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However, our national effort has been directed ever since 1931 to stabilize the general economies of other nations throughout the world.
With the trend in this country toward urban living, our cities have become our principal economic centers, yet, here we are in 1959, almost 30 years after the big depression, still urging consideration for stabilizing the economies of our own communities at home.
I endorse wholeheartedly the statements made by Congressman Brent Spence which were made in connection with the introduction of the community facilities loan bill now before you.
Your chairman clearly indicates that you gentlemen understand the problem, and I am confident that a sincere effort will be made at providing Federal aid in well-deserved areas of need.
Admittedly, this is a long-ranged program. It is regrettable that it was not effectuated a long time ago so that its benefits could have begun to have been felt by now. The modern solution to chronic unemployment is simple in theory. We either provide jobs or we provide public assistance. The greater the failure to provide job opportunities, the greater the need for public welfare funds. It is as simple as that.
I am sure most people subscribe to the philosophy that it is socially, morally, and econmically indefensible to subject to programs of permanent public assistance, those employable men and women who are able to work, and who want to work.
I am thinking of the millions of persons, primarily those over 40 and the youngsters just entering the employment group, who face indefinite periods of unemployment because of company mergers, decentralization trends, automation, seniority rules and other factors prevalent in what is being described as the industrial revolution.
The legislation being considered by this committee offers the opportunity to attack this problem on several fronts. But this attack must be augmented by a broad, comprehensive effort all along the economic battleline.
Let's use Detroit as a typical example of what we are talking about.
In the first place, Detroit obviously qualifies as a distressed area under the bill's top classification. The unemployment in the District metropolitan area has been reduced considerably from its peak, but it still stands at almost 200,000, or 13 percent of the labor force.
About 60 percent of Michigan's unemployed are from within the corporate limits of the city of Detroit, and the percentage stands about the same.
From all available information our experts tell us that the rate of unemployment for the Detroit area will not go below 12 percent within the foreseeable future. If this holds true, the Detroit area will continue to be one of the hardest hit areas in the Nation.
In the year 1958 approximately 147,000 persons in the Detroit area exhausted their regular unemployment compensation. Since June 1958, supplemental temporary benefits have been paid.
The rate of unemployment compensation exhaustions, both regular and including the temporary additional benefits, was 12,500 for the month of January of this year, and it is expected that this rate will continue for some time.
These cases are indicative of the chronic unemployment problem inasnıuch as it shows, in cases where the temporary payments come to an end, that the enployee has been out of work for 9 months and is unlikely to find work within the present economic and industrial structure.
For the year 1958, the total money paid in the Detroit area for regular and supplementary unemployment benefits amounted to $237 million. This is more than double the amount of any of the past 10 years, and 5 times over the average. Previous years have ranged from $20 to $94 million.
The impact upon our welfare caseload has been most serious. There are at this time about 70,000 persons on the welfare rolls, or a caseload of about 16,000. This is triple the number of June 1957, and has far exceeded the city's financial resources.
Thousands upon thousands of these unemployed are men in their 40's and 50's with years and years of seniority. They have families, they are buying or own their own homes. Now, after 20 to 30 years of wage earning, they find themselves for the first time on public welfare.
Mergers in the automotive and other heavy industries have left these people out on a limb. The vast majority find it almost impossible to uproot themselves from the community in which they have made their lives.
They have a wealth of experience, but the huge plants in which they gained that experience have been abandoned because of changing manufacturing methods.
So Detroit finds itself cursed with hundreds of acres of industrial slums.
Other industries, not as large as the automotive plants, but still substantial employers, also have been forced to move because of inability to expand within the confines of their urban locations.
Others have merely put off expansion programs.
So we end up with the picture of increasing areas of industrial sites and the presence of industries which could expand their employment providing economically sound means were found to do so.
It is for this reason we stressed the need for relaxing the slum housing provisions of renewal legislation.
In the small pilot project in our Milwaukee-Junction area, where the city of Detroit on its own is reclaiming a 17-acre site, it was proved that rundown industrial areas can be given new life and provide additional employment.
The revolving loan fund to industries will prove a most effective weapon in this program of plant expansion.
However, the renewal phase must be a part of it because the sites are needed upon which expansion programs can be effected.
The loans and grant provisions for advancing public facilities are of utmost importance to many communities, as your chairman so ably pointed out in his introductory statement.
However, retraining provisions also would be of great value in achieving a well-rounded program. Our changing times require new and added skills. Retraining will undoubtedly be effective in reducing the unemployment rolls.
