is less than $800, and this of course does not make clear the fact that a great preponderance of individuals in the area subsist on annual cash income of far less than $400.

Average unemployment in many of the counties of the area has exceeded 20 percent for several years, and the average unemployment of the entire area runs close to 20 percent normally.

In contrast to the small proportion of the State's revenue which this area is able to bear, because of the depressed status of its people, the cost of most Government services in this area are of a reverse proportion.

In spite of the long-term unemployment of the area and of the fact that less than 1 percent of the State's industrial employment exists in the area, 24.3 percent of the total unemployment compensation payments in the State of Kentucky were made in this area.

Of the total public assistance payments to the old age, needy, blind, children's aid, and permanent and totally disabled recipients, the 32 counties received 35 percent of the total cost of these programs in the State.

The Commonwealth of Kentucky has a minimum foundation plan which includes an equalization fund which distributes a portion of the State's education budget on an equalization basis into the poorer counties. Of this fund, more than 40 percent was expended in the 32 counties.

The depressed status of this area, then, is unquestionable. Moreover, the degree of depression-and the extensive cost in terms of welfare and other State programs are increasing on a ratio in line with the deepening of the depression within this area.

Even now the welfare cost of programs in this area, when reduced to a per capita basis, is more than twice that of the other portions of the State, while the revenue return on a per capita basis in this area is less than half that of the rest of the State.

These excessive and increasing welfare costs, related to the worsening of conditions of this chronically depressed area, exists in spite of a tremendous outmigration of the area's people.

However, outmigration is not an answer to the problem of the area as some have unfortunately stated-since investigation indicates that almost the total outmigrating population is made up of the able and productive young people, while the proportion of the very young and the very old, therefore, increases within a population which simply faces additional burdens in maintaining its livelihood.

In considering the second point mentioned in the beginning of this testimony, many reasons may be ascribed to the distressed nature of eastern Kentucky's economy.

However, without question we can find a distinct relationship between the economy of eastern Kentucky and the economy of the entire southern Appalachian region, which is, of course, similar in terrain and other features, and which suffers from common economic problems.

In considering the many factors related to the depressed economy of the Appalachians and of eastern Kentucky, the most salient frustrating feature facing those who have tried on many occasions to bring all possible forces aggressively to bear to develop this economy, is the overriding frustration of the underdeveloped condition of the

area.

This underdevelopment has restricted the development of this area through the years in which nearly all other persons of the United States have seen the development of a most progressive and prosperous economy, at least on a comparative basis.

Therefore even though this status of underdevelopment has been a bar to the prosperity and well-being of the people of this area in all times, it renders the economy of this area more completely out of joint in today's total economy than ever before.

Repeated and searching analysis of the economy of this area and its problems, have developed consistently this problem of underdevelopment. Within the underdevelopment problem, certain features stand out most strongly of all.

Certainly the most effective and frustrating bars to development of this economy, involves the tremendously difficult problems of accessibility within the area, or in one word, transportation; and, secondly, the harassing factors of uncontrolled water in this area.

Although there is a plentiful supply of water in the area, it is subject to rapid fluctuation to the extent that the area is harassed frequently by severe flooding, while, on the other hand, it must subsist in many months of each year with a low flow in streams and tributaries which actually fails to provide the necessary water for normal community uses, not to mention the potential uses of potential industry. It must be borne in mind here that although this area is underdeveloped, it is not underpopulated.

The difficulties of developments of transportation facilities, such as roads and airports, and of water control facilities of various kinds, in this area, involve construction costs which are out of line with the normal feasibility, cost-benefit ratio formulas by which such construction projects are normally justified.

Thus, even though the area has a population density equal to that of the rest of the State, this large and significant population has been unable through the years to obtain those regional facilities which are basic and necessary to the development of even a modest or minimal regional economy.

