correct in saying
gram the Senator from Massachusetts
sources of New England has not been
we are dealing not only with a regional
that the State in New England which
has mentioned.
developed, and that with some Federal
problem but also with a national prob-
has the largest potential amount of
Mr. KENNEDY. Mr. President, I
assistance, in the building of structures,
lem. The development of the maximum
waterpower has State laws preventing
appreciate the statement the Senator
which would develop the resources, New
electric power of New England helps not
the development of waterpower for use
from Florida has made. In that con-
England would be strengthened as a
only New England but the Nation as well.
beyond the borders of that State.
nection let me say, for instance, that I
great potential defense area in case we
I shall vote for any project for the de-
I believe that our Public Works Com-
believe the expenditure of funds for the
should become involved in a war?
velopment of the maximum electric-
mittee has great potentialities of serv-
Tennessee Valley Authority has perhaps
Mr. KENNEDY. I certainly believe
power potential of any stream in Amer-
ing every State and every region and the
been objected to by some persons in
that to be true.
ica, wherever it may be located, whether
Nation as a whole; and I hope the Sen-
New England. Yet that development
The Senator from Oregon can under-
in Massachusetts, New Hampshire, Flor-
ator from Massachusetts will assiduously
has helped contribute to the prosperity
stand that our problem involves an at-
ida, Arizona, or any other State, provided
pursue that particular part of his sug-
of New England, as well as to the pros-
tempt to help not only industry but also
it is sound from an economic and engi-
gestion, because I believe there is great
perity of other parts of the Nation. So
the consumer of electricity. The fact
neering standpoint, because I happen to
merit in his contention that New Eng-
it is important that there be adequate
that our cost of power per unit is 52 per-
be one who feels that providing the
land had not adequately insisted upon
development of all our regions.
cent higher in New England than else-
American people with the greatest
its full part, and has not received its
I hope some of the statements we are
where in the country, 80 percent higher
amount of cheap electric power is vital
full part, of betterment in connection
making today will stimulate some una-
than in North Carolina, and 246 percent
to the expansion of our economy.
with the program of resource improve-
nimity of agreement on the point the
higher than in Tennessee places us at a
Mr. KENNEDY. I thank the Senator
ment in the field of the production of
Senator from Florida has made. I
great disadvantage with respect to in-
very much for the interest he has shown.
hydroelectric energy.
certainly appreciate his statement.
257478-46779
257478-46779
27
26
the first comprehensive understanding of the
of the 1954 fiscal year-a lack of funds hav-
Mr. President, when I examine the
may be disagreement as to the amount of
potential development, utilization, and con-
ing postponed this completion date 2 years.
chart published by the Federal Power
undeveloped water power in New Eng-
servation of the land and water resources of
The 1954 budget now under consideration
Commission, showing typical electric
land. Nevertheless, as stated by the
New England and New York. The subjects
contains requests for funds for the comple-
bills in 1952 in cities of 50,000 population
Committee on the New England Econ-
under study include agriculture, drainage,
tion of this study in the various department
and more, I am dismayed to compare the
fish and wildlife, flood control, mineral re-
and agency budgets. The appropriation for
omy-
sources, navigation, beach erosion, pollution
fiscal 1954 to the Corps of Engineers for their
low bills of the communities at the top
To the extent that cheap hydroelectric ca-
control, power, public health insect control,
work in the interagency survey which was
of the list-in areas competing with New
pacity can be developed and properly mar-
recreation and water supply.
anticipated to be $1,200,000, has been re-
England, and for which New England
keted
it will serve to hold down the
The fullest utilization of our natural re-
duced in the revised budget to $710,000. In
tax funds in many instances have built
level of rates and help to keep the spread
sources is an important step in the expan-
comparison, the total amount in the printed
hydroelectric projects-with the bills,
between New England and national power
sion of commercial and industrial activity in
1954 budget for the entire survey (Army, De-
more than twice as high, paid by the
costs from widening further.
New England-an expansion that is sorely
partment of Commerce, Federal Security
housewife and the businessman living in
Practically every New England Sena-
needed to offset problems resulting from
Agency, Federal Power Commission, Depart-
the communities at the bottom of the
tor has endorsed one or more Federal
industry dislocation and migration. For sev-
ment of Interior and Department of Agricul-
eral reasons well known to this committee,
ture) of $1,762,309 has been reduced in the
list, which consist almost entirely of
projects or otherwise has recognized New
proper utilization of our water resources
revised budget to $1,107,463. It is evident
Massachusetts and Rhode Island cities.
England's needs for more adequate
necessarily and properly requires at least
from these figures that most of the reduction
Development of hydroelectric capacity
lower-cost hydroelectric power. Several
some participation by the Federal Govern-
has been made in the proposed appropriation
in Maine, on the St. Lawrence, and in
items, not exclusively dealing with power,
ment. Although the Federal Government
for the Corps of Engineers, the agency carry-
other New England areas would lower
need our immediate attention.
has made tremendous expenditures for the
ing out a specific directive of Congress. The
our cost, without damaging the rights
development of the water resources of other
Assistant Chief of Engineers for Army Civil
INTERAGENCY SURVEY
of private utilities. On the contrary,
areas of this country and indeed of other
Works informed me this morning that this
As the first step, I urge the continua-
private utilities have much to gain from
countries, its expenditures for such purposes
cut in funds will delay completion of the
tion of adequate appropriations for the
in New England, whence a large share of the
study still another year until 1955.
such development. Both the supply of
Interagency New York-New England
tax funds supporting such projects have
What sort of economy is it that refuses to
power and the stimulation offered by its
River Basin Committee surveying the
come, have been almost nil. For example,
permit a completion of a limited task and
distribution have given to private power
land and water resources of New Eng-
of the 156 hydroelectric power developments
requires all personnel involved to keep on
companies in areas aided by Federal
land. I think it would be ill advised for
in the United States, not a single one is lo-
this job for an unnecessarily long time. A
hydroelectric developments higher prof-
cated in any of the six New England States.
me or others to recommend any program
reduction in an appropriation of this type is
its than those now enjoyed by New Eng-
Yet higher power costs and relatively small
not an economy, for although the annual ap-
for comprehensive resources develop-
land utilities. Massachusetts is not
development of hydroelectric power are
propriation will be reduced, the total cost of
ment in New England until this intensive
Montana; we cannot flood huge acres of
among the many factors causing the decline
the job will in all likelihood be increased.
valuable and scarce land for water-
survey is completed. I think it would be
of the textile industry in New England and
This situation results from the fact that in-
equally ill advised for the administration
the lack of new industry.
adequate funds force delaying completion
development purposes; nor can the Fed-
or Congress to deny to this study com-
We have many studies of New England's
of the project without actually reducing the
eral Government replace the farmer, the
mittee the funds necessary for the full
need for resource development. The pur-
overhead. Key personnel, who have been
housewife, the industrialist, the munici-
pose of the New England-New York Inter-
and prompt completion of its survey.
assigned a specific job and will finish it if it
pality, or the private power company in
agency Survey is to provide us with a com-
takes 10 more years, are continued through-
their important roles in the development
In order to give the people of New Eng-
prehensive program to meet those needs. In
out the whole survey. If an adequate
of our water resources. But where the
land and New York at the earliest pos-
the past, there have been a number of piece-
amount were made available promptly, the
people find it necessary to act through
sible date the most comprehensive view
meal studies of our New England river basins,
whole survey could be rapidly completed and
their national representatives in order to
possible of their resources and how they
but they have been limited to particular
the results would be made available not only
can serve them, every effort should be
problems or particular rivers.
to the Federal agencies involved, but to the
provide for the most efficient utilization
exerted to make certain that the ad-
I think it would be ill-advised for me or
seven States that are vitally concerned with
of such resources, I am hopeful that the
interests in New England who have long
ministration and the Congress provide
others to recommend any program for com-
the sound development of their resources.
the necessary appropriations for the New
prehensive resources development in New
This drag-out procedure of the Federal Gov-
opposed any such activity on the part of
England until this intensive survey is com-
ernment forces the States also to delay and
the Federal Government will realize the
York-New England Interagency study.
pleted. And I think it would be equally ill-
prevents them from effecting economies
wisdom of such Federal Government ac-
Mr. President, I ask unanimous con-
advised to deny to this Survey the funds
which could be made through rapid com-
tivity. We have many studies of New
sent to insert in the RECORD, at this place
necessary for the full and prompt comple-
pletion of the study. I am convinced that
England's need for power development.
in my remarks, my statement before the
tion of its study. As you know, this com-
such a study is not a luxury at a time when
House and Senate Appropriations Com-
mittee consists of representatives of the
our mobilization economy requires the full-
The completion of the present New York-
Army Corps of Engineers, the Federal Power
est utilization of our resources. It is not a
New England Survey should provide us
mittees, on appropriations for the Inter-
Commission, the Department of Interior, the
matter which should be returned to State
with a comprehensive program to meet
agency Survey.
Department of Agriculture, the Department
and local or private interests, if an effective
those needs.
There being no objection, the state-
of Commerce, the Federal Security Agency,
and comprehensive study is to result.
There may be disagreement as to the
ment was ordered to be printed in the
and each of the seven States involved. In
PASSAMAQUODDY STUDY
importance of the cost of power to New
RECORD, as follows:
addition, the cooperation and contributions
STATEMENT OF SENATOR JOHN F. KENNEDY ON
of local agencies, civic organizations, and
Mr. KENNEDY. Mr. President, a
England industries, partly because the
private individuals interested in resource de-
second and more specialized study is
high cost has necessarily resulted in the
APPROPRIATIONS FOR THE NEW ENGLAND-NEW
velopment have been encouraged. The com-
YORK INTERAGENCY SURVEY, MAY 15, 1953
likewise of great importance to the New
establishment in New England of indus-
mittee was established by Presidential direc-
England power picture. Senate Joint
tries which do not require as much
Mr. Chairman and members of the com-
tive of October 9, 1950, and was based on
power. There may be disagreement as
mittee, I appreciate very much the oppor-
Resolution 12, introduced by both of
provisions of section 205 of the Flood Control
to the importance of hydroelectric power,
tunity to speak before your committee in
Act of that year. The single comprehensive
my colleagues from Maine [Mrs. SMITH
behalf of the restoration of funds for the
sreport to be prepared of the coordinated
and Mr. PAYNE), calls for a survey by
although steam generating plants suffer
New England-New York Interagency Survey,
findings of the committee's various report
the International Joint American and
from the high cost of fuel and its trans-
in particular those allocated to the Army
groups and subcommittees is now scheduled
Canadian Commission to determine the
portation to New England. And there
Corps of Engineers. This survey is to enable
to be submitted to the President at the end
cost of construction of the Passama-
257478-46779
257478-46770
29
28
license under the Federal Power Act to con-
the present proceedings. It was stated in
quoddy tidal power project in Maine and
with the Senator from Maine [Mrs.
struct and operate project No. 2000, a proj-
the engineering report of your Bureau of
New Brunswick; to determine whether or
SMITH] as to the need for such power
ect for the development of hydroelectric
Power (1952, p. 30) that New England
not such cost would allow hydroelectric
if it could be economically developed.
power on the International Rapids section
alone-without Maine-could, in the 5-year
power to be produced at a price that
The most recent Federal Power Commis-
of the St. Lawrence River. It is my under-
period from 1956 to 1960, readily absorb the
would be economically feasible; and to
sion report on additional hydroelectric
standing that interested persons may file
entire output of the proposed St. Lawrence
determine what contribution such a proj-
power which is possible of economical
briefs and comments on the case at any time
plant. Beyond the statistical summary up-
ect would make to the national economy
development at New England sites lists
prior to February 20. My interest stems
on which this conclusion is based are facts
from the interest and concern of the people
of vital importance to the businessmen,
and the national defense. This joint
400,000 kilowatts from the International
of the Commonwealth of Massachusetts in
workers, housewives and other citizens of
resolution is the latest in a series of
Passamaquoddy project. If such a proj-
plentiful and low-cost power for their
this region.
joint resolutions, bills, reports, petitions,
ect is or will become practicable, Con-
homes, offices, and plants. If this project is
Electric rate surveys of your Commission
messages, International Commission
gress cannot afford to say that it was un-
to be constructed, the plan for utilization of
since 1935 have uniformly revealed that New
studies, and Federal Power Commission
able to support a timely study of the
the power to be made available therefrom
England has one of the highest overall rates
actions which, since 1924, have been con-
project.
must protect the legitimate interests of New
in the United States. FPC charts con-
cerned with the power utilization of the
England and Massachusetts.
sistently show Massachusetts cities at the
Legislation calling for an intensive
tides of Passamaquoddy Bay. Senators
I wish to stress the importance of includ-
top of the list in terms of amount of typical
study of the Passamaquoddy project is
ing in any license granted a condition effec-
monthly electric bills. The President's Wa-
and Presidents of both parties have been
essential to our resources development.
tuating an absolute guaranty allocating to
ter Resources Policy Commission found resi-
interested in the development of the
ST. LAWRENCE POWER
New England and Massachusetts a share of
dential consumption of electricity in New
Passamaquoddy. It has been more than
the power to be produced, such share to
England to be comparatively low because
10 years since the Federal Power Com-
One other item of importance in the
be based equitably upon the needs of that
families were paying more per kilowatt hour
mission made its report questioning the
New England power picture is not de-
area; and a requirement that definite in-
than the rest of the Nation. This means
efficiency and the marketability of power
pendent upon completion of the inter-
terstate machinery be established to give
increased drudgery for the housewife and a
produced from an American project, but
agency study. I refer to the contem-
each State proper representation in all de-
decreased standard of living for her family.
leaving open for further study the feas-
plated hydroelectric power development
cisions affecting the distribution of such
A new supply of low-cost power is of con-
on the St. Lawrence River. Although
power. Only a vague assurance of inter-
siderable importance to our Massachusetts
ibility of an international project, with
Congress has before it measures which
state distribution was given by the appli-
homes.
the words:
The events seem certain; the only uncer-
propose the inclusion of provision for
cant during the most recent hearings; and
Industrial power rates are also much
I understand that there are no plans at
higher than those for the Nation as a whole,
tainty is in point of time.
such a project in Federal legislation in
present for providing in the license for a
according to the Boston Federal Reserve
connection with proposals for the St.
definite method of determining each State's
Bank; and as a result consumption is lower
In 1950, the International Passama-
Lawrence seaway, the matter is also be-
share. A mere hope or prediction of agree-
in this category as well. The lack of suf-
quoddy Engineering Board reported to
fore the Federal Power Commission,
ment, with intervention by the Federal
ficient low-cost hydroelectric power has been
the International Joint Commission that
upon application by the State of New
Power Commission if agreement is not
cited as at least one of the reasons for New
the project could be physically engi-
York. At this time, the latter appears
reached, is not sufficient to satisfy our con-
England's economic difficulties-i. e., pri-
neered, constructed, and operated, but
to be the most likely basis for approval
cern; nor is an applicant's unenforceable
marily the movement southward in textiles
that the information available was not
pledge. The Governor of Massachusetts on
and other industries, the lack of new indus-
of such a project. Nevertheless, I do
October 30, 1952, filed a formal protest with
tries as a substitute, and a comparative lag
adequate to determine its economic
not feel that Congress can abdicate its
the Commission on grounds that our Com-
in overall economic expansion-by the re-
feasibility. In May of last year, the
interest in this matter. It is important
monwealth's interests would not be protected
port of the New England Governors' Com-
Army Corps of Engineers made a sup-
that the Congress as a whole and indi-
by the issuance of this license. If such
mittee on the Textile Industry, the report
plemental report reducing the estimated
vidual Senators and Representatives
license is to be issued, and is not governed
of the Council of Economic Advisers' Com-
costs of necessary investigations, due to
from the States concerned make certain
by presently pending legislation, I strongly
mittee on the New England Economy, the
new equipment which is now available.
that the project is developed in accord-
request that it contain, in connection with
report of the Special Massachusetts Legis-
The Senator from Maine [Mrs. SMITH]
and in addition to a condition for fair dis-
lative Commission on the Textile Industry,
ance with national policies and to serve
tribution based upon need, provisions for
has stated in her bills that such a proj-
and a poll of textile and other manufac-
best the national interest.
formal interstate machinery whereby the
turers by the Boston Federal Reserve Bank,
ect is desirable for the purposes "of pre-
I have set forth my views concerning
States concerned will be properly represented
among others. It has been mentioned as
venting future power shortages in the
the St. Lawrence power project, includ-
in all decisions respecting the allocation of
one cause of industrial loss by the Secretary
State of Maine and all of New England;
ing a general summary of New England's
this power. Such decisions include, if not
of the Interior in a statement quoted before
for the development of large quantities
power needs, in a statement filed with
the construction of the project, defining the
your Commission by Mr. Gatchell in an
of dependable low-cost electrical energy
market area, making arrangements for power
earlier proceeding, and by industrialists
the Federal Power Commission on Feb-
and for the stimulation of industrial
transmission, and allocating power to indus-
themselves in surveys or before congressional
ruary 19 of this year. At this time, Mr.
tries, localities, and public and private
committees.
growth and development in the area and
President, I ask unanimous consent that
utilities. Provision should also be made for
throughout New England. The strategic
As long as industrial power rates continue
a copy of this statement be inserted at
assuring the availability of a fair share of
to be substantially higher in New England
importance of this section of the coun-
this point in the RECORD, as a part of
the power for the municipally owned utilities
than in the Southeastern States or other
try to our national defense makes im-
my remarks.
in the region, of which there are 40 in Mas-
areas, so long will those New England indus-
perative ample quantities of low-cost
sachusetts, in a manner consistent with
power. Power shortages such as devel-
There being no objection, the state-
tries-particularly those such as textiles
traditional American policies for marketing
where power is a more important cost-suffer
oped in this section during the winter
ment was ordered to be printed in the
publicly developed hydroelectric power.
competitively. And these high power costs
of 1947-48 have seriously interfered with
RECORD, as follows:
Such assurance thus far has not been given
directly affect the ability of Massachusetts
by the New York Power Authority in testi-
the productive capacity in the area and
STATEMENT OF SENATOR KENNEDY, OF MASSA-
and other New England States to compete on
tend to discourage the establishment and
CHUSETTS, FOR CONSIDERATION BY THE FED-
mony presented to the examiner in this
an equal footing with other areas in the at-
ERAL POWER COMMISSION, SUBMITTED FEB-
hearing.
traction of new industry-so vital to us if we
growth of industries."
RUARY 19, 1953
The particular needs of Massachusetts and
would end our dependence on industries
I cannot, of course, offer any technical
I wish to record with the Commission my
the New England area for low-cost power
which are now almost permanently dis-
judgment as to the feasibility of this
views relating to the pending application of
have not, to my knowledge, been fully pre-
tressed. Thus the people of New England,
project; but I cannot help but agree
the New York State Power Authority for a
sented to your Commission with respect to
the thousands of unemployed in the mill
257478-46779
257478-46779
FORD
GERALD
31
30
cities like Lawrence, as well as business and
CONNECTICUT RIVER FLOOD CONTROL
think that you can see the importance to the
As I believe that the Connecticut River
Nation of harnessing the serious floods which
flood-control compact is an aid to such com-
community leaders, are directly affected by
It must be emphasized that the com-
are capable of great damage to this impor-
prehensive development, a contribution to-
the distribution of any low-cost power to be
prehensive development of our water re-
tant area. The enormous waste of property
ward that end by solving problems arising
produced on the St. Lawrence.
sources is not limited to matters of hy-
and water which results from these floods
from a particular phase thereof, the con-
It is not enough to respond that the power
droelectric power. Comprehensive de-
concerns all of us. Since 1927, flood damages
trolling of destructive floods, I urge that you
to be available from the proposed St. Law-
rence project will only fill a small part of our
velopment of our rivers necessarily in-
in the entire Connecticut Basin have
give it your full support.
cludes flood control; and there is now
amounted to over $80 million. A few weeks
area's needs; that is but further evidence of
Mr. KENNEDY. I am hopeful that
pending before Congress Senate bill 261,
ago, another flood added to this toll. The
the importance of making provision for spe-
United States Corps of Engineers has been
this compact will be approved by the
cific allocation of a sizable portion of such
introduced by the Senator from Vermont
building a series of reservoir projects which
Congress for the purposes set forth in
power output to New England, and for defi-
[Mr. AIKEN], for the 8 Senators of the 4
have thus far emphasized only this single
this statement.
nite machinery giving New England its
States concerned. That bill would grant
purpose; and further projects are under
WATER POLLUTION CONTROL
proper voice in all determinations affecting
the consent and approval of Congress
study. The completion of the New York-
the distribution of such power.
New England interagency study, in which I
There is one other important item
to the Connecticut River Flood Control
In summary, may I reemphasize that the
am most interested, will lead to further proj-
where the Federal Government may act
cost of power is one of several cost differ-
Compact.
Mr. President, I ask unanimous con-
ects, including those for multipurpose de-
with respect to the fullest utilization of
entials between New England and other parts
of the United States competing with New
sent to insert in the RECORD at this place
velopment of the Connecticut River. It is
New England and the Nation's water re-
in my remarks my statement on this
imperative that action be taken before flood
sources. I refer now to the Federal Wa-
England in the attraction of industry. This
control projects are SO far along that there
compact given before the Senate Public
ter Pollution Control Act. This law, in-
difference in power costs must be reduced if
will be no possibility of adequate multipur-
New England is to expand its commercial
troduced by the Senator from Ohio [Mr.
Works Committee.
pose development.
development and standard of living on a
The PRESIDING OFFICER. Is there
TAFT] and the former vice-president,
As a sponsor of the Connecticut River flood
basis comparable with other areas. If your
control compact, I wish to stress the im-
then Senator from Kentucky, Mr.
Commission is concerned, as any Federal
objection?
agency should be, with the discrimination
There being no objection, the state-
portance of such compact in the develop-
Barkley, in the 80th Congress, was orig-
ment was ordered to be printed in the
ment of flood control projects in New Eng-
inally passed with a 5-year authoriza-
against New England in the public develop-
RECORD, as follows:
land. It is only proper that southern New
tion. The 82d Congress extended the
ment of hydroelectic power in the United
England should compensate northern New
duration of the act for 3 more years un-
States-a discrimination due in part to lim-
STATEMENT OF SENATOR JOHN F. KENNEDY BE-
England for losses of farmlands, recreational
ited potential, but also to our own negative
FORE THE SENATE PUBLIC WORKS COMMIT-
til June 30, 1956. I am convinced that
facilities and tax capacity. But I also wish
attitude in the past to the development of
TEE, APRIL 23, 1953
this Congress should make this act a
to stress my understanding that it in addi-
our natural resources-it is of great im-
Mr. Chairman, I am very happy to appear
tion permits consideration of all the rich
permanent piece of legislation, in order
portance that you act to safeguard our re-
today to testify on behalf of the Connecti-
advantages of a comprehensive water regula-
to permit long-range planning and defi-
gion's interests in any license granted for
cut River Flood Control Compact of which
tion program. If I am correct in my under-
nite commitments. It is also necessary
the St. Lawrence power project. Such inter-
I am one of the sponsors. This compact
standing, I assume that the compact upon
that Congress provide for its administra-
ests can be secured only if our industries and
was authorized by Connecticut in 1949 and
enactment will be so carried out. If other
tion appropriations more nearly in line
citizens can be assured of an adequate sup-
by Vermont, New Hampshire, and Massachu-
sponsors of the compact differ on this inter-
ply of low-cost power, through the inclusion
with the ceiling contained in the act,
setts in 1951. It provides a formula for con-
pretation, I would appreciate their com-
of appropriate conditions in such license pro-
which funds are necessary in order to
tributions in lieu of taxes to be made by
ments now in order that the legislative his-
viding protection to the rights of the mu-
downstream States receiving the benefit of
achieve the objectives of that act, in-
tory of this bill may be clear.
nicipalities, a guaranty of a sizable propor-
flood-control reservoirs as reimbursement to
The compact recognizes the role and re-
cluding grants and loans to the State
tion of such power for New England, and
the State in which the reservoir is located
sponsibility of the Federal Government in
and local agences for their water pollu-
definite machinery for equitable participa-
for loss of taxes due to Federal ownership
the prevention of floods and in, it states,
tion control programs. Congress should
tion by the New England States in the de-
of reservoir lands, and for other economic
"other utilization of water resources." The
also include in the tax amortization pro-
termination of questions relating to the dis-
loss to political subdivisions where flood-
compact enables the signatory States to co-
tribution of such power.
gram heretofore discussed an accelera-
control reservoirs are built on the Connecti-
operate more effectively in accomplishing the
tion incentive to encourage the construc-
Mr. KENNEDY. Mr. President, this
cut River or its tributaries by the Federal
object of flood-control and water-resources
tion of industrial waste treatment
St. Lawrence project has been under
Government. It is believed that such a com-
utilization in the basin of the Connecticut
consideration by both United States and
pact will facilitate the construction of
River and its tributaries. Unlike the com-
works, as recently recommended by the
Canada for over 30 years, and Canada is
urgently needed projects. The bill itself,
pact submitted in 1937, it neither limits the
New England Interstate Water Pollution
of course, involves no expenditure of Fed-
authority of the United States Government
Control Commission and the advisory
ready to proceed immediately with con-
eral funds. Unfortunately, I might add, the
to take further action with respect to such
committee of the Massachusetts Depart-
struction of the Canadian half of the
compact does not show on its face that it has
developments nor with respect to the pro-
ment of Health on Water Pollution Con-
project. No longer should this project
been ratified in the usual sense of having
visions of the compact itself. I have, there-
trol.
be tossed back and forth by the Con-
been signed and confirmed by representatives
fore, assumed that such a compact does not
The availability of clean water is of
gress and the Federal Power Commis-
of the four States.
intend to stress single-purpose river-develop-
sion, at the cost of sorely needed, eco-
For over 5,000 years, man has harnessed
ment projects-such purpose being that of
importance, not only as a matter of
rivers and controlled floods. The Connecti-
nomical hydroelectric power to the peo-
flood control only-to the exclusion of multi-
health and living standards, but as a
cut River is the great river of New England
purpose projects which could produce badly
question of industrial development.
ple of New England, New York, and else-
embracing parts of 4 of the 6 New England
needed power, aid navigation, regulate pol-
The most recent report of the Massa-
where.
States within its basin. It includes the
lution, or take other action. It is instead, I
chusetts Development and Industrial
I am very hopeful that the St. Law-
greatest area and it has the largest popula-
am confident, a proposal typical of New Eng-
Commission pointed out the importance
rence power project can immediately be
tion of any drainage area in the region. The
5 land wherein our States, recognizing the
of water to the location of new indus-
constructed, in view of the needs of de-
valley contains all or part of 355 towns and
it need for Federal action with respect to one
try. A basic factor in the long-discussed
fense and civilian industry for power,
cities, of which 20 have a population of over
of the many phases of river development, are
10,000. It contains farms with more than
and that the rights of New England will
1: cooperating to see that the local costs as well
possibilities of locating a non-integrated
4 million acres of land worth over one-half
as the local advantages of such Federal ac-
steel mill, cement plant, or other indus-
be amply protected in the manner set
billion dollars and its manufactured prod-
tivity are equitably allocated among the four
try in New England is the availability
forth in my statement.
ucts are over a billion dollars annually. I
Connecticut River States.
of such water. The early growth of
257478-46779
257478-46779
32
33
New England was possible because there
The progress in pollution abatement in
Control Act, demonstrate our confidence
an actual drop in the domestic produc-
was plenty of good water available. To-
New England has been seriously handi-
in its desirability and clear the way for
tion of ground fish and ocean perch fil-
day it is used for the public water sup-
capped because the majority of States
long-range planning in this area. Tax
lets of 19 million pounds. The lower
ply, industrial water supply, agricultural
lack adequate surveys and investigations.
amortization incentives for industrial
production has increased production
water supply, bathing, fish and wildlife,
According to the report of the Public
waste treatment plants would also be
costs per unit of vessel and per unit of
commercial fishing, and other uses where
Health Service on this area, "Unless in-
helpful.
package product. The Boston fleet in
clean water is necessary.
creased funds and additional technical
In conclusion, Mr. President, may I say
1950 was only about 60 percent as great
The Water Pollution Control Act rec-
personnel are made available to the State
that the water resources of New England
in number as in 1939 and only 55 per-
ognizes the primary responsibility and
water pollution control agencies, a sig-
and the United States are a most pre-
cent of the tonnage. Decline was very
rights of the States and municipalities
nificant delay in carrying out pollution
cious treasure, much of which we have
sharp particularly in the large trawlers
in controlling water pollution. The
abatement programs is in prospect."
failed to use properly. Whenever the
available. Under the competitive pres-
United States Public Health Service has
Appropriations by the Congress have to-
problems they present or the uses which
sure of increased imports, domestic
developed comprehensive water-pollu-
taled only a small fraction of the amount
they offer require action on a national or
ground fishing operations have begun to
tion control programs in cooperation
provided by the act. I cannot stress too
interstate level, I am hopeful that the
be curtailed. In 1952, imports of ground
with the States, municipalities, indus-
strongly the importance of the Federal
Congress will not underestimate the im-
fish and ocean perch fillets totaled 108
tries, and others in New England. The
Government's assuming its full share of
portance of water resources development
million pounds, equivalent to 85 percent
New England States have also estab-
the responsibility of supporting these re-
to the economic well-being of our citizens
of the domestic production. In the past
lished an Interstate Water Pollution
gional and State programs with funds
and to the fullest utilization of our pro-
few years, the duty paid prices of im-
Control Commission to control and co-
and technical assistance and setting the
ductive capacity in the mobilization
ported fillets in the United States have
ordinate the abatement of pollution of
example itself by providing adequate
period.
generally been lower than correspond-
interstate, inland, and tidal water.
sewerage treatment facilities for Gov-
AID TO FISHING INDUSTRY
ing prices of domestic fillets, causing an
But New England has a long way to
ernment installations in the area.
Finally, a very specific problem indus-
increase of 50 percent in the cold storage
go. Pollution is today the largest single
Although I have used New England as
try affecting the economic growth of
holdings of ground-fish fillets between
destroyer of New England water re-
my example for the need and effective-
New England and particularly other
January 1, 1952, and January 1, 1953,
sources, hindering the economy, health
ness of the water pollution control pro-
coastal areas, is the fishing industry, an
and a drop in average wholesale prices
and prosperity of the region. In 1952,
gram, an equal need exists in all parts of
industry valuable to all coastal States
ranging up to 33 percent.
available data showed that nearly 800
the United States. In 1952 State ex-
and those bordering on the Great Lakes.
There are several logical steps which
separate communities in New England
penditures for water pollution control
The value of fisheries to New England
Congress should take to prevent this
discharged the sewerage from more than
amounted to approximately $4.50 for
can be estimated in many ways. The
decline of one of our basic food indus-
6½ million people into our waterways.
each dollar of Federal grant. Industries
1950 earnings from catching, processing,
tries. The fishery industry, made up
More than 1,000 industrial plants dis-
all over the United States have made de-
wholesaling, and retailing New England
of hard-working, independent men, has
charged their process waste directly into
cisions respecting the location of their
fishery products totaled some $75 mil-
never received direct or indirect sub-
streams, in addition to those hundreds
plants based upon the availability of
lion; 15,000 are employed in processing
sidies other than a few Government re-
who add their pollution to the load of
clean water and the cost and necessity of
plants, freezers and cold-storage ware-
lief purchases in the late thirties, nor
human waste contained in the muni-
treating it before use. The United States
houses, and well over 30,000 are directly
any shipbuilding assistance or other
cipal sewers. Only 152 communities pro-
Public Health Service has cooperated
engaged in fishing. The total income of
bounties such as those given to other
vide satisfactory treatment plants for
with the States in the conduct of surveys,
New England from its fisheries, not in-
industries or given in other countries.
water pollution. Less than 80 treatment
the development of comprehensive basin
cluding retailing fish, was $153 million in
This Nation cannot afford to let the fish-
plants control the sources of industrial
plans, providing funds and assistance for
1951, and the total value of manufac-
ing industry go down the drain; and
pollution. Based on 1950 cost levels, it
State and local studies such as the study
tured fishery products in that year was
there is no reason why it should. We
is estimated that the municipal sewers
now being conducted in the Lowell Tex-
estimated at $87 million. In Boston
can compete with imports and expand
and sewerage treatment facilities known
tile Institute regarding the disposal of
alone, the yearly payroll to employees in
our domestic fishing industry if its de-
to be needed in New England will cost
wool scouring wastes, the encouragement
the fishing and fish processing industries
velopment is assisted as other industries
$200 million. Industry will need to
of uniform State laws, and the provision
totals $15 million, and the value of fish-
are, not by subsidies or relief but by
spend an estimated $50 million to con-
of technical aid to State, interstate, and
ing boats and vessels, plant investment,
technical assistance, market develop-
trol present pollution. Over a period of
local agencies and other agencies of the
and real estate added another $24
ment, and other aids. Yet the Fish and
30 years, this will only cost each indi-
Federal Government. The Environmen-
million.
Wildlife Service of the Department of
vidual 90 cents a year for construction
tal Health Center of the United States
Unfortunately, the once preeminent
Interior has had available only 82 cents
and a few more cents for operation.
Public Health Service established in Cin-
position enjoyed by New England's fish-
per ton of fish caught per year, where-
Given the technical services and Federal
cinnati, the only one of its kind, is a
ing industry, America's oldest, is in dan-
as the Department of Agriculture has
credit and grants provided by the Water
leader in the development of new tech-
ger. Several of the most important food
about $7 per ton for other foods. In
Pollution Control Act, if this is made
niques to meet these problems.
fish in the New England catch have be-
1949, the Secretaries of State and Com-
permanent, individual towns and indus-
It is, I think, apparent that the fullest
come increasingly difficult to secure in
merce, after making a comprehensive
tries can assume their responsibility as
development of this program now re-
recent years. Landings at Boston,
study of the problems of the fishing in-
neighbors in a democracy to make sure
quires that positive action be taken by
Gloucester, New Bedford, and on Cape
dustry as affected by the imports of
that their carelessness does not infringe
the Congress. We must provide adequate
Cod during 1952 declined 43 million
upon their neighbors' rights. The only
appropriations for the Public Health
pounds or almost $2 million worth from
large quantities of fish from abroad,
way to test thoroughly the workability
Service in carrying out the purposes of
landings of 1951. The decrease in land-
recommended that the most appropriate
of this emphasis upon State and local
this act and for making grants and loans
ings of key species of fish and the re-
method of meeting the industry's prob-
control is to provide adequate grants and
to State and local programs, and, by
sulting lesser production of fillets have
lem of competition would be a positive
loans for such purposes.
making permanent the Water Pollution
increased production costs and caused
course of action directed toward expand-
257478-46779
257478-46770
34
35
ing consumption and reducing domestic
frozen fillets, the main New England
purchase of surplus fish are less than
has presented to the Senate this after-
production costs.
product, exists, particularly those in
the 30 percent of import duties Congress
noon. I make particular note of the fact,
It would seem constructive-
which consumption is not at the national
intended to be allocated for such pur-
Mr. President, that the Senator from
average. The housewife, the TV viewer,
poses. No additional appropriations or
Massachusetts, in bringing to our atten-
The report concluded-
and the schoolchild can be educated
increase in budget would be necessary
tion the problems of the New England
for the Congress to provide funds for the ap-
about fish products. Transportation
under such a program and the benefits
States, and, in particular, of his own
propriate governmental agencies to cooperate
studies have to be initiated to determine
would result not only to those directly
great State of Massachusetts, has not in
with and aid industry in developing and ex-
the most inexpensive ways of moving
engaged in the fishing industry, but to
panding programs for the further improve-
any way criticized other areas of the
ment of techniques and facilities for catch-
fishery products and the best methods
our consumers and businessmen in
Nation for the fine programs which may
ing, storing, processing, transporting, and
for maintaining quality while they are
general.
have benefited them, but, rather, he has
marketing of fish.
stored or en route. All parts of the fish-
Such a research program, of course, is
pointed to other areas of America only
ing industry would benefit from some ex-
one of long-range benefit. In the mean-
to show what might be done to alleviate
I thus feel that Congress, in addition
tension services in the techniques of their
time, the Congress must decide whether
some of the problems in his own partic-
to providing adequate funds for the
trade. Quality control must be applied
the fishing industry is also in need of and
ular region. His forthright language
Commercial Fisheries Division of the
from the moment fish are landed on
entitled to other means of assistance
and what I consider to be his very fine
Fish and Wildlife Service, should also
board ship to the moment they are put
which are provided to similar or compet-
analysis of the economic problems in-
look with favor upon a bill which I shall
on the consumer's table. Such quality
ing industries. These would include
volved in his area should command the
soon introduce, and similar to one which
control, including the adoption and use
study by the Tariff Commission of the
attention of the appropriate committees
I have introduced previously, providing
of standards by the fishing industry,
necessity of the imposition of a tempo-
of the Congress.
not for the expenditure of new funds but
would, more than anything else, assist
rary flexible import or tariff quota on
for the transfer of an equitable share-
I desire to assure the Senator from
in the development and maintenance of
ground fish fillets, and by the Congress
amounting to $1 million-of those funds
Massachusetts that I, for one, will do
markets for our fishery products.
of the establishment of a price support
now allocated from import duties for
all I can as a Member of this body to
Like those quoted in a recent editorial
program for fish, or other subsidy. It is
such purposes generally, under Depart-
be of help, particularly in those areas
in the Maine Coast Fisherman, I be-
my intention to present to the Congress
ment of Agriculture jurisdiction, for use
needing the development of the great
lieve that "quality products, efficient
from time to time further information
by the Department of the Interior in co-
natural resources of New England and
operation with the Department of Agri-
operation, aggressive sales policies-
and proposals relating to these problems.
the solution of problems which deal with
culture in the encouragement and de-
these are the avenues that lead in a con-
As a first step, Congress should pro-
the fishing industry which is so basic to
structive direction." A recent series of
vide for the transfer of a fair share of
velopment of domestic consumption cf
the economy of the New England States,
articles in the Gloucester Daily Times
import duty revenues to utilization in the
our fishery products, further exporta-
together with all the many social and
tion of such products and effective edu-
demonstrated that improved technical
type of fishery research, market develop-
economic problems which the Senator
processes is the best answer to foreign
ment and other studies I have outlined,
cation, research, and quality control.
from Massachusetts has outlined.
competition. New filleting machines,
to enable that industry to contribute to
Purchase of surplus fishery products is
The Senator has performed a valua-
not included at this time in this bill, the
bigger trawlers, electronic dragging de-
our economic expansion.
ble service, not only for his own people,
Secretary of Agriculture already being
vices, freezing fish at sea, precooked
Mr. President, this is one of a series
but I think he has set a pattern for the
frozen foods-all of these can revitalize
of three speeches to be devoted to the
authorized to expend $1.5 million for
rest of us showing how we can discuss
the fishing industry if we will only give
economic problems of New England.
such purposes.
the problems which we face and relate
it the attention it deserves. A fishery
The second will be given on Wednesday
Such technological and marketing
them to the total problem of the United
educational service is needed to carry to
of this week, May 20, and the third on
studies are fundamental to the future
States.
prosperity of our fishing industry if it
the industry techniques and information
Monday, May 25.
Mr. HUMPHREY. Mr. President, will
I wish to assure the Senator that I
is to continue to form the economic
now available but unknown or unused.
the Senator from Massachusetts yield?
shall stand with him in whatever his
foundation for a significant portion of
The type of legislation which I have
New England's population. Technolog-
here proposed has received widespread
Mr. KENNEDY. I yield.
endeavors may be for the constructive
Mr. HUMPHREY. I desire to com-
good of his region and of the Nation.
ical studies will help to land top quality
support from various segments of the
fish despite longer trips to new fishing
fishing industry, not only in New Eng-
mend the distinguished Senator from
Mr. KENNEDY. I am extremely
grounds, help discover such grounds, and
land but all over the country, particu-
Massachusetts for the very splendid
grateful to the Senator for his kind
will improve handling and processing
larly with respect to the educational
study, research, and program which he
words.
techniques after landing so that these
services and technological research.
257478-46779
products will come into the hands of
Such support includes the resolutions of
the consumer unsurpassed by competing
the National Fisheries Institute, the At-
foods, whether imported fish or domestic
lantic States Marine Fisheries Commis-
agricultural products. Studies are al-
sion, and the Gulf States Marine Fish-
ready underway to evaluate the effec-
eries Commission. Representatives of
tiveness of freezing fish on the high seas
labor, management, and public agencies
for later thawing, filleting, packaging,
concerned with the fishing industry have
and refreezing ashore. It is hoped that
united in their support.
this procedure will be sufficiently prac-
It is only just that fishery products
tical, economical, and otherwise success-
receive their proper share of the funds
ful to assure the fishing industry of New
set aside each year from duties collected
England many years of prosperity. Mar-
under the customs laws for such pur-
keting studies are necessary to find those
poses. Actually, the amount provided in
areas in which an unsatisfied demand for
this bill in addition to the 1939 funds for
257478-46779
37
Report in its 1949 report on the Impact
but I am convinced that Congress might
of Federal Policies on the Economy of
more easily and quickly take the step
the South. Thus, my appeal for a higher
of raising the minimum wage to $1 be-
minimum wage in 1953 is directed at
cause of the obvious need for such step.
Speech No. 2-May 20, 1953
session to raise the minimum wage to $1
every Senator and every citizen in every
A $1 minimum wage would provide a
an hour.
part of the country who believe in main-
standard which would prevent employ-
THE ECONOMIC PROBLEMS OF NEW
Seventy-five cents an hour, or $30 a
taining and improving our economy and
ers who now are paying less than that
ENGLAND-A PROGRAM FOR CON-
week, is not a living wage in any part
our labor standards.
figure from continuing to exploit the
of the country today. According to the
A doctor of philosophy in economics
helplessness of their employees. Fur-
GRESSIONAL ACTION
Bureau of Labor Statistics, the average
is not required to realize that today a
ther, it would be a stabilizing factor in
III. PREVENTION OF FURTHER INDUSTRIAL
four-person family in Mobile needed
minimum wage of 75 cents an hour is
these days when economists talk darkly
DISLOCATION
more than twice that amount in order
a nearly meaningless and obsolete yard-
of a mild recission. More money means
Mr. KENNEDY. Mr. President, the
to maintain a modest standard of liv-
stick, wholly inadequate even as a wage
more purchasing power and decent-liv-
second major task facing those of us
ing-to pay $51 monthly rent, for exam-
floor. According to the Bureau of Labor
ing standards. Of particular import-
who are interested in alleviating the
ple. But $30 a week, or 75 cents an hour,
Statistics, the consumers price index, the
ance to legitimate manufacturers in New
economic problems of New England and
is the minimum wage now set by the
best measure of living costs for which
England and elsewhere, who now are
the Nation is to prevent the further de-
Fair Labor Standards Act; and, thus,
wages go, shot up from 169.7 to 190.7
paying wage scales well above $1 an
cline and dislocation of business. I have
that is the incredible sum, for example,
from October 1949 when the 75 cents
hour, is the effect such a minimum
previously pointed out the intensity of
that thousands of cotton-textile-mill
figure was enacted, to December 1952.
would have in preventing unfair under-
such industrial dislocation, migration,
workers in the southeast region of the
In any event, 40 cents an hour was
cutting by sweatshop-work employers.
and decline and the serious economic
United States are paid. What sort of
admitted by its sponsors to be inade-
President Eisenhower's campaign
and social consequences they have
homes, food, clothing, and medical care
quate pay in 1938; 75 cents an hour was
pledge to workers of "a high level of
caused in so many communities in New
can these workers obtain for themselves
admitted by its sponsors to be inade-
wages with steady purchasing power"
England and elsewhere. Whenever they
and their families? Yet, a proposed in-
quate pay in 1949, and $1 an hour would
cannot be realized SO long as some work-
are due to congressional policy, unfair
crease to $1 an hour is protested. An
not be excessive pay in 1953.
ers in interstate commerce still receive
methods of competition, discrimination,
increase in the minimum was recom-
The average wage of New England
less than $40 a week. Generally, such
or other action contrary to the national
mended by the report of the New Eng-
factory workers in October 1952 was
workers are being victimized at such a
interest, it is proper that the Congress
land Governors' Committee on the Tex-
nearly $1.60 an hour, and similar wages
low wage, not because of their lack of
take remedial action. There are several
tile Industry.
are reported elsewhere. It is unthink-
skill or productivity, but because their
areas of this nature in which Congress
Since 1840, when Martin Van Buren
able that such workers should be forced
age, color, lack of organization, or simi-
should act to prevent or at least to re-
established a 10-hour day for workers
to compete with the labor of those re-
lar factors prevent them from being in a
strict further such problems.
in Government Navy yards, labor-stand-
ceiving less than one-half that amount,
position to bargain for the wages paid
LABOR COSTS
ards legislation has been an increasingly
particularly since, according to a Bureau
by decent employers in the same indus-
The first item under this heading in-
important part of America's social legis-
of Labor Statistics survey of 1951, there
try. Events since the 1938 act and the
lation. It is legislation which has been
volves the cost of labor. I realize that
was little difference in the urban cost
1949 amendments amply disprove the
enthusiastically endorsed by citizens and
Congress cannot and should not make
of living between North and South.
usual claims and clichés that such legis-
Senators from every part of the country
labor costs North, South, East, and West
Wages in the United States are over
lation would "cause mass unemploy-
because it benefits every part of the
exactly equal. But Congress does have a
40 percent of the value added by man-
ment," "interfere with free enterprise
country. Hugo Black, of Alabama, was
duty to see that the laws of the United
ufacturers for all industries, with fig-
and collective bargaining," and "dis-
one of the first sponsors of the Fair
States are not preventing the equaliza-
ures ranging up to nearly 50 percent in
criminate against small business." The
Labor Standards Act because he foresaw
tion of labor costs; and a further duty,
the case of textile and other industries.
most recent nationwide data on wage
the steady economic progress and better-
which has long been recognized, to see
The report of the Committee on the
rates issued by the Department of Labor
ment of living standards which the
that labor is not exploited at an un-
New England Economy stated that
demonstrate that such an increase could
South would enjoy under the stimulation
reasonably low cost.
minimum wages should be high enough
be easily absorbed by all employers af-
of labor-standards legislation and simi-
to stop the exodus of industry from
fected. Moreover, productivity con-
FAIR LABOR STANDARDS ACT
lar economic improvements. He and his
older areas when this is not justified
tinues to increase under the stimulation
The first and most important step
colleagues realized that the industrial-
by underlying economic conditions.
of decent wages and working conditions.
which must be taken to equalize more
ization of the South would not be handi-
The report pointed out that, thus far,
Although my main concern is with the
nearly the cost of labor in this country,
capped by its inability to offer sweatshop
the minimum-wage rates have been at
minimum wage itself, I wish to add one
on the basis of minimum standards of
wage labor as an attraction to new busi-
levels that affect a relatively small part
word concerning the coverage of the act
decency and fairness, is to amend the
ness. They did not want runaway in-
of the total labor force, including the
and the exemptions therefrom. When
Federal Fair Labor Standards Act SO as
dustries to desert their northern em-
to increase the minimum wage from 75
ployees to come South in an attempt to
South, because of the general rise in de-
Franklin D. Roosevelt proposed wages-
mand and in industrialization through-
and-hours legislation in 1937, its con-
cents an hour to at least $1 an hour. I
exploit, at low wages, the labor supplies
out the country. A higher and more
stitutionality and the full scope of the
realize that there are other inadequacies
of the South. Nor did they want the
effective minimum wage, the committee
commerce clause were still in doubt.
in our minimum wage and hours law,
industries of their own areas, that were
paying legitimate wage scales, to face
pointed out, would by no means elim-
Accordingly, Congress acted cautiously
particularly the large number of ex-
inate wage differentials, but would tend
with respect to coverage. In 1949, in-
emptions and exceptions to the coverage
competition from those paying wages
to reduce the advantages of low-wage
of that law which in 1949 were increased
below a decent minimum. Their posi-
stead of extending the coverage, such
by the Congress. But, if nothing else,
tion has been borne out, as demonstrated
areas. There are many who maintain
doubts having been resolved, opponents
that a minimum wage of $1.25 would
of the increase to 75 cents exempted
it is incumbent upon Congress at this
by the Joint Committee on the Economic
be more realistic and more effective,
from the protection of the act an esti-
257478-46779
257478-46779
(36)
38
39
mated half million workers-those in the
more adequate rates. Hours, working
Provisions for determinations of areas
ditions cannot be maintained at the
lumber, telephone, newspaper, laundry,
conditions, child labor, and other labor
and goods to which an order applies
expense of decent labor conditions. Be-
and other industries and those in retail
standards are similarly regulated. The
should be clarified to spell out existing
cause of the increased Government de-
establishments. This trend must now be
object of the act, as stated by the United
and I believe proper, administrative in-
mand for thousands of items, the Walsh-
reversed. The benefits of such legisla-
States Supreme Court, was to "obviate
terpretation into law. The Senator
Healey Public Contracts Act has become
tion must be distributed over as broad
the possibility that any part of our tre-
from Maine [Mr. PAYNE] and Repre-
of increasing importance in maintain-
an area as the Constitution and prac-
mendous national expenditures would go
sentative Rogers of Massachusetts have
ing our labor standards, protecting an
ticality permit. I am concerned, I may
to forces tending to depress wages and
each introduced bills in order to make
increasing number of employers and
add, about the pressures that seek to
purchasing power and offending fair SO-
clear beyond question that minimum
their employees from the unfair compe-
exempt still more persons and occupa-
cial standards of employment."
wage rates under the act may be deter-
tition of bid brokers and speculators and
tions from the coverage of the act.
Although an administrative lag fre-
mined on a nationwide basis, and that
that minority of firms that will not
In summary, Mr. President, the
quently diminished its importance in the
the Secretary is not required to fix dif-
maintain the fair labor standards gener-
strengthening of our basic fair-labor-
wage picture, the Walsh-Healey Act
ferent wage rates for different areas of
ally observed in their industries. Fiscal
standards legislation is an immediate
worked well without far-reaching
the country. Such an amendment is
1952 contracts under the Walsh-Healey
necessity. If we are to maintain a
amendments until 1952. Near the close
clearly in keeping with the purpose of
Act for the products of the woolen and
healthy, vital, confident, and strong
of the 82d Congress, when preparation
the Walsh-Healey Act by preventing the
worsted industry alone, for example,
for the national conventions was reach-
use of expenditures of the Federal Gov-
were valued at $236 million. The con-
economy, vigorously pursuing a foreign
policy designed to strengthen the demo-
ing its peak, several extensive amend-
enament to encourage and perpetuate
gressional purpose in enacting this law
ments to this permanent labor legisla-
substandard labor conditions in low-
was to prevent this tremendous spend-
cratic forces and living standards abroad
tion were introduced as amendments to
wage areas. Such an amendment is
ing power of the Government from being
and stability and security at home, we
must follow the principle stated in the
the Defense Production Act. One such
desirable in order to substantiate the
used to perpetuate intolerable working
declared policy of the Fair Labor Stand-
amendment was enacted in the last few
present administrative interpretation
conditions and unfair competition. The
days of Congress which provided, among
which prevents unscrupulous contrac-
Government is protected from dealing
ards Act:
other things, for judicial review of the
tors in higher wage areas from peddling
with undependable and irresponsible
To correct and, as rapidly as practicable,
Secretary's determination under the act.
their bids to have the contract work per-
suppliers and need not award defense
to eliminate labor conditions detrimental to
It is difficult politically to oppose judi-
formed by manufacturers in low-paying
contracts as subsidies to those who weak-
the maintenance of the minimum standard
of living necessary for health, efficiency, and
cial review. But not logically. The
areas. This interpretation has been
en our workers' morale and productivity
general well-being of workers.
amendment introduces the confusing
confirmed by the continued appropria-
through substandard conditions of em-
uncertainties of court decisions to mat-
tions for and review of the enforcement
ployment. A strong and effective
A $1 minimum is a modest goal; it
ters for administrative finding of fact.
of the Walsh-Healey Act by Congress
Walsh-Healey Act, free from the en-
would go virtually unnoticed by practi-
It thus serves only to cripple unneces-
and a specific rejection of a contrary
tanglements of the Fulbright amend-
cally every industry and every legitimate
employer in the country; but it would be
sarily the effective operation of the act.
amendment during the last session. A
ment, is an important step in the
Its encumbering effect was recognized
determination of minimum wages on
achievement of a stronger national econ-
a step forward in eliminating the worst
forms of underpayment and in setting
by the report of the New England Gov-
a locality basis would in effect prevent
omy without undesirable industry dis-
ernors' Committee on the Textile In-
the Walsh-Healey Act from achieving
location.
a realistic floor beneath the Nation's
dustry.
the purposes for which it was enacted.
ADMINISTRATION
economy.
The real basis of the amendment was
Consideration should also be given to
There is one more problem with re-
An increase in the minimum wage to
demonstrated as soon as the Secretary
means of expediting changes in the va-
spect to the Fair Labor Standards,
$1 an hour would take into consideration
of Labor issued a finding of prevailing
rious industry rates as proposed by the
Walsh-Healey, and other acts, which af-
the minimum standards of living neces-
wages in the textile industry. Cer-
New England Governors' Committee. I
fects the general problems which I have
sary in this country, the increase in the
tain textile manufacturers immediately
realize the importance and desirability
been discussing. I refer to the effective
cost of consumer goods purchased by the
brought suit to review the action, claim-
of the present procedures which call for
and equitable enforcement of these laws
wage earner, the prevailing minimum
ing that separate rates should have been
informal consultations with employers
rather than substantive amendments to
rates in most American industries today,
set for southern mills, that the proce-
and employees, careful studies of wage
them. Here too, however, Congress has
and the general rise in wage levels and
dure followed was improper in a number
rates, and quasi-judicial proceedings ad-
an important role to play; first, by pro-
productivity throughout the Nation; and
of ways, that the finding was unsubstan-
hering to the basic elements of due
viding adequate appropriations for the
it would help prevent undesirable indus-
tiated and that such finding should be
process; however, I am hopeful that some
administration and enforcement of such
trial migration and dislocation.
held up indefinitely while all these mat-
machinery may be provided whereby
laws; and, secondly, by maintaining a
WALSH-HEALEY ACT
ters were litigated in the courts. In
such wage determinations may be kept
watchful attitude to see that the intent
The next step in more nearly equaliz-
February, a temporary injunction was
more nearly up to date. I am likewise
of Congress is not frustrated or misused.
ing wage rates and the cost of labor in
issued suspending the textile increase
concerned that no further weakening
These laws, including the Fair Labor
order to prevent further decline and dis-
for the employees of the plaintiffs.
amendments be introduced to destroy
Standards Act, the Walsh-Healey Act,
location of business is the improvement
Thus, the whole intent of the Act was
the effectiveness of the act by excluding
and the National Labor Relations Act,
of the Walsh-Healey Act. This law, orig-
frustrated as the southern mills con-
particular commodities or industries or
require able administrative personnel in
inally enacted in 1936, provides in gen-
tinued to undercut the industry with
by insisting that wage rates be set on a
adequate number to accomplish their
eral for a determination by the Secre-
low wages. The Senator from Rhode
local basis.
purposes. They also need constant sur-
tary of Labor of the prevailing wage rates
Island [Mr. GREEN] has introduced a
As in the case with the Fair Labor
veillance by the Congress to determine
in an industry with which the Federal
bill to repeal the Fulbright amendment.
Standards Act, the fundamental objec-
when the law is not accomplishing those
Government is contracting, and requires
If this cannot be done, surely the pro-
tives of this law are generally accepted
objectives and is in need of further leg-
such contractors to observe minimum
visions for judicial review can be dras-
by employers, employees and the public,
islative action. For example, with re-
wages based on these more current and
tically modified.
who agree that healthy competitive con-
spect to the Taft-Hartley law, which I
257478-46779
257478-46779
40
41
shall subsequently discuss, Congress
ploitation of children at unreasonable
goods to be processed and thus avoid the
least a free opportunity for an equaliza-
should be concerned about reports that
wages.
higher-wage levels here on the mainland.
tion of the degree of unionization in vari-
National Labor Relations Board field ex-
LEARNER PERMITS
The present minimum-wage rates in
ous sectors of the country. This requires,
aminers and employees are intimidated
A second important problem area
Puerto Rico under the Fair Labor Stand-
of course, revisions of the Taft-Hartley
in certain areas, and, further, that there
under the Fair Labor Standards Act con-
ards Act are low enough to cause concern
law. As stated by the Committee on the
is an unreasonable and unnecessary de-
cerns the use of learners permits. The
to manufacturers in any part of the
New England Economy:
lay in processing of cases. The Senator
original intention of that section of the
United States regardless of what wage
In still another field Federal policies may
from Ohio [Mr. TAFT] has introduced
law permitting employers under certain
they may be paying. Such wages as 17½
injure New England's interest.
The
an amendment to provide for an ad-
circumstances to be granted learner per-
cents an hour for certain textile workers,
Wagner Act tended to advance unionization
visory committee on procedure which
mits by the Secretary of Labor while
23 cents an hour for certain leather
much more rapidly in the northeast than in
may be helpful along these lines. As
training employees at a wage less than
workers, and 30 cents an hour for certain
the south, and the Taft-Hartley Act tends to
freeze that situation.
The
Taft-
another example, we find the Wage and
the minimum wage was to make the
button, buckle, and jewelry workers
Hartley Act
has had one unfortunate
Hour Administration, on its present
transitional period that much easier fol-
shock the conscience of most American
effect; namely, a freezing of an advantage
budget, faces far more violations of the
lowing the establishment in 1949 of a
citizens, particularly those who must
for the South which has a much lower pro-
Walsh-Healey Act in need of detection in
minimum wage of 75 cents. But, the
compete with the products of such labor.
portion of unionized workers.
It
af-
the textile areas outside of New England
transition period for a minimum wage
And yet the Puerto Rican Government
fected adversely the labor-cost position of
than within that region.
of 75 cents, if such period ever existed,
has embarked upon a program to entice
the New England manufacturers in their
It is with respect to the Fair Labor
has been long past. Today, there is no
American employers to abandon their
competition with the South by retarding the
Standards Act in particular that Con-
justification for paying a learner less
mainland plants and employees and mi-
equalization of labor conditions.
gress must give its attention to matters
than 75 cents an hour; and there is par-
grate to the cheap labor of Puerto Rico,
Similarly, the report of the New Eng-
of enforcement and accomplishment of
ticularly no justification for the whole-
promising in one letter I have seen that
land Governors' Committee on the Tex-
sale issuance of learner permits to estab-
wages will be only one-third or lower
objectives; and I will mention here three
tile Industry, prepared for the New
specific problem areas where this is true.
lished industries which have moved to
of those the employer now pays. Again,
England Governors' Conference of which
southern or rural areas to take advantage
I do not believe that the exemption pro-
Sherman Adams, now Assistant to the
CHILD LABOR
of low-cost labor. Complaint has been
vided for Puerto Rico in the Fair Labor
President, was chairman, and of which
The first relates to the child-labor pro-
made that more learner permits have
Standards Act under which minimum
the Senator from Maine [Mr. PAYNE] was
visions of the Fair Labor Standards Act.
been issued to 1 such company in at
wages are determined by special indus-
a member, stated that abuses of the Taft-
The Bureau of Labor Standards has done
least 1 instance than such company had
try committees was intended to encour-
Hartley law had helped to "freeze a
an excellent job of educating the public
employees in a particular year.
age industry dislocation and bid ship-
situation which finds unionization re-
to cooperate with respect to the pro-
I hope that Congress will give serious
ping. Nor do such low-minimum wages
tarded in the South to the disadvantage
visions of the act and checking on its
attention to this problem and determine
alleviate the lack of purchasing power,
of New England. Unless southern trade
compliance, but it cannot do so without
if the exemption for learners continues
standard of living and unemployment in
unionism advances substantially in the
adequate appropriations and personnel.
Particularly in agricultural occupations,
to be necessary and useful; whether this
Puerto Rico. I think it apparent that
near future, New England will continue
exemption has been inadequately ad-
the present system of industry commit-
to suffer a serious handicap."
and here especially for children of mi-
ministered by the Wage and Hour Divi-
tees who meet every few years to grant
The figures bear out these conclusions.
grant families, are violations of the law
likely to occur without adequate infor-
sion due to a lack of funds or personnel;
slight increases industry by industry is
In 1946, 32 percent of our nonagricul-
mational and compliance services.
or whether such exemption has been
not effective; and that Congress must
tural labor force was unionized; but in
abused by either administrators or em-
take action to accelerate the upward re-
1952, 6 years after Taft-Hartley, the fig-
If we are concerned about the health
ployers and is in need of corrective ac-
vision of the Puerto Rican minimum
ure was only 31 percent. During the 5½
and education of our children in every
tion by the Congress. Certainly we have
wages not only that they may bear a
years before Taft-Hartley, the percent-
part of the country, then we shall be
a right to be concerned about a provi-
proper relationship to our own wages.
age of southern elections, of which there
concerned about the adequate enforce-
sion of the law which permits, for ex-
particularly in the case of those con-
were 260, lost by the Textile Workers
ment of our child-labor laws. A sur-
ample, a wage of 60 cents an hour to be
cerns migrating or bid-shipping from,
Union of America was 42 percent; but
prisingly large number of children found
paid to certain employees in the apparel
or competing with, American industry;
despite increased union activity during
employed in violation of the law are only
industry.
but also that they may alleviate the low-
the 5½ years after Taft-Hartley, it had
9 years old or younger. This is not a
PUERTO RICO
wage structure presently afflicting that
risen to 63 percent of only 150 elections.
question of one area of the country being
Finally, an important problem area
economy. Exemptions may be granted,
More important, the number of new
pitted against another. The basic min-
under the Fair Labor Standards Act to
as for handwork; and a period of tran-
members dropped about 75 percent; and
imum age for employment under State
which Congress should make certain that
sition permitted. But action should be
where elections were successful, the per-
laws in July 1952 was the same for all of
taken now.
the States of the Southeast as it was for
the law is being effectively and equitably
centage of successful collective bargain-
enforced is the special exemption for
Congress should immediately review
ing relationships established dropped
most of New England and the Middle
Atlantic States. But, unless full and
Puerto Rico. I am most sympathetic to
the administration of the child labor,
from 77 to 43 percent.
accurate information about the child-
the problems faced by the employers and
learners' permits, and Puerto Rican ex-
Unionization affects the cost of wages,
employees of Puerto Rico where sub-
emption provisions of the Fair Labor
working conditions, and workloads, and
labor laws reach employment agencies,
standard labor conditions, miserable liv-
Standards Act to make certain that the
is frequently a cause of plant migration.
labor contractors, schools, and other
ing standards, and unemployment are
objective of that act are being carried
Prof. Seymour Harris in his book on
employers, this most shocking of all vio-
out.
lations of decency will continue. Ade-
far more prevalent than in the United
The Economics of New England sums it
quate enforcement of the Federal law,
States. But I am not sympathetic with
TAFT-HARTLEY LAW
up this way:
moreover, helps to equalize the cost of
those American manufacturers and other
The next important step which needs
The Taft-Hartley Act has had the effect
social legislation to employers in various
employers who establish sweatshops in
to be taken with respect to the equaliza-
of freezing New England in its current rela-
parts of the country, and prevents ex-
Puerto Rico to which they can ship their
tion of the cost of labor is to provide at
tively unfavorable unionization position. By
257478-46779
257478-46779
42
43
guaranteeing employers freedom of speech,
I am completely opposed to any at-
Dacotah Cotton Mills, Lexington, N. C.:
punishment for engaging in collective
by changing rules of evidence, by outlawing
tempt by this Government to restrain
"Who are the men who run this union
bargaining.
the closed shop, and by introducing numer-
the free speech of employers or em-
anyway? I will name some of its chief offi-
ous other changes, the authors of the Taft-
cers to you. Baldanzi, Rieve, Chupka, Genis,
As proposed in 1949 by the distin-
Hartley Act have substantially retarded
ployees which is protected by the Con-
Jabor, Knapik, and Rosenburg. Where do
guished majority leader [Mr. TAFT], the
unionization in the South where the largest
stitution; but I think it cannot be dis-
you think these men come from and where
act should at least be amended to permit
advances remain to be made. The compa-
puted that speech itself is frequently
do they live? Are their background, up-
such statements in their full context to
nies frequently intimidate workers, use their
and properly considered as evidence of
bringing, viewpoints, beliefs, and principles
be used as evidence of an unfair labor
freedom of speech to threaten workers who
motivation and may thus carry some
anything like yours and mine?"
practice.
wish to join a union, fire organizers, refuse
penalty with it. This is clear in every
Johnson Manufacturing Co., Charlotte,
The second provision in the Taft-
to abide by National Labor Relations Board
other field of law, whether it be homi-
N. C.:
Hartley law which discriminates against
decisions, introduce all kinds of delays as a
cide, defamation, family relations, or
"Everybody knows that where unions are
means of flouting collective bargaining-in
is where strikes generally occur, and every-
those sections of the country such as
fact, frequently do not bargain collectively.
anything else. I think it is equally clear
body knows that strikes mean trouble, dis-
New England which were more quickly
In some cases, by the time an employer has
that a statement may have a coercive
sension, strife, hunger and misery, lost work
organized is section 14 (b) which per-
finally yielded, the union has disappeared.
effect without explicitly threatening
and lost pay. A union often costs people
mits State laws prohibiting the union
punishment or promising rewards. A
more than just the dues it collects from
shop or other union security agreement
Wage cuts imposed by arbitration in
well-established union may be able to
them: it often costs them their entire earn-
to take precedence over the Taft-Hartley
the North have upon occasion been
protect itself from hostile statements;
ings."
Act which permits a limited form of
frankly ascribed to failure by the unions
Pacific Mills, N. C.:
but a weaker union, attempting to get
"Your common sense is bound to tell you
union shop. This section applies re-
in the South to organize sufficiently and
on its feet in an antagonistic community,
keep pace with wages in the North, The
that the union organizers are not here be-
gardless of whether the plants are in
is seriously hurt by antiunion statements
cause they have suddenly felt an affection
interstate commerce and regardless of
largest woolen employer has recently de-
whether they are explicitly coercive or
for you. They are here, and were sent here,
whether the union security arrangement
manded a substantial wage cut for simi-
not. Thus the Senate Labor Subcom-
to get some of your money. So long as they
is agreed upon by an employer and a
lar reasons.
mittee found that this section has been
think there is any chance of getting it, they
union each of whom have units in sev-
There are many amendments needed
responsible, as much as any single pro-
will stay here. If and when they find out
eral States. It is my understanding
in the Taft-Hartley law, just as it has
vision of the Taft-Hartley law, for
they are not going to get it, they will leave
that 16 States, mostly in the South, pro-
many provisions which should be re-
as suddenly as they came."
frustrating the efforts of textile workers
Union Screw Products:
hibit even the limited union shop that
tained or strengthened. However, I wish
to organize in the South.
"The CIO was a bunch of Communists;
the Taft-Hartley law permits. Indeed,
at this time to discuss only a few pro-
Demagogic and violent themes are
veterans had nothing to gain by engaging in
the institution of this provision of the
visions in the law which have seriously
used by some employers with such an
union activities; the IAM was no longer a
Taft-Hartley law was an invitation to
retarded unionization in southern and
inflection and in the midst of such cir-
good outfit."
such States to be more restrictive. This
other sections of the country to the
cumstances and conduct that the work-
Tennessee Valley Broadcasting Co.:
is not a question of States rights. There
disadvantage of New England and other
ers dare not organize into unions of their
"Telling an employee he was silly, stupid,
are several States, such as Massachu-
areas which were industrialized and
own choosing. Yet, under the Taft-
and unwise in remaining in a union."
setts, whose State labor-relations laws
Matthews Lumber Co. case:
unionized earlier.
Hartley law, such statements do not con-
"Statements by the employer that he was
ar- less restrictive in this field than the
The first section in need of amend-
stitute coercion; they are privileged.
opposed to the union, 1+ causes trouble, did
Taft-Hartley law, but they are not per-
ment is the so-called employer "free
I ask unanimous consent, Mr. Presi-
no good, and existed only to get dues."
mitted to take precedence as is the case
speech" section. Section 8 (c) of the
dent, that a memorandum be included
Vinton Coil Co.:
in the antiunion States. This has re-
Taft-Hartley law states that:
at this point in my remarks, which mem-
"Preelection letters to employees urging a
sulted in a hodgepodge of national pol-
The expressing of any views, argument, or
orandum sets forth examples of such
'no' vote to protect their jobs and families."
icy and a lack of uniform treatment of
opinion, or the dissemination thereof,
speech which have been permitted under
Mr. KENNEDY. Mr. President, under
a single industry or even a simple com-
whether in written, printed, graphic, or vis-
the Taft-Hartley law.
the cloak of this so-called free-speech
pany with plants in many States.
ual form, shall not constitute or be evidence
The PRESIDING OFFICER (Mr.
of an unfair labor practice under any of the
amendment, certain employers have re-
Perhaps the best statement in favor
SPARKMAN in the chair). Is there
provisions of this act, if such expression
vealed with immunity their intimidation
of eliminating such State priority is
objection?
and coercion upon the rights of their
found in the unanimous bipartisan re-
contains no threat of reprisal or force or
promise of benefit.
There being no objection, the memo-
employees in a manner alien to Ameri-
port of the Senate Committee on Labor
randum was ordered to be printed in the
can standards of fair play and justice.
and Public Welfare of the 82d Congress
The effect of this provision, as pointed
RECORD, as follows:
For example, in the first case cited in
concerning the bill to permit in effect a
out by the Committee on the New Eng-
MEMORANDUM ON SPEECH PERMITTED UNDER
the above memorandum, where the plant
closed shop in the building and construc-
land Economy, and the Senate subcom-
THE TAFT-HARTLEY LAW
superintendent allegedly told employ-
tion industry. The bill provided that
mittee studying labor-management re-
American Thread Co. plant at Tallapoosa:
ees that the union involved pot-bellied
such agreements were to be permitted
lations in the southern textile industry,
"We have a nice mill here, but someone or
Yankees, sharing rest rooms with Ne-
"despite any other provision of the Act
under the able chairmanship of the Sen-
something is fixing to come in and tear up
groes, strikes, and pure communism, the
or any other Federal, State or territorial
ator from Minnesota [Mr. HUMPHREY],
your playhouse. This outside influence is
trial examiner was upheld by the Board
law." The reasons for this were clearly
has been to prevent the National Labor
just a bunch of potbellied Yankees with big
when he found that these remarks "al-
stated in the report, and are clearly ap-
Relations Board from considering the
cigars in their mouths, and the dues they
antiunion statements of an employer as
collect will just go up North, and you should
though antiunion, are not violative of
plicable to all industries:
want to keep your money in Tallapoosa. If
the act. Under the act mere words
As the problems of this industry are indi-
evidence of motivation of subsequent
they come in you will share the same rest-
ascribed to an employer do not consti-
visible and national in scope, it is provided
hostile conduct which would otherwise
rooms with Negroes and work side by side
tute unlawful interference with the legal
that such agreements are permissible despite
constitute an unfair labor practice SO
with them. It comes right out of Russia and
the provisions of any other section of the
rights of the employees unless the words
long as the statement in question did not
Act or any State or territorial law.
is pure communism and nothing else. In
amount to an actual threat of economic
explicitly threaten punishment or prom-
one place the people who went out on strike
Approximately 16 States have constitutional
ise reward.
had to eat raw cabbage."
257478-46779
257478-46779
44
45
or statutory limitations on union security
trine that an employee who is out on
successfully shattered employee morale
limited right of appeal to the Board; to
more stringent than those of section 8 (a)
strike for higher wages is no longer en-
and scattered the members of the union
permit the Board to issue a decision in
(3) of the National Labor Relations Act or
titled to state who shall represent the
to jobs elsewhere. An enforcement order
an unfair labor practice case where the
those contemplated by this bill. Section
workers at that plant.
14 (b) of the act provides that such limita-
by then serves little purpose.
parties waive the right to a hearing
President Eisenhower referred to this
tions are controlling. Congress can pre-
Mr. President, this unconscionable de-
and agree to a stipulation of the facts;
empt the field of labor-management rela-
provision of the Taft-Hartley law as
lay in part is due to the staggering load
and finally to establish a court of labor
tions to the exclusion of State and Terri-
"licensing union busing." The subcom-
of 78,000 different cases docketed under
appeals, with the same jurisdiction as
torial action by legislation and it has done
mittee of the Senate Labor Committee
the Taft-Hartley Act. In part it is due
the courts of appeal now exercise in re-
so to an appreciable extent. The needs of
studying labor-management relations in
to the lack of adequate appropriations
view and enforcement cases, similar to
contractors, labor organizations, and em-
the southern textile industry explored
for sufficient National Labor Relations
the Emergency Court of Appeals estab-
ployees in this industry are the same
the impact of this provision on the union
Board personnel, particularly in the re-
lished with respect to orders of the Office
throughout the country. Failure to meet
at the American Enka Co. in Morris-
ginal offices, to handle such load. In
of Price Stabilization. In addition, pen-
these needs has resulted in problems which
are nationwide.
Their impact upon
town, Tenn. In this case it concluded:
part, it is due to the natural difficulties
alties and enforcement of the law
the national economy, and especially upon
The effect of that doctrine on the Ameri-
of attempting to interpret and apply an
should be made more effective.
defense activities, does not vary from State
can Enka case is obviously that, since the
act SO complicated as the Taft-Hartley.