Also needed in a complete program are provisions for an independent agency and for enough flexibility to meet the individual and specific needs of the various communities.
Our cities have the necessary sites for industrial expansion. They have programs to redevelop these sites. They have industries which desire to expand.
On the other hand is an army of unemployed, skilled workers who want jobs, not charity.
I speak for every hard pressed community suffering chronic unemployment conditions in urging prompt passage of this and other much-need legislation.
We are most hopeful that this Congress also will give equal attention to the pressing need for meeting the immediate needs of the unemployed as it is giving here to the long range program.
Unless this is done, millions of able-bodied men will continue for years to live under the stigma of welfare handouts.
The time already lost has not healed any wounds. It has only resulted in increased hardship for the communities needing help and in hardship for the suffering, the unemployed.
We pray that proper and necessary legislation be given wholehearted support and approval.
It is unbelievable that any other course is open to anyone who has studied the wealth of material gathered by Congress during this, and previous sessions.
Mr. SPENCE. Thank you for your very interesting statement, Mr. Mayor. We are pleased that you could appear before the committee.
Are there any questions?
Mr. WIDNALL. Mr. Egan, your city enjoys an excellent credit rating, does it not?
Mr. EGAN. Yes, sir.
Mr. WIDNALL. I notice that your general obligation bonds are rated Aa by Moodys Investment Service. Just 3 weeks ago your city sold $435,000 worth of general purpose bonds with an average maturity of 4 years at a net interest cost of only 2.795 percent.
Mr. EGAN. Yes.
Mr. WIDNALL. That is a favorable sale in this market, is it not? Mr. EGAN. Yes, sir.
Mr. WIDNALL. Your city also has some revenue bonds, airport and water issues which are not full faith credit rating but nevertheless which receive Aa rating; 20 year maturities of those issues sell at a price to yield 3.75 percent. Do you think that is an excessive rate?
Mr. EGAN. Congressman Widnall, if we could sell the bonds for this program at 278 which is proposed in this House bill, I am sure that it would be looked upon very favorably and we would get favorable passage from the people of the city of Flint, but I can only rely upon the advice of the fiscal agent for the city of Flint and the financial director who have assured us that this bond program of sewage and water facilities will bear an interest rate of 4.25, no less, and probably 4.5.
Nr. WIDNALL. Well, the Federal Government just paid 4 percent on 10-year bonds, offered just a week before you sold your recent issue. Do you think that is an excessive rate?
Mr. Egan. Four percent?
Mr. Egan. Not being a fiscal agent, I would not know. I might say we do enjoy an Aa credit rating and it is something that we are extremely proud of. As for the selling of the $435,000 bonds, this actually was a special assessment program and I think that it should be so noted. We actually received two bids almost identical, one was 2.795,I believe it was the low bid and I think the other was 2.798.
Actually we had to go to the third decimal figure.
Mr. WIDNALL. Well, Mayor, do you think the Federal Government should borrow money at 4 percent and then loan it to Flint at 278 percent? That is a fine way to go broke, is it not?
Mr. Egan. I was not aware of the fact that the Government was borrowing it at 4 percent but I do think even if you are borrowing it at 4 percent, we have problems in the city of Flint that have to be solved and I think we should look upon some help from the Federal Government for the solution of those problems.
At present we have in the city of Flint almost 14 percent of the people unemployed. Yet, we are prepared to proceed with the sewage part of our program. We can start almost immediately if we can yet the help offered by this bill.
Mr. WIDNALL. By your statement, Mayor, do you mean that if today the committee decided it was not going to act on any kind of a community facilities bill, that the city then would abandon all efforts to solve your sewage and water problems?
Mr. EGAN. No. I think that is a very facetious question.
While you might cite Flint as an example of a city that enjoys a great credit rating, I am sure you will find communities throughout the country that would not enjoy that and therefore, would have a great benefit from House bill 5944.
Mr. WIDNALL. Mayor, I think you just said something that is true throughout the United States. This is the easiest way to do it. It is not the best way in the long run as far as the taxpayers are concerned. It is the way that disguises the amount the taxpayers pay as much as any other way because they do not feel the bite when it comes to a general lending program from the Federal Government.
Now, I believe that you would be labeled as a chronically depressed area in Flint and I would like you to verify the following tax collection record for your city.
For 1954, I have a figure here of 98.1 percent; 1955, 98 percent; 1956, 97.8 percent; 1957, 97.7 percent; 1958, 97.8 percent. That does not look as though you have a depressed area when your tax collections are like that.
