POST-WAR PLANNING THURSDAY, JANUARY 20, 1944 HOUSE OF REPRESENTATIVES, COMMITTEE ON PUBLIC BUILDINGS AND GROUNDS, Washington, D. C. The committee met at 10 a. m., pursuant to adjournment, in caucus room, House Office Building, Hon. Fritz G. Lanham, chairman, presiding. The CHAIRMAN. The committee will be in order. STATEMENT OF JOHN CLIFFORD FOLGER, PRESIDENT, INVESTMENT BANKERS ASSOCIATION OF AMERICA, WASHINGTON, D. C. The CHAIRMAN. We shall hear first this morning Mr. John Clifford Folger, who is president of the Investment Bankers Association of America. You may proceed, Mr. Folger. Mr. FOLGER. Mr. Chairman and members of the committee: My name is John Clifford Folger. I am president of the Investment Bankers Association of America. My address is 730 Fifteenth Street NW., Washington, D. C. The Investment Bankers Association of America is composed of 616 of the leading investment bankers, with more than 1,200 offices in 42 States, the District of Columbia, and Canada. A substantial majority of the members, which include 79 banks and trust companies, deal in municipal bonds. We are deeply interested in the public-works program; first, because of its effect upon the general welfare; second, because of its effect upon the quality of the Government, State, and municipal bonds which we distribute to our customers. In many ways the Government and municipal end of our bond business is the most satisfactory of all. Buying this type of bond is like buying a cross-section of thrift, enterprise, and character of an entire community or nation. Naturally the more bonds we have to sell, the greater our volume and chance of profit. On the other hand, we have been brought up with definite standards of quality. Notice of even a temporary default in a bond issue which he has distrbuted is a sad and searing experience in the life of a bond dealer. We have seen what excessive public expenditures can do to municipal credits. The first questions we ask about borrowings for public works are: First, will they be repaid? Second, do the projects themselves serve a necessary and useful purpose? Third, can and will the people pay the taxes and other charges to support the program through good times and bad? Fourth, will the ratio of debt to taxable asset get dangerously out of balance? When we get away from such moorings and over into the realm of general benefit, we are inclined to proceed with caution. Every businessman is now thinking in terms of employment, realiz ing that private industry should provide reasonable employment. I think business is more than ever before inclined to go all-out on such a program. While as individuals we might like to see large public works adjacent to some of our own holdings, yet we do not think that by any means they provide the main answer for employment. We believe that governmental activities, whether national or local, should not be such as would tend to compete with or discourage private operations, but rather should encourage and supplement them. From the standpoint of credit, we feel the National Government is straining its resources to the limit in the war. It must have some time to save up and get even. States and municipalities, on the other hand, have had opportunity to get their finances in shape. They are presently doing a great deal of thinking and planning for public works. From our observations, they have been and still are making extensive studies of local needs. Their considerations embrace every phase of municipal operations. We believe that local governments will be prepared to proceed actively with a fairly sizable portion of their plans very promptly following the war provided materials are available. Road-building and transportation projects generally, such as airports, are of a type to appeal to the businessman. As stated, the financial condition and debt structure of most local governments has materially improved during the past several years. They are, in the main, in very good shape. I might interpolate here, Mr. Chairman, by saying that I understand the over-all debt structure of States has improved in the neighborhood of 17 percent since 1940, which is a very remarkable improvement. As a result of the war, it was necessary for the National Government to acquire a vast amount of real property formerly subject to local taxation and also to impose Federal levies and restrictions upon other media which in normal times are important sources of State and municipal revenue. As the Federal property acquisitions are disposed of to private hands after the war, these properties will be restored to the local tax rolls. Except where undertakings of national importance and relationship are concerned, we believe it will be to the best interests of the States and their local governmental units to proceed on their own with post-war activities even though they may have to be very much less extensive than with Federal aid. If the money spent is to be raised locally, there may well be a more rigid test of the practical value of various projects. Federal grants which obviously are paid for in the main by taxpayers of other communities may prove injurious to the economy as a whole. If a man owns a vacant lot upon which he has paid taxes for many years, it would not be hard to persuade him it would be a fine thing for the Government to buy the lot and build a new post office thereon. The same man might question the over-all wisdom of such a project when located at a distance. We feel that the various branches of the National and local governments should be using this period of inactivity in public works to look ahead and to make careful plans. Such a program would permit detailed scrutiny as to the practical value of the work contemplated and its justification with respect to whatever tax burden it may entail. The CHAIRMAN. Mr. Folger, that is very interesting and helpful; it is very much along the line of our inquiry. A subcommittee of this committee has been holding hearings with reference to