I am convinced that the enactment of
to State. In providing the remedies which
back-to-work movement had replaced the
But it is also due to the presence or lack
these and other amendments would re-
would be afforded by this bill. the commit-
strikers, the old union would be ousted, and
of particular provisions in the act itself,
duce the unnecessary delay and expendi-
tee is convinced that the provisions of this
the competing union which had no valid in-
a few of which I might discuss.
tures which are so harmful to the at-
bill should take precedence over all local
terest in the plant prior to the dispute,
would emerge victorious from any election.
The Taft-Hartley law prohibits pre-
tainment of justice in labor-manage-
regulations.
Under such circumstances as these, the doc-
hearing elections, bans methods of de-
ment relations in this country.
The Taft-Hartley law is a national
trine would convert the ultimate exercise
termining a majority other than an elec-
The next problem under the Taft-
labor-management relations act. It
of economic strength by the union, the
tion, and prevents hearing officers from
Hartley Act which affects the unioniza-
should not provide for national problems
strike, into a suicidal weapon.
making recommendations in representa-
tion of southern and other unorganized
of labor-management relations to be
The Senator from Ohio [Mr. TAFT]
tion cases. These prohibited practices
areas is the matter of injunctions. I
governed by 48 separate acts. Such a
has introduced a bill to eliminate this
had previously worked well and fairly
speak here primarily of State court in-
federal preemption amendment must
provision of the law. Elimination of the
to expedite representation cases, without
junctions, which are not specifically
be added for all industries and all parts
ban on economic strikers voting should
loss of full rights and safeguards. They
mentioned in the Taft-Hartley law, but
of the act if we are to have uniformity
have the support of every Senator and
should not be required; but neither
the use of which has been stimulated by
in the governing of labor relations in
citizen who believes in fair labor-man-
should they be prohibited. In the year
the passage of that act. As a result,
this country.
agement relations.
prior to the enactment of the Taft-Hart-
there has been a tremendous increase in
A third provision of the Taft-Hartley
ley law, 626 prehearing elections were
State court injunctions since 1947.
law which has unfairly restricted the
The next very serious problem affect-
held and only 172 required later hearings.
Moreover, by failing specifically to pre-
right of labor to organize and bargain
ing the unionization and rights of em-
The act also provides for many com-
empt the field of labor-management re-
collectively in those areas not now or-
ployees in previously unorganized areas
plex and detailed filings, with penalties
lations in what was supposed to be a
ganized is section 9 (c) 7 which prohibits
is the unreasonable delay which the
for the slightest defect in compliance
National Labor-Management Relations
economic strikers from voting in a rep-
many entangled requirements of the
with such requirements. Senator TAFT
Act, the Taft-Hartley law enabled these
resentation election. The statement in
Taft-Hartley law have caused. Delay
has already introduced an amendment to
State courts to issue injunctions denying
that section that "employees on strike
causes discontent and injustice and fre-
eliminate the necessity of filing certain
to the workers the right to conduct ac-
who are not entitled to reinstatement
quently aggravates differences for em-
information relating to union constitu-
tivities which the Taft-Hartley Act itself
shall not be eligible ot vote" is combined
ployer, employee, and the public alike.
The National Labor Relations Board and
tions and bylaws which are practically
permitted and protected. Strikes con-
with the longstanding rule that eco-
nomic strikers-those who strike for
its General Counsel's office have been
always a matter of public record in any
ducted by the Textile Workers Union of
case, and I am hopeful that the Con-
striving to improve their procedures; and
America against Exposition Cotton Mills,
reasons other than their employers' un-
gress will consider further amendments
my criticism is directed not at those offi-
Athens Manufacturing Co., and Cromp-
fair labor practices-are not entitled to
along these lines.
cials but at the various provisions in the
ton Highland Mills in Georgia, Brewton
reinstatement if their jobs have been
The abolition of the central review
Taft-Hartley law which prevent the
Weaving, Bonita Ribbon Mills, Gurney
filled by permanent replacements. The
section of the National Labor Relations
Manufacturing Co., and Jewel Fabrics
effect of these two rules means that an
most expeditious handling of cases under
Board, and the prohibition of assistants
in Alabama; and against Pee Dee Cotton
economic striker who is replaced loses
the act.
to trial examiners are other examples of
Mills, Safie Manufacturing Co., and
his eligibility to vote in a National Labor
For example, in the cases of the Amer-
legislative interference with internal ad-
Amazon Cotton Mills in North Carolina,
Relations Board election. When an eco-
ican Thread Co. in Tallapoosa, Ga., and
ministration which has made agreement
all were restrained by court orders arbi-
nomic strike is called, accordingly, all
the Anchor Rome Mills in Rome, Ga.,
more difficult, processing more inefficient
trarily issued without a hearing soon
an employer has to do to throw the
delays of nearly 2 years after filling
and each case more costly.
after the workers left their jobs.
union out of the plant for good is to
charges of unfair labor practices broke
Other suggestions which have come
These arbitrary denials of the right to
bring in replacements and, either him-
the struggling textile unions completely.
from the study of the Senate Subcom-
self or through the replacements, peti-
The Aldora Mills, Barnesville, Ga., case,
strike and picket place the power of Gov-
mittee on Labor and Labor-Management
ernment on one side of a collective-
tion for an election by the board for the
begun in 1946, is unsettled today.
Relations with respect to the admin-
bargaining dispute; make agreement
selection of a bargaining representative.
Naturally, this delay works the great-
istration of the Taft-Hartley Act in-
with the employer almost impossible;
Under such circumstances, only the re-
est hardship on the weaker unions at-
clude an amendment to permit a re-
marshal the forces of law and order
placements are allowed to vote while the
tempting to gain a foothold in hostile
gional director to exercise final authority
against the employees; justify the pres-
employees whom they replace are not.
and previously unorganized areas. After
on all issues in representation cases,
ence of unusually large number of police
This provision introduces the novel doc-
2 years, an antiunion campaign can have
most of which are routine, subject to a
officers, State highway patrolmen, and
257478-46779
257478-46779
46
47
sometimes national guardsmen; and
one of the worst types of labor exploita-
ing the use of arbitration to obtain con-
centage of such private industrial pen-
excuse the use of brutal violence against
tion. Frequently it means that men do-
formance.
sion plans are based on what is known
the employees. I do not mean to suggest
ing the same job at the same level of
I am hopeful that the Congress will
as the offset or deductible method. Un-
that a State should be powerless to deal
skill and under the same conditions are
review this situation and enact such
der this method, the retiring employees
with violence arising out of a labor dis-
paid unequal wages. The accumulated
legislation to prevent minority discrimi-
or their survivors are assured of a
pute, but the cloak of violence should not
experience of many States and dozens of
nation on Government contracts in the
monthly annuity of a fixed sum, such as
be used to cover types of concerted action
municipalities, as pointed out by the
near future.
$125 a month, to consist of their social-
which were not violent and which were
report of the Committee on Labor and
Finally, in dealing with the overall cost
security annuity and the difference paid
protected by Federal statute. Most of
Public Welfare in the last session of Con-
of labor which affects the location and
by the employer's pension fund. There
the New England States and many other
gress, proves that discrimination in em-
migration of industry, we must not for-
are merits for and against this par-
States have statutes similar to the
ployment can be minimized. Such dis-
get those nonwage payroll costs which
ticular type of pension plan which I do
Norris-LaGuardia Anti-Injunction Act.
crimination also has. of course, other
today form a substantial percentage of
not now intend to discuss; but it is ob-
Although I realize that the solution to
very serious adverse effects upon our in-
total labor costs. Naturally, a large per-
vious that the present low level of social-
this problem is a difficult question of
ternational relations, our society and the
centage of such costs involve private
security benefits increases the amount
legislative draftsmanship and constitu-
individual which are not pertinent to this
matters for collective bargaining or in-
which such an employer must contribute
tional law, I am confident that Congress
present discussion.
dustrial policy, and others are confined
for the old age of his employees or their
can enact appropriate legislation to en-
This country does not believe in dis-
to matters of State law. But I should
survivors, while requiring the less-en-
able its will to be carried out and to pre-
crimination or the exploitation of
like to mention briefly two items which
lightened employers who have no such
vent the widespread abuses of the labor
minority labor or in paying unequal
are within the jurisdiction of the Federal
fund to pay only the 11/2-percent pay-
injunction which presently prevents the
wages for equal work. We do not believe
Government and which do affect the dif-
roll tax required under the social-secu-
orderly conduct of industrial relations.
that any manufacturers should gain a
ferential in labor costs between various
rity law.
May I also add that it is most impor-
competitive advantage through discrim-
areas of the United States.
I know of no reason why the policy
tant that not only should liberalizing
ination. I think it is important for pur-
OLD-AGE AND SURVIVORS INSURANCE AND
of the United States should result in
amendments including those mentioned
poses of fair labor standards and fair
PENSIONS
certain employers paying large sums in
above be adopted by the Congress, but
competition throughout the country that
The first of these relates to our Fed-
order to provide their retired employees
that further restrictive amendments be
such discrimination in employment be
eral old-age and survivors insurance
or their survivors with an adequate
defeated. To extend to representation
discontinued.
legislation. I think there is nearly
standard of living while their competi-
elections the present license an employer
A second step in regard to this same
unanimous agreement in the Senate and
tors make disproportionately smaller
is given in making intimidating state-
problem concerns the enforcement of
throughout the country that these laws
contributions to a Federal program
ments would be to stop union organiza-
nondiscrimination provisions in Federal
do not provide real social security today.
which does not provide that adequate
tion in unorganized and hostile areas al-
contracts. The recent report of the
And yet in too many plants, in too many
standard. As mentioned earlier, I shall
most completely. To ban industrywide
President's Committee on Government
industries, in too many parts of the
subsequently discuss the particular pro-
bargaining. even where agreed upon by
Contract Compliance stated that the
country, the $50 or so a month received
visions in our social-security program
employer and employee, would bring
nondiscrimination provision was "almost
by the retired worker under the Federal
which are in need of improvement and
chaos and increased wage differentials
forgotten, dead and buried under thou-
program is the extent of his benefits.
which will call for a higher level of
in the garment and other industries
sands of words of standard, legal and
Not enough New England textile mills
benefits.
which are located in more than one re-
technical language in Government pro-
have pension and insurance programs,
But as a matter of equality in non-
gion.
curement contracts." The nondiscrim-
but the amounts paid by those who do
wage payroll costs, as pointed out by the
I am hopeful that a fair and workable
ination clause is the means by which
are, I am sure, enough to more than off-
Committee on the New England Econ-
labor-management relations act will be
Federal contracting agencies direct that
set the slightly higher proportion of pen-
omy, increased social-security benefits
passed by the Congress, fully protecting
the million of American workers in pri-
sion plans, though not survivors' insur-
narrow this labor cost differential still
the public interest, our standard of liv-
vate industries whose skills are paid for
ance plans, in the southern mills; and
further.
ing and the rights of employers and em-
in whole or in part by Federal funds be
the report to the President by the Com-
UNEMPLOYMENT COMPENSATION STANDARDS
ployees, with a minimum of government
recruited, hired, trained, paid, and pro-
mittee on the New England Economy
urged higher social-security benefits all
The second item of nonwage payroll
interference in the collective-bargaining
moted in accordance with their merit, in
costs which is within the jurisdiction of
process.
over the Nation to include those con-
all parts of the country. The need for
the Federal Government is our unem-
MINORITY EXPLOITATION
action on this provision, said the report,
cessions now privately granted by New
The next step, Mr. President, in at-
England's textile mills.
ployment compensation program. Al-
is an important responsibility of the Na-
though this is administered primarily on
tempting to put the cost of labor in this
tion, particularly in times of defense
Subsequently, I shall go into more de-
a State level, the basic law is a Federal
country, which is an important factor in
mobilization when the fullest utilization
tail as to specific means of improving
statute. Here again, unless minimum
industrial dislocation, on a fair and equal
of manpower is imperative.
our old-age and survivors insurance pro-
standards are provided for each State,
basis, is the prevention of exploitation
The committee recommended that
gram. But I wish to stress at this time,
employers in various parts of the country
of minority labor. Although Negro em-
with respect to the matter of labor costs,
when conciliation and persuasion failed
will suffer or gain unfair advantages be-
ployment is very low in the textile indus-
that the present low level of benefits
in enforcement of the nondiscrimination
cause of the degree to which they them-
try, the presence of such a large group
paid under the social-security law acts
selves or their State legislators are con-
of workers subject to unequal wages de-
provision, "contracting agencies enforce
as a subsidy to that employer who re-
cerned over the problems of unemploy-
presses wages for all. In 1950, the Negro
the provision where practical through
fuses to supplement this annuity with
ment. As stated by the report of the
wage and salary worker earned an aver-
termination of contract, injunction, or
a private pension in his competition
Committee on the New England Econ-
age of about $1,300, or 52 percent of the
disqualification from future contract-
with those more enlightened employers
omy, with respect to benefits under un-
average for white workers, according to
ing" and that if these remedies prove in-
who make financial contributions to em-
employment compensation as well as
census figures. Such discrimination is
effective, legislation be enacted support-
ployee pension programs. A large per-
minimum wages and hours, "We strongly
257478-46779
257478-46779
48
49
recommend that wherever possible the
ly $25 in Massachusetts, nearly $22 in
amount and duration of payment of un-
of ceramic tile, and offered a Massachu-
Federal Government should adopt mini-
Vermont and Rhode Island, and nearly
employment benefits in order to pre-
setts textile firm a low-rent 30-year
mum standards of working conditions
$21 in Connecticut and New Hampshire;
vent the continuance of inadequate pro-
lease to its municipally financed indus-
and social services. In this way, the
but it was less than $17 in Mississippi,
grams in any part of the country, a
trial building. Walton County, Ga., ac-
competition among States to improve
North Carolina, Georgia, Tennessee, and
situation which adversely affects those
cording to a Boston Herald column, of-
their competitive position by retarding
Texas; and little more in Kentucky,
regions with adequate programs.
fered free building sites as 1 of 40 at-
the growth of their service would be
South Carolina, Alabama, Arkansas,
In summarizing the issues of depressed
tractions. According to a recent edition
met."
Virginia, and Florida. Similar examples
labor costs and their effect on indus-
of the Springfield Free Press, the Ameri-
As pointed out by the committee, to
of standards below what is now gener-
trial decline and dislocation, I would
can Bosch Co., a permanent fixture in
the extent that the cost of these various
ally considered to be an adequate mini-
simply say: The exploitation of labor
the industrial life in the city of Spring-
programs is not borne by labor, but by
mum level and duration of payments
or lack of adequate standards should
field, is leaving its location in that city
the consumer in higher prices or by busi-
may be cited. Such standards frequent-
not be a factor in fair competition.
for a free plant, free taxes for 10 years,
ness in lower profits, the competitive
ly have not been raised for years despite
Whether such workers are nonunion, in
and low-wage labor in Columbus, Miss.
position of New England and other ad-
the increased cost of living. They cre-
sweatshops, children, learners, or Puerto
In Mississippi, communities can author-
vanced areas is injured. We are not
ate discriminatory advantages in the
Ricans, or whether they are denied ade-
ize bond issues to build plants for new
ashamed of our high social legislation
nonwage payroll cost to be borne by em-
quate wages, pensions, or unemployment
industries certified by a State industrial
standards in New England, just as we are
ployers and the public in particular
benefits, the effect is to damage the well-
board as acceptable, the bonds to be re-
not ashamed of our high wages. Nor am
States.
being of not only those workers, but em-
tired over a 20-year period by the rent
I persuaded that they are yet high
Of course, a large part of New Eng-
ployers, employees, and the public
the industry pays on the tax-free plant.
enough Well-designed and adminis-
land's problems with respect to the un-
everywhere.
The mayor of Woodsville, Miss., offered
tered social programs are not drains but
employment-compensation program has
TAX ABUSES
both site and building to a Connecticut
investments which will pay large divi-
been the high incidence of unemploy-
Next, Mr. President--and this is a long
manufacturer. Another southern com-
dends and which are important to our
ment in the past few years, particu-
overdue matter-we must eliminate
munity has recently voted $26 million
democracy and our economy. But we see
larly in certain industries and commu-
those competitive abuses of Federal in-
worth of bonds to build industrial plants
no reason for being penalized for being
nities, as already noted. However, a
come-tax privileges which have contrib-
and lease them to private manufacturers,
in the vanguard of social legislation by
principle I have previously stated with
incurring competitive business disadvan-
uted to unnecessary and undesirable
among them a well-known textile manu-
respect to old-age and survivors insur-
industrial migration and dislocation.
facturer.
tages, even though they may be tempo-
ance is equally applicable here: That
As municipal property these buildings
MUNICIPAL SECURITIES
rary.
employers in particular States should
escape local property taxes, and the com-
The unemployment compensation pro-
not be penalized competitively because
Under this category, there are five
panies operating them pay only the lower
grams of the New England States are on
their State has adopted adequate mini-
particular abuses which I wish to dis-
rent made possible by this means of
the whole somewhat more adequate than
mum standards for unemployment com-
cuss. First, we must eliminate the Fed-
financing. Moreover, since interest on
the country at large in terms of the
pensation program under Federal law.
eral income-tax exemption given to mu-
these municipal and county bonds is
amount of qualifying earnings, weekly
For several years, many of us have
nicipal securities which are used for
exempt from Federal income taxes, they
benefit amounts, maximum weekly ben-
called attention to the inadequacies of
commercial, nonmunicipal purposes such
can be financed at lower interest rates.
efits, total benefits allowable in the bene-
unemployment benefits in various parts
as the acquisition of sites or plants for
Such methods induce bargain-seeking
fit year and duration of benefits. In
of the country, including New England,
use ir new industry.
manufacturers in other areas to abandon
1949, the average cost of unemployment
and have recommended Federal mini-
There appears to be a growing tend-
their plants and workers to accept the
insurance in the Nation as a whole was
mum standards as the long-range solu-
ency of States, counties, and municipali-
gains of such a tax dodge; and constitute
2.2 percent of taxable wages. The cost
tion to this and other shortcomings of
ties to use their credit to issue tax-
unfair competition to a private company
was 3.7 percent for New England, and a
the unemployment-insurance program.
exempt bonds for the construction of
which would have to pay higher interest
maximum of 6.3 percent for Rhode Is-
Minimum standards of this nature were
factories which are subsequently leased,
rates to finance taxable bonds for a new
land, 3.9 percent for New Hampshire,
recently recommended by the New Eng-
loanea, or given to private profit-making
plant. I am told that because of reduced
and 3.6 percent for Massachusetts. On
land Governors' Textile Committee.
enterprises. This is a problem which
overhead costs, this type of financing
January 1, 1952, Massachusetts pro-
This amendment would in no way in-
has been particularly harmful to the
within the textile industry may result
vided for a weekly unemployment bene-
volve Federal control any more than
textile industry and attention has been
in new mills being established only in
fit from $7 to $25 and up to $51 where
Federal control is involved in other labor
called to it on more than one occasion
those States offering such tax dodges.
dependents were involved, for a total of
standards legislation or in other State-
by the New England governors.
One tax expert concluded that a munici-
from 21 to 23 weeks; this may now be
grant programs. Such a law should pro-
Such tactics have been employed re-
pally financed $8 million cotton mill
increased to 26 weeks. In Rhode Island,
vide for a minimum-probably of 26
cently in Kentucky, Mississippi, Tennes-
needed only 2.4 percent purofit on sales
there was a maximum of $25 a week for
weeks, one-half of a year-for the dura-
see, Alabama, California, and Illinois;
to stay in business, compared to a 4.36
26 weeks; and similar figures prevail for
tion of unemployment benefits, and an
other States, including Arkansas and
percent return needed by a privately
most other New England and Middle
adequate minimum and permissible
Louisiana, appear on the point of fol-
financed cotton mill.
Atlantic States. But in Mississippi, the
maximum of amounts of benefits to be
lowing suit. A short time ago, a com-
These bonds are not issued for a public
weekly benefit amount ranged from $3
granted, as well as improving present
munity in Tennessee completely financed
purpose, as Congress originally intended
to $20 in the case of total unemploy-
standards of coverage. Naturally, an
a modern textile plant for the purpose
that term. There is no reason why they
ment for a maximum of 16 weeks; in
adequate period of time would be given
of luring a New England textile mill to
should be permitted to escape the Fed-
South Carolina, from $5 to $20 for 18
to each State to amend their laws to
the locale. Very recently the city of
eral taxation which applies to all other
weeks, and in Virginia from $5 to $20
meet such standards.
Florence, Ala., issued 5-percent converti-
commercial bonds. As a recent editorial
for 16 weeks. Thus, the average weekly
I am hopeful that Congress will see
ble revenue bonds to finance the con-
in the Boston Record stated:
payment in the spring of 1952 was near-
fit to enact minimum standards for the
struction of a building to be used by a
We have always been highly ethical in our
private corporation for the manufacture
treatment of municipal bonds. We
issued
257478-46779
257478-46779
50
51
them in the approved and proper manner
What happens when their new-found
vious year was liquidated with dire con-
derived from unrelated business activi-
for the construction of schools, water sys-
benefactors leave for another bargain
sequences to the community simply be-
ties and from long-term leases of prop-
tems, streets, and hospitals. Since these
elsewhere?
cause such liquidation was more profit-
erty acquired with borrowed funds; sec-
securities are tax-exempt, we felt that their
use should be prudently restricted and their
Congress should take action to elimi-
able under these tax-avoidance schemes.
ond, upon engaging in specified types of
value never impaired.
nate the Federal tax exemption on mu-
Such manipulators are intent on bleed-
prohibited transactions with the donors,
Instead of utilizing their municipal bond-
nicipal securities used for purely com-
ing the productive enterprises in which
or upon accumulating income under cer-
ing privileges for public works and the pro-
mercial, nonmunicipal purposes in order
they have gained control without regard
tain specified circumstances exemption
tection of the people from disaster and dis-
to prevent further such abuses and un-
to the welfare of their workers or the
will be totally or partially denied. sub-
ease, the southerners put up streamlined
fair methods of competition.
communities in which their plants are
ject to certain limitations; third, annual
mills which various cities and towns rented
located.
information returns available to the
for almost unbelievably small amounts to
CAPITAL GAINS
I am not proposing that the prefer-
public indicating the nature of the op-
bargain-hunting individuals and corpora
Secondly, Congress should eliminate
ential treatment of capital gains be
erating activities are required to be filed;
tions from the North. This naturally en-
the opportunity for repeated abuses of
abled the fugitives to pare down their tax
ended; and I realize that any limitation
and, fourth, feeder organizations, enter-
the capital-gains preferential treatment
bills and to slash their operating costs so
is difficult to draft and administer.
prises all of the income of which is dis-
drastically that they could undersell their
on income received by financial specula-
But I am proposing that the repeated
tributable to an exempt organization,
northern competitors in the domestic and
tors from the liquidation of going con-
abuse of the capital gains privilege for
are taxable in the same manner as other
foreign markets.
cerns purchased for financial manipula-
tion rather than operation. The capi-
the purposes of liquidating going con-
corporations. These provisions are
This is not in keeping with our tax
cerns be prohibited under the Internal
modifications, however, of the original
tal-gains provision has been increasingly
policies, nor is it free enterprise. As
Revenue Code.
proposals to prevent such modifications
used by such persons, rather than legiti-
pointed out by an editorial in the Textile
mate commercial operators, to exploit
CHARITABLE TRUSTS
and were, of course, made in good faith:
World for February 1952, "such practices
Third, Congress must take further ac-
but a further review is now needed in the
and destroy established and profitable
are a gross inequity: a sly, unfair, and
tion to make effective the elimination
light of subsequent experience with these
businesses for personal gain, regardless
potentially vicious financing scheme: a
of economic dislocations and human
of the abusive use of charitable trusts
provisions.
tax dodge" and a conspiracy to give such
waste. The misuse of the lower tax rate
and tax-free institutions to acquire busi-
I recommend that the tax-exempt
plants a competitive advantage in their
on capital gains has been a factor in
ness concerns. Such abuses have con-
charitable trust loophole which permits
market over businesses established on
many textile mill sales and liquidations
tributed to the decline of New England
discrimination and unfair competition
the basic American principles of private
textiles, as pointed out in the Report of
be tightened to prevent further abuse.
since World War II, I am told, and ap-
ownership. In the words of the South-
the New England Governors' Commit-
PUERTO RICO
parently in liquidations in other fields,
eastern States Tax Officials Association,
including leather, tobacco, and retail
tee; and the same report points out that
The fourth item of competitive abuse
speaking in conference at Atlanta, Ga.,
establishments.
apparently the 1950 Revenu Act has
of tax privileges is the total tax exemp-
in September 1951, this practice is "in-
Such speculators make a business of
not yet solved these problems.
tion which is offered by the Puerto Rican
equitable and unfair to industry in the
acquiring going concerns and shortly
I am sure that no one who was in the
government to industries which come to
State and detrimental to the taxpayers
thereafter liquidating them in order to
Senate in 1949 has forgotten the investi-
that island. Although closely related
of the State because what is given away
receive the income therefrom under a
gation of the closing of the Nashua,
to the first abuse mentioned dealing with
must be paid for by other businesses and
preferred tax treatment. Surely this is
N. H., mills by the Textron Co. as a part
the use of community bonds, this raises
individuals, ultimately, thereby creating
an unhealthy social and economic condi-
not the purpose for which the capital-
of a manipulation of mill properties
many more difficult questions. At the
gains-tax privilege was intended. When
through the use of a charitable trust.
present time, certain new industries are
tion." The Investment Bankers Associa-
used in this way, the lower rate does not
Such hearings demonstrated that such
granted a complete exemption from in-
tion of America recently requested its
induce new capital investment in pro-
charitable trusts and similar tax-exempt
come taxes, insular and municipal prop-
members to refrain from purchasing
ductive enterprises as was the aim of this
organizations were being used to avoid
erty taxes, and certain license fees, ex-
such securities.
legislation, but on the contrary drains
Federal income taxes, often with serious
cise taxes and other levies imposed by
Moreover, the industries thus at-
it off. In one example which has been
effects upon a particular industry, plant,
the insular and municipal governments
tracted are migrants, not new enter-
cited to me a single group of speculators,
or community. Title 3 of the Revenue
of Puerto Rico for the period from July
prises. Obviously not devoted to the
through a series of financial manipula-
Act of 1950 was intended to close this
1, 1947, to June 30, 1959; a 75-percent
public interest or high ethical standards,
tions over a period of 8 years involving
loophole; but experience has shown that
exemption from such taxes for the fiscal
they leave behind them stranded work-
about a dozen allegedly different cor-
it did not do SO completely.
year 1959-60; a 50-percent exemption
ers and sometimes stranded communi-
porations, has been able to list most of
The outstanding example of the ap-
for the fiscal year 1960-61; and a 25-
ties. Once having accepted such benefits
the taxable income from the textile mills
parent need to tighten this loophole, as
percent exemption for the fiscal year
and a few years of heavy profits, they
involved as capital gains, thereby paying
reported by the Governors' Committee,
1961-62. Recently, the Governor has
may again move leaving the community
a maximum tax of 25 percent-now 26
is again a recent action of Textron, who
requested a still more far-reaching pro-
with empty buildings and a heavy bond
percent-instead of the higher rates in-
sold a mill to a southern university; the
gram of tax exemption. In addition to
issue. As such use of public credit
tended by the tax laws. As a part of
latter could pay a relatively high price
permitting the payment of unbelievably
spreads, no community can be sure of
these maneuvers, the capital assets of
because of its tax-exempt status, and
low wages, not being covered by the Fair
the stability of the enterprises on which
one textile nill in New Bedford, Mass.,
then "permitted" Textron to manage the
Labor Standards Act minimum as pre-
its citizens depend for their livelihood.
were so impaired that it was liquidated
mill and pay only a fixed sum each year.
viously discussed, Puerto Rico further
In one town of only 10,000 people, muni-
in 1949, destroying 1,000 jobs; other mills
In general, the Internal Revenue Code
offers direct subsidies to attract conti-
cipal bonds for private industrial plants
met a similar fate. The fact that the
now provides with respect to charitable,
nental industries. United States corpo-
were proposed to the extent of $51
enterprise may be a successful one makes
educational, and certain other tax-
rations in Puerto Rico and Puerto Rican
million, or an additional debt load of
no difference under these circumstances.
exempt organizations that, first, such
corporations, as well as citizens of Puerto
more than $5,000 plus interest for every
For example, one mill which had re-
organizations are taxable upon income
Rico, do not, except under special cir-
man, woman, and child in the town.
ported earnings of $395,000 in the pre-
257478-46779
257478-46779
52
53
cumstances, pay Federal income taxes to
examining the list of certificates of
tificate was awarded was classified as a
action can be taken by the Congress to
the United States.
prevent the abuse of Puerto Rico's tax
necessity issued to companies in the
group III labor surplus area.
I fully sympathize with the need of
privileges which are employed to lure
textile industry, I find that the J. P.
I protested this action to the Defense
going industries and thus result in in-
Stevens Co., Inc., applied for such a cer-
Production Administration at this time;
Puerto Rico for further industrializing
dustrial dislocation and unemployment
tificate for facilities to be located in
but was told that such a move was justi-
its economy; and I am opposed to undue
interference by the Congress in Puerto
in this country. From a strictly legal
Stanley, N. C., on March 28, 1951. Only
fiable under the statute as it is now
Rico's affairs since the granting of its
point of view, the constitutional rela-
a few days later, the same company an-
worded. I was happy to read a recent
tionship of Puerto Rico to the United
nounced the liquidation of its Haverhill
address by a Pittsfield General Electric
constitution. But, I cannot believe that
States remains unchanged. The statute
mills, throwing over 400 employees out
executive reasserting that corporation's
Congress is powerless to act upon the
which authorized the Puerto Rican con-
of work.
belief in and practice of community re-
type of unfair competition and industry
stitution continued in force those Fed-
According to James B. Carey, presi-
sponsibility, and its plans to expand fur-
dislocation which such tax exemptions
create. This situation is exemplified by
eral statutes which provided the author-
dent of the IUE-CIO, there are these
ther at Pittsfield; but I am nevertheless
the following letter to the president of a
ity to the Puerto Rican Legislature to
further examples in the electrical
convinced that those communities with
textile mill, in a Massachusetts com-
levy certain forms of taxes and fees for
industry:
corporations less responsible or mistaken
munity already hardhit y dislocation
the support of insular and municipal
General Electric secured a certificate
in their intentions need to be protected
government. Such sections, therefore,
of necessity for $20 million tc build and
from Government incentives to unneces-
and unemployment, from a Puerto Rican
could be amended without infringing
equip an immense plant at Louisville,
government official, attempting to induce
sary and undesirable migrations. I be-
that mill to migrate to Puerto Rico. The
upon or repudiating the compact by
Ky., supposedly to make jet engines. But
lieve, therefore, that administrative
which the people of Puerto Rico were
the company then discovered that only
letter stated:
action or legislation is necessary first to
authorized to organize their own gov-
a small area was needed for jet engines,
prevent rapid amortization certificates
In brief, we can offer complete tax exemp-
tion for a period of years, an abundance of
ernment. Such amendments should be
and is proceeding to shut down GE
now being given for emergency defense
good help at approximately one-third of the
enacted if we are to save both the people
plants at Trenton, N. J.; White Plains,
facilities from being used where unde-
going rate in the continental United States,
of Puerto Rico and the United States
N. Y.; South Scranton, Pa.; and Bridge-
sirable industrial dislocation accompa-
a help training program which is to a large
mainland from exploitation by those un-
port, Conn., and move 19,000 refrigera-
nies such expansion; that is to say, where
extent free, plus liberal terms for financing
scrupulous manufacturers abusing such
tors, washing machines, and other appli-
the recipient while building these facili-
both machinery and buildings.
tax privileges.
ances jobs to the new Louisville plant.
ties is simultaneously closing down or
Puerto Rico is able to offer complete tax
Westinghouse received a $20 million
Congress must give careful study and
curtailing activities in similar facilities
exemption as it is an unincorporated pos-
certificate of necessity for a jet engine
enact appropriate legislation to prevent
in other parts of the country; and sec-
session of the United States without voting
representation in Congress. Accordingly it
the abuse of Puerto Rican tax privileges.
plant at Columbus, Ohio, discovered it
ond to condition the awarding of such
is not subject to the usual Federal tax and
was not needed, and now plans, says Mr.
rapid amortization certificates upon the
CERTIFICATES OF NECESSITY
writes all of its own tax legislation. There
Carey, to move the refrigerator division
recipient's first using-or justifying his
are no duties on goods of Puerto Rican manu-
Fifth and finally, Congress should take
from Springfield, Mass., and Mansfield,
not using-existing facilities in labor sur-
facture imported into the continental
action to eliminate the abuse of award-
Ohio, to Columbus.
plus areas, and upon the recipient being
United States as Puerto Rico is within the
ing certificates for rapid tax amortiza-
Westinghouse has received $10.5 mil-
required to give priority in the selection
United States customs boundary.
tion which result in undesirable indus-
lion in tax amortization to build a new
of the site for such emergency facilities
The Textron hearing in 1949 also re-
try dislocation, or which are awarded
meter plant at Raleigh, N. C., which may
to labor surplus areas. No tax amorti-
vealed a similar situation. As stated by
without regard to available sites or facil-
involve the loss of jobs of hundreds of
zation certificates should be issued by the
the Report of the Committee on Inter-
ities in labor surplus areas. Moreover,
workers in Newark.
Government to replace existing produc-
state and Foreign Commerce at that
such grants should be reviewed and re-
Hundreds of workers may suffer loss
tion, nor should such certificates be is-
time, the workers and manufacturers in
voked whenever the facilities are not
of jobs and wage cuts because Westing-
sued for plants which would have been
both New England and the South who
used for the emergency defense purposes
house secured $12 million tax amortiza-
constructed in the absence of such tax
must sell in the same market with Puerto
upon which the grants are based. The
tion at Horseheads, N. Y., and another
amortization certificates. Finally, it is
Rican products find their economic live-
enactment of such conditions would, I
$6.8 million at Bath, N. Y., for electronic
fundamental that such tax privileges
lihood threatened by the activities of a
believe, dovetail with the previous pro-
tubes which had been produced at
should be revoked whenever the facili-
government heavily subsidized by the
posals I have put forward regarding our
Bloomfield, N. J.
ties are not used for the purposes stated
United States Government, but paying
tax amortization or rapid depreciation
These moves, as already pointed out,
in the certificate of necessity. To my
nothing into the United States Treasury.
program; namely, the use of such tax
leave in their wake thousands of unem-
astonishment, I have learned that prac-
As stated by the committee investigat-
privileges as incentives to industries ex-
panding in labor surplus areas as well
ployed, loss of seniority, and pension
tically no check or review for possible
ing the Textron case:
rights, and serious community problems.
revocation is provided under the present
as to older industries seeking to replace
The subcommittee recognizes that when
our Government acquired Puerto Rico it
and modernize equipment; and the pre-
All too frequently such moves are made
program, regardless of the use to which
vention of a disproportionate distribu-
in order to exploit the cheap, unorgan-
such facilities may be put once the tax
assumed an obligation to take reasonable
ized labor of the new rural or southern
privileges are given. Such conditions
steps to help this impoverished Territory to
tion of such incentives. Even should
locations. What made all the more
would not and should not make manda-
improve its economic condition, with the
those other proposals fail of enactment,
hope that eventually it could arrive at an
it is most important to prevent the fur-
tragic the awarding of the tax-amortiza-
tory the location of industries in such
economic parity with the continental United
ther use of such certificates under our
tion privilege of $25 million to the Gen-
areas, nor even the utilization of the
States. However, any program conducted or
present defense program from contribut-
eral Electric Co. for a new transformer
obsolete facilities which at present
tolerated by our Government should not be
ing to undesirable industry dislocations
plant in Rome, Ga., was the fact that
plague New England.
at the undue expense of our continental
this threatened further curtailment of
and widespread unemployment.
Such legislation will be of particular
wage earners and our continental industries.
General Electric's activities in Pittsfield,
importance if our defense expansion
My concern over the abuse of this tax
It is my intention to introduce a reso-
Mass., which at the very time such cer-
goals are increased. Presumably, the
privilege is not aroused by purely
lution to determine what appropriate
theoretical possibilities. For example in
257478-46779
257478-46779
54
55
present regulations of the Office of De-
practically irrelevant. However, I feel
contracts to areas of unemployment
Mass., drawing unemployment or assist-
fense Mobilization deny certificates to
very strongly about the need for an
must not result in unemployment in
ance payments are not contributing to
a facility or part of a facility which is
equitable distribution of Federal busi-
other areas.
our efforts to economize. Surely the idle
or will be used in lieu of existing facili-
ness incentives of at least three types in
The report of the New England Gov-
mills and machines, as well as idle men,
ties, with certain exceptions; presum-
particular-first, the allocation of de-
ernors' Committee on the Textile In-
in textile areas both North and South
ably such regulations further provide
fense contracts; second, Federal pro-
dustry recommended that defense con-
are not contributing to the efficiency of
that the adequacy of existing facilities
jects; and third, certificates of necessity
tracts need not and should not be award-
our mobilization production. Surely it
for the production of the goods to be
for rapid tax amortization of defense
ed exclusively according to price bid,
is more inefficient and more uneconomi-
manufactured by such new facilities
facilities.
particularly since Government procure-
cal to waste the skills and facilities and
must also be considered. The investi-
GOVERNMENT CONTRACTS
ment agencies already depart from the
human and material resources which
gation of the Hardy subcommittee of the
Although I realize that Government
principles of sales to the lowest bidder.
could otherwise be utilized in our na-
House Committee on Government Op-
contracts even during emergency times
"In awarding contracts," the committee
tional production if only some slight
erations 2 years ago, however, indicated
are not only a temporary but a wholly
stated, "the Government should consider
preference were given to them.
that such regulations were not being
inadequate solution to the problems of
the amount of unemployment in definite
Moreover, there are other considera-
strictly enforced, particularly on a na-
distressed industries and areas, it is obvi-
regions, States, and local areas since the
tions besides economy and efficiency. In
tionwide basis. Such statute as I pro-
ous that they are helpful step in enabling
diversion of contracts to distressed areas
Lawrence, Mass., in April of this year,
pose would not, therefore, impair the ef-
a community or industry to get back on
will help to lower the cost of unem-
the Communists distributed leaflets at-
fective administration of such a pro-
its feet. It is my intention to introduce
ployment."
tempting to exploit the acute distress in
gram, but would provide specific au-
legislation specifically providing for the
These are matters of immediate ad-
that city for propaganda purposes.
thority for such regulations and carry
awarding of certain public contracts to
ministrative, as well as legislative, con-
That attempt was wholly unsuccessful in
their intent another step to meet more
bidders from areas of very substantial
cern. Speaking now with particular
terms of winning converts in Lawrence;
adequately the situation I have de-
labor surplus where their bids do not
reference to the problems of the textile
but it serves to illustrate the advantage
scribed.
exceed by more than a fixed percentage
industry, I am hopeful that either
we are handing to communism, both lo-
The Federal Government should not
the lowest bids submitted from other
through Congressional mandates or ad-
cally and internationally, when we fail
positively aid the shifting of industry
areas. I emphasize the word "specific"
ministrative action the Defense Depart-
to take action in areas which have suf-
from one section of the country to an-
because New England has had earlier
ment will be more alert to the problems
fered several years of serious unemploy-
other with disastrous consequences such
experience with both legislative and ad-
of the industry and the unemployment
ment and poverty.
as I have previously discussed. Nor can
ministrative action which were aimed at
which is continuing. If defense orders
Widespread unemployment in any
I see why the Federal Government,
the allocation of defense contracts to
could anticipate the fluctuations of the
area should be of concern to all the Na-
which has talked so long about aiding
so-called distressed areas, but which, be-
industry, and the Department could ac-
tion; and SO should adequate methods of
labor surplus areas without offering
cause of some loophole or legalistic
celerate its orders and stockpile its tex-
contract allocation to alleviate that un-
more than token assistance, should fail
sophistry, have failed to be of any assist-
tile goods accordingly the situation
employment. It is better to bring de-
to give preferential treatment to such
ance whatever.
would be at least somewhat improved.
fense work to the workers, who are in
areas in the awarding of such certifi-
cates.
Such a bill as I propose would provide
At the present time, despite the recom-
need of jobs in their own communities,
more specific authority for Defense Man-
mendation made by the textile panel of
rather than move those workers to
A prosperous, growing economy in
power Policy No. 4 than is now provided
the Surplus Manpower Committee, mills
already tight areas with overloaded
every section of the country is an im-
portant pre-requisite for a strong Na-
by the "public interest" provision of the
operating 80 hours or less per week are
schools, housing, and other facilities.
Armed Services Procurement Act and
rarely, if ever, given preference over mills
If they are not moved and do not mi-
tion. I am hopeful that Congress will
the opinions of the Comptroller General
operating more than that. There is gen-
grate, unemployment continues to in-
condition the granting of tax amortiza-
More important, such legislation would
eral agreement among leaders in both
crease and, as pointed out, the national
tion certificates for defense facilities in
close the loopholes of that policy which
labor and the industry, as well as im-
interest is further harmed through the
this manner in order to prevent their
have prevented it, despite the fact that
partial observers, that the surplus man-
loss of their contribution and the wel-
abuse and undesirable consequences of
it was inspired by the conditions of New
power contract allocation program has
fare funds necessary for their support.
industrial dislocation.
England's textile towns, from being of
been a failure as far as textiles, and par-
Moreover, the conversion from civilian
FEDERAL INCENTIVES
any real help in alleviating the unem-
ticularly woolen and worsted mills, are
to military production has been the
There is a third important step, in
ployment situation in those communities.
concerned. For example, the workers
cause of much of our dislocation and
addition to its role in equalizing the cost
Such a bill would make certain that the
of Asheville, N. C., can understand the
unemployment.
of labor and preventing tax abuses,
allocation of such contracts to compa-
disdain which the workers of Lowell,
Those other areas of the country who
which the Federal Government can take
nies with plants in labor-surplus areas
Mass., have for Defense Manpower Pol-
have in the past objected to such a policy
to prevent further industrial migration
would result in additional employment
icy No. 4, inasmuch as its so-called
should remember that these distressed
and dislocation and a general business
in those areas, and not merely in such
preference has been no preference at all.
areas are not confined wholly to one
decline in those problem areas such as
contracts replacing present work which
New England textile and apparel con-
section of the country; and that regions
I have pointed out exist in many parts
is either put aside or placed in other
tracts in the first 2 months of 1953
which have received SO much assistance
of New England; I speak now of an
plants of the same company in other
amounted only to about $13 million.
of other kinds from the Federal Govern-
equitable distribution of Federal busi-
areas. Only areas of very substantial
I realize that the policies which I am
ment should not object to a temporary
ness incentives. Of course, the Federal
labor surplus and only responsible bid-
now discussing are fraught with serious
relief measure of that type. Although
Government assists business in many
ders who are in the lowest range of bids
problems with respect to both the eco-
Government contracts are one method
ways, most of which I shall not attempt
would be covered by such a bill in order
nomic principles involved and their ad-
of at least easing extensive transitions,
to discuss here. Moreover, in many of
to prevent wholesale abuses of such a
ministration. I realize that some may
such a policy is not going to prevent the
these items considerations of areas are
privilege. Moreover, such allocation of
say that such policies are inefficient and
overall operations of the forces of free
257478-46779
uneconomical. But surely 10,000 or more
and fair competition. The allocation of
unemployed textile workers in Lawrence,
defense contracts to labor surplus areas
257478-46779
56
57
and the granting of preference to such
and traditions of scientific development
ployment, defense contribution and will-
Mr. KENNEDY. Mr. President, from
areas, as well as giving special consid-
are unequalled. Lawrence, with 47
ingness to expand. During World War
the foregoing table, it will be seen that
eration to distressed industries, are
acres of available land on the Merrimack
II, although New England received over
proportionately New England has ob-
founded on those principles which have
River, could be the ideal spot for some
9 percent of the contracts for military
tained certificates for about one-third
been applied to aid every industry in
installation.
goods, she received only about 4.5 per-
of the percentage it has had of value
every section of the country, and which
Massachusetts received only 1 percent
cent of the contracts for expanding
added by manufacture. This is much
are particularly important now in the
of the value of Federal contracts for
plants and equipment. A similar dis-
the lowest proportion of any section of
light of the problems I have discussed.
various facilities, projects and other
proportion exists in the certificates
the country. The Middle Atlantic and
I am not proposing that we abandon the
Federal construction in 1952; yet this
awarded during the Korean emergency.
East North Central States, and South
principles of awarding contracts at the
was far more than any other New Eng-
By the end of 1952, New England firms
Atlantic and Pacific have also obtained
lowest cost to the Government, but
land State. Not one of the 8 South-
had been granted little more than 1,000
proportionately less in certificates than
merely that the Government recognize
eastern States-Alabama, Florida, Geor-
certificates for $612 million in new plants
they have had in value added. Great
the necessity of placing contracts in the
gia, Kentucky, North Carolina, South
and equipment, approximately 2.5 per-
gains have been concentrated in the
areas that most need them. The Fed-
Carolina, Tennessee, and Virginia-had
cent of the comparable total for the
West South Central area-Arkansas,
eral Government at present attempts to
as small a share. Indeed, the share of
United States, and this figure fell further
Louisiana, Oklahoma, and Texas-whose
meet the problems of surplus agricul-
any one of 4 of these States, Alabama,
during the first 10 weeks of 1953. The
percentage of certificates is 4½ times
tural commodities in a manner which its
Kentucky, South Carolina, or Tennessee,
percentage is even lower if transporta-
its percentage of value added by manu-
most enthusiastic supporter could not
was greater than that awarded all 6
tion and electrical utilities are excluded.
facture in 1950.
call wholly efficient and economical;
New England States combined.
According to the latest release of the De-
One of the major consequences of a
surely the same consideration may be
Those of us who represent New Eng-
fense Production Administration the 4
disproportionate award of certificates to
given to our surplus human resources.
land in the Congress must continue to be
West South Central States, with far less
one section of the country, is that after
Nor is the principle a new one in the
alert to the needs and opportunities of
defense participation, had certificates
the emergency there may be surplus
specific field of awarding defense con-
our region in the awarding of Federal
of necessity for projects worth 5 times
plants in some industries. If there is
tracts. During World War II, it was a
projects, installations and grants.
the amount awarded the 6 New England
such a surplus and an industry has both
common procedure to award such con-
TAX AMORTIZATION CERTIFICATES
States. Similar comparisons may be
efficient plant and inefficient plant, It
tracts to those other than the lowest
made with the South Atlantic and East
competitive bidder and this had the ap-
Finally, in order to prevent widespread
will naturally close the inefficient plant.
South Central States. One of the most
and unnecessary industrial dislocation
If the old, obsolete, wornout and ineffi-
proval of Congress and the Comptroller
frequently cited bases for comparing
and decline through inequitable distri-
cient plant is concentrated in one section
General. Thus, I am asking only that
certificates issued is the "value added by
bution of Federal business incentives,
of the country because it failed to get
our present policy be made more effective
manufacture" in each region.
and more specific in order to achieve a
I propose that Congress enact legislation
Mr. President, I ask unanimous con-
certificates of necessity, then that area
to prevent grossly unequal geographic
will be the one to suffer. Each area
greater utilization of the manpower
sent that there be inserted at this place
distribution of certificates of necessity
should be entitled to its share of govern-
skills and facilities now wasting in areas
in my remarks a table comparing the
for rapid tax amortization of defense
of substantial labor surplus.
percent of the cost of facilities receiving
ment aid in expanding production, or
facilities. The present program of ac-
Specific legislation giving priority in
certificates of necessity as of September
those discriminated against will suffer
celerated amortization, and it may well
the awarding of defense contracts to
30, 1952, by region and the percent of
in the years to come. That area is cer-
be that the program has already passed
value added by manufacture in such re-
tainly justified in pointing out any dis-
areas of substantial labor surplus is
its peak, has had the effect of a dis-
needed if the distribution of these Fed-
gion in 1950.
crimination against it and may well
criminatory action on the part of the
eral business incentives is to be equi-
The PRESIDING OFFICER (Mr. FER-
argue that it is entitled to legislation
Federal Government against New Eng-
GUSON in the chair). Is there objection?
protecting it in the future. As pointed
table, and undesirable dislocation halted.
land and other areas; and if, because of
There being no objection, the table
out earlier, our Nation as a whole can-
GOVERNMENT PROJECTS
world conditions, the program contin-
was ordered to be printed in the RECORD,
not prosper to the degree it should, if
As a matter of long-range legislative
ues to be of importance in the defense
as follows:
one of its major regions is economically
objective, rather than specific legislative
production picture, such regional dis-
sick.
or administrative directive, it is impor-
crimination must be ended.
Certified
Value
According to a recent study by the
tant that we strive for a fair allocation
As I have previously discussed, such
facilities
added
chairman of the New England Gov-
of Federal projects, installations and
certificates have frequently been used
ernors' Committee on Textiles, New
grants. Such expenditures by the Fed-
as an incentive for particular instances
Percent
Pe cent
England received one-fourth as many
New England
eral Government are no insignificant
2.88
8.27
of plant migration with resultant unem-
Middle Atlantic
certificates as might be expected on the
20.92
26.20
contribution to the economic life of an
ployment. But I shall talk now about
East North Central
26.12
33.24
basis of its manufacturing employment,
area, and it is important that all parts
West North Central
the effect of providing one area of the
7.44
5.72
and about one-third of its share on the
South Atlantic
8.27
9.42
of the country receive equal considera-
country-and speaking frankly I refer
East South Central
5.44
3.84
basis of total employment. Last year,
tion in the distribution of such benefits.
to the South-with a disproportionate
West South Central.
18.97
4.29
information was supplied that of 58 cer-
Mountain
2.86
1.10
New England has not received its fair
share of such incentives while not pro-
Pacific
7.09
7.85
tificates of necessity granted to the tex-
share of such projects and, as a result,
viding the same opportunities to New
tile industry, an excessive number in
Total
its economy lacks that additional aid
100.00
England and other areas. New Eng-
100.00
view of the over-capacity in the indus-
which such Federal projects and grants
land's participation in these programs,
try, 6 were granted to New England
Excluded from the total cost figure of $23,007,800,000
might otherwise have provided. I have
which foster new productive capacity
are $8,000,500,000 for transportation storage and public
plants; and of a total amount of $171.3
long believed, for example, that a major
with the privilege of accelerated amor-
utilities which are not allocated by States, and $347,
million in certificates awarded to the
500,000 of other certificates in continental United States
operation of the Atomic Energy Com-
tization and tax concessions, has been
not allocated by States or which are outside the United
textile industry, only $1.9 million or
mission might well be located in Massa-
disproportionately small in terms of its
States.
about 1.1 percent went to New Eng-
chusetts whose facilities for research
population, income, manufacturing em-
257478-46779
257478-46779
58
59
land. Even in textiles exclusive of
other areas and Federal incentives to
shall introduce a resolution to this ef-
products are by truck. The committee
synthetics, New England received but
stimulate such industrialization. But
fect, than to investigate the charges of
on the textile industry of the New Eng-
3 percent of the tax amortizations al-
the welfare of the Nation is not well
discrimination in trucking rates for
land Governors' Conference recom-
though it accounts for 25 percent of the
served by using the forces of the Federal
commodities being shipped into New
mended:
industry. In other words Federal sub-
Government to stimulate the industrial
England, in freight rates both within
An equalization of trucking rates for ship-
sidies went against New England 8-1.
growth of one region at the expense of
New England and on commodities being
ments of raw materials to New England and
Although New England has five times
others. Again, equal competition and
shipped to or from locations outside of
for finished textiles out of New England
the South's capacity in woolens and
equal treatment should be our standard.
that region, and in water shipping rates
with rates equal for equal distances to those
worsted, it received one-fifth as much
I realize that a large part of the blame
on commodities leaving the port of Bos-
rates for shipping to and from the South.
aid for expansion as the South, or in
for this unequal distribution lies with
ton. Such a committee investigation
RAILROADS
short, one-twenty-fifth as much as
the manufacturing and business com-
would, of course, be made with the coop-
Similar questions have been raised
might be expected. As of June 30, 1952,
munity of New England and its own lack
eration of private transportation inter-
with respect to railroad freight rates.
none of Massachusetts' four major tex-
of enterprise in seeking more of such
ests, industrial groups, State and local
Since 1946 a rapid series of successive
tile towns had received any, and Rhode
certificates or seeking to expand further
governments and appropriate agencies
freight-rate increases have made New
Island had 0.1 percent. Similar com-
its facilities. And I can assure you that
of the Federal Government. New Eng-
England's situation with respect to these
parisons may be made for the chemical
if those New England bus nessmen who
land's proximity to domestic markets is
costs more difficult. The Interstate
and metal industries.
have not yet acted continue to sit tight,
of no advantage if the service and rates
Commerce Commission now operates
When it is realized that these facili-
undergo no expansion and refuse this
for importing and exporting raw mate-
under a regulation equalizing freight
ties can be written off in a 5-year period
opportunity to modernize their obsolete
rials and manufactured products dis-
rates in all territories east of the
instead of the usual 20-25-year period,
factories and machinery, then I will seek
criminate against that advantage.
Rockies. New England shippers do not
thus providing increased deductions for
neither to blame the Federal Govern-
Moreover, New England's disadvantage
ask for privileged rates or freight
tax-return purposes at a time when nor-
ment or the South, or require that such
from its location on the northeast corner
charges which discriminate against the
mal and excess-profits-tax rates are par-
incentives be handed to New England on
of the Nation with respect to the cost
South. But such a regulation must be
ticularly high, then the effect such dis-
a silver platter.
of importing raw materials is aggra-
wisely administered if New England,
criminatory treatment is having upon
But these are problems upon which
vated by any discriminatory practices.
with its more difficult terrain, more
industrial decline in New England may
all of us must cooperate. I am asking
The heavy reliance of New England in-
dense population, and general short-haul
be fully understood. These certificates
that legislation be enacted which would
dustry upon raw materials and natural
characteristics, is not to be harmed.
also gave priorities in allocations of
result in a more equitable distribution
resources from other parts of the United
Charges of general discrimination in the
scarce materials. I am certain that the
of rapid tax amortization certificates in
States makes fairness in transportation
matter of railroad freight rates on the
Senators and business leaders of other
order to give New England business the
costs of great importance.
part of New England business interests
areas on the short end of such discrimi-
opportunity to take this step in prevent-
TRUCKING
have lessened since the institution of
nation are equally concerned. Surely it
ing its own decline.
Charges of discrimination are fre-
the Interstate Commerce Commission
is not in the interest of national defense
TRANSPORTATION COSTS
to provide lavishly critical materials and
quently made with respect to trucking
regulation; but the Senate committee
financial aid for the construction of new
Fourth, the Federal Government is
rates on commodities shipped in and
should investigate the administration of
plants in the South, particularly in in-
charged with the responsibility of pro-
out of New England. Trucking rates
these rates to make certain that they are
dustries not suffering from lack of ca-
viding for equal treatment in all parts
generally are confused and apparently
being applied with fairness and flexibil-
pacity, while New England plants re-
of the country in the matter of trans-
discriminatory. For example, it is
ity, and to lay to rest the charges that
main idle; or to train apprentice work-
portation rates. Such rates cannot, of
cheaper to ship from Boston to Phila-
the national rate structure discrimi-
ers for new mills while our own skilled
course, be equalized in the true sense of
delphia by truck than from Boston to
nates against New England. Such a
workers are unemployed. I might add
the word. Nor can it be denied that New
New York. Moreover, a large differen-
study was recommended by the Commit-
that the so-called industrial dispersal
England has some geographic advantage
tial prevails on trucking rates between
tee on the New England Economy in its
program is in no way responsible for this
in its proximity to the world's richest
North and South. In the case of New
report to the Council of Economic Ad-
maldistribution; while that is a factor
marketing area, as well as disadvantage
England textiles, which are in intense
visers. Only by a thorough study of
in the granting of tax-amortization cer-
in its location to the Nation as a whole
competition with the South and ship
commodity rates under which the
tificates, it is confined to the location of
in matters of transportation costs. In
primarily by truck, this differential
greater part of the freight in and out of
textiles, transportation costs are not a
amounts to about one-third. For ex-
New England is shipped can it be de-
plants on sites other than those imme-
diately adjacent to the existing plants.
comparatively large item. Nevertheless,
ample, to ship a quantity less than a
termined to what extent, if any, the ex-
If some equilibrium is not maintained,
it is of concern to all parts of the country
truckload of cotton or cotton and rayon
isting structure of commodity freight
we shall end the emergency period with
that our transportation rates-by rail,
from Lowell, Mass., to Detroit, Mich.,
rates is adverse to New England or other
some sections of the country having most
truck and water-be fair and nondis-
costs $2.15 per 100 pounds; but from
regions. Such a study might well be ex-
of the new plants and equipment while
criminatory.
Greensboro, N. C., to Detroit, approxi-
tended to include other factors in the
others will have most of the old plants.
The Senator from New Hampshire
mately the same distance, it costs only
New England rail transportation picture,
Those of us in New England and other
[Mr.ToBEy] has announced that his In-
$1.60 per 100 pounds, according to one
including the discontinuance of facilities
areas who are faced on the one hand
terstate and Foreign Commerce Com-
recent study. Trucks are handling
and service and the desirability of im-
with increasing need for modernization
mittee is concerned with problems of the
great and increasing quantities of gen-
proving access to the natural resources
and expansion of our manufacturing fa-
New England economy. I know that the
eral freight between points within the
and alternate routes of Canada.
cilities, and on the other hand with our
Senator from New Hampshire has been
region and between New England and
A primary problem of discrimination
tax funds being drained to help develop
long concerned with these problems.
points throughout the country, particu-
in railroad-transportation rates, with
other areas, cannot sit idly by. I am
I can think of no more logical field of
larly in the period since World War II.
respect to which the charges of discrimi-
not opposed to the industrialization of
investigation for this committee, and I
Seventy percent of New England's inter-
nation have not diminished, -relates to
257478-46779
regional shipments of finished textile
commodities shipped to the port of Bos-
257478-46779
60
61
ton. As stated by the Committee on the
port, in order to compensate for a lower
and the equalization of ocean freight
diction of the Commodity Exchange
New England Economy-
ocean rate which Boston once had-but
rates irrespective of distance to foreign
Authority.
There is no reason why inland cities send-
has no longer. When the iron ore of
ports. Attention should also be paid to
In order to lay to rest the allegations
ing materials to Philadelphia, New York, and
Labrador begins to move in quantity,
other important New England ports, in-
which have been made concerning the
Baltimore should have favorable rates rela-
Boston's obvious suitability as port of
cluding Providence, Portsmouth, Port-
abuses of the wool futures market, the
tive to the charges for commodities shipped
call will be defeated by this rail differ-
land, and New Haven.
to Boston.
Commodity Exchange Act should be
ential imposed on equal water-carrier
Such a study by the Senate Committee
amended to include wool along with the
But this is precisely the case, although
costs. These rail differentials on iron
on Interstate and Foreign Commerce of
other basic commodities now covered by
it now appears that, with respect to grain
ore are presently under litigation. Not
discrimination in New England trucking,
that act. This would be a basic first
for export shipped from Buffalo, Boston
only iron ore and grain but all such dif-
rail, and ocean carrier freight rates
step in preventing those unscrupulous
is to be given the same rail rates as the
ferentials should be abolished, particu-
could go a long way toward eliminating
speculative practices which can adverse-
two southerly ports. This change took
larly in view of further discrimination in
all discrimination and inequalities in the
ly affect the woolen-manufacturing in-
5½ years of litigation, and may not yet
ocean-carrier rates.
cost of transportation to New England
dustry and, I might say, the wool-pro-
be definite. These difficulties began back
Thus, although Boston is 1,926 miles
industry, and thus prevent further de-
ducing industry of the West. The au-
in 1877, when four trunkline railroads
closer to Bordeaux, France, for instance,
cline and dislocation of such industry in
thority of the Secretary of Agriculture
under the guiding hand of W. K. Van-
than New Orleans, and some 200 miles
that area.
under the Commodity Exchange Act is
derbilt signed an agreement which estab-
closer than the nearest major competi-
SPECULATION-WOOL FUTURES
limited, and the importation of foreign
lished rail rates between the tidewater
tive eastern seaport; 1,740 miles nearer
The final specific problem area which
wool is an important cause of fluctua-
ports on the east coast and the area
Calcutta, and even 500 miles closer to
holds potential, if not actual, threats to
tions in the market which can in no way
north of the Ohio River, east of the Mis-
Buenos Aires and 100 miles nearer Rio
industrial stability in New England and
be prevented by the Wool Futures Con-
sissippi, and west of New York State.
de Janeiro than is New Orleans; it is for-
the United States, Mr. President, is spec-
tracts Exchange. But regulation by the
This agreement gave Baltimore a prefer-
bidden the competitive advantage that
ulation on the commodity exchanges and
Commodity Exchange Authority is a
ence under New York, Boston, and Phila-
such a geographical position should
specifically in the wool futures contracts
logical and necessary safeguard to pro-
delphia. Early in the 20th century the
afford.
market. My office has received several
tect the wool producing and manufac-
Interstate Commerce Commission per-
In view of these and other handicaps,
complaints relating to the wool futures
turing industries from such undesirable
mitted the railroads to reduce their ex-
it is small wonder that the port of Bos-
market and alleged price manipulations
practices and transactions as manipulat-
port rail rates to favor shipments to the
ton, despite its locational advantages,
on that market which have adversely
ing prices, speculating on a large scale,
ports of Baltimore and Philadelphia.
more than 30 miles of berthing space and
affected the woolen-textile industry. If
cornering wool, cheating or defrauding
Other competing ports received similar
constant improvement and moderniza-
such allegations are true, or if the futures
customers, making false reports to cus-
advantages until exporters from the
tion by the Port of Boston Authority, has
exchange in wool is misused at some
tomers, disseminating false crop or mar-
Middle West saved 3 cents per hundred-
suffered competitively in recent years.
future time, the effect on the wool-tex-
ket information, engaging in fictitious
weight by using the southern ports.
At one time, New England had, in Boston
tile industry would be very severe. No
transactions, misusing customers' funds,
OCEAN CARRIERS
and New Bedford, 2 of the 4 largest
Senator is equipped with the means to
and conducting improper operations on
This problem is closely related to the
ports in the United States. But no
investigate the validity of such com-
the Wool Exchange.
third facet of the Senate committee
longer. Although in 1900, Boston was
plaints; nor should individual cases be
The unethical or illegal speculator is
study which I believe could profitably
second only to New York in total volume
dealt with by legislation. We all know,
no friend of either the wool farmer or
be made, namely, discrimination in
of foreign trade, in 1948, it was fifth in
however, that similar allegations and
the wool manufacturer. It is generally
water shipping rates. The apparent
imports and forty-eighth in exports.
actual instances of unlawful manipula-
agreed that speculation in wool as well
purpose behind the rail-rate discrimina-
Between 1935 and 1951, despite recent
tion and speculation in the various com-
as cotton has harmed European manu-
tion which I have just mentioned was
increases in total tonnage, the percent
modity exchanges led to the Grain Fu-
facturers. This should not be allowed
the lower ocean shipping rates that
of all foreign trade cargo handled by the
tures Act of 1922, which was strength-
to happen here. If wool futures are
Boston would be able to offer shippers
port of Boston decreased from 8.7 per-
ened and broadened by the Commodity
brought under the Commodity Exchange
because of its location nearer to impor-
cent to 4.7 percent, while the percentage
Exchange Act of 1936. Purely on the
Authority, transactions or practices
tant world ports; but this intention was
handled by Fhiladelphia and Baltimore
basis of historical accident, the wool fu-
which appear to be in violation of the
defeated, both by the shipping lines
was nearly doubled.
tures market was never included within
act are checked, brought to light, and
themselves and by the United States
I am hopeful that the Senate Com-
the scope of such act. In 1938, when
penalized. Violations are criminal of-
Shipping Board, back in World War I.
mittee on Interstate and Foreign Com-
the act was amended to include the mar-
fenses under section 9 of the act and may
Under the stress of the war-imposed dis-
merce will find that the regulatory ac-
ket in wool-top futures, and 1940, when
also result in denial of trading privileges
location in shipping, the Shipping Board
tivities of the Maritime Commission, the
still other commodities were added, the
on all contract markets under the ad-
allowed identical rates to be established
enforcement of the Federal antitrust
wool futures market had not yet begun
ministrative procedures provided in sec-
for all North and South Atlantic and,
laws, the calculation of operating sub-
to operate on a substantial basis. Sub-
tion 6 (b). Basically, the statute and
eventually, gulf ports. This may have
sidies for oceangoing carriers or other
sequent bills which would have included
the Commodity Exchange Authority
been a necessary measure in war, but
Federal action may be utilized to prevent
wool, along with other basic commodi-
operate through the governing bodies of
it put Boston under a crippling competi-
such discrimination. The port of Boston,
ties not yet under the act, included cer-
the various futures exchanges them-
tive handicap, a handicap under which
described in a recent proclamation by
tain controversial amendments which
selves, through the exchange rules and
it still suffers, as the practice has been
Governor Gregg, of New Hampshire, as
prevented their enactment. Thus, the
self-enforcement. Futures commission
continued ever since.
the foundation stone of our New Eng-
wool futures market has inadvertently
merchants and floor brokers must regis-
In other words, with the probable ex-
land economy, cannot continue to suffer
been excluded from the coverage of the
ter each year with the Authority, which
ception of grain which is admittedly the
on even some commodities both a differ-
Commodity Exchange Act and the juris-
must approve each exchange as an ac-
most important item, rival ports enjoy a
ential rail export-freight rate favoring
257478-46779
lower rail rate on goods going into ex-
Baltimore, Philadelphia, and gulf ports
257478-46779
62
ceptable contract market, audit futures
futures market under the Commodity
merchants books, investigate alleged
Exchange Act is an important step, not
manipulations, supervise daily trading,
only to protect the industry from undue
Speech No. 3-May 25, 1953
tire story; they do not show that 30 per-
and take other necessary administrative
fluctuations and unscrupulous practices,
cent of the northern cotton-rayon mills
action.
but also to protect the reputation of
THE ECONOMIC PROBLEMS OF NEW
were working 4 days or less in February
Such regulation may involve a mini-
those engaged in trading on the market.
ENGLAND-A PROGRAM FOR CON-
1952 and that they had lost over one-
mum amount of additional paper work
The third and last speech on the New
GRESSIONAL ACTION
third of their man-hours of production
for those who utilize the services of such
England program will be delivered on the
IV. REDUCTION OF ECONOMIC HARDSHIPS
from the figure of a year previous to that
a market; but regulation of the wool
floor of the Senate on Monday, May 25.
date. Between January 1951 and Janu-
Mr. KENNEDY. Mr. President, I wish
257478-46779
ary 1952, textile mills employment was
to turn now to a discussion of the less
reduced by 13.6 percent or more than 3
positive but nevertheless important part
times as high as the reduction of em-
of the program which I have been pre-
ployment in textiles in 6 Southern States.
senting concerning the economic prob-
During that year, unemployment in-
lems of New England and other areas.
creased by 150 percent in Fall River,
I wish to discuss at this time the role of
Mass., and over 100 percent in New Bed-
the Federal Government in exercising its
ford. In Massachusetts alone the num-
efforts toward a reduction of those hard-
ber of employees filing for unemployment
ships which are caused by a recession or
compensation benefits reached shocking
industry dislocation. Primarily, I am
speaking of the problem of unemploy-
proportions in the towns of Lawrence,
Lowell, Fall River. New Bedford, Worces-
ment and the alleviation of hardships
which unemployment brings, rather
ter, North Adams, Milford, and Taunton.
But this problem was not confined to
than, the proposals which I have dis-
cussed elsewhere in this series relating to
Massachusetts, nor to New England.
the prevention of unemployment and the
Despite the broad scale improvement in
provisions of jobs for the unemployed.
employment in the major metropolitan
labor markets during 1952, 35 areas are
However, I am discussing separately
from the proposals relating to the unem-
presently classified in the group IV, sub-
ployment compensation program those
stantial-labor-surplus category by the
Department of Labor.
proposals which relate to the retirement
Mr. President, I ask unanimous con-
income or financial plight of our elder
citizens. I do this because the younger
sent that there be inserted at this place
in my remarks in the RECORD a list of all
man who loses his job remains in the
communities classified as areas of sub-
labor force as unemployed; but as clearly
shown by the Galenson report on unem-
stantial labor surplus in April 1953.
ployment in Massachusetts, the older
There being no objection, the list was
man, exhausting his benefits and denied
ordered to be printed in the RECORD, as
follows:
employment elsewhere, and finding that
it is futile to remain in the labor force,
GROUP IV AREAS OF SUBSTANTIAL LABOR
SURPLUS
retires. The problems of inadequate
benefits, low living standards, and lack of
Region I: Fall River, Mass.; Lawrence,
purchasing power apply equally to both.
Mass.; Lowell, Mass.; Providence, R. I.
Region II: Atlantic City, N. J.; Gloversville,
I am also including in this discussion
N. Y.; Utica-Rome, N. Y.; Mayaguez, P. R.;
the problem of middle-income housing,
San Juan, P. R.; Ponce, P. R.
because of its importance in the financial
Region III: Altoona, Pa.; Clearfield-Du-
stability of these same workers and
bois, Pa.; Pottsville, Pa.; Scranton, Pa.;
families affected by these economic
Sunbury-Shamokin-Mt. Carmel, Pa.; Union-
hardships, and its predominance in older
town-Connellsville, Pa.; Wilkes-Barre-Hazle-
ton, Pa.
areas.
UNEMPLOYMENT
Region IV: Cumberland, Md.; Asheville,
N. C.; Durham, N. C.; Winston-Salem, N. C.;
I have discussed previously the loss of
Beckley, W. Va.; Fairmont, W. Va.; Martins-
plants to other areas, the general slump
burg, W. Va.; Morgantown, W. Va.; Parkers-
in particular industries, the lack of eco-
burg, W. Va., Point Pleasant, W. Va.; Ronce-
nomic growth, and the failure to attract
verte-White Sulphur Springs, W. Va.
new industries. All of these things have
Region V: Jasper, Ala.
meant a tremendous loss of jobs for New
Region VI: Iron Mountain, Mich.; Athens-
England as a whole and particularly in
Logan-Nelsonville, Ohio.
Region VII: Herrin-Murphysboro-West
certain communities within that region.
Frankfort, Ill.; Terre Haute, Ind.; Vincennes,
Figures from the unemployment com-
Ind.
pensation program do not show the en-
Region VIII: Tacoma, Wash.
257478-46779
FORD
(63)
GERALD
65
64
Mr. KENNEDY. The sight of empty
Congress show that only one of them
other methods of financing; caution
FORAND have long fought.. There are
should be used in the provision of any
several means by which this may be
buildings and from 10,000 to 14,000 un-
would be necessary.
Federal reinsurance funds to make good
done other than Federal Loans, and I
employed workers in a single town such
REINSURANCE OF STATE FUNDS
on the financial errors of a particular
am not insisting at this time that one
as Lawrence is not a pleasant one, Mr.
With respect to the sufficiency of State
State. But whenever such funds are
means be preferred over the other.
President; and such unemployment af-
funds, we all realize the burden placed
threatened because of economic condi-
Basically, such a reinsurance program
fects more than those workers and their
upon such funds by a concentration of
tions causing heavy unemployment, it is
would call for State contributions to a
families. As I have pointed out before,
unemployment within such State for an
proper that the Federal Government
reinsurance reserve to be used whenever
it affects their grocers and doctors and
extended length of time. In Lawrence,
take appropriate action. If our unem-
the fund of a particular State fell to a
relatives and State government and Fed-
Mass., alone, for example, the annual
ployment compensation program is truly
dangerously low level. Such a program
eral Government and eventually all of us.
rate of unemployment-insurance pay-
insurance, then the fact that one or
would not involve additional outlays by
This Nation has devised a measure to
ments in July of 1952 was over $11 mil-
more States are particularly hard hit by
either the Federal or State Government.
ease the suffering of these individuals
lion. It was nearly $4 million in West
economic catastrophe will not threaten
Funds for the reinsurance reserve could
and to prevent the total decline of their
Frankfort, Ill., and nearly $7 million
the existence of their programs.
most easily come from that three-tenths
purchasing power. This is, of course,
in Scranton, Pa. Similar figures can be
What action may be taken? In 1944,
of 1 percent of State receipts which are
our Unemployment Compensation Pro-
cited for other areas of heavy unem-
Congress enacted the George amend-
now paid to the Federal Government for
gram. I have already discussed certain
ployment. It is obvious that such drains
ment providing for repayable Federal
the purpose of, but not directly used for;
aspects of that program and the need for
on the State unemployment-insurance
loans to any State whose fund fell to a
Federal administrative expenses. There
legislation to provide minimum stand-
funds can, in due time, threaten the
dangerously low level. The mass post-
is( of course, no constiutional difficulty
ards relating to the amount and dura-
solvency of such fund.
war unemployment which was expected
at this time in earmarking proceeds
tion of benefit payments, in connection
Unfortunately, there is now no real
never materialized, and no State found
from unemployment taxes to be used for
with the importance of equalizing non-
protection against the possible bank-
it necessary to seek a loan. Although
such a reinsurance program. An al-
wage payroll costs among the various
ruptcy of an individual State program.
extended several times, the George loan
ternative source would be to require
States. I wish to discuss at this time
Most of our State systems are in sound
fund provision expired January 1, 1952.
each State to contribute to such fund
the inadequacies of that program as they
financial shape and some are well above
It should be obvious that a Federal
a fixed percentage, or one based upon
relate to States, communities or indi-
any foreseeable needs. Several States,
repayable loan fund can only hope to
the probability of its drawing upon such
viduals who have been particularly hard
however, have funds which are danger-
deal with temporary crises at most; it
fund, of its own unemployment tax
hit by an intensive period of heavy un-
ously low, despite the all-time high level
merely postpones emergency taxation to
receipts.
employment. Whenever that program
of employment in the Nation. For ex-
pay back the loan until employment rises
Such a program need not increase
is inadequate, the individual worker lacks
ample, the State of Rhode Island on
again. For a long-term problem such as
Federal control of the unemployment
security on the job and an adequate
June 30, 1952, had $20.8 million in its
the decline in textile employment in
compensation system which is primarily
means of support and purchasing power
reserve fund, but during the preceding
Rhode Island, a repayable loan is not a
administered on the State level. A re-
when out of work. This hurts us all.