It is recognized that need is not always an ideal criteria on which awards of any service may be justified. However, it is essential that a new look, and new attitudes must be developed in considering the justification of developments for the eastern Kentucky and for the Appalachian area.

This is true because of the necessity for development of this area into a productive area which may contribute to rather than depend upon the economy of the country which grows out of the need itself.

In this sense, the third point mentioned above-the program of the Eastern Kentucky Regional Planning Commission becomes important.

The commission has been at work for a little over a year now, charged with the responsibility of finding means for improving the economy of this area, on a permanent and continuing basis.

The commission recognizing the intense needs of the area's people, recognizing the vastly increasing cost to all other areas of the country of maintaining this area in its present state of nonproductivity and high welfare costs, has determined that solutions are necessary and required-the only question is what solutions can best be invoked to achieve the most accelerated degree of success.

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The commission, after exhaustive study, has reached two basic conclusions. The first is that no program of general development can succeed in any reasonable fashion until certain basic regional development is provided for-these regional developments involve the creation of a regional system of highways, or at least minimal provision of other regional transportation facilities such as airport and airlines service facilities; the development of a regional system of minimal water control and supply facilities.

The second conclusion reached by the commission is that upon the basis for success in seeing the development of these regional facilities commenced, there must be formulated a concurrent comprehensive program of development affecting all phases of human endeavor in this area that is to say, there must be programs of improvement, all the way from minor to major in nature, of education facilities, of health and welfare programs and practices, of farming techniques, of the development of new markets for coal and timber resources which are rich in this area, and of the many other categorical activities which affect the general economy.

The commission is embarking upon this comprehensive and twofold program. Even now as I present to you our arguments for your consideration in providing help in the establishment of community facilities which is related to our first purpose-that of establishing basic regional facilities-the commssion is constantly engaged in the development of a comprehensive program.

We are finding great cooperation and interest in the furtherance of this program within the area, and within the entire State of Kentucky. Thus we are seeking to bring to bear the most effective influences and activities at the local, State, and Federal levels of government, as well as private enterprise and the private organizations and institutions.

In terms of highways, water control, and airport construction, all included within the attempt to build a system of basic regional facilities, the commission is working with various local, State, and Federal agencies toward the devising of new criteria-or, I should say, more applicable criteria-in order to allow the proper consideration of the justification of State and Federal projects for the building of highways and water control facilities and airports within this area, as related to the comprehensive needs and potentials of the economy. We are meeting with a considerable degree of success in presenting this basic point of view.

Although revisions in the criteria are yet to be made, we feel certain that in the very near future we will see the establishment of procedural considerations by which we show the interrelationship of highways, water control facilities, airports, and such regional facilities, so that the cost-benefit ratio affecting the construction feasibility of any of these facilities may be affected by their interrelationship and by the effects upon the total economy of the successful construction of any of these facilities in relation to the entire economic development program. The economic situation in eastern Kentucky is worsening rapidly and constantly. The situation calls for the most accelerated possible action in the face of growing crisis to relieve the basic causes of this condition. The potential for development is definitely here, but the tools of development are required.

Within the regionwide picture of an ecenomy in distress we find the most distressing and discouraging picture of these problems at the community level.

In each of the communities of the area, where people must deal directly and intimately with the problems that determine their standards of living, we find organized local efforts directed aggressively toward solution of our consuming problems of health, welfare, population growth, housing, and unemployment.

However, these efforts are constantly frustrated especially the efforts to meet the costs required to develop community facilities such as waterplants, sewage disposal plants, and other facilities needed to deal with many of these problems.

These frustrations arise out of the inadequate current community tax revenues and credit sources, which are themselves products of the current regional depression and are, at the same time, a bar to such development of the communities as is required before the communities can take part successfully in overall economic develop

ment.

Both comprehensive regional development and effectively planned community development programs are needed, working together to solve the complex problems.

The Eastern Kentucky Regional Planning Commission is now formulating a regional program which will go into effect within the coming year. In the context of this regional program, the potential for realistic benefits from practical community developments become even greater.