Mr. Egan. I think that you will have to realize that a great amount of our tax collection came from unemployment benefits that people had received from the unemployment securities commission.
I do not feel that collections will be that good in the present year because many of the people of the city of Flint have exhausted their unemployment benefits. In fact, we, in the city of Flint, with the help of the securities commission have instituted a 1-day work program. People in the homes who have any little job around the house where they might employ an unemployed person for the 1 day are being urged to contact the securities office so that this work can be turned over to the people who no longer enjoy the benefits of unemployment compensation.
So, I do not think that the figures this year are as bright as they have been in the past. I do not dispute the figures.
Mr. WIDNALL. Has industry been moving in or out of your city in the past few years?
Mr. EGAN. I do not believe there has been any exodus from the city of Flint but I do think there has been a great curtailment of production in the city of Flint.
Mr. WIDNALL. That is not true of the automobile industry in Flint, is it?
Mr. Egan. On March 20, 5,600 people were added to the unemployment rolls in the city of Flint, 4,500 came from the Buick Division; 1,000 were furloughed from the Fisher Body Division, and 100 from the Turnstedt Division which supplies the handles needed in the production of Buicks.
So we have today a decreasing employment figure in the automobile industry.
Mr. WIDNALL. Is your depressed condition due to the fact that you are a one type of production town?
Mr. EGAN. I would say so. We have set up a committee in the city of Flint to work with the chamber of commerce in an effort to induce diversified industry to move into the Flint area.
We would like to provide the facilities they need. At present we do not even have the facilities to take care of production, if it were at the 1955 figure. More and more water is used in every part of the automobile industry, even with the same amount of production.
Mr. WIDNALL. That is all.
Mr. Reuss. Mr. Mayor, I would like to ask you about the hypothetical bond issue of the city of Flint that you speak of on page 8 and page 9 of your testimony-the issue which would bear an interest rate in the neighborhood of 4.5 percent. What is the number of years of that issue?
Mr. Egan. Thirty years.
Mr. Reuss. Would these be full faith and credit bonds?
Mr. Reuss. Would they be entitled to immunity from Federal income taxation?
Mr. KANE. I believe so.
Mr. Reuss. Despite that immunity, 4.5 percent is the best figure bond counsel says you could get ?
Mr. Egan. That is what our fiscal agent says; yes. Mr. Reuss. Thank you. Mr. SPENCE. Mr. Mayor, is there any limitation by law on the city of Flint as to the tax rates, or expenditures, or indebtedness! Mr. Egan. Mr. Chairman, there is a limitation on the general obliga
, tion bonds that we may apply for. There is no limitation on the amount of revenue-producing bonds.
Mr. SPENCE. But there is a limitation on your indebtedness or on your direct obligations?
Mr. Egan. Yes, sir.
Mr. SPENCE. Now in meeting the pollution problem, isn't it necessary to have complete cooperation of all communities along a waterway or the whole program fails? If one or two cities fail in their duty to keep sewage out of the rivers, there can be no cure for pollution. Don't you find that true in Michigan?
Mr. EGAN. Very much so. That is true.
Mr. SPENCE. And the bonds that you speak of are revenue bonds, are they not?
Mr. EGAN. Yes.
Mr. SPENCE. And naturally, there would be a higher interest rate on revenue bonds than on direct obligations?
Mr. EGAN. Right.
Mr. SPENCE. What disposition is made of the industrial waste of the industries in your city?
Mr. Egan. The A.C. Spark Plug has just constructed a new filtering treatment plant to take care of their industrial waste. Buick has had such a plant for many years. I think that the Du Pont plant in the city of Flint also has a waste disposal plant that treats the effluent prior to the dumping of their industrial wastes into our river. But we do not find that with the amount of water that we must take out of the river, that the effluent is as pure and the river as attractive as could be made if we had a different source of water supply.
Mr. SPENCE. Does a great deal of that industrial waste get into the river?
Mr. Egan. All of it. All of it after being treated is dumped right into the Flint River from the industrial plants.
Mr. SPENCE. This cleaning up of the pollution of the water supplies of Michigan is certainly a most important problem, is it not?
Mr. EGAN. Yes; and we would certainly be moving
Mr. SPENCE. It not only involves the success of industry and the happiness of the people but it involves their health because water transmits disease. I have understood the virus which is the cause of poliomyelitis has been discovered in impure water and the doctors are divided in their opinion as to whether that produces that dread disease. Are there any further questions?
Mr. Brown. Let me ask a question.