12 months had paid out $21 million in
satisfactory solution.
insurance fund from State contributions
Again, although I shall concentrate
benefits. Thus, Rhode Island's unem-
If a State struck by such an economic
is not really a Federal grant. Stand-
upon using the New England States as
ployment-benefits reserve consisted of
catastrophe raises its rates to safeguard
ards of solvency, sound management,
my examples, I am discussing problems
less money than had been paid out dur-
its fund or repay a loan, it loses more
and realistic taxing policy would be es-
which are of importance to every part of
ing the previous year.
industry to other areas where the unem-
tablished upon agreement with those
the United States. Virginia, Tennessee,
The fund of the State of Massachu-
ployment tax is lower, and thus is faced
States participating in the reinsurance
and North Carolina have experienced
setts was also in a dangerous position.
with both dwindling income from indus-
heavy unemployment in textiles. Only
It had the equivalent of 4.2 percent of
program. Such a bill should not pro-
try taxes and mounting unemployment.
vide for the granting of large sums from
a year ago, the State of Michigan
taxable payrolls on June 30, 1952, while
It is unthinkable to expect such a State
was leading the fight for improving the
benefit payments for the previous 12
the Federal Treasury to the States to be
to be able to repay a loan under such
months had amounted to 1.7 percent of
used for such administrative purposes
unemployment - compensation program
circumstances or after an extended
taxable payrolls. Thus, the Massachu-
or benefit payments as the States may
with respect to these particular inade-
period of unemployment. The loan pro-
setts reserve fund amounted only to
see fit. To take that unwarranted step
quacies. Since then, the unemployment
gram does not meet the entire purpose of
about 2½ times the benefit payments
would neither provide the necessary
problem in Detroit and other Michigan
a federally sponsored system, that of
communities has substantially lessened,
during the preceding year. Alaska also
safeguards for a realistic reinsurance
preventing one State from being at a dis-
but I know that the Senators from that
had a reserve fund only about 2½ times
program, nor be consistent with the need
advantage in comparison with another,
to reduce the Federal deficit. It would
State are no less interested in prepar-
its most recent annual benefit payments,
and it may not prevent the failure of
the New Hampshire fund amounted to
also undermine the minimum standards
ing for a similar emergency. No Sena-
the unemployment program in the hard-
tor knows when his State may be next.
only slightly more than 3 times its cur-
needed for a real system which protects
hit States.
There are two approaches to making
rent annual benefit payments, and New
the more progressive State systems and
our unemployment-compensation pro-
York had in its reserve fund the equiva-
I believe a necessary solution to this
their more liberal plans against the
gram more adequate to meet such emer-
lent of about 5½ times its current an-
problem lies in some form of nationwide
backward States. Nor would such a re-
nual benefit payments. A heavy period
reinsurance of the State unemployment
insurance fund have to be very large.
gencies: The first emphasizes the suffi-
of unemployment would unquestionably
funds, as recently recommended by the
In 1951, the State employment security
ciency of the State fund; the second
threaten the solvency of such funds.
Report of the New England Governors'
agencies collected $1.5 billion in contri-
emphasizes the sufficiency of payments
I realize that in some instances the in-
Committee on the textile industry and
butions at an average contribution rate
to the individual worker. It is my in-
tention to discuss, and strive for the
sufficiency of the State fund is due to
many others, and for which the Sena-
of 1.6 percent. Thus, for the country as
passage of, both types of legislation, un-
unsound and haphazard State policies
tors from Rhode Island [Mr. PASTORE
a whole, an average reisnurance rate of
less further study by the committees of
with respect to experience rating or
and Mr. GREEN] and Representative
one-tenth of 1 percent of taxable pay-
257478-46779
257478-46779
66
67
rolls would have yielded about $100 mil-
Again, no Federal control is involved
stopped, these men are unable to find
and a decline of immigration since 1925,
lion for a reinsurance fund, which would
since the activation of such a provision
work to restore their income. Nor are
poses serious problems for those inter-
have been ample to take care of any
would require the consent or request of
payments high enough to adversely af-
ested in the economic security of these
immediate needs of States like Rhode
the State government; and by making
fect the incentive to work. Too many of
older citizens. Only about one-third of
Island or Massachusetts.
supplementary payments from the Fed-
such able-bodied workers are thrown on
these older persons derive their income as
The insuring of this type of excess loss
eral Treasury which has already been
the relief rolls, thus further burdening
earners or wives of earners. About an-
would give every State a more secure
enriched by the three-tenths percent tax
the remaining taxpaying industries in
other third derive their income from so-
position for itself and an opportunity
paid by the States, such a program pre-
the State. The Galenson study described
cial insurance and related programs;
to avoid unbearably heavy tax charges
vents the burden of heavy unemploy-
the plight of such workers who have ex-
one-fifth from old-age assistance pro-
for its industry, just as the State pre-
ment from being placed on particular
hausted their benefits-the cashing of
grams; and a much smaller percent from
gram pools the risks of individual indus-
States and employers. Such a law would
their savings bonds and insurance pol-
private insurance, private pensions, and
tries. As pointed out in the Providence
remove neither the responsibility, the ad-
icies, the selling or mortgaging of their
other private means. On the whole, our
Journal-Bulletin in a series of editorials
ministration of the unemployment bene-
homes, the exhaustion of their savings,
elder citizens are found in the very low-
last year, reinsurance is the constructive
fits program, nor the detailed determina-
the incurring of heavy debt to their
income groups, without either earnings
and intelligent solution to this problem.
tion of its nature from the shoulders
banker, grocer, or landlord, and finally
or adequate retirement incomes. In
of the State where it presently rests.
their reliance upon relief.
June 1952, the average annual payment
It is generally agreed that the expira-
Nor would it be desirable to provide
I think it imperative that legislation
to a retired worker with a wife eligible
tion of the George loan fund requires
benefits for an unlimited period of time.
be enacted by this Congress to make cer-
for benefits under the old-age and sur-
immediate action on the Federal level.
This is necessarily short-term insurance.
tain that those individuals who have ex-
vivors insurance program was only $840.
I am convinced that a national reinsur-
I realize the difficulty of drafting a
hausted their unemployment claims
Yet, at October 1950 price levels, the Bu-
ance program for our unemployment
workable bill which will fully meet these
during a period of severe unemployment
reau of Labor Statistics estimated that
compensation system is a necessity if we
standards; and I also realize that it is
do not go without benefits from the pro-
an elderly couple in Boston, Mass.,
are to safeguard the solvency of our State
important, as a corollary with the enact-
gram which this country established to
needed nearly $1,900 a year to maintain
systems in times of economic disaster be-
ment of either of these methods of safe-
provide for just such situations.
a very modest budget.
yond their control and prevent the ter-
guarding the State unemployment com-
OLD AGE
OLD-AGE AND SURVIVORS INSURANCE
rible consequences which would result
pensation programs in times of economic
from the downfall of those systems.
Secondly, we must take action to pro-
Because in our modern society a com-
catastrophe, that the previously dis-
vide a more adequate program for the
bination of several social and economic
SUPPLEMENTARY BENEFITS
cussed uniform minimum standards for
elder citizens of our Nation who are
factors have caused a decrease in the
The second approach to the problem
such State systems be enacted. But de-
particularly hard hit by unemployment
employment opportunities for the older
of long-term unemployment and the in-
spite these difficulties, and at least until
and recessions. The growth in number
worker, we have devised social-security
adequacies of our present program is
the enactment of minimum standards
and proportion of the aged in America's
programs for the purpose of providing
through direct payments to the indi-
and reinsurance, I recognize the neces-
population during the 20th century has
insurance against the economic hazards
vidual. Supplementary unemployment
sity for stopgap Federal action under
been tremendous. Since 1900, the total
of old age. The very large proportion
compensation benefits from the Federal
such circumstances to prevent the un-
population in the United States has
of unemployed textile workers in Law-
Government, again working through the
employed worker from going without
doubled, but the number of persons 65
rence who are over 65 years of age now
State systems, of course, may be neces-
any benefit after he has exhausted his
years of age and over has quadrupled.
need such security. But how much se-
sary when under the emergency condi-
claim.
In 1900, about 1 in 25 persons was age 65
curity is provided by a program which
tions described above, employees have
During the 1949-50 recession in
and older; but in 1950, the proportion
pays a worker on the average of $60 a
exhausted their claims to benefits under
Massachusetts, there were over 161,000
was about 1 in 12. This increase in the
month or a retiring couple $95; which
the normal State laws.
unemployment recipients who had ex-
number of persons age 65 and over has
excludes from its coverage many of the
Such a bill, introduced a year ago by a
hausted their benefit rights-or nearly
been far greater than that of any other
self-employed, domestic servants, pub-
bipartisan group of Senators from all
40 percent of those who received first
age bracket.
lic employees, and farm laborers; which
parts of the country, recognizes the re-
payments under the program. In
This growth is of particular impor-
too frequently computes an annuity on a
sponsibility of the Federal Government
Lawrence today-and I continue to use
tance to all areas of the United States
basis which penalizes the older worker
to treat fairly unemployed workers laid
Lawrence as my most frequent example
and to our New England States in par-
for periods of low-wage employment or
off as the result of mobilization conver-
because the conditions there are most
ticular. Although the West and some
employment in jobs not covered by the
sion or other emergencies, and a desire
severe and exemplify what might well
parts of the South had the largest in-
program; which imposes a so-called
on the part of the entire Nation to pre-
happen to other areas of the United
crease in population 65 and over between
work clause of $75 a month prohibit-
serve the standard of living and produc-
States in time of recession-over 50 per-
1940 and 1950, the highest percent of
ing beneficiaries from receiving their
tive skills which are otherwise dissipated
cent of those unemployed workers are
aged persons in the population may be
annuity should they earn more than that
under such circumstances. We have al-
without unemployment benefits. The
found in certain Midwestern and New
small amount; which provides no bene-
ready mentioned the direct aid given by
Galenson study shows that nearly three-
England States. In New Hampshire,
fits for those forced to retire before age
the Federal Government to business in
fourths of those who exhausted their
Vermont, and Maine, over 10 percent of
65 for reasons of disability; and which
times of mobilization through the grant-
benefits during 1949-50 remained un-
the population is 65 and older, while less
denies benefits to widows between the
ing of tax amortization certificates, and
employed for more than 5 weeks after
than 6 percent is in this aged bracket in
ages of 60 and 65 despite the obvious
we know of similar aid in agriculture,
benefit exhaustion, and nearly 50 per-
South Carolina and North Carolina.
need for their eligibility?
transportation, and other fields. It is
cent more than 20 weeks. If nothing
Similar comparisons may be made with
I realize that all improvements in the
only just that the Federal Government
else, this indicates that the drain on
respect to other States. This increase,
law which might be desirable cannot be
provide for supplementary benefits to
unemployment compensation funds is
caused by a significant decline in the
obtained free of charge; although there
our human resources under such circum-
not caused by malingering on any large
birth rate, an increased life expectancy
is disagreement as to the extent of ad-
stances.
scale, for even after their payments have
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257478-46779
68
69
ditional benefits which might be in-
means of aiding New England. I think
Nevertheless, until that day when the
cluded without a change in the methods
it is apparent that our old age and sur-
It is my hope that when budgetary
old-age assistance program can be com-
vivors insurance program is in general
considerations make it possible, the Fed-
of financing. However, the basis for
need of improvement. If this Nation is
pletely ended because all older persons
eral Government will assist the other
computing contributions and benefits
to meet the test of a truly moral society,
will be adequately protected by old-age
States in raising their standards, as I
presently pegged at $300 a month maxi-
mum should be increased to $400 or pos-
it will not fail in its responsibility to its
and survivors insurance, Congress has
know they are most anxious to do.
the responsibility to see that such pro-
retired citizens.
PRIVATE PENSIONS AND EMPLOYMENT
sibly $500, simply as a matter of keeping
gram provides adequate funds for the
the act current with present economic
Extending and improving this basic
maintenance of our less fortunate aged
In addition to liberalizing our social-
trends. Such an increase would permit
social security program is essential if we
citizens.
security programs, further action must
many, if not all, of the improvements in
are to give adequate protection to those
Mr. DOUGLAS. Mr. President, will
be taken with respect to other sources of
social security most seriously needed to-
most often victims of economic hard-
the Senator from Massachusetts yield?
income for our aged persons. It is my
day.
ships.
The PRESIDING OFFICER (Mr. PUR-
intention to introduce a resolution con-
Moreover, I hope that the Congress
OLD-AGE ASSISTANCE
TELL in the chair). Does the Senator
cerning, or otherwise urge a study of, two
will in the future give consideration to
In addition to liberalizing the old age
from Massachusetts yield to the Senator
problems in particular: First, the means
the possibilities of a Federal contribu-
and survivors insurance program, at-
from Illinois?
of coordinating private pension plans
tion as a supplementary means of financ-
tention must be given to our old age as-
Mr. KENNEDY. I yield to the Sena-
without Federal interference; and sec-
ing the old-age and survivors insurance
sistance program. It is unfortunate that
tor from Illinois.
ond, the means of providing tax or other
program. Such contribution, like that
too many of our elder citizens find it
Mr. DOUGLAS. Mr. President, I no-
incentives to employers for the employ-
given to similar programs by other na-
necessary to be given payment on the
tice that the Senator from Massachus-
ment and retention of older workers.
tions, would be more equitably based
basis of need-or so-called assistance or
setts very modestly omitted the great
Private pension plans, as I have indi-
upon ability to pay than an increase in
relief-rather than on the basis of a con-
assistance rendered by the State of
cated earlier, have had phenomenal
the present obviously regressive payroll
tributory insurance program, either be-
Massachusetts. When I last looked at
growth in this country. Although only
tax.
cause they are not covered by such pro-
the figures Massachusetts was one of
approximately 3 percent of our aged per-
I see no reason why lawyers, dentists,
gram, or because their social-security
the States in the Union which have the
sons were receiving income from that
public employees, and other thousands
benefits are too low.
highest average payments.
source in December 1952, the tremendous
of workers should be arbitrarily denied
The administration of the old-age as-
Mr. KENNEDY. Yes. Massachusetts
growth in the number of such plans in
the protection which this act is intended
sistance program is primarily a State re-
in many of these fields has pioneered
the last 20 years, and in particular the
to provide. I see no reason why an able-
sponsibility. As a result, there is wide
and has maintained a high standard.
last 10 years, has been astounding. This
bodied man age 65 or over should be
fluctuation in the average payments
Of course, that has been one of the
has been due to a number of reasons, in-
faced with a $75 limitation upon his
ranging in December 1951 from $18.68 a
problems which we have faced in at-
cluding collective-bargaining trends,
earnings as a condition for the receipt
month in Mississippi to $70.91 in Colo-
tempting to compete with areas which
tax treatment, and an inadequate old-
of his annuity, in this day and age when
rado. The Nation's average was $44.54.
do not have such high social-security
age and survivors insurance program.
the total of both $75 a month and a so-
Since then, the Congress has provided
standards.
The number of employees covered has
cial-security benefit cannot meet the cost
for additional funds to the States-a
Mr. DOUGLAS. Is it not a fact that
more than tripled during that same pe-
of living. I see no reason why those re-
contribution which was not in all in-
Massachusetts, along with the State of
riod. But such plans, despite the neces-
tiring before age 65 because of a total
stances utilized to increase the welfare
Oregon and, to some degree, the State
sity of meeting certain standards for
and permanent disability should be de-
payments to the individual. I urge that
of New York, really leads the country in
tax-deduction purposes, have developed
nied the protection of social insurance if
the Congress annually review the
social legislation?
in a completely helter-skelter fashion.
they are under the social-security pro-
adequacy of the system's payments and
Mr. KENNEDY. Yes. The Senator
Coverage is haphazard and incomplete.
gram, although given such protection
consider providing additional grants to
from Illinois is one who has long been
Frequently such plans bar employment
under our railroad retirement and other
the States for the purpose of increasing
an able student of our various social-
to older workers or impose compulsory
publicly sponsored programs. Actually,
the individual allotments when this be-
security programs. I believe he would
retirement on a chronological age basis.
disability is more of an economic burden
agree that one of the basic tasks now in
Their funding and investment provisions
comes necessary.
than old age. It adds an extra de-
the areas which have gone ahead is not
have raised serious problems which have
I have talked with the older people of
pendent who may need special care, and
to turn the clock back and thus lower
yet to be answered. Perhaps of most im-
it comes at a time when children may
my State and elsewhere. I know that
portance to the Congress and to the
not yet be grown and the responsibility
they prefer to receive retirement pay
their standards but to attempt, through
problem areas I have been discussing,
from an insurance fund to which they
legislation and through encouragement
for their support is greatest.
by contributions from the Federal Gov-
such private pension plans either re-
have contributed rather than public as-
The Committee on the New England
strict the mobility of the employees in-
sistance from any kind of means-test
ernment, to bring about a general rais-
Economy stated that "liberalization of
volved, or fail to provide protection for
program. Such a program separates
ing of such standards throughout the
old-age insurance and programs for re-
those who have sufficient funds from
Nation.
those who leave the service of the par-
taining older people in employment
ticular company after a considerable pe-
those who do not; it sets a minimum
After all, the difference between the
would help New England because her
riod of years. It is important that Con-
which becomes a maximum for the in-
cost of living in Mississippi and the cost
proportion of older people is large."
gress take cognizance of this problem of
dividual under the program. It is little
of living in Massachusetts certainly is
Studies have shown that unemployment
coordinating private pension plans, and
in advance of the public charities of
not great enough to account for the tre-
hits older workers harder than any other
before it is too late, act to meet it effec-
years gone by. In order to reduce the
mendous difference in payments of this
age group and in disproportion to their
tively without Federal control.
need for such an assistance program,
type. The latter difference obviously
numbers. This is particularly true in
Similarly, attention should be given
our textile industry.
Congress must make social insurance
means that the people in these States
to the proposals of Professor Slichter
But I do not recommend these im-
more effective and its coverage more
who are given extremely little assistance
and others that tax incentives be given
provements in the program merely as a
widespread.
are really suffering and undergoing
to employers for the employment and
great hardships.
retention of older workers. Such a pro-
257478-46779
257478-46779
70
71
gram raises a host of administrative and
the various programs of Federal loans
and Korean veterans. They find them-
The goal for such a program might be a
policy problems, particularly since most
and guaranties for higher priced dwell-
selves saddled with monthly payments
minimum of 200,000 units.
employees desire to stay on past the age
ings. In the 81st Congress I introduced
of interest, amortization, taxes, upkeep,
The development of a sound and work-
of 65 until forced to retire by their dis-
a bill to provide for direct Federal loans
and utilities beyond their means. No
able method of meeting the housing
ability or compulsory retirement pro-
to meet the housing needs of moderate-
grams. But it is just the latter element,
income families and to provide liberal-
other high-income country in the world
needs of middle-income families would
has been as careless of its people's hous-
benefit the entire Nation, contribute to
whereby even in areas and industries of
ized credit to reduce the cost of housing
ing problems as has the United States.
the stability of our economy and the wel-
labor shortage, employees are required
for such families, operating through co-
If we have been less than adequate in
fare of our citizens, limit inflationary
to cease all gainful activity because they
operatives and other types of nonprofit
organizations providing housing for
our low-income housing programs, we
credit transactions, and economize upon
have reached a specified chronological
rental or for sale to their members. The
have been almost totally neglectful of
the expenditures for financing, con-
age, that creates a serious social and
our middle-income group. Their prob-
structing, and maintaining dwelling
economic problem in the United States.
purpose of such a program is to provide
lem continues to grow. It may yet make
units adequate to serve the needs of this
To postpone the age of retirement or
a means whereby housing of sound
a mockery of our high living standards
group. To encourage home ownership
bring back to work in areas of labor
standard and design, construction, liv-
if we do not take preventative measures.
through a program of financial and ad-
shortage the many able-bodied retired
ability, and size for adequate family life
An adequate, middle-income housing
ministrative self-reliance and decentral-
employees, would provide a valuable con-
can be produced and made available for
tribution to industries now badly in need
program is necessary to supplement
ization, and to achieve real savings for
families of moderate income who cannot
of skilled manpower, reduce the need of
other programs, both public and private.
the average housing consumer, will go a
afford to pay the rents or prices charged
The public housing program is depend-
the support of such persons from pub-
long way toward meeting a largely over-
for privately financed housing currently
ent upon the provision of satisfactory
lic and private sources, provide such
looked housing problem in this country,
being made available in their localities.
housing for families in public housing
persons with a more adequate standard
which is particularly troublesome in the
Under such a law, a National Loan Cor-
projects whose incomes exceed the lim-
of living, and enable them to achieve
New England and Massachusetts area.
poration for private housing cooperatives
its for continued occupancy. The suc-
the status and satisfaction which they
Such legislation has particular mean-
would be set up as a constituent of the
cess of the urban redevelopment program
might derive from worth-while employ-
ing for us in Massachusetts, not only be-
Housing and Home Finance Agency, with
is dependent upon the development of
cause we have a law authorizing the cre-
ment.
authority to borrow on taxable bonds
a sound middle-income housing pro-
ation of housing cooperatives, but also
The Galenson report on unemploy-
and to make 100-percent mortgage loans
gram. I firmly believe that such a pro-
because Massachusetts has attempted to
ment compensation in Massachusetts
at cost to such cooperatives. Such a
gram is also of importance to the growth
solve the problem of middle-income
pointed out that-
program might also include provisions
and continuance of the private building
housing first on a private, and then on a
Anything that can be done to facilitate the
for guaranteeing the bonds of public
industry.
public, basis. Indeed, in 1911, Massa-
placement of the older worker will relieve
agencies, such as State housing agencies
The extensive use of housing coopera-
chusetts was the first State to consider
the fund of a substantial burden.
or universities who wish to embark upon
tives in Europe, and their successful be-
the use of public funds for the construc-
I am hopeful that Congress will con-
middle-income housing programs, and
ginning on a small scale by such groups
tion of housing to relieve congested areas
sider legislation to encourage the active
aid to limited dividend corporations.
as the Amalgamated Clothing Workers
and a shortage of housing. Massachu-
employment in labor-tight markets of
Such program involves neither Govern-
in New York, shows what can be done.
setts has had for many years both a
our older able-bodied workers.
ment ownership, Government subsidies,
As the Right Reverend Monsignor John
rental-sale program for individual cities,
nor tax exemption. It makes no pro-
MIDDLE-INCOME HOUSING
O'Grady, chairman of the National Con-
which was to provide publicly sponsored
vision for direct loans to individuals,
ference of Catholic Charities stated:
Another most important area for Fed-
housing for veterans in a higher income
other than those now covered by the
Cooperative housing should be regarded as
bracket than those covered under the
eral action is in the field of housing.
veterans' program, since a general pro-
a real effort on the part of the people to do
Although this is a problem all over the
normal public housing program, and a
gram of that type would likely be almost
things for themselves. It is a genuine ex-
country, New England and particularly
$225 million State public-housing pro-
impossible of administration unless se-
pression of responsible, democratic self-
Massachusetts because of their older and
gram under which rental housing proj-
vere limitations are placed upon the in-
organization on the neighborhood basis.
ects-in a category above Federal hous-
more urbanized development are especi-
dividual's right of resale, and would,
With long-term, low-interest loans
ing but below the FHA cost level-were
ally hard hit. The solution to America's
moreover, be in more direct competition
and technical assistance from a quasi-
provided through State guaranties of lo-
housing problems includes provisions
with present private sources. Neither
independent Federal agency, such co-
cal housing-authority bonds and an OC-
for an adequate slum clearance and ur-
does such a program provide for insur-
operatives could well provide the answer
casional subsidy. Under the first pro-
ban redevelopment program; adequate
ance of housing loans, other than the
to our middle-income housing shortage.
gram, less than 2,000 units were built in
public housing for those whose income
provisions of the FHA which provide a
Without public ownership, cash subsidies
18 communities from 1946 to 1951. Un-
denies them and their families anything
minimum amount of insured loans to
but the most substandard dwelling; and
or tax exemptions, real savings are nev-
der the second, 16,000 units in 145 proj-
housing corporatives.
ertheless available through cooperatives
ects were constructed in 88 cities and
provisions for the continuation of rent
Today it has been said that the mid-
because of no profits and coordinated
towns since 1948, at average rents rang-
controls in areas where such controls
dle-income groups-those with incomes
maintenance costs. Such a program,
ing from $34 to $48. Incomes for ad-
are necessary to prevent a critical hous-
between $2,500 and $4,500, depending on
self-supporting and self-liquidating at no
mission range from $3,200 to $4,000, and
ing shortage. However, I wish to stress
the cost of living in their particular
cost to the Government or the taxpayers,
for continued occupancy, $4,000. The
at this particular time one facet of the
area-are in the twilight zone of earn-
will prevent the middle-income families
lowest rent is $22. Nevertheless, in 1952,
housing problem on which Congress has
ing too much to qualify for admission
from being priced out of the market, and
the State housing board reported that
yet failed to take adequate action,
or continued oceupancy in a public hous-
will enable them to join in cooperatives
67 communities had on file 23,960 appli-
namely, the problem of middle-income
ing project, and too little to purchase
charged with the management and care
cations of veterans who could not be
housing.
or rent private housing, and particularly
of their own properties and receiving
housed under rental program; and 52
Those in the truly middle-income
new housing. Within this group are
the better financing terms-3 percent
communities estimated a need of 50,884
brackets are offered nothing by the pub-
most of the members of organized labor
interest on a 50-year loan-which the
units for nonveterans. The above com-
lic low-rent program and nothing by
and a large majority of World War II
Federal Government is able to provide.
munities comprise 73.9 percent of our
257478-46779
257478-46779
72
State's population. The United States
Government at cost would save prob-
Housing Census of 1950 showed in Mas-
ably 1 percent in the interest rate?
sachusetts 82,000 married eouples with-
Mr. KENNEDY. Certainly that is
out own household; 288,000 units, 21.2
true; and through the cooperatives I be-
percent substandard; 171,000 units, 25.9
lieve it would be possible to maintain a
V. OVER-ALL OBJECTIVES
Administration, and the decrease in old-
percent, of renter-occupied substandard;
much longer mortgage period, and
Finally, Mr. President, before conclud-
age assistance expenditures resulting
1,408,787 units in State, and 1,572,000
thereby reduce the monthly payments.
ing this series of discussions relating to
from improved old-age and survivors
families, or deficit of 163,203 units.
Mr. DOUGLAS. Even at a saving of
proposed solutions to the economic prob-
and unemployment insurance programs.
In Massachusetts, we can justifiably
1 percent, on a house costing $10,000 for
lems of New England and elsewhere, I
The elimination of tax loopholes will
say that the combined efforts of the State
a family, that would mean a saving of
would like to mention very briefly cer-
certainly balance any loss in total reve-
and local government and private enter-
$100 a year, or a little less than $10 a
tain overall legislative objectives which
nues resulting from additional tax amor-
prise have failed to fulfill the needs for
month; and if the amortization could be
have a particular effect upon these prob-
tization privileges, which in themselves
middle-income housing. Other States
spread out to 35 years, instead of 25,
lems, and upon which I am hopeful that
will result in lower taxes for those per-
during the past 7 years have tried to give
there would be a further saving, would
New England and, indeed, all Senators,
sons able to utilize them. Recommen-
relief to this middle-income group by
there not?
can unite. The accomplishment of such
dations concerned with labor standards,
various costly methods: Subsidized, pub-
Mr. KENNEDY. Yes. I have even
objectives is of considerable importance
transportation costs, and the regional
licly owned housing; tax abatements;
suggested a 50-year amortization pe-
to the stabilization of our economy.
industrial development corporations, as
loans of low interest rates; and capital
riod, but perhaps that would be too long.
These long-range objectives are: Econ-
well as continuing or improving Federal
grants. These States, however, have
At any rate, such a change would make
omy in the National Government; cau-
regulation or studies in particular fields,
been in the minority, and have reached
a tremendous difference.
tion in the development of international
such as wool futures or water resources,
only a small proportion of their popula-
I know the Senator from Illinois has
trade policies; effective enforcement of
will be at little or no additional cost in
tion. Aid, too, has been largely limited
been concerned about this matter, and
antitrust laws; safeguards against fur-
the long run, as will eventually be true
to veterans. These State measures were
I think he will agree that there is a
ther opportunity for disaster of future
of any multipurpose projects which may
temporary stopgaps initiated under the
group that is in a sort of middle-income
inflation or serious deflation; and a na-
result from such studies. Moreover, a
pressures of demobilization and congres-
no-man's land. It is not helped, al-
tional agricultural policy which har-
prosperous economy brings a higher vol-
sional inactivity. Connecticut will pro-
though it deserves help, since it com-
monizes the interest of all segments of
ume of revenues from a great number
vide approximately 9,000 units of public,
prises the backbone of the economy of
the economy. Permit me to discuss each
of people, thus making possible a de-
rental housing, at a cost of $115 million;
the country.
of these briefly.
crease in tax rates for all.
and 6,000 units, through loans of $60 mil-
Mr. DOUGLAS. Yes.
ECONOMY
In addition, I have joined in the spon-
lion to home purchasers. New Jersey,
Is it not, furthermore, true that under
First, we must strive for economy in
sorship of other measures designed to
Illinois, and Pennsylvania, among oth-
the cooperatives the cooperators would
the National Government. This is of
bring about more effective control by
ers, have made their contributions. New
maintain their properties and, hence,
particular importance to a region such
Congress and the executive department
York State and New York City have pro-
would lessen the expenses for upkeep?
as New England. The report on the New
of the Federal budget, and to permit an
vided aid for some 10 or more years.
Mr. KENNEDY. Yes.
England economy stressed the fact that
intelligent and honest reduction of ex-
Such a Federal program for middle-
Let me also say that I believe the
the Federal Government exerts a net
penditures without harming the func-
income housing, which has previously
concern which has been expressed by
drain upon the finances of New England
tions which must necessarily be per-
been supported by many able and ex-
some groups, who take the position that
and urged that the Federal Government
formed by the Nation's Government.
perienced Senators, including in partic-
this field is one in which the Govern-
be as economical and efficient as possible.
An efficient reorganization of Govern-
ular the Senator from Vermont [Mr.
ment has no right to move, is scarcely
Many Senators, such as the distinguished
ment operations; the exposure, reduc-
FLANDERS] and the junior Senator from
justified. The fact is that the Govern-
Senators from Illinois and New Hamp-
tion, and elimination of unnecessary sub-
Alabama [Mr. SPARKMAN], involves many
ment has assisted most groups of the
shire [Mr. DOUGLAS and Mr. BRIDGES],
sidies; the careful and incisive reduction
more details than the broad principles
economy with their housing problems,
and other Senators from both parties,
of civilian projects; the prevention of
which I have been able to outline in this
but this particular group has been over-
have on and off the floor of the Senate
luxurious and duplicative personnel pay-
short time. My wish is to stress the im-
looked.
provided the leadership and wisdom
ments; a curbing of the unexpended bal-
portance of having Congress enact at
Mr. DOUGLAS. Has the Senator
which is necessary for this task.
ances carried over from previous years;
the earliest opportunity a program to
from Massachusetts observed the fact
Although I have in this series of ad-
and particularly a reduction of military
provide an adequate supply of middle-
that Government assistance often is
dresses on the problems of the New Eng-
waste can achieve for us a more effec-
income housing for the families of mod-
granted to those who need it least?
land economy proposed some three dozen
tive, more efficient, and more economical
erate means, who are the backbone of
Mr. KENNEDY. In many instances
steps which I believe the Congress should
Government. All of us have seen ex-
our Nation and chief producers of our
I think that is true.
take, it is my considered opinion that
cessive, wasteful, and discriminatory
national wealth, whether they live in
Certainly our economy depends upon
complete enactment of such a program
procurement, stockpiling, and construc-
Boston, Mass., or any other part of the
the maintenance of an adequate housing
will not depend upon larger public ex-
tion practices on the part of our Armed
United States.
program. The difficulty is that for
penditures, further burdening our over-
Forces. We have seen abuse of cost-
Mr. DOUGLAS. Mr. President, will
many reasons houses have been over-
burdened taxpayers, and might, indeed,
plus contracts and markups and the
the Senator from Massachusetts yield at
at least in many instances, effectuate a
priced for many persons, particularly in
needless inefficiency of overspecifications
this point for a question?
the middle-income group.
savings in the level of Federal expendi-
and supersecrecy. We know full well
Mr. KENNEDY. I am glad to yield.
tures. For example, I have mentioned
I appreciate the comments of the Sen-
that the annual $600 million or larger
the contributions to the Federal Treas-
Mr. DOUGLAS. Is it not true that
ator from Illinois because I know that
appropriation for various river and har-
ury from the Reconstruction Finance
under such a plan as the one the Sena-
in the Banking and Currency Committee
bor projects-which I might add have
Corporation, the savings on Government
tor from Massachusetts suggests, the
he has given a great deal of attention
included very little for Massachusetts-
contracts from the Small Defense Plants
loan of capital to the cooperatives by the
to these problems.
has not always been necessary for the
257478-46779
257478-46779
(73)
74
75
national interest. In approaching this
tual Security, with respect to wool, for
dairy products. Next week the House Ways
tiles have been reduced by 66 percent. To
problem of economy, we must recognize
example, "the domestic woolen manu-
and Means Committee will be concerned with
increase the restrictions upon the importa-
that social security, welfare, and health
facturer is entitled to an opportunity to
restricting the importation of lead, zinc, and
tion of raw wool into this country, without
expenditures constitute less than 4 per-
compete on a fair basis with synthetic
petroleum products. At the same time, the
consideration of the tariff on manufactured
cent of our total budget, as compared
fabrics. If the consumption and pro-
Foreign Relations and Foreign Affairs Com-
wool, would result in great harm to our
to the nearly 60 percent devoted to mili-
duction of woolen goods are not to be
mittees are concerned with expanding our
woolen manufacturers and, in turn, to the
trade with the free nations of the world.
domestic wool producers who are dependent
tary service.
penalized, it is necessary to allow raw
We cannot pursue a trade and tariff policy
upon the manufacturers as their major out-
Moreover, in addition to cutting waste
wool to be imported without a tariff or
in the national interest unless the adminis-
let. Raw wool now coming to this country
in our Federal budget and pushing a
with a considerably reduced tariff." I
tration speaks with the same voice upon
would instead be available in larger quan-
program which will most efficiently mo-
have recently protested before commit-
each occasion, and unless the Congress deals
tities and lower prices to foreign textile con-
bilize the resources of our Nation, we
tees of the House and Senate proposed
with the problems of various industries and
cerns, who would thus be able to import still
may achieve real economy and greater
restrictions on wool and oil imports
regions on a comprehensive, rather than a
further goods into this country at a still
which would unnecessarily damage our
segmentized basis.
lower price.
opportunity for tax reductions by clos-
I shall return to this method of approach
Perhaps you will say that the answer is to
ing those tax loopholes which enable
economy.
as it applies to wool in just a moment; but
increase substantially the tariffs on both
the few to escape their just share of
Mr. President, I ask unanimous con-
first permit me to mention the basis for
raw wool and manufactured wool. But I am
taxes at the expense of the many. Such
sent to have printed in the RECORD at
the interest in my section of the country
convinced that such a policy, and the inu-
loopholes include the percentage deple-
this point in my remarks copies of my
with respect to our wool policies, and interest
merable other demands for protection which
tion allowance for oil, gas, and mining;
statements before the Senate Commit-
which must be equally considered along with
would follow it, would not be in the best
family partnerships created for tax
tee on Agriculture and Forestry and the
the interests of the woolgrowers of the
interests of a vital and expanding woolen
avoidance only; special exemptions from
House Ways and Means Committee, re-
West, the consumers all over the United
industry or national economy; and I think
States, and, of course, our national and
it is apparent that it would not be in the
the excess profits and corporation taxes;
garding wool and oil imports.
international economic objectives. No doubt
interests of our present international pro-
and other unwarranted loopholes and
There being no objection, the state-
the members of this committee, who come
gram. For these reasons, I cannot support
privileges costing in all hundreds of
ments were ordered to be printed in the
for the most part from large wool-producing
any proposal effectuating a higher tariff on
millions which otherwise would be used
RECORD, as follows:
States, are convinced that I have never seen
raw wool as a trade for higher tariffs on
to reduce everyone's taxes.
STATEMENT OF SENATOR JOHN F. KENNEDY, OF
a sheep in Massachusetts, much less have
woolen manufactures.
Economy in the national Government
MASSACHUSETTS, ON WOOL IMPORTS BEFORE
any information concerning the problems of
2. DISTRESSED CONDITION OF THE WOOLEN
will ease this drain on New England
THE SENATE AGRICULTURE COMMITTEE, FRI-
the domestic wool industry. Although it
MANUFACTURING INDUSTRY
funds and strengthen the stability of our
DAY, MAY 8, 1953
may surprise you to learn that Massachu-
setts produces over 50,000 pounds of shorn
As the second example of the need for a
national economy.
Mr. Chairman, I appreciate very much the
wool annually, admittedly this is only two-
comprehensive approach to the problem, I
INTERNATIONAL TRADE
opportunity to appear here this morning to
hundredths of 1 percent of the national total,
ask that you consider not only the economic
express my views concerning those proposals
and Massachusetts ranks 41st in national
difficulties of wool producers, but likewise
Secondly, the Congress and the Fed-
now before you which would effectuate fur-
the economic difficulties of woolen manu-
production. But over 70 percent of the wool
eral Government must exercise eaution
ther restrictions upon the imports into this
consumed in the United States-and we are
facturers and their employees. Since Janu-
in the development of our international
country of various agricultural commodities.
the largest wool-consuming nation in the
ary 1, 1949, 99 woolen and worsted mills, in-
trade policies. We in New England rec-
including proposals for a parity tariff, for
world-goes through Boston, the world's wool
cluding over 640,000 spindles and over 6,000
ognize that we are in a difficult position
import fees or import quotas. In particular,
center. Over 60 percent of this Nation's
looms, have gone out of business. Nearly
with respect to such policies. It is not
I wish to discuss these proposals as they re-
woolen and worsted manufacturing industry
40,000 employees in these plants have lost
our desire to demand undue protection
late to the importation of raw wool.
is located in the New England area-an in-
their jobs. Many other mills are either
dustry which nationally employs some 150,-
partially or fully shut down. Recent state-
for our manufacturing industries in a
A COMPREHENSIVE APPROACH TO TARIFF
PROBLEMS
ments indicate that further liquidations may
manner inconsistent with national in-
000 to 200,000 workers with an annual pay-
roll approaching $500 million. I think that
be expected. I know that the Senator from
terest, our international policies and
I am very concerned about the possible
legislation which may be recommended by
you will agree that the Federal Government,
Vermont [Mr. AIKEN], the chairman of this
world peace and prosperity. Nor would
in determining its policies with respect to
committee, is concerned about the 26 woolen
this committee or by the present adminis-
a generally high tariff policy benefit New
tration. I was very disappointed in the state-
wool, must consider these interests as well as
and worsted mills in his State. The propor-
England, since more than one-third of
ment by Secretary of Agriculture Benson to
the interests of the woolgrowers.
tion of unemployment in woolen centers is
the House Ways and Means Committee on
But I am convinced that such interests are
unbelievably high. In Lawrence, Mass.,
its industrial employment is dependent
extensively upon the importation of raw
not antipathetic. I believe that this Nation's
where approximately one-fifth of all work-
Wednesday of this week in which he indi-
cated that further restrictions on the im-
woolgrowers, wool trade, woolen and wor-
ers have been without jobs continually since
materials. Trade barriers to the impor-
portation of wool were necessary. I was
sted manufacturers and textile workers have
1947, the proportion of unemployment is
tation of long-staple cotton, raw wool,
particularly disappointed because, at the
mutual and harmonious interests. Rather
more than twice as great as the figure
aluminum, copper, zinc, manganese, oil,
than attempt to solve the difficulties of one
reached during the depression in 1930. In
same time that Secretary Benson was testi-
and bauxite are particularly harmful to
fying, other representatives of the adminis-
group without regard to that solution's
many other woolen manufacturing cities of
New England's industries. An adequate,
tration were talking along entirely different
effect upon the others, we must consider the
New England and the South, unemployment
low-cost supply of these materials can-
problems of wool and those involved in its
has continued at high levels despite the
lines before other committees of the Con-
gress. If this Nation believes in a policy of
production and consumption in their en-
overall national prosperity.
not be supplied by the domestic market
tirety. I am convinced that only in this way
Thus, gentlemen, when you speak of de-
alone. (With respect to copper at least,
expanded trade, and I know that this is of
clining prices, production and wages among
Public Law 4 of this Congress has ex-
particular importance to your committee be-
will such problems be solved.
the wool growers of the West, you must not
tended until 1954 the suspension of the
cause the United States is the world's largest
1. PRESENT TARIFFS ON WOOLEN AND
exporter of agricultural products, then we
WORSTED MANUFACTURES
forget the distressed areas of New England.
import tax on copper; and the Senators
To take action supposedly for the benefit of
must apply that policy consistently with
from Connecticut [Mr. PURTELL and Mr.
As the first example of the need for this
the wool growers which would result in mak-
respect to all types of legislation, all kinds
comprehensive approach, I ask you to look
BUSH] were active in supporting that
ing even more difficult the competitive posi-
of commodities, and in all parts of the world.
at the tariff situation of the woolen and
tion of the wool manufacturers is not the
extension.) As stated by the report of
Today your committee is concerned about
worsted manufacturers as well as the wool
proper approach to this question. I realize,
the President's Advisory Board for Mu-
restricting the importation of wool, fats, and
producers. Since 1933, tariff rates on tex-
of course, that there are various problems
257478-46779
257478-46779
77
76
besetting the New England economy other
relationship between the price or amount of
apparel wool fell sharply from actual weight
is entitled to buy woolen goods in preference
imported wool and the support price. The
of 810.2 million pounds in 1946 to 246.8 mil-
to synthetics without being penalized for
than its decline in textiles, and I intend to
discuss these with the Senate at a subsequent
Secretary would have us believe that our
lion pounds in 1949. During the same 3
his choice. The domestic woolen manufac-
price-support program attracts wool imports
years, domestic production, instead of in-
turer is entitled to an opportunity to com-
date. But I do wish to remind you that eco-
from all over the world, which, in turn, de-
creasing, decreased from 342.2 to 248.5 mil-
pete on a fair basis with synthetic fabrics.
nomic distress is not confined to any par-
ticular area of our country.
press the price in the domestic market. How-
lion pounds. Cash receipts of domestic wool
If the consumption and production of woolen
There is, moreover, ample evidence to in-
ever, in April 1952, when extensive Govern-
growers fell from $118.8 million to $105.2
goods are not to be penalized, it is necessary
ment action became necessary to support the
million. After 1949, when imports increased
to allow raw wool to be imported without a
dicate that despite recent declines in prices,
tariff or with a considerably reduced tariff."
the situation of the woolgrowers includes a
rapidly falling domestic wool price, the cause
once again, domestic production and cash
brighter aspect. The overall trend in the
was not heavy increases in wool imports;
receipts also increased for the domestic wool
If, on the other hand, the wool manu-
for according to the figures the Secretary
growers. Curbing imports, then, is not the
facturer chooses to pay a higher price for
price of raw wool has been upward, and the
total cash receipts of woolgrowers have fluc-
presented to the House Ways and Means
answer to their problem. The most impor-
his wool, his manufactured product must
tant statistic is the fact that United States
tuated on about the same level. According
Committee, that was a time when the
sell at a higher price, the demand for his
manufacture of woolens and worsteds fell
to the Boston Commercial Bulletin of May
amount and value of apparel wool imports
products decreases and his foreign compet-
during the same 3-year period from 494 mil-
itors undersell him. I cannot believe that
2, 1953, the demand for domestic wool re-
were dropping sharply. His statement fur-
mains very high, and buyers have been fol-
ther indicated his belief that the price-
lion to 334 million pounds, despite an in-
the wool growers wish to take such action
support program gave the benefit of higher
crease in the world production and consump-
which would only further injure their mar-
lowing the shearers, so to speak, and pur-
tion of wool.
chasing shorn wools as they became avail-
prices to foreign wool producers who could
ket. Nor is this a wise policy for the United
I think then that it is obvious that what
able. Although there is some evidence that
import wool at a price which, including the
States. As pointed out by Fortune magazine
woolgrowers are continuing to hold their
duty, was just below the support price. The
the American wool grower needs most of all
of January 1947, the tariff added $136 million
is the American wool manufacturer. We ex-
to the United States wool bill in 1946 while
product off of the market in the hope of
facts of the matter are, however, that sta-
tistics over a period of years demonstrate
port, of course, only an infinitesimal amount
all the wool in the United States contributed
either congressional action or some emer-
of wool; and thus unless the woolen and
that there is no relationship between the
only $126 million to our national income.
gency, this cannot be blamed upon market
worsted manufacturers of New England and
What the wool growers and wool manufac-
difficulties. Moreover, 60 percent of our
supported or unsupported domestic wool
the South are prosperous and active, the
turers need, Mr. Chairman, is to take the
sheep already go for slaughter, and more and
price and the price of wool imports; and
wool growers of the West must necessarily
that at the present time, the prices of for-
offensive away from the synthetic fibers and
more sheepmen are able to turn to the pro-
lose their market, decrease their production,
our foreign competitors. We must coop-
duction of lamb or cattle as more profitable
eign wool are mostly higher than the sup-
and face a decrease in their cash receipts,
erate to expand our markets and lower our
investments, unlike the textile worker of
port-level prices of domestic wools, par-
regardless of the wool-import situation.
ticularly in the better quality wools which
prices. We cannot do this by increasing
Lawrence whose job is taken from under him.
Let us consider then the needs of the wool
the price of wool and decreasing our im-
Certainly it was to be expected that the price
comprise the bulk of United States produc-
manufacturer. Obviously, because raw wool
ports. Whatever problems the wool grow-
of wool would fall sharply after the excessive
tion. I realize that in theory at least the
is a substantial part of the final cost of the
ers of this Nation have, they will not solve
peak it reached during the first year of the
price-support program is contradictory to the
finished woolen and worsted product, vary-
them by harming the wool manufacturers.
Korean emergency. Moreover, the increas-
principles of heavy importation of wool, but
ing from 20 percent to 50 percent, depending
Instead, all concerned should cooperate on
ingly high cost and scarcity of land in the
I am convinced that it would be far more
upon the cost of wool and the type of article,
the wool growers' problems of grazing lands,
major woolgrowing States have contributed
helpful to the domestic wool producer to
the woolen manufacturer is desirous of ob-
disease, and predatory animals; on promot-
to the present decline in production. If we
revise our present agricultural price-support
taining his wool from the most inexpensive
ing the marketing and advertising of woolen
understand these factors, we will not so
program than to impose additional restric-
source possible. With the price of raw wool
goods; fair and free competition with syn-
easily place all of the blame upon wool im-
tions upon the importation of wool.
now being several times as high as in 1939,
thetics; on revising the price-support pro-
ports, nor consider the situation to be one of
4. THE ECONOMIC NEEDS OF WOOL GROWERS AND
the wool manufacturer becomes increasingly
gram into one that makes sense for all
particular distress. But in any event, let us
MANUFACTURERS
concerned with his supply from imports.
groups concerned, including the consumer;
not forget the distressed areas and industries
Finally, getting to the heart of the prob-
Domestic producers, because of limitations
and possibly on seeking a world wool agree-
in other parts of the United States.
lem, as a part of a comprehensive approach
on land, labor, and investment, simply can-
ment, similar to the world wheat agree-
3. THE AGRICULTURAL PRICE-SUPPORT PROGRAM
to these matters, the Congress must con-
not supply enough to meet our needs, partic-
ment, by which those problems of interna-
As the third example of the need for a
sider the economic needs and interrelation-
ularly at prices comparable with imports, and
tional trade might be better controlled with-
comprehensive approach to our interna-
ships of the wool growers and wool manu-
as a result we must obtain approximately
out harm to the interests of any group. A
tional trade problems, I ask that you do not
facturers. Basically, what does the wool
two-thirds of our raw wool from foreign pro-
most recent example of effective cooperation
consider the problems raised by our domes-
grower need? I do not believe that the
ducers.
of this type related to the problem of im-
tic agricultural price-support program apart
answer is higher prices. Between 1941 and
What, then, would be the result of placing
portation of subsidized wool tops from
from the long-range economic problems of
1952, the price of wool in this country in-
additional curbs upon the importation of
Uruguay in which I was happy to join with
the wool-producing and wool-manufactur-
creased from 35.5 cents to 53.3 cents per
raw wool? The woolen manufacturer must
Senators from the wool-growing States and
ing industries. According to the report of
pound (with a particularly sharp rise and
either do without or he must pay a higher
the wool growers and wool mamufacturers
the Public Advisory Board for Mutual Secu-
then drop during the first year of the Korean
price. If he does without, that part of his
associations in protesting to the Secretary
rity in February of this year, a board on
crisis. But over this same period of time,
production is either liquidated or devoted to
of the Treasury against this discrimination
which the heads of the three great farm or-
the total cash receipts of the wool growers,
competing fibers, foremost among which are
which hurt us all; and I was happy to see
ganizations serve:
despite this increase in price, actually showed
the synthetics. I cannot believe that the
Secretary Humphrey's announcement a few
a decrease from $137.7 million to $123.9 mil-
wool growers are anxious to see the rapidly
days ago that countervailing duties would
"The objectives of the price-support pro-
gram can be realized without restricting
lion. The reason is, as pointed out by Mr.
growing and highly advertised synthetic and
be imposed. It is only through such coop-
imports of needed commodities. There
Bishop of the Boston Wool Trade Association
so-called miracle blends displace still fur-
eration, and through a comprehensive ap-
would be no serious adjustment problem for
before this committee 1 week ago, that as
ther the woolen manufacturing industry to
proach by the administration and Congress
domestic wool producers If arrangements
prices rose production dropped, from 453.3
which they must sell their product. As
to our international trade problems, that
this Nation's economy, and the vitality of
were made to give them the equivalent re-
million pounds in 1941 to 266 million pounds
pointed out by the report of the Mutual Se-
turn that they now get from the support
curity Advisory Board, the wool tariff is
individual industries within it can remain
in 1952. Higher prices, then, will not solve
price. After the tariff has been reduced or
the wool growers' problems, and it is useless
"an important element in the competition
strong and prosperous.
between wool and synthetic fibers; the use
eliminated, increased imports of wool would
I again express my appreciation for the
to restrict imports for this reason.
of wool tends to be reduced below the level
meet the greater demand for wool at the
opportunity to present these views; and al-
But will a decrease in the competition from
lower price, while domestic production would
that would result from free choice by users
though I have not supplied detailed sta-
imports help the wool growers? Again, the
at prices that would prevail in the absence
tistical tables in support of the statements
be unaffected."
The statistics bear out this conclusion.
record indicates that the answer is in the
of the wool tariff. The domestic consumer
I have made upon the assumption that such
Secretary Benson to the contrary, there is no
negative. After the war, the net imports of
257478-46779
257478-46779
78
79
data was available to the committee, my
dustry has recently suffered certain cut-
ucts constitute more than half of the
ports to approximately 80,000 barrels per day,
office will be glad to supply such informa-
backs, such cutbacks-which were not con-
total shipments to military forces, it is ne-
the reduction of supplies is not a minor one.
tion upon request.
fined to the United States-followed the most
cessary to have assured source available in
But in New England, where an analysis of
productive year in that industry's history.
other countrie in all parts of the world
tankers receipts in 11 ports shows that two-
STATEMENT OF SENATOR JOHN F. KENNEDY, OF
when more wildcat and development wells
where they would be accessible to our forces."
thirds of its 60 million barrels of residual
MASSACHUSETTS, BEFORE THE HOUSE COM-
and a greater total footage were drilled and
For similar reasons, the President's Ma-
fuel oil consumed per year are imported, the
MITTEE ON WAYS AND MEANS, THURSDAY,
more geophysical crews were employed than
terials Policy Commission recommended last
cut would have a most harmful effect upon
MAY 14, 1953, ON H. R. 4294 (SIMPSON BILL)
ever before. The industry has faced similar
year:
the consumers of such oil.
AND OTHER BILLS To LIMIT OIL IMPORTS
cutbacks in previous years following mild
"In view of its future needs and limited
The second result which naturally follows
winters, only to rise to new heights again.
resources, this Nation should welcome crude-
such a reduction in supply is an increase
Mr. Chairman and members of the com-
But whatever problems the oil and coal
oil imports, not place obstacles in their way.
in the price of residual fuel oil. Some have
mittee, I appreciate very much the oppor-
industries may have, they are not to be
Tariffs on crude oil imports should there-
estimated price increases of 50 percent or
tunity to appear today in opposition to those
solved by denying to the consumer his free
fore be held down, reduced, or eliminated,
more would result from the enactment of
provisions of the Simpson bill, H. R. 4294,
market and free choice. In New England,
within the limits imposed by national secu-
this bill. Based on New England's exper-
and 20 some other bills which would severely
for example, our textile mills are suffering
rity considerations."
ience with a moderate fuel shortage in the
limit the importation of residual fuel oil
very seriously from foreign imports and other
The harm to our exporting industries:
winter of 1947-48, when the price increased
into the United States.
problems. Unemployment is heavy in many
Turning now to the effect on our domestic
$1.23 a barrel from February 10, 1947, to
Before discussing this particular provision,
of our mill towns. But we do not claim that
economy, let me first mention briefly the
I would like to mention briefly my position
February 4, 1948, such an increase in price
the answer to the problems of the woolen
harm such import limitations would impose
would cost our region alone-and we use
with respect to other issues under consid-
and cotton textile industry is to raise the
upon our farmers and manufacturers who
one-third of the residual fuel oil consumed
eration by this committee. I favor an ex-
consumers price and require him to use
must sell their goods to other nations in
in the United States-over $70 million annu-
tension of the present Reciprocal Trade
woolen or cotton textiles instead of syn-
exchange for the dollars those nations re-
ally.
Agreements Act, as a necessity for the pros-
theties. Nor are we seeking a solution which
ceive by selling oil to us. Venezuela is this
perity of our Nation and the free world.
The third result which naturally follows
would do great harm to this Nation's inter-
Nation's fourth largest customer. Last year,
I am opposed to quotas and other exces-
a decrease in supply and increase in price,
national relations and defense.
it bought more than 70 percent of its im-
sive limitations upon the importation of
and which is fully intended by the coal in-
The harm to our international relations:
ports from the United States, one-half bil-
lead, zine, and crude petroleum products, all
dustry in its support of this measure, is a
If we are to expand our trade with other
lion dollars worth of machinery, textiles,
of which-as we so well realize in the manu-
conversion by many consumers now using
nations, give them an opportunity to close
electrical goods, electronic devices, leather
facturing community of New England-must
oil to coal. Many of these consumers have
the dollar gap and buy our goods and bol-
goods, paper, canned foods, chemicals, and
be available in adequate, economical sup-
during the past several years converted at
ster the prosperity of the freed world, this
other products which are of such great im-
great expense from coal to oil. Others could
ply in all parts of the world.
Nation cannot take such action as the Simp-
portance not only to New England but all
In particular, however, I wish to discuss
not meet the necessary costs of the heavy
son bill provides and arbitrarily violate our
parts of the United States. Since Venezuela
the harmful effects which would result from
equipment and installation costs, higher op-
trade agreements with other nations and
gets 95 percent of its foreign exchange from
section 13 (a) (2) of the Simpson bill which
erating costs, and additional storage require-
refuse to buy their goods. Today, with re-
the oil that it ships to the United States—
ments which such conversion would entail.
would limit the total quantity of residual
spect to residual fuel oil, this issue arises
which, when the shipping, insurance, and
Still others-such as ships, apartment houses,
fuel oil which may be imported into the
primarily in our relations with Venezuela,
other services we provide are included, is
hospitals, churches, public buildings, and
United States to 5 percent of the preceding
which provides 97 percent of our residual
worth roughly one-half of the goods and
some industries such as laundries and oth-
year's domestic demand. I am convinced
fuel-oil imports and 70 percent of all of our
services it buys from us-this profitable mar-
ers-could not convert at all and would be
that the harm to our international relations,
oil imports. Since 65 percent of that na-
ket will be denied to us, with resulting con-
forced to compete at higher prices for what-
our national defense and natural resources
tion's oil product is residual fuel oil, it IS
sequences upon the incomes of our produc-
ever oil was available. Because New Eng-
and our manufacturing and consuming
estimated that the provisions of the Simp-
ers and their employees.
land gets its oil by water and its coal by
economies which would result from the im-
son bill would inflict a loss of $300 million a
The harm to our residual fuel oil con-
rail, the first is obtainable at a savings, while
position of such a quota would far outweigh
year or 23 percent of its output upon that
sumers: Finally, I wish to point out the
coal to large purchasers is priced about 40-
any of the benefits claimed for our domestic
nation, 65 percent of the revenues of its
disastrous effects such limitations would
percent higher than to similar buyers in the
oil and coal industries.
national treasury presently coming from
have upon those who presently consume resi-
country as a whole.
Because I have been making a special
these residual-oil exports. We would thus
dual fuel oil. I think it is apparent that
I am hopeful that representatives of other
study of distressed or labor surplus areas in
threaten not only the friendship of a free
such limitations would have and are frankly
parts of the country will indicate to you how
this country, I am fully aware of the eco-
and peaceful friend who has never asked or
designed to have three direct results. First,
these three results would harm their re-
nomic problems of the coal industry. But I
received a single dollar of United States aid,
the supply of residual fuel oil in this coun-
gion and the Nation as a whole; but permit
agree with the conclusions of the hearings on
but also, as pointed out by the Secretary of
try would be decreased. It is generally
me to draw upon my experiences in New
the 1952 Supplemental Trade Agreement
Commerce, threaten the availability to the
agreed that, because American refineries
England to demonstrate how such restric-
that the decline in the coal industry is due
United States of that vital oil supply by in-
concentrate on more valuable components of
tions on fuel oil would damage our economy.
not to residual oil imports primarily, but to
creasing demands for nationalization and re-
crude oil, there will be an increasing gap
It is estimated that 30 percent of the New
problems of technology and transportation,
quiring Venezeula to sell to other countries,
between domestic production of residual fuel
England users of residual fuel oil are public
methods of productivity. conversions of rail-
perhaps behind the Iron Curtain.
oil and demand. The State Department, the
utilities. Economic studies by the Federal
roads to other fuels, milder weather, reduced
The harm to our defense and natural re-
Mutual Security Advisory Board, and the
Power Commission and the Federal Reserve
exports, work stoppages and other problems
sources: This relates to a second important
Paley Commission all forecast an increasing
Bank have indicated that about 80 percent
of industrial relations, and particularly the
tremendous increase in the use of natural
point: The adequacy of our oil supplies in
deficit over the next 25 years unless there
of the difference in the cost of steam-gen-
the interests of defense and conservation.
should be a tremendous unforeseeable in-
erated electricity to New England and to the
gas as a substitute fuel. Many of these fac-
At present we have an 11 to 1 advantage in
crease in the discovery of new wells in this
United States is the result of differences in
tors have also affected the domestic oil in-
oil over the Soviet Union because of our
country. If this deficit, which in 1951 was
the cost of fuel. To further increase this
dustry. The decrease of 50 million tons in
the domestic consumption of coal in the
supplies and concessions abroad. But, asi
117 million barrels of residual fuel oil, is not
cost would be to make our power costs even
pointed out by the Mutual Security Public
met by imports, and the yield of residual oil
more discriminatory. Forty percent of New
United States in 1952 was accompanied by
only a limited increase in the importation
Advisory Board:
in United States refineries continues to drop
England's residual fuel oil goes to industry,
"The United States cannot expect to have
(as it has by nearly one-third since 1945),
for its boilers and furnaces and other indus-
and use of residual oil. This has been the
consistent trend since World War II, with a
access to such supplies unless it imports
the shortage could be a serious one. Since
trial uses. I need not tell you that too many
reasonable quantities of petroleum from
it is estimated that the United States, now
New England industries already are on the
much larger increase in the consumption of
these producing regions. As petroleum prod-
importing over 400,000 barrels of residual oil
verge of liquidation or migration, and that
natural gas. Although the domestic oil in-
daily, will face an 80 percent cut in its im-
our towns such as Lawrence already have
257478-46779
257478-46779
30
81
unbelievably high unemployment rates.
discussing. We need, moreover, to de-
when the nations primarily benefited
maintenance of national and interna-
Their economic existence should not be fur-
velop markets abroad for our textiles,
thereby are not in need of assistance in
tional, as well as regional, prosperity.
ther threatened by this measure. Since New
electrical machinery, metal fabricating
closing the dollar gap or other economic
ANTITRUST LAWS
England is the largest user of imported heavy
and other manufactured products.
aid. Nor can we assume that the attain-
oil in the Nation, the New England Council
Third, we must make certain that our
Hundreds of thousands of Massachusetts
ment of lower trade barriers for the
and other groups have expressed serious con-
antitrust laws are strengthened and ef-
cern over the effect of curbing importations;
jobs depend upon exports. An estimated
United States is an isolated goal without
fectively enforced. I have previously
and the New England Governors' Textile
1 of 19 of manufactured goods in our
regard to their relationship to the trade-
pointed out the fundamental importance
Committee and the Council of Economic Ad-
Commonwealth is for export, and a pro-
barriers of other nations and their ef-
of small business in the preservation of
visers' Report on the New England Economy
portion twice as high exists in Connecti-
fect upon the domestic economy.
competition to our national economy and
both called for the importation of fuels
cut and Rhode Island.
I realize that our trade policies must
particularly to regional economies in
without tariffs. Fifteen percent of our re-
gion's residual oil is used for purposes of
Nevertheless, at least two other im-
of necessity be based on the national
need of economic stimulation and expan-
heating homes, apartment buildings, offices,
portant industries in New England, tex-
interest, and not the interest of any par-
sion. As I said at that time, we should
and factories. This is an important factor
tiles and fish as well as watches, have al-
ticular region; but I am urging a
neither give unfair advantage to small
in the cost of living in the colder climate
ready been seriously damaged by heavy
cautious approach to this problem be-
business nor condemn big business. But
of New England; and, according to the 1950
importations of such commodities from
cause of the effect which a damaged
such small business and vigorous compe-
census, over 50 percent of the heated OC-
other countries. I have supported the
regional economy can have upon the
tition cannot continue if they are denied
cupied dwelling units in Massachusetts used
requests of the fishing industry for
Nation and the entire world. Much can
the opportunities and resources which
oil, rather than coal or gas. This is no time
to increase the cost of living to these families
a determination by the Tariff Commis-
be said in favor of the idea of specifying
are essential to their existence by the
sion-and I may say parenthetically
the quantities of these highly competi-
and businessmen. Finally, 15 percent is
economic concentrations, discrimina-
that, in my opinion, it is the Tariff Com-
tive commodities that would be permit-
used for bunkering ships at port, railroads,
tions, and other predatory actions of
military, and miscellaneous uses. Here
mission that should decide these ques-
ted to enter the country in a given period
their giant or unlawfully combined com-
again, price and supply are important; and
tions-as to whether countervailing du-
of time at reduced rates of duty, par-
petitors, who seek to force them out of
it is reliably estimated that the total residual
ties or other limitations were necessary
ticularly in relation to domestic produc-
business, capture their market or keep
oil available under the Simpson bill would
tion. This would mean that the domes-
not be enough for bunkering our ships alone.
to prevent unfair competition from for-
others out of business originally through
eign imports. I have supported the re-
tic producers would know how much
such practices. Monopolies are not al-
In conclusion, Mr. Chairman, I want to
quests of the woolen industry for a
competition to expect under certain cir-
say that I agree with the conclusions of
ways more efficient, nor do price dis-
cumstances and would be able to make
past congressional and Executive studies
Treasury and Tariff Commission inves-
criminations always save the consumers
which have recommended, not excessive im-
tigation of discrimination from subsi-
their business plans accordingly. Many
money. To weaken at this time the
port limitations, but other means of stimu-
dized wool-top imports which have be-
of the complaints up to now against
Robinson-Patman Act as has been pro-
lating the discovery and development of our
tariff reductions have been occasioned
come increasingly heavy from certain
posed and thus permit monopolistic price
resources, the conservation of our fuels, the
South American countries in recent
by the uncertainty of the results of
discriminations without effective legal
diversification of our industries and other
years at prices from 25 to 40 cents below
lowered duties. If producers knew that
remedies is unthinkable to those of us
means of assistance to our oil and coal in-
dustries. Let us adopt a program seeking
those combed in Massachusetts, Rhode
quotas would increase-and at a dimin-
who believe in the preservation of a com-
Island, and Pennsylvania. But I further
ishing rate-only as domestic production
more fuel, more energy, more production,
petitive free enterprise system. The
and consumption increase, they might be
and better living standards, with increased
ask, as my colleague the senior Senator
Robinson-Patman Act, the Clayton An-
trade between nations, all over the world.
much less fearful of reductions in tar-
from Massachusetts [Mr. SALTONSTALL]
titrust Act and the Sherman Antitrust
iffs. Upon many occasions individual
has long urged, that the Congress and
Act are all in need of strengthening to
Mr. KENNEDY. Moreover, both the
the administration act with caution
producers have made it plain that un-
prevent the enemies of competition from
Waltham and Elgin Watch Cos., as
when lowering tariff barriers with re-
certainty is their greatest worry when it
taking advantage of loopholes in the
pointed out in a recent Fortune maga-
spect to the fish, textile, and other in-
comes to import competition.
law, uncertainties in interpretation, or
zine article and a recent editorial in the
dustries already distressed. No one
Such a policy of caution would be con-
weaknesses in penalties or enforcement.
Worcester (Mass.) Telegram, have dem-
onstrated their New England initiative,
claims that either woolen textiles or fish
sistent with the recommendations and
Such laws do not foster the inefficient
to a degree deserving public commenda-
are infant industries in need of absolute
the Report of the New England Gover-
or fight the competitive struggle for the
tion in view of the severe difficulties they
protection. On the contrary, both in-
nors' Committee on the Textile Industry
weak; they merely assure for all a fair
have faced, in meeting competition of
dustries are suffering from old age rath-
and the report of the Committee on the
and equal opportunity to compete.
New England Economy. The latter re-
It is important that the Federal Trade
Swiss watches through better produc-
er than infancy. But a reduction in
tion and diversification. The Public
tariffs on those strong and growing in-
port states:
Commission, dedicated by Congress to
dustries of this country is more benefi-
The Federal Government should reduce
protecting the rights of businessmen
Advisory Board for Mutual Security in
its report to the President on a trade and
cial to the economic stability of the en-
import duties on products of New England's
from unscrupulous trade practices,
tire Western World than to grant fur-
declining industries with caution and when-
should not be destroyed through weak
tariff policy in the national interest rec-
ever possible should offset any reductions by
ther extreme concessions causing fur-
appointments or inadequate appropri-
ommended that in those cases where a
reducing barriers against imports of raw
choice must be made between injury to
ther heavy unemployment in those in-
ations. The same is true of the anti-
materials and foods into New England.
dustries already declining and heavily
trust Division in our Department of Jus-
the national interest and hardship to an
concentrated in particular areas. To re-
Such an approach is not inconsistent
tice. For more than half a century,
industry, the industry be helped to make
strict the entry of Parmesan cheese from
with our present international trade
this Nation has believed in preventing
adjustments through extension of un-
Italy while offering no significant bar-
policies or the new catch phrase of
unlawful business conspiracies. We
employment insurance, assistance in re-
rier to Icelandic fish is not a realistic
"trade, not aid." A considered ap-
must continue in that tradition, and
taining workers, diversification of pro-
duction, and conversion to other lines
policy. There is no need to make whole-
proach in the reduction or imposition
strengthen our fair competition statutes
through RFC loans and tax incentives.
sale reductions in our duties which will
of trade barriers affecting distressed in-
and agencies, if we are to retain the
It will be noted that all of these items
only lead to further deterioration of our
dustries is an important objective in the
vitality of our economy.
are included in the program I have been
own industries and living standards
257478-46779
257478-46779
82
83
ANTI-INFLATION AND ANTI-RECESSION POLICIES
standby controls program which would
in other areas. Moreover, our tax funds
taxes and prices. New England CCC
Fourth, a healthy national economy,
go into immediate effect in the case of
are used to purchase the commodities
loans on 1949 and 1950 crops were but
and particularly a regional economy
emergency is a necessity if we are to pre-
which are stored to keep up the prices we
nine one-hundreds of 1 percent of the
such as New England which is depend-
vent the economic hardships to both in-
pay. On the whole, although New Eng-
$2.6 billion total.
ent upon the rest of the country for its
dividuals and our entire economy which
land's own agricultural groups have not
We favor prosperous agriculture ev-
supply of raw materials as well as its
result from uncontrolled inflation.
received support from the Federal Gov-
erywhere as a boon to all regions, but it
markets, requires adequate safeguards
In view of the present indications of
ernment comparable with other regions
would be better if this were not done at
against any future inflationary spirals.
deflationary trends, it is apparent that
and other commodities, they are, never-
the cost of higher prices and unequal
While current signs indicate that at
we must be equally concerned with the
theless, forced to pay higher prices for
treatment for some regions. The Com-
present the peak has been reached, we
dangers of a severe recession. Practi-
their grain and other artificially sup-
mittee on the New England Economy
are particularly interested in New Eng-
cally every measure which I have advo-
ported products. The importance of
stated that Congress should study care-
land in preparing against future infla-
cated in this series would be an impor-
such groups cannot be overlooked. Ten
fully proposals which would shift our
tionary disaster. As pointed out by the
tant step in developing our economy, the
million acres of New England are in
Federal agricultural policy to "support-
report of the Committee on the New
stability of our industries, the wages of
farmland. The dairy and poultry indus-
ing farm incomes directly while leaving
England Economy, New England has a
our workers, and the purchasing power
tries of New England each contribute
agricultural prices to be determined in
larger interest than most regions in con-
of our consumers, and thus ward off an-
nearly $200 million annually to the in-
the market." Such a program must, of
trolling inflation:
other severe recession. It is my belief
come of that region, with a total farm in-
course, be without regimentation of the
It tends to suffer in inflationary periods
that such measures will strengthen those
come of approximately $600 million.
rural economy, subsidization of the in-
both from the usual tendency of raw mate-
many programs of the last 20 years
Many counties in New England rank
efficient farmer, or subordination of the
rial and agricultural prices to rise faster
which should prevent any recurrence of
among the leaders in these two lines,
independence of all farmers. Nor has
than other prices and from the failure of the
the great depression of 1929.
relatively heavy property income component
and in tobacco, fruits such as apples and
Congress ever given adequate attention
in its total income to grow at as rapid a rate
However, if the Federal Government is
pears, vegetables such as potatoes and
to the special problems of specialized
as other incomes. Being a large net im-
to be prepared for threatening trends
onions, nurseries and greenhouse prod-
agriculture that always characterize our
porter of food. feed, and raw materials, it
of this nature, not only legislation but
ucts, and other items. In 1950, 34 New
older or industrialized regions. I am
felt severely the impact of the rapid infla-
advance study and preparation are re-
England counties ranked among the
hopeful that the Congress and the De-
tionary price increases in these commodities
quired. For these reasons, I am anxious
leading 100 counties in the Nation 170
partment of Agriculture will give active
after the outbreak of the war in Korea. In
that the valuable work of the President's
times for specific farm activities. Wor-
consideration to needed improvements in
fact, according to as yet unpublished anal-
Council of Economic Advisors and the
cester and Middlesex Counties in Massa-
transportation, research, equipment,
yses by the Federal Reserve Bank of Boston,
it was a net loser by $7 million on commer-
Joint Congressional Committee on the
chusetts, for example, have some of the
land use, labor recruitment, and educa-
cial and financial account during the year
Economic Report be continued; and that
best farms in the Nation. But aside
tion for New England's farm families as
1950 for the first time on record. Much of
the Congress and the executive branch
from highly dubious programs for such
recommended by the Committee on the
the deteriorated position in commercial and
take steps now to prepare for the eco-
items as potatoes, butter and others, the
New England Economy. A national farm
financial account in the postwar years can
nomic changes necessary when the pres-
present price-support law has hurt the
program which will promote the interests
probably be attributed to the differential im-
ent mobilization period ends. Adequate
region more than it has helped. The
of all farmers and consumers in all re-
pact of inflationary developments on the
preparation for deflationary economic
New England balance of payments. New
chief support items-corn, cotton and
gions would be an important step in bol-
England would be well-advised to be in the
crises is necessary for the maintenance
wheat-cost New England dearly in
stering our national economy.
vanguard of those demanding antiinflation-
of a strong economy and Nation and for
257478-46779
ary measures.
the economic well-being of our citizens.