The improved credit opportunities for community facilities construction provided for eastern Kentucky communities by terms of the Spence bill, that is, H.R. 5944, thus would answer an important and specific problem affecting, not only the level of eastern Kentucky people, but one of the required bases for reasonable and effective development of the area's economy.

The human needs for such development as well as the opportunity which this development would provide in helping to change an economy from one dependent upon charitable assistance to one of the economic production and self-sustenance, both indicate the important and necessary contribution which this bill would make in the economic future of the area.

Certainly, similar benefits could accrue in other communities of similar areas and such benefits would be even more direct in other more developed areas.

Passage of this bill, thus, is vitally needed, both in terms of the direct benefits involved and in terms of the related benefits which this bill's provisions could give to comprehensive development programs of depressed and underdeveloped areas.

That concludes my statement, Mr. Chairman.

Mr. SPENCE. Are the economic conditions of eastern Kentucky improving, or are they growing worse?

Mr. WHISMAN. Unfortunately, sir, they are growing worse, and very rapidly. They are compounding themselves, and I mentioned the word "frustrating" here, and they are frustrating even the organized efforts at development in the area at this moment.

Mr. SPENCE. A great number of unemployed are barely existing now on Government surplus food for daily sustenance, isn't that true?

Mr. WHISMAN. Again, unfortunately, some of the highest percentage of persons, within the total population, of any area of the country are represented in those proportions in eastern Kentucky, who rely on surplus foods and, as indicated, the other welfare programs.

Mr. SPENCE. How long has that condition existed?

Mr. WHISMAN. The depressed condition has existed for a long time. During the last World War, there was of course a tremendous need for people, and we have counties where the draft is unneeded in eastern Kentucky, because the people volunteer. And so this took care of a great many young people who went out into the services.

There was also a great need for the resources of the area, and many people actually migrated in, in order to man the coal mines of eastern Kentucky when the coal was needed in line with the defense effort.

In that period, the area was more prosperous than it has ever been. It was a superficial prosperity based on needs that are not present normally-unusual needs for coal, unusual needs for people.

Since that time, since the end of the war, as the people came back, as the market for eastern Kentucky's coal has been forced to dwindle with the competing problems of transportation, which affect the price of coal, and so on, all these frustrating factors combined together have rerelegated this area to inaccessibility and depression.

Mr. SPENCE. It is my recollection that there has never been a draft for the military service in any war in eastern Kentucky, isn't that correct?

Mr. WHISMAN. In a number of counties, that is true.

Mr. SPENCE. What is the need for those smaller communities of eastern Kentucky, for water supply and sewage treatment works? Mr. WHISMAN. All of the communities in our area fail to have these facilities. Pikeville, which is one of the larger communities in the area, and which is on the Big Sandy River-and they are much concerned about pollution of the Big Sandy, which of course goes on and empties into the Ohio-Pikeville is facing the fact that it may be required to build a sewage disposal plant, which it is demonstrably unable to build under all the present credit and resource facilities.

Paintsville has been anxious for a long time to apply to the Housing and Home Finance Administration under their program, which is fairly liberal for some communities, but it represents an impossibility to Paintsville.

Paintsville is one of the more thriving of the communities in our area, but it is unable on its tax base and its credit situation to meet the necessary portion of contribution which it would have to under the HHFA program for water facilities and sewage facilities. I could name other communities.

Mr. SPENCE. That is the greatest basic municipal need at the present time, is it not?

Mr. WHISMAN. That is true. It affects the health of the area, of course, very definitely, and health is a great problem in this area.

Mr. SPENCE. That sewage goes into streams like the Big Sandy, and smaller streams that are tributaries to the Ohio River, and contributes to the pollution of that river and makes it more difficult to control.

Mr. WHISMAN. That is right. It reaches the Ohio River in just such form as the streams carry it, because of course the entire area,