Mr. RAINS. Thank you, Mr. Rose.

I assume that the summary of the ARA project from the State of Washington which is attached to your statement, you would like to have included in the record, and that may be included at the conclusion of your testimony.

Mr. ROSE. Fine.

Mr. RAINS. You have a very good statement, indeed. I do not quite understand how we can change the wording of the law to take care of those situations such as the city which you mentioned, and I have some in my State, and so does every member here, which is wavering, as you stated it, on the edge of being eligible. We have to find some fairly definite figure that we can set as a requirement.

Do you have any suggestion as to how that kind of a problem could be met?

Mr. ROSE. Nothing specific, sir, except for this one thought. Where you have a rather rigid formula for determining by definition what would be a designated area, in your smaller, less populated areas this works fine; it gives us no problem, because of the lesser numbers involved.

If, somehow, this formula could be a little less rigid to permit some flexibility in application of it administratively so that in the larger metropolitan areas where the numbers of people have a significance that far exceeds the percentage factor involved, you might be able to depart a little bit from, say, your 6-percent requirement, or whatever the figure might happen to be.

Mr. RAINS. Mr. McDade, any questions?

Mr. McDADE. I have no questions, Mr. Chairman.

Mr. RAINS. Mrs. Dwyer?

Mrs. DWYER. No questions.

Mrs. SULLIVAN. No questions.

Mr. REUSS. No questions.

Mr. VANIK. I was just wondering, I suppose Washington is somewhat affected by the TFX contract, is it not?

Mr. ROSE. We are most concerned about it.

Mr. VANIK. What impact would that have had on the State of Washington?

Mr. ROSE. I do not believe that I could give you a statistical answer to that. A portion of the work would have been involved in the Boeing Seattle operations.

Mr. VANIK. Is Seattle the city you refer to?

Mr. ROSE. Yes.

Mr. VANIK. Is it coming close to ARA eligibility?

Mr. ROSE. No, sir; it is not. That is Spokane.

Mr. VANIK. Spokane?

Mr. ROSE. Yes.

Mr. VANIK. There has been some criticism about the ARA development of tourist facilities. Now, here you indicate a development need for the Olympic Peninsula. It would seem to me that by this time it would have been determined what needs to be done about the tourist advantages of the Olympic Peninsula?

I cannot imagine how much more could be done to further development.

open it up for

Mr. ROSE. As a matter of fact, sir, as we look at it, at least, the entire Olympic Peninsula area has been rather neglected as far as development for the tourist industry is concerned.

Mr. VANIK. That is for moderate-priced accommodations. You have the old national park facilities.

Mr. Rose. For most anything. You see, in putting together this particular application we had 25, a total of 25, Federal and State agencies that all went together on this.

Mr. VANIK. Then let me ask one more question.

What is the total tax contribution, that is, Federal tax contribution, of the State of Washington, and how does it compare with the Federal expenditures in the State of Washington, including defense contracts?

Mr. Rose. I do not know, sir.

Mr. VANIK. Could you provide that for the record?

Mr. Rose. I will be happy to try to get it.

Mr. VANIK. One of the problems in my State is that the people complain about Ohio making tremendous tax contributions and getting very little back from the Federal Treasury by way of either defense contracts or Federal appropriations.

Will you supply that for the record?

Mr. Rose. I will do my best to get them, sir.

Mr. VANIK. Thank you, Mr. Chairman.

Mr. RAINS. Mr. Lloyd?

Mr. LLOYD. Mr. Rose, I am just taking one project at random here, and I am wondering if you are familiar enough with it.

Mr. ROSE. May I, before you ask, I brought along with me Mr. Lloyd Kirry, who is the manager of our local affairs division, and under whom this particular area of work comes directly, so, with your permission, if I cannot answer.

Mr. LLOYD. I know nothing about this project concerning which I am going to inquire, but I am taking it at random. The Far West Fisheries, Inc., an industrial loan in the amount of $455,000 has been approved for direct, first-year employment of 57 persons.

On what basis do you state that an additional 57 will be employed during the later years of the project?

Mr. KIRRY. The basis of that is the estimated employment on the application for the project that is submitted to the State agency. Mr. LLOYD. This was submitted by?

Mr. KIRRY. By the applicant.

Mr. LLOYD. Applicant?

Mr. KIRRY. Far West Fisheries, Inc., who had initially submitted for approval to the local, overall economic development committee in the county, they had approved it and referred the application to the State agency.

Mr. LLOYD. Is this a hope, or do you feel that the application has been proven, when it says that an additional 57 will be employed? What I want to know is: How deeply do you go into this to determine whether there is a sufficient market for this added production of tunafish to feel that the extra 57 will be employed?

Mr. KIRRY. To the extent of the staff time and abilities, and this was submitted quite a number of months ago, when we had a smaller staff than we do now.

However, based upon our investigation at that time, the estimate of 57 seemed to be reasonably realistic.

Mr. LLOYD. At the present time there has been $8,000 expended for each person who is employed. Do you have any evidence in your short period here to determine whether or not those 57 persons are to be permanently employed? Is the evidence conclusive at this time? Mr. KIRRY. One of our concerns with the program to date is that, administratively, we are involved with the processing of the application through the State agency and the State's recommending approval to the Federal Government. The Federal Government actually approves the application and negotiates the actual loan through the Small Business Administration directly. Normally, we have no direct knowledge of the actual financing or the actual employment that has actually taken place as a result of the loans.

This is one of the concerns of the State agency that possibly we might be more directly involved in some manner in the future. Mr. LLOYD. That is my understanding.

In other words, you would not be able to assure us that this employment was going to be permanent or that the future employment would actually take place.