AGRICULTURAL PROGRAMS
I thus deem it essential not only for
the good of the New England economy
Fifth, New England is concerned
but for the protection of the consumer
about our national agricultural policies
and businessman and farmer and worker
and their effect upon that region. As
in all parts of the country, that the dam-
pointed out by the Report of the New
aging consequences of the sharp infla-
England Governors' Committee on the
tionary increases in the cost of living
Textile Industry, agricultural policies
which result from emergencies be con-
which excessively and artificially in-
trolled in advance. The President has
crease the prices of farm products, raw
seen fit to remove all controls; this has
materials and food are contrary to the
already increased the cost of many vital
interest of New England industries and
commodities, such as copper, and many
consumers who must import a large pro-
essential market-basket items, such as
portion of such products from outside
coffee. Controls will not now be re-
the region.
stored, I know; but it is essential that an
Since 1928, the prices of raw cotton
adequate standby controls program be
and wool have increased five times as
maintained by Congress in preparation
much as those for rayon staples, causing
for an emergency which would cause
New England textiles to face higher
such an inflationary increase. It is no
prices, deoreased sales, increased compe-
use ordering the fire extinguisher after
tition and increased need for new ma-
the fire has broken out. An adequate
chinery and plants which are too often
257478-46779
85
4. By preserving and strengthening
19. Particularly municipal securities
independent Government agencies such
used for commercial purposes;
as the RFC and SDPA for providing
20. Liquidations under the capital
VI. CONCLUSION
to elimination of abuses of tax privilege.
loans, technical assistance, and a fair
gains provision;
Mr. President, this concludes the pres-
An improved social-security program is
share of Government contracts to small
21. The abusive use of charitable
entation of my discussion of the prob-
essential to the equalization of labor
business;
trusts and other tax-free institutions,
lems facing the economic growth of New
costs and to a reduction in the hardships
5. By providing for the fullest utiliza-
22. Total exemptions in Puerto Rico;
England and other parts of the country
caused by dislocation and recession.
tion of our natural resources and the
and
and the outline of my proposed solutions
Nor have I attempted to deal with these
development of an adequate supply of
23. The misuse of tax amortization
for such problems. As I have stressed
problems on an industry-by-industry
low-cost power;
certificates.
throughout, although many of the rec-
basis. Thus, the textile and shoe indus-
6. Through adequate appropriations
By providing for an equitable distri-
ommendations I have made are of spe-
tries may benefit from those proposals
for the New York-New England survey;
bution of Federal business incentives—
cial importance to New England, never-
aimed at preventing a further decline
7. The reservation for New England
24. Through the allocation of defense
theless, none is contrary to the national
and dislocation of business, tax incen-
of a proper portion of the output of the
contracts to labor surplus areas; and
interest, but rather would, if enacted, be
tives for modernizing equipment, regula-
St. Lawrence power project;
25. The equal distribution of tax
of benefit to all the people wherever they
tion of trade in wool futures contracts,
8. A study of the feasibility of the
amortization certificates; and
may live. My discussion of these prob-
caution in international trade policies,
Passamaquoddy project;
26. On a long-range basis, in the lo-
lems is intended to inspire action, not
a farm program which decreased mar-
9. Approval of the Connecticut River
cation of Federal installations and
gloom. It has been impossible for me to
ket prices of wool and cotton, cheaper
flood control compact;
grants;
cover adequately here all of the problem
power, and most of the other items men-
10. By making permanent the Water
27. By investigating the discrimina-
areas in our region or Nation, or to dis-
tioned. The fishing industry will benefit
Pollution Control Act; and
tion in the costs of New England trans-
cuss all legislative steps which might
from such caution in international trade
11. By specifically earmarking an
portation, including trucking rates, rail-
have an effect thereon. I am hopeful
policies, as well as from the proposal to
equitable portion of import-duty funds
road freight rates, and ocean freight
that the present study conducted by the
provide additional funds for research
for research, quality control, and market
rates from the port of Boston; and
National Planning Association under the
and market development, tax amortiza-
development in the fishing industry.
28. By providing for regulation of
auspices of the Joint Committee on the
tion incentives for new equipment, and
Secondly, toward the prevention of
trade in wool futures contracts under
Economic Report will cast further light
industrial diversification. All industries
further decline and dislocation of busi-
the Commodity Exchange Act.
upon these problems and their remedies.
will benefit from improved transporta-
ness—
Third, toward a reduction of hard-
It has also been impossible to present the
tion and cheaper power, from the pro-
12. By more nearly equalizing the cost
ships caused by recession or dislocation-
full details of all of the various legisla-
tection of small business, the stimulation
of labor-through increasing the mini-
29. By providing for a more adequate
tive proposals which I have mentioned.
of new business, and economy in the
mum wage and otherwise improving the
unemployment compensation program
But I am hopeful, Mr. President, that I
National Government, to name but a few.
Fair Labor Standards Act;
with reinsurance of State unemployment
have presented a basis for legislative at-
This is basically a program for busi-
13. Through clarifying and making
funds and/or supplementary benefits to
tention and action on these problems.
ness, for its employment, its stimulation,
more effective the Walsh-Healey Act
workers who have exhausted their
I realize that it may well be 2, 4, 6, or
its modernization, and its protection. It
without the restrictions of the Fulbright
claims; and
more years before such a program is
is also a program for so-called distressed
amendment;
30. By providing for a more adequate
enacted. I also realize that there will
areas, to bring them new industries, to
14. Through modernizing and ade-
program for our older citizens through
be many New Englanders both in the
prevent further industrial migrations,
quately enforcing such laws to prevent
the liberalization and extension of our
Senate and in my home State who may
and to reduce the hardships caused by
abuses in the provisions regulating child
old age and survivors insurance pro-
disagree with one or more of the propo-
such migrations and heavy unemploy-
labor, learner permits, and the Puerto
gram, improvements in the old age as-
sals which I have set forth. The cooper-
ment. The theme of the program, if it
Rican exemption;
sistance program and a study of other
ation of all Senators from both parties
may be boiled down to a single sentence,
15. Through revising the Taft-Hartley
problems; and
from New England and other regions
would be the importance of the Federal
law to prevent unfair restrictions on
31. By providing for a more adequate
who realize the importance of getting
Government in the preservation of fair
unionization in competing areas;
middle-income housing program.
started on a comprehensive program to
competition in an expanding economy.
16. Through preventing the exploita-
Fourth, toward the accomplishment of
meet these problems which threaten our
In short, I have proposed that the
tion of minority labor with a Federal
other overall legislative objectives affect-
economic well-being is essential; and I
Federal Government act in the follow-
equal opportunity law and enforcement
ing these problems, including specif-
would welcome their study and sugges-
ing specific ways:
of nondiscrimination provisions in Fed-
ically-
tions in order to provide the most feasi-
First, toward the diversification and
eral contracts; and
32. Economy in the National Govern-
ble legislative tools to deal with such
expansion of commercial and industrial
ment,
activity-
17. Through the equalization of non-
problems.
33. Caution in the development of in-
This presentation has been organized
1. By providing for regional industrial
wage payroll costs by providing for a
ternational trade policies,
primarily along the lines of the prob-
development corporations;
more adequate social-security program;
34. Effective enforcement of anti-trust
and
lems involved rather than the relation-
2. By permitting tax amortization in-
laws,
centives to industries expanding in labor
18. Minimum standards in our unem-
ship between the various proposed solu-
35. Safeguards against the disaster of
surplus areas, and older industries seek-
ployment compensation program.
further inflation or serious recession,
tions. Thus, the question of tax amor-
ing to replace and modernize equipment;
By eliminating competitive abuses of
and
tization is important to the stimulation
3. By establishing an adequate job re-
tax privileges which have accentuated
36. A national agricultural policy
of new industry, to the equitable dis-
training program for the acquisition of
such business decline and industrial mi-
which harmonizes the interest of all seg-
tribution of Government incentives, and
new skills for the unemployed;
gration-
ments of the economy.
257478-46779
257478-46779
(84)
86
Let us go forward to build a better New
Government, business, and labor.
England-a better Nation and a better
Through the cooperative efforts of all of
world-free from the economic hard-
these groups, New England's economy
ships and tragedies which prevent a full
can be built back to what it should be.
life for us all.
Mr. Speaker, Senator KENNEDY has
Mr. LEHMAN. Mr. President, I have
performed a task that has been little
Editorial and Press Comment on the
read the greater part of the excellent
short of herculean. I have had the rec-
study which the junior Senator from
ords of Congress searched and could not
Massachusetts [Mr. KENNEDY] has made
find anything that approaches, in rela-
Kennedy Program
of the economic problems of New Eng-
tion to this particular theme, the study,
land. This careful analysis of the in-
the research, the painstaking analysis.
[From the New Bedford (Mass.) Standard-
to support any legislation that will impair
dustrial ills of that great section of our
Senator KENNEDY'S splendid report could
Times of May 21, 1953]
that region's currently favorable position.
country should be considered seriously
have come into being only after many,
AID FOR NEW ENGLAND
Nor are they certain of unanimous northern
by all those interested in the well being
many hours of diligent search; pouring
Apart from any consideration of the pro-
support.
not only of New England, but of the
But the Senator from Massachusetts rec-
over the many and voluminous reports
entire Nation.
gram itself, Senator KENNEDY'S ambitious
of groups that have dealt with similar
ognizes his program is neither fixed nor
and far-reaching plans for Federal legislation
I am happy to join with the many
sacred. He and it are both amenable to
matters; burning the midnight oil into
to help cure New England's economic ills
others who have commended the junior
improvements. However, it must be clear
the early hours of the morning in evalu-
have a definite value. Simply by bringing
to all that no program can meet all objec-
Senator from Massachusetts for this
ating all available data and combining
the attention of the Nation's lawmakers to
tions it will encounter and still retain any
valuable service.
the best of it with the Senator's own
the problem and orienting it to the Nation's
value.
Mr. KENNEDY. I thank the Senator
whole economic well-being, the junior Sen-
solutions. It surely was a labor from
The major innovation included in the
from New York.
ator from Massachusetts has performed a
which many would have shrunk-ardu-
useful service. But more important his ef-
Kennedy plan is the creation of regional
industrial development commissions. As he
ous, penetrating, and slow. It takes
forts to rally the national legislators from
envisages them, they would be chartered
courage, patience, ability, and industry
New England into a unified, dedicated and
under the Federal Government as tax-free
Congratulations to Hon. John F. Kennedy,
to sift the mountain of facts and figures
articulate bioc within Congress to speak for
enterprises to provide technical and man-
into elear, intelligible, and convincing
and plan for New England, in concert, give
agement help to new or expanding business.
of Massachusetts, for a Job Well Done
argument. Senator JOHN F. KENNEDY
promise of a new order of things in the
The regional Federal Reserve bank would or-
Nation's Capital.
met the challenge in characteristic style.
It is obvious that ties that bind New Eng-
ganize and sell stock in the Commission and
all that would be needed to get one started
EXTENSION OF REMARKS
The report offers no easy solutions, no
land, economically and industrially, are
would be to have two or more States indi-
OF
panaceas, to the major industrial prob-
stronger than the competitive differences
cate their willingness to participate. State
HON. EDWARD P. BOLAND
lems of the northeast region. It does
between the individual States. Yet, despite
industrial development organizations could
pinpoint the matter and points the di-
this compelling reason for mutual endeavor,
gain membership and the regional body
OF MASSACHUSETTS
rection that can lead to success. Suc-
New England's Senators and Congressmen
could make loans to the State commission or
have gone their separate ways in the past.
IN THE HOUSE OF REPRESENTATIVES
cess necessitates unity and cooperation.
guarantee its loans if desirable.
Seldom have this area's Representatives in
I strongly favor the recommendation of
As KENNEDY develops the idea, the re-
Wednesday, May 27, 1953
Washington joined forces in the interests of
Senator KENNEDY that the New England
gional commissions would be self-support-
the region as a whole.
Mr. BOLAND. Mr. Speaker, on last
ing, autonomous and regionally directed.
congressional delegation organize into
If Senator KENNEDY'S tremendous efforts
Monday, May 25, the junior Senator
There have been objections to the plan on
a cohesive, active group. I have assured
accomplish only this-a working arrange-
the ground that it smacked of new bureauc-
from Massachusetts, the Honorable
Senator KENNEDY of my whole-hearted
ment among the national representatives of
racy and New Dealism. There may be other
JOHN F. KENNEDY, completed his series
endorsement of his suggestion. The
the six New England States-he will have
valid objections, but this isn't one of them.
of congressional speeches pointing to the
united efforts of all of the New England
accomplished much.
The only other new principle offered by
serious problems and suggesting some
congressional members are needed to
The program for Federal legislation to bol-
KENNEDY in his first two speeches entails a
remedies on the economy of New Eng-
promote the legislative action necessary
ster New England's economy offered by KEN-
program for permitting quick tax amortiza-
land. I rise today, Mr. Speaker, to con-
NEDY is set forth in a series of 3 speeches,
tions on new industrial buildings and expan-
to meet the problems that confront the
gratulate him on the brilliance, the
2 of which already have been delivered on
sions in labor-surplus areas, and in older
area. The group would serve as an ideal
the floor of the Senate. Much of what he
industries seeking to modernize their plants.
thoroughness, and the forthrightness
sounding board for the region. It could
recommends is not particularly new or orig-
This is similar to the present system of al-
with which he has presented the prob-
meet to study, review, and pass on gen-
inal. Revising the Walsh-Healey law to per-
lowing quick tax writeoffs for defense in-
lems of New England to the Senate of
eral legislation. It could map out ways
mit northern textile industries to achieve
dustries. There should be little objection to
the United States. I am pleased to as-
and means of dealing most effectively,
equal footing with their southern rivals in
this provision from any source.
sociate myself with the distinguished
on a legislative basis, with matters re-
competing for Government contracts, rais-
On the whole Senator KENNEDY has dis-
Senator from Massachusetts in his great
lating to New England. I trust that the
ing the national minimum wage to $1 an
played a remarkably keen penetration of the
efforts to harness the cooperation of the
hour-another approach toward the equali-
problems besetting New England's continued
members from New England will take
zation of wage-rates North and South; elim-
industrial growth. He has no panaceas to
Nation, through the Congress; New Eng-
immediate steps to organize into a real,
inating transportation differentials unfav-
offer and he readily admits the Federal Gov-
land, through interstate compacts; Mas-
formal, and effective congressional dele-
orable to New England; revising the Taft-
ernment can play only a relatively small part
sachusetts, through concerted action by
gation.
Hartley law to make it easier for unions to
in overcoming all the obstacles to that de-
257478-46779
organize southern labor, and eliminating
velopment. The major share of the burden
some of the tax loopholes which give south-
must be borne by the States, local com-
ern and western communities a competitive
munities and the people of New England
advantage when bidding for new industry.
whose faith in New England's future will be
To some of all of these suggestions, there
tested by their willingness to invest in it.
will be raised dissenting voices. Southern
But, inescapably, the Federal Government
Senators and Congressmen will be reluctant
has it in its power to provide an assist in
257478-46779
(87)
88
89
this imposing task, and Senator KENNEDY'S
[From the Boston (Mass.) Traveler of
thoughtful, detailed and comprehensive pro-
acted, be of benefit to all the people where-
many of the recommendations I have made
May 20, 1953]
gram deserves a detailed, thoughtful and
ever they live."
are of special importance to New England,
AIDING NEW ENGLAND
comprehensive analysis and discussion by
Admitting that the South has taken much
nevertheless, none is contrary to the national
the officials, industrialists, and people of
Senator KENNEDY has fired the first of
business from this six-State section, Sen-
interest, but rather would, if enacted, be
New England. This, we can be sure, it will
three broadsides intended to jar Congress
ator KENNEDY commented: "But it is not
of benefit to all of the people wherever they
receive.
into helping solve New England's economic
my intention to attempt to penalize the
may live
problems. His second will be touched off
South to give New England or the
He points out that even if the measures
today, and his third will be heard on Friday.
North any unfair advantages
did benefit New England chiefly, it is recog-
[From the Boston (Mass.) American of
All of which will certainly do his cause no
May 22, 1953]
Briefly, he feels that the major economic
nized that one region's prosperity has some
pains of this region can be eased by a 40-
harm with fellow Senators from the South
effect on supporting the entire Nation's
ON SOLID GROUND
step legislative cure-all program, which also
and other sections of this country.
prosperity, while a serious depression in any
Senator JOHN F. KENNEDY made an impor-
would benefit all the rest of the Nation.
The junior Senator from Massachusetts
one section will eventually take its toll in
tant contribution to the further welfare and
He feels that New England isn't getting
has made it known he will follow up the pres-
other sections.
stability of the Nation and the several States
enough held from Washington to compen-
entation of his program with the Introduc-
There undoubtedly will be some resistance
when he deplored the municipal-bond abuses
sate for the taxes that we New Englanders
tion of and active support for specific legis-
to his program on the grounds that it is
which are an increasingly common practice
have to shell out.
lative measures embodying its recommen-
paternalistic and in violation of States' and
in the South.
His critics are saying that this is a bid
dations.
local rights. But in nearly every instance
It cannot be denied that mortgaging a city
for unwanted Federal interference in local
Management and labor will weigh the Sen-
it will be possible to puncture this stand by
or town for the more or less exclusive benefit
affairs. His backers are saying that we're
ator's recommendations carefully. It is
pointing out that local and State agencies
of an industry which may or may not survive
entitled to a lot more Federal aid than we're
doubtful if what he proposes will please
have failed utterly to solve the problems.
is a hazardous course of action, particularly
getting and that we'd be idiots not to de-
both. Yet what is good for New England is
Take, for instance, the city of Lawrence,
in these inflated times.
mand it.
good for both management and labor, and-
Mass., where unemployment in these boom-
Every other taxpayer in the community has
Leaving that angle out of the picture for
let us not forget-the people who sent Mr.
ing times is close to that of the great de-
to assume the burden which the favored in-
the moment, there's no question that we
KENNEDY to the Senate.
pression.
dustry avoids, and that cannot fail to result
have lost large ehunks of our industry to
Take, for instance, the question of pollu-
in a reduction in the general living stand-
the South in recent years and that we need
[From the Augusta (Maine) Kennebec
tion, one of the most shameful problems in
ards.
to modernize and expand.
Journal of May 20, 1953]
Maine, the State that boasts of its lakes and
Extravagant tax exemptions, which the
Probably no other region has contributed
streams. Local communities and the State
A DO-SOMETHING PROGRAM FOR NEW ENGLAND
Senator also criticized, have attracted some
as much to the development of this Nation
have failed utterly, thus far, to solve the
firms to the South from New England, be-
as New England has done. In finance, cul-
For the last few years we have seen at
problem. Senator KENNEDY points out that
cause our constitutions and statutes do not
ture, and hard-rock construction, New Eng-
least one major study or survey per year
clean water is one of the major demands
allow us to engage in this sort of ruinous
landers have led the way. In textiles, ship-
of New England's economic difficulties.
of industry today, the integrated steel mill
competition.
ping, science, and learning, they have climbed
What, if anything, any of them has accom-
New England is seeking, for instance. But
But there is no assurance that the migra-
the high peaks. Unfortunately, sometimes
plished has yet to be shown.
Senator KENNEDY has a concrete proposal
tion will be beneficial to the South in the
they have slipped down the far side of those
Now Massachusetts' new Democratic Sen-
for solving the problem, both for private
long run. An industry which goes bargain
peaks and seen others take their place.
ator JOHN F. KENNEDY comes forward with
industry and communities which dump their
hunting around the country for cheap labor
Senator KENNEDY'S fight to patch up our
a new approach. His is a 159-page book on
sewage into the rivers.
and no taxes can prove more of a liability
economic life is an imaginative fight and a
the region's economic problems that lays
The Kennedy program is too broad and
than an asset to a city or town.
timely one.
more emphasis on action than study. In
comprehensive for blanket endorsement.
It is a fact, also, that many of the leading
We're a long way from dead, in this part
fact, he entitles it "A Program for Con-
But the approach deserves hearty praise
brokerage houses are seriously disturbed by
of the country. We have been hurt, but
gressional Action."
and support. We'll be interested to hear
the activities of southern municipalities
we've not been paralyzed. What we want
We won't attempt to review the 50 dif-
what the Maine delegation members have
which are erecting mills at public expense
now is to overcome those hurts, and regain
ferent proposals for congressional action,
to say about it.
for least at almost ridiculous sums to fugi-
some of our lost leadership.
ranging from regional industrial develop-
New England should be hearing a lot from
tives from the North.
In spite of our oceasional setbacks, we
ment corporations through tax measures to
this program in the coming months.
If too mony municipalities tried to expand
are still up with the leaders. New indus-
encourage business expansion and stepped-
in this near-Socialist manner, the Federal
tries are expanding here and beekoning us
up job retraining to specific projects such
[From the Reading (Mass.) Chronicle of
Government might be forced to intervene
toward a new golden age. Old industries are
as Quoddy and the St. Lawrence seaway.
May 21, 1953]
and impose taxes on all city and town bonds.
still in the black more often than not.
The program has been touched on in news
A PROGRAM FOR NEW ENGLAND
Such action would have a serious effect on
But we do need to pull together as a region,
articles and is the subject of May Craig's
Senator JOHN F. KENNEDY has shown one
the entire bond market, and the ability of
rather than separately as six States. And
column on this page today.
of the reasons he was able to make such
cities and towns to make essential public
we are entitled to fair and just consideration
What we do want to comment on is Sen-
improvements would be impaired.
in Washington when we go there with our
an impression at the polls last year. He is an
ator KENNEDY'S approach. His study, while
Senator KENNEDY was on equally solid
problems.
intelligent and earnest young man going
exhaustive, is of far less importance than
about his job in a workmanlike manner.
ground when he chided Congress for sanc-
KENNEBY'S program deserves close study.
his program of action. As a matter of fact,
tioning laws which have perpetuated back-
Just issued by him is a series of three
his study should have required little more
ward conditions in the South and tended to
speeches in which he is presenting the eco-
[From the Brockton (Mass.) Enterprise and
than an analysis and correlation of ma-
jeopardize the social progress which the
nomic problems of New England with a pro-
Times of May 20, 1953]
terial obtained in all the other studies on
North has made in the past half century.
gram for congressional action. Two of the
this subject made by the Governors' Con-
For, as he advised his colleagues, it would
SENATOR KENNEDY'S SPEECHES
speeches have been presented and the third
ference, the New England Council, the Inter-
is slated for tomorrow. We have had time
be infinitely better so far as the whole Na-
Senator JOHN F. KENNEDY has delivered
Agency Committee, the President's Economic
tion is concerned to bring the South up to
to examine only the first speech.
the first in his series of three congressional
Advisory Commission and all the others.
level of the North rather than to force the
Lumping New England's problems in one
speeches, all aimed at establishing a pattern
But, by proposing a program of action,
North to sink to the conditions prevailing
package seems to be logical since we have
of progress for New England.
in those parts of the South which have re-
he offers the one thing that has been most
many common to the whole area which has
sorted to financial schemes and panaceas
The Senator made it clear that while he
lacking, intelligent and dynamic leadership.
been sending large sums in Federal taxes to
that cannot be easily reconciled with free,
was a special-interests pleader-speaking for
He offers a rallying point for the entire New
Washington and watching the money used to
the New England States-"
competitive private enterprise.
the recom-
England delegation. And he holds a hope
help other parts of the country while less
mendations I have made
would, if en-
for getting the attention of the entire Con-
came back to relieve the plight of some of our
257478 46779
gress by pointing out that "even though
cities and industries.
257478-46779
90
01
His panacea for New England communities
Senator KENNEDY comes up with something
like Lawrence and Lowell, suffering from
more practical. He at least is a New Eng-
National Capital, but stated in his open-
aging patient if treated with care and wis-
labor surpluses, would, he says, help similar
lander, and knows the problems first hand.
ing that he wanted to discuss the "eco-
dom.
communities in, for instance, Tacoma, Terre
He pointed out that New England accounts
nomic problems of New England and the role
Senator JOHN KENNEDY must be listed
Haute, and Scranton, which also suffer from
for more than 20 percent of the Nation's
of the Federal Government in the solution
among the hopeful; more than that, he must
these conditions. His cure for the economic
textile manufactures, better than 50 percent
of such problems." He said: "I want to make
be listed among those willing to give his
stagnation of particular areas is introduction
of textile machinery manufacturing, and
it clear from the outset, however, that nei-
time and energy to reach an intelligent
of new industries, renovation of old ones, and
about 50 percent of the production of nails,
ther the problems which I shall discuss nor
diagnosis before prescribing a remedy.
retraining surplus labor for new jobs.
typewriters, lathes, saws, bearings, etc., and
the congressional measures which I shall
During the young Senator's 5 short
To this end he recommends and will seek
a large percentage of electrical appliances,
propose are peculiar in their application to
months in Washington he has been busily
Federal legislation for: regional industrial
aircraft and their engines, tools, shoes, rub-
New England economy." He added that ser-
studying his region, examining its economic
development corporations; tax amortization
ber, hardware, and scores of other important
ious labor surpluses not only exist in Law-
life and worrying about the future. The re-
incentives to industries expanding in labor
items.
rence and Lowell, Mass., but they also im-
sults of his findings and the pattern of his
surplus areas, and older industries seeking
The Senator wants to protect this. He is
pair the prosperity of dozens of other areas,
proposals are being outlined in three
to replace and modernize equipment; a job-
not opposed to the South getting its share of
such as Tacoma, Wash., West Frankford, Ill.,
speeches, the first delivered Monday, the
retraining program to furnish the unem-
American industry and business, but he still
Durham, N. C., and he named a score of
second scheduled for today, the last one next
ployed with new skills; strengthening the
wants New England to retain what it has and
other sections.
Monday.
small-business functions of either RFC or
to expand. Mr. KENNEDY also feels that New
In the 159 page book assembled by Sen-
In his first chapter he proposed regional
SDPA (Small Defense Plant Administration);
England "can no longer rour tax funds into
ator KENNEDY, who forwarded a copy to the
industrial development corporations to en-
providing low cost power through hydro-
the economic development of other regions
Woburn Daily Times, he treated the econ-
courage business activity, revision of income
electric and flood control projects; providing
without receiving some fair consideration of
omic illnesses of New England which are
tax laws to stimulate industrial growth, a
an equitable portion of import duty funds
its own problems from Congress. In recent
also general in other sections, and the treat-
job-retraining program to stem the flow of
for research and market development in the
years, New England has contributed far more
ment of them, in some cases calling for
workers from unemployment areas, and the
fishing industry.
funds to the Federal Government than have
the application of legislation already enacted
development of the area's power potential.
While much of Senator KENNEDY'S speech
been returned in Government services or
will or should erase partisan lines in New
Senator KENNEDY'S approach cannot be
sounds reasonable, it is hard for Republicans
expenditures." He has something there.
England, noted in industrial history for
appraised until the second and third chap-
just committed to less Federal control of
Briefly, his first address called for:
its rugged individualism.
ters are revealed, but he made it clear in his
local affairs to wax enthusiastic over the idea
Establishment of regional industrial de-
Senator KENNEDY treats such subjects as
first speech that his program, while based on
of forming new ties with Washington. How-
velopment corporations; tax amortization in-
job retaining, analyzes parts of the Taft-
New England's problems, related in general
ever, in every case where his recommenda-
centives; stepped-up job retraining; aids to
Hartley Act which are detrimental to New
to the national picture. He further stated
tions have a New Deal flavor, he has watered
small business; fullest investigation of natu-
England's interest and beneficial to the
that he would suggest 40 legislative steps to
it down to make it more palatable. For in-
ral resources, development of hydroelectric
South in luring our textile industries to
implement his plan, legislation he insists
stance, in the case of a regional development
power, flood control and prevention of water
that section, and calls for a modification on
would be as important for the rest of the
corporation he recommends not a Federal
pollution; continuation of appropriations for
these inequities. He calls for a minimum of
Nation as for New England.
agency but enabling legislation for formation
surveying land and water resources; Con-
KENNEDY was wise, when he started his
$1 an hour wage in these industries south of
of such a corporation locally; he does not ask
necticut river flood control; aid to fishing
the Mason and Dixon line as well as in
project, to include all six New England States,
direct subsidies for the fishing industry but
industry; intensive study of the Passama-
Massachusetts, and he points to the 80th
not just Massachusetts, and certainly he is
technical research such as the Department
quoddy project (Maine); and immediate con-
Congress action which made millions avail-
wise now to promote his ideas as something
of Agriculture gives to farmers in large
struction of the St. Lawrence power project.
able for the fight against water supply pollu-
of national significance, not purely a regional
measure.
He seems to have produced a comprehen-
tion, asserting that New England could use
development scheme.
Whether or not we can agree with all of
sive study of most of our problems, and by
its share of these available funds for the
His strategy should pay off when he pre-
the time he has finished his addresses to the
sents his 40 legislative proposals to his col-
Senator KENNEDY'S program-and it deserves
sewerage disposal in areas where the water
Senate, he may at least point to a pathway
leagues in Washington. He has done his
considerable study, since It has much meat
supplies are either polluted or threatened
in it-he earns our respect for the exhaustive
which will lead to more prosperity for the
best to eliminate antagonism from other
by the lack of sewerage.
study of New England's problems which he
area.
New England Congressmen, to enlist sup-
The New England treatise is a masterpiece
and his staff have made, and the complete-
Some of his steps are highly controversial.
port from the rest of the Nation. Whether
of study analysis, and justifiable demand for
ness of the program he is working for. We
Some of the program will be seen as New
or not all his proposals prove of a practical
proper distribution of the Government ex-
expect to hear more of the junior Senator
Dealish. But it at least reveals that this
nature, New England should applaud him
penditures to harrassed areas. The youthful
from Massachusetts.
United States Senator is ready to wage a
for his devotion to the region's future, his
Senator not only amazed his colleagues on
legislative fight for the interests of the region
painstaking research in staking out a course
the floor of the Senate but arched the eye-
[From the Bridgeport (Conn.) Post of May
of which his State is a part. Unquestionably
of action, his shrewd political maneuvering
brows of political editorial writers and col-
New England needs more champions in the
in seeking a fair hearing.
20, 1953]
umnists with his straight-forward and thor-
national legislature.
ough treatment of a subject which is bound
CHAMPION OF NEW ENGLAND
[From the Boston (Mass.) Record of
to have some results. The document he has
May 20, 1953]
Senator JOHN F. KENNEDY, Democrat, of
[From the Woburn (Mass.) Times of May
prepared if commercialized, should be New
Massachusetts, has given the first of three
19, 1953]
KENNEDY PAVES WAY
England's best seller.
talks in the Senate on 40 proposed legislative
SENATOR JOHN F. KENNEDY OF MASSACHUSETTS
It is heartening and inspiring to find an
steps to help cure industrial, business, and
The initial clarion call for the protection
[From the Portland, Maine, Press-Herald of
outstanding member of the New England
employment this of New England. And these
May 20, 1953]
congressional delegation taking the floor of
40 proposals for our 6 States, he hopes, will
of New England industry was launched yes-
the United States Senate and demanding
also aid the Nation.
terday in the history-making step taken by
KENNEDY WOULD HELP NEW ENGLAND To
fair treatment for our six-State area.
Senator JOHN F. KENNEDY, of Massachusetts,
PROSPER
Economic unification is his aim, and we
Not everyone will agree with Senator JOHN
in the 2-hour speech on the floor of the
hope he can point the way to this great
Old age can mean death, or it can mean
F. KENNEDY.
achievement without too much intervention
United States Senate. Senator KENNEDY
strength and maturity. While the vitality
There are bound to be many who will
on the part of the Federal Government.
plans two more such speeches in which he
of New England, a venerable elder among
suggest different ways to cure the business,
will complete his economic digest which he
Many studies and surveys have been made
America's regional civilizations, is believed
industrial, and employment ills of this sec-
and his researchers have promulgated after
in regard to the New England economy. Cab-
by some to have hit its peak and started a
tion.
lengthy study.
met members in the last administration as-
tumble to the grave, others refuse to give up.
But that is not the important point, and
Senator KENNEDY does not plan a New
sured us they had all the answers. We hope
Others predict a new lease on life for the
the person who allows himself to be con-
England bloc to force recognition in the
257478-46779
257478-46779
92
93
fused by technicalities misses the Senator's
legislation and legislative action for im-
One of the main points of Mr. KENNEDY'S
eral months the forthcoming report on the
purpose.
proving New England's economy.
thesis is that New England's waterpower
New England economy by the group of New
The important point is that our own Com-
Some of the ideas are excellent. Others
resources must be fully developed, and,
Englanders actually bearing that designation.
monwealth of Massachusetts contributed the
have less merit. Bu the important feature
among other things, he calls for new em-
The question now is: What will Congress
tremendous sum of $1,838,000,000 to the Fed-
of the Senator's effort is that it brings to-
phasis on the New England-New York inter-
and New England do about the Senator's
eral Government last year and received only
gether, in one package, SO much of the in-
agency committee program. This committee
report and recommendations? Will they be
the relatively scant sum of $70 million from
formation and so many of the suggestions
was established under the Truman admin-
ignored, as has been the case with many
the Federal Government.
developed piecemeal in the dozens of sur-
istration and, as far as we can find out, it
earlier reports about New England's economic
These figures are not the Senator's. They
veys that have embraced this field.
has been all but deactivated since President
problems and needs?
are the Massachusetts Federation of Tax-
The Kennedy formula stresses the need
Eisenhower took over.
This column has 2 suggestions for getting
payers' Association's. And one does not
for more financial assistance to New Eng-
In connection with waterpower Mr. KEN-
the answers to these questions. The first is
have to be an Einstein to see that Massa-
land's small business. The proposal is made
NEDY urges immediate construction of the
that the Senator immediately give a sum-
chusetts, like the rest of New England, has
for permitting industries in surplus-labor
St. Lawrence project, and he asks also that
mary of his legislative program to each of
been compelled by unfair laws to drain its
areas to take advantage of faster tax write-
intensive restudy be given the Passama-
the other 39 members of the New England
own resources for the benefit of the rest of
off, an idea that has gained considerable
quoddy plan under which the immense tides
delegation in Congress. This should be done
the Nation.
popularity in Washington during recent
of the Bay of Fundy would be harnessed.
before he files a flock of bills, each bearing his
Furthermore, it would have been impos-
weeks.
Mr. KENNEDY stresses that the maximum
name as sole sponsor. He will then be in
sible for the Federal Government to siphon
Mr. KENNEDY'S program includes Federal
of local control be exercised in any program
position to invite all other members of the
away the resources of Massachusetts and
assistance for training New Englanders in
that might be set up to benefit New England.
delegation-Republicans and Democrats
New England in this manner if our own
the special skills needed in a greater indus-
Federal intervention to some degree would
alike-to join with him in sponsoring bills
congressional delegation had not been lax
trial diversity.
be inevitable, of course, since the concern is
in support of those of his proposed measures
and apathetic on many occasions when it
Old suggestions for hydroelectric develop-
a 6-State region.
of which they individually approve.
should have taken the stand which Senator
ment are revived-although nothing is said,
The proposals of the junior Senator from
Such a procedure would put his program
KENNEDY took in his first major speech in
surprisingly enough, of the more promising
Massachusetts, a Democrat, are all-inclusive.
on a nonpartisan basis. It would demon-
the upper branch of the national legislature.
possibility of cheaper electric power from
How the Eisenhower administration and
strate the Senator's sincerity of purpose. It
New England is a comparatively small part
atomic reactors.
Congress will receive them remains to be
would also give the Members of the majority
of the United States, as we have said at least
The Senator very correctly points to the
seen.
party an opportunity to prove theirs and
a thousand times in the past 20 years. The
gains New England might make through
But the Senator's premise is correct-New
insure consideration of the Kennedy pro-
combined area of our six States is much
better control of stream pollution; and he
England is relatively depressed and the
posals on their merits, in relation to the best
smaller than many single States in the West.
proposes assistance to the area's fishing in-
economic plight of so large a region is a
interests of New England. Otherwise, so in-
It is not much larger than a Texas county.
dustry, long neglected, he says, by the Fed-
matter for national attention.
tense is the partisan spirit, that bills spon-
So it is only a matter of obvious common-
eral Government.
sored only by KENNEDY the Democrat may
sense that our own self-interest requires
As the Massachusetts legislator develops
[From the North Adams (Mass.) Transcript
get short shrift at the hands of Republicans.
us to to work together in the closest pos-
his theme in speeches to be given on Wed-
of May 25, 1953]
Something of this spirit is already apparent
sible harmony and to avoid all temptation
nesday and next Monday, he will doubtless
SENATOR KENNEDY HAS PICKED UP THE BALL
in New England comment on the proposals
to engage in cut-throat competition.
add many more specific items to his list, and
contained in the first 2 installments of his
When Massachusetts prospers the whole
we shall await them with interest.
(By Dudley Harmon)
program.
New England area shares the increase in
There is not likely to be any widespread
New Englander of the week is, unques-
One of KENNEDY'S most important sugges-
industrial and employment activity. If
agreement on the whole program, and it
tionably, young, personable JOHN F. KEN-
tions is that the New England delegation in
Maine undertakes a major improvement,
may need to be tailored before It meets the
NEDY, who last November won the Senate
Congress organize itself to do a better job for
some good is bound to come across the State
satisfaction of the New England group in
seat of Republican Henry Cabot Lodge.
New England. This has long been needed,
border into New Hampshire and Massachu-
Congress, which Mr. KENNEDY believes
Mr. KENNEDY based his campaign on the
not necessarily for aggressive action, but in
setts. Any program that lifts the standard
should join ranks on regional questions.
need for something to be done in Washing-
defense of New England against State and
of living in Vermont cannot fall to be bene-
But this is a forthright start, in any event.
ton to aid industry in Massachusetts. He
area groups representing the South and West.
ficial to New Hampshire and Connecticut.
toured the industrial centers, talked with
By meeting together, members of the delega-
All this was ordained by geography long
[From the Watertown (N. Y.) Times of
managers and workers, and hired the services
tion could quickly discover which one of the
before there were any States or any country.
May 20, 1953]
of industrial engineers. Since taking his
Kennedy proposals have the approval of a
MR. KENNEDY AND NEW ENGLAND
seat in the Senate he has continued his
It is truthful and realistic consequently
majority or more. Thus, a positive New Eng-
studies with professional assistance.
to say that Senator KENNEDY is only looking
land program would be formulated, and as-
The junior Semator from Massachusetts
Now, as a freshman Senator, he has broken
at the situation as It exists and encouraging
JOHN F. KENNEDY has, in what amounts to
sured of strong support.
everybody else in New England, and espe-
precedent and in a big way. In three 2-hour
The second suggestion relates to the people
his first major speech before the Senate, out-
cially the members of the New England con-
speeches on the Senate floor he has presented
back home. Through the newspapers they
lined a program for the economic rehabilita-
gressional delegation to be equally factual
a comprehensive review of the economic mal-
have had opportunity to appraise the Ken-
tion of New England. He outlines 40 points
and practical.
adjustments of New England, accompanied
nedy program. They should encourage dis-
in all and if his analysis is as valid as 1t is
by specific proposals for their remedy and
cussion of its numerous proposals, to the end
We profoundly hope that all our Con-
thorough, it is a remarkable program in-
relief.
deed.
that not only their author, but other mem-
gressmen and Senators can be induced to
In the Nation's greatest public forum he
bers of Congress shall learn, as promptly as
give similar speeches in Washington and
Mr. HENNEDY refers at considerable length
has presented New England as a problem
possible, the views of their constituents.
thus make it plain to their law-maker col-
to the impairment of New England's status
area, as F. D. R. once termed the now boom-
A few weeks ago the New England council
leagues that New England has abandoned
as the Nation's workshop. This has come
ing South. Furthermore, he is calling on
and several chambers of commerce polled
the role of Santa Claus and intends, from
about through a gradual drift of industry.
Congress to act, by preparing some thirty-
their members on 11 national issues pending
now on, to get a square deal from Unele Sam.
principally in the textile field away from
odd bills to implement his suggestions.
in Congress. What could be more appropri-
New England and into the South.
Few will deny that in this undertaking
ate than that they now conduct polls on
[From the Woreester (Mass.) Gazette of
He says he does not ask for New England
KENNEDY has rendered distinguished service
KENNEDY'S congressional program for New
May 19, 1953]
anything that would militate against the
to New England, much as we dislike to have
England? State and local manufacturers'
MR. MENNEDY REPORTS ON NEW ENGLAND
national needs or diseriminate against any
our troubles SO effectively publicized. With
associations, statewide labor federations,
other region, but he adds that the Nation
In the first of three congressional speeches
the aid of his personal research staff, KEN-
and councils might well do the same. We
"cannot afford to ignore the economic prob-
on the subject, Senater JOHN F. KENNEDY
NEDY has operated as a one-man committee
have here a rare opportunity for business
lems of an area so vital to our national
yesterday began his outline of a program of
of New England. He has anticipated by sev-
leadership in New England to prove itself
prosperity and well-being."
257478-46779
257478-46779
FORD
GERALD
94
95
Some, perhaps many, of the KENNEDY pro-
a surprising lack of understanding of the
posals will not command the approval of the
people he represents. His proposals include
Here in Holyoke we may be understanding
Governor Herter's plan calls for a corpora-
New England business community. This will
some highly controversial olitics and some
that there is a new Mackintosh mill in
tion, privately financed, aimed at attracting
especially be the case in reference to his
which cross traditional opposition to Fed-
Clover, N. C., and that the American Thread
new industries to the State, rehabilitating
ideas about greater participation of the Fed-
eral intervention. Perhaps he will convince
workers are now buying their groceries and
and expanding existing companies and es-
eral Government in the development of our
others of the logic of his proposals, but it
supporting their churches in Connecticut.
tablishing a source of credit not otherwise
natural resources, such as water power. His
is obvious that he faces a struggle which
Acting Mayor Doherty gave a discouraging
readily available for economic development.
proposal for a system of industrial develop-
no other in his shoes has been able to
picture of passing industries in Washing-
Senator KENNEDY, discussing New Eng-
ment corporations in each Federal Reserve
overcome.
ton the other day. But President Barrett
land's economic problems in the Senate of
district will also draw fire, although a New
Thus far KENNEDY has spoken only in his
of the Holyoke Water Power Co. can tell of
the United States, said that he is intro-
England Republican, Senator FLANDERS, of
own behalf, but he has invited the cooper-
new coming industries, too. It is not all on
ducing legislation that would enable the
Vermont, has just introduced a bill of similar
ation of the New England delegation in pro-
the darker side.
establishment of regional industrial devel-
import.
moting his plan, which would be launched
Senator KENNEDY has been working on
opment corporations, seeing in them a way
Many of KENNEDY'S proposals are not new.
by establishing regional industrial corpora-
this New England picture for many months.
toward revitalizing business.
Some of them were contained in the report
tions to provide technical and other assist-
He had it in mind as he campaigned up and
Federal enabling legislation, Senator KEN-
on New England prepared for the President's
ance in stimulating new industries.
down and across the State last year. Now
NEDY said, is necessary primarily only to de-
Council of Economic Advisers by a group of
Surely New England needs attention, not
he has his program and that's more than
fine the role of the Federal Reserve banks in
New England economists. The point here is,
only from within but from the outside, which
most of the propositions presented to the
connection with the corporations and to es-
however, that KENNEDY is the first man to
of course must involve Federal legislation.
Senate have back of them. Mr. KENNEDY
tablish conditions for tax exemptions; in all
propose that something be done to give effect
Of all the points Senator KENNEDY has
says that he and his staff have been engaged
other respects, he told his colleagues, such
to these recommendations, submitted 2 years
raised, that relating to tax amortization in-
in intensive research on the economic prob-
a project would be local in its entirety.
ago. The Senator has not only picked up
centives promises the most appeal at this
lems of Massachusetts and New England
Development corporations are not new.
the ball. He intends to run with it.
time. Much of the loss of New England
since the Senate convened and that while
They date back to the years immediately
manufacturing has been due to attractive tax
Federal support is needed that is not enough
following World War I.
and labor conditions in the South.
and unnecessary Federal expenditures only
Their early growth was not spectacular
[From the Greenfield (Mass.) Recorder-
Of local interest is the Connecticut River
serve to increase our problems. We in
and their greatest impetus has come in the
Gazette of May 20, 1953)
flood-control project for which KENNEDY
Holyoke will be following the Kennedy
last half decade or SO.
THE KENNEDY PLAN
speeches with the understanding that they
proposes continued Federal appropriations.
That they have a mission-and that they
are addressed to us personally.
For this and his other projects he soon
accomplish their mission-are borne attest
The Bay State's youthful Senator JOHN
On the eve of the Kennedy speeches Gov-
J. KENNEDY has its interests at heart, but
will introduce legislation. The Senator has
by their expansion.
ernor Herter has offered his plan to finance
he faces stubborn opposition from his om-
launched a drive worth, of serious consid-
There are communities like the Cape that
small businesses. He would set up a $20
want to expand industrially to balance or
patriots as well as from many New England
eration and the cooperation of not only
million Massachusetts Development Corp. It
New Englanders but others with a take
diversify their economy. Quite frequently,
industrialists despite the fact his five-point
would be something like the Maine State
regular channels are closed to them. They
program placed before Congress this week
in keeping this area on a par with other
plan which had drawn many small indus-
must have, among other things, risk capital.
is directed toward the growth and expan-
parts of the Nation.
tries from Massachusetts including some
They must demonstrate that a favorable at-
sion of New England economy.
from Holyoke.
titude toward new industry exists.
His plan will be opposed because for the
[From the Holyoke (Mass.) Transcript of
The fund will be privately established, but
Many a small community has demon-
most part it gives the Federal Government
May 15, 1953]
it must have State permission.
strated that the development corporation is
too much power over the region. In other
MASSACHUSETTS: THERE SHE MAY COME
It will be recalled that the late Nathan P.
a means toward that successful end. It's
words, it puts Uncle Sam's thumb into the
pie which New Englanders have been trying
For a considerable time they have known
Avery had such a fund set up for Holyoke,
not the whole story; it's not a panacea, but
to restore to the six-State area.
in Washington and in our Massachusetts
the big fellows did not go into it and al-
it's good to learn that Governor Herter and
industrial centers, that Senator JOHN F.
though it had chamber of commerce favor
Senator KENNEDY are intent on putting mod-
Senator KENNEDY is an ambitious young
it was not developed. But Governor Herter
ern methods to work.
man, nevertheless, and his initial speech
KENNEDY was going to present a program to
is to be followed by two more on May 20
bring cheer to New England-Mr. KENNEDY
has 60 topflight bankers, business, and in-
will start on Monday a 3 days' or rather a
dustrial leaders of the Commonwealth in his
[From the Boston Daily Globe of May 19,
and 25, dealing with labor problems and
transportation costs. His first was a chal-
three speeches' presentation of the problems
immediate support.
1953]
that are known to all of us.
Here we have the proof that our political
SENATOR KENNEDY'S PLANS FOR NEW ENGLAND
lenge to New England to forget its pride
For the past few years our industries have
leadership is daring new patterns, inclusive
and independence and to turn to the Fed-
(By John Harriman)
eral Government for help in its hour of
been closing their doors and going into other
enough to reach the whole State. There
will be careful study of what Governor Her-
Many studies have been made of the New
need.
States where there are more favoring con-
ter and Senator KENNEDY are offering.
England economy. We have been examined
The program, however, does not involve
ditions-lower taxes, both local and State-
In fact just today there is rising spirit, and
and analyzed by experts. Economically
vast Federal monetary grants, but legisla-
fairer working conditions. Also, costs pro-
duction have been mounting. We have not
readiness to venture, that can become a
speaking, we know what makes us tick.
tive aid for federally sponsored region in-
Yesterday in the Senate, JOHN F. KENNEDY
used our great Port of Boston to its greatest
challenge of "Massachusetts: there she
dustrial development corporations to pro-
delivered the first of three speeches which
mote expansion and diversification of indus-
powers.
comes."
will sum up what the experts have discov-
try, Federal loans to promote and encour-
We have had some betterments in trans-
We can start by receiving proposed pat-
ered about us-and outline a legislative pro-
age the growth of small business, tax amor-
portation. The New Haven railroad has been
terns with the favor of careful study and as
gram aimed at solving our problems.
tization incentives to stimulate commercial
set up by the Dumaine leadership so that
much appreciation as this great State can
The subject of yesterday's speech was in-
and industrial activity, Federal development
it has brought advantages. The picture
find for them.
dustrial diversification and expansion. The
of water and other natural resources in the
there is so distressing to New York interests
problem of bolstering existing industry and
form of hydroelectric plants, flood-control
that they have tried to wrest them from us.
[From the Hyannis (Mass.) Cape Cod
relieving economic hardship will be treated
projects and the prevention of water pollu-
Our cross State highways are still inade-
Standard Times of May 20, 1953]
in two further speeches within the week.
tion and aid in the fishing industry through
quate although much money has gone into
DEVELOPMENT PLANS
A FEDERAL RESERVE FOR DEVELOPMENT
the transfer of a fair share of import duty
them. Our mill buildings are old.
Governor Herter in Boston and Senator
The most interesting of Senator KENNEDY'S
revenues for fishery research and market
Our labor situation is not discouraging.
KENNEDY in Washington have turned the
suggestions to expand and diversify indus-
development.
In fact the action of the textile unions is
spotlight of their favor on business develop-
try is his plan for regional industrial devel-
The Kennedy program thus far has some
making it possible for some of our industries
ment corporations.
opment corporations.
striking qualities, but the Senator has shown
to have new faiths.
257478-46779
257478-46779
96
He would see these corporations estab-
Quick tax writeoffs which would encourage
lished by Federal charter in any region de-
industrial expansion in areas suffering from
string them. They would be formed by the
unemployment.
regional Federal Reserve bank, which would
then sell the stock in the corporations to
Job retraining to aid workers to shift to
new industries.
banks and other financial institutions in the
area. Stock could also be bought by various
Financial and credit aid to small business.
State development agencies-such as the one
Mr. KENNEDY also outlined a program for
Go: ernor Herter is backing in this State.
development of our natural resources-water
Thus these federally established regional
and power, including a study of the tidal
agencies which the Senator has in mind
power at Passamaquoddy, and a demand that
would e privately owned within the region
we get our share of any power to be generated
they serve, and would not represent a large
on the St. Lawrence; and he has plans for
expansion of the Federal Government into
the fishing industry, which today is in much
the local picture.
need of some sort of aid.
Once set up, these regional agencies would
All in all, the Senator appears to have
act as clearinghouse (and possibly as banker)
thoroughly digested what has come to be
to all agencies and organizations working
called the New England problem, and then
for local development and diversification.
gone on to evolve an impressive program
They would, in a sense, act as a sort of
aimed at solution.
Federal Reserve to State and local develop-
ment agencies.
Business interests may not approve of cer-
They might also, according to Mr. KEN-
tain parts of this program and labor may not
NEDY, make loans or grants to their local
approve of other parts. That, of course, is
members, and they might insure or guaran-
to be expected; a program to please everyone
tee loans made either by these members or,
on all counts would be so innocuous as to be
in certain instances, by local commercial
valueless.
banks.
What Mr. KENNEDY has done is to outline
WRITEOFFS, JOB RETAINING, AND QUODDY
broadly a path which can be more closely
Other measures urged to benefit New Eng-
defined by future compromise and agree-
land in the Senator's speech yesterday in-
ment. It is a path which could lead us to
clude:
easier and more prosperous days.
257478-46779
U. 3. GOVERNMENT PRINTING OFFICE: 1953
&
FORD
RALD
LIBRARY
"WHICH WAY FOR INDUSTRY NORTH OR SOUTH?"
"America's Town Meeting of the Air"
May 25, 1954 - Jacksonville, Florida
Background Questions
1. Is there a trend of industrial migration from the North to the South? If so,
what industries are primarily involved?
a. Has this been a fairly recent economic development? Or, has it been going
on for many years?
b. Have whole industries just packed up and moved? Or, do firms start the
shift by opening plants in both the North and South and gradually abandoning
their Northern operations as their Southern plants prosper?
2. Evaluate the famous Hatters' strike in South Norwalk, Connecticut. Is the
battle over "the runaway shop" realistic?
a. Was the union justified in demanding a 3-year guarantee that the company
would not wipe out the jobs of any of its South Norwalk employees by moving
its operation South or West?
b, Would it be possible for a united effort of labor and management to over-
come those elements of costs which lure concerns to relatively undeveloped
areas?
C. If the Hatters' strike does not represent a sound economic approach to the
problem, is it at least indicative of the tremendous social hardship and
unrest caused by industrial migration?
3. What basic reasons are there for a southward trend of industry?
a. Is it true that many Northern areas (e.g. New England) are entering a normal
stage of economic maturity or decline?
b. Is it true that the South, once referred to as the nation's "No. 1 economic
problem", has now become the nation's "No. 1 opportunity"?
C. To what extent is any southward trend of industry the result of natural
advantages possessed by the South? Or -- normal economic processes and
competition?
d. To what extent has industrial migration taken place for causes other than
normal competition and natural advantages?
e. Has Gov't intervention or the influence of federal programs played any part
in creating, accelerating or retarding this trend?
4. Senator John Kennedy of Mass. recently expressed particular concern about the
cost differential which he claims is caused in part by unfair or substandard
practices and conditions. Do you agree?
5. Evaluate the following unfair practices he cites - - -
-
substandard wages
low and inadequate pensions and fringe benefits
inadequate Federal standards for social security and unemployment compensa-
tion
disproportionate grants of federal tax amortization benefits to Southern
plants
discrimination of federal transportation rates against New England
6. Evaluate Sen. Kennedy's charge that the "most obviously unfair inducements
offered to those considering migration is the tax-free plant built by a
Southern community with the proceeds of federally tax exempt municipal bonds."
7. The Senator also claims that "In the South unionization of competing plants
has been virtually halted since enactment of the Taft-Hartley law." Do you
agree?
folorey
8. Will artificial or substandard inducements to industrial migration harm the South
more than it helps it? Will it tend to bring weak industries and hit-and-miss
industrial development?
GERALE ORD LIBRARY
9. Prof. Seymour E. Harris, economist, recently stated that in a dynamic economy
"some regions are bound to grow more rapidly than others, and in the process
to capture some of the industries of the older regions." Do you agree? Is
this trend an inevitable process?
10. He stated further that "all that the older regions can ask is that the transition
be eased as much as possible; and above all that they should not be made more
difficult." Do you agree?
11. Have the war and large military and other Gov't outlays obscured the extent of
the adjustment problem facing both North and South?
12. Evaluate Pres. Eisenhower's memorandum of December 29, 1953 which provided -
A "set aside" of 20 to 30 percent of the defense materials purchased to
"surplus labor" communities able to "meet the prices established through
the competitive buying procedure"
An information program to keep concerns in surplus labor areas fully in-
formed on defense contract opportunities.
Provisions for award of any contracts to companies in economically depressed
areas in event of tie bids or offers from concerns outside the "set aside"
classifications.
"Technical help to areas attempting to attract new industries."
Easier write-off provisions for capital investment relating to defense
production.
Encouragement of prime contractors to sub-contract to concerns in areas
of large unemployment.
13. Is Sen. Maybank correct in stating that implementation of this policy would
make a mockery out of the competitive bidding system?
14. Is Sen. Saltonstall correct in saying that the new policy does not go far
enough in diverting orders to distressed areas?
15. What other action can the federal government take to alleviate economic distress
due to the migration of industry?
a. Can the federal government aid expansion and diversification of industry in
older areas to replace industries lost through migration?
b. What types of loans and assistance can be granted - especially to small
businesses?
C. Should the federal gov't assume responsibility for retraining unemployed
industrial workers?
d. Can the federal gov't help in the development of natural resources?
e. Should provisions for tax amortization benefits for industries expanding
in areas of chronic unemployment be more lenient? Can tax lcopholes be
closed to give equal advantages to all regions?
f. Should increased security for jobless and aged who are victims of industrial
dislocation be granted?
16. Gov. Lodge of Conn. recently commented "the manufacturer who moves from New
England or from anywhere in the Northeast into a less developed region with the
thought of obtaining lower labor costs
finds that it is not long before
competition raises the cost of living in the new community so that his new
workers will need wage scales comparable to those now enjoyed by the labor of
this area." Do you agree with this evaluation?
a. Will interregional cost differences tend to work themselves out in the
long run?
b. Are full employment, a deversified economy, etc. for the nation as a whole,
necessarily incompatible with the economic health of any one of its regions?
GERALD FORD LIBRARY
17 May 1954
CORPS OF ENGINEERS
CIVIL FUNCTIONS APPROPRIATIONS FOR CONSTRUCTION
BY STATES FISCAL YEARS 1946-1954 (INCLUSIVE)
Appropriations
State
F.Y. 1946-1954
Alaska
$ 4,379,400
Alabama
29,407,000
Arizona
771,000
Arkansas
116,638,000
California
232,398,600
Colorado
18,722,000
Connecticut
13,799,700
Delaware
1,085,000
District of Columbia
791,000
Florida
50,317,900
Georgia
97,825,700
Hawaii
--
Idaho
44,322,000
Illinois
96,989,200
Indiana
21,985,000
Iowa
32,422,200
Kansas
64,950,300
Kentucky
137,516,000
Louisiana
44,669,000
Maine
1,735,000
Maryland
10,484,900
Massachusetts
11,342,500
Michigan
17,240,200
Minnesota
17,679,200
5,522,300
99,435,400
Mississippi Missouri Ohio Montana Nebraska Nevada York
12,517,500
77,085,300
--
New Hampshire
2,536,000
New Jersey
13,337,800
New Mexico
4,978,000
New
82,624,700
North Carolina
45,429,500
North Dakota
217,680,000
59,323,500
Oklahoma
100,444,000
Oregon
321,979,200
Pennsylvania
108,061,800
Puerto Rico
I
FORD is LIBRARY GERALD
Appropriations
State
F.Y. 1946-1954
Rhode Island
513,500
South Carolina
41,844,600
South Dakota
190,707,000
Tennessee
81,033,000
Texas
180,347,300
Utah
708,000
Vermont
4,324,000
Virginia
66,211,100
Washington
241,281,500
West Virginia
37,150,200
Wisconsin
148,600
Wyoming
I
TOTAL
$3,062,694,600
Note: In addition to the above, $371,391,000 has been
appropriated for construction of the project,
Mississippi River and Tributaries located in
Missouri, Illinois, Kentucky, Arkansas, Tennessee,
Mississippi, and Louisiana. A breakdown by states
is not readily available.
2
Should Industry Move South?
By JOHN O. TOMB
VE RI TAS
REPRINTED FROM
HARVARD BUSINESS REVIEW
SEPTEMBER-OCTOBER 1953
FORD & LIBRARY GERALD j
Edited under the direction of the Faculty of
HARVARD
THE GRADUATE SCHOOL OF BUSINESS
ADMINISTRATION, HARVARD UNIVERSITY
EDITORIAL BOARD
HOWARD T. LEWIS, Chairman
Business
KENNETH R. ANDREWS BERTRAND Fox
GEORGE P. BAKER EDMUND P. LEARNED
CHARLES A. BLISS MYLES L. MACE
DONALD T. CLARK MALCOLM P. McNAIR
Review
FRANKLIN E. FOLTS ROBERT L. MASSON
STANLEY F. TEELE
September-October 1953
Vol. 31, No. 5
EDITOR
EDWARD C. BURSK
ARTICLES
Associate Editor: JOHN F. CHAPMAN
Organizing for Defense
29
Assistant Editor: DAVID W. EWING
Eugene S. Duffield
Managing Editor: VIRGINIA B. FALES
Management Communication and the Grapevine
43
Advertising Director: ROGER B. KENT
Advertising Manager: JAMES L. STOLTZFUS
Keith Davis
Business Manager: T. K. WORTHINGTON
Public Relations Down to Earth
50
Circulation Manager: AGNES M. JORDAN
J. A. R. Pimlott
Address all communications, including manu-
How to Design the Salesman's Compensation Plan
61
scripts, to Harvard Business Review, Soldiers
Harry R. Tosdal
Field, Boston 63, Mass. Telephone: KIrkland
7-9800.
A Program for Cost Reduction
71
Reprints of all articles and features in this
Bruce Payne
issue, as well as most previous issues, are avail-
Should Industry Move South?
83
able. Information on request from Business
John O. Tomb
Office at above address.
A Volume Index to the Review is published
Coordinating Procurement: A Case Study
91
annually with the November-December issue.
Howard T. Lewis
The contents are currently indexed in The
Profitable Inventory Levels
IOI
Industrial Arts Index.
F. Beaman Todd and Irving Scharf
VEHRI ITAS
Industry Calls in the Doctor
109
Robert Collier Page
Plan Your Retirement Activities Early
118
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PRINTED IN U.S.A.
and opinions in its columns.
J
GERALD FOND LIBRARY
From In This Issue
John O. Tomb
When, a short while ago, one
of its clients in the North was
considering whether or not to
Should Industry
move south, McKinsey & Com-
pany, Management Consultants,
assigned John O. Tomb, one of
Move South?
its associates, to study the pros
and cons of the proposed move.
Mr. Tomb's findings were a sur-
prise to him personally as well as
to many other people: (1) In some
This article is the outgrowth of a location study made for a
localities the traditional North-
northern manufacturer. Initial thinking corresponded to the popu-
South cost differentials were nar-
lar notion that operating costs would be lower in the South. But as
rowing fast, and in others they
had even disappeared; (2) some
facts accumulated, a number of surprises developed.
of the advantages usually cited
were due not to the change in
location but to better manage-
ment, improved product lines, and
By John O. Tomb
Very few manufacturers are fortunate enough to
so on; (3) the expenses of relocat-
have similar northern and southern operations
ing were much more difficult to
The grass on the other side of the fence looks
which permit the development of comparative
recoup than usually realized.
exceedingly green to many a manufacturer as he
cost data. Usually a manufacturer faced with the
Following his report to the
watches the ascending curve on the cost chart
relocation question winds up by trying to syn-
client, Mr. Tomb decided to ex-
and mails another check to the tax collector.
thesize costs at one or more prospective locations.
plore the subject further because
Why not, he asks himself, move to a more ad-
Whether direct cost comparisons or synthetic
of the wide public interest in it.
vantageous location. This usually means moving
data are used, the approach needs to be more
He continued his talks with peo-
South; for in recent years that has been the trend,
than historical. It is necessary to project current
ple who had done other plant
and in many cases with good reason. So let us
costs and trends into the future, not only for
relocation studies, with business
be specific, even though the basic question and
alternative locations, in the South and elsewhere
executives of companies having
the conclusions to be drawn are much broader.
in the North, but also for the present location.
northern and southern plants,
Perhaps the executive has seen figures indicat-
Executives who go to the expense, often more
with tax specialists, labor leaders,
ing that labor is cheaper in the South. Climatic
substantial than they realize, of uprooting and
economists, and bankers. He
conditions there are supposed to permit more
of transplanting existing organizations without
checked more literature and sta-
simple and less expensive construction. Then
fully appraising future conditions may be in for
tistics. Now he answers his own
there is the element of taxes, both state and local,
a rude awakening.
question, Should Industry Move
which supposedly favor industry there. Power
Plant relocation is no longer the open-and-
South? with a series of further,
costs may be cheaper, too. Sometimes raw ma-
shut case which many people have assumed it to
more searching questions, appli-
terials are more readily available. And frequently
be. Management may find, after careful study,
cable to relocation in any section
a municipal development corporation will float
that this particular city or that particular town
of the country.
tax-free issues to finance the cost of facilities
offers real cost advantages. And it may well be
Mr. Tomb is in the Chicago
needed. In other words, it looks as though a
true that the number of advantageous locations
office of McKinsey & Company.
move south would soon be paid for and profit
that can be thus pinpointed is still greater in the
He was formerly associated with
margins increased.
South than in the North. As a section, however,
the firm's Boston office and, be-
But almost every executive faced with the
the South no longer offers a guarantee of lower
fore that, with a New York manu-
question of moving south - or anywhere else --
costs than the North. In the many localities of
facturer as Secretary-Treasurer.
requires more than generalities like the above.
the South where costs are close to or on a par
He needs to know what relocation would mean
with costs in many northern cities, it has be-
to his company in terms of actual dollar profits.
come increasingly difficult to recoup the sub-
83
Should Industry Move South? 85
84 Harvard Business Review
stantial outlay which is involved in a relocation
with a wage differential of "about 10%." After a
cities range from 80% to 101%, which is very
efits. Sometimes these concessions are prompted
detailed study, however, the company concluded
close to the national figure.⁴
by a desire to avoid unionization. In at least one
program. In this article I want to explore the factors
that it (should not assume that any substantial dif-
(4) Even in the area of direct labor, traditional
case, pension benefits "voluntarily" provided in
ferential in wages would continue to exist for more
concepts of North-South pay differentials may re-
the South by management involve a higher cost
that management should appraise in consider-
than five years after a plant had been established
than contracts negotiated by the company with
ing relocation in the South. I shall focus par-
in the South
EXHIBIT I. PERCENTAGE OF EMPLOYEES UNDER
labor unions in the North.
ticularly on the factors involving cost, such as
This viewpoint has been confirmed more recently
VARIOUS BENEFIT PLANS
This does not appear to be an isolated case. A
labor rates, taxes, and capital expenses, because
by executives of companies with northern and
recent appraisal of fringe-benefit coverage in 20
Paid
Year-end
Health
the usual purpose of relocation is to lower oper-
southern operations. In general, they visualize a
sick leave
bonus
insurance
cities indicates that some leading southern com-
steady narrowing of wage differentials. More than
City
Office
Plant
Office
Plant
Office
Plant
munities have approached or even surpassed rep-
ating costs for the existing volume of produc-
one such organization has backed up the opinions
Boston
38%
9%
30%
25%
74%
76%
resentative northern localities in the percentage of
tion. There may, of course, be secondary ob-
of its executives by making substantial investments
Buffalo
30
8
29
19
65
66
employees covered by benefit plans. As EXHIBIT I
jectives in relocation - for example, to expand
in the modernization of northern properties in the
Trenton
30
2
33
28
76
68
indicates, this is true of Atlanta, Norfolk, Richmond
operations, serve the market more effectively, or
Scranton
33
6
48
39
53
66
tap new sources of materials. These are more
past few years.
Richmond
I9
6
43
48
and New Orleans with respect to bonus payments
41
30
(2) The more recent experience of a soft-goods
New Orleans 23
I2
57
38
39
31
and paid sick leave for plant employees.
likely to be of importance in locating a new
manufacturer tends to confirm this conclusion.
Atlanta
34
19
41
43
48
57
Of course these figures do not show the amount
plant, however, and have already been examined
The labor-cost differentials between northern and
Norfolk
14
9
39
37
65
58
or the cost of fringe-benefit coverage, which is
competently in connection with that subject.¹
southern operations of this company were so big
SOURCE: U.S. Bureau of Labor Statistics, Wages and
what counts. At the same time they illustrate the
that the profit margin of its southern plants was
Related Benefits, 40 Labor Markets, 1951-1952, Bulletin
fallacy of generalizing that fringe benefits are not
nearly twice that of the northern plants. These
No. 1113 (Washington, Government Printing Office,
a substantial factor in the South. Again, the only
Labor- Costs
differentials were due in part to the fact that
1952), pp. 54, 55, 57.
safe guide is careful, location-by-location analysis.
one substantial element of labor cost in the South
(6) More than one labor group has set its sights
In many cases the prospect of lower labor
costs alone has dominated and determined de-
was only one-half the corresponding northern cost.
quire re-examination. For example, average hourly
upon the South as the country's largest single area
At least, that was the case up through 1951. By
earnings of production workers in manufacturing
of potential union members. If organizing drives
cisions to move south. There is no denying,
1953, however, the change in the labor climate
industries in Birmingham and Memphis during
move into higher gear, it is possible that a period
either, that manufacturers who capitalized in
had caused the difference in this element of labor
March 1952 exceeded the pay levels of Manchester,
of unfavorable union-management relations could
years past upon the economic immaturity of the
cost to disappear entirely.
New Hampshire; Portland, Maine; and Lancaster
develop. By contrast, many northern areas have
South profited handsomely.
(3) A recent study for a manufacturing concern
and York, Pennsylvania. The Birmingham and
passed through the birth pangs of unionization
Today, however, the economy of the South
with northern and southern mills revealed that
Memphis figures were $1.51 and $1.44 per hour
and have now arrived at a more mature basis for
is expanding rapidly. For example, the sales of
50% of the indirect personnel in the southern
compared with $1.41, $1.34, $1.43, and $1.37
collective bargaining negotiations.
goods manufactured in the 12 southeastern
plants received higher pay than their counterparts
for the respective northern cities. The fact that
(7) Clerical pay rates in some southern com-
states rose 115% from 1939 to 1951 compared
in the northern mills. (The indirect personnel in-
with a nationwide increase of only 86%. Dur-
cluded supervisors and clerical and technical em-
EXHIBIT II. AVERAGE WEEKLY EARNINGS OF CLERICAL WORKERS IN THE INSURANCE CARRIER INDUSTRY
ing the same period construction in the South
ployees in service departments.) The differentials
increased by 268%, while the national average
by which southern rates exceeded the northern
Birm-
Phila-
Atlanta
ingham
Houston
Boston
Buffalo
delphia
were sizable; some approached 20%.
Position
3/52
4/52
1/52
4/52
1/52
10/51
rose but 183%. And as much as 80% of the
This condition is not unique. Higher rates of
Clerks, Acounting
$45.00
$43.50
$48.50
$43.50
-
$40.50
scheduled expansion of the pulp and paper in-
pay in the South have characterized more than one
Clerks, File, Class A
42.00
41.00
-
41.50
-
41.00
dustry and 50% of the scheduled expansion of
category of skilled workers.3 Since in many organ-
Clerks, File, Class B
34.00
34.50
34.00
$33.00
33.00
the chemical industry are centered in the South.2
Stenographers, General
44.50
42.00
48.00
40.50
41.00
izations these workers (often classified as indirect
39.50
Typists, Class B
36.50
37.00
38.50
36.50
33.00
36.00
As a result, the South's once plentiful supply
personnel) account for a substantial portion of total
of labor is diminishing. Increasing competition
payroll, wage comparisons based only upon the pay
SOURCE: "Average Weekly Earnings for Selected Occupations in the Insurance Carrier Industry," Monthly Labor Review,
October 1952, pp. 420-421.
in the labor market, in turn, is being reflected
levels of direct workers can be dangerously mislead-
in higher pay rates, lower productivity, and
ing. In fact, because the differences in wage scales
added fringe benefits, among other things. Rel-
of high-paid and low-paid workers are greater in
there are many northern localities with higher pay
munities actually exceed the levels existing in
ative North-South positions in regard to these
the South than elsewhere, it is not safe to use gen-
scales (e.g., Duluth, Minnesota, with $1.70), as
northern cities. Average weekly salaries for clerical
factors can be reversed or altered very quickly,
eralizations favorable or unfavorable to the South
well as many southern localities with lower pay
jobs in Atlanta, Birmingham, and Houston are
even within a year's time; some have been
based upon figures for any one category of workers.
scales (e.g., Charleston, South Carolina, with
higher than those of Boston, Buffalo, or Philadel-
Thus, 10 southern cities selected for study by the
$1.16), is beside the point. What I am trying to
phia. EXHIBIT II shows the figures for the insur-
already. For example:
Bureau of Labor Statistics show pay levels for un-
bring out is the danger of unquestioningly accept-
ance carrier industry.
(1) When, a few years ago, a large textile ma-
skilled janitor, shipping, and warehouse jobs rang-
ing the concept that locating a plant in the South
(8) There is also the other side of the labor-
ing from 60% to 78% (New York City = 100%),
practically guarantees lower rates of pay than in
chinery manufacturer faced the problem of rebuild-
cost picture. What is happening to work loads, pay
ing its plants in their present northern location or
which is the lowest for any geographic section; but
the North.
rates, and so forth in the North? The work-load
the levels for skilled maintenance jobs in the same
(5) More and more southern managements now
increases and pay cuts resulting from arbitration
relocating them in the South, the South was favored
recognize the desirability of liberalizing fringe ben-
proceedings in many northern hosiery and textile
1 For example, see Robert M. Atkins, "A Program for
2See William H. Doty, "The Southern Picture," The
Locating the New Plant," HARVARD BUSINESS REVIEW,
Spectator, August 1952, pp. 44-45.
U.S. Bureau of Labor Statistics, Wage Differentials
"Hours and Gross Earnings of Production Workers in
November-December 1952, p. 113; and National Indus-
8 See Norman J. Samuels, "Patterns of Wage Variations
and Rate Structures among 40 Labor Markets (Washing-
Manufacturing Industries," Monthly Labor Review, June
trial Conference Board, Techniques of Plant Location,
in the United States, 1951-1952," Personnel, September
ton, Government Printing Office, June 1953), pp. 3, 5.
1952, pp. 741-746.
Studies in Business Policy, No. 61 (New York, 1953).
1952, pp. 158-169.