evolving some policy for the orderly distribution of land, buildings, and other property acquired by the Government during the war. We do not want them dumped on the market hastily, all at once, so as to disrupt private enterprise. You alluded to that feature in your remarks, and we are endeavoring to be helpful along that line. The subcommittee has just concluded hearings, and that subject will be looked into very carefully in an effort to draft a proper measure. Looking to the future, as we can see it, and with proper planning, what opportunities do you see now for the success and profitable operation of your organization? It will depend very largely, I assume, upon whether or not the recommendations made are carried outnamely, that cities, municipalities, and local enterprises be placed upon their own responsibility-and that, I fancy, has a great deal to do with the worth of the bonds in which you deal. Mr. FOLGER. That is correct, Mr. Chairman. I might state that i members of our organization deal not only in municipal bonds but in all other types of securities. Of course, we are very deeply concerned with the flow of capital into private enterprise. We see the deposits damming back in the banks, and we realize that there is more money pressing for investment now than ever before. We are eager to have the bottlenecks removed from the channels of investment finance. At the same time, we are suggesting certain restraint with respect to the municipal class of securities, because as merchants we are interested in the quality of the merchandise we sell. We think the answer is the investment of private funds in private business. An examination of the deposit structure will clearly indicate the volume of money that is available. The CHAIRMAN. Could you indicate any kind of planning on the part of the Federal Government that would facilitate the investment of those funds in proper projects? Mr. FOLGER. That is a very large question, Mr. Chairman. I am thinking the speed with which some of these adjustments are made will be very important. We may run into a period of adjustment sooner than we think. Whenever it comes, it may be more violent, let us say, than is now contemplated. Businessmen will need to move quickly because their current assets after taxes will not permit them to wait a long period while adjustments are ironed out. They must land running and become active in whatever project they are contemplating. I have talked with businessmen who say that they have just about enough quick assets to run a month or two after the cessation of the war activities. The appraisement of the values of the properties now owned by the Government but which may be returned to private business is a difficult problem. Speed in action will be a most important factor. The CHAIRMAN. Are there further questions to be asked? We certainly appreciate your statement, Mr. Folger. STATEMENT OF WALTER H. BLUCHER, EXECUTIVE DIRECTOR, AMERICAN SOCIETY OF PLANNING OFFICIALS The CHAIRMAN. We shall now hear a statement by Walter H. Blucher, executive director of the American Society of Planning Officials. Please state your full name and address for the record, Mr. Blucher. Mr. BLUCHER. My name is Walter H. Blucher. I am executive director of the American Society of Planning Officials. My address is 1313 East Sixtieth Street, Chicago, Ill. Mr. Chairman and gentlemen: The American Society of Planning Officials is an organization with about 1,200 members, representing for the most part official planning agencies in all levels of government-city, county, State, and region, and persons who are doing planning on a national level. Of that number, roughly 800 are the official or the active members; the other 400 represent people who are interested in planning, engaged in industry, and doing planning within those industries. We have members in a number of foreign countries. The Society is principally a clearing house of planning information. We get together information and circulate it to our members, and we answer inquiries that they send in to us. At the present time we are conducting a series of planning institutes in the various States, for public officials. The public officials who are in charge of local post-war planning activities are being invited to get background information on what is being done and how they should proceed. The CHAIRMAN. Your organization is not a governmental organization; it is a private organization? Mr. BLUCHER. It is a private organization, with members for the most part from official agencies in the various levels of government. Mr. ABERNETHY. Throughout the Nation? Mr. BLUCHER. Throughout the Nation, in all the States, and representing, I should say, practically every active official planning agency in the country. Although the American Society of Planning Officials is intensely interested in broad post-war economic and social problems and their solutions, I should like to discuss today the narrower question of local community planning and programs for the preparation of public works projects. At the outset, let me say that we have no illusion that a public-works program, irrespective of its scale, will bridge the gap between the war economy and the post-war economy. Public works can alleviate unemployment only to a relatively minor degree; they are not a curative for economic depressions. Before discussing the matter further, I should like to interject that the American Society of Planning Officials believes that much of the misunderstanding and lack of agreement about the role of public works planning arises from a failure to distinguish properly among the kinds of public-works programs. First are the deferred maintenance items: the holes in streets that must be patched, the buildings that need repair, the small additions required for public structures. We have no knowledge of any realistic figures which show the extent of this work, but we believe that, in total over the entire country, it is comparatively small. Because |