In view of that, do you think we would be justified, after this type of experience that we have had for a limited time, in increasing our grant authorization by more than 100 percent ?

Mr. Rose. I do not know how closely you can pin down any of these individual projects, and I do not know to what extent anyone could give any kind of guarantee that 1 job or 100 jobs might ultimately become permanent.

In our judgment, they are sound and they are soundly based, and the thought that I was going to add to what Mr. Kirry has said is this: That we use our business and economic research division in the department to tie in with Mr. Kirry's division, which is, in a sense, coordinating, doing the State level of work for the ARA program, and the decisions, the judgments that we render-in this particular case, we said, from all available evidence, this is an indication of a sound business venture; that these jobs will be forthcoming; the market will support it.

This is based upon work which was done in our research division. Now, I do not contend that that is infallible; they could make errors; but their best analysis of the market, not the qualifications of the individual industries, we do not get that, as Mr. Kirry has pointed out, but for this particular type of project, it certainly appeared to us that a loan of this magnitude was certainly warranted.

It looks to us, barring unforeseen economic happenings in the market, that the employment would be as stable, perhaps, as anything else that we could develop in our particular area.

We do not do these things lightly, is the thought that I am trying to get across.

Mr. LLOYD. You speak as a representative of State government? Mr. ROSE. Yes.

Mr. LLOYD. Is that right, Mr. Rose?

Mr. ROSE. That is correct.

Mr. LLOYD. Thank you. That is all.

Mr. RAINS. Along the line there an interesting question was raised about having an investment of $8,000. Some witness on another occasion has testified before this committee that private industry must have an investment of much more than $8,000. I am going to ask the staff to put into the record the generally accepted figure which you will find in some of these booklets.

(The data referred to above is as follows:)

1 "Working assets" include those in col. 1, plus values for current assets and land reported to the Internal Revenue Service by corporations.

2 Not available.

Source: "Investing in Jobs," published by Area Redevelopment Administration.

Mr. LLOYD. May I make a statement at that point, Mr. Chairman? I would say, in the case of private industry, they do it as an investment and hope to be repaid, whereas, in this case, there is no hope or no indication at all that the Federal Government, which expends these funds, will be repaid, in the case of grants; and, certainly, in the case of loans, there is as yet no conclusive evidence that the repayment will be in the full amount of the money loaned and certainly there will be no increase in the loaned dollar, as in the case of the investment dollar of private enterprise.

Mr. TALCOTT. Of course, it varies for every type of occupation.

Mr. RAINS. That is true, but the U.S. Chamber of Commerce and the National Association of Manufacturers have sat at that table many times and said it takes this much to do it, and sometimes it is about seven or eight times this figure.

Mr. TALCOTT. I hear 25,000, on the average.

Mr. RAINS. Mr. Weltner?

Mr. WELTNER. No questions.

Mr. RAINS. Mr. Talcott?

Mr. TALCOTT. Mr. Rose, using the same Far West Fisheries as an example, are those 57 people employed now?

Mr. ROSE. Yes.

As a matter of fact, we indicate here that the direct initial employment will be 57, with a later employment of double this figure. As I recall it, and I do not have the file here on this particular case, the total, anticipated number of employees was in the neighborhood of 140. Now, we do not know that they would hit 140. This figure that we have here would come out, as you can see, to 114 people.

For our particular area, for our particular locality, this is built, really, on one of our traditional industries, the fishing industry. Mr. TALCOTT. Are there 114 people working there now? Mr. ROSE. No. It would be something less than that.

Mr. TALCOTT. But you do not know how many people are working there now?

Mr. ROSE. Not the precise figure; no, sir.

Mr. TALCOTT. Do they work 2 months of the year? Is that about what they work?

Mr. ROSE. In this cannery operation? Lloyd, do you know?

Mr. KIRRY. I cannot cite the exact number of months, although there is some degree of seasonal operation. I understand that some of the tuna is being caught off the coast of Anacortes, and some of it, I understand is being shipped in and processed, fish from Japan.

Mr. TALCOTT. This particular cannery, is it adaptable for other kinds of fish, other than tuna, so that it could be used more than 2 months of the year when tuna is in season?

Mr. KIRRY. This is one of the primary reasons for adapting the cannery in the first place. It was primarily a salmon cannery, and, in order to extend the seasonal aspect of the salmon canning, this is one of the reasons for adapting it also for handling tuna.

Mr. TALCOTT. Can it still be used for salmon?

Mr. KIRRY. Yes.

Mr. TALCOTT. And along a different line, do you think that tourism is a good industry for you to promote with Federal funds? It seems to me, at first blush, that tourism might be very good for a locality, but it is not very productive, and it does not bring back for the benefit of the whole Nation like if you were producing lumber, lumber products, and things of this sort, that the whole Nation could use.

I think we should distinguish between a project that is of only local benefit and a project that has national benefit.

What do you think about tourism in this light?

Mr. ROSE. In the northwest corner of the country, of course, we do not have many people there. Population and distance are two of our greatest problems, economically.

Certainly I believe that we must have productive jobs and a basic industry of some type to build your economy on. At the same time we are going to progress awfully slowly in that direction, and this is true of the entire Northwest, until we get more people.

Now, tourism has the value regionally, of course, of generating a flow of capital through the area.

Mr. TALCOTT. I did not hear that.

Mr. ROSE. I said that tourism has the advantage of generating a flow of capital through the area, a flow of cash. It has the added advantage, though, of supporting a good many other industries or a good many other fields of work all the way from sporting goods manufacturing to resort ownership, restaurants, retail outlets, and so forth.