86 Harvard Business Review
Should Industry Move South? 87
concerns during 1952 have been well publicized.
begin with, he foresaw (a) a slow but steady
issued last year by the University of North Caro-
$85,548 for the furniture organization. The dif-
The principal argument for these pay reductions
rise in southern wage rates because of the com-
lina.⁸ This study analyzed the state and local tax
ference between the low and high tax totals rep-
was to lessen the North-South wage differential.
petition of nontextile plants which have been
position of specific hosiery and furniture concerns
resented 1.56% of sales for the hosiery concern
In at least one case, work loads were increased by
opening up in the South and (b) a stabilization,
in both urban and rural areas. Unemployment
and 1.88% for the furniture company - almost
as much as 100%. To be sure, corrections of this
and possibly a decline, in northern wage rates.
taxes were excluded.
as much as their 1951 median profit margins of
sort are happening principally in New England,
In addition, he cited many examples to support
From balance sheet and profit and loss informa-
only 2.26% and 2.77% respectively.⁸ These fig-
but then this is the area most often cited when
tion filed with the State of North Carolina by the
ures hardly suggest that profit improvement from
comparisons are made to show the advantages of
his belief that northern plants can be as produc-
hosiery and furniture companies, hypothetical tax
lower taxes would result from locating at random
relocation in the South from a labor-cost viewpoint.
tive as any others, that with good engineering
bills were developed for 96 localities in 19 states.
in the South.
(9) In workmen's compensation costs, the evi-
methods and research and development staffs
Computation of local taxes was based upon pub-
2. Comparison of selected cities - In 1951
dence indicates that the gap between many north-
they can meet competition from anyone, includ-
lished tax data supplemented by the assistance of
the Massachusetts Commission on Taxation com-
ern and southern states has already been largely
ing the South.
taxing officials. The state tax bills were computed
puted the real estate, property, income, and capital
closed. The highest cost states, to be sure, seem to
I think that his second point, as well as his
by applying the tax rates of each of the 19 states to
be New York, Massachusetts, and New Jersey; yet
first, was well taken. Some northern companies
the actual balance sheet and income statement of
EXHIBIT IV. RELATIVE TAX LOADS FOR SELECTED
the heavily industrialized states of Illinois, Michi-
have run into difficulty not because they are
each company.
MANUFACTURING CORPORATIONS OPERATING IN
gan, and Indiana are very close to Virginia and
According to the hypothetical tax bills thus de-
DIFFERENT LOCALITIES
located in the North but, in the final analysis,
Alabama, and as a matter of fact lower than Texas,
because they have failed to keep up with com-
veloped for each company at median-tax cities and
(Massachusetts = 100)
Missouri, and Maryland; while Pennsylvania has
them all beaten. The average rate of cost per $100
petition in the concepts and techniques of mod-
rural sites, prevailing concepts about relative tax
of payroll, according to a study published last
ern management. Management's desire in such
loads are far from correct. (See EXHIBIT III.)
year,6 is as follows for 14 states:
cases to start over in the South with a clean slate
EXHIBIT III. RANK OF STATE AND LOCAL TAX
Philadelphia
South Bend
is a laudable one; and, if it follows up with ef-
Buffalo
Charlotte
New Haven
Paterson
Lansing
BILLS COMPUTED FOR SELECTED HOSIERY AND
Kind of tax
New York
$1.505
Maryland
$0.539
0.482
fective new policies, the chances are good that
FURNITURE CORPORATIONS AT MEDIAN-TAX
Massachusetts 1.103
Illinois
Real estate
9°
43
127
64
95
99
65
Michigan
it will succeed where previously it failed - not
CITIES
New Jersey
0.823
Property
90
204
127
182
0.444
311
277
296
Texas
Indiana
so much because of the move south as because
(Lowest tax bill ranked as one)
Income and capital
66
8
0.778
54
78
0.433
29
4
16
Wisconsin
Virginia
Median
71
80
0.741
0.390
71
113
104
68
97
Connecticut
0.720
Alabama
0.356
of the new management approach. And that can
Hosiery
Furniture
Rank
Missouri
0.624
Pennsylvania
work wonders equally well in the North.
company
company
SOURCE: Report of the Special Commission on Taxa-
0.320
I
Ohio
Ohio
tion, Part IV, The Comparative Impact of Corporate
The narrowness of the gap between the II states
2
Michigan
Kentucky
Taxes in Massachusetts, June 1951, p. 10.
beginning with New Jersey and ending with Ala-
Tax Levels
3
Indiana
Virginia
4
Kentucky
Pennsylvania
bama can be seen from the fact that the dollar dif-
taxes that 20 Bay State manufacturing corpora-
5
Louisiana
ference for a $1,000,000 payroll would be only
High tax rates, especially in some New Eng-
Michigan
6
New York
New York
tions would have had to pay in 1950 in various
$4,670 annually, or less than ½ of I %.
land states, have been an often-quoted argu-
7
Tennessee
South Carolina
northern cities and in Charlotte, North Carolina.
However, the cost comparisons above reflect a
ment for the relocation of operations. In 1949
8
Massachusetts
Alabama
(The particular cities studied were chosen because
9
Connecticut
Massachusetts
weighting of 45 classifications, and so they do not
the Federal Reserve Bank of Boston questioned
industrial opportunities and conditions in them
IO
New Jersey
Louisiana
necessarily afford a fair picture for any one firm.
663 New England manufacturers about the ad-
were deemed comparable to those found in Massa-
II
Alabama
Indiana
Moving from any of the northern states on the
vantages and disadvantages of their operations.
I2
Pennsylvania
North Carolina
chusetts.) The Commission found that three-
list to any of the southern states might save either
I3
Virginia
Tennessee
fourths of the corporations in the sample would
In listing the advantages and disadvantages of
more or less in workmen's compensation costs than
14
Georgia
Georgia
face higher tax bills in Charlotte than in Massa-
doing business in Massachusetts, most of the
15
South Carolina
Connecticut
the figures indicate.
chusetts, and that the tax load in Charlotte ex-
Bay State manufacturers regarded state and
16
North Carolina
Arkansas
17
Illinois
Illinois
ceeded the estimated tax of Philadelphia, South
Summing up, while there are many localities
local taxes as the leading competitive disadvan-
18
Arkansas
Mississippi
Bend, Buffalo, Paterson, and Lansing by substan-
in the South where labor costs are still low com-
tage.⁷ A similar feeling is shared to a lesser but
19
Mississippi
New Jersey
tial amounts. These calculations, summarized in
pared to the North, the number of such local-
still important extent by some of the manufac-
SOURCE: Joe Summers Floyd, Jr., Effects of Taxation
EXHIBIT IV, are before any allowance for the
ities is decreasing. Moreover, even where labor
turers in other areas of the North.
on Industrial Location (Chapel Hill, The University of
higher assessed values that would be involved in
North Carolina Press, 1952), p. 80.
the construction of new plants at today's prices.
costs are low now, there is always the possibility
Income and Property Taxes
to be taken into account that the advantage may
Two studies, one made by a southern univer-
Northern states such as Ohio and Michigan ap-
Unemployment Taxes
be lost by the time a new plant is built or an old
pear consistently as low tax states, while such
one bought and remodeled, for in many areas
sity and the other by a northern state, indicate
Both of the tax studies discussed above ex-
southern states as Arkansas, Georgia, and Missis-
the cost trend is moving upward.
that, contrary to popular opinion, southern loca-
sippi turn up as high tax areas. Seven of the ten
clude unemployment compensation levies. Al-
A short while ago I talked about this plant
tions do not always have the advantage of lower
lowest tax states for the hosiery company and five
leged unemployment tax differentials, favorable
relocation business to a leading labor union
income and property taxes:
for the furniture company are north of the Mason-
to the South, have been the subject of heated
executive who is especially well informed on the
Dixon line.
discussion in some northern areas. Once again,
1. Comparison of states - A comprehensive
subject. His observations were interesting. To
study of the impact of taxation in I9 states was
The tax bills ranged from $7,481 to $38,843
however, the South's traditionally favorable po-
for the hosiery company and from $24,165 to
sition loses some of its margin under closer in-
John L. Train, "Workmen's Compensation Costs and
? Federal Reserve Bank of Boston, "The Comparative
Experience in New York State - A Basic Problem," The
Tax Study as a Guide for Corporation Tax Policy: A
8 Joe Summers Floyd, Jr., Effects of Taxation on In-
9"14 Important Ratios for 36 Manufacturing Lines,"
Monitor (official publication of Associated Industries of
Massachusetts Experience," Monthly Review, December
dustrial Location (Chapel Hill, The University of North
Dun's Review, December 1952, p. 29.
New York State, Inc.), October 1952.
1951,p.8.
Carolina Press, 1952).
FORD
GERALD
88 Harvard Business Review
Should Industry Move South? 89
vestigation. EXHIBIT V shows the average em-
ployer contribution rate for unemployment
Costs of Relocating
(1) It is first necessary to train a force of super-
tance of carefully calculating them in advance.
visors at the operating level. This involves either
When this is done, the results may be surprising.
insurance in various states during I949.
Labor costs and taxes usually receive most of
transporting present supervisors to the new loca-
For example:
Four of the five lowest rates are in highly in-
the attention in discussions of the advantages
tion and housing them while new supervisors are
dustrialized northern states; six of the ten
and disadvantages of moving south, but they are
being trained or, preferably, bringing the new
A thorough study by one company disclosed that
lowest rates are in northern states. While there
by no means the whole story. There are also
supervisors to the present plant. If the training
a period of I2 to 20 months would be needed
process is at all involved, travel and housing costs
before capacity operations could be attained at the
the costs of building the new facilities, of mov-
ing people and machines, of obtaining auxiliary
can become substantial. At best, a temporary dupli-
new location. In addition, about 4 more years
EXHIBIT V. AVERAGE EMPLOYER CONTRIBUTION
RATE FOR UNEMPLOYMENT INSURANCE
services, and many others.
cation of payroll costs results.
would be required to recover the one-time costs
(2) Once a nucleus of supervisors is available
incurred in moving and building up a new organ-
Per cent of
State
Construction Costs
at the new location, recruiting and training the
ization. In other words, management could not
total taxable wages
work force can begin. This may involve a cost of
hope to make an additional dollar of profit for the
Connecticut
0.7%
Indiana
In view of the earlier discussion of labor costs,
$250 or more per employee. This item alone can
owners of the business until more than 5 years had
0.7
Ohio
it is perhaps not too surprising that construction
represent a sizable expense.
elapsed. And any further narrowing of the his-
0.7
Virginia
costs are not so low in the South as many people
torical differential between northern and southern
0.7
(3) Termination pay for employees left behind
Pennsylvania
0.9
believe. In one recent case involving simple
at the old location can also represent a substantial
operations during this build-up period could defer
Illinois
I.O
Alabama
I.I
mill construction, they were practically equal
outlay - especially when alternative opportuni-
considerably the expected improvement in profits.
New Jersey
I.I
to northern costs for comparable property.
ties for employment are not readily available.
This is not an argument against relocating -
South Carolina
I.I
Whatever the southern cost, it will be far
Arkansas
1.2
in the South or elsewhere - but only a re-
Georgia
1.2
above the cost at which existing northern mills
A relocation move usually will be made by
minder that the cost advantages must be positive
Mississippi
1.3
were constructed. To illustrate the impact of
stages if operating conditions permit. In this
and sizable before the move is justified.
Tennessee
1.3
this fact in terms of depreciation alone:
case, the work force can be gradually reduced
Massachusetts
1.4
North Carolina
A large northern concern has recently investi-
in the old location to offset expansion at the
1.4
Kentucky
1.6
gated the possibility of relocation in the South. The
new (though perhaps with some difficulty be-
Availability of Management
Louisiana
1.6
Michigan
1.8
company's present depreciation on buildings totals
cause of seniority rules). The same flexibility is
The soundness and vigor of an industrial
New York
seldom attainable, however, with plant facili-
I.9
only $50,000 annually. These buildings are old,
organization is largely determined by the caliber
but they have been kept up and management con-
ties. This means that until the old plant can be
SOURCE: Facts and Figures on Government Finance,
of its management. Replenishing the reservoir
1950-1951 (New York, The Tax Foundation, 1950),
siders them perfectly adequate. Replacement of
closed and disposed of, there will be a duplica-
pp. 208-209.
these buildings in the South has been estimated
of competent executives is a very real problem
tion in depreciation, upkeep, protection, and
to cost $35,000,000. Assuming a 2% deprecia-
for most industrial concerns today. This prob-
other overhead charges.
tion rate, annual depreciation would increase to
lem can be made doubly difficult by a decision
is not complete correlation, the high tax states
During a relocation move, customer service
according to the study of the hosiery and furni-
$700,000 - or 14 times the present rate.
to relocate operations in a community which
frequently suffers. In those cases where dif-
lacks adequate access to educational, cultur-
ture concerns (EXHIBIT III) are also the states
In addition, of course, state and local property
ferentials in labor cost dominate the choice of a
al, professional, and recreational facilities. Of
with high unemployment tax rates. Of course,
taxes, even at lower rates, would tend to be much
new location unduly, speed of delivery from
course, there are many communities of this kind
these unemployment tax figures reflect average
heavier on a new southern plant than on older
the new site may be slower. The cost of poor
in the North as well as the South, and so what
rates for all employers in each state; the effective
buildings valued at a fraction of that figure.
service is difficult to measure. In normal times,
I shall have to say applies to intrasectional moves
tax rate for individual concerns could differ
Amortization and interest on the funds employed
however, poor service may be translated into
as well as intersectional. If the problem has
from the averages in accordance with actual
in construction of the new buildings should also
lost sales - either present or future.
been particularly acute in the latter case, it is
experience under merit-rating programs.
be allowed for, even if an industrial develop-
An equally important factor in relocation
probably because managements have tended to
ment corporation or some similar agency pro-
costs is the prompt availability of auxiliary serv-
overlook the social factors in their enthusiasm
Future Levels
vides the plant. In the case above, for example,
ices - especially for the repair and mainten-
for the economic.
The foregoing comments reflect comparisons
management estimates the increase in these
ance of machinery and equipment (including
Judging by past experience, a company is not
based on recent tax rates. Any plant relocation
additional carrying charges to be more than
office machines). Will such service be available
unlikely to find it difficult to retain key personnel
appraisal should also consider the future impact
$2,000,000. Such an increase obviously makes
at almost a moment's notice, or will it be neces-
after operations are moved south. Here are the
of the need for expanded community facilities
it more difficult for management to justify re-
sary to wait a day or more for an essential piece
kinds of thing that may happen:
in the South. Southern states have a larger pro-
location on the basis of lower operating costs.
of equipment to be put back into operation?
portion of school age children and correspond-
This is an important question when equipment
(1) One concern was forced to recall its plant
Transferring Operations
ingly larger needs for educational funds.¹⁰
is being set up after a move of possibly a
manager because his "Yankee temperament" did
In addition, as southern cities and towns grow
The expense involved in transferring opera-
thousand miles or more. And what about the
not blend effectively with the southern workers.
with the expansion of industrial activity, every-
tions to a new location is often much greater than
availability of other auxiliary services, such
(2) Key employees of a large plastics manufac-
management estimates. Some costs are antici-
turer found that living conditions in their new
one will want and need more housing, hospitals,
as vendors' representatives, research facilities,
southern home did not compare favorably with
roads, and soon. These will have to be provided
pated easily enough - for example, the cost of
transportation, or educational facilities for em-
those they had left in the North. The result was
at today's higher cost levels.
moving and installing equipment. But moving
ployee training programs?
an expensive turnover in experienced personnel.
or "installing" personnel presents a much more
There are other relocation costs, but enough
(3) Somewhat more personal is the experience
10 Joe Summers Floyd, Jr., op. cit., p. 29.
complex problem:
have been mentioned to emphasize the impor-
of the executive of a large northern corporation
90 Harvard Business Review
who recently had to decide whether to go along
provide flexibility in meeting seasonal or cyclical
with the transfer of his company's headquarters
fluctuations?
from a northern metropolis to a small southern
(3) If the available labor supply is limited, what
community. In this case, his company pretty well
will be the impact upon training costs and total
dominated the economic and social life of the
payroll costs?
southern location. The executive's decision not to
(4) Will existing labor-rate differentials between
make the move was based upon two factors: (a) "It
the present and the proposed locations narrow or
would be too much like living in a goldfish bowl"
disappear within the next five years?
and (b) "I would completely stagnate." To be sure,
(5) Will the proposed location provide adequate
he might not have felt this way if the company had
housing facilities? If not, what capital outlays will
moved to a city of a size comparable to its old
confront the company in making necessary housing
locale in the North - say, Atlanta or Birmingham
available?
or Memphis - but the smaller communities are
(6) Will the proposed location provide adequate
frequently the ones that are most attractive costwise.
medical facilities? If not, will the company be
forced to underwrite the cost of making them
It is quite true that good management can be
available?
trained and recruited. The fact that numerous
(7) Will auxiliary services be readily accessible
southern industries are staffed with able admin-
at the proposed location? If not, what costs will
istrators drawn from local areas is proof that a
the company incur because of delay in repairs, in-
company can find good executive material in the
frequent shipments, inadequate training, and so
South as well as in the North. So there is no
forth? Or, what costs will the company be forced
Reprints of articles in this and most previous issues are
reason to doubt that any executives lost because
to incur to avoid these disadvantages?
available at the following prices:
of a decision to relocate in the South can be re-
(8) Will the company be sufficiently close to
facilities required for product research and develop-
Single reprint
$1.00
Four to 99
$ 0.40 each
placed in time. But this is not the point. The
ment activities?
Two reprints
1.30
First 100
39.7°
point is that executive development is not easy,
(9) Will moving to the proposed location re-
Three reprints
1.50
Additional 100's
10.00 each
in whatever area and from whatever source, and
quire relocation of top management? If so, will
that the cost of breaking up one executive team
there be a problem as a result of senior executives
Harvard Business Review
and building another is one that may need to be
refusing to move and exercising sufficient authority
SOLDIERS FIELD, BOSTON 63, MASSACHUSETTS
taken into account in weighing the advantages
to force retention of present head-office facilities?
of moving south.
(10) Will the proposed location adversely in-
fluence the company's ability to attract qualified
executives, including those below the top-manage-
Conclusion
ment level?
This analysis suggests three main conclusions,
(11) Will the proposed location adversely in-
applicable to relocation anywhere:
fluence the likelihood of executives keeping them-
selves abreast of developments in management
(1) Before casting the die on a plant relocation
techniques because of a lack of ready access to
program, management should carefully appraise
technical or professional organizations?
not only present but prospective cost differentials
(12) Will the company become such a predomi-
between the existing and proposed locations.
nant influence in the proposed location that regard
(2) Management should carefully measure the
for the social well-being of the community will
total cost of relocating, including personnel and
induce management to modify actions dictated by
equipment.
purely business considerations?
(3) Comparing the projected cost relationships
(13) Will the proposed location create a net
of the old and new sites with the expense involved
increase in the cost of transporting raw materials
in relocation, management can then determine
and finished goods?
whether the expected profit increase is sufficient
(14) Will the proposed location increase the
to justify the proposed move.
investment required in raw materials or finished
goods because of longer in-transit time or a possible
As an aid in reaching a decision, management
need for duplicate warehouse facilities?
may find it helpful to ask itself the following
(15) Will the new location permit sufficiently
questions:
prompt execution of customers' orders?
(16) Finally, can the costs of relocating per-
(1) Will the proposed location provide an ade-
sonnel and equipment be recovered within a rea-
quate labor supply five years hence?
sonable period of time after considering the prob-
(2) Will the labor supply be large enough to
able cost differentials applying in the future?
Advantages of Great Lakes
Michigan Department of Economic Development
Location are Improving,
422 W. Michigan Avenue, Lansing 15, Michigan
Study Shows
For Release
Friday A.M.
January 8, 1954
The following paragraphs are a digest of a talk being given by John O. Tomb
of McKinsey and Co., management consultants, Chicago, Thursday evening Jan. 7 at a
joint meeting of the Great Lakes States Industrial Development Council and the Mich-
igan Economic Development Commission at the Kellogg Center, Michigan State College,
East Lansing. Mr. Tomb's talk, which is part of the program of the two-day annual
meeting of the Great Lakes States Industrial Development Council, presents findings
of a study he completed recently. Mr. Tomb is the author of the widely discussed
article in the September Harvard Business Review "Should Industry Move South?"
The economic factors which influence the profitability of industrial opera-
tions will place an increasing premium upon locations in the Great Lakes area.
Changes in the outlook for markets, sources of raw materials and operating
costs all appear to offer a new opportunity for industrial expansion in the Great
Lakes area.
Since many of the factors influencing this outlook are just now becoming ap-
parent, any appraisal of the pros and cons of a proposed Great Lakes location should
be based upon more than an examination of conditions which existed in the past.
The Great Lakes area enjoys an unequalled position in relation to markets.
The availability of strategic raw materials is improving and operating costs
present a more favorable outlook for the region than is generally realized.
Nearly sixty percent of America's own market lies within less than a day's
reach of the Great Lakes region. No other area could be a more logical source of
products required by Canada's rapidly growing market. In addition, plans for
GERALD FORD LIBRARY
development of the St. Lawrence seaway open up an intriguing prospect of also capi-
talizing upon the three-fold increase in foreign trade which the Paley Commission
predicts for the next two decades.
As for raw materials, of greatest significance is the rapid exploration and
development of new sources of raw materials, especially in Canada. Projects to turn
out vast quantities of iron ore, nonferrous metals, petroleum and natural gas are
just beginning to reach the point of availability. Many of these are directed
toward the needs of the metal fabricating and consuming industries which predominate
in the Great Lakes region.
Perhaps most significant of all is the marked trend toward equalization of
regional operating costs. This is a condition about which only a part of the
business community has become aware. Yet, studies of inter-regional cost differences
clearly point to a disappearance of the low wage or low tax rates which once made
other areas - such as the southeastern states - attractive locations for industry.
The steel industry, for example, recently eliminated its traditional North-South
wage differentials.
Many industrial and clerical rates in the South now equal or exceed the pay
for comparable positions in the Great Lakes area.
As far as taxes are concerned, a number of the Great Lakes states possess
decided advantages.
KEEPING
THE CONTINENT'S
GREATEST INDUSTRIAL AREA AHEAD
PROCEEDINGS OF SECOND ANNUAL MEETING
GREAT LAKES STATES INDUSTRIAL DEVELOPMENT COUNCIL
KELLOGG CENTER, MICHIGAN STATE COLLEGE,
EAST LANSING
JANUARY 7-8, 1954
Published By:
MICHIGAN ECONOMIC DEVELOPMENT DEPARTMENT
Stevens T. Mason Bldg.,
Lansing 15, Michigan
-
April 1954
Price $2.50
FORD is LIBRARY GERALD
Officers of Great Lakes States Industrial Development Council, 1953
Chairman - Charles H. Slayman, associate
Cragin, Lang, Free and Co., industrial realtors, Cleveland
Secretary-treasurer - Albert E. Redman, director
industrial development, Ohio Chamber of Commerce
The Great Lakes States Industrial Development Council held its
second annual meeting in the Kellogg Center, Michigan State College,
East Lansing, on January 7 and 8, 1954. Theme for the two-day con-
ference was "Keeping the Continent's Greatest Industrial Area Ahead".
The major speeches and highlights of the discussion meetings are re-
produced in this booklet for your information, along with an appendix
containing the board of directors and officers elected for 1954 and
the attendance list for the conference. Additional copies may be
secured upon request.
Edited and Published by Michigan Economic Development Department
Editor:
Jessie I. Bourquin, economic research analyst
Reporters: Gertrude Bishop, field representative
Carl Bond, business information specialist
Kenneth Houck, field representative
Clifford Kleier, field representative
David Poxson, industrial agent
GERALD R. FORD VIBRAR d
INDEX
Program
1
Opening Address, by Hon. G. Mennen Williams, Governor of Michigan
1
Industrial Resources of the Great Lakes Area, by George Moore, manager
3
Cleveland district U. S. Department of Commerce
Some Facts of Life the Great Lakes Area Faces, by Maurice Fulton,
18
Chicago manager Fantus Factory Locating Service
Panel Discussion: The Problems of Most Importance to All Concerned
24
with Industrial Development in the Great Lakes Area
Panel Discussion: The Promotional Activities and Opportunities of
27
Most Common Interest to All Concerned with Industrial Development
in the Great Lakes Area
Labor's Interest in Industrial Development of the Great Lakes Area,
33
by Barney Taylor, managing editor United Automobile Worker,
official publication UAW-CIO, Detroit
Summary of talk on Freer Trade, Its Importance to the Great Lakes Area,
35
by John S. Coleman, chairman Committee for National Trade Policy,
president Burrough Corporation, Detroit
Weighing the Advantages of the Great Lakes Area, by John Tomb,
38
McKinsey and Co., management consultants, Chicago
Symposium: Relative Influence of Management Factors and Location
45
Factors from the Point of View of Industrial Development
Metropolitan Area Industrial Development Problems, by Paul Reid,
50
Planning analyst, Detroit Metropolitan Area Regional Planning
Commission
Panel Discussion: Industrial Promotion Trends and the Plant Location
54
Outlook for 1954
National Security Policies on Industrial Location, by Colonel Ted Enter, 56
director continuity of industry division of the non-military
defense staff, Office of Defense Mobilization, Washington, D. C.
Appendix
Board of Directors, 1954
62
List of Officers, 1954
62
Attendance List
63
PROGRAM
GREAT LAKES STATES INDUSTRIAL DEVELOPMENT COUNCIL
Illinois
Indiana
Michigan
Ohio
Wisconsin
Kellogg Center, Michigan State College, East Lansing
Conference Theme: Keeping the Continent's Greatest Industrial Area Ahead
Thursday and Friday, January 7- - 8, 1954
Thursday Morning
Registration
Morning meeting - Presiding, John Mellett, director Indiana Economic
Council, Indianapolis
Introduction of the Governor of Michigan by Max Horton, executive director
of the Michigan Employment Security Commission and chairman of the
Governor's Full Employment Committee
Opening address by Hon. G. Mennen Williams, Governor of Michigan
Industrial Resources of the Great Lakes Area
George Moore, manager
Cleveland district U. S. Department of Commerce
Thursday Noon
Luncheon - Presiding, William Poole, manager industrial department
Toledo-Edison Co., Toledo
President's Remarks on the Past and Future of the Great Lakes States
Industrial Development Council
Charles H. Slayman, associate
Cragin, Lang, Free and Co., industrial realtors, Cleveland
Some Facts of Life the Great Lakes Area Faces
Maurice Fulton, Chicago
manager Fantus Factory Locating Service
i
Thursday Afternoon
Friday Morning
Afternoon meeting - Presiding, C. Dwight Wood, industrial commissioner
Detroit and Mackinac Railway, Tawas City, Michigan
Morning meeting - Presiding, Harry Shearer, assistant secretary Detroit
Board of Commerce
Panel Discussion: Problems
Symposium on the Relative Influence of "Management Factors" and "Location
For the Purpose of Identifying
THE PROBLEMS OF MOST IMPORTANCE TO ALL CONCERNED
Factors" from the Point of View of Industrial Development
WITH INDUSTRIAL DEVELOPMENT IN THE GREAT LAKES AREA
Chairman, Cliff Gildersleeve, industrial commissioner Cleveland Chamber
of Commerce
Chairman, Albert E. Redman, director industrial development, Ohio Chamber
of Commerce, Columbus
Peter Altman, engineering consultant, Detroit
William G. Keck, consulting geophysicist, East Lansing
John Tomb, McKinsey and Co., management consultants, Chicago
E. E. Fournace, industrial development consultant Ohio Power Co., Canton
Maurice Fulton, Chicago manager Fantus Factory Locating Service
Wayne Stettbacher, general manager Employers Association of Detroit
Ray Hartman, area development salesman, Cleveland Electric
Hugh Campbell, manager transportation bureau Detroit Board of Commerce
Illuminating Co.
Metropolitan Area Industrial Development Problems Paul Reid, planning
Panel Discussion: Promotion
analyst Detroit Metropolitan Area Regional Planning Commission
For the Purpose of Identifying
THE PROMOTIONAL ACTIVITIES AND OPPORTUNITIES OF MOST COMMON INTEREST
Round-up to Determine What is being Done in the Various Regions of the
TO ALL CONCERNED WITH INDUSTRIAL DEVELOPMENT IN THE GREAT LAKES AREA
Great Lakes Area to Assist Small Business Conducted by O.K.Fjetland,
director of the employment service division Michigan Employment
Chairman, Paul Pfister, J. B. Pfister and Co., industrial realtors,
Security Commission
Terre Haute, Indiana, member Governing Council National Society
of Industrial Realtors
Business meeting - Presiding, Charles H. Slayman, Council president
Jack Reich, executive vice president Indiana State Chamber of Commerce
Reports of the two committees appointed at the Thursday afternoon panel
Indianapolis
Arthur Longini, industrial agent Chicago & Eastern Illinois R. R.,
discussion to draft statements of (1) the problems of most impor-
tance to all concerned with industrial development in the Great
Rolle Chicago Rand, managing director Industrial Development Corporation of the
Lakes Area, and (2) the promotional activities and opportunities
of most common interest to all concerned with industrial develop-
Port Huron-Marysville Area, Port Huron
Harry Brockel, director Milwaukee Port Commission, Milwaukee
ment in the Great Lakes Area.
Wisconsin
Lester J. Steele, vice president Silloway and Co., industrial realtors,
Report of Secretary-treasurer, Albert E. Redman
Detroit
Any Other Business
Thursday Evening
Dinner - Joint Meeting of the Council and the Michigan Economic Development
Friday Afternoon
Commission
Luncheon - Joint meeting of the Council, the Michigan Chapter of the
Presiding - Dan F. Gerber, president Gerber's Baby Foods, Fremont,
Society of Industrial Realtors and the Michigan Economic
chairman Michigan Economic Development Commission
Development Commission
Labor's Interest in Industrial Development of the Great Lakes Area
Barney
Presiding, Charles Crabb, manager industries division Milwaukee Assoc-
Taylor, managing editor United Automobile Worker, official publication
iation of Commerce
UAW-CIO, Detroit
Freer Trade, Its Importance to the Great Lakes Area John S. Coleman, chairman
Committee for National Trade Policy, president Burrough Corporation, Detroit
Weighing the Advantages of the Great Lakes Area John Tomb, McKinsey and Co.,
iii
management consultants, Chicago
ii
Morning Meeting, January 7, 1954
Industrial Promotion Trends and the Plant Location
Presiding:
for
1954
John Mellett, director Indiana Economic Council, Indianapolis
Henreken, executive director Committee of 100 of South
OPENING ADDRESS
Mishawaka, Indiana
By Hon. G. Mennen Williams, Governor of Michigan
inson, general supervisor of Industrial development, Ohio Edison Co.,
It is a true privilege for the Governor of Michigan to welcome so many
industrial development director Consuers Power Co.,
representatives of our sister states of the Great Lakes to this second annual
meeting of the Great Lakes States Industrial Development Council. I am proud
Hubbard Associates, industrial realtors, Detroit,
that own Economic Development Department has been an active participant
Michigan Chapter Society of Industrial Realtors
in organizing and effecting this Council.
Chicago manager Fantus Factory Locating Service
We face the problem of keeping the world's greatest industrial area ahead
and I am delighted that you have made industrial progress the keynote of this
Policies on Industrial Location
Col. Ted Enter,
meeting.
continuity of industry division of the non-military
Office of Defense Mobilization, Washington, D. C.
Our region's tremendous industrial advantages have made us the envy and
the target of other regions not so fortunately blessed with human and material
resources. Today we have an industrial workshop second to none. If we are to
maintain our position of leadership, we will have to work together to do it.
Unfortunately cooperation has been a quality lacking all too often in our past.
of Board of Directors, 1954
You know of the war between Michigan and Ohio a century ago in which the armed
might of our two states was turned against each other, with, I believe, total
of
Officers,
1954
casualties of one broken leg. Our peace treaty gave Michigan the Upper Penin-
sula and Ohio the Toledo area and a strip of territory just south of Michigan's
present boundary. The only loser seems to have been Wisconsin, which might
naturally have fallen heir to the Upper Peninsula at some future date.
Even in this early conflict the seeds of cooperation were sown, for the
Ohio gain became a mighty industrial area and the Upper Peninsula became one of
the world's great suppliers of basic materials for industry. The interlocking
relationships which exist in an industrial economy have brought profit and
higher levels of living to all our people.
So it is today. Our states will continue to compete among themselves for
more industry, for better living, and for the material wants of life. And
that is good. That is good because it is clean, healthy competition which
will better us all.
While reserving the right to squabble within our Great Lakes family let us
turn a solid united front to any area that uses foul play to make temporary
gain. I trust that this meeting will establish a high standard of cooperation
in this region. I hope that our record here will lead to cooperation in other
ways as well. Every region in the U..S. except our own Great Lakes holds an
annual Governors' Conference. Let us hope that the need and the value of work-
ing together will be so amply demonstrated here today that the rewards from
cooperation in the past will be repeated many-fold.
iv
- 1 -
"INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
Let us examine this question of the Great Lakes area greatness, its loca-
tion, natural resources and people. Our area has been blessed with the gifts
By George Moore, manager Cleveland district U. S. Department of Commerce
of Almighty Providence for within our 5 state area we find the key resources
that have made us the workshop of the world.
I have been asked to talk to you about the industrial resources of this section
of the country represented by the five Great Lakes states of Ohio, Michigan, Indiana
In mineral resources we have iron, coal, limestone, salts and other minerals
Illinois and Wisconsin. Apparently, it was thought that I might add something to
so essential to our national growth and economy.
the solution of your mutual problems. These problems are largely concerned with
the retention of industries in these five states and the attraction of outside or
In transportation we have an unparalleled rail, highway, water, and air
new industries into these states. Your job, therefore, is a selling job, as most
system. Michigan's lumber era brought rail to all parts of the state. When
jobs are; and it is largely a matter of mustering your facts in order to present
the forests were turned into houses for our middle-western communities, the
your arguments skillfully. The competition that you are meeting with other sections
rails remained, were integrated with national systems, and today provide access
of the country is aggressive and you are dealing with customers who have keen analy-
into every part of the state. In no area of similar population density will
tical minds. These men want facts not oratory or sentiment. They want these facts
we find the rail development of central and northern Michigan.
authenticated so that they cannot be disputed.
Our water is pure and there is plenty of it. We have no problems like New
I hope to present these facts to you. I will not attempt to dress them up in
York and Los Angeles where available supplies are inadequate to meet population
sales talk for that job you can do far better than I. To do the assignment justice,
needs. We have 3/5 of the entire world's fresh water supply, which is contin-
I have tried to put myself in the place of your potential customer. It is not too
ually replenished by our well-distributed rainfall. If we have a water problem,
difficult to do that. For 25 years I was in charge of a company with two metal-
it is to keep it completely useful.
working plants, one located in Detroit and one in Toledo. So today I want to talk
to you as an industrialist and not as an official of the Department of Commerce.
For markets we have the greatest market area in the United States for both
Let's assume, therefore, that I am still in the manufacturing business, that I have
consumer and industrial goods.
outgrown my plant and cannot expand where I am located, and therefore must move.
It occurs to me that it wouldn't be much more expensive to move several hundred
We are a production-minded people. Our tremendous industrial know-how
miles as to move across the street and that if there are better locations else-
made us the arsenal of democracy in World War II and the workshop of the
where, where costs would be cheaper, operations more efficient or inducements
world today. The basis for our supremacy in mass production know-how is our
greater, the time to investigate is now. So I go to a Department of Commerce office
managerial ability-unexcelled anywhere in the world. Our labor ability is
to find out what I can about the economic background of the various parts of the
equal to that of any place in the world with the most production per dollar
country. Naturally before picking a specific location, I want to decide, first,
of capital investment.
on the section of the country where I feel the opportunity would be greatest,
whether the Atlantic Seaboard, the South, the Southwest, the Pacific Coast, or to
For recreation and leisure hours our workmen are favorably located near
stay in the Great Lakes area where I am presently located. He explains to me that
our vacationlands. This is a wonderful ingredient for happy living.
the country is divided into 9 Census Divisions and that the 5 states around the
Great Lakes are called the East North Central Division. The other divisions terri-
The Great Lakes Area has been blessed by Almighty Providence with natural
torially are defined as follows: New England covers the New England states; the
gifts. Our people have used them wisely to build a mighty industrial empire.
Middle Atlantic covers New York, New Jersey, Pennsylvania; the South Atlantic all
Let's keep the area sound not only for ourselves but for the entire world.
states from Delaware to Florida plus West Virginia; the East South Central those
southern states east of the Mississippi from Kentucky to the Gulf; the West North
Central those agricultural states west of the Mississippi including the Dakotas,
Minnesota, Nebraska, Iowa, Kansas and Missouri; the West South Central states
include Oklahoma, Arkansas, Louisiana and Texas; the Mountain states cover 8
states running from the Canadian to the Mexican border; and the Pacific Coast covers
the 3 states of Washington, Oregon and California. For comparative purposes, there-
fore, these Census Divisions are a natural.
Before digging into his reports, he asked me what I considered the most important
criteria for a favorable location. I told him that first should come people for
people are workers, customers and neighbors. The character and number of people
determine labor supply, markets and the level of government, of schooling and of
cultural advantages. Second come manufacturing facilities, agricultural production,
- 3 -
2 -
power availability. access to raw materials, etc. Third, financial resources
labor availability and market potentials. Within these 5 states are ten of the
availability of sound financial institutions, incomes and 80 forth. Fourth, labor
50 largest cities in the country, double that of any other Census Division and
supply, type of labor, wage rates and labor productivity.
including No. 2, No. 4 and No. 7 in rank. 54% of these people are in the age
brackets between 20 and 60, which is the best age for factory workers and which
So we start with people. He tells me that the East North Central district with
represents a total and a percentage that is second only to the Middle Atlantic group.
which I am most concerned has more people in it of any other Census Division
30,399,368, to be exact in 1950. He points out that this 30 odd million is 20.2% of
"You have satisfied me on the labor market but what kind of customers and
the total U. S. population and he asks me to remember that figure because it will be
neighbors will these people make in comparison with other areas." I say -
a measuring stick of the relative standing of this area on other factors. The growth
in population from 1940 to 1950 was 14.2% showing that the area is not stagnant.
You would find them certainly above the U. S. Average. Let's consider education.
About 2-1/4 million more people have been added since 1950. This growth is at the
88% of those in the age bracket of 14-17 are in high school. That is the highest
rate of about 515,000 a year so that a population of about the size of a city like
percentage of any part of the country except the Pacific Coast and it is 4% higher
Cincinnati is added every year. This is a powerful stimulant to steadily increas-
than the U. S. average. Down in the South East Central states for instance only
ing markets for food, clothing and soft goods and also creates pressures for larger
about 75,0 go to high school. There are more colleges and universities in these
and more homes, schools, retail and industrial buildings, highways-and so forth which
5 states than in any other Census Division with an enrollment of 422,098 which
bring with them the need for hard goods. Projecting this growth into the future he
is slightly below that of the Middle Atlantic states but three times that of New
estimates that by 1960 there will be a total population of 34-35 million people. An
England, double that in the South and 50% greater than on the Coast. About one
interesting point that he makes is that this growth in the past has been the result
out of every 8 people have gone to college, over 2-1/4 million of them, representing
both of excess of births over deaths, and of excess of migration in over migration
an excellent source from which to train management assistants. Here is a figure
out. There were 712,871 babies born in these 5 states in 1950 more than in any
that will interest you as an industrial employer. About 25% of all graduate
other Census Division and exactly the same as the national average. In the same
professional engineers are living in these states, over 130,000 of them. That in
year 305,274 people died, with an excess of births over deaths of over 400,000. But
contrast with the 20 thousand in Dest South Central and 52,000 in the South Atlantic.
the important point he makes is that 1/3 of the growth of population is due to an
With engineers so much in demand that certainly is an asset.
excess of people coming into these states over those going out. There were 900,000
of these between 1940 and 1950. This far exceeds every other Census Division except
Let us see how these people live. Single homes predominate and of the 46,000,000
the Pacific Coast. During that same period East South Central states lost 1,325,000.
dwelling units in the U. S. in 1950 over 9-1/4 million were in these 5 states which
the West South Central 988,000 and the West North Central 891,000, and the South
figures out 20.3% of the U. S. total. Over 1,650,000 of these houses were built
Atlantic 134,000. He points out. that people do not migrate unless there is some-
since 1940. 60% of these homes are owner-occupied, 5% more than the national average
thing attractive to migrate to; higher incomes, better living conditions, better
and much higher than in New England and the Middle Atlantic and South Atlantic states.
jobs; so that this influx of people from other parts of the nation is indicative of
This high percentage of owner-occupied might be interpreted as indicating both the
a favorable economic climate.
income status of the family and of the permanency of their location. Another
indication is that 86,2% of these homes are equipped with mechanical refrigeration
"Alright, I am satisfied about the number of people, but how about employment
against the national average of 80.2% When you look at the figures in the South and
and living conditions, etc."
South West, there is a very marked decline with only 60.4% in the East South Central
states. The median value of these owner-occupied houses was $7,720; $400 higher than
Again, he pointed out, the study, will bring out some very interesting facts.
the average, a little lower than the East and Pacific Coast sections but much higher
The population is very largely native white, only 10-1/2% of those over 21 are
than in the South where the average runs from $5,000 to $6,300. Of course allowance
foreign born. This is considerably lower than in New England, the Middle Atlantic
has to be made for the fact that in the warmer climates houses do not have to be 80
states and the Pacific Coast. Only 6% of the population is non-white. A little
well built or equipped. Median rentals run about $38 a month in these states along
more than New England, the Prairie states and the far West, but much less than the
with the Middle Atlantic and Pacific contrasting with $21 - $31 in the South and
South and South West where 20-25% are non-white. About 35% of the people are
South West. From these housing statistics it would seem as though the people in
employed in manufacturing which is the highest percentage in the country except New
these 5 Great Lakes states are housed a little more comfortably than in some other
England. The rest find employment in retail, wholesale and service trades and
sections, that their homes are a little better equipped and that they have a greater
about 9% in agriculture. The 3,664,249 people working in manufacturing plants in.
desire to own their own homes. The indication that the scale of living in these
these 5 states in 1952 was 29% of the U. S. total and 350,000 more than in the
states is high is shown by checking automobile registration. About 11-1/4 million
Middle Atlantic states which ranks next in manufacturing employment. It is obvious,
cars and trucks are owned in these 5 states, 21% of the total and 2 million more than
therefore, that in these 5 states there is the greatest pool of labor available
in the 3 states of New York, New Jersey and Pennsylvania, the next highest. The
in the country, and inasmuch as the predominant type of manufacturing requires
fewest number of cars are owned in New England and East South Central. It is
skills, the number of skilled and semi-skilled workers is correspondingly high.
perhaps only natural that the inhabitants of the Great Lakes area should be auto-
Another interesting point about the spread of pepulation is that there are no
conscious inasmuch as the manufacture of automobiles is so predominate in this
great wide open spaces. 124 people per square mile is the average against 148
part of the country.
in New England; 300 in New York, Pennsylvania and New Jersey; 79 in the South
Atlantic; 64 in the East South Central; 34 in the West South Central and 45 on the
This brings us to a discussion of the comparative level of incomes in these
Pacific Coast. Greater concentration of people is most important when considering
various Divisions. According to 1950 figures the median income of families in the
East North Central states was $3,063, the highest of any Census Division. The
nearest approach to that figure is the Pacific Coast with $3.004 and the Middle
4
5
Atlantic with $3,020. The lowest is $1,555 in the East South Central states;
which includes machine tools; and transportation equipment, which includes automo-
$2,021 in the West South Central and $2,432 in the South Atlantic. The national
biles, are produced in greater quantity in these 5 states than in all the rest of
Average is $2,619. These great differences are largely accounted for by the pre-
the country. Over 40% of primary metal industry (steel, copper and aluminum) of
dominance of manufacturing in the 5 Great Lakes states where both management and
metal product fabrication, and of rubber products come from these 5 states; over 30%
labor participate in the benefits of high industrial income. Another interesting
of electrical equipment, and furniture and fixtures; and over 20% of food and kindred
fact about family incomes is that in these Great Lakes states 21% of the families
products, of chemicals and allied products, of printing and publishing industries, of
have less than $2,000 and 24% more than $5,000. In the South and South West from
stone, clay and glass products, of paper and allied products, and of petroleum and coal
40-50% of the families have less than $2,000 and only 10-15% have more than $5,000.
products also originate in this section. Only in apparel and related products, in
textile mill products, in lumber products and in leather and leather products do the
"Now to your second point how about the industrial setup of this part of the
5 states fall below the norm of 20%. It is important to not e the preponderance of
country."
high and medium wage industries in these predominant groups. Seven of these indus-
tries are high wage, 5 medium wage and only one low wage. All 4 of the industries
As has been indicated above manufacturing predominates in these 5 states and no
with production less than 20% are in the low wage group.
other section of the country can touch it. According to the 1952 Census figures the
value added by manufacture was $35 billion. This was 32.7% of the U. S. total.
Industry in these states is supported by very heavy flow of raw materials from
The nearest approach to that was the Middle Atlantic Region with 28-1/2 billion
their mines, forests and farms. Including the immediate adjacent area in Minnesota,
dollars. This accounts for the high employment in manufacturing but it would be
the iron mines furnish 4/5 of the domestic iron ore output. Among other non-fuel
incorrect to assume that because of this large industrial output the economy is out
mine products are copper, lead, heavy clay products, stone, sand and gravel. Coal is
of balance. Surprisingly enough the products of its farms is about 6 billion dollars
plentiful and the output per man per day is the highest in the country accounted for
second only to the 8 billion of the Prairie states. This 6 billion represented
largely by the fact that about 4/10 of its coal comes from strip mines and that the
about 19% of the U. S. total. So that even in agriculture these 5 states show an
underground mines are heavily mechanized. No other region can come close to the
output of about 1/5 of the country as a whole. If you add to this farm production
output of these 5 states in ingot steel, about 45% of the U. S. total in the first
that of the 7 states immediately adjoining across the Mississippi, you would have a
6 months of 1953; or in steel castings about 45%; in grey iron castings about 47%;
total of $14 billion, 45% of the total for the U. S. Consequently, for a manufac-
in malleable castings about 84% or in non-ferrous castings of about 59%.
turer who is selling to the farm market, location in this particular area would have
some very distinct advantages.
Production of electric power is, of course, of great importance in choosing a
location. In 1951 the electric utilities in these 5 states produced over 84 million
"All right, I understand about the heavy concentration of industries in the
kilowatts far in excess of the production of any other Census Division and represent-
past but will it continue? Is not industry migrating to other parts of the country?"
ing 22.8% of the U. S. total. This electric power capacity is also being greatly
expanded at the present time.
The best answer to that is to check the increase in manufacturing in the past
few years. In the 5 years from 1947-1952 the value added by manufacture in these
Naturally the industrial market afforded by the 56,000 menufacturing plants is
states grew from 23 billion to 35 billion or about $12 billion. This was the
a most attractive one because of the wide diversification of industries with its
largest increase of any Census Division and 50% more than in the Middle Atlantic.
demand for almost all kinds of materials and products that industry needs.
The Pacific Coast which has had a spectacular increase in population added about
An estimate had been made that this amounts to about $42 billion in 1952 far exceed-
$4 billion in those 5 years to their manufacturing production. In 1952 the total
ing that of any other Census Division.
expenditures for new plants and equipment in the U. S. was approximately $8 billion,
2-1/2 billion of that was invested in these 5 states or 32% of the total and 3/4
The consumer goods market is also large. The high incomes and the high standard
of a billion greater than in any other group of states. So when the figures for 1953
of living have created retail sales of about 29 billion in 1947, slightly greater
are available, it seems very certain that this geographical division has maintained
than in the Mid Atlantic states and more than double that of the South Atlantic
its position of predominance in manufacturing over any other area. It is also good
or the Pacific Coast. This amount was 22.2% of the U. S. total. Wholesale sales
evidence that management in these 5 states is thoroughly satisfied with the future
were 212/0 of the U. S. total. Receipts from 110,000 service establishments show
possibilities of its present location.
21.6% of the U. S. total. These figures indicate a market above the population
norm which should appeal to any manufacturer who is concerned with expansion of his
If you want further evidence of the expanding character of the industrial
sales or who is desirous of cutting his distribution costs.
economy in these states, it could be obtained by checking the Certificates of
Necessity for quick amortization which had been granted since the start of the
"You want to know something about the financial resources of this area so let's
Korean mobilization up to June 30, 1953. Over 4,800 of these Certificates have been
get along to that. I think we can dispose of that rather quickly", the Commerce
issued to firms in these 5 states. A third more than any other Census Division and
man continues. Inasmuch as most of the large banking institutions are in New York
the total amount certified for amortization was over $4 billion. Again far in excess
City, these East North Central states take second place to the Mid Atlantic. How-
of any other part of the country and representing 24.4% of the national total.
ever, the largest cities in these Great Lakes have some very powerful banks with total
deposits of 28 billion and a percentage of 19.4% of the U. S. total. Indicative of
Let's break these manufacturing figures down a bit to find out what particular
the thrift of the people who live in these states is that 22.6% of all E Bond sales
categories of industry are predominant in this area. You may surmise that heavy
in 1950 were made to them, the highest of any Census Division. Another indication
industry leads but perhaps you didn't realize how much. Machinery (except electrical)
of high income and business activity was the $17 billion paid by residents of these
states in Federal Income and other Federal taxes in 1952. This was second in value
among the Census Divisions being topped only by the Mid Atlantic group by about
6
1-1/2 billion but represented, however, 26.7% of the total. The next largest amount
- 7
was 7 billion from the South Atlantic states. Another important criteria is income
payments to individuals in 1952. Of the 255 billion for the country as a whole 58
billion came to people in the East North Central states which is a little less than
in increased production is management. In a pamphlet published in 1951 by the
in the Mid Atlantic states but about double the next highest in the Pacific states.
Department of Commerce there was this statement, "Furthermore available evidence
This was 22.8% of the U. S. total.
indicates that output per worker on this region's (Great Lakes states) farms and
in its factories is somewhat above the average. The high output per worker helps
"That's fine now let's get. down to the last point. Is not this Great Lakes
to explain the high wage scale."
section a high wage area and what can you tell me about its labor productivity."
Well that's the story that I got from my Commerce friend. He had a lot more
It certainly is a high wage area which to a marked extent explains the pros-
to tell me but I had stayed long enough. All this he obtained from publications
perous condition of its people, the very active industrial and consumer markets
on his shelves and he told me that if I wanted similar information by states and
and the high scale of living enjoyed by its inhabitants. The average wage scale
counties, to come back and he could give it to me also.
for production workers in manufacturing are highest on the Pacific Coast and second
highest around the Great Lakes. The lowest are found in the South East Central
I don't know whether you can dress this up as an effective sales presentation
states about 30% below the Great Lake's average which in turn is about 10% above
to your customers but as far as I was concerned as an assumed industrialist, I
the national average. However, these average figures tell only part of the story.
thought my Commerce friend had done a very good sales job on the Great Lakes
A most important reason for the high wage rate in the Great Lakes states is
Region.
because of the predominance in those states of high wage industries as I have
already pointed out. 12 of the 13 industries whose production in this area was
greater than 20% of the nation's total were either high wage or medium wage, and
all of the primary industries where production was very light were low wage.
If you take a look at the production picture in the South where the average wage is
low, you will find just the reverse of that. For instance among the low wage
industry are textiles, apparel, leather products, lumber and lumber products and
furniture and fixtures. If you check the industrial setup in the South East,
you would find that 60% of their industry falls in those categories. If you check
the Great Lakes states, you will find that 60% is in the high wage group such as
machinery, transportation equipment, primary metal products etc. The gap
between the wage rates for the same industries in different sections of the country
is narrowing and will probably continue to do SO. So if you are in an industry
where high wage rates prevail you will find less difference wherever you locate
than the figures on average wage would indicate. To make an accurate comparison
you should do it on the basis of industry, by industry and not use the average
figure.
"I can see that, but what about labor productivity?" "Well there you have
me", said my Commerce friend, "for it's impossible to set up any measuring stick
for the various sections of the country or even by industries in the same area.
By labor productivity you mean output per man-hour. I can give you some figures
here on the annual production per man in the various Census Divisions in 1952.
Taking the value added and dividing by the number of production workers, we find
that the value added per worker in Great Lakes states was $9,665. That was the
highest of any other Census Division except the West South Central states including
Texas. and Oklahoma where petroleum products predominate which was $9,747. The South
Atlantic group was $6,495, about 1/3 lower, the East South Central was $6,697 about
30% lower and the New England group $7,398 about 233 lower. But do not draw too
hasty conclusions as far as productivity is concerned for production per man in
dollar value varies very greatly by types of industries. For instance the value
added per worker in petroleum and coal products is around 312 thousand. The value
added in textile mill products is less than, 5000. Naturally if your textile mill
products are your leading industries, you will have a low average value added per
worker. So it isn't a good measuring stick for comparing regional labor productivity
nor have I been able to find one. You cannot compare a firm like the Lincoln
9 -
Electric of Cleveland whose annual dollar production per worker is above $30,000
to a plant manufacturing textiles where it may be around 5000. All that I can
suggest is that you consider the information given above about the people who will
be your labor source and the training that these people have had in long established
industries and come to your own conclusions. After all the most important factor
- 8
TABLE I
TABLE II
COMPARATIVE DATA - INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
Population Characteristics
Vital Statistics
Percent
Percent
Popula-
Percent
Percent
Census
Births
Percent
Birth
Deaths
Percent
Death
Census
Population
(1950)
of U.S.
Increase
tion per
White
Foreign Born
Division
(1950)
Births to
Rate
(1950)
Deaths to
Rate
Division
Total
1940-1950
Sq. Mile
(Over 21)
U.S. Total
(1952)
U.S. Total
(1952)
6.2
10.4
148
98.4
21.6
New England
194,625
5.5
22.6
96,946
6.7
10.3
New England
9,314,453
20.0
9.5
300
93.6
18.7
Middle Atlantic
30,163,533
620,480
17.6
21.7
315,386
21.7
10.4
Middle Atlantic
30,399,368
20.2
114.2
124
93.9
10.5
East North Cent.
712,871
20.0
24.8
305,274
21.0
9.9
East North Cent.
7,946,627
5.3
15.0
194
93.5
5.5
Ohio
185,850
5.3
25.3
80,633
5.5
10.3
Ohio
109
95.5
2.5
Indiana
93,479
2.6
25.3
40,630
2.8
9.9
Indiana
3,934,224
2.6
14.8
5.8
10.3
156
92.4
8.9
8,712,176
Illinois
189,913
5.3
22.7
92,490
6.4
10.4
Illinois
6,371,766
4.2
21.2
112
92.9
9.3
Michigan
160,955
4.5
26.2
57,748
4.0
8.8
Michigan
Wisconsin
3,434,575
4.3
9.5
63
98.8
6.3
Wisconsin
82,674
2.3
25.2
33,778
2.3
9.6
28
96.5
6.0
334,464
24.7
141,455
9.7
10.0
West North Cent.
14,061,394
9.3
4.0
West North Cent.
9.3
14.1
18.8
79
75.7
2.7
South Atlantic
534,194
15.0
26.4
21,182,335
187,611
12.9
8.9
South Atlantic
East South Cent.
7.6
6.5
64
76.4
.07
11,477,181
East South Cent.
303,922
8.5
26.9
104,900
7.2
9.9
West South Cent.
14,537,572
9.6
11.3
34
82.8
.03
West South Cent.
375,915
10.5
26.2
121,971
8.4
8.2
5,074,998
3.4
22.3
6
95.5
7.6
Mountain
140,911
3.9
28.9
43,730
3.1
8.7
Mountain
14,486,527
9.6
48.8
45
94.8
13.2
Pacific
336,767
9.7
25.3
135,181
9.3
9.3
Pacific
100.0
14.5
51
89.5
10.3
150,697,361
United States
3,554,149
100.0
24.8
1,452,454
100.0
9.6
United States
Mfg. Empl.
Agric. Empl.
Population
Percent
Census
Mfg. Empl.
Census
Marriages
Marriage
Percent
as % of Tot.
as % of Tot.
(20-60 yrs)
of U.S.
Division
(1952)
Rate
Marriages
Division
as % of Tot.
Area Empl.
Total
Area Empl.
U.S. Empl.
(1952)
to U.S. Total
New England
38.5
9.7
3.6
5,094,419
6.2
New England
93,455
9.8
6.0
Middle Atlantic
33.0
26.3
3.3
17,246,746
21.3
Middle Atlantic
249,354
8.1
16.0
East North Cent.
35.2
29.0
8.9
16,624,988
20.5
East North Cent.
281,467
9.0
18.0
Ohio
36.6
7.7
7.0
4,333,125
5.9
Ohio
63,242
7.7
4.0
11.6
Indiana
34.8
3.6
2,084,791
2.9
Indiana
61,881
15.1
4.0
Illinois
32.0
7.8
7.1
4,921,911
6.8
Illinois
81,785
9.2
5.2
6.7
6.8
3,480,716
4.8
40.8
Michigan
49,779
7.4
3.2
Michigan
Wisconsin
30.6
2.8
18.8
1,804,949
2.5
Wisconsin
24,780
7.0
1.6
West North Cent.
5.6
24.7
7,302,153
8.9
15.4
West North Cent.
115,966
8.1
7.4
21.7
11.7
16.2
11,096,396
13.6
South Atlantic
South Atlantic
259,178
11.7
16.6
18.4
4.6
27.2
5,674,801
7.1
East South Cent.
125,698
11.0
8.0
East South Cent.
13.3
4.2
19.3
7,524,961
9.3
West South Cent.
187,430
12.4
12.0
West South Cent.
9.5
1.0
17.8
2,592,656
3.1
Mountain
130,197
23.9
8.3
Mountain
26.2
7.9
8.2
8,110,107
10.0
Pacific
119,834
7.8
7.7
Pacific
25.9
100.0
12.2
81,267,227
100.0
United States
United States
1,562,579
10.0
100.0
NOTE: Birth, death and marriage rates per 1,000 people.
- 10 - -
11 -
TABLE III
TABLE IV
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
Educational Characteristics
Housing Characteristics
Census
Percent in School
Number of
Enrollment
Census
Total Dwelling
Percent of
Added since 1940
Division
Ages 14 to 17
Colleges
(1952)
Division
Units
U.S. Total
Number
Percent
(1950)
(1950)
New England
2,879,409
6.2
441,080
18.1
New England
85.9
156
156,330
Middle Atlantic
9,171,773
19.9
1,297,370
16.5
Middle Atlantic
87.1
279
449,276
East North Central
9,334,211
20.3
1,652,643
21.5
East North Central
88.0
321
422,098
Ohio
2,402,565
5.2
424,872
21.5
Ohio
88.9
69
110,630
Indiana
1,232,314
2.7
226,362
22.5
Indiana
87.5
40
56,729
Illinois
2,671,647
5.8
390,641
17.1
Illinois
87.8
100
125,715
Michigan
1,971,842
4.3
452,464
29.8
Michigan
89.1
46
87,992
Wisconsin
1,055,843
2.3
158,124
17.6
Wisconsin
91.1
66
41,032
West North Central
4,411,435
9.6
495,532
12.7
West North Central
84.6
248
185,988
South Atlantic
5,996,267
13.0
1,448,951
31.9
South Atlantic
77.4
287
250,544
East South Central
3,195,164
6.9
458,639
16.8
East South Central
75.7
147
107,778
West South Central
4,462,334
9.7
870,139
24.2
West South Central
79.5
171
206,706
Mountain
1,608,421
3.5
369,833
29.9
Mountain
85.3
67
87,206
Pacific
4,924,364
10.9
1,623,741
49.2
Pacific
90.4
171
268,316
United States
45,983,398
100.0
5,983,398
23.2
United States
83.7
1,851
2,134,242
Percent with
Median Value
Median Monthly
Percent
Census
Census
Number 25 yrs.
Professional
Percent
Division
Mech. Refrig.
One-Unit Dwelling
Rental, Renter-
Dwelling Units
Division
or older having
Engineers
to U. S.
Structures(Nonfarm)
Occupied (Nonfarm)
Owner Occupied
attended college
(1950)
Total
(1950)
New England
86.2
$8,943
$30.45
50.9
Middle Atlantic
90.1
8,722
38.42
47.7
New England
770,000
37,700
7.1
East North Central
86.2
7,720
38.33
60.0
61.1
Middle Atlantic
2,266,720
137,083
25.8
Ohio
87.5
8,304
34.28
East North Central
2,261,020
130,068
24.6
Indiana
82.6
6,226
34.26
65.5
Ohio
592,620
38,254
7.2
Illinois
87.8
8,646
41.91
50.1
Indiana
265,515
13,189
2.5
Michigan
87.0
7,496
40.29
67.5
Illinois
703,805
39,835
7.5
Wisconsin
81.9
7,927
37.85
63.5
Michigan
445,565
27,152
5.2
West North Central
78.9
6,391
33.76
62.2
Wisconsin
253,515
11,638
2.2
South Atlantic
69.5
6,349
28.92
52.1
West North Central
1,106,050
28,442
5.5
East South Central
60.4
4,933
21.63
53.6
South Atlantic
1,426,990
52,363
9.8
West South Central
69.5
5,466
31.57
55.8
East South Central
547,760
19,519
3.7
Mountain
77.1
6,582
36.65
59.4
West South Central
1,009,335
39,204
7.4
Pacific
84.0
8,872
39.56
57.2
Mountain
489,980
16,432
3.2
Pacific
1,668,225
68,605
12.9
United States
80.2
7,354
35.50
55.0
United States
11,546,445
529,416
100.0
- 13 -
- 12 -
TABLE VI
TABLE V
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
Statistics for Industry Groups - 1952
Manufacturing, Agriculture, and Electric Power
(Ranked by Value Added in East North Central-Division)
Census
Value Added
Percent
Value Added
Industry Classification
Division
Farm Mktgs.
Percent
Wage
Value Added by
by Mfg.1952
of U.S.
per worker
1952
($000,000)
of U.S.
Classif.
Manufacture
Total
1952
($000,000)
Total
U.S. ($000,000)
New England
$ 8,989
8.3
$ 7,398
$
801
Machinery (except electrical)
28,540
2.5
High
Middle Atlantic
$ 12,806
26.3
8,609
Transportation equipment
High
East North Central
2,104
6.5
32.7
6,069
Primary metal industries
11,924
35,413
9,665
18.8
High
Ohio
9,045
10,033
9.3
9,638
1,090
Fabricated metal products
3.4
Medium
Indiana
7,168
4,465
4.1
9,281
1,112
Food and kindred products
Illinois
3.5
Medium
11,340
9,309
8.5
9,748
2,005
6.2
Electrical machinery
Medium
6,869
Michigan
8,285
7.6
9,994
727
Chemical and allied products
High
8,267
Wisconsin
2.2
3,321
3.1
9,276
1,136
3.5
Printing and publishing industries
High
West North Central
5,660
6,218
5.7
8,787
7,958
24.6
Miscellaneous manufactures
Medium
South Atlantic
3,731
9,583
8.8
6,495
3,468
10.8
Stone, clay, and glass products
Medium
East South Central
3,531
3,871
3.5
6,697
2,078
6.4
Paper and allied products
Medium
West South Central
3,890
5,156
4.8
9,747
3,875
Rubber products
High
Mountain
11.9
1,744
1,267
1.2
9,248
Pacific
2,328
Furniture and fixtures
7.1
Low
1,904
9,440
8.7
9,526
3,692
11.4
Petroleum and coal products
High
2,619
Apparel and related products
Low
4,849
United States
108,477
100.0
8,591
32,373
100.0
Lumber products (except furniture)
Low
3,449
Leather and leather products
Low
1,597
Textile mill products
Low
Census
5,257
New Plant and
Percent
Electric Utility
Percent
Division
Equipment 1952
of U. S.
Production 1951
of U.S.
Industry Classification
Value Added By Manufacture
($000,000)
Total
(Mil. Kil-hrs.)
Total
East North Central
Ohio
($000,000)
% of U.S. Total
($000,000)
% of US Tot.
New England
$ 420
5.3
17,490
4.7
Middle Atlantic
1,792
22.6
70,028
18.9
Machinery (except electrical)
$ 6,494
50.7
$ 1,960
15.3
East North Central
2,537
32.0
84,391
22.8
Transportation equipment
6,065
50.9
1,271
10.7
Ohio
748
9.4
24,617
6.7
Primary metal industries
3,683
40.7
1,453
16.1
Indiana
379
4.8
12,457
3.4
Fabricated metal products
3,066
42.8
866
12.1
Illinois
609
7.8
22,644
6.0
Food and kindred products
3,041
26.8
565
5.0
Michigan
608
7.7
16,636
4.5
Electrical machinery
2,643
38.5
696
10.1
Wisconsin
183
2.3
8,037
2.2
Chemicals and allied products
1,853
22.4
501
6.1
West North Central
327
4.1
21,170
5.7
Printing and publishing industries
1,554
27.5
407
7.2
South Atlantic
754
9.5
49,754
13.3
Miscellaneous manufactures
1,106
26.4
416
11.1
East South Central
377
4.8
21,959
7.6
Stone, clay, and glass products
992
28.1
434
12.3
West South Central
912
11.5
26,997
7.3
Paper and allied products
990
25.4
247
6.3
Mountain
127
1.6
17,626
4.8
Rubber products
765
43.9
511
29.3
Pacific
683
8.6
55,258
14.9
Furniture and fixtures
691
31.0
172
9.0
Petroleum and coal products
653
21.1
178
6.8
United States
7,929
100.0
370,673
100.0
Apparel and related products
539
11.1
140
2.9
Lumber products (except furniture)
391
11.3
60
1.7
Leather and leather products
289
18.1
55
3.4
Textile mill products
211
4.0
- 14 -
- 15 -
TABLE VII
TABLE VIII
COMPARATIVE DATA - INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
COMPARATIVE DATA - "INDUSTRIAL RESOURCES OF THE GREAT LAKES AREA"
Comparison of Retail, Wholesale, and Service Sales 1948
Financial Indicators
Census
Retail
Sales
Percent Re-
Wholesale
Sales
Percent
Division
Stores
($000,000)
tail Sales
Establish-
($000,000)
Wholesale
Census
Bank Deposits
Percent
E & H
Percent
to Total
ments
Sales to Tot.
Division
12/31/1951
of U.S.
Bond Sales
of U.S.
($000,000)
Total
1952
Total
New England
115,219
8,557
6.4
13,123
9,341
5.1
($000,000)
Middle Atlantic
395,268
28,175
21.5
64,046
57,747
30.6
East North Cent.
350,319
28,901
22.2
47,412
40,345
21.5
New England
$ 14,016
7.5
$
188
5.7
Ohio
86,971
7,373
5.7
11,099
9,469
5.1
Middle Atlantic
64,662
34.8
866
26.1
Indiana
44,754
3,532
2.7
5,325
3,227
1.7
East North Central
35,208
19.0
916
27.7
Illinois
103,405
8,805
6.7
17,454
18,137
9.6
Ohio
8,609
4.6
233
7.0
Michigan
68,689
5,950
4.6
8,434
6,684
3.6
Indiana
3,542
1.9
102
3.1
Wisconsin
46,500
3,241
2.5
5,100
2,829
1.5
Illinois
13,754
7.5
296
8.9
West North Cent.
179,246
13,268
10.2
31,814
21,988
11.2
Michigan
6,017
3.2
208
6.4
South Atlantic
222,848
14,772
11.2
22,430
16,287
8.7
Wisconsin
3,286
1.8
77
2.3
East South Cent.
112,879
6,417
4.1
10,318
7,897
4.2
West North Central
14,865
8.0
380
11.5
West South Cent.
169,520
10,923
8.3
20,441
13,005
7.0
South Atlantic
14,439
7.8
306
9.2
Mountain
59,861
4,665
4.8
8,615
4,270
2.3
East South Central
6,259
3.4
122
3.7
Pacific
164,380
14,838
11.3
25,167
17,805
9.4
West South Central
12,814
6.9
191
5.8
Mountain
4,503
2.4
85
2.6
United States
1,769,540
130,520
100.0
243,366
188,688
100.0
Pacific
18,992
10.2
256
7.7
United States
185,756
100.0
3,310
100.0
Census
Service
Receipts
Percent
Division
Establishments
($000,000)
Service Receipts
to Total
Census
Int. Revenue
Percent
Total Income
Percent
Division
Collections 1952
of U.S.
Payments 1952
of U.S.
New England
38,709
507
5.9
($000,000)
Total
($000,000)
Total
Middle Atlantic
141,838
2,395
27.9
East North Cent.
110,159
1,848
21.6
New England
$ 3,573
5.5
$ 16,635
6.5
Ohio
28,990
437
5.1
Middle Atlantic
19,360
29.9
59,176
23.2
Indiana
13,640
184
2.1
East North Central
17,654
27.2
57,985
22.8
Illinois
35,218
707
8.2
Ohio
4,538
7.0
15,378
6.0
Michigan
21,376
367
4.3
Indiana
1,359
2.1
6,917
2.7
Wisconsin
10,935
153
1.9
Illinois
5,381
8.3
West North Cent.
53,593
652
7.6
17,681
6.9
Michigan
5,090
7.8
58,652
879
10.2
12,172
4.8
South Atlantic
Wisconsin
1,286
2.0
East South Cent.
26,349
354
4.2
5,837
2.3
West North Central
4,503
6.9
West South Cent.
50,993
634
7.4
22,128
8.6
South Atlantic
6,901
10.6
Mountain
17,008
233
2.7
28,829
11.3
East South Central
2,212
3.4
11,847
4.6
Pacific
62,258
1,072
12.5
West South Central
3,425
5.4
19,978
7.8
Mountain
1,327
2.0
United States
559,559
100.0
8,414
8,578
3.3
Pacific
5,865
9.1
30,375
11.3
United States
64,821
100.0
16
255,367
100.0
- 17 -
Noon Meeting, January 7, 1954
Presiding:
William Poole, manager industrial department Toledo-Edison Co.,
Toledo
"SOME FACTS OF LIFE THE GREAT LAKES AREA FACES"
By Maurice Fulton, Chicago manager Fantus Factory Locating Service
When your program chairman suggested that I talk on "Facts of Life the
Great Lakes Area Faces", I felt that the title was an anachronism. After
all, the area represented by your membership has been amply blessed by the
benefits of industrial activity. The patron saint of industrial development
men, if there be such, has been friendly. This is an area which has "plenty
of skilled labor", "ample good water", "is within X miles of at least
50,000,000 people", maybe more, has "the best location in the world", and
many other attributes I could tell you about if I had our library of bro-
chures with me. Of course it would not matter which brochures I referred
to since they would all probably describe the Great Lakes area, and any
other area for that matter, or at least would so claim.
Seriously, however, the Great Lakes States are an industrial man's
dream. Of nineteen major industrial categories, the East North Central
States (Ohio, Indiana, Illinois, Michigan, and Wisconsin) have the greatest
percentage of employees, in manufacturing plants with over 100 employees,
in 8 different categories. 32% of all such employees are in the East North
Central States. Thus, these states lead in the production of food, furni-
ture, paper, rubber, primary metals, fabricated metals, non-electrical
machinery, and transportation equipment.
The area falls behind in tobacco, textiles, and lumber, the greatest
concentration of which is in the South Atlantic States. The Middle Atlantic
leads in apparel, printing, chemicals, glass, and instruments. And New
England has greater employment in leather.
Furthermore, not only has the Great Lakes been well off for years, it
has profited greatly as a result of the tremendous post-war growth this
country has experienced. A recent sampling of about 150 companies operating
over 1500 plants shows that 25% of all plants built or purchased in the period
from 1940 to 1947 were located in the East North Central States. In the
period from 1946 to 1951, almost 28% were located in your area. In the latter
period Ohio led the entire nation, with California second, in the number of
these plants built or purchased.
The question of future growth of the area has been reserved I under-
stand for discussion tomorrow afternoon.
Plant location in the post-war years has been based primarily upon
those factors which have been considered by industry for decades. Obvious-
ly, the relative importance of these factors varies greatly among industries
and even among companies within a given industry. Furthermore, the import-
ance of these factors varies from region to region throughout the country.
- 18 -
Looking at it on a national basis, post-war expansions
In addition to decentralization into smaller communities we
have been affected by the following factors which I will outline
have another form of decentralization in the establishment of branch
in order of importance:
plants in completely distant areas. An obvious example of this is
the current trend toward decentralization in the automotive industry.
Proximity of existing facility. The vast majority of
There is now a general movement away from Detroit as the center of
expansions which have occurred within the past ten years have
the automotive industry. This has been emphasized by the construction
been additions to existing facilities. In the North Central
of regional assembly plants throughout the nation. However, equally
States, almost four of every ten projects entail the expansion
significant with the removal of these jobs to other areas is the
of facilities through the purchase of an available plant or
effect on suppliers to the automotive industry.
merger with a going concern. This should be obvious to you in
view of the usual desire of industrial prospects for existing
At one time approximately 80% of the auto parts volume origin-
buildings. However, addition to existing plants and construction
ated within 300 miles of Detroit. The centralization of the parts
of entirely new facilities each represented about one-third of
suppliers was concentrated principally in the Great Lakes States.
the total.
The dispersion of assembly plants is resulting in a definite program
by auto manufacturers to develop local sources of supply in the
The fact that expansion within the region has been almost
vicinity of assembly plants, and what started out as a simple branch
equally divided among the three types is evidence of the area's
plant has resulted in Los Angeles County ranking second to Akron
economic strength in the past as well as its potential for the
in the manufacture of automobiles, tires, and tubes.
future. The area's past industrial importance is attested to
by the fact that industry has been able to expand by enlarging
This example of the automotive industry is not unique. Where
or purchasing facilities already existing locally and yet, many
transportation cost or service to customers is a problem, we get
companies think enough of the future of the area to have become
an increasing tendency toward the establishment of branch plants
involved in new construction.
away from the industrial heart of the country.
I suppose that we are all most interested in new construction.
I am perfectly aware that all of you realize the industrial
After all it is the brand new plant coming from another area which
importance of the Great Lakes area. I have taken the trouble to
is the most glamorous. It sometimes means the introduction of new
repeat the obvious because some of the problems --- some of the
capital, new skills, and new products to the industrial base.
"Facts of Life" the area must face stem directly from the very
characteristics which make the area so great.
Next in importance to proximity of existing facility as a
factor has been the location of markets. This is followed by raw
I suppose if any one phrase were used to characterize this
materials, labor supply, transportation, and, finally, water,
region it would be "a high degree of industrialization". As a
fuel or power. In addition such new items as national security
direct result of this favorable situation we have several problems
and the tax rate structure are also beginning to make themselves
facing the industrial developer.
felt as factors in the location of industrial plants.
One of these is a problem of labor supply. During periods
It has been my experience that among most manufacturing
of full employment in the nation, the Great Lakes area, along with
concerns considering establishment of a new plant, there has
the middle Atlantic, is one of the first to show a labor shortage.
been one basic equation which reflects the entire location pro-
I know of many instances of removal from the area caused by
cess. This is a balancing of transportation costs on one side
inability to locate a suitable labor supply within the region.
with labor on the other side.
If we look at the Department of Labor's list of labor surplus
areas, we find 15 major and 24 smaller areas listed as chronic
All of us are aware of the new significance the small city
labor surplus areas. Only one of the 15 major and two of the
is taking on in connection with the construction of new plants.
24 smaller areas are in Great Lakes States.
This decentralization into small communities has been an important
characteristic of post-war expansion.
I know that many of you will question the absence of a
labor supply in at least a dozen choice locations within the
Before 1940 nearly one-half of all American industrial plants
service area, city, state, along the railroad, or what have
were in cities of more than 100,000 population. Today, only about
you, which he serves. I will not deny that there is always a
one-third are so situated. This does not mean that the larger
certain amount of labor available in any location however tight
cities have lost industrial employment. They have continued to
the situation might be. However, the easy, ample, labor supply
grow in that respect as well. However, thirty per cent of all
which makes for selective recruiting, higher labor productivity,
new plants established since 1940 have been located in towns of
less turnover, and greater respect for the job, all so desirable
10,000 or less.
to the manufacturer is quite different from that labor supply
- 19 -
20 -
which exists through extension of the commuting area, pirating
More significant, however, are the influences from the
from other employers, lowering of hiring standards, high pressure
outside. Such influences have a profound effect on your tasks.
recruiting tactics, and so on.
Chief among these is the matter of true decentralization.
Another problem this area must face is one most of us do
If all location criteria dictate establishment of a plant out-
not like to talk about, at least in public. Nevertheless, I
side of Great Lakes area there is little to be said or done.
would be derelict if I did not point out that among our clients
That is, there is little to be said or done unless you take
are many important companies which make strike history, union
the attitude of one Texan I know who feels that a case can be
activity, or attitude, a major locational factor. I do not mean
made for A Texas location for every plant that is ever located
that they are seeking absolute freedom from union membership.
anywhere regardless of the product, distribution, or other
I do mean, however, that many industries are reluctant to move
factors dictating the location.
into a community dominated by some of the larger more aggressive
union organizations. Hand in hand with this objection is a re-
Another outside influence is a possible complete return
luctance to be located in the same city with some of the larger
industrial establishments. Many firms fear competition in the
of the steel industry to uniform pricing and freight absorption
where necessary for competitive reasons. Just as the return to
same labor market with these industrial giants where wage levels
and other practices are established for the community by the
f.o.b. pricing resulted in some centralization of steel fabri-
super-industry.
cating plants, so will a return of freight absorption eliminate
one of the objections to decentralization on the part of these
Another problem of the area is the complacent attitude of
plants.
many of the communities. This attitude stems from years of in-
dustrial plenty. Many of these communities have never known
A final outside influence it is necessary to reckon with
what it is to be without payroll and, consequently, fail to con-
is the great amount of effort being expended by other areas
sider the advantages of new industrial blood flowing through the
and aimed at your industries. Detroit, Cleveland, Chicago,
citys' veins.
are all serving as happy hunting grounds for the raiders from
the South, Southeast, and Southwest. Their ammunition is big
Another problem facing you people working in the area is
caliber too. They come loaded with inducements, prestige
the relative age of the industrial plant. Because of the early
appeal, in the form of personal visits from Governors, and
growth of manufacturing in this region many of the facilities
offers of cost advantage, not all of which are as ephemeral
as some of you might like to believe.
involved are old. Buildings are sometimes antiquated, machinery
has been written off decades ago, there is little land for ex-
The inducements take many forms and in spite of the fact
pansion and location. In view of shifting markets, new products,
that a common bromide heard among communities in this area is
or what have you, are no longer strategic. In some cases un-
economic practices have crept into its production and cannot be
that "every good company likes to pay its own way" do not for
a moment believe that every "good company" turns its ear on
eradicated without complete removal from the location. As a
result, one sometimes finds an itchiness, a higher degree of
talk of inducements. These inducements may constitute five
mobility, a greater desire to pull up stakes and improve condi-
or ten year tax exemption, not tax exemption but a special
tions among industries in this area than in other, less matured
deal on assessment, a plant built to the company's specifica-
industrial centers.
tions and financed by popular subscription of the citizenship,
funds of an industrial corporation, the sale of revenue bonds,
Other factors or problems sometimes have a bearing on your
the sale of stock, etc. They may also consist of free land,
job although they are much less significant than those I have
extension of utilities at no cost, city services outside the
mentioned. For example, the cost of utilities -- power and gas
city, etc., or they may consist of outright cash grants, or
for example, may be much less in Southern and Southwestern loca-
cash in the guise of moving expenses, labor training costs, etc.
tions, resulting in a greater attraction of those areas for
those industries for which these things are important. State
Furthermore, these inducements or as you probably prefer
factors, such as taxes, are generally favorable in the Great
to call them, subsidies, are often presented by the Government
Lakes states.
of the state in person. It is a remarkable thing to observe
the great interest the Governors of non-industrial states take
Summarizing, then, it appears that we have certain prob-
in industrial development. Many a Midwestern business man is
lems which are generated within the area itself. These are
flattered into action by the personal invitation of the Governor.
problems of labor supply, aggressive unionization, domination
of super industries, the attitude of many communities, and
Finally, many of these industrial development people from
the age of the industrial plant.
outer space will show many fields in which initial and perpetual
cost advantages can presumably be realized. With little en-
couragement, they are prepared to make comparative tax studies,
- 21 -
- 22 -
local government, the type of rail service, labor, attitude, and a score
comparative traffic studies, and any other elaborate preparations
of other features, any one of which might discourage an industrial prospect.
designed to show how their particular area will:solve all of the
headaches of the particular manufacturer.
In facing up to the "Facts of Life", there are a limited number of steps
that can be taken. As I just said, first and foremost is enlistment of the
It would thus appear that industrial development personnel
cooperation of existing industry. Education of communities to the point
in the Great Lakes States area have a two-fold problem, one
where significant and factual information is provided is almost as important.
generated from within and the other the result of influence out-
side the area. Both are generally the result of the high degree
Finally, I would liken the situation to that of a father advising his
of industrialization you presently enjoy.
daughter on the "Facts of Life". "You are attractive, have most of what it
takes, and there are many outsiders who would like to rob you of some of
It seems to me that a development group in this area has
your most priceless possessions". If you keep conditions at home sufficiently
two possible courses of action open to it. The first is the
attractive, there is less likely to be wandering into other meadows where the
simplest, in which the group or agency simply acts as a passive
grass appears greener.
source of information. Brochures are furnished to inquirers and
"cooperation" offered anyone considering putting a plant in the
area. On the other hand, the development group can combine this
activity with a much more active role. This involves not only
Afternoon Meeting, January 7, 1954
the principles of aggressive, hard selling, but also entails
recognition of some of the problems peculiar to the industrial-
ized area. There are three phases to this activity.
Presiding:
C. Dwight Wood, industrial commissioner Detroit & Mackinac Railway,
First is the matter of attracting new industries. This is
Tawas City, Michigan
the most glamorous, the most attractive, and the one which re-
ceives most publicity. It is the phase on which most funds and
Panel Discussion: PROBLEMS
efforts are expended.
For the purpose of identifying the problems of most importance to
all concerned with industrial development in the Great Lakes Area.
In view of the fact that so much industrial growth origi-
nates from. local sources, it would seem that the encouragement
of new, sprouting industry would be a second function.
Chairman:
Albert E. Redman, director industrial development, Ohio Chamber of
Finally, and certainly of equal importance, particularly
Commerce, Columbus, Ohio
in this area is the problem of conservation. I am convinced
that the necessity for retaining the industrial concerns al-
Panel Members:
ready within the area is a function which is sometimes over-
Wm. G. Keck, consulting geophysicist, East Lansing
looked in the search for new scalps to be added to the belt.
E. E. Fournace, industrial development consultant, Ohio Power Co.,
Canton
The lack. of emphasis on this phase is undoubtedly due to
problems you folks have on the other side of the fence. Prob-
Wayne Stettbacher, general manager, Employers Association of Detroit
lems of budget, necessity of showing results, satisfying the
Hugh Campbell, manager transportation bureau, Detroit Board of Commerce
have-not communities, etc. Or perhaps it involves efforts
Dr. Keck cited the importance of determining the quantity of good water
which we, in our organization, do not come into contact with.
Yet, in dealing with our many clients and in the course of
for a specific area. The chemical analysis of such water is of course a
factor for an industry requiring certain water properties. Dr. Keck emphas-
many intimate meetings with them, it is usually apparent that
ized that "in making such a survey it is important that it be predetermined
no effort has been made on the part of a local group to in-
that the water supply is sufficient to supply the natural growth rate of a
terest the company in expanding or remaining in its present
location. The importance of working with your existing in-
community as well as fulfilling the requirements for additional industry."
dustry cannot be overstated. An industry saved is as im-
portant as an industry gained.
Furthermore, your local industrialists are without doubt
your best salesmen or your competitors' best salesmen. If
manufacturing conditions are satisfactory, the manufacturer
24 -
will generally say so when approached by a plant location
investigator. On the other hand, if local conditions leave
something to be desired, you can be certain that the dis-
gruntled industrialist will be loud in his condemnation of a
23
It is noted that, even in this small town, 8 industries account for 10% of
The various methods used to determine underground water supply were explained.
real estate valuation and over 68% of personal property valuation. When the total
Two in common practice are the electrical and drilling methods. The electrical
of real and personal property valuation - excepting railroad and utility property,
method involves the use of certain equipment that registers the resistance of var-
is considered, these 8 industries account for over 25% of the total, or $9,313,125,
ious underground materials to electric current. In this test electrodes are placed
as shown herewith.
in the ground at various distances. The strength of the current between the elect-
rodes determines the solidity of underground formations which in turn are analyzed
(B) INDUSTRIALS (8)
(1)
(2)
Total (1) & (2)
by a geologist. Drill equipment is often used for actual tests. Pumping water
above the ground and then noting the draw upon other drillings in the area, as
#1
$ 662,100.
$ 822,450.
well as the length of time it takes to refill the drillings, is a common method
2
774,290.
611,750.
used in underground water analysis. It is noted that sand and gravel deposits are
3
128,530.
309,790.
of great importance to a potential water supply. The Geological Survey Division of
4
180,620.
354,219.
the Conservation Department is an informational source on water resources for the
5
215,070.
556,720.
State of Michigan.
6
94,650.
247,670.
7
90,650.
247,556.
8
302,120.
3,714,940.
E. E. Fournace emphasized the importance of retaining existing industries.
$2,448,030.
$6,865,095.
$ 9,313,125.
Such retention could be helped through contacting management from time to time to
talk over any problem or "gripe" that they might have. Future adverse decisions
When railroad and utility valuations are added to the 8 industrials it is
affecting a community might very well be avoided by this approach.
found these three classifications make up nearly one-third of the city's total
valuation of real and personal property as shown in the following table:
The speaker also emphasized the necessity of a community to work closely with
professional planning groups in setting aside definite areas for industrial
Assessment
Rate
Tax
development. This is of primary importance; past experience has shown a tendency
to place such sites last in city planning. As a result, industry has quite often
(A) Railroads
(3)
$
884,120.
$15.00 Per M.
$ 13,261.80
been hemmed in and the outcome is a blighted area and slum conditions. Smaller
(B) Industrials
(8)
9,313,125.
15.00 Per M.
139,696.88
towns are apt to think of all land outside their community boundaries as potential
(c) Utilities
(4)
2,167,820.
15.00 Per M.
32,517.30
industrial sites and do not take into consideration the expense of extending munici-
Small Business
11,210,280.
15,00 Per M.
168,154.20
pal services.
Residential
14,812,295.
15.00 Per M.
222,184.42
Communities are prone to think of industry in terms of the past. Such terms
$ 38,387,640.
$ 575,814.60
as dirty, smelly, noisy, are not in keeping with the facts of modern plants that
have done much to overcome these nuisances.
From this tabulation, one readily notes that the 8 industrials plus the rail-
roads and utilities also pay nearly one-third of the total taxes collected. The
Communities must also recognize the importance of industrial taxation to their
assessed value of the properties of railroads and utilities on Tiffin for 1952 is
economic welfare. Large industries bear a large part of the burden of paying for
as follows:
schools and municipal improvements in larger cities. The same holds true in small
communities. In proof of this fact Mr. Fournace cited the example of Tiffin, Ohio-
(A) B & O
$
325,680.
a town of 19,000 population. The following 1952 tax study gives the tax valuation
P. R. R.
460,660.
of 8 principal industries, located within the city limits, compared to the assessed
N. Y. C.
97,780.
value of residential and small business property, real and personal:
$ 884,120
Tiffin City Real Estate Duplicate
$25,265,590
Deduct 8 Industrials
2,448,030
(1)
(c) Electric
$
849,850.
Residential & Small Business
$22,817,560
Gas
256,550.
60% Residential
$13,690,540
Telephone
434,630.
40% Small Business
9,127,020
Water
626,790.
Tiffin City Personal Property Duplicate
$10,070,110
$ 2,167,820.
Deduct 8 Industrials
6,865,095
(2)
Residential & Small Business
$ 3,205,015
Surely, this comparison of taxes and assessed valuation clearly points out the
35% Residential
$ 1,121,755
financial aid to community services, facilities and improvements that springs from
65% Small Business
2,083,260
the establishment of manufacturing plants.
- 25 -
26
Wayne Stettbacher stressed the fact that favorable labor conditions in the
Great Lakes States Industrial Area are proved by the record of migration of plants
and that only those requiring lesser skilled labor can afford to risk moving to low
Rolle Rand discussed Promotion at the Local Level" as follows:
cost labor areas. John Tomb's article was cited as pointing out the pitfalls of
moving to so-called low wage areas.
Community Relationships
In discussing the productivity of labor today Mr. Stettbacher felt that it was
Each community has two conflicting groups: one wants to keep things as they
management's responsibility to make labor conscious of the importance of his job and
are and tends to discourage new industries from coming in, the other feels that
that a "fair day's work for a fair day's pay" is being developed through the science
it has more to gain by inducing new industry to move in. This group tends toward
of human relations. The Great Lakes area is devoting much time and study to the
uneconomic overdevelopment.
problem of training in both high school and industry. For example, the Caterpillar
Company in Peoria, Ohio, originally made the machine operators do their own set-up
The local industrial developer must be able to win the support of both
work. This presented a terrific training problem that was met by setting up an
factions if he is to build a successful development program. In most cases this
apprentice training program to train men for this specialized field. One of the
means "playing the situation by ear" convincing both groups of the need for con-
great advantages of this area is the existence of public facilities for training
certed action for the common good.
employees. There have been great strides made in labor relations and it can be
expected that there will be greater improvement as time goes on.
The developer must not only fuse community action, he must generate enthusiasm
for rational industrial growth. This means making community salesmen out of all
the citizenry. Favorable local attitudes are the community's best indicator of
pleasant living conditions. Everyone should be on the lookout for industrial pros-
Hugh Campbell observed that economic studies do not look far enough ahead in
pects. If a potential employer comes into town, word should be flashed immediately
making predictions or in giving accurate estimates on industrial development. Our
to the development office.
industrial growth has been tremendous in the past few years. As an example, the
water tonnage this year exceeds the figure that was estimated for 1960.
The local developer must have an unusual talent. He is responsible to every-
one and is frequently the target for everyone's complaints. Actually a successful
Transportation has always been a problem and is becoming a greater one as popu-
location is the result of the combined efforts of many people and many agencies.
lation increases. This population increase has overtaxed existing transportation
facilities. This is true with air as well as rail, trucking and water. Inadequate
Promotion in all its forms-publicity, public relations, public education-- is
planning has resulted in the scarcity of "transportation land". Land that should
the method of overcoming public inertia and of welding together the force for a
have been earmarked for highways has been used for other purposes. Good trucking
constructive development program. At the same time promotion should not be built
facilities are important to industry both large and small. Competition among
around the developer or even his organization. They should not become symbols of
various transportation companies and methods of transportation has been very keen
industrial or community progress. The community is greater than its institutions.
in the past. It is time that railroad, trucking and water transportation get to-
The true basis of development should be the need and the vision of the people to
gether and recognize the "facts" of life" rather than pecking at each other. A
pull together to make their community a better place in which to work and to live.
sound transportation program must rely upon the cooperation of existing types of
transportation.
Industrial Prospect Relationships
Industry moves primarily to obtain additional manufacturing space, and to
Panel Discussion: PROMOTION
improve its labor situation. The aim of promotion at this time is to induce rest-
less manufacturers to come in and look the town over. It is never enough to close
For the purpose of identifying the promotional activities and
the deal, but only to attract attention and build up interest.
opportunities of most common interest to all concerned with
industrial development in the Great Lakes Area.
Obtaining industries from outside the community is a realistic, highly com-
petitive business based on material--not philanthropic--reasons. The developer
Chairman:
must draw his plans very carefully if he is to be successful. He must be certain
Paul Pfister, J. B. Pfister and Co,, Terre Haute, Indiana, member
that he has a suitable location for the prospect's type of business. His object
Governing Council, National Society of Industrial Realtors
is not to sell land; it is to add payrolls. Rumors can skyrocket land prices to
the point where sale may be impossible, or at best, a definite handicap to indus-
Panel Members:
trial location. It may be necessary for other towns to do what Port Huron did--
Rolle Rand, managing director, Industrial Development Corporation,
establish an Industrial District for new industry, where land is available,
of the Port Huron-Marysville Area, Port Huron, Michigan
favorably platted, zoned and developed, and for sale at a token price.
Arthur Longini, industrial agent, Chicago & Eastern Illinois Railroad,
Chicago, Illinois
Jack Reich, executive vice president, Indiana State Chamber of Commerce,
Indianapolis, Indiana
Lester J. Steele, vice president, Silloway and Co., industrial realtors,
- 28 -
Detroit, Michigan
- 27 -
GERALE FORD LIBEARY
The industrial developer must be equally certain that he has all the facts
Join all the real estate boards. Management will check with realtors early in
necessary to enable the prospect to make a wise decision. Michigan Bell Telephone
the search for new locations. The developer should back them up with full community
Company recently selected Port Huron for its new branch record office primarily
information. A Society of Industrial Realtors tour of your buildings and sites
because it was able to get complete information from one source.
pays dividends over and over again.
The scrupulous developer builds up his knowledge of the prospect's personal
Other governmental agencies can be of real service to the developer. Port
likes and dislikes just as soon as possible, and caters to them. He avoids any
Huron is closely watching St. Lawrence Seaway developments. Its Industrial Develop-
possible friction between temperaments and personalities.
ment Corporation at the request of the local Port Study Committee recently deter-
mined the amount of freight tonnage available in the hinterland that could be water-
The developer should remember that what he is trying to do will disrupt the
shipped from Port Huron in the event ocean traffic became a reality in the area.
entire life of the manufacturer, his family and friends, and business associates.
Make the rough areas as smooth as possible.
Measurable Results
Above all, the developer must never violate a confidence. The prospect will
want any contemplated move kept quiet. Do not let your enthusiasm lead to a pre-
Unemployment has been reduced from 6% to 3.9%--better than at any time during
mature disclosure. Towns have lost industries this way--some they felt certain
World War II. Within one year from its inception, the Industrial Development
about.
Corporation has succeeded in signing up six new employers in the Port Huron-Marys-
ville Area.
Promotion Aids and Assistance
A brochure can not be called a powerful selling weapon, but prospects have
A summary of Arthur Longini's description of the industrial development work
come to expect one from each community. It should be prepared for a specific level
carried on by the Chicago and Eastern Illinois Railroad is given as follows:
of management. Port Huron prepares a brochure for top level management which is
in capsule form--so a busy executive will get the most salient message as quickly
The Chicago Eastern Illinois Railroad entered the industrial development
as possible. The site selection level of management will receive maps--contour,
field only recently. A management consulting team advised setting up a department
aerial photographic, precinct, to show where the community is located, and
to handle this work. Today one-third of the department's time 18 spent in servic-
more detailed data about it.
ing on-line firms and the balance in bringing in more industry.
Direct mail pieces should be large enough to get the full story across. Port
One of the first steps taken in this field of industrial development was to
Huron's is 3* pages long. If a prospect 1s interested in reading it at all, he
prepare surveys of Evansville and of Southern Illinois cities served by the
will want a fairly complete story. Applying this reasoning, Port Huron received
Chicago and Eastern Illinois. The latter survey was prepared in considerable de-
40-44% returns from its direct mail campaign. Of these, 18% were willing to meet
tail and was bound in brochure form.
with the industrial developer.
Continuous advertising is essential to a successful program. Newspaper and
Use of the Brochure
magazine advertising with a great many free mentions have helped pre-sell Port
Huron thereby greatly aiding subsequent contacts. If this form of promotion were
The company felt that this 300 page brochure would serve several purposes.
suspended, the community's name would be quickly lost. The experience of nationally
First it brought scattered information together into a useful form. Secondly,
advertised products proves this.
the Railroad's 240 freight solicitors were supplied with the information necessary
to interest prospects in Southern Illinois. An instruction course was given to
Industrial prospects should be encouraged to deal directly with the Industrial
the lines' representatives in all parts of the country and the brochure was used
Development Corporation in the community. The greatest advantage to the manufact-
as a text-book, However, the lack of formal training in development work, the
urer is that this is a one-stop service. A tremendous amount of work is saved by
conflicting interest of building up freight business in local areas, and the fact
obtaining all information in one place. This means that the developer must have
that solicitors normally deal with traffic men, not top decision-making management,
an attractive, easily accessible office for his operations. It must have an aura
were enough to make this part of the program expensive and largely ineffective.
of permanency, and be suitable for confidential, uninterrupted conversations
where supporting information can be adequately displayed and utilized.
Another purpose of the brochure was to furnish information directly to potential
prospects and inquiring manufacturers. Advertising in Business Week, the Wall
Don't forget your local manufacturers. What they say to industrial prospects
Street Journal, and similar business publications resulted in a tremendous number
may well be the deciding factor. The prospect will want to talk with local manu-
of requests for the book. Some of these were from other development groups inter-
facturers to learn their experiences in the locality. If they are on your side,
ested in obtaining copies of the brochure for their own purposes. These were honor-
if they say what they like about the town, there is hardly a more convincing testi-
ed until the supply became dangerously close to exhaustion. There should have been
monial.
a $5.00 charge for each of these copies which would have covered publication costs.
only.
- 29
- 30 -
Blind prospecting was attempted by using Moodys' Industrial Manual as a mailing
list. The brochure was sent to firms with good records of growth and adequate
The Indiana State Chamber of Commerce is currently promoting a better educational
capital for expansion. The Chicago area proved to be the most fruitful.
program for all its people.
Preparation of the Brochure
A summary of Les Steele's comments is given below:
The brochure sticks rather closely to factual information although opinions
are added whenever they are obviously justified. Transportation, power, fuels,
He states that there is no magic answer in successful industrial location
and labor received the most extensive coverage although water supply, climate and
work. The best procedure is the skillful presentation of the facts most signifi-
taxes also were included. The brochure makes good use of maps.
cant to the prospect and his firm.
A number of new methods were used to overcome handicaps long confronting devel-
Small firms can be influenced in their choice of location because they
opment research people such as:
generally do not have a staff member experienced in plant location. Large firms,
on the other hand, have their best locations pretty well in mind by the time the
Labor-management relations were put on a comparative statistical basis
industrial realtor is called in.
by using information purchased from the Bureau of Labor Statistics on work
stoppages with number of man-days lost by counties.
Industrial location people should remember that where there are several plant
sites that seem to be about equally satisfactory as far as economic conditions are
Commuting patterns indicating distances workers will drive to a good
concerned, living conditions may well be the deciding factor. Industry consists
wagepaying plant were worked out to reveal potential labor supply.
of people who want to be welcome in a new community. They want to be good neighbors.
They will not go where they are not wanted. The manufacturer will ask his associates
Power cost charts were developed which permitted direct rate comparisons
"How would you like to live in so-and-so town?" You can bet that if the staff does
of various power companies, considering the variables involved.
not have a favorable opinion of that town, the community has small chance of getting
that plant. The industrial agent should sell the prospect's kind of pleasant living.
Transportation rates were mapped showing class and exception rates
for specific areas. (Commodity rates still can not be used as they are
Industrial location patterns are constantly reflecting technological, economic,
not based on geographic conditions)
and population changes. Industry is no longer tied to rail. Freeways have made
the choice of sites much broader than it once was. At the same time they have
Both warehousing and wholesaling facilities were listed as well as a
caused land values to rise. Open land between cities has now become of great
list of other industries which might be potential suppliers to any new
value for plant location. A plant today must have ample room for expansion--a
industry.
factor that is forcing them out of our major metropolitan areas. However, fringe
area sites alone are not enough. These sites must be assembled, platted, favorably
Manufacturing cost ratios giving breakdowns by specific industries
zoned, and have adequate water supplies.
were compiled from the Census of Manufactures for the first time.
Comments from the group were to the effect that some manufacturers believe that
Jack Reich brought out the following points:
you can tell the personality of a people by the kind of public officials that are
elected. Indifference and self-satisfaction among the people are quickly revealed
Sell specifics that create a favorable and lingering impression in the minds
by the attitudes encountered in City Hall.
of your prospects. Pick your area's outstanding advantages, put them in easily
remembered terms, and concentrate on them. G M sells the key to power. You
should sell: efficient labor, satisfied manufacturers, inexpensive (not cheap)
Evening Meeting, January 7, 1954
labor, lower total wage costs (don't use rates).
Joint meeting of the Council and the Michigan Economic Development Commission
The Indiana State Chamber of Commerce has no industrial department. Its job
is to improve the "governmental climate". The state 18 unique in that it does not
Presiding: Dan F. Gerber, president Gerber's Baby Foods, Fremont, Michigan,
want federal assistance. At present it has a tax surplus and is undertaking a
chairman Michigan Economic Development Commission
gigantic road program without borrowing funds to do it.
Members of the Michigan Economic Development Commission present at the dinner
This independent attitude is also characteristic of Indiana's industries.
meeting were introduced by Dan Gerber. The first two speeches of the evening
Labor unions want no paternalistic employers. Indiana's labor leaders are respons-
meeting were given by members of the commission.
ible individuals whose attitude toward industrial development has been a major
factor for the state's sensational increase in per capita income from manufacturing
during the past six years.
32 -
- 31
A Detroit manufacturer a couple of years back moved a portion of his operation
to a small southern town where he employed about 250 people. The UAW promptly
organized the workers and won an NLRB election by a majority somewhat greater
"LABOR'S INTEREST IN INDUSTRIAL DEVELOPMENT OF THE GREAT LAKES AREA"
than we usually get in the north. Partly because the employer had depended
heavily on cheap labor in making his contracts, and partly because of the lack of
By Barney Taylor, managing editor United Automobile Worker, official publication UAW-CIC
collective bargaining experience of his new work force, a long strike took place,
with the result that wages and conditions are now not very far short of Michigan
Although the program for this dinner lists my subject somewhat broadly as
standards.
'Labor's Interest in Industrial Development of the Great Lakes Area"
I am somewhat
reluctant to assume the role of spokesman for all of labor not even
for
all
of
I was down there for a day or two and I can assure you I never saw a less
organized labor. I have no more desire to speak for Harry Bridges and his longshore-
docile group of men in my life. UAW representatives had to go in to keep down
men of the West Coast than I would for Joe Ryan and his longshoremen of the East
what might have turned into a shooting war. I have heard Michigan strikers talk
Coast. To get into a little different territory, I don't think that I could or
about a punch on a strikeleader's nose, but down there the talk was of shootin'
would speak for that arch-opponent of the St. Lawrence Seaway
Mr.
John
L.
Lewis,
irons.
whose social vision seems to be blocked by a pile of coal.
Even if it were desirable, it is not possible for Labor to separate itself
I do believe, however, that I can speak with some authority of the views and
from society as a whole. It is not possible for Labor to be a "special interest"
policies of the United Automobile, Aircraft and Agricultural Implement Workers of
group at odds or in some kind of conflict with those not members of unions because
America - known to all of you as the UAW-CIO - with the belief that those views
union members and their families form too great a portion of the total population
and policies are in harmony with the majority of organized labor, both CIO and AFL.
of the country. That is why Walter Reuther has said many, many times that Labor
The UAW has about 1,450,000 members. Of that number, 1,100,000 live and work in
must make what progress it can with the community and not at the expense of the
states touching on the Great Lakesway.more than 600,000 in Michigan, 90,000 in Ill-
community. Throughout history, progress made by stepping on the neck of one's
inois, more than 175,000 in Ohio, more than 100,000 in Indiana, 60,000 in New York,
neighbor has never been real or lasting. Because we in the UAW-CIO have recog-
55,000 in Wisconsin, 45,000 in Pennsylvania and 5,000 in Minnesota. There are about
nized this simple truth, we have sometimes been given undue credit for extra-
70,000 UAW members in Canada, with nearly all of them concentrated in the Province
ordinary social vision. But what some term "advanced" social thought is no more
of Ontario.
than looking at the cold facts of our life.
It's hardly necessary to go beyond these figures to establish compelling reasons
The kind of labor movement we are building in America is not one committed
for the UAW's most profound interest in the industrial development of the Great
to the proposition that our work begins and ends with another nickel or two in
Lakes Area. The question in your minds probably is: Does labor understand and
the pay envelope. We want to mobilize workers in the economic field and then
appreciate its importance? The answer, of course, is yes.
apply our organized strength to the struggle in the political field as citizens,
and to the whole field of social - and industrial - progress as citizens.
We are not interested in narrow sectionalism. We know that there are elements
of competition for the industry between various sections of the United States. and,
We do not want to patch up the old world so one can starve less often and less
indeed, between the various Great Lakes states. Labor would like to keep that com-
severely. We would much rather bring out a new model that would incorporate all
petition healthy and fair. I am a citizen of Michigan and I like the place where
of the finest innovations that modern thought, science and technology can devise.
I live. But I want Michigan to sell its legitimate advantages to industry and not
I think we are tooled up to do that job. I think we can conquer poverty and human
to depend, as a few southern states do, on unfair and unreasonable, tax-exempt,
insecurity if we can learn to use those tools. We know how to make things (and
industrial revenue building bonds, on unfair and anti-social labor legislation,
how to split the atom); but we must learn to take those things we know how to
and on a depression-scale level of unemployment compensation benefits. Such
make and use them to create human happiness and human security--not just for
incentives can hurt us here, while tending to perpetuate the backwardness of the
members of the CIO or AFL, but for everyone.
states that offer them--largely, I'm afraid, to transient and relatively undesir-
able industry.
When the CIO supports "Oil for Education" measures, it doesn't mean education
for children of CIO members only, but for all American children. When the UAW-CIO
Take the state of Tennessee, for example. The UAW-CIO has given unanimous
members contributed some $200,000 for relief of the recent tornado victims in
support to the Tennessee Valley Authority - delegates to our conventions from
Michigan and Ohio, not one cent was marked "for CIO members". Those funds are for
Michigan and Ohio and everywhere else want to see the region served by TVA grow
the relief of the whole community.
and prosper. In turn, the delegates representing the some 15,000 UAW members in
Tennessee give just as enthusiastic support to the St. Lawrence Seaway.
It is popular in nearly all organizations to sneer at convention resolutions
as so many scraps of paper. Yet, in the labor movement those resolutions adopted
Labor regards the St. Lawrence Seaway and TVA as both being in the national
in democratic conventions make up the actual living program for the union until
interest and not as matters of sectional favoritism. Despite the many valid and
the time of the next convention. I can speak here only for my own union, the
worthwhile incentives Tennessee has to offer industry, the legislature of that
Auto Workers: not one single resolution has ever been passed that was not designed
state has chosen also to offer short-sighted and regressive laws as an added
to benefit the great majority of the people and the country. Certainly many actions
attraction for the near-sighted. I get sort of a chuckle out of some Southern
of labor have been directed against narrow, short-term, selfish interests of some
advertising which offers an"ample, loyal, docile, Anglo-Saxon labor supply"--
employers and other small groups; but no action has ever been designed to advance
also cheap!
the union member by taking something away from his neighbor.
33
34
I have spoken of the impossibility of Labor separating itself from the rest
of the people, and I think that fair-minded people will agree that such separation
The speaker pointed out that the Great Lakes area has a productive capacity
is impossible. But let us assume that the will to place organized workers on an
greater than our own domestic economy can consume. Where does the answer lie
island of prosperity all by themselves did exist among the leaders of labor. I can
but in sending or selling more of our goods to those who wish to buy them? One
say categorically that such leaders would not be leaders very long. The individual
of the reasons we are unable to do this is because of some of our trade practices
union member is involved in many affairs outside his job. He has savings. He has
prohibit the countries that would buy from us from earning the dollars whereby
some kind of investment--even if only a small insurance policy. His brother, or
they could purchase American goods, agricultural products and mining commodities.
his father, or his favorite uncle, is a farmer. Maybe he ownes a small piece of
This nation has assumed the role of leader among the nations of the world. It is
land himself. He may own another house that he rents--or maybe he just rents a
incumbent, therefore, on the United States to take the initiative in removing
room to a clerk in a law office. He drives an automobile, goes to church, sends
the barriers to trade.
his children to school, pays taxes, goes to the ball park or golf course, belongs
to a civic or fraternal organization or both. His interests are widespread and
To those of us who live within the Great Lakes Basin, we often forget that
his union must also place no limit on its interests.
Canada is just as much a foreign country as France or Brazil, China, India, or
Japan. For to those who work in Detroit and have branch plants in Windsor, those
As the Constitution of the United States defines the duties of government, SQ
branch plants are closer than the outlying plants in the city of Detroit. Here
does the union also exist to promote the general welfare. Trade unions today
to the north of us we not only have a great, good and necessary neighbor, but a
should be among the best voices of the people. They must be responsive to the
neighbor who purchases more from the United States than all the other countries
needs of all the people if they are to perform their true function in a free
combined. Its growth has been phenomenal. If we wish to sell our goods there,
society.
we should lower some of the barriers that prohibit us from buying Canadian goods.
When I went to Governor Williams' office to be sworn in as a Commissioner of
In Detroit plants, one out of every seven employees owe their jobs to export
Economic Development, I asked him his views on the role of a labor representative
trade. That is credited to the automobile industry but actually its influence
on this commission. He said, "Do all you can, the best you can, for the people of
extends far beyond the confines of Detroit to Saginaw, Lansing, the western
Michigan and for Michigan industry." I told the officers of the UAW-CIO what the
section of the state and to the Upper Peninsula where copper and iron ore are
Governor had said, and asked them if they had anything to add. They said, "That's
mined. It extends beyond the boundaries of our state to the suppliers of the
good enough for us". And I've never had any further instructions since and expect
automobile industry. For example, a textile manufacturer in Hartford, Connecti-
to have none.
cut, sells his total textile output to the automotive industry. He was originally
violently opposed to the lessening of restrictions which prohibit us from carry-
I. am sure that progressive labor in each of your states is ready and willing
ing on a freer trade throughout the world. Yet the future of his own company
to work with you. If you and your state governments are willing to take labor
in New England was tied directly to the automotive industry, which is an export-
into partnership and I am sure that many of you already have done so - we can
ing industry and furnishes cars at a lower cost abroad than can the foreign manu-
make a team that can not only put up a successful defense for the economies of
facturer. The same thing is true of an electric motor manufacturer in Chicago.
our several states and the Great Lakes region, but we can move ahead to greater
He thought he had no interest in this subject because he makes only fractional
and better industrial development for us all.
horsepower motors, but at least half of his motors are sold to companies having
large export businesses. This is true throughout the country. Where the rub in
the whole question seems to lie is that when you increase exports you must in-
"FREER TRADE, ITS IMPORTANCE TO THE GREAT LAKES AREA"
crease imports.
From a talk by John S. Coleman, chairman Committee for National Trade Policy,
Alexander Hamilton first introduced protective tariffs in 1789 primarily
president Burroughs Corporation, Detroit
for revenue raising purposes, and secondly to shield the infant manufacturer.
McKinley added protection against low-priced foreign labor in 1878. Our degree
Mr. Coleman spoke briefly on the subject of what foreign trade means to this
of productivity is so great in the United States that other countries have
great industrial basin of the midwest, as summarized below. He mentioned
raised barriers against the importation of U. S. goods, particularly manufact-
President Eisenhower's State of the Union message of that very day in which the
ured items, because they cannot compete with the automatic machinery and the
president had urged the Congress to approve promptly our participation in the
high plant investment that we have in order to produce an article at the lowest
construction of the St. Lawrence Seaway and had endorsed the stand of the
possible cost. The productivity rate in Great Britain is one-half that of the
Committee for National Trade Policy. Mr. Coleman thought that in perhaps no
productivity rate in the United States; that of France is one-third; in the
other way than through an invested expansion of trade can our high degree of
rest of the world the productivity rate averages one-ninth of what we can pro-
industrial might be maintained.
duce here. So when hearing the argument that the United States cannot compete
abroad with foreign labor, it is interesting to note that we sold 16 billion
dollars worth of goods outside the United States last year, not including mili-
- 35 -
tary goods, in direct competition with Germany and other parts of the world, and
this has been going on since 1918.
- 36
"WEIGHING THE ADVANTAGES OF THE GREAT LAKES AREA"
Hence, year after year, we have been able to compete in other markets of the
world which have provided jobs for people in this area, particularly Detroit,
By John Tomb, McKinsey and Co., management consultants, Chicago
Cleveland, Milwaukee, Toledo, Chicago and Buffalo.
A great deal is heard today about the competition that Western Germany
The subject that your committee suggested we might spend a few minutes
is going to give us. Because of its wage rates and manufacturing genius, Western
exploring this evening has been labelled, "Weighing the Advantages of the
Germany will be able to manufacture export goods and undersell our markets. In
Great Lakes Area". I think perhaps I ought to tell you at the outset that
this civilized basin of Western Europe is a population 12 percent greater than
I am really not a mid-westerner, I don"t know if I am even qualified to dis-
the population of the United States, and an employed population 8 percent
cuss this subject, because actually I am a transplanted easterner. I do live
greater than all those gainfully employed in the United States. And yet the
in Chicago, and I work there, but up until a few months ago I was a Bostonian,
total gross production from there last year was only 27 percent of the gross
and prior to that I lived in New York for ten years, and prior to that
national production of this country.
Boston and its suburbs, so if you want to disagree with anything I say this
evening, you can lay it to the fact that I arrived here so recently that I
We know that increasing imports into the United States does not displace
really don't know much about the middle west.
employment here By increasing imports, foreign countries earn more dollars
which must be spent here, and which in turn will employ more labor in this
The question of weighing the advantages of the Great Lakes can be ap-
country. A national trade policy will do certain things, but the principal
proached, I think, from a number of points of view. Some of your speakers
one is to bring about some semblance of order in our customs regulations.
today have all ready done a very exhaustive job of covering a lot of the in-
Varying duties on importation of tuxedos from Canada depending on the trim
formation that relates to this whole question, and I just want to say now that
down the pants, on matches from Sweden depending on the decoration of the
I am very much impressed by the spirit that I sense in your meetings here.
match-cases, and on ping-pong balls from Japan depending on their use, bring
It seems that you have made up your minds to establish a regional organiza-
the point home.
tion that can advance and promote the interests of this part of the country.
I don't think I have ever participated in a series of meetings where people
It is in our national self-interest to encourage two-way trade and to
were BO avidly interested in building up a store of factual information that
get away from the aid that we have been paying six billion dollars a year in
they can take back to use in their daily work. This is without question one
taxes to support for the past six years. Some individuals and industries
of the most attentive groups I have ever had the privilege of participating
oppose foreign trade. What about the copper industry? Copper goes into
in or being a part of. I am impressed by what I have seen, and having had
motors and into automobiles, particularly Northern Peninsula copper. Perhaps
some experience with similar organizations, particularly in New England, I
the largest consumer of copper wire, next to the Detroit Edison Company, is
do want to wish you well in the program that has been outlined in broad terms
the American Telephone and Telegraph Company. Within the next five years, the
here today. I should think you could do great things to help promote the
first cables will be laid down between New York and England to transmit the
economy of this part of the country.
human voice. This is a 27 circuit cable that takes the highest type of copper
wire. What about our agricultural production? While the rest of the world
When I prepared the article for the Harvard Business Review that has been
is clamoring for food, there are no longer enough store-houses in the commodity
very kindly referred to several times today, I was particularly concerned with
credit corporation to take care of our surplus agricultural products.
the problem of plant relocation. Some of the advance material that went out to
you indicated that this was a problem in the Great Lakes Area, but if I may, I
The world looks to us today for leadership. We assist them politically,
would like to deal with the subject more from the standpoint this evening of
give them money for military use, but hesitate to put the economic foundation
how can the Great Lakes Area do a better job of attracting new industry. If
under them that they need.
you have looked ahead on your program for tomorrow, you will find that there
is going to be a panel discussion in the morning dealing with the question of
management versus location, and although don't want to predetermine the pro-
gram for the chairman of that group, I think at that time we may deal more with
the problem of how we in this area can do a better job of retaining the industry
that is already here --or to put it a little bit differently, how can we do a
more effective job of combating the tendericy for industry in the Great Lakes
Area to migrate to other parts of the country? Tonite, therefore, I would like
to concentrate our attention for a few moments on what are the assets that
make this part of the country an attractive place for industry to locate.
I think in starting out that we can perhaps agree that selecting an
37
industrial location is primarily a matter of economics. It is simply a matter
of selecting the location where management can obtain the maximum profit from
its operation. I would like to toss out for your consideration four major
38 , $
factors that determine location. First, where are a company's markets located?
Looking ahead or looking around a bit to a broader picture, where are some
Secondly, where do a company's raw materials come from? Thirdly, what are the
of these European or foreign markets that Mr. Coleman spoke of? -- a European
operating costs? --and I am thinking now of operating costs in the sense of the
market that is said to be only 27% of the industrial output of our country. That
differences between different parts of the country. And then fourthly, what
is a fantastic potential demand for American production. And thanks to the
kind of management can this organization expect to have? Partly because we are
President's recommendation today, and the recent decision of one of the key sena-
going to talk about management tomorrow, I suggest that we assume that manage-
tors to support the St. Lawrence seaway, I again would just like to raise the
ment is adequate for the purposes of our discussion this evening. So in talk-
question- what area in the United States is better equipped to provide manufact-
ing about markets, in talking about raw materials, and in talking about operat-
ured goods for our overseas markets than this Great Lakes section of the country?
ing costs, should we make one other assumption? Could we approach this problem
not from the standpoint of what have been the markets or the raw materials
The McGraw-Hill Publishing Company, in a survey or study it made of our
picture or the operating costs in the past, but let's look ahead into the future,
foreign market as of 1975, recently estimated that we could probably look for-
because I think most of you men in this room are primarily concerned with trying
ward to a tripling of our foreign trade by that time. That is the sort of ex-
to find locations for tomorrow, not with trying to find locations yesterday.
pansion of demand for American products that could go a long way toward sopping
Let's focus our eyes on the future, and see what this pattern looks like. We
up some of this unemployment which in recent weeks has become of growing concern
might call it a new look at the Great Lakes future. We have a map up here just
to all of us around the country. This, I will admit, is looking a bit into the
to orient everything. I am sure all of you are acquainted, without any further
future, and it requires making some assumptions on our part. However if we try
comment from me, with the five states that make up the Great Lakes region. And
to approach the problem of where industry should locate in terms of the market
so, as our chairman has pointed out, we have eight percent of the land area,
that we are likely to have in this country, and the market that we can command
twenty percent of the people, we furnish twenty-nine percent of the country's
abroad, it seems logical to me that there certainly is no part of the United
production, and thirty-two percent of the national income.
States that is better equipped to serve that growing market than the Great Lakes
Area. I would even go so far as to question whether there is any area that is
What has been happening in the last few years and what is likely to happen
as well equipped to supply it as this part of the country.
in the future to market aspects of this Great Lakes Area? To repeat what you have
all ready heard today, the Department of Commerce figures show that the Great
Let's jump along to the raw materials picture. As you gentlemen know from
Lakes Area has grown steadily in employment; it has grown to the point now
some of the statements made today, the Great Lakes Area is the center of the
where it is the largest geographical division used by the Bureau of the Census.
nation's metal producing and manufacturing industries. Chicago, for example,
As far as employment is concerned, it has now replaced the Middle Atlantic Area
has wrested from Pittsburg the nation's lead in steel production. The primary
in size. Outside of the South and West it is the only part of the United States
metal, fabricating, and machine industries have over sixty percent of manufact-
that has improved its income position considerably faster than the rest of the
uring employment in this East North Central region. This means that the impor-
country. For instance, from 1929 to 1951, per capita income in the United
tance of adequate supplies of raw materials is obvious and should not be under-
States increased by 133%. Ohio increased its per capita income by 141%,
estimated. Just what does that mean for this part of the country as far as
Wisconsin by 155%, and Michigan by 183 %. In other words, what we have today
industrial location goes?
is a situation where a larger share of the nation's income is centered in the
Great Lakes region than ever before. This Great Lakes region--bounded on the
The Pauley Commission, which recently turned in a very exhaustive study of
west by the Mississippi River, on the east by the northern border of New York
America's national resources, tells us that because of the rate at which we have
State, the Hudson River, and then along the Appalachian mountains to Tennessee
been using up our iron ore, our copper (even in the Northern Peninsula), and
and Arkansas on the south--is an area that the economists' own economic geo-
many of our other basic raw materials, we are going to become increasingly depen-
graphers refer to as the urban industrial market of the United States. This
dent upon foreign sources for these raw materials. Just to take one example, it
urban industrial market, which represents only twenty percent of the land area
is estimated that within the next twenty years nearly fifty percent of our iron
of the United States, accounts for nearly sixty percent of the nation's income
ore will come from abroad. I think is interesting that in the newspaper today
payments to individuals. And the significant thing about this urban industrial
there was an article about the first shipment of iron ore from Venezuela. Well,
market is that, because of the strategic position of the Great Lakes Area prac-
let's take a look at where some of these raw materials are going to come from
tically smack in the center of the urban industrial market, from this part of
other than Venezuela. And again our direction and attention seems to go in a north-
the country you can serve sixty percent of the nation's spendable income within
ward direction. We have the Steep Rock iron ore development in the Province of
less than twenty-four hours'time. How can anybody possibly ask for a better
Ontario; we have the Quebec-Labrador iron ore development; aluminum in Quebec;
situated position than the Great Lakes region offers, in terms of getting a
non-ferrous metals of all types or of many types in the Provinces of Ontario and
substantial chunk of the total demands for goods and services?
Quebec. We have the fantastic petroleum and natural gas developments that are
just beginning to come into their own in the Ontario Province. And then on top
Let's probe into it a little bit further. Mr. Coleman has already referred
of that, we have the South American, African and Asiatic sources for raw materials
to the growing Canadian market which sometimes we overlook. But Canada, as he
which the Pauley Commission tells us will become increasingly important.
told us, is far and away our largest foreign customer. And the Canadian market,
very much like the American market, is centered in the same geographical section
Again, the real significance of this picture, it seems to me, is that, be-
from the Atlantic Coast to the Pacific Coast. In other words, the center of the
cause of the availability of water transportation to this area--the Mississippi
Canadian market and the Province of Ontario are practically on top of our Great
River and the St. Lawrence seaway--the Great Lakes Area is in a position to
Lakes Area. Again, what more logical section is there in the United States for
capitalize upon this shift that is coming inevitably from domestic sources for
serving this vast and growing number one customer of ours abroad, than the area
strategic raw materials, to foreign sources for strategic raw materials. Certain-
that you ladies and gentlemen are interested in?
ly the differentials in the transportation costs between waterborne freight
and
40 -
39
For a quick specific example-- client company we made a pretty careful
study for, to determine the answer as to where to locate a plant, had a plant in
landborne freight, much as some of our railroad friends may hate to admit it,
the North and one in the South, making practically identical products. In 1951
can make all the difference in the world between operating an enterprise profit-
the labor cost fferential between the Northern and the Southern plants was so
ably and unprofitably. So to summarize on these two points, we have a picture of
great that the Southern plant was making twice as much money as the Northern
market development and a pattern of raw materials or natural resources avail-
plant. During 1952, some of these conditions that I just mentioned began to work
ability that seems to indicate that the location you occupy here in the Great
in the wage picture of this particular company, and the result was that by 1953
Lakes Area will put you in a particularly favorable position, especially as time
the differential had disappeared entirely.
goes on, and as foreign markets expand in their demand for our products. As
foreign sources of supply grow in importance as the source of raw materials,
The industry provides a similar example. I will agree that very
these factors put you in a particularly favorable position here to provide the
few people are interested in the hosiery industry in this area, but think
kind of inducement that will help you do a more effective job of bringing industry
that this is significant as an indication of what is going on. In 1951, the
into this area.
North-South differential in average hourly earnings was eight percent for full-
fashioned hosiery. The following year this differential had entirely disap-
Now, some of you may be saying, that is all very fine, but we don't need to
peared, and in 1953, there were certain months in which the hourly rates in the
have someone from Chicago come over to tell us these things, we knew these things
South actually exceeded the hourly rates in the North. The hosiery industry is *
already. But how about this problem of operating costs? Well, how about them?
one of those few industries for which the Bureau of Labor Statistics compiled
I sometimes think that there may be a similiarity in this problem of operating
monthly comparisons on a regional basis. They don't have appropriations to make
costs to some of Mr. Coleman's comments about the ping pong balls, because I
similar comparisons for many industries.
have an idea that some of our good friends who have been attracting new plants
to other parts of the country have been putting across a story that couldn't
You have already been told in one of the sessions this afternoon that one of
always be supported by facts, that is, if people would take the time to get the
the three big automobile producers has a long-standing policy of no geographic
facts. And the most important element in this pattern of facts, it seems to me,
differentials. When the Continental Can strike was settled the other day, one of
is founded on the basis of not only my personal experience with this problem,
the agreements was a program to eliminate geographic differentials. Last year
but on the basis of a good many discussions I have had with business men who
the steel industry got rid of its traditional North and South differentials. So
have faced up to it, and also on a certain amount of economic statistical re-
here we have a pretty definite pattern. It may not take place one hundred per
searching- the most important single factor, I repeat, is that whatever regional
cent over night, but I think the important thing for you people in your discus-
differences in operating cost patterns we may have had in this country in the
sions, regarding any one concerned with locating in this area, is that you don't
past are beginning to rapidly disappear. As a matter of fact, in some instances
care what the historical differentials have been, here is a trend that is very
already the pendulum has swung so far that if we were to go out and get the facts,
rapidly taking shape.
I am sure a lot of us would be surprised to find that certain portions of the
Great Lakes Area are more favorable to locate in from an operating cost stand-
Because Mr. Cisler is in front of me, and his company is one of the organ-
point than some of the sections of. the country that have been beating the tom-
izations in this area that from my own observation has done an outstanding job
toms, as our friend from the UAW told us, about their docile low-cost labor supply.
of preaching the advantages of this area, here are a few comparisons in the
utility industry. You have to have a lot of meter men to run a. public utility,
Let's just look at this a little more carefully. I think there are several
gas or electric. The average hourly rate, according to the Bureau of Labor
factors that have influenced the change in the operating cost picture. First of
Statistics, is $2.01 an hour in the Great Lakes area; in the Southeast, the
all, as one of the speakers mentioned this morning, some of the Southern states
Carolinas, Georgia, Florida, etc, $2.08 an hour. That is not much differential,
have actually commenced to have a loss of population in the past decade, meaning
but here the Southeastern rate is actually higher than in this part of the
fewer people to man the jobs that industry wants to take care of. Against that
country. For trouble men the rate is $2.19 in the Great Lakes area, and $2.21
we have the fact that many of you are aware of, that certain of our large manu-
in the Southeastern states. Maybe some of you have doubts about BLS statistics,
facturers of durable goods have found it desirable to locate assembly plants
but according to what Uncle Sam reports, here is one instance where the Southern
closer to the consumer market. This has been particularly true of automobiles,
rate is actually higher than the Northern.
refrigerators, production of that type, for transportation charges for a finished
product are particularly heavy. So we have had this dual influence going on at
Let's look at one other aspect of labor costs, indirect personnel-- the time
the same time--a loss of workers in the labor force, and a very active program
study people, the foremen, supervisors, office workers, etc., employees of that
on the part of certain manufacturers to set up plants in an area that was losing
general nature--anyone outside the direct labor category. Again, a study we made
part of its labor supply. I don't need to tell you what the result has been.
literally shocked our client; the head of manufacturing refused to admit this
It is just what you always expect in the law of supply and demand. Fortunately
condition existed, and hauled out a little black book of wage rate figures, and
the law of supply and demand doesn't stop at the Mason-Dixon line as far as
when he checked them he was quite chagrined to find he couldn't disagree with the
wage rates are concerned, in spite of the things done down there to keep wage
figures. He found that in this company's Southern plant, or plants, fifty percent
rates low.
of the indirect workers were getting as much as twenty percent more in pay than
their counterparts were getting in the company's Northern mills. And that is not
a unique situation. Higher rates of pay in the South have for a long time chare
41
acterized skilled workers such as electricians. These comparisons have recently
42
been taken from the Bureau of Labor Statistics' reports for July 1952. Electricians
in Milwaukee get $2.60 an hour; in Memphis, Tennessee-which I understand liter-
I hope that nobody will feel from what I have said here that I am trying to
ally flods some of the manufacturers in this area with all sorts of attractive
suggest that it is completely wrong for industry to ever consider locating in
brochures about the advantages of doing business in the State of Tennessee--the
the south. All I am trying to bring out is that as you sit back and try to
wage rate is $2.75, in Columbus it is $2.63; for plumbers the rate is $2.70 in
appraise the advantages of the Great Lakes Area, it seems to me that there are
Milwaukee, $2.75 in Columbus, $2.80 in Memphis. These are straws in the wind,
certain trends going on in this pattern of operating costs that you and your
I submit, and they are the kind of straws that a lot of people haven't taken the
customers or your clients should be thoroughly aware of, and I feel personally
time to pull out and evaluate in terms, of what is likely to be the actual cost of
that if they are aware of them you will improve your ability to sell them on the
operating a plant if they decide to locate in some other part of the country
Great Lakes Area.
that is not as favorably situated with respect to markets and raw materials. The
same picture is true on clerical rates of pay. I will skip the figures because
Let's just take a quick look at the tax picture, because I think in certain
I think we are perhaps running a little behind time, but please take my word for
states of the Great Lakes Area that has been a tough problem. Unfortunately
it, when you go down South you can expect to pay fully as much, even in a city
there isn't much on comparative tax data. Several studies were made--one in
like Atlanta, and in Dallas you pay more.
my State of Massachusetts, another by a student at the University of North
Carolina. These studies may be subject to certain limitations and qualifications,
Part of the wage costs of business organizations today are fringe benefits.
but I offer them to you as practically the only comparative data available, and
Here we find the same situation. Some companies, even though they are not union-
they do seem to tie in with the information that I have gathered verbally from
ized, and we frequently hear the lack of labor unions is one of the big induce-
various business men not only in this group but elsewhere.
ments of a southern location, are finding that it is becoming more and more desir-
able to offer fully as much in the way of fringe benefits in the South as in the
The State of Massachusetts was concerned about the high level of taxes in
North; and the main reason they do it is to keep the labor unions out. I know
Massachusets, and decided to take twenty Massachusetts companies and locate them
of one company that voluntarily provides pension benefits that cost considerably
in several different communities in the United States--and one, incidentally, was
more in its southern plant than the payments it made to the union pension fund
Lansing--to find out the tax load. They sent blueprints and all sorts of data to
in its northern plants. And again we have government figures on the extent of
permit the local appraisers to arrive at a fair valuation of the tax load, and
fringe benefits in various southern locations which indicate that a good many
they found that with Massachusetts as an index figure of 100, Lansing's tax rate
southern communities, at least for whom this information is available, have
would be 97, South Bend's, 80, and Charlotte, North Carolina would be 113, which
caught up with or surpas northern communities in the extent of coverage as far
doesn't make that part of the south sound like a very desirable place to locate.
as fringe benefits are concerned.
I had occasion to play a part in a comparative study for one company that
There is another aspect to the labor picture, and then I will touch on taxes
involved the State of Georgia, and much to the surprise of that company, its tax
and we can call it an evening. This other part of the labor picture has already
agents came up with the facts that the tax load in the State of Georgia was
been referred to a bit in the various discussions- what I would. characterize as
higher than the northern community where that company was located.
the inflexibility of labor in the south. This is particularly true of the metal
fabricating and metal using trades. A number of companies in this part of the
Mr. Floyd, the student at the University of North Carolina who made a study
country, I understand, have made studies from time to time of possible locations in
of a hosiery company and a furniture company, two companies actually operating
the south. One of the reasons that they have decided to remain here is that the
in the State of North Carolina, went to the tax authorities in North Carolina and
supply of skilled labor in the metal trades just does not exist in sufficient
got the tax returns, So he would have the information on what it would be in
volume in the south, and that is particularly true if once after you locate down
other locations, he tried to get the tax load in nineteen different states; and
there, you enjoy a spurt of business and have to expand your operations. You
this is perhaps the biggest shocker of all- Ohio consistently turns out as the
may be able to staff a plant of 100 people, and if fortune smiles and you need
to expand to 200, you might have a difficult time recruiting the personnel you
lowest tax state; Mississippi, which has probably done as much as any other
need
state I know of to beat the drums for its low taxes, turns up in one case to be
the highest, and in another the second highest. Michigan and Indiana, in that
Tied in is a, very important second point--the versatility of labor. In talked
order, are the next lowest behind Ohio; while going to the other end of the scale,
to a number of business men who feel this way about the situation. They say 11n
Arkansas, Illinois, North Carolina, South Carolina and Georgia are at the high
end of the scale.
what we, are talking about is a relatively unskilled class of labor, the kind to
run a sheeting mill for instance, sure, they can do a lot better for themselves
if they go south. But as soon as they go into the kind of production that 18the
Even when we turn to the picture of unemployment taxes we find that Indiana,
characterized by changes in the production. line, as in certain classi ications of
Ohio and Illinois are relatively low cost states, while Louisiana, North Carolina,
apparel like women' wear, where there. are, seasonal changes, and the line one
Tennessee, Mississippi, Georgia and Arkansas are in the upper half as far as tax
year is completely different than the previous year, people who have had exper-
load is concerned, according to a study made in New York several years ago.
ience with that type of production line say that the southern worker in many
cases finds it difficult to adapt himself to production line changes. In fact,
These are factors that I offer to you as some of the conditions that seem to
one fellow I know went 80 far as, to say that they went completely to pieces, and
be developing and for which in many cases there is a very logical explanation,
the company had to pull back their operations to where, they could take it. as far
one being that as these southern communities have expanded, there has been a grow-
ing demand for increased community services and government provided facilities of
00
all kinds-hospitals, police, housing, schools--these all have to be paid for,
43
and I might say they have to be paid for even though a community induces
44
industry to move in on a partial or completely tax-exempt basis. More and more,
He cited the four reasons listed below as the most usual ones that bring about
industry seems to be coming to the conclusion that it doesn't pay to take advantage
plant expansion or plant relocation. They are:
of local tax exemptions, because somebody has to foot the bill, and if you don't
A present shortage of adequate facilities;
today, you are probably deferring until tomorrow the cost of financing government
The introduction of a new product into the line;
in the area in which you decide to locate. So here we have a tendency that seems
A lack of suitable manpower;
to be developing, and I can't emphasize too much that many of these conditions seem
Personalities.
to have come up to the point that I have mentioned here only in the past year or two.
Not infrequently this latter point--personalities--is a predominant reason
As a matter of fact, if you look at the changes in the level of wage rates in
for the relocation or expansion of a plant apart from its present operation
some Southern communities in a period of twelve months time, I think you would be
Considered here, also, are the prevailing local conditions in the community.
quite shocked at the amount by which the increase in the Southern rates has exceeded
In any event, there is seldom a single answer to the problems which cause a company
the increase in the Northern rates. There will be communities in the South that
to move its operation from its present location.
don't fit into this pattern; I am sure there are communities in this part of the
country that don't fit into the Columbus or Indianapolis or Detroit or Cleveland
In pointing out the general point of view held by Continental Motors in
or Chicago pattern; so if anybody is making comparisons it is important to compare
analyzing locations for new facilities, Mr. Altman stressed the fact that his
equals, and not make the mistake that management I am afraid all too frequently
company is thinking mainly in terms of technical and mechanical skills, along with
makes of comparing operations in a large Northern community with a small, back-water
the necessary and needed management to operate this type facility.
town in the Southeastern part of the country.
The first procedure in setting up an expansion or relocation program is to
If we go back to our original pattern of three reasons--the three basic reasons
adopt'a table of merit, listing particular factors such as people, sources of
or factors that influence the profitability of operations--maybe we can agree that
supply, utilities, educational facilities, taxes, salary scales, labor rates,
as far as the market opportunity is concerned, there is no section of the country
and community attitudes. All these factors are identified and weighted according
that offers more than the region that you people are doing business in. As far as
to their importance to the particular type operation to be undertaken. It is
the availability of raw materials is concerned, it seems to me that there are many
important to realize from the outset that the ideal will never be reached, but
advantages that industry would enjoy in this part of the country that it would lose
that the area chosen for relocation or expansion will be the best compromise
in other sections. So that brings us down to the third factor of operating costs;
between all the various factors involved.
and if this pattern that I have suggested here is at all applicable to any of the
companies you know that are thinking of locating here or some place else, maybe
Any program has as its first and most important consideration, people--those
you can persuade them to take a pretty careful look at the picture before they
persons who will be charged with the responsibility of staffing and operating the
make up their minds; and I hope for your sake and the Great Lakes States that they
facility. Full consideration is given as to whether staff personnel and skilled
decide this is the part of the country they want to be in.
technicians will be moved from the existing operation to the new plant or whether
all personnel will be recruited from the new area.
Morning Meeting, January 8, 1954
Investigations are made as to the locations of sources of supply for the new
operation, the cost of transporting raw materials to the new production lines,
Presiding:
and the availability of subcontractors in the new established area. Another impor-
Harry Shearer, assistant secretary Detroit Board of Commerce
tant consideration is the location of markets and the shipping costs that ensue as
the result of the new location. A new area also undergoes thorough investigation
Symposium: THE RELATIVE INFLUENCE OF "MANAGEMENT FACTORS" AND "LOCATION FACTORS"
as to the availability and cost of utilities, such as water, gas, and electricity,
FROM THE POINT OF VIEW OF INDUSTRIAL DEVELOPMENT
and what kind of cooperation can be expected from the utility companies and local
governments in extending power and gas lines. The utility system, depending upon
Chairman:
the type of operation considered, often plays an important part in relocation or
Cliff Gildersleeve, industrial commissioner Cleveland Chamber of Commerce
expansion plans.
Panel Members:
Mr. Altman particularly stressed the predominant place that the local educa-
Peter Altman, engineering consultant, Detroit
tional facilities play in the present"expansion'and relocation plans, This has
Ray Hartman, area development salesman, Cleveland Electric Illuminating Co.
taken on added importance to manufacturers since quality control plays a most
Maurice Fulton, Chicago manager Fantus Factory Locating Service
necessary part in any successful operation. There are many companies who do not
John Tomb, McKinsey and Co., management consultants, Chicago
now have proper testing and laboratory facilities and are dependent, to a large
degree, upon laboratory facilities and testing equipment available in universities
The first speaker, Peter Altman, vice-president, Continental Motors, Detroit,
and colleges. Apart from this physical-technical skill, nearness of educational
outlined the method his company uses to weigh the advantages of a given community
facilities provide the new operation with a choice supply of capable personnel.
when considering an expansion or relocation.
- 46
45
In considering the weight that should be given to the labor cost factor, Mr.
Altman emphasized that the base scale is not the all-important question, but ex-
tensive consideration should be given to the production work that comes from the
They want to know the occupational history of the area, and how these skills
Management is also concerned with the social background of the community.
payroll dollar. A criterion used in considering this factor is not necessarily
would fit into their picture of operations. This is of particular importance to
the prevailing wage rate, but the productivity of the workers in relation to the
some industries, in that they would be able to ascertain the number of new per-
going wage rate.
sonnel that would need education in their jobs, and at the same time management
would be able to gather in new workers that would require a minimum of educational
The final consideration that is given to expansion or relocation areas is the
training. Along with this goes an investigation of the community's school facil-
general community attitude toward the establishment of a new plant. Unless the
ities, and the occupational skills these schools teach.
community genuinely welcomes the new plant into its economic, social and cultural
family, no company will seriously consider establishing itself in that area.
Lastly, industry is interested to know of the mental attitudes of the commun-
ity, the people, and its organizations toward accepting a new industry in their
When the work of gathering these facts and weighing them according to the
midst; and in the last analysis it is this team effort on the part of the commun-
individual merits, is completed, and usually this is done by a committee charged
ity to prove to management that they not only have a willingness, but a keen desire
with location or expansion responsibility, the material is presented to the execu-
to have an industry locate with them, that is the final selling point.
tive committee for consideration. From this committee comes the final decision as
to which area the company will move to.
much a dogma that can be traced reasonably well by such instrummts as the BILF
According to the next speaker, Maurice Fulton, industry locations are pretty
The second speaker, Ray Hartman, prefaced his remarks by mentioning the
(Basic Industrial Location Factors) published by the U. S. Dept. of Commerce.
great amount of research time necessary on the part of a utility company staff to
Some industries, weigh certain factors more heavily than others, but this, of
gather the facts and present them to an industry for consideration preparatory to
course, is entirely dependent upon the situation prevailing within the particular
their proposed expansion move. He pointed out that a given company has certain
industry. Certain set examples would be: the aluminum industry which makes water
basic problems in which they are more interested in than others, and these must
supply an all-important factor, producers of chemicals, or an industry which is
be given every due consideration when presenting factual information to that company.
producing for a single customer.
Mr. Hartman included under three broad headings all the various factors that
Mr. Fulton, however, concerned himself in his talk with the case of a manu-
an industry wishes to consider before relocating. These three headings are:
economic, political, and social. Under these come all the facts that are consid-
facturer looking for a relocation or expansion move who has a freedom of choice,
with no particular or unusual requirements. He points out, first of all, that
ered for a new location, such as markets, labor conditions, taxes, railroads,
there often exists a difference of opinions between officials within a company
sources of supply, utilities and residential characteristics.
each with equal weight in determining the matter of relocation. One official pre-
as to the best spot in which to locate. He gave, as an example, two vice-presidents,
Mr. Hartman reiterated the previous speaker's point that an industry is great-
ly concerned with the people in the locale where they plan on setting up a new
ferred a small community and the other vice-president preferred a large city. One
facility. He stressed the fact that population information is most important and
was able to muster convincing reasons for the selection of a rural community, and
the other for the selection of a metropolitan area; perfectly legitimate cases
must be correct. In many instances, industry does not want to be responsible for
more than 10% of the labor force in any given area. In every case they want to
could be made for the establishment of industry in both areas. The point that the
know all sides of the labor story, not just one side. Plants coming into the
best points of all factors considered in making such a selection.
speaker wanted to make here was that a location is a matter of compromising the
area served by Mr. Hartman are seldom worried about the prevailing labor rates.
They simply want to be sure that they do nothing to upset the current rates. He
remarked also that industries are now considering to a greater degree the politi-
Mr. Fulton stated that the first procedure Fantus uses-1s to determine from the
cal complexion of a community before settling there.
that company. He stated that this is a very difficult process because the compan-
company with which they are working what particular factors are significant to
Industry is interested to know what type of zoning obtains, and kinds of
ies do not have readily catalogued the weighted factors necessary for consideration
services rendered. Company representatives want to talk to public officials in
in making a move; an example of this is the determination of how many people will
terms of job opportunities, and to ascertain the attitude of the entire govern-
be on the new payroll, how many of these people must be skilled, and how many can
mental structure towards the industry. They are interested in school facilities,
now is toward a greater degree of training by industry itself, rather than an ex-
the company afford to train. In this regard, he stated that the trend in industry
and the police and fire protection that can be expected. They are not particu-
pectation on the part of business to hire trained personnel locally. This is
larly interested in obtaining any tax favors, but are very positive in obtaining
equitable tax rates.
largely due to the fact that there is a lack of desire on the part of young men to
take labor. apprentice training, and also because of the prevailing shortage of skilled
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"METROPOLITAN AREA INDUSTRIAL DEVELOPMENT PROBLEMS"
A second very important factor that Fantus tries to determine at the outset is
By Paul Reid, planning analyst, Detroit Metropolitan Area Regional Planning
the general area in which the industry is interested. This determination is made
Commission
in some instances by detailed system of graphs to determine present sales, history
of past sales, feature sales and potential sales. In this system attention is given
Importance of Metropolitan Areas
to detailed market analyses, suppliers, and other allied items.
From the standpoint of industrial development, the most outstanding feature
The third important factor emphasized by Mr. Fulton are the intangibles that
of growth in our nation over the past 15 years has been the expansion of our
enter into the selection of a location. For each industry these are individual
metropolitan areas, economically and population-wise.
items and cannot be generalized upon. In closing, he remarked that no company
gets the ideal location, but it is always a matter of compromising and weighing
In the five Great Lakes states, the Bureau of the Census lists 37 standard
the strong points of one area against those of another area.
metropolitan areas. Of these, 32 are wholly within the five states, while 5
have major or minor parts in adjoining states.
The latest official figures we have on manufacturing employment are for 1947.
The final speaker, John Tomb, stated that an industry considering plant reloc-
In that year, the five Great Lakes states had a total of 4,317,812 people employed
ation or expansion must have a thorough understanding of both the external and the
in manufacturing enterprises. The 37 standard metropolitan areas accounted for
internal questions that need to be answered prior to selecting a particular area.
3,220,415 or 74.6 percent of this total manufacturing employment.
In his remarks, Mr. Tomb investigated entirely the internal analysis that a company
should make of itself prior to moving from the present facility. In considering
According to the 1950 Census, our five Great Lakes states had a total popula-
this, he stressed the part that the community must play in keeping its present
tion of 30,399,368. Our 37 standard metropolitan areas (each over 90,000 in popu-
industry satisfied.
lation) accounted for 18,796,107 or 61.8 percent of the sum of the population of
the five states.
By citing personal experiences that have been encountered in New England, the
speaker showed the great need for self-analysis on the part of industry preceding
It is within this framework--this structure of 5 states, dotted with metro-
any contemplated move. In one instance, a New England woolen manufacturer blamed
politan concentrations of population and manufacturing--that we should view the
his poor production output on the improper location of his plant. In the same
industrial development problems and the current problems of these five mighty
vicinity, however, a plant with parallel facilities and employment produced six
Great Lakes states.
times again the output of the first manufacturer.
As an added indicator of the importance of our metropolitan areas, let me
This point was made by several other illustrative cases. Such personal cases
cite some figures compiled by the Territorial Information Department of the
brought out in a very vivid way that management does not always move for considered
Commonwealth Edison Company of Northern Illinois. In the 7 years from July
and positive reasons, but often the reasons for moving do not have a basis in fact.
1945 to July 1952, a total of over 2.6 billion dollars was spent on new indus-
He also remarked that labor and transport costs are tending to become equal in all
trial plants in the 20 major metropolitan areas of the United States. Their
parts of the country and less and less a factor for plant location moves.
share of the total construction investment was $1,005,938,000 or 38.3% of the,
total. No other area in the nation made such a significant addition to its basic
It is Mr. Tomb's considered opinion that industry must examine its own internal
industrial structure!
operations such as market research analysis, engineering services, factory layout,
process improvement, production and planning techniques, which will cancel out need
Location of Industrial Expansion
for excessive inventories before deciding upon a new or expanded location. It is
necessary to compare the company with successful businesses throughout the country
A very considerable part of this new industrial growth has taken place out
in order to determine if they are failing to do those things which successful
side the central cities of these metropolitan areas. As you probably know, a
business does as a matter of course.
metropolitan area--according to the Bureau of the Census--is a central city
(or cities) with a population of 50,000 or more and the adjoining counties with
In all this work, Mr. Tomb pointed out that the existing industrial group in
a non-farm population of 10,000 or more each and with close economic relationships
the community should have, as its first consideration, a meeting with representatives
to the central city or cities.
of industry in their locale, and investigate and analyze in a very businesslike way
these factors.
I have not had time to assemble data on other metropolitan areas regarding
industrial growth outside the central city. But here are the figures for the
In closing, the speaker pointed out that if management will get its own house
Detroit metropolitan area which covers the 3 counties of Wayne, Oakland and
in order, location may become a secondary issue, and that the community can play a
Macomb. From the fall of 1950 to the spring of 1953, tax amortizations granted by
very helpful part in assisting management to review its own internal structure.
the federal government showed that a total of $467,471,000 was expended for new
plants, plant additions and equipment in the Detroit metropolitan area. Now only
21% of these expenditures were for industrial construction and equipment within
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the central city of Detroit; 79% was expended outside in the suburban and per-
ipheral areas. In other words, about 4 times as much was expended for industrial
For the METROPOLITAN AREA it has often meant:
expansion outside the central city as inside. During the same period, 65% of the
Expensive string installations of public facilities;
dollar volume of defense orders went to plants outside the center and only 35% to
New traffic congestion patterns at unexpected points;
manufacturing plants within the city of Detroit.
An uneven and irregular rate of development in peripheral areas,
with some communities prospering and others suffering from the
Implications and Problems
land use pattern brought about by new industrial developments.
There are probably many "why's" for this dispersion and growth of industrial
For the INDIVIDUAL COMMUNITY, it has meant in some cases:
enterprise outside the central cities within our metropolitan areas. Certainly
An influx of new residents who work in a nearby community but who
two of the most important are: the need for more space for expansion and efficient
must be given school, street, water, sewer and other public facil-
operation, and the desire and economic need to get away from the friction of traffic
ities where they live;
in our congested central cities.
More workers in the new plants than the community can house;
Absentee management and ownership, depriving the growing community
This dispersion and diffusion of manufacturing in the open areas surrounding
of the civic and governmental leadership that management and owner-
our central cities has many good aspects.
ship provide where they live, not where their business is located.
I want to stress this last point with the example of a large public utility
For the MANUFACTURER it has meant:
in Detroit and the surrounding area. Its executives live in the suburban com-
Ample room in which to build efficient, one-story structures;
munities and take an active part in the community life.
Room for off-street loading docks;
Parking space for workers' cars;
I'm not waving the crying towel. I'm simply trying to point out some of the
Land at a reasonable price for future expansion and development
problems of industrial development as I have observed and experienced them in one
of the enterprise.
metropolitan area over the past 5 years. I trust these problems are typical. I
would not continue in the job I hold, or even presume to raise these problems here
For the METROPOLITAN AREA it has meant:
if I didn't think something constructive could be done about them. I had a public
Some relief from traffic congestion--actual and potential--
speaking teacher in high school who used to say; "Either put fire in your speech,
within the central city;
or put your speech in the fire". Let's see if we can use this fire to forge
A 'higher' use of idle or farm land or vacant land;
something better for the future in the character of metropolitan industrial
A significant increase in the economic base of the area.
development.
For the INDIVIDUAL COMMUNITY (city, village or township), it has meant:
Strategy for the Future
An increase in the tax base;
Employment for some of its residents;
These are the points to outline as a program for the future. It seems to me
Expansion of retail and service trades;
that the facts and conditions of today require that we view industrial development
A shorter journey-to-work for some of its citizens, because of
on a metropolitan basis.
location of new plant.
The economic dynamic that has resulted in our metropolitan manufacturing
because of the multiplicity of local units of government in our metropolitan
complex is sound. It is the arrangement of the various enterprises,
areas and the checker-board, hop-skip-and-jump arrangement of these governmental
the use of the land in our peripheries in the best possible and most
jurisdictions, in many cases this industrial expansion beyond the central city
rational way that is the major consideration. The physical environment
borders has given rise to a whole series of serious problems.
and layout of the whole metropolitan area is of vital concern to suc-
cessful industrial enterprise. The economic health of the central city
For the INDUSTRIALIST, it has meant in too many cases:
is related to that of its suburbs and satellites. And the economic
Difficulty in obtaining necessary public facilities, such as water,
well-being of each community in the periphery depends in the long run
sewer lines, streets and highways, and even adequate fire protection;
on the conditions of manufacture, trade and commerce in the whole area,
Longer journey-to-work for many employees with the resulting nervous
so we ought to take a metropolitan viewpoint for our industry.
tensions and lowering of efficiency from driving through heavy traffic
to reach the outlying plant.
Some governmental agency or civic association should have the responsibility
The difficulty of dealing with rural-minded local officials that
for creating a sound land-use plan for the entire metropolitan area, allocating
often tend to be parasitic instead of cooperative toward the new
in the proper places ample land for industrial development, residential construc-
industrial development.
tion, trafficways, park and recreation areas and central commercial enterprises.
Sound and rational zoning can only develop on the basis of a plan first.
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Areas for industrial land use, in this all-over plan, need to be laid out
It seems to me that we have as much a responsibility to protect our communities
along or near the major arteries of transportation--rail and highway.
and people against bad economic development as we do to promote good development.
Sound research and planning are basic to and should precede in time and thought
any promotional program. And in the Detroit area we are finding that research
The railroad industrial men work earnestly and long--and justifiably
so--for the location of new industrial enterprises along their rights
the promotion program itself.
and planning, when properly done, are not only basic but also extremely helpful to
of way. But most of them know, as you know, that not all industry
wants, needs or will accept sites along rail lines; most of the heavy
Our metropolitan areas are actually families of communities. The economic
industries do, and also those light industries that require vast quanti-
ties of raw or semi-finished materials that can be moved efficiently only
health and civic welfare of each is related to the others, closely and legitimately
related because of their integration of functions.
by rail transportation. Many light and smaller industries thrive well
along major highways and should not clutter up good rail sites. These
Summary
off-rail industries should be planned for as well as residential areas
which should not clutter up rail sites.
Most of the industrial development in the Great Lakes states in the future
will take place in our metropolitan areas.
Last spring, Jack Howard - vice president of the American Institute of
Planners prepared a very important paper on the subject: "The Express
Highway: Its Industrial Development Potential". He took the city and
Sound development must be planned and oriented to the total metropolitan
area basis--physically, economically, and socially.
state planners to task for negligence and ineptitude. Planners, he
maintained, are certainly well aware of the impact of expressway programs
on industrial location, but they don't seem to be bringing their areas
Afternoon Meeting, January 8, 1954
of knowledge to bear on the problem of the location of these highways.
With all five of the Great Lakes states now building or planning more
Presiding:
expressways, many of them through, around or near the metropolitan areas,
Charles Crabb, manager industries division Milwaukee Association of
it is high time that planners and industrial developers get together with
Commerce
state highway departments and increase the opportunities for industrial
growth that the economic and efficient locations of these new highways
Panel Discussion: INDUSTRIAL PROMOTION TRENDS AND THE PLANT LOCATION
present.
OUTLOOK FOR 1954
Obviously residential development in the peripheries of our metropolitan areas must
Chairman:
be related to industrial developments.
F. R. Henreken, executive director Committee of 100 of South Bend
and Mishawaka, Indiana
The long journeys-to-work, the traffic snarls and hazards, the high
employment turn-over due to lack of housing near new plants must all
Panel Members:
be reduced to a great degree if our industrial development is to be
sound and lasting. Here the industrialists as well as the local
Horace Brewer, industrial development director, Consumers Power Company,
Jackson
communities and the entire metropolitan area must be concerned. The
Koder Collison, of the Springfield, Ohio Development Commission
finest of engineering skills and construction practices are utilized to
Roger Hubbard, Hubbard Associates, industrial realtors, Detroit
erect efficient production plants.' But seldom is the same quality of
president Michigan Chapter Society of Industrial Realtors
thought, ingenuity and promotion expended on the problem of homes for
Maurice Fulton, Chicago manager Fantus Factory Locating Service
the workers close to these plants. An example is the lack of adequate
housing close to the Willow Run plant, which was a major cause of large
Unlike the panel sessions preceding this, the panel members, as introduced,
labor turn-over in the Kaiser-Fraser manufacturing activities
were called on to make only brief remarks concerning their viewpoints of the dis-
With manufacturing and residential areas laid out in the metropolitan area in a
discussion. cussion subject, 80 that the major portion of the time could be devoted to group
rational and liveable pattern, it is also obvious that a master plant of public fac-
ilities -- water, sewer, and highways -- must complement this land allocation to
Horace Brewer read excerpts from an editorial appearing in the January 4th
make it effective. In many of our metropolitan areas the only adequate solution
edition of the Tupelo, Mississippi, Daily Journal about expenditures for industrial
seems to be a metropolitan water and sewer authority that can make these extensions
development in the South and about the competitive aspects of TVA VS. the private
on an areawide scale.
power company as it affects industrial development. He also reported the change
his company has noted in purchasing techniques in recent months--that salesmen are
And finally, any sound plan for desirable and efficient metropolitan development
now calling on Consumers Power Company's purchasing department--the first evidence
must rest on comprehensive and penetrating research to lay bare the past trends
of sales efforts since materials became so difficult to obtain. He feels their
of industrial development, assess the current growth and dispersion and estimate
company, too, must make greater effort to sell their services as we are now
the future potential of the area.
approaching an era of competitive markets.
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54
shorter driving distances, and in some instances, lower tax rates than in those
Koder Collison evidenced optimism concerning the future outlook although he
areas where needed utility and other services must be extended to serve industry;
feels there is bound to be a leveling-off process which has now begun. But it will
that while sites in these larger cities are not plentiful there is land in the
be of short duration and by 1960 another boom may be expected which will be related
so-called blighted sections which could be used for industry and which when made
to the increase in population. He indicated the need for more thorough study and
available is quickly picked up; (2) That a scanning of the "help wanted" section
consideration of industrial zoning problems in our communities for the protection
of the newspapers will reflect the need of industry for skilled help in spite of
of existing and new industry, particularly as it relates to the encroachment of
the front-page headlines concerning major lay-offs; that this again indicates
housing developments. He stated that Springfield, Ohio is working on the zoning
the need for revamping the apprenticeship programs to more adequately provide
of 3,000 acres for industrial use. Mr. Collison stressed the importance of co-
training for the unskilled workers; (3) that varied methods must be employed to
operation and the elimination of jealousies between all persons and groups inter-
make some of the communities desiring industry aware of the sales efforts necessary
ested in the industrial development of our communities, states, and areas.
on their part, such as: selecting good leadership; stressing the fact that if
they make their community the best one in which to live, they will have a well
balanced economy and can interest new industry; educating local residents to be-
come salesmen of their communities; using on local officials which need to be
Roger Hubbard, who admittedly is optimistic about the future, indicated his
sold, the so-called magic formula of how much each job in a community means to
feeling is in part based on the results of a recent survey completed by the
the merchants, the service trades, and in increased tax returns, etc.; the
National Association of Real Estate Boards. This showed that the market would
"business-industry-education" programs which have been so successful in many
continue equally good for the next six months and possibly better in the following
communities; and greater consideration of qualifications of those persons elected
six months, with perhaps a small drop (5 to 10%) in total business to be expected
to public offices.
but with the overall demand for plants continuing. He noted the shortage of good
sites in Detroit and immediate vicinity, and the current demand for existing fac-
Another question or comment concerned the evident lack of consideration of
ilities. He also mentioned an activity of the Society of Industrial Realtors. in
the dispersal of industry program in the interest of national security. This
Michigan which has become an annual event--the tour of various communities in the
comment was ably handled by the succeeding speaker, Colonel Ted Enter. It was
state which want new industries or have available plant facilities. The benefits
generally agreed that the average industry seeking a new location needs the help
are two-fold--providing the industrial realtors with first-hand information about
of those who have made studies of the communities' assets, as too often a site is
the communities which enables them to do a better selling job, and also making
purchased without the assurance of adequate power, roads, railroad spurs, etc.
the local people feel there is more help available to them in the field of
industrial development.
"NATIONAL SECURITY POLICIES IN INDUSTRIAL LOCATION"
By Colonel Ted Enter, director continuity of industry division of the non-
Maurice Fulton indicated that he didn't feel quite as optimistic as the
military defense staff, Office of Defense Mobilization, Washington, D.C.
others--perhaps because of the varied sources of his information. He estimated a
decline of 8% in manufacturing spending in 1954 which will still leave it at a
President Eisenhower, in a recent talk to regional and state Civil Defense
high level. He predicts the retail and service trades will go beyond that of 1953.
Directors, commiserated with them on the problem of giving the public sufficient
In general, new industry will probably be harder to get because of a greater aware-
information to arouse them to action without indulging in "scare" propaganda.
ness and interest in this activity. Some stimulus for greater activity should re-
This problem is of much concern to the ODM in trying to furnish guidance to
sult through removal of the excess profits tax; through an increase in tax write-
industry and communities on realistic programs designed to assure continuing pro-
offs on buildings and equipment; if there is evidence of a truly lasting peace;
duction in event of attack. The enlightenment of industrial and community leaders
through development of automation; and other economic adjustments. Looking
is essential to the planning programs that must be undertaken if we are to pro-
considerably into the future, Mr. Fulton touched on the completely different pro-
tect our industrial potential and assure our national survival. This problem of
blems which will affect industrial development planning in case of the advent of
preparing a defense for our industrial capacity in event of attack has been of
industrial automation. Greater reliance will be placed upon specific types of
great concern to President Eisenhower. He recently stated "We must conclude that
labor such as skilled machinists, upon instrumentation and controls. The amount
the Soviets now have the capability of atomic attack on us, and such capability
of land required will be a lot less. He stressed the need for everyone who is
will increase with the passage of time". This, of course, poses a problem to
concerned with industrial development. to work harder and pointed out the importance
which both industry and government must give grave consideration.
of an area organization such as the Great Lakes States Council in furthering such
a program.
Now, without resorting to "scare" propaganda, let's just look at the capability
in terms of our national safety.
The Soviets have the bomb and can deliver it on U. S. continental targets.
At this point questions concerning the panel subject were invited. Answers
to some of these were--(1) that if there is any trend of industry returning or
Our present defense against aircraft launched against us is based on the
locating in the large urban centers, in spite of the generally accepted dispersal
concept of radar and interceptors around our national perimeters, supported
idea, it is due largely to the availability of skilled labor, existing utilities,
by terminal defenses at the principal targets.
55
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The most optimistic estimates by our Joint Chiefs of Staff lead to 30% kill
under the most favorable defense circumstances, 7 out of 10 get thru,
decreasing considerably under less than the most favorable circumstances
In undertaking our Industrial Defense we must first, of course, be assured
of defense. Certainly the most favorable circumstances would not obtain
of as much direct military defense as possible. This leads us to the highly-
in a surprise attack.
complex and controversial subject of continental defense. It is extremely important
that we maintain a balanced view of the relative effectiveness of the various means
Industrial centers will be prime targets. The U. S. having twice attained
we have of defending ourselves against attack. The pitfall of "Maginot Line" think-
victory in war through the mobilization of our industrial might, it would
ing can be applied to over-reliance on any one means to the exclusion of others.
be fool-hardy of any enemy not to destroy or immobilize this potential, if
The U. S. will continue, of course, to place its major hope of peace both in the
possible, at the very outset of hostilities.
United Nations and in our own efforts to win over those bent on aggression to
World Peace.
Therefore, we may further conclude that our industrial centers may become
"frontline" targets and that, for the first time in our history, industry
We will continue to base our military defenses primarily on the deterrent
may be faced with the problem of production while under attack.
strength of a strategic retaliatory striking force, and the maximum early warning
possible by establishing an effective radar "fence" system plus necessary inter-
Let's look, for a moment, at what "attack" can mean in terms of the air-atomic
cepter forces. But, least a reckless enemy gamble on gaining an early victory by
age. To get on a firm ground of comparison, let's take the Nagasaki bomb--known
launching a surprise attack aimed at knocking out both our strategic bases and
as the nominal bomb of 1X = an energy release of 20,000 tons of TNT. This is
our industrial might in the initial blow, we must be prepared to defend ourselves
equivalent to 4 freight trains of 100 cars each, fully loaded with TNT. Flash
against an "Atomic Pearl Harbor".
back now to conventional bombs of WW II--our largest bomb was the blockbuster--10
tons of TNT.
Since we know there can never be a "perfect" military defense, we must,
finally, pay increasing attention to the non-military measures that can be taken
Now let's compare employment of weapons--conventional and atomic. In our
to reduce our vulnerability to attack and to deal with the effects of attack.
three major raids on Hamburg during the last days of July 1943, we used 2100
These measures are necessary to enable us to recover after attack and support the
4-engine aircraft, dropped 7200 tons of HE, and casualties amounted to approxi-
military forces required to restore peace. While there may be some difference of
mately 75,000 killed or missing and 12.5 square miles of metropolitan area destroyed.
opinion as to the number and size of bombs that Russia will possess at any given
time, there can be no doubt that the leaders in the Kremlin alone have the capa-
Then the A-Bomb at Nagasaki: One bomb, the equivalent of 20,000 tons of TNT.
bility to choose the time and destination for delivery of a mass attack on our
One Airplane! From 75,000 to 100,000 people killed or missing and 5 square miles of
centers of population and government.
metropolitan area destroyed. That still only brings us up to August of 1945.
Just as the military must, and are doing everything within their capability
As you are all aware, the progress of weapons techniques, since then, has
to warn, to intercept and to minimize the impact of an attack so must we as a
been staggering. To bring us to date, I have only to remind you of President
civilian complementing force, pick up where the military leaves off. We must under-
Eisenhower's remark in his recent talk at the United Nations wherein he pointed
take all non-military defense measures within our resources and abilities, which
out that: "Atomic bombs today are more than 25 times as powerful as the weapons
will lead to reduction of our industrial concentrations and provide reasonable
with which the atomic age dawned, while the hydrogen weapons are in the ranges of
assurance that our great industrial capacity will be available after attack.
millions of tons of TNT equivalent." Today, the U. S. stockpile of atomic weapons,
which of course increases daily, exceeds by many times the explosive equivalent of
In examining the problem of our industrial vulnerability, we find alarming
the total of all bombs and all shells that came from every plane and every gun in
concentrations of critical production capacity in just a few of our target cities.
every theater of WW II.
There are disturbing situations, as I am sure most of you are aware, of cases where
only one target city contains all or a major portion of the capacity for specific
The march of progress of weapons has been truly staggering in our brief life
highly-critical products. The loss of such output will paralyze vast segments of
span! The progress of delivery techniques has been equally astounding, ranging
other industries dependent upon them and will result in shortages of military end-
from the speed-of-sound jet-propelled aircraft to many times faster guided missiles,
items when they might be most critically needed.
with the intercontinental missile looming on the horizon.
To put this into more local context, I note that during 1952 the East North
But has the march of progress within industry been of equal proportions as re-
Central States, comprising Ohio, Indiana, Illinois, Michigan, and Wisconsin, account
gards security from the very weapons it has produced? A fearful doubt exists when
for 1/3 of the total dollar value added by manufactures in the U. S. Of this
we note that 71% of our productive capacity and 54% of our industrial workers are
amount, however, 75% was concentrated in facilities located in the major urban 43
contained in 50 of our metropolitan areas! These centers of industry and population
centers within these few states. Even more important is the fact that if we look
are such lucrative targets that they present an open invitation to mass attack by
at certain selected industries that are most important from a defense production
an enemy increasingly capable of using atomic and other weapons of mass destruction.
viewpoiht--such as chemicals, petroleum, rubber, primary metals, fabricated metals,
These cities could be seriously damaged or destroyed by a certain number of con-
machinery, electrical machinery, and transportation equipment--we find that 42% of
ventional and atomic bombs, and it is assumed that this number will be available to
U. S. production, based on value added, is located in this region. In addition,
the enemy and the planes to carry them.
57
58 -
when we look at some of the most important individual products, we find that: 100%
of the national total of tantalum, 75% of molybdenum, 100% of precision horizontal
Naturally, problems and obstacles exist due to economic considerations of
boring machines, 100% of radial drills, 100% of capacitors, and 46% of jet engine
local communities. In some cases, there are too few sites available within the
blades are produced in target areas within this region. The loss of production of
corporate tax limits of a city meeting the dispersion criteria. It is difficult
any of these products would have a tremendous effect upon our industrial mobiliza-
for such a city to persuade prospective industry to locate beyond its borders.
tion capacity to produce the munitions of war. Now, let's look at some of the
However, these problems, and others must be solved.
things we may be able to do about this problem.
The Continuity of Production Program, unlike Dispersion, deals principally
For the purpose of developing policies and programs to meet the threat of
with the established facilities in prime target cities. Established facilities
attack upon the continental U. S., Dr. Flemming, Dir. of ODM, organized the Non-
obviously can't be picked up and moved out of the target zone. Therefore, we
Military Defense Staff, headed by Lt. General Willard S. Paul. The Non-Military
must determine what can be done to assure that production of the producers' pro-
Defense area in ODM deals with both Continuity of Government and Industry. The
duct will be uninterrupted in event of damage to the plant.
Continuity of Industry Program has the objective of developing the policies and
procedures which will assure essential production under attack conditions.
This type of planning involves measures relating to safe location of records,
Principal among these programs are:
specifications and critical data. It also involves: making arrangements in
advance for alternate production sources in dispersed sites. And, stockpiling
Industrial Dispersion and Production Continuity Measures. The national
at safe locations raw materials, components, end items and maintenance and repair
policy for industrial dispersion was announced by the President in August 1951
equipment including key items of long lead-time production equipment. It also
to assure relatively greater security of the nation's industrial plant from atom-
involves: incorporating protective construction into the facility to minimize
bomb attack through proper spacing of additions to productive capacity. It pro-
blast damage. (In this regard, ODM has granted 100% tax amortization for the
vides that new defense-supporting production facilities be located 10 or more
costs of all such protective construction.) And finally, it involves: under-
miles from highly industrialized or densely populated sections or from major
taking of advance construction planning SO as to have solved, to the extent
military installations.
practicable, before attack, the problems of reconstruction that must be met after
attack.
The Federal Government has made proper location of a new defense plant a
condition for receiving defense-production assistance. Such aid takes the form
Currently, more than 30 key industries are at work on this problem through
of certificates of necessity (the accelerated tax amortization privilege) and
task groups composed of top-management representatives from the industry. Some
defense loans, as well as procurement placement. Industrial Dispersion is the
of these industries facing major problems of production continuity in event of
employment of the simple military measure of using space for defense against attack.
attack and at work developing plans to meet this problem are: the steel industry,
chemical industry, photographic film, machine tool, jeweled watch movement,
This creates a multiplicity of targets and thus reduces the vulnerability
rubber industry, aluminum industry, and many others. One very important and major
of any one concentration. It is designed to disperse new and expanding industry--
industry has developed full-scale plans for transfer of production of their most
not to move established industry. The long-range objective of Industrial Disper-
vital defense product from present production facilities to dispersed sites in
sion is the carrying out of the natural industrial expansion away from congested
event of attack damage.
centers. This movement has been under way for a number of years and the disper-
sion program encourages and speeds the loosening up of the industrially congested
The result is that within approximately 90 days after attack, production in
target centers.
the dispersed facilities will almost equal the output of the present facilities
in the target zone. Of course, much planning, thinking and resourcefulness of
Today many advantages accrue to industry from locating facilities outside of
industry must go into such efforts. It is here that the industrial executive
the highly-congested urban centers. More and more dispersed sites offer attractive
becomes a strategist. The fundamental reasoning for industrial defense strategy,
economic advantages as well as the security that your facility will not be a
or even for peacetime business analysis and decision making, falls into four parts:
"sitting duck" in a target zone. Continued emphasis must be put on industrial
What is this thing worth in terms of continued production and national
dispersion.
security?
How much does it cost?
Effective results can stem from the assistance given by local communities.
How much can I afford to spend?
In this regard, some 89 industrial dispersion committees in major metropolitan
How can I get the most value for the amount spent?
areas serve as local advisers to industry seeking dispersed sites. Encouraging
progress is being made in dispersion. In the first six months of 1953, 84% of
The question of value can be measured by the objectives which an industrial
facilities costing $1 million or more for which rapid tax amortization was granted
defense program is designed to accomplish, namely:
will be located on dispersed sites. These local committees, together with industry
To keep the plant functioning as a part of the national industrial war effort;
consciousness of the vulnerability problem, contributed much to bring this about.
To safeguard lives, jobs, and the morale of employees;
I am sure that effective assistance could be given these committees by your organi-
To preserve the capital investment of the stockholder;
zation especially in developing more industry consciousness in selection of dis-
To maintain the competitive position of the company in the industry.
persed sites.
- 59 -
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APPENDIX
The problem of planning and developing specific measures to assure production
continuity in event of attack can only be done by industry. Only industry has the
competence, resourcefulness, enterprise and intimate knowledge of its particular
GREAT LAKES STATES INDUSTRIAL DEVELOPMENT COUNCIL
problems necessary to attain effective results. However, in cases where the most
practical and feasible action may be beyond the economic capabilities of industry,
government may be required to lend assistance.
Board of Directors, 1954
To this end we are currently examining what additional Federal incentives and
aids may be made available to industry in furthering the accomplishment of the
necessary measures. Although the actual planning and development of measures to
John R. Cassleman - Industrial Commission, Grand Rapids Chamber of Commerce,
assure production continuity is a more or less vertical problem within industries,
Grand Rapids, Michigan
the earrying out of many of the plans is geographic. Local communities should
James O. Coates - Consumers Power Company, Jackson, Michigan
examine the problem of attack damage and determine a pattern for pre-attack and
post-attack actions. This type of planning could involve the mapping of facilities
Harry Feltenstein - sales engineer, Central Illinois Light Co., Peoria,
in and out of the target zone, the development of rehabilitation planning with local
Illinois
construction contractors, the advance arrangements for essential equipment and per-
Maurice Fulton - Fantus Factory Locating Service, Chicago, Illinois
sonnel location in dispersed areas, etc.
Clifford Gildersleeve - Cleveland Chamber of Commerce, Cleveland, Ohio
In this regard, a contract study was made of the San Francisco Bay Area by the
Stanford Research Institute. Committees were formed of leading local industrialists
H. C. Kniebusch - industrial agent, Wabash Railway, St. Louis, Missouri
and businessmen. The problems of attack damage were faced and recommendations made,
all compiled into a report known as: "The Community Plan For Industrial Survival"
John K. Lamb - executive vice-president, Terre Haute Chamber of Commerce,
by the San Francisco Bay Area Committee on Post Attack Industrial Rehabilitation.
Terre Haute, Indiana
M. H. Markworth - industrial agent, Nickel Plate Road, Cleveland, Ohio
I hope I have not wandered too far off the title of the subject I have been
given on the agenda--namely, "National Security Policies on Industrial Location".
Rhea McCarty - executive secretary, Ohio Development and Publicity
However, the discussion under that title could be rather succinctly and ungram-
Commission, Columbus, Ohio
matically stated: "Being where the Bomb Ain't". In closing, however, I should
Paul J. Pfister - J. B. Pfister and Co., Terre Haute, Indiana
like to leave this thought in regard to location of industrial facilities. Look-
ing towards the future with its ever-increasing weapon techniques and the capa-
Albert E. Redman - director industrial dept., Ohio Chamber of Commerce
bilities to deliver them, costly obsolescence of these weapons will develop with
Columbus, Ohio
the introduction of new and more powerful systems.
Charles H. Slayman - Cragin, Lang, Free and Co., Cleveland, Ohio
However, if industrial target concentrations remain, the cost of obsolescence
Lester J. Steele - Silloway and Company, Detroit, Michigan
will be outweighted by the potential destruction which our enemies can reap with
the new weapon. But dispersion does not obsolesce. On the contrary, the greater
Carl D. Wilkins - industrial agent, Pennsylvania Rail Road, Chicago, Illinois
the reduction in industrial concentration of our urban targets, the greater will be
the offset of the most advanced weapons developments in terms of destroying our
M. C. Wittenberg - executive secretary, Kenosha Chamber of Commerce,
industrial capacity.
Kenosha, Wisconsin
If we are to think in terms of industrial survival in the years hence, no
matter who the enemy, our "sitting duck" industrial concentrations must not be
Officers 1954
there waiting for inter-continental missiles, or whatever may be worse, in the
scientific future.
Chairman, C. Dwight Wood - industrial commissioner, Detroit & Mackinac
Railway, Tawas City, Michigan
Vice Chairman, E. E. Fournace - industrial development commissioner, Ohio
Power Co., Canton, Ohio
Vice Chairman, John C.Mellett - director, Indiana Economic Council,
Indianapolis, Indiana
Secretary-treasurer, Don C. Weeks - director, Michigan Economic Development
Department, Lansing, Michigan
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GERALD LIBRARY
Attendance Second Annual Meeting
Hay, John, secretary-manager, Chamber of Commerce, Muskegon, Michigan
Himburg, William, operation manager, Indian Trails Inc., Owosso, Michigan
GREAT LAKES STATES INDUSTRIAL DEVELOPMENT COUNCIL
Herlihy, Frank, vice-president, Herlihy Mid-Continent, Chicago, Illinois
Holmes, Robert E., engineer-economist, Battelle Memorial Institute, Columbus, Ohio
Kellogg Center, Michigan State College, East Lansing
Hornberger, Albert C., assistant to director, Administrative Services Division,
MEDD, Lansing, Michigan
January 7 - 8, 1954
Houck, Kenneth, eastern Michigan district representative, Industrial Development
Division, MEDD, Lansing, Michigan
Kavanagh, Jack, industrial agent, industrial development division, MEDD, Lansing, Mich.
Registrants
Kleier, Clifford, Detroit industrial agent, ind. develop. div., MEDD, Lansing, Mich.
Kniebusch, H. C., industrial agent, Wabash Railroad Co., St. Louis, Missouri
Anthony, Ernest L., dean of agriculture emeritus, Michigan State College, E. Lansing
Lamb, John K., Chamber of commerce, 629 Cherry St. Terre Haute, Indiana
and commissioner, Michigan Economic Development Commission
Lattin, John A., Louis Kingscotts Assoc., Inc., 208 Nelson St., Kalamazoo, Mich.
Bannan, Lawrence, secretary, Chamber of Commerce, Owosso, Michigan
Martin, Rosemary, manager, Industrial & World Trade, 30 E. Broad St., Columbus, Ohio
Bishop, Gertrude, northern lower peninsula district representative, MEDD, Lansing
Marzolf, Wendell J., executive manager, Board of Commerce, Mt. Clemens, Michigan
Michigan
McClure, Harold E., industrial realtor, 1015 Ford Bldg., Detroit, Michigan
Bond, Carl, business information specialist, MEDD, Lansing, Michigan
McCoskey, James J., executive secretary, Chamber of Commerce, 2582 E. Washington
Border, Charles, director of area development, Indianapolis Power and Light Co.,
Street, Frankfort, Indiana
17 N. Meridian, Indianapolis, Indiana
McCrea, Ralph S., vice-president and general manager, West Michigan Dock & Market
Bosworth, Claude, Michigan State College, East Lansing, Michigan
Corporation, Muskegon, Michigan
Bourquin, Jessie I., economic research analyst, MEDD, Lansing, Michigan
McFadyen, Alex I., exécutive-secretary, Chamber of Commerce, Federal Square Bldg.,
Boyd, Albert C. secretary, Chamber of Commerce, Box 730, Saginaw, Michigan
Grand Rapids, Michigan
Bradley, John S., Jr., vice-president, Ohio Chapter Society of Industrial Realtors,
Meyers, Frank X., Monon Railway, 1450 Transportation Bldg., 608 S. Dearborn,
Toledo, Ohio
Chicago, Illinois.
Brockel, Harry, secretary, Milwaukee Board of Harbor Commissioners, Milwaukee,
Miller, Harris K., chief research and information division, MEDD, Lansing, Michigan
Wisconsin
Misuraca, Antoni, commissioner, Michigan Economic Development Commission, Paw Paw,
Brown, David, special representative, Panhandle Eastern Pipe Line Co., 2557 Guardian
Michigan
Bldg., Detroit, Michigan
Motz, Paul H. & Mrs., U. S. Dep't. of Commerce, 210 Engineers Bldg., Cleveland, Ohio
Byers, Robert, chief industrial development division, MEDD, Lansing, Michigan
Nicholson, Glenn R., southwestern Michigan district representative, MEDD, Lansing
Caine, John, manager, industrial department, Chamber of Commerce, 228 Ohio Bldg.,
Michigan
Akron, Ohio
Oswald, Guy, business representative Carpenters Local AFL, Lansing, Michigan and
Cassleman, John R., industrial commissioner, Chamber of Commerce, 33 Pearl, N. W.,
commissioner, Michigan Economic Development Commission
Grand Rapids, Michigan
Panzer, Frank E., president of state Senate, State of Wisconsin, State Capitol,
Cisler, Walker L., president, Detroit Edison Co., and commissioner, Michigan
Madison, Wisconsin
Economic Development Commission.
Pearsall, Kay, secretary, research and information division, MEDD, Lansing, Michigan
Clements, James B., general manager, Chamber of Commerce, Michigan City, Indiana
Petrie, George R., assistant manager, Detroit Office, U. S. Dep't. of Commerce,
Coates, James, industrial development department, Consumers Power Co., Jackson,
Detroit, Michigan
Michigan
Poxson, David, industrial agent, industrial development division, MEDD, Lansing,
Davenport, Dean & Mrs., mayor, Charlevoix, Michigan
Michigan
Dyball, Harlan W., realtor, Dyball Real Estate, 901 Chamberlain St., Flushing,
Robinson, Roy & Mrs., city engineer, Charlevoix, Michigan
Michigan
Robertson, James, mayor, Sault Ste. Marie and commissioner, Michigan Economic
Ervast, Aarne, upper peninsula industrial agent, MEDD, Lansing, Michigan
Development Commission
Fagan, J. J., realtor, J. J. Fagan & Co., 1061 Peck St., Muskegon, Michigan
Savely, Joseph, industrial manager, A. C. & Y Railroad, 12 E. Exchange St.,
Feltenstein, Harry D., Central Illinois Lighting Co., 316 S. Jefferson Ave.,
Akron, Ohio
Peoria, Illinois
Schott, Sidney M., president & owner, Sidney M. Schott & Associates, 722 Ford Bldg.,
Frank, John M., director of area development, Columbus & Southern Ohio Electric Co.,
Detroit, Michigan
215 N. Front St., Columbus 15, Ohio
Shephard, James B., branch manager, Small Business Administration, 620 Federal Bldg.,
Freeman, William L., director, Citizen's Industrial Commission, Sault Ste. Marie,
Detroit, Michigan
Michigan
Sherwood, E. Burr, Iron county supt. of schools, Crystal Falls, Michigan and
Frowerk, Gertrude, secretary, MEDD, Lansing, Michigan
commissioner, Michigan Economic Development Commission
Greenway, John, industrial commission, Chamber of Commerce, Owosso, Michigan
Slack, Leo J., industrial commissioner, Erie Railroad Co., 514 Republic Bldg.,
Habermann, Rudolph, executive secretary, Chamber of Commerce, Battle Creek, Mich.
Cleveland 15, Ohio
Hammer, Patricia, typist-clerk, dministrative services ivision, MEDD, Lansing, Mich.
Slagle, Richard W., Chamber of Commerce, Marshall, Michigan
Handly, Arthur, research member, State of Wisconsin Legislature Council,
Smith, Jean, typist-clerk, research and information division, MEDD, Lansing, Mich.
204 S. State Capitol, Madison, Wisconsin
- 63 -
64 -
Steegman, Herman, assistant industrial development consultant, Ohio Power Co.,
Cleveland Ave., Canton, Ohio
Stewart, Don C., secretary, Chamber of Commerce, Benton Harbor, Michigan
Longini, Arthur, chief economist, Chicago & Eastern Illinois Railroad, 332 E.
Thal, L. E., Toledo Chamber of Commerce, 218 Huron St., Toledo 4, Ohio
Michigan Ave., Chicago 4, Illinois
Todd, Paul H., president & general manager Farmers Chemical Co., Kalamazoo, and
Mellett, John, director of industrial economic council, Public Service Co. of
commissioner, Michigan Economic Development Commission
Indiana, Plainfield, Indiana
Uhl, Lee, chief business and industry service division, MEDD, Lansing, Michigan
Moore, George & Mrs., regional division, U. S. Dep't. of Commerce, Cleveland, Ohio
Vander Werp, Don, Senator, Fremont, Michigan and commissioner, Michigan Economic
Pfister, Paul, Terre Haute Chamber of Commerce, 629 Cherry St., Terre Haute, Ind.
Development Commission
Poole, William R., manager, industrial development, Toledo Edison Co., Toledo, Ohio
Von Soosten, Helen, Cheboygan, Michigan
Rand, Rolle, Industrial Development Corporation of Port Huron-Marysville, Port Huron,
Walters, Roscoe A., Employees Security Commission, 320 N. Capitol Ave., Lansing,
Michigan
Michigan
Redman, Albert E., director industrial development, Chamber of Commerce,
Walz, Kenneth H., secretary, Greater Jackson Ass'n., 100 E. Mich. Ave., Jackson,
397 W. 7th St., Columbus, Ohio
Michigan
Reich, Jack, executive vice-president, State Chamber of Commerce, Board & Trade
Weddell, William, executive secretary, Highland Park Board of Commerce, 13700
Bldg., Indianapolis, Indiana
Woodward Ave., Highland Park 3, Michigan
Reid, Paul, planning analyst, Detroit Metropolitan Area Regional Planning
Wedin, Kenneth N., executive director, Wisconsin Headwaters Inc., Merrill, Wisc.
Commission, 7377 Byron, Detroit 2, Michigan
Weeks, Don, executive director, Michigan Economic Development Department, Lansing,
Shearer, Harry, ass't. secretary, Board of Commerce, 302 W. Lafayette, Detroit,
Michigan
Michigan
Welch, Willis, Ohio Development & Publicity Committee, Rm. 707, Wyandotte Bldg.,
Slayman, C. H. & Mrs., associate, Cragin, Lang, Free & Co., 825 Nat'l City E. 6th
Columbus, Ohio
Bldg., Cleveland, Ohio
Wittenberg, M. C., Kenosha Chamber of Commerce, 815 57th St., Kenosha, Wisconsin
Steele, Lester, Silloway and Co., 725 Witmore Rd., Detroit, Michigan
Young, Wilbur M., industrial development engineer, Detroit Edison Co., 2000 Second,
Stettbacher, Wayne, general manager, Employees Association of Detroit
Detroit, Michigan
2309 Book Tower, Detroit, Michigan
Taylor, Barney, managing editor of United Automobile Worker, 8000 E. Jefferson,
Detroit, Michigan, and commissioner, Michigan Economic Development Comm.
Program Personnel
Tomb, John, management consultant, McKinsey & Co., 1115 Chestnut, Wilmetta, Ill.
Williams, Hon. G. Mennen, Governor of Michigan, Lansing, Michigan
Altman, Peter, engineering consultant, 552 Maccabees Bldg., Detroit 2, Michigan
Wood, C. Dwight, industrial commissioner, Detroit & Mackinac Railway, Tawas City,
Brewer, Horace, industrial development director, Consumers Power Co., 212 Michigan
Michigan
Ave., Jackson and commissioner, Michigan Economic Development Commission
Campbell, Hugh, manager transportation bureau, Detroit Board of Commerce,
320 W. Lafayette, Detroit 26, Michigan
Coleman, John, Burroughs Adding Machine Co., Detroit, Michigan and commissioner,
Michigan Economic Development Commission
Collison, Koder M., director, Springfield Development Council, Springfield, Ohio
Crabb, Charles G., manager industrial division, Milwaukee Association of Commerce,
611 N. Broadway, Milwaukee, Wisconsin
Dickinson, Franklyn, general supervisor industrial development, Ohio Edison Co.,
Akron, Ohio
Enter, Col. Ted, Office of Defense Mobilization, Washington, D. C.
Fournace, E. E., industrial development consultant, Ohio Power Co., Canton, Ohio
Fulton, Maurice, Fantus Factory Locating Service, 139 N. Clark St., Chicago, Ill.
Gerber, Dan F., president, Gerber's Baby Foods, and chairman, Michigan Economic
Development Commission, Fremont, Michigan
Gildersleeve, Clifford, industrial commissioner, Chamber of Commerce, 400 Union
Commerce Bldg., Cleveland, Ohio
Hartman, Ray, development salesman, Cleveland Electric Illuminating Co., 6005
Hodgman Dr., Parma Heights 30, Ohio
Henrekin, Ronald F., committee executive director, Committee of 100 of South Bend
and Mishawaka, 309 National Bank Bldg., South Bend, Indiana
Hubbard, Roger & Mrs., Hubbard Associates, realtors, Detroit, Michigan
Keck, William G., consulting geophysicist, Box 107, East Lansing, Michigan
4/256
66 -
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MUNICIPAL FINANCING OF INDUSTRIAL PLANTS
by
Robie Mitchell, Attorney, New York, New York
It is quite apparent that the action taken by the Investment
Bankers Association of America at its annual convention last November
has made it very difficult for cities to market bonds for constructing
manufacturing or industrial plants to be leased to private corporations.
A resolution was adopted at that convention calling attention to the
dangers in financing of this type and recommending extreme caution on
the part of dealers in municipal securities. The effect of a resolution
adopted by an organization of the standing of the I. B. A. can not be
modified very materially by what any one individual may now say about
this subject. My comments, therefore, will be directed to the possible
dangers which prompted the adoption of that resolution and which, it
appears to me, should be carefully considered and weighed before any
additional state passes legislation to authorize its municipalities to
embark on this course.
Development of Financing of this Type
It will doubtless be helpful, particularly for those who are
not familiar with the situation, to review briefly this recent develop-
ment. This movement started in Mississippi in 1936. At a special
session of the Legislature in that year a law (1) was enacted authoriz-
ing the issuance of general obligation bonds, declaring in the act that
"the state public welfare demands and the state public policy
requires:
'(a) That agriculture be balanced with industry. ***
"(c) That the present and prospective health,
safety, morals, pursuit of happiness, right to gainful
employment and general welfare of its citizens demand,
as a public purpose, the development within Mississippi
of industrial and manufacturing enterprises, ***. 11
The Supreme Court of Mississippi sustained this legislation
and held that the provisions authorizing the levy of taxes for the
bonds did not violate the due process clauses of the State and Federal
constitutions. (2) An appeal from the decision of the Supreme Court of
Mississippi was dismissed by the Supreme Court of the United States
for want of a substantial federal question. (3)
In July of 1950 the Court of Appeals of Kentucky sustained
an
act (4) authorizing revenue bonds of cities for this purpose, and held
that the bonds did not violate the constitutional provision which prohibits
a city from loaning its credit to any corporation or individual. (5)
A few months later there was reported an advisory opinion (6)
of the Justices of the Supreme Court of Alabama sustaining an act pro-
viding for the creation of industrial development boards in cities
with power to issue their own bonds for this purpose. Upon reading
this advisory opinion it will be observed that the Court treated these
boards as separate and distinct entities from any city or political
FORD
subdivision. They probably could not qualify as political subdivisions
within the Port Authority and Triborough federal income tax decisions
7)
LIBRARI
2
Apparently in an effort to overcome this difficulty, the Alabama
Legislature at its regular session in 1951 passed an Act (Act No. 756,
House Bill No. 733) to authorize the cities themselves to issue
industrial revenue bonds, so that the bonds would be obligations of
a political subdivision and the interest exempt from Federal income
taxes. The constitutionality of a companion bill in the Senate had
previously been sustained in an advisory opinion (8) of the Justices of
the Supreme Court of Alabama, and in March of this year the Supreme
Court of Alabama, following its Advisory Opinion, sustained the
validity of the 1951 Act and a proposed issue of revenue bonds of a
city for paying a part of the cost of constructing a plant for ex-
tracting naval stores from pine stumps, to be located 15 miles
from the city and to be leased to a private company. (9) A majority
of the Court held that the Act did not violate Section 94 of the
Alabama Constitution which prohibits the Legislature from authorizing
a city
"to lend its credit, or to grant public money or thing of
value in aid of, or to, any individual, association or
corporation whatsoever, *** by issuing bonds or otherwise".
Two of the Justices vigorously dissented saying that
"an enterprise whose object is to extract resin and
turpentine from pine stumps for sale to the public
is not a public enterprise",
and that "Section 94 of the Constitution prohibits the legislature
from authorizing a city to acquire property for the purpose of turning
it over to a private corporation to enable it to receive benefits which
are only available to the city as a municipal corporation".
The Supreme Court of Tennessee (10) has also sustained a proposed
issue of "Industrial Building Revenue Bonds" of the City of Elizabeth-
ton to be issued under a 1951 act (11) for the purchase of a site and the
erection thereon of an industrial building to be leased to a certain
corporation for manufacturing, industrial and commercial purposes.
A bill was introduced in the Rhode Island Legislature this
year to create an industrial development corporation with authority to
acquire industrial sites, construct industrial plants and lease them
to private industry, and to appropriate $1,000,000 of public funds to
be used by the state in purchasing all of the stock of such corporation.
In an Advisory Opinion to the Governor (12) it was held that the bill could
be constitutionally enacted by a 2/3 vote, but a majority of the
Justices of the Supreme Court expressed the opinion that
"the purpose for which public funds are thus appropriated
is a private and not a public use".
The Legislature, however, rejected the bill. A similar bill to create
a state "industrial plant trust" is pending in the Massachusetts Legis-
lature, but it is not expected that it will be enacted at the present
session. The sponsors of these two bills recognize the objection to
the issuance of municipal bonds for this type of financing and are not
seeking federal income tax exemption for the securities to be issued.
To meet this demand for financing industrial plants perhaps
consideration should be given to measures of the type which authorize
3
the creation of privately-financed and operated state and local credit
development corporations to provide credit for businesses which cannot
obtain it through normal banking channels. I understand that state
programs of this type are already functioning in Maine and Now
Hampshire, with legislation for similar plans being prepared in other
states.
Is Industrial Plant Financing a Proper Municipal Purpose?
All of us are aware of the fact that the states and municipal-
ities are today engaged in many activities that were formerly considered
private and not public. The Supreme Court of Pennsylvania (13) has
recently pointed out that
"views as to what constitutes a public use necessarily vary
with changing conceptions of the scope and functions of
government, so that today there are familiar examples of
such use which formerly would not have been so considered.
As governmental activities increase with the growing com-
plexity and integration of society, the concept of 'public
use' naturally expands in proportion. "
In 1919 it was contended that cortain North Dakota laws which
provided for the State engaging in the business of manufacturing and
marketing farm products, and of providing homes for the people, and
which appropriated money, created the state banking system and authorized
bond issues and taxation for carrying the program into effect violated
the due process clause of the Federal Constitution, These laws were
approved by the people and sustained by a decision of the Supreme
Court of North Dakota. And the Suprome Court of the United States, in
Green V. Frazier (14), refused to set aside this decision, calling atten-
tion to the "peculiar conditions existing in North Dakota".
There may be many situations where it is important to the
social and economic stability of a state or a community that it finance
some projects which might at first blush appear to be private in their
nature. Where do we draw the line between the facilities which it is
proper for a state or a municipality to finance and those which it is
improper?
I do not believe that any one would severoly criticize the
issuance of public revenue bonds to moot directly a great public need
in the community, simply because there would be involved an element
of private gain for one or morc corporations or individuals who would
loase all or a part of the facilities. I have in mind such projects as
public markets, whether conducted for the benefit of the farmers or the
consumers, wharves and docks, grain elevators and warehouses, parking
garages and terminals, and subways or hospitals to be leased to and
operated by private corporations. Thore are doubtless many other such
projects where public financing would not be objoctionable.
It is to be observed that in all such cases the primary object
of the facility to be financed is to render a direct service to the
people in the community which is doing the financing. But in the case
of the industrial plants the primary object is to manufacture or produce
something for distant markets.
It is difficult for me, with a background of thirty-five
years' work in state and municipal finance, to go along with the
FORD i LIBRARY GERALD
4
proposition that it is a proper municipal purpose for a city in
Alabama to finance a plant to manufacture shoes for sale in Boston, or
for a city in Mississippi to finance a plant to manufacture carpets for
sale in Seattle, or for a city in Kentucky to finance a distillery to
meet the demand in New York City for good bourbon.
Inherent Weakness in Securities.
The soundness of revenue financing of this type will depend
almost entirely on the continued solvency of the corporation which is
to lease the plant. If the corporate lessee should go into bankruptcy,
the bondholders would probably be faced with at loast a temporary
default until a new lessee can be secured. Will it be an easy matter
to secure a new tenant of a plant specially designed for one tenant or
one type of business? What can the municipality or the bondholders
do with a white elophant of this kind?
Effoct on Municipality.
Before ombarking on a program of this kind, the municipal
officials as well as the bankers have some problems to consider. Must
additional housing accommodations be provided in the municipality for
the employees of the plant and additional streets, sidewalks, water
and sewer linos, schools, hospitals and other public facilities con-
structed and, if so, what will be the effect on the tax rate and the
financial structure of the municipality? Perhaps also there should be
considered the effect on the municipality, as well as on the bondholders,
in case the corporate lessee after a few years of operation should
have financial difficulties.
Results of Similar Financing in the Past.
There have been three periods of serious state and municipal
defaults in the history of this country, each caused in a large measure
by the subsidizing of private enterprise. In the 1830's large amounts
of state and municipal debts were created in aid of banks and canals.
This was followed by a period of defaults so serious that many states
adopted constitutional amendments prohibiting the state from engaging
in works of internal improvement. After the war between the States
there was a rogular epidomic of railroad aid bonds, followed by a
period of defaults on hundreds of issues and bittorly contested suits
in state and federal courts to enforce the bonds. In fact the docisions
of the courts in these cases constituted a large part of the law of
municipal securities as it existed prior to World War I. Again con-
stitutional amondments were adopted in many states, this time to prevent
the grant of public moneys and the londing of credit to privato enter-
prise. Following World War I many municipalities issued bonds for
streets, sidewalks, and water and sewer linos to keep pace with the
real estate developers. All of you recall the defaults on municipal
bonds in the early 30's, aggregating somothing like $2 Billion.
The people who promoted the financing which resulted in these
serious defaults were just as honest in their efforts and just as con-
fident of the tremendous benefits which would result as are the
proponents today of municipal financing of industrial plants. It is
this history of defaults which causes municipal bond men, rating agencies,
FORD
analysts and many public officials to look upon this proposed type of
financing with extreme caution if not with disfavor.
GERALD
LIBRARY
5
Inherent Dangers in Financing.
There is a very forceful editorial on this subject in the
March 20 issue of the Philadelphia Daily News, entitled "Deprossion
Breeders". The first paragraph of this editorial is as follows:
"Any deviation from the normal methods of estab-
lished business that tends to disrupt the free enterprise
system, the keystone of democratic economy, is a peril to
the economic welfare of the nation."
This plan of financing is not only a peril to our free enterprise
system but also to our American system of dual sovereign governments.
Under this system the Federal Government can not tax the power of a
sovercign state or its municipalities to borrow money. But if a state
or its municipalities go into the business of building industrial
plants for private corporations, what will become of this tax immunity?
As you know, efforts have been made in Washington for several years to
tax the income of municipal bonds. This plan of municipal financing
of industrial plants will give those who would destroy this tax
immunity just the ammunition they have been looking for to support their
efforts. If Congress should docide to tax the interost on these
industrial plant bonds, is it not probable that the Supreme Court of the
United States will sustain the taxi That Court did not hesitate to
deny immunity from Federal taxes when the State of South Carolina (15)
and the State of Ohio (16) went into the liquor business or when the State
of New York went into the business of bottling mineral water (17) In the
opinion in the Ohio case it was said:
"If a state chooses to go into the business of buying and
selling commodities, its right to do so may be conceded
so far as the Federal Constitution is concerned; but the
exercise of the right is not the performance of a govern-
mental function When a state enters the market place
seeking customers it divests itself of its quasi sovereignty
pro tante, and takes on the character of a trader, so far, at
least, as the taxing power of the federal government is
concerned."
I for one do not want to see any state authorize a municipality,
in order to secure an industrial plant, to barter away tax immunity or
any other attribute of severeignty or take any other stop which would
tend to destroy our American governmental system.
In an article in The Daily Bond Buyer (18) a few months ago, the
president of a corporation was quoted as saying:
"Under the leadership of the State of Mississippi,
thore are today thousands of communities in the country which
can logally issue tax-cxempt bonds for the purposo of build-
ing industrial plants and loasing such facilities to operat-
ing companies. This new plan not only makes available again
these huge reservoirs of storilized capital for the nation's
continued industrial expansion, but it offers a uniquo oppor-
tunity for cooperation between industrial companies and the
communitios in which they plan to operate. =
GERALD FORD ViBRART
Whore are "thesc huge reservoirs of storilized capital",
having in mind today' S prossing domands for public improvements such as
6
highways, bridges, schools, hospitals, water and sewer extensions, sewage
disposal systems, etc., the cost of which has been ostimated in excess of
$100 billion?
Why shouldn't one be enthusiastic about this financing if his
corporation is to be the beneficiary, if it is to have a plant provided
for it on which it will pay no ad valorem taxes, the cost of which is
not reflected in the capital structure of the corporation for franchise
tax purposes, and for the use of which the corporation pays a rental
which is based on tax-exempt financing and which is an operating expense
of the corporation and deductible in computing its income tax.
Should one corporation be given all those tax advantages which
are not possessed by its competitors? Will not industrics which have
been in business and paying taxes for years be seeking the same subsidies?
It is stated in an article on this subject in the March 1952 issue of The
American City:
"As far as industries alroady establishod are con-
corned, the municipal industry-financing plans now in
effect are grossly unfair, undormining the principle which
underlies our tax systom-oquality of taxation for all
property of the same class. If
Will this movement for public ownership of industrial plants
load to municipal or state ownership of all industrial plants? If so, is
it going to be very difficult to change from "Uncle Sam" to "Uncle Joe"?
FORD & LIBRARY GERALD
(1) C. 1, Laws of First Extraordinary Session of 1936.
(2) Albritton V. City of Winona (1938)
Miss.
, 178 So. 799.
(3) 303 U. S. 627.
(4) Ch. 58, Acts of 1946, KRS 103.200 et seq.
(5) Faulconer V. City of Danville (1950)
Ky.
, 232 S.W. (2d) 80.
(6) Opinion of the Justices (1950)
Ala.
$ 49 So. (2a) 175.
(7) Comr. of Int. Rev. V. Shamberg's Estate (1944) 144 Fod. (2d)
998, and Comr. of Int. Rov. V. White's Estate (1944) 144 Fod.
(2d) 1019; coriorari denied, 323 U.S. 792.
(8) In re Opinion of the Justicos,
Ala.
, 53 So. (2a) 840,
decided August 20, 1951.
(9) Newborry V. City of Andulsia (1952)
Ala.
, 57 So. (2d) 629.
(10) Holly V. City of Elizabethton,
Tenn.
, 241 S. W. (2d)
1001, decided August 31, 1951.
(11) Ch. 137, Public Acts of 1951.
(12) Opinion to the Governor (1952)
R.I.
, 88 Atl. (2d) 167.
(13) Dorman V. Philadelphia Housing Authority (19 ) 331 Pa. 209,
221, 200 Atl. 834, 840; quoted in
McSorley V. Fitzgerald (1948) 359 Pa. 264, 59 Atl. (2d) 142.
(14) Green V. Frazier (1920) 253 U.S. 233, 64 L. Ed. 878.
(15) South Carolina V. United States (___) 199 U.S. 437.
(16) Ohio V. Helvering ( ) 292 U. S. 360.
(17) State of New York V. United States (1946) 326 U.S. 572.
(18) November 26, 1951.
EFFECTS OF INDUSTRIAL FINANCING ON STATE AND LOCAL TAXES
by
Dick Netzer, Economist, Federal Reserve Bank, Chicago
In this discussion, I shall address myself to the possible and
probably effects of industrial financing on state and local taxes under
various hypothetical conditions, rather than to the very sketchy evidence
which there is relating to the few existing schemes. This type of dis-
cussion requires a fairly precise definition of just what is involved in
the concept "industrial financing." My definition is that the essential
element in industrial financing is the use of public credit, whether
through revenue bonds or general obligation bonds, to raise funds to con-
struct new plant, to be leased to a private enterprise under a contract
providing for full repayment of the public's investment.
I assume that the local property taxes which would have been in-
curred had the plant been privately financed are substantially paid in
full via contractual provisions for in lieu payments or some other device.
It is true, however, that not all existing or proposed schemes do actually
provide for property tax payment and that even where in lieu arrangements
exist there is apt to be some element of tax abatement, first, because
the assessment may intentionally or unintentionally be below the general
level of assessments in the community and second, because fixed in lieu
payments under a long-term contract will insulate the lessee against
rising property tax rates. Moreover, a city may provide the new plant
with various kinds of service without cost or at nominal rates; however,
I am assuming that the value of these advantages, like the extent of prop-
erty tax abatement, will ordinarily not be large enough to be of major
significance.
ELEMENTS OF SUBSIDY
The elements of subsidy under this definition are twofold-and
make no bones about it, subsidization is involved, for if there were no
subsidy industrial financing would be no more effective in attracting in-
dustry to a ctiy than is mere exhortation. First, interest on the bonds
issued to build the plant is exempt from Federal (and state) income taxes.
Thus the bonds bear a lower interest rate than borrowing of a similar char-
acter which is not tax-exempt, and the interest cost to the occupant of
the plant is less than it would have been had the plant been financed from
funds borrowed privately. Second, the governmental unit issuing the bonds
bears most of the risk involved in the investment, for in practice there
is no sure-fire way of guaranteeing that the lessee will meet all his
obligations. A city can be very selective, thus reducing this possibility,
but it cannot eliminate it. Since the element of risk involved in any
investment is a very real cost in an economic sense, and this cost is
transferred from the private enterprise to the public borrower, this con-
stitutes a not unimportant subsidy.
EFFECTS ON INDIVIDUAL COMMUNITY
The effects of industrial financing on state and local taxes in
particular and state-local finance in general may be very different for
the individual community attracting new industry under an industrial
FORD is LIBRARI GERALD
- 2 -
financing program than for the country as a whole. I shall begin with a
discussion of the individual community effects.
First, let's take the case in which the arrangement proves to be
successful-that is, the company meets all the payments required under the
contract and maintains a payroll at least as large as that expected when
the negotiations were concluded. The most obvious impact on state and
local taxes is a direct increase in tax bases-an increase in the property
tax base by the amount of the value of the new plant and equipment (to the
extent there is no property tax abatement and an increase in the state
income tax base-if there is a state income tax-by the amount of the
payrolls and of the company's net income from the new operations. In
addition to this, there are the indirect increases in tax bases-the
additional industrial activity generates other increased activity as
local firms provide the company itself with various goods and services
and as the company's employees spend their paychecks at grocery stores
and service establishments and for housing and the myriad other items
that make up a wage-earner's budget. Thus there will be a "second round"
of tax base increases in income, property, and sales, the major conven-
tional sources of tax revenue.
There is apt to be at least a partial offset to these increases in
revenue in the form of increased governmental costs, though. This will
occur if, as has been the case with most existing industrial financing
programs, the new industrial activity represents an increase in local
employment rather than an offset to unemployment created by the departure
of some local firms. In cases like this, particularly in a city of moder-
ate size, an influx of population is likely to occur, bringing in its wake
greater needs for schools, hospital beds, utility connections, street
capacity, and a host of other publicly provided services. Of course, the
increased governmental costs are an offset to higher revenues in a finan-
cial rather than an economic sense, since the community will be "consuming"
more government quantitatively and perhaps qualitatively.
IMPACT IF COMPANY FAILS TO MEET CONTRACT
The community will face an entirely different set of consequences
if the company occupying the plant financed by a municipal bond issue
fails to meet the contract, because it either goes out of business entire-
ly, migrates elsewhere, or is unable to make the payments required to
service the debt. I should like to reiterate at this point what I said
a moment ago-that a city cannot really make a company stick to its bar-
gain. The only effective sanction would be the prospect of a money loss,
and if the company is losing money on its local operations anyhow, the
penalty would have to be a severe one indeed. Clearly one could not ex-
pect a firm to immobilize a large amount of funds as a performance bond;
such a step would cancel out much of the subsidy which attracted it in
the first place. Moreover, insurance company performance bonds for this
purpose in the past have had a way of just not being paid off when they
are most needed, if ever, because of litigation. In fact, when a com-
pany finds itself in difficult straits, it is apt to press for greater
subsidization, such as additional property tax abatement or even direct
payments from public funds, in addition to reduction or postponement of
its rental payments; the city, faced with the threat of unemployment as
well as loss of rentals, is over a barrel and is apt to grant the con-
cessions.
- 3 -
It is important that we recognize in this connection that no
matter how suitable a firm may seem for a particular ci ty and no matter
how bright are its prospects in general, there is no way to guarantee
that the firm will not be adversely affected over a span of years by
the complex movements that characterize our economy, whether a general
downturn in the business cycle, a selective recession in certain lines,
or a secular change in the composition of the nation's demand for goods
and services. Thus, it is quite likely that as industrial financing be-
comes more widespread, more instances of breaches of contract will occur.
What then will be their effect on taxes in the communities af-
fected? Obviously, if the plant has been constructed via the issuance
of general obligation bonds, local taxes will have to be increased to
meet debt service requirements. And even if revenue bonds were the source
of funds, many cities would find it to their advantage, if they could
legally do so, to increase general taxes to meet the debt service require-
ments, because a default, even on revenue bonds, could have long-term
adverse effects on the community's credit standing. A self-righteous
refusal to bail out the bondholders in the long run would probably cost
a small city far more in additional interest charges and difficulty of
selling bonds for other purposes than would assuming the debt service ob-
ligations on the industrial financing.
At the same time as taxes will probably be increased to service
this debt, the higher level of municipal operating costs stimulated by
the increase in employment and population will continue. Even if the
new factory closes down completely, and the workers are unemployed the
costs will continue, because in the short run the unemployed workers and
their families are not apt to leave their new homes. In fact, if the
plant shuts down, governmental costs are apt to be increased, since
additional public assistance expenditures probably will be required.
Although some of the costs of providing for the support of the unemployed
will be shifted to other levels of government (the state and the Federal
Government via unemployment compensation and grants-in-aid for public
assistance), the city itself is likely to be saddled with a significant
additional burden. Moreover, the reduced industrial activity and payroll
will have additional adverse effects as the service and trade businesses
dependent on the industrial activity experience declines; thus the income,
sales, and property tax bases will contract and collections from the major
state and local taxes will fall off.
Obviously, the extent to which these probably adverse consequences
of failure of the contract are of concern in any particular city depends
upon the relative role of the industrial activity attracted by industrial
financing. A city of 100,000 may be in a position to run the risks that
a firm employing 100 persons in a new factory will not meet the terms of
the contract, whereas a city of 30,000 which finances a factory employing
500 people is in a very different position. A major hazard, however, is
that because a large new factory offers a small city so much in the way
of additional income, industrial financing is most attractive and apt to
be pursued most energetically in just those situations in which the po-
tential losses are greatest.
GERALD FORD (18843)
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ECONOMIC SIGNIFICANCE FOR WHOLE COUNTRY
Before moving on to discuss the impact of industrial financing
on state and local taxes for the country as a whole, I think it is neces-
sary to go into the economic significance of industrial financing briefly.
Regardless of the type or extent of subsidy involved, industrial financ-
ing can have one of two effects for the economy considered as a whole, if
it is effective in attracting industry to a particular locality, industry
which would not have located there in the absence of the special induce-
ments. The result can be an increase in the total output of the economy
through more effective utilization of labor and capital or it can be merely
a transfer of production from one part of the country to another without
any increase in total output.
An increase in total output can come about in a number of ways.
First, let's take a community from which industry has migrated, with re-
sulting unemployment and probably unused factory buildings or other plant
as well. Typically, the unemployed workers will be extremely loath to
migrate to other sections, and factory buildings just cannot be moved
great distances economically. Governmental assistance to industry, whether
through industrial financing or otherwise, may make it possible to put
these idle resources to work. In the absence of a subsidy element, the
assistance provided typically will have the economic effect of overcoming
the "frictions" or "market imperfections" of inadequate knowledge of
favorable conditions on the part of prospective manufacturers or of in-
ability to secure financing through ordinary channels. If this is the
case, then the governmental aid has had the effect of helping to make a
competitive system function more smoothly and more efficiently.
If there are elements of subsidy, as in the case of industrial
financing, what must be considered is whether or not the subsidy results
in a greater increase in total output than that which could have been pro-
duced through employing funds equivalent to the money value of the sub-
sidy in the ways they would have been used had a promotional program not
been adopted. In a community with unemployed labor and unused plant, in
many cases a relatively small subsidy may have greater leverage in increas-
ing output than any conceivable alternative use of the community's savings,
and often this will be the case. This may happen in an under-developed
area, too, where typically the labor resources of the area are inefficient-
ly used, particularly on farms with relatively low productivity per unit
of labor.
On the other hand, the effects of a subsidy in increasing output
in a particular community may be spurious from the standpoint of the
economy as a whole. What may happen is that a firm which might otherwise
locate elsewhere, because over-all unit costs are lower (taking all factors
into consideration), is induced to locate in a city which offers an in-
dustrial financing scheme. Because of the subsidy element, the costs to
the particular firm will be lower. However, the costs to the whole
economy will be higher, since the company's costs in the subsidized com-
munity plus the money value of the subsidy are greater than its total
unsubsidized costs would have been elsewhere. This kind of subsidization
appears to be the case with regard to some of the Southern programs,
particularly when we consider that the rural labor supply which is in-
efficiently utilized on the farm has been migrating to the larger indus
trial centers, in both the North and the South, at a rapid rate over the
past few decades. Thus industrializing smaller Southern communities
GERAL
LIBRARY
- 5 -
through industrial financing or other subsidies may increase output over
what it would be if no one migrated but less than what it will be if
people continue to migrate to the larger industrial centers where costs,
considering the subsidy in the smaller city, may be lower.
In short, industrial financing may be "good" or "bad" for the
economy, depending upon the facts in each case. For the country as a
whole, there are probably far more potential cases in which the effect
of subsidization is make the economy function less efficiently than there
are opportunities for inexpensively overcoming "frictions" and immobilities.
Moreover, as industrial financing programs become more widely established
and publicized, it becomes likely that more and more cases will arise in
which one community is benefited at the expense of another and at the ex-
pense of the country as a whole.
OVER-ALL EFFECTS ON STATE-LOCAL TAXES
Clearly, in those cases in which industrial financing is success-
ful (in the sense that the company lives up to the contract) and leads to
an increase in the nation's output, the effects on state and local finance
for the country as a whole are all to the good-the increased output and
income enhances state, local, and Federal revenues not only in the parti-
cular city and state but for the country as a whole. That is, the fact
that over-all product has been increased means that the gains in tax
revenues flowing from the increased activity in the area offering the
inducements are greater than the gains foregone by other areas which
failed to attract the new activity. These foregone gains typically will
appear to be fictitious since other areas may not even be aware of the
possibilities for attracting the new plant.
However, in what seems to me to be the more frequent case, in which
industrial financing results in a transfer of production from one place
to another with a concommitant poorer allocation of resources and resul-
tant failure to achieve the greatest possible national output, the effects
are very unfavorable. First, there is the shrinkage in tax bases in the
areas losing industrial employment. Sometimes this may be observable, as
when industry actually migrates. In such cases, governmental costs will
ordinarily be greater as well as taxes smaller, because of unemployment,
although here again some of the costs will be borne by the state and the
Federal Government. In other cases, we may not see an actual shrinkage in
tax revenue and reduced employment because the city does not actually
suffer from migration of industry-what happens is that firms which might
have located there had there been no subsidies available elsewhere do go
elsewhere and its tax bases are smaller than they would have been in the
normal course of events.
But whether the losses in adversely affected communities are ob-
servable or not, the losses in tax bases for the country as a whole are
quite real. Lower total output and income than could be produced in the
absence of subsidization will mean lower tax revenues than could be real-
ized. Now this too is not easy to observe; in fact, because the economy
is dynamic and complicated, it is probably impossible to isolate what
actually takes place and trace specific changes in gross national product
to particular cases of subsidy or lack of subsidy. The foregoing remarks
RD
are merely indicative of what tendencies industrial financing will set up
and indicate, at any rate to me, that the burden of proving that industrial GERAT
LIBRARY
9 1 I
financing will not do more harm than good is on its proponents in each
particular case.
SOME FURTHER CONSIDERATIONS
Another problem which industrial financing raises is the possibility-
I might say the specter-that communities will compete with each other
through industrial financing to attract new industry and retain existing
plants. In this eventuality, obviously there would be a tendency to expand
the extent of subsidy to outbid rival cities, by increasing the degree of
property tax abatement, providing free services, and so on. Expanding the
subsidy compounds some of the possible difficulties-such as greater po-
tential loss in the event of failure and smaller potential net gains in
tax revenues in the event of success. Moreover, it means a greater dis-
tortion of the pattern of industrial location and a greater departure from
the optimum.
In addition, the greater the extent of subsidy the more redistri-
bution of the tax burden is involved and the more considerations of the
equity of the tax system are raised. A substantial degree of property tax
reduction can mean a significant shift in the property tax burden to other
property in the city. The income tax exemption feature of the bonds sold
for plant construction can mean, if industrial financing becomes widespread,
a shift in the state and Federal income tax burden from interest income
which would have been taxed had the funds been raised privately to other
income.
In the not unlikely event that competitive subsidization tends to
cancel out and industry locates where it would have been located without
the special inducements, obviously some of the deleterious effects of inter-
community bidding for industry will disappear. In particular, the adverse
impact on national output will be mitigated. However, the shifts in the
tax burden will continue to be present, and the possibility of severe
strains on local finances in the event of economic conditions unfavorable
to subsidized firms will be as great as ever. Thus the possibility of com-
petitive bidding, whatever its outcome would be, is another reason for grave
doubts over the advisability of encouraging the continuance and expansion
of industrial financing programs.
Finally there is a possible effect which seems some what remote at
this time; however were it to occur, it would be of great significance for
state and local finance. It is this: in the nineteenth century, wide-
spread failures and defaults on state and local borrowing to finance indus-
trial development-principally transportation facilities-led in a large
number of states to the adoption of very rigid constitutional limitations
on borrowing, particularly state borrowing. These restrictions have had
various and profound effects on state-local finance in general and taxation
in particular. They explain in part the use of certain types of tax sources
in preference to others, the difficulties in the timing and financing of
capital improvements, and the development of special institutions, such as
ad hoc units of governments, to evade the restrictions.
Gradually the difficulties presented by the restrictions are being
overcome and in numerous instances the restrictions themselves are being
FORD
GERALD
LIBRARY
- 7 -
modified, typically by voter approved borrowing for special purposes. A
new wave of defaults on state-local borrowing-and industrial financing is
the only area in which widespread defaults are conceivable-could lead to
another wave of borrowing restrictions, and in just those areas least
affected by the nineteenth century provisions; that is, in the South and
New Englad rather than the Midwest. We can safely say that public author-
ities are wiser and more selective today in their industrial financing than
were their nineteenth century counterparts, but we still face the possibi-
lity of national, regional, and industry recessions which even in the nine-
teenth century were responsible for many of the defaults, just as it may be
in future years. I said earlier that this somewhat gruesome prospect seems
remote, and I think everyone will agree to this. Nevertheless, it is some-
thing to think about.
CONCLUSION
In closing, I shall summarize what I think are the major points to
be concerned with regarding the possible effects of industrial financing on
state and local taxes:
(1) Where the arrangements work out successfully, industrial
financing can generate a significant increase in tax
revenues and improvement in public services in an indi-
vidual community.
(2) However, the exposure of any particular firm to economic
fluctuations is very great and a city may be subjected to
severe financial strains at very inopportune times.
(3) The cases in which industrial financing is good for the
economy as a whole and consequently for state-local finance
in an over-all sense are probably limited in number.
(4) The generally unfavorable judgment on industrial financing
which this implies is strengthened by the possibility of
competitive bidding for industry with its attendant com-
pounding of the potential evils.
Industrial Development
Michigan Economic Development Department
Fact Sheet No. 4a
Research Section
October 1952
MICHIGAN INDUSTRIES
MICHIGAN'S INDUSTRIAL STRENGTH
REVEALED BY ANNUAL SURVEY OF MANUFACTURES, 1949 AND 1950
Michigan continued to rank fifth in the nation in 1950 in manufacturing
employment and in value added by manufacture (the amount by which value
of shipments exceeds cost of materials and supplies) although standing
only seventh in population. The states of New York, Pennsylvania, Ohio
and Illinois occupy the first four positions.
The nation as a whole lost in number of production workers from 1947 to
1950. Only three of the leading industrial states, Michigan, California
and Indiana, show an increase in production workers during this three-
year period (see Table I). Of the three states, California had the
greatest increase, 7.2 percent; Michigan followed with 3.5 percent and
Indiana gained 0.8 percent. In value added by manufacture, Michigan had
more than twice the national increase of 20.5 percent. Michigan's gain
of 42.3 percent was the greatest of the eleven leading industrial states
(brought out in Table II). Indiana was second with 28.7 percent and
California was third with 28.2 percent.
From 1949 to 1950 all states showed an increase in production workers and
value added by manufacture. Again the same three states led in percent
increase in production workers although Michigan fell from second to
third place. In value added by manufacture Michigan remained in first
place, Connecticut was second and Indiana third.
An analysis of Table III reveals that the most important major industry
groups in Michigan continue to be transportation equipment, machinery
(except electrical), fabricated metal products, and primary metal indus-
tries. The greatest numerical increase in production workers, nearly
29,000, occurred in our largest industry group, transportation equipment,
which was followed by fabricated metal products with a gain of over
16,000 workers. Four major industry groups had an increase in employment
of more than 20 percent. They were lumber and products except furniture,
printing and publishing, leather and leather products and fabricated
metal products.
All the major industry groups in Michigan, except textile mill products,
increased in value added by manufacture in the three years from 1947 to
1950. Transportation equipment, miscellaneous manufactures, furniture
and fixtures, and fabricated metal products had a percent gain of more
than 50 percent during this period.
GENALD FORD
TABLE I
GENERAL STATISTICS FOR ALL MANUFACTURING ESTABLISHMUNTS IV MICHIGAN AND LEADING INDUSTRIAL STATES: 1950, 1949 AND 1947
1950
1949
1947
State
Production
Rank
Val. Added
Production
Val. Added
Production
Val. Added
Workers
by Manuf.
Workers
by Manuf.
Workers
by Manuf.
(Are. for
(In 000's
(Ave. for
(In 000's
(Ave. for
(In 000's
the Year)
of Dollars)
the Year)
of Dollars)
the Year)
of Dollars)
U. S. Total
11,766,056
$89,675,779
11,016,301
$75,366,527
11,916,188
$74,425,825
MICHIGAN
850,623
5
7,392,255
768,876
5,759,964
821,721
5,196,338
New York
1,363,992
1
10,506,454
1,318,111
9,528,110
1,424,705
9,666,588
Pennsylvania
1,180,447
2
8,123,994
1,113,965
6,941,473
1,219,426
6,946,958
Ohio
934,924
3
7,967,482
860,447
6,412,895
988,446
6,359,006
Illinois
908,248
4
7,929,910
860,475
6,898,999
954,415
6,680,137
New Jersey
575,288
6
4,867,312
546,552
4,206,331
601,748
4,177,080
California
568,659
7
5,120,976
507,312
4,168,034
530,283
3,994,981
Massachusetts
560,563
8
3,659,916
528,426
3,193,499
601,503
3,370,094
Indiana
461,334
9
3,832,892
414,857
3,059,100
457,582
2,977,508
Wisconsin
339,452
10
2,687,346
313,081
2,360,949
343,008
2,260,574
Connecticut
302,498
11
2,123,447
275,842
1,674,430
331,527
1,896,546
TABLE II
PERCENT CHANGE IN PRODUCTION WORKERS AND IN VALUE ADDED BY MANUFACTURE IN MICHIGAN AND LEADING INDUSTRIAL STATES:
1947 - 1950 AND 1949 - 1950
1947 - 1950
1949 - 1950
State
Production Workers
Val. Added by Manuf.
Production Workers
Val. Added by Manuf.
U. S. Total
-1.3
20.5
6.8
19.0
MICHIGAN
3.5
42.3
10.6
28.1
New York
-4.3
8.7
3.5
10.3
Pennsylvania
-3.2
14.9
S.O
17.0
Ohio
-5.4
25.3
8.7
24.2
Illinois
-4.8
18.7
5.5
14.9
New Jersey
-4.4
16.5
5.3
15.7
California
7.2
28.2
12.1
22.9
Massachusetts
-6.8
8.6
6.0
14.6
Indiana
0.8
28.7
11.2
25.3
Wisconsin
-1.0
18.9
8.4
13.8
Connecticut
-8.8
12.0
9.7
26.8
GERALD
?
Source: U. S. Bureau of the Census, Annual Survey of Manufactures: 1949 and 1950
FORD
LIBRARY
TABLE III
GENERAL STATISTICS FOR MAHUFACTURING ESTARLISHMINTS IN MICHIGAN, BY MAJOR INDUSTRY GROUPS: 1950, 1949 AND 1947
Porcent Change
1950
1949
1947
1947 - 1950
Major Industry
Production
Val. Added
Production
Val. Added
Production
Val. Added
Production
Val.
Group
Workers
by manuf.
Workers
by manuf.
Workers
by manuf.
Workers
Added by
(Ave. for
(In 00D's
(Ave. for
(In 000's
(Ave. for
(In 000's
Manuf.
the year)
of dollars)
the year)
of dollars)
the year)
of dollars)
All Industries, Total
850,623
$7,392,255
768,876
$5,769,964
821,721
$5,196,338
3.5
42.3
Food & kindred products
37,157
352,201
35,296
332,786
35,582
284,824
4.4
23.7
Textile mill products
3,983
28,284
4,390
26,248
5,453
31,058
-27.0
-8.9
Lumber & products,
except furniture
18,497
94,463
14,333
59,328
14,694
68,995
25.9
36.9
Furniture & fixtures
20,765
149,427
17,200
110,353
19,473
94,922
6.6
57.4
Paper & allied products
24,273
213,429
22,714
165,789
23,133
174,319
4.9
22.4
Printing & pub. industries
16,497
174,311
15,293
163,208
13,593
136,983
21.4
27.2
Chemicals & allied prod.
23,279
396,868
23,999
301,180
25,018
281,118
-6.9
41.2
Petroleum & coal products
2,416
55,063
2,511
38,072
2,851
50,247
-15.3
9.6
Rubber products
10,879
95,511
10,435
71,188
12,497
85,231
-12.9
12.1
Leather & leather prod.
4,819
26,010
4,466
21,826
3,992
23,822
20.7
9.2
Stone, clay, & glass prod.
14,880
119,355
12,909
94,776
13,476
88,782
10.4
34.4
Primary metal industries
72,819
611,124
63,996
427,178
81,100
427,239
-10.2
43.0
Fabricated metal products
94,562
767,719
74,994
524,111
78,360
496,091
20.7
54.7
Machinery (except elec.)
107,631
939,265
96,081
737,520
119,168
796,178
-9.7
18.0
Electrical machinery
13,880
103,188
12,427
86,424
17,823
102,073
-22.1
1.1
Transportation equipment
360,606
3,110,023
330,414
2,484,613
331,680
1,938,214
8.7
60.5
Instruments & related prod.
3,989
29,371
3,281
22,035
3,872
20,058
3.0
46.4
Misc. manufactures
12,480
92,761
11,112
58,529
12.3
58.5
Source: U. S. Bureau of the Census, Annual Survey of Manufactures: 1949 and 1950
GERALD
?
FORD
Industrial Development
Michigan Economic Development Department
Fact Sheet No. 4
Information and Research Division
MICHIGAN INDUSTRIES
July 1951
MICHIGAN'S INDUSTRIAL PRE-EMINENCE AND DIVERSITY
SHOWN BY U. S. CENSUS FIGURES
Michigan's high position in a wide variety of industries is revealed
in the U. S. Census of Manufactures: 1947 for which complete data
have recently become available.
In the nation, Michigan stands fifth in manufacturing employment and
also fifth in the value added by manufacture (the amount by which value
of shipments exceeds cost of materials and supplies).
The overwhelming national importance of Michigan's automotive industry
sometimes obscures the fact that the state is a leader in many other
lines of manufacturing. Some of the products turned out in these other
industrial activities find considerable use in the automobile industry
while others are used only in a small way by this industry and still
others have no such economic ties.
A list of the major industry divisions, as defined by the U. S. Bureau
of the Census, appears in Table I with data to show Michigan's position
in each. The industry divisions are arranged with respect to their
relative importance in Michigan's total mamufacturing employment.
Michigan's rank in mumber of persons employed is given in each instance
and also its rank in value added by manufacture. Under the major industry
divisions appear the specific industry groups in which Michigan ranks
fourth or higher in either employment or value.
Michigan stands high nationally in many additional industry groups, only
the most prominent ones being shown here. This information will contri-
bute materially to an understanding of Michigan's industrial strength.
The diversity of Michigan's manufacturing is apparent from the fact that
81% of the industry groups defined by the U. S. Bureau of the Census are
operating in the state - 364 out of the total of 451 (Table II). By
comparison, 74% of the industry groups were represented in Michigan in
1939.
GERALD FORD
TABLE I
MICHIGAN'S NATIONAL RANK IN THE MAJOR INDUSTRY DIVISIONS
AND IN SELECTED INDUSTRY GROUPS
- By Number of Employees and Value Added by Manufacture -
Source: U. S. Bureau of the Census, Census of Manufactures: 1947
Note: n.a. - Not available
* - Exact rank unknown due to data being
withheld for some states
Major Industry Division
Number of Employees
Value Added by Manufacture
and
Selected Industry Group
Avg. for Yr.
Rank
Dollars (000)
Rank
ALL INDUSTRIES, TOTAL
973,675
5
5,196,338
5
Transportation Equipment
384,773
1
1,938,214
1
Motor vehicles & parts
371,795
1
1,880,757
1
Automobile trailers
2,484
1
13,567
1
Boat building & repairing
2,076
4
7,496
4
Truck trailers
1,573
2
n.a.
2
Machinery, Except Electrical
143.171
3
796,178
3
Cutting tools, jigs, fixtures, etc.
24,146
1
149,065
1
Refrigeration machinery
18,212
3
102,360
2
Internal combustion engines
14,356
2
70,113
2
Machine shops (jobbing & repair)
9,092
1
44,185
1
Machine tools
8,359
2
43,160
2
Computing & related machines
7,966
3
n.a.
3
Valves & fittings, exc. plumbers'
7,798
4
39,329
4
Domestic laundry equipment
3,830
3
21,455
4
Woodworking machinery
2,494
1
14,007
1
Primary Metal Industries
92,606
4
427,239
4
Gray-iron foundries
40,146
1
155,539
1
Nonferrous foundries
6,696
4
28,349
5
Iron & steel forgings
5,270
4
29,232
3
Copper rolling & drawing
5,266
3
27,998
3
Malleable-iron foundries
4,812
3
20,340
2
Welded & heavy-riveted pipe
2,365
2
16,430
3
Fabricated Metal Products
90,853
4
496,091
4
Metal stampings
19,808
2
101,501
1
Hardware, not elsewhere classified
(for builders, transportation
equipment, furniture, etc.)
16,759
2
77,014
1
Wirework, not elsewhere classified
(inc, fencing, bale ties, springs
etc.)
13,178
1
n.a.
I
Heating & cooking apparatus, exc.
electric apparatus & oil burners
9,257
4
64,456
5
Plating and polishing
5,285
1
24,566
1
Screw-machine products
4,138
3
23,663
3
Metal doors, sash, and trim
2,866
3
18,219
3
-2-
(Continued - Table I)
Major Industry Division
Number of Employees
Value Added by Manufacture
and
Selected Industry Group
Avg.for Yr.
Rank
Dollars (000)
Rank
Food & Kindred Products
47,600
9
284,700
11
Cereal preparations
4,768
1
n.a.
I
Beet sugar
1,275
4
5,104
5 or 6*
Chemicals & Allied Products
33,940
6
281,118
6
Industrial organic chemicals, exc.
derivatives of coal-tar, plastics
materials, synthetic rubber, syn-
thetic fibers, and explosives
7,980
4
74,008
***
Pharmaceutical preparations
7,859
3
71,464
3
Salt
1,293
1
n.a.
1
Paper & Allied Products
26,022
7
174,319
6
Paper & board mills
10,615
4
81,171
5
Paper coating & glazing
3,515
1
20,300
1
Furniture & Fixtures
22,314
5
94,922
5
Public-building furniture
1,893
1
n.a.
-
Metal house furniture, exc.upholstered
1,634
4
n.a.
1
Metal office furniture
1,457
3
9,716
3
Window & door screens
1,239
2
5,406
2
Professional furniture
1,119
1
n.a.
I
Window shades
1,031
4
4,560
4
Electrical Machinery
22,049
10
102.073
11
Electrical welding apparatus
1,268
2
9,782
2
Engine electrical equipment
3,248
4
n.a.
I
Printing & Publishing Industries
21,677
7
136.983
7
Lumber & Products, Except Furniture
16,083
15
68,995
12
Wood products, not elsewhere classi-
fied (inc. household & kitchen wood-
enware, furniture turnings, etc.)
4,465
3
n.a.
-
Stone, Clay & Glass Products
15,669
9
88,782
9
Gaskets & asbestos insulations
2,823
2
12,863
2
Concrete products
2,525
4
13,835
2
Abrasive products
1,473
5
8,943
4
Rubber Products
15.417
5
85,231
3
Tires & inner tubes
12,085
2
n.a.
2 or 3*
Apparel & Related Products
9,103
20-24*
34,043
20-24
Trimmings & art goods ( inc. automotive)
1,362
2
6,410
-3-
(Continued - Table I)
Major Industry Division
Number of Employees
Value Added by Manufacture
and
Selected Industry Group
Avg. for Yr.
Rank
Dollars (000)
Rank
Textile Mill Products
5,996
20 or 21*
31,058
19-21*
Paddings & upholstery filling
2,111
1
n.a.
1
Instruments & Related Products
4,840
10
20,058
10
Leather & Leather Products
4,357
-*
23,822
_*
Petroleum & Coal Products
3,479
12
50.247
12
Tobacco Manufactures
906
_*
3,612
*
Miscellaneous Manufactures
12,794
10
58,529
11
Sporting & athletic goods
3,619
3
16,910
1
Models & patterns, exc. paper
263
2
1,188
2
TABLE II
MICHIGAN'S REPRESENTATION IN THE INDUSTRY
GROUPS RECOGNIZED BY THE U. S. BUREAU OF THE CENSUS
Industry Groups
Number in
Number in
Major Industry Division
U. S. Census
Michigan
Food and kindred products
42
36
Tobacco manufactures
4
2
Textile mill products
31
18
Apparel and related products
41
34
Lumber and products, except furniture
20
14
Furniture and fixtures
16
14
Paper and allied products
11
9
Printing and publishing industries
16
16
Chemicals and allied products
42
27
Petroleum and coal products
8
6
Rubber products
4
3
Leather and leather products
12
10
Stone, clay and glass products
29
24
Primary metal industries
20
15
Fabricated metal products
32
27
Machinery, except electrical
39
36
Electrical machinery
21
18
Transportation equipment
14
14
Instruments and related products
10
10
Miscellaneous manufactures
39
31
TOTAL
451
364
GSTALO BROOKD
4
0-70
Industrial Development
Michigan Economic Development Dept.
Fact Sheet No. 6
Information and Research Division
INCOME
Lansing 15, Michigan
March 1954
MANUFACTURING PAYROLLS AS A PERCENT OF TOTAL INCOME
An important index of industrial economy is the position that manufacturing
payrolls occupy in relation to other major sources of income. The state of Mich-
igan ranks first in the nation in percentage of total income derived from manu-
facturing payrolls. The accompanying table gives the percentage figures for Mich-
igan and the other major industrial states (as determined by number of production
workers and value added by manufacture) for 1948 through 1952.
Manufacturing payrolls are far more important in Michigan's industrial
economy than in some of the other major industrial states. In New York and Cali-
fornia, for example, the percentage of total income derived from manufacturing
payrolls is below that of the United States as a whole. In Michigan, the percent-
age is nearly double that of the United States. Connecticut runs Michigan a close
second in this factor. It is worthy to note that Connecticut is showing a larger
relative gain in manufacturing income in recent years than is Michigan and if the
trend should continue, may soon surpass Michigan in relative concentration of income
in manufacturing.
Manufacturing Payrolls as a Percent of Total Income
In Michigan and Other Major Industrial States:
1952, 1951, 1950, 1949 and 1948
Source: Survey of Current Business, U. S. Dep't of Commerce
1952
1951
1950
1949
1948
% of
Rank
% of
% of
% of
% of
State
Tot. Inc.
Tot. Inc.
Tot. Inc.
Tot. Inc.
Tot. Inc.
U. S. Total
24.5
23.9
22.6
22.1
22.4
Michigan
41.6
1
41.6
41.1
39.3
39.6
New York
24.1
17
23.3
22.2
22.0
22.3
Pennsylvania
31.8
10
31.2
28.7
29.1
30.1
Ohio
36.8
3
36.5
34.0
32.5
33.2
Illinois
29.4
12
28.6
27.4
26.6
27.2
New Jersey
35.3
6
34.5
33.1
32.9
34.4
California
18.7
26
17.1
15.2
14.4
14.4
Massachusetts
30.3
11
30.2
28.6
28.2
30.2
Indiana
35.7
4
34.8
34.2
32.7
31.9
Wisconsin
32.1
9
31.3
29.8
28.5
28.9
Connecticut
39.4
2
39.2
35.6
33.8
37.1
4/108
FORD & LIBRARY GERALD
RELATIONSHIP OF MICHIGAN AUTOMOBILE EMPLOYMENT
TO U.S. PASSENGER CAR PRODUCTION, SALES En DEALER INVENTORIES
700,000
LEGEND
U.S. PASSENGER CAR PRODUCTION
U.S. PASSENGER CAR SALES
600,000
DEALER INVENTORIES
MICHIGAN AUTOMOBILE EMPLOYMENT
500,000
400,000
300,000
200,000
MONTHLY AVERAGES
MONTHLY AVERAGES
MONTHLY AVERAGES
SALES
350,800
SALES
504,600
SALES
PRODUCTION
360,800
425,000
100,000
PRODUCTION
512,100
PRODUCTION
INVENTORIES
302,700
420,800
INVENTORIES
EMPLOYMENT
534,200
INVENTORIES
394,800
EMPLOYMENT
471,900
466,300
EMPLOYMENT
408,700
GERALD
?
LIBRARY JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1952
1953
1954
PLANNING, RESEARCH AND STATISTICS DIVISION
MICHIGAN EMPLOYMENT Es UNEMPLOYMENT
RECORD OF JAN. 1953-MAR. 1954-ESTIMATE FOR APRIL-DEC. 1954
3,000,000
TOTAL LABOR FORCE
2,800,000
UNEMPLOYMENT
2,600,000
FARM EMPLOYMENT
2,400,000
SELF-EMPLOYMENT & DOMESTIC SERVICE
OTHER DURABLE MANUFACTURED PRODUCTS
2,200,000
2,000,000
AUTOMOBILES
1,800,000
MANUFACTURING
1,600,000
METAL PRODUCTS
1,400,000
MACHINERY
1,200,000
NON-DURABLE MANUFACTURED PRODUCTS
ALL OTHER NON-MANUFACTURING INDUSTRIES
1,000,000
CONSTRUCTION
TRANSPORTATION, COMMUNICATIONS, PUBLIC UTILITIES
800,000
600,000
NON-MANUFACTURING
WHOLESALE & RETAIL TRADE
400,000
200,000
SERVICE INDUSTRIES
o
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1953
1954
PLANNING RESEARCH AND STATISTICS DIVISION
MICHIGAN EMPLOYMENT SECURITY COMMISSION
DEFENSE PRODUCTION EMPLOYMENT
IN MICHIGAN MANUFACTURING
JAN. 1952-JUNE 1954
220,00
200,000
TOTAL - ALL INDUSTRIES
180,000
160,000
140,000
120,000
100,000
MISCELLANEOUS INDUSTRIES
FABRICATED METALS, ELECTRICAL MACHINERY,
ORDNANCE, AIRCRAFT, ETC.
80,000
60,000
AUTO PLANTS
NON-ELECTRICAL MACHINERY
40,000
PRIMARY METALS
20,000
o
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
1952
1953
PLANNING RESEARCH AND
1954 STATISTICS DIVISION FORD LISHAR,
MICHIGAN EMPLOYMENT SECURITY COMMISSION
0
COMPARISON OF RATE OF CHANGE IN
MICHIGAN EMPLOYMENT En UNEMPLOYMENT
RECORD OF JAN. 1953-MAR. 1954 ESTIMATE FOR APR.-DEC. 1954
,500,000
400,000
,300,000
MANUFACTURING
,200,000
,100,000
,000,000
NON-MANUFACTURING - TOTAL
900,000
800,000
700,000
600,000
MOTOR VEHICLES
500,000
450,000
400,000
350,000
300,000
250,000
240,000
230,000
220,000
210,000
200,000
190,000
180,000
170,000
160,000
150,000
140,000
UNEMPLOYMENT
130,000
120,000
110,000
100,000
90,000
80,000
CONSTRUCTION
70,000
60,000
50,000
40,000
30,000
& FORD LIBR.
20,000
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP 13 OCT NOV DEC
1953
1954
G
Michigan Employment
Planning, Research and
Security Commission
Statistics Division
SUMMARY or LABOR FORCE CHANGES
June 1953 to March 1954
Laber Forse, June 1953
2,825,000
Excess of new entrants over
deaths and retirements
23,500
Net re-entrants
9,800
33,300
Sub-tetal
2,858,300
Not ext-migration
47,300
Seasonal farm labor
26,000
73,300
Labor Force, March 1954
2,785,000
SUMMARY OF ADDITIONS TO UNEMPLOYMENT
June 1953 to March 1954
Unempleyment, June 1953
45,000
Employment reductions
in urban industries
185,000
Not now entrants
23,500
Net re-entrants
9,800
218,300
Sub-total
263,300
Not sut-migration
47,300
Unempleyment, March 1954
216,000
Number
$ of Total
s of Laber Force
Minimum Unemployment
45,000
20.8%
1.65
Seasonal Unemployment
36,000
16.7%
1.3%
Other Unemployment
135,000
62.5%
4.9%
Total Unemployment
216,000
100.0%
7.8%
GERALD FORD LIBRARY
Michigan Exployment
Planning, Recommed and
Security Commission
Statistics Division
COMPARISON OF MICHIGAN AUTOMOBILE EMPLOYMENT
WITH
U.S. PASSENGER CAR PRODUCTION, SALES, AND DEALER INVENTORIES
(Recerd through February 19548 Estimate for March-December 1954)
Dealer Inventeries
Michigan Automobile Employment
Passenger
U.S.
Car
Retail
On Auto
On Defense
Period
Production
Sales
Number
Weeks of
Production
Production
Total
(000)
(000)
(000)
Sales
(000)
(000)
(000)
1952 - January
286.5
274.7
267.8
3.41
391.5
48.5
440.0
February
331.6
340.8
258.6
3.31
389.0
51.0
440.0
March
377.3
339.5
296.4
3.50
390.5
53.5
444.0
April
411.5
368.2
339.7
3.47
400.2
52.8
453.0
May
389.7
427.4
302.0
3.13
402.5
55.5
458.0
June
395.4
419.4
278.0
4.58
402.4
58.6
461.0
July
160.1
264.0
174.1
4.07
274.6
48.4
323.0
August
238.3
186.3
226.1
2.87
379.2
57.8
437.0
September
438.8
342.3
322.6
3.46
406.5
59.5
466.0
October
482.1
405.3
399.4
3.94
419.8
62.2
482.0
November
403.8
440.0
363.2
3.92
436.3
63.7
500.0
December
414.1
402.3
375.0
3.80
444.7
68.3
513.0
Totals
4,329.2
4,210.2
Monthly Average
360.8
350.8
302.7
N3.48
394.8
56.6
451.4
1953 - January
465.8
428.8
412.0
4.25
454.8
69.2
524.0
February
485.1
420.9
476.2
4.05
466.3
68.7
535.0
March
568.9
509.9
535.2
4.27
479.0
69.0
548.0
April
601.2
548.3
588.1
4.27
489.2
66.8
556.0
May
546.1
597.2
537.0
4.15
487.9
68.1
556.0
June
587.6
562.1
562.5
4.43
489.8
66.2
556.0
July
588.9
552.1
599.3
4.96
488.6
65.4
554.0
August
513.4
523.6
589.1
5.29
460.5
62.5
523.0
September
472.5
481.7
579.9
4.78
452.2
55.8
508.0
October
552.4
525.9
606.4
5.18
443.3
53.7
497.0
November
361.7
508.2
459.9
5.03
440.1
48.9
489.0
December
401.7
396.9
464.7
5.22
443.5
47.5
491.0
Totals
6,145.3
6,055.6
Monthly Average
512.1
504.6
534.2
W4.69
466.3
61.7
528.0
1954 - January
456.7
364.7
556.7
6.02
434.5
42.5
477.0
February
443.3
401.5
598.5
5.78
418.6
36.4
455.0
March
450.0
460.0
588.5
5.20
420.7
36.3
457.0
April
461.5
490.0
560.0
4.67
434.2
34.8
469.0
May
500.0
520.0
540.0
4.68
457.7
33.3
491.0
June
475.0
500.0
515.0
5.42
439.4
32.6
472.0
July
380.0
420.0
475.0
5.16
381.5
30.5
412.0
August
300.0
400.0
375.0
4.53
344.7
29.3
374.0
September
350.0
360.0
365.0
4.17
365.7
M.3
394.0
October
390.0
380.0
375.0
4.22
389.1
27.9
417.0
November
410.0
385.0
400.0
4.15
400.2
27.8
428.0
December
433.5
418.8
414.7
4.59
413.5
27.5
441.0
Totals
5,050.0
5,100.0
Monthly Average
420.8
425.0
471.9
M4.67
408.3
32.3
440.6
M = Median
GERALD
IBRARY
lichigan Employment
Planning, Research and
lecurity Consission
Statistics Division
THE KANOR STREET
Jane 1993 to March 1954
Labor Force
Increase or Decrease
Item
June 1853
March 1954
Total
Befense
Other
USANDS)
Total Labor Jerse
2,695.0
2,785.0
8 40.0
-
Farm Employment
172.6
146.0
- 26.0
Ten-farm Labor Force
2,653.0
2,639.0
- 14.0
Unempleyment
45.0
216.0
+171.0
Non-farm Employment
2,608.0
2,423.0
-185.0
- 82.1
-102.9
Self-Employment
223.0
223.0
0
Wage & Salary Employment
2,385.0
2,290.9
-185.0
CP 82.1
-102.9
Manufacturing
1,285.0
1,120.0
-162.0
- 82.1
a 79.9
Automobiles
556.0
457.0
& 99.0
- 31.6
a 67.4
Machinery
197.0
193.0
- 4.0
- 12.3
* 8.3
Fabricated Metals
118.0
102.0
$ 16.0
- 3.9
- 12.1
Primary Metals
85.0
75.0
- 10.0
& 9.7
1 is
Other Transpt. Equipment
42.0
20.0
- 22.0
- 15.6
of 6.4
Lumber & Wood Products
16.0
15.0
a 1.0
o
- 1.0
Furniture
24.0
23.0
- 1.0
0
= 1.0
Food Products
54.0
51.0
- 3.0
0
ap 3.0
Chemicals
41.0
45.0
+ 4.0
@
+ 4.0
Paper
34.0
34.0
0
©
0
Printing & Publishing
24.0
25.0
+ 1.0
0
+ 1.0
Textiles & Apparel
15.0
15.0
0
0
@
Other Manufacturing
76.0
65.0
a 11.0
- 9.0
- 2.0
Non-Manufacturing
1,103.0
1,000.0
3 23.0
$ 25.0
Construction
98.0
86.0
8 12.0
- 12.9
Transportation, Utilities
157.0
150.0
- 7.0
- 7.0
Wholesale Trade
102.0
102.0
0
a
Retail Trade
312.0
312.0
0
0
Service Industries
319.0
318.0
- 1.0
a 100
Government
96.0
95.0
B 100
3 1.0
Other Non-Manufacturing
19.0
17.0
- a.e
- 2.0
Note: Reduction of 26,000 in farm employment is entirely seasonal, affecting only the
seasonal farm labor force (does not add to surrent unexployment); employment TO
ductions in urban industries are: 1. Defense - 82,100 (44.4%): 2. Seasonal -
36,000 (19,5%): 3. Other - 66,900 (36.1%).
GERALD FORD LIBRARY
Michigan Employment
Planning, Research and
Security Commission
MICHIGAN'S LABOR FORCE
Statistics Division
AREA AND INDUSTRY SUMMARY
March 15, 1954
MAJOR OUTSTATE LABOR MARKETS
STATE
DETROIT
ITEM
OF
METROPOLITAN
BATTLE
BAY
BENTON
GRAND
KALA-
MUS-
PORT
UPPER
MICHIGAN
AREA
CREEK
CITY
HARBOR
FLINT
RAPIDS
JACKSON
MAZOO
LANSING
KEGON
HURON
SAGINAM PENINSULA
RESIDUM
a/
TOTAL LABOR FORCE
2,787,000
1,504,000
53,400
31,300
47,700
135,300
124,600
45,700
54,700
84,500
51,700
33,700
62,500
100,500
456,900
Agricultural Employment
151,000
10,000
2,800
2,600
5,900
2,500
4,100
2,500
2,200
2,800
1,300
3,500
4,200
10,700
96,100
Non Farm Labor Force
2,636,000
1,494,000
50,600
28,700
41,800
132,800
120,500
43,200
52,500
81,700
50,400
30,200
58,300
89,800
360,800
Workers Involved in Labor Disputes
4,000
2,000
-
-
100
-
1,400
-
-
-
-
-
100
-
-
TOTAL UNEMPLOYMENT
216,000
135,000
5,800
3,000
4,300
4,400
5,600
3,300
2,600
3,700
5,800
3,900
2,800
11,300
24,500
Net Change from February 1954
& 2,000
- 5,000
-
200
& 300
& 300
&
800
& 1,700
+ 100
t
100
t
300
t
400
t
200
& 600
t 1,300
t
500
Unemployment as Percent of Total
Labor Force
7.8
9.0
10.9
9.6
9.0
3.3
4.5
7.2
4.8
4.4
11.2
11.6
4.5
11.2
5.4
NON-FARM EMPLOYMENT
2,415,000
1,357,000
44,800
25,700
37,400
128,400
113,500
39,900
49,900
78,000
44,600
26,300
55,400
78,500
336,300
Seif Employment and Domestic Workers
223,000
114,000
4,000
3,200
3,700
9,500
9,000
3,000
4,100
4,400
3,500
2,700
5,100
8,100
48,400
WAGE AND SALARY WORKERS
2,193,000
1,243,000
40,800
22,500
33,700
118,900
104,500
36,900
45,800
73,600
41,100
23,600
50,300
70,400
287,900
Net Change from February 1354
- 10,000
-
- 200
600
-
100
2,200
3,100
$ 200
0
300
-
100
-
600
0
200
900
- 1,100
6
300
MANUFACTURING b/
1,108,000
645,000
21,200
10,800
19,200
78,000
52,600
16,800
24,200
32,700
26,400
10,500
27,000
19,100
124,900
Net Change from Februar: 354
- 16,000
- 2,000
-
200
- 500
-
- 2,600
2,800
100
-
300
400
-
500
0
300
- 500
. 1,500
3,400
Durabie Goods Industries
922,000
558,000
12,100
9,200
15,200
75,100
42,800
14,000
9,000
31,100
24,700
7,900
24,700
12,000
86,400
Lumber and Wood Products
14,000
2,000
100
300
200
100
1,600
-
100
100
100
-
200
7,000
2,100
Furniture
23,000
4,000
-
600
200
100
8,700
100
100
-
2,300
-
500
800
5,400
Metal Industries
176,000
105,000
3,100
1,900
4,800
4,800
14,900
2,300
1,800
3,000
5,200
4,000
9,600
300
15,100
Primary Metal Products
74,000
40,000
1,000
1,400
3,500
300
1,500
500
300
2,200
4,600
3,700
8,900
300
6,100
Fabricated Metal Products
102,000
65,000
2,100
500
1,300
4,500
13,400
1,800
1,500
800
600
300
700
-
9,000
Machinery (non-electrical)
149,000
85,000
3,800
1,400
5,700
7,700
2,700
1,600
2,100
9,900
600
4,700
1,300
21,900
Electrical Machinery
37,000
8,000
900
900
1,300
1,200
1,500
400
100
500
8
500
800
8,500
Transportation Equipment
477,000
331,000
4,000
3,800
2,500
54,000
4,500
6,300
2,600
25,300
5,300
2,600
8,900
400
26,200
Motor Vehicles and Equipment
456,000
321,000
2,600
3,600
2,400
54,000
500
6,200
2,200
25,300
5,300
1,800
8,800
100
22,400
Other Transportation Equip.
21,000
10,000
1,400
200
100
-
4,000
100
400
-
-
800
100
300
3,800
Other Durable Goods Manufacturing
46,000
23,000
200
300
500
16,100
4,200
1,100
2,400
500
1,400
700
300
1,400
7,200
Non-durable Goods Industries
186,000
87,000
9,100
1,000
4,000
2,900
9,800
2,800
15,200
1,600
1,700
2,600
2,300
7,100
38,500
Food and Kindred Products
51,000
23,000
7,000
1,000
500
1,100
2,800
600
800
700
300
300
1,600
1,600
9,400
Text. Mill Products and Apparel
15,000
6,000
-
400
300
500
1,300
400
600
0
100
400
100
800
3,900
Paper and Allied Products
33,000
8,000
1,500
-
1,800
100
1,300
-
9,700
-
700
600
100
1,700
7,300
Printing, Pub. and Allied Ind.
25,000
15,000
500
200
900
700
2,000
300
900
700
200
200
300
500
2,800
Chemicals, Petro., and Coal Prod.
44,000
24,000
100
-
-
500
600
200
3,000
200
200
800
100
1,600
12,700
Other Non-durable goods Manufact.
18,000
11,000
-
-
500
-
1,800
1,300
200
-
200
300
100
900
2,400
ION-MANUF ACTURING b/
1,085,000
598,000
19,600
11,700
14,500
40,900
51,900
20,100
21,600
40,900
14,700
13,100
23,300
51,300
163,000
Net Change from February 1954
7 6,000
& 2,000
-
- 100
-
100
t
400
300
300
-
&
300
-
100
f
100
400
t
400
3,100
Construction
87,000
48,000
1,600
900
700
6,000
3,000
1,300
2,300
2,600
900
1,300
1,600
3,800
12,500
Transp., Commun., & Utilities
150,000
85,000
3,100
1,400
2,200
3,700
8,300
4,600
2,400
3,500
2,200
3,300
3,500
6,100
21,100
Wholesale Trade
103,000
64,000
1,000
1,000
1,300
2,600
6,400
1,500
2,000
3,100
1,200
600
3,000
2,000
13,100
Retail Trade
312,000
169,000
6,000
3,700
4,800
14,000
16,200
5,800
6,300
10,300
4,800
4,200
7,200
10,400
49,000
Service
320,000
179,000
6,800
3,600
4,300
11,700
14,100
4,600
7,300
13,900
4,100
2,700
6,400
11,000
51,000
Government c/
95,000
52,000
1,100
1,100
1,100
2,900
3,600
2,100
1,200
7,300
1,300
1,000
1,500
5,900
12,900
Other Non-Manufacturing
18,000
1,000
-
-
100
-
300
200
100
200
200
-
100
12,100
3,400
State totals do not equal summation of individual areas because of rounding.
Employees of government-operated public utilities are included in "Transportation, Communication
of
Distribution by industry includes wage and salary workers only. This does not
and Utilities". Teachers are included in the Service industry figures.
include self-employed persons, domestic workers, or unpaid family workers.
Included in other durable goods manufacturing to avoid disclosure.
Data-includes-8,400 workers in iron mines and 2,500 workers in copper mines.
REMARKS OF SERATOR JOHN F. KENLDY TO DE DALIVERED AT CHATTANOOGA, TERNESSEE,
THURSDAY, DECEMBER 10, 1953,
It is a great. pleasure to be here today in Tennessee, and to become
better acquainted with your famous and justly celebrated state. I value most
highly my association in the United States Senate with two of the most able mem-
bers of that body, Estes Kefauver and Albert Gore, with both of whom I had the
pleasure of serving in the House of Representatives, and I can assure you that
they have wasted no opportunity to tell me about the advantages and assets of
the Volunteer State. I am also a long. admirer of your Andrew Jackson, and have
framed on my Senate office wall a letter of President Jackson in 1836 warning
against "attempts to build up political power irresponsible to the will, or
faithless to the trusts, of the majority."
Only a short time ago I had an opportunity to learn more details about
Tennessee's industrial development in a special advertising supplement to the
Sunday NEW YORK TIMES. I acquired a good many copies of that paper because it
also contained an article by myself describing some of the problems currently
facing New England, including southern competition. The Tennessee advertising
section substantiated, rather than contradicted, many of the points in my article.
I would like to discuss with you today some of the issues which concern
New England and the South with respect to this whole question of industrial
development and migration.
Possibly you will say that you know of no instances where companies
have abandoned their Massachusetts plants and simultaneously established the
same operations in Tennessee. But the process of industrial migration is more
subtle and indirect. More often, firms start by operating mills in both New
England and the South, then abandon their northern plants in periods of decline
and later expand their southern operations when prosperity returns. Beginning
chiefly with cotton textiles over 25 years ago, this pattern of industrial migra-
tion has spread to other industries. Since 1946, in Massachusetts alone, 70 tex-
tile mills have been liquidated, generally for migration or disposition of their
assets to plants in the South or other sections of the country. Besides textiles,
there have been moves in the machinery, hosiery, apparel, electrical, paper,
chemical and other important industries. Every month of the year some Massachu-
setts manufacturer is approached by public or private southern interests, inclu-
ding Tennessee, offering various inducements for migration southward. Other
manufacturers warn their employees that they must take pay cuts to meet southern
competition or face plant liquidations.
Why do our industries move to Tennessee and to the South, with all of
the attendant consequences to their employees and community?
It would be unfair to imply that your natural advantages have not been
responsible for a large share of this industrial migration. Perhaps most impor-
tant of all, the South has a much larger supply of farm workers to draw upon
for industrial employment, permitting wider selection of the most productive
employees. Pure, fresh water; nearness to raw materials and production factors;
greater space; a milder climate; and the hospitality shown new industries in new
areas are also southern advantages which should not be denied. Nor should we
deny or seek to hamper the rapid efforts of the South to obtain for itself some
of New England's own many and well-known advantages, in skilled labor, research,
markets and credit facilities.
However, it is an unfortunate fact that the southward migration of
industry from New England has too frequently taken place for causes other than
normal competition and natural advantages, which causes I shall detail in a
moment. It is particularly unfortunate when one realizes the impact such indus-
trial migration has upon New England. Although our states are far from depressed
or undeveloped, and our citizens still enjoy a standard of living and per capita
income above that of the nation as a whole, the lack of sufficient new industry
to replace the old plants lost to the South has retarded New England's economic
growth. Its industrialization, manufacturing employment, share in particular
industries, and per capita income have not kept pace with increases in the rest
of the country, even in 1953, one of our most prosperous years. What is true of
New England generally is particularly true in Massachusetts, where we have been
unusually dependent upon manufacturing as a source of employment and income.
In Tennessee, on the other hand, the trend has been in the oppositages
direction. Between 1939 and 1952, the number of manufacturing plants in Tennessee
more than tripled; the number of manufacturing employees nearly doubled; and the
value of manufacturing output has increased by some 450%. Thousands of new
industries, and billions of dollars in investment in plant expansion, have poured
into this state. The same trend, of course, is true for the South as a whole.
The 11 Southeastern states, for example, between 1929 and 1950 increased their
per capita income 179%. The gain for the nation as a whole was 111%; for New
LIBRARY
England, 85%.
- 2 -
It would be wrong for New England to attempt to retard industrialization
of the South. Although New England is at a locational disadvantage in reaching
the rapidly expanding markets of the Southeast and the Southwest, New England,
who must sell to the South, benefits from this tremendous increase in purchasing
power. To the extent that locational advantages of southern industries offer
real efficiency, New England consumers share the benefits of such efficiency with
the entire nation.
But while recognizing New England's gains from southern industrialization,
and the natural advantages of southern industry, we must also recognize that the
serious consequences of industrial migration are not all due to these natural
advantages.
There are two other major reasons influencing this remarkable industrial
development. The first has been the influence of Federal programs. The Tennessee
Valley Authority, which I shall discuss in more detail in a moment, is only
one of these. Tennessee has also received from the Federal Government a dispro-
portionate share of government contracts, tax amortization certificates, federal
construction projects, grants in aid, and similar aids to its economy in compari-
son with Massachusetts, partly due to our own uninterest. In 1952, Massachusetts,
with 50% more population than Tennessee, received 1% of the value of federally
financed construction projects; while Tennessee received nearly 15% of such con-
tracts. Hassachusetts, in fiscal 1952, contributed nearly 4 times as much as
Ternessee to the Federal Government in taxes; but Tennessee received from the
Federal Government 4 times as much as Massachusetts in expenditures for rivers,
harbors, and flood control projects under the Army Engineers. The latest figures
available show that, as of one year ago, tax amortization certificates had been
awarded Tennessee valued at twice those awarded Massachusetts, despite the fact
that Massachusetts deserved a larger proportion than Tennessee in terms of manu-
facturing capacity, defense contribution, proportion of industry, need for expan-
sion, and so crth.
The second major reason - influencing industrial migration from New Eng-
land to the South and the relative development of those two areas -- is the cost
differential resulting from practices or conditions permitted or provided by Fed-
eral law which are unfair or substandard by any criterion. An inadequate minimum
wage permits industries moving South to pay wages below the subsistence level. A
weakened Walsh-Healey Public Contracts Act permits them to bid for Federal contracts
despite wage levels substantially below their northern competitors. A Labor Rela-
tions Act which has frozen unionization permits employers to run away from unions
and particularly a union shop by moving to Tennessee or other southern states.
Various tax loopholes encourage migration to take advantage of tax-free plants,
charitable trusts, and other privileges. These are some of the Federal policies
which unduly accentuate this cost differential and industrial migration.
Although time does not permit us to examine each of these aspects of
the struggle for industry between New England and the South more closely, permit
me to cite in contrast two examples of inducements which Tennessee offers to
industry through the NEW YORK TIMES advertisement -- the Tennessee Valley Author-
ity, an example of a Federal program which has been greatly beneficial to Tennessee
although Massachusetts and New England have no comparable program; and your tax-
free plant and site program, an example of what I deem to be unfair competition.
First: There is no denying the fact that the low cost power made possi-
ble by the TVA is a consideration in the location and development of business.
The man who wants to start a moderate sized industry with a demand of 500 kilo-
watts and a monthly use of 100,000 kilowatt hours finds his annual electric bill
in Boston would be $26,800; in Chattanooga $11,000. There is not a single Federal
hydro-electric project in the state of Massachusetts or indeed in the entire six-
state New England area. There is not a single R.E.A. cooperative or utility
district, such as you have in Tennessee, in the whole state of Massachusetts. We
do have municipally-owned electrical plants in Massachusetts similar to yours;
but they must purchase their power from the private utilities at rates nearly
twice as high as those paid by your municipal system here. Interestingly enough
the rates in these two regions were at approximately the same levels in 1932; but
by 1948, the bills for 250 kilowatt hours a month had declined about 18% in New
England and about 47% in Chattanooga.
It is my position, a position not shared by all segments of opinion in
New England, that our answer to your power advantage in the struggle for industry
should not be attempted dilution of power development in Tennessee; but instead
the development of our resources in Massachusetts and New England. The TVA is
not "creeping socialism" because it attracts industry which might otherwise locate,
remain or expand in New England. It is a challenge to us to seek further utili-
zation of our own natural resources. I do not want to see your electric bills
for industrial power go up; I want to see our bills go down.
FORD LIBRARY
Perhaps Hassachusetts will never enjoy the same advantages in the field
of power as Tennessee. Our fuel costs are higher; we have fewer land areas which
- 3 -
can suitably or profitably be flooded; and our river valleys are less adaptable to
power and multi-purpose development. Nevertheless, the power potential of the
rivers of Maine and other New England states, of a tidal project at Passamaquoddy,
of the St. Lawrence and Niagara, have not yet been fully tapped. The current
Federal Inter-Agency Survey of Water Resources has been continually hamstrung,
and its cenclusion postponed, by inadequate appropriations. If New England can
see this comprehensive survey financed and completed, and obtain therefrom a com-
prehensive formula for its power development, we will be able to move ahead with
definite knowledge and goals.
But if we are to pursue these objectives, we need the help of the South.
I am hopeful that southern Congressmen and Senators will not attack any such pro-
gram, as some of them have attacked appropriations for this Inter-Agency Survey;
and still more have opposed other programs to bolster the economy of New England
-- including Defense Hanpower Policy 4 assisting labor surplus areas to get
defense contracts, and the Walsh-Healey Act, to which they attached the restric-
tions of the Fulbright Amendment as "Federal interference with the forces of
free competition." For, as I have previously pointed out, the South has long
recognized more than any other region the tremendous importance that the Federal
Government can play in developing the resources of an area. Lioreover, so inter-
dependent is the economy of the United States that any increase in tempo in New
England from the development of its power potential or other aids will stimulate
industry in the South.
Let us turn now from the TVA, which incidentally I will be touring this
week, to the Tennessee Industrial Revenue Bond Building Act of 1951. It is my
understanding that this Act, as amended in 1953, authorizes all incorporated
municipalities and counties to erect buildings and acquire sites, as inducements
to new industry, through the issuance of revenue bonds. The NEW YORK TIMES adver-
tisement goes on to proclaim proudly:
"Since the bonds are exempt from state and federal taxation, and most
materials used in the building are also tax exempt, it is possible for
local governments to provide factory space at a lower financial outlay
in most cases than would be possible for such space to be provided by
private financing."
This constitutes, in my opinion, unfair competition to the private companies which
must pay higher interest rates to finance taxable bonds for a new plant. Indeed,
in effect, the taxpayers of Massachusetts and every other state are handing a
subsidy to Tennessee and the industry moving into Tennessee and other southern
states to take advantage of this subsidy. Textile, apparel, machine, leather,
abrasive, paper and other important industries have been lured to these states at
least partly through the use of industrial development revenue bonds. I under-
stand that last year the city of Elizabethton, Tennessee, approved a 6 million
dollar bond issue to finance the erection of a plant for Textron, Inc., once a
major source of employment in New England. Although this particular deal appar-
ently fell through, Textron has located many of its southern plants through the
use of various tax loopholes, including charitable trusts. I am also told that
the city of Lawrenceburg, Tennessee, planned to build a 4.5 million dollar plant
for the Wamsutta Hills, a New Bedford, Massachusetts, firm. Again, this was one
arrangement which did not work out, partly because investment bankers are in-
creasingly reluctant to handle such bonds. But I am sure you know of many more
successful examples, not only in Pulaski and Merryville, Tennessee, but other
parts of the South, involving firms from New England and elsewhere.
Why are such securities exempted from federal income taxes when they are
issued for a proprietary rather than for a public purpose? The U. S. Chamber of
Commerce, the Investment Bankers Association, the Municipal Finance Officers
Association, the American Bar Association's Section of Municipal Law and others
have all condemned this practice.
I am hopeful that southern spokesmen and statesmen, including your able
Representatives in Congress from Tennessee, will assist me in my efforts to plug
up this federal tax loophole. In the long run, fair competition is just as
important to the South as it is to any other section. There are areas in Tennessee
and the Southeast which already share New England's troubles of surplus labor
areas, a declining textile industry, one-industry towns, and the out-migration of
-
industries to take advantage of unfair inducements elsewhere. These are all prob-
lems, in fact, that exist now in many parts of the country and which will multiply
as the economies of those regions mature; and which will particularly trouble the FORD
Southeast because of your dependence on textiles, already hit by the impact of
synthetic fibres, foreign competition and migration. Chattanooga, Knoxville,
Memphis and Nashville have all experienced some labor surplus.
GERALD
LIBRARY
Horeover, tax subsidies are no foundation on which to build stable indus
tries. Virginia repealed its tax exemption law in 1946, on grounds that it
meant unstable industry and an unstable tax base. It was unfair to existing
business, said one Virginia spokesman, for "someone has to pay in the long run."
Although 6 southern states besides Tennessee have statutes offering tax exemptions
to new industries, the others do not. The Southeastern States Tax Officials Asso-
ciation has condemned the practice of tax-free municipal plants as "inequitable
and unfair to industry in the state and detrimental to the taxpayers of the state
because what is given away must be paid for by other businesses and individuals,
ultimately, thereby creating an unhealthy social and economic condition."
Industries thus attracted are migrants, not new enterprises. Their home
offices are generally not in Tennessee, but in New York, Boston or elsewhere. Once
having accepted your tax benefits and a few years of heavy profits, they may again
move, leaving your community as well with empty buildings, stranded workers and a
heavy bond issue. As such use of public credit spreads, no community can be sure
of the stability of the enterprises on which its citizens depend for their liveli-
hood. I am told that your town of Elizabethton, with only 10,000 people, had
$26 million in municipal bonds for private industrial plants in February 1952,
and was planning another issue to bring this total to $51 million, or an additional
debt load of more than $5,000 plus interest for every man, woman, and child in the
town! What happens when their new-found benefactors leave for another bargain
elsewhere?
I intend to work for the elimination of unfair competition of this charac-
ter in Congress, and urge the South to support this move for its own benefit. This
is not an issue between North and South, but one concerning the stability and
integrity of our entire national economy. The competitivo struggle for industry
will and must go on, but it must be a fair struggle based on natural advantages
and natural resources, not exploiting conditions and circumstances that tend to
depress rather than elevate the economic welfare of the nation.
Contrast, if you will, your TVA with your program of tax-exempt factories.
The one utilizes the vast resources of the Federal Government to develop publicly
the natural, human, and material resources of an area; the other robs the Federal
Government of its tax dollars by utilizing a public advantage for private gain.
The one contributes immeasurably to the economic progress of our nation and all
of its citizens; the other abuses a federal tax policy in order to benefit one
section of the country at the expense of another. The one sets a standard for all
the nation to admire and emulate; the other offers a path which is eventually self-
destroying for those who follow it.
New England's answer to the South lies neither in prohibiting federal
power and other programs aiding the South; nor, as some have maintained, in cutting
wages or social benefits in New England or meeting subsidy with more subsidies; for
in the end all of us are harmed and our problems remain unsolved. Instead positive
action is required. For this reason I presented to the Senate in May of 1953 a
comprehensive program calling for federal legislation aimed at the correction of
these abuses.
I called for action to aid the expansion and diversification of industry
in our older areas to replace the traditional industries lost through migration.
Such aid would include providing loans and assistance to small business, retrain-
ing unemployed industrial workers, tax amortization benefits for industries expand-
ing in areas of chronic unemployment, developing natural resources, and aiding
local industrial development agencies. I further called for more adequate security
for the jobless and aged who are the victims of industrial dislocation. But that
is not enough. The Minimum Wage, Walsh-Healey, Taft-Hartley, Unemployment Compensa-
tion and Social Security Laws must be improved to prevent the use of substandard
wages, anti-union policies and inadequate social benefits as lures to industrial
migration. Tax loopholes must be closed, and equal consideration given to all
areas in the administration of policies dealing with tax write-offs, transporta-
tion rates or government contracts and projects; for these should not properly be
factors inducing plant migration.
These are some of the policies within the jurisdiction of the Federal
Government affecting New England's economic status. At no time did I suggest in
this program that any solution of New England's difficulties must be at the expense
of the economic well-being of the South. I was anxious that the program be studied
not as a political or regional issue, with heated arguments and oversimplified
solutions, but rather as a program of mutual benefit for all, based upon the
inter-dependent economies of New England, the South and the nation. It was not
my intention to absolve New England itself from all responsibility for its economic
ills, or to make the South our whipping-boy in an appeal to the emotions of the
man on the street. This is a problem upon which inter-regional cooperation, not
political antagonisms, is needed. It calls, not for a single simple solution, but
many steps consistent with the approach I have outlined.
The South, instead of fighting such a program, should welcome it for the
stability that it promises and the safeguards that it assures to the South's new
LIBRARY
and proud industrialization. It is a common goal that lies ahead of us - the
expansion and prosperity of every section of the nation, not the ephemeral aggram
dizement of one at the expense of another through the exploitation of impermanent
and ultimately self-destroying values. In checking such practices, the alliance
of both South and North is needed if we would carry out our common pledge "to pro-
mote the general welfare and to secure the blessings of liberty to ourselves and
our posterity.'
In his first year as the Junior Senator from Massachusetts, JOHN F. KENNEDY in three incisive speeches hit hard
at the unfair competitive practices that have led industry to migrate from New England to the South. He argued
that substandard wages and tax subsidies are no foundation on which to build a stable economy, and then presented
his program for a fairer competition - a program which he has graphically illustrated in the article which
follows. Born in Brookline, educated at the London School of Economics and at Harvard, he made a heroic
record as a PT boat commander in the war; then on his return to civilian life he was elected to the House of
Representatives and served in the 80th, 81st, and 82nd Congresses. In 1952 he was elected to the Senate.
atlantic monthly-january
NEW ENGLAND AND THE SOUTH
The Struggle for Industry
by JOHN F. KENNEDY
1
EARLY 14,000 employees working for the John
Labor Statistics states that 86 per cent of the
N
Doe Company, a New England textile con-
woolen textile workers in the southeastern part of
cern, lost their jobs in the period following
the United States operate under contracts calling
World War II because of the liquidation of thirteen
for minimum entrance rates of $1.05 or less, whereas
of their mills. During the same period, the same
only 6 per cent of the New England workers have a
company opened a large number of new plants in
minimum as low as this. At four plants in South
the South. It had "migrated." Why? To what
Carolina and Georgia the John Doe Company ob-
extent was it influenced by natural advantages, by
tained "learner permits" allowing it to pay many
unfair practices, or by the policies of the Federal
workers, over a period of time, less than the out-
government?
moded Federal minimum wage of 75 cents an hour.
For one southern operation, the John Doe Com-
The Board Chairman of John Doe testified before
pany bought a surplus naval factory at a low price;
a Senate subcommittee comparing the cost of his
and for another, it obtained an accelerated tax
southern and New England operations. Power cost
amortization certificate from the Federal govern-
per kilowatt-hour was 7.4 mills at his Alabama plant
ment, authorizing it to depreciate its plant within
as compared with 17 mills at his Rhode Island plant.
five years rather than the normal period of twenty
Transportation rates were one third lower for equal
to twenty-five years. It also utilized a Federally
distances, unemployment compensation taxes were
tax-exempt charitable trust in order to avoid taxes
half as great, and employee pension and vacation
on several of its new southern operations, and nego-
plans in operation at northern plants were not cus-
tiated with three southern communities for the
tomary in southern plants.
building and equipping of more new plants through
One may think that this hypothetical case -
the issuance of municipal revenue bonds that are
which is actually a combination of two true cases
exempt from Federal taxation.
is an extreme example. But it is by no means un-
Not a single one of the John Doe Company's
typical in revealing the pattern of industrial migra-
southern plants has been organized by a labor union,
tion from New England to the South. Since 1946,
although attempts at unionization have been made
in Massachusetts alone, seventy textile mills have
for more than ten years. Injunctions, employer
been liquidated, generally for migration or disposi-
propaganda, and procedural delays under the Taft-
tion of their assets to plants in the South or other
Hartley Act have prevented the union from keeping
sections of the country. Besides textiles, there have
any foothold gained through representation elec-
been moves in the machinery, hosiery, apparel,
tions. Partly as a result of these maneuvers, the
electrical, paper, chemical, and other important
wage scales at the southern plants are all consider-
industries. Every month of the year some New
ably lower than the prevailing union wage scale in
England manufacturer is approached by public or.
FORD
the liquidated New England mills. The Bureau of
32
private southern interests offering various induce- BERALE
LIBRARY
NEW ENGLAND AND THE SOUTH
33
ments for migration southward. Other manu-
Mississippi pay workers only that less-than-sub-
facturers warn their employees that they must take
sistence wage, and those employees under "learners
pay cuts to meet southern competition or face plant
permits" even less. Practically all New England
liquidations.
woolen textile mills pay a wage of at least $1.20 an
In only a small number of cases does direct migra-
hour; but because of the recent Fulbright Amend-
tion take place through closing New England plants
ment to the Walsh-Healey Act, which has held up
and transferring their operations to southern plants.
the establishment of this wage as the new Federal
More often, firms start by operating mills in both
minimum for that industry, the New England mills
New England and the South, then tend to abandon
must bid for government contracts against southern
their northern plants in periods of decline and later
mills paying only $1.05 an hour. Labor organiza-
expand their southern operations when prosperity
tions in highly unionized New England have
returns.
achieved not only better wages but pension and
Such a movement has been going on for more than
fringe benefits as well. In the South, however,
twenty-five years in the cotton textile industry.
unionization of competing plants has been virtually
In 1925 New England had 80 per cent of the indus-
halted since enactment of the Taft-Hartley Law.
try; now it has 20 per cent. Former Governor of
Without adequate Federal standards for social
Georgia Ellis Arnall and other southerners have
security or unemployment compensation, many
freely predicted that the South will also "capture"
employers who move south support a level of bene-
the woolen and worsted industry, two thirds of
fits far below those paid by New England industry.
which is still in New England, and large segments of
Federal tax amortization benefits have not only
other manufacturing groups.
been disproportionately granted to southern plants,
but have also been granted to promote expansion
2
in the South without regard to available facilities
and manpower in New England. Federally regu-
Why do industries move south, with all of the
lated shipping rates by rail, truck, or sea discrimi-
attendant consequences to their employees and
nate unduly against New England and are a con-
community?
fused, shapeless mass of regulation. One of the
It would be unfair to imply that the South's nat-
most obviously unfair inducements offered to those
ural advantages have not been responsible for a large
considering migration is the tax-free plant built by
share of this industrial migration. Perhaps most im-
a southern community with the proceeds of Feder-
portant of all, the South has a much larger supply of
ally tax-exempt municipal bonds.
labor, primarily from the farms, to draw upon for
It is therefore an unfortunate conclusion that the
industrial employment, thus enabling employers
southward migration of industry from New England
to select the youngest and most adaptable. Pure,
has too frequently taken place for causes other
fresh water; nearness to raw materials and produc-
than normal competition and natural advantages.
tion factors; greater space; a milder climate; and
This is particularly unfortunate when one real-
the hospitality shown new industries in new areas
izes the effect of such industrial migrations upon
are also southern advantages which should not be
the communities left behind. In Massachusetts
denied. Nor should we seek to hamper the rapid
alone, over 30,000 jobs have been lost in the textile
efforts of the South to obtain some of New England's
industry since 1946. When the Kilburn Cotton
many and well-known advantages, in skilled labor,
Mill in New Bedford, Massachusetts, was partially
research, markets, and credit facilities.
liquidated and moved to North Carolina, 1000
Another major reason has been the influence of
workers lost their jobs. In Lawrence, particularly
Federal programs. The best example of this is the
dependent upon the textile industry, post-war
cost of electric power. The man who wants to start
liquidations and migrations caused approximately
a moderate-sized industry with a demand of 500
one fifth of all workers to be without jobs con-
kilowatts and a monthly use of 100,000 kilowatt-
tinually from 1947 to early 1953 - the period of
hours would pay an annual electric bill in Boston
the greatest prosperity in American history. Nearly
of $26,800, but in Chattanooga only $11,000. New
5 million square feet of industrial plant stood idle.
England, it should be noted, has not yet acquired
Over $11 million annually was paid out in unem-
for itself a single Federal hydroelectric project.
ployment insurance benefits which were exhausted
But the final reason for migration, with which I
by over 50 per cent of the thousands of unemployed.
am particularly concerned, is the cost differential
Today Lawrence and the other one-industry towns
resulting from practices or conditions permitted or
in New England have made a remarkable recovery,
provided by Federal law which are unfair or sub-
partly through improvement in the textile industry
standard by any criterion. Massachusetts manu-
but also through the fullest utilization of Yankee
facturing industries in May of 1953 paid an average
initiative and natural advantages in developing
hourly wage of $1.64; but because the Federal mini-
new, more stable industries to replace the old.
mum is only an outdated 75 cents an hour, many
But current threats of further migration, include
industries migrating to the rural communities of
ing the largest woolen manufacturer in the nation,
GERAL
LIBRARY
34
THE ATLANTIC MONTHLY
again endanger the improved employment status in
vantages of southern industries offer real efficiency,
these communities.
New England consumers share the benefits of such
These labor surplus areas are just one effect
efficiency with the entire nation.
which the years of industrial migration have had
New England knows it cannot shrink from com-
upon older manufacturing regions. Although the
petition with the South. The TVA is not "creeping
New England states are far from depressed or un-
socialism" because it attracts New England in-
developed, and their citizens still enjoy a standard
dustry. It is a challenge to us to seek further utiliza-
of living and per capita income above that of the
tion of our own natural resources. The modern
nation as a whole, the lack of sufficient new industry
plants and machines of the South, and the new and
to replace the old plants lost to the South has re-
vigorous ideas of southern manufacturers, set a
tarded New England's economic growth. Its indus-
standard which New England industry should emu-
trialization, manufacturing employment, and per
late, not try to destroy.
capita income have not kept pace with increases
in the rest of the country. The year 1952-1953
3
was one of New England's most prosperous years;
yet the region lagged behind national increases in
However, I must reiterate that Federal policies
total income and manufacturing payrolls and suf-
have in many instances contributed to the unfair
fered a serious loss of employment in nonelectrical
competitive practices or unfair inducements which
machinery, textiles, apparel, leather products, and
have led to industrial migration. The answer lies
several other industries. In all too many cases mi-
neither in prohibiting Federal power and other pro-
gration southward was directly responsible for this
grams aiding the South, nor, as some have main-
job loss, even in the newer hard-goods industries
tained, in cutting wages or social benefits in New
such as electrical machinery. The losses which
England or meeting subsidy with more subsidies;
would be suffered in the event of a general recession
for in the end all of us are harmed and our problems
or another textile crisis would be drastically more
still remain unsolved. Instead positive action is
severe in New England than in any other area of
required. For this reason I presented to the Senate
the country.
in May of 1953 a comprehensive program calling for
In contrast, as pointed out by Oscar Handlin in
Federal legislation aimed at the correction of these
the December issue of the Atlantic, the South is
abuses.
becoming industrialized at a pace we must all ad-
I called for action to aid the expansion and diver-
mire. In 1951 the South added, on the average, one
sification of industry in our older areas in order to
multimillion-dollar plant a day. In that year capi-
replace the traditional industries lost through mi-
tal investment in new southern plants reached $3
gration. Such aid would include providing loans
billion. Included among the new plants of the past
and assistance to small business, retraining un-
few years are well over a hundred new woolen and
employed industrial workers, providing tax amorti-
worsted mills. During the past two decades, the
zation benefits for industries expanding in areas
South's multiple increases in the sale of goods
of chronic unemployment, developing natural re-
manufactured, in value added by industry to raw
sources, and aiding local industrial development
materials received, in number of new independent
agencies. I further called for more adequate se-
businesses, in construction, in industrial employ-
curity for the jobless and aged who are the victims
ment, in total income payments, in total wages and
of industrial dislocation. But that is not enough.
salaries, in wage rates, and in per capita income
The minimum-wage, Walsh-Healey, Taft-Hartley,
payments have been many times as great as the rate
unemployment compensation, and social security
of increase for the United States as a whole, for New
laws must be improved to prevent the use of sub-
England, or for any other region. The eleven
standard wages, anti-union policies, and inadequate
southeastern states, for example, between 1929
social benefits as lures to industrial migration. Tax
and 1950 increased their per capita income 179 per
loopholes must be closed, and equal consideration
cent. The gain for the nation as a whole was 111
given to all areas in the administration of policies
per cent, for New England 85 per cent.
dealing with tax write-offs, transportation rates, and
It would be wrong for New England to attempt
government contracts and projects; for these should
to retard industrialization of the South. It is wrong
not be factors inducing plant migration.
to say, as did a Boston newspaper editorial, that
These are some of the policies within the jurisdic-
the South is trying to "impoverish New England."
tion of the Federal government affecting New Eng-
Although New England is at a locational disadvan-
land's economic status. At no time did I suggest
tage in reaching the rapidly expanding markets of
in this program that a solution of New England's
the southeast and the southwest, New England
difficulties must be at the expense of the economic
must sell to the South and the nation as a whole.
well-being of the South. I was anxious that the pro-
New England thus benefits from this tremendous
gram be studied not as a political or regional issue,
increase in southern and national purchasing power
with heated arguments and oversimplified solutions,
and prosperity. To the extent that locational ad-
but rather as a program of mutual benefit for all,
NEW ENGLAND AND THE SOUTH
35
based upon the interdependent economies of New
hard hit when the hosiery industry moved to lower
England, the South, and the nation. It was not my
wage areas further south and in Puerto Rico. These
intention to absolve New England from all respon-
are all problems that now exist in many parts of the
sibility for its economic ills, or to make the South a
country, and they will multiply as the economies of
whipping boy in an appeal to the emotions of the
those regions mature.
man on the street. This is a problem upon which
It is imperative for the newer industrialized areas
interregional coöperation, not political antagonisms,
such as the Southeast to plan now for their "old
is needed.
age." When other areas, in Latin America and
Unfortunately, perhaps owing to incomplete re-
Asia, are industrially developed, the South will
ports in the public press, my position was not so
suffer the same pangs of aging now suffered by New
understood by most southern newspapers. I was
England. This is particularly true because of the
accused in editorials appearing all the way from
concentration of the southeast states upon the vul-
Greenville, North Carolina, to San Antonio, Texas,
nerable American textile industry. In 1950 the
of "blatantly asking for special and unusual con-
three largest textile states of the South had 57
sideration
attempting punitive legislation
per cent, 67 per cent, and 39 per cent of their manu-
against the South
seeking Federal interference
facturing employment in textiles. Already employ-
to help New England and hurt the South
and
ment in these states has been affected by the impact
projecting on a legislative scale the North-South
of synthetic fibers, foreign competition, and migra-
row at the 1952 Democratic National Convention."
tion on the cotton textile industry.
Some of my colleagues in the United States Sen-
Third, the South is certain to seek Federal meas-
ate and House of Representatives also misunder-
ures to alleviate these problems, just as it utilized
stood my position. I did not, as Senator Maybank
Federal assistance in the days when Franklin
implied in his speech hailed by the southern press as
Roosevelt called it "The Nation's Number One
an answer to "The Kennedy Program," seek "to
Problem Area." Thus it does not behoove some
transfer the faults and ailments which caused (New
southern spokesmen now to attack programs chan-
England's) hardships to other regions." Certainly
neling defense contracts to labor surplus areas, or
I hope I was not one of those New England "spokes-
seeking improvements in the Walsh-Healey Act,
men" who, Representative Chatham of North
as "Federal interference with the forces of free
Carolina said, had "cried SO pitifully over an empire
competition." More than any other region the
which has lost its control over the rest of the
South has reason to recognize the tremendous role
country."
that the Federal government can play in developing
4
the resources of an area. RFC loans, Federally con-
structed or financed power projects, soil conserva-
I SINCERELY believe that any future economic re-
tion programs, farm price supports, grants-in-aid,
vival in New England, and my proposals for fair
construction projects, military installations, tax
competition under existing Federal statutes, will
amortization certificates, and other policies and
aid, not injure, the prosperity of the South. I say
programs of the Federal government have been
that for four reasons: -
largely responsible for the remarkable improvement
First, SO interdependent is the economy of the
in the southern economy during the past twenty
United States that any increase in tempo in New
years. The southeastern states received in 1949
England will stimulate industry in the South. When
7.3 per cent of their income, gross wages, and sal-
New England prospers, as it has in recent months,
aries from the Federal government, as compared
the South and all sections of the country that de-
with 3.7 per cent for New England and 4.8 per cent
pend upon New England for markets and sources
for the United States as a whole. Four southern
of supply are also benefited. New England's role in
states, for example, received certificates of necessity
our economic stability and, I might add, in our
for rapid tax amortization of industrial facilities
mobilization effort is fundamental. The progress
worth five times the amount awarded the six New
that the South has made in the past two decades
England states, although the latter's proportionate
has had a measurable effect on the welfare of the
share of manufacturing industry was twice as great.
people all over the country. It is, I am sure, of
In fiscal 1952, total Internal Revenue collections in
importance to the entire United States that the
Georgia netted the Federal government only a little
New England economy remain a strong and viable
more than one third of the amount collected from
force in the economic life of the country.
Massachusetts; but expenditures of the Federal
Secondly, surplus labor areas, a declining textile
government for grants-in-aid, wages and salaries,
industry, inadequate use of water resources, one-
and rivers and harbors and flood-control projects in
industry towns, the debilitating effects of long-term
Georgia actually exceeded such Federal expendi-
unemployment and economically insecure old age,
tures in the state of Massachusetts. Admittedly this
all trouble to some degree certain areas and indus-
is due in part to a consistent lag in the efforts of
tries in the South as well as in New England. Some
New England businessmen and officials to partici-
ORD
North Carolina communities, for instance, were
pate in such programs; but the fact remains-that
GERAL
LIBRARY
36
THE ATLANTIC MONTHLY
the South has profited enormously and will in the
Southeastern States Tax Officials Association has
future profit from Federal action in the economic
condemned the practice of tax-free municipal plants
sphere.
as "inequitable and unfair to industry in the State
5
and detrimental to the taxpayers of the State
LAST, but most important, I have stressed many
because what is given away must be paid for by
other businesses and individuals, ultimately, there-
times in my speeches the theme of fair competition;
by creating an unhealthy social and economic
and fair competition is just as essential to the South
condition."
and its industries as it is to any other section of the
Industries thus attracted are migrants, not new
United States. I am certain that the use of unfair
enterprises, with home offices outside the South.
practices to encourage the abandonment of existing
Once having accepted tax benefits and a few years
plants, employees, and communities in New Eng-
of heavy profits, they may again move, leaving
land, with its consequent long-term unemployment
that community as well with empty buildings,
and distress, is not a necessary part of the South's
stranded workers, and a heavy bond issue. As such
industrialization program. Its aim should rather
use of public credit spreads, no community can be
be one of new industrial development. "Our in-
sure of the stability of the enterprises on which its
dustrial concept," stated Mississippi's Governor
citizens depend for their livelihood. In one southern
White, "is not of robbing Peter to pay Paul."
town of only 10,000 people, municipal bonds for
Robbing Peter to pay Paul, in my opinion, does
private industrial plants were proposed to the extent
those Southern communities which practice it more
of $51 million, or an additional debt load of more
harm than good. Dr. Harriet Herring of North
than $5000 plus interest for every man, woman, and
Carolina, in her book Southern Industry and Re-
child in the town! What happens when their new-
gional Development, pointed out that artificial or
found benefactors leave for another bargain else-
substandard inducements to migration bring weak
where?
industries, a hit-or-miss industrial development,
The elimination of unfair competition of this
and no diversification of industry.
character will benefit the South as it will benefit
Substandard wages and tax subsidies are no
New England. The proposals I have made should
foundation upon which to build stable industry.
not be regarded as posing an antagonistic issue be-
As pointed out by the San Antonio News, "The
tween North and South. The issue that they do
South should not want any industrialization founded
pose concerns the stability and integrity of our en-
on the reactionary concept of cheap labor. It is not
tire national economy. The competitive struggle
cheap in the long run for any of the parties con-
for industry will and must go on, but it will be a fair
cerned." The South's greatest industrial growth
struggle based on natural advantages and natural
has occurred at the same time as a steady narrowing
resources, not exploiting conditions and circum-
in the North-South wage differential; and southern
stances that tend to depress rather than elevate the
factories producing automobiles, aircraft, oil, and
economic welfare of the nation.
other products pay the same wages as their northern
New England, without unthinking optimism,
plants or competitors. Several southern economists
undue pessimism, or unfair recrimination, must
and study groups have concluded that the Federal
meet the actual advantages of the South by de-
minimum-wage law, introduced by Hugo Black of
veloping its own human, material, and natural re-
Alabama, has not harmed industrial development
sources and, in that process, by utilizing the facili-
in the South but has on the whole been beneficial
ties of the Federal government wherever that is
and needs revitalization. Wages, they point out,
appropriate. It must also call upon the Congress to
are not only costs but also aids to productivity and
correct those abuses of Federal policies and competi-
purchasing power. Companies that come south to
tive practices which have led to undesirable indus-
exploit southern labor, with the aid of inadequate
trial dislocation.
minimum-wage and public contracts laws, and free
The South, instead of fighting such a program,
from unionization under Taft-Hartley, are merely
should welcome it for the stability that it promises
holding back southern progress.
and the safeguards that it assures to the South's
Southerners themselves are becoming aware of
new and proud industrialization. It is a common
the vice of luring industry southward through such
goal that nes ahead of us - the expansion and pros-
inducements as tax-free plants built with Federally
perity of every section of the nation, not the ephem-
tax-exempt municipal bonds. Virginia repealed its
eral aggrandizement of one at the expense of an-
tax exemption law in 1946, on the ground that it
other through the exploitation of impermanent and
meant unstable industry and an unstable tax base.
ultimately self-destroying values. In checking such
Although Alabama, Arkansas, Kentucky, Louisiana,
practices, the alliance of both South and North is
Mississippi, Oklahoma, and Tennessee have statutes
needed if we would carry out our common pledge
offering tax exemptions to new industries, Virginia,
"to promote the general welfare, and secure the
Texas, North Carolina, and Georgia do not. The
blessings of liberty to ourselves and our posterity."
The New York Times
Magazine
November 8. 1953
SECTION 6
What's the Matter With New England?
The region's economic soft spots are appraised and a program
of remedial action is proposed by a New England Senator.
By JOHN F. KENNEDY
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