I submit that some of these problems are beyond New York's capacity as a city to solve. They have spilled over beyond city boundaries and into several surrounding States. The problems have local aspects, but embrace several hundred cities, towns, and villages in a great many counties in several States. Remedial action by one local government may only move the problem to another local authority. What is true of New York is true of every other urban area to a greater or lesser degree. We agree with "Life" that this "ought to alarm and concern the whole country."

Mass transit, housing, municipal obsolescence, aid and water pollution, overcrowding, lack of open spaces, et cetera; these problems sap our internal strength and they cannot be solved by local governments alone.

For these deeply disturbing reasons, I appear before you urging favorable action on the legislation before you. The mission of the Department of Urban Affairs and Housing should be directed toward solving these problems which are beyond the capacity of any one municipality or local area to solve. Such an approach need not, nor should it, diminish our traditional concepts of home rule and selfdetermination. Properly administered and with energetic responses from the local level such an approach will enhance local prowess.

To those who fear that this proposal will result in a transfer of power and responsibility from city to Nation, we cite the example of the Department of Agriculture which has certainly strengthened the position of the farmer in the best interests of the Nation. We believe that the same would be true in the case of a Department of Urban Affairs and Housing. Indeed, it is our feeling that such a program would enhance local home rule by clearing away the obstacles to local self-determination wherever possible.

Federal domination comes from an implementation of policies without consultation at the local level. Having an area for consultation gives you participation in the formation of those policies and the implementation of them to give you a true opportunity to determine your own direction. The result can only be a stronger nation better able to carry out its international commitments. It is time for the urban problem, and all that goes with it, to be met head on with a dynamic program that offers purpose and direction in an overall coherent fashion. I beseech your favorable action on this most important legislation.

In addition, gentlemen, I might say that what is really at stake before you today is the Federal system of Government. Our Federal system is the longest Federal experience in the world. For one reason or another, those areas in the past that have increased their urban areas have for one reason or another died.

You take the Babylon of the past, it is nothing but an historical site today. The great contributions made by the Greek city-state of the past is a matter of history.

The Roman Empire rose to great heights and fell only to be followed by the Dark Ages.

The Aztec civilization of the Western Hemisphere smolders in the ashes of the past. These were all urban societies. They failed to meet not only the economic and political problems but they failed to meet the sociological problems that come with great concentrations of people.

That we are an urban dwelling nation nobody will deny. Are we, as a nation, to be the first to meet these problems of urbanization? We are not meeting them today.

If we do not meet them today we might be a casualty in the years

to come.

We often hear the statement, "Let's bring business into Government."

Where would the business today be which tried to follow the same patterns of the past? Where would the man who was a blacksmith who did not change his mode of living, did not go into something new when the automobile took the place of the wagon and the horse, where would he be? That man had to change. Much of our business today has changed to meet the changing conditions.

Government can be just as bankrupt as business can be if it fails to meet the changing conditions of the day.

Our principal concepts of government, our principal constitutions in the States, and most of the laws based on that were under pressures and needs of an agricultural society and a rural dwelling nation. We are an industrial society today and an urban dwelling nation. We must change our Government to meet the changed conditions of today, and in effect what we are pleading for here in the creation of this Department is a recognition of three-quarters of the people of the Nation today, the vast cultural and productive wealth of the country being at stake.

When we ask for the creation of a Department of Urban Affairs we are long overdue. The time is wasting. If we are to meet the problems of an urban society we must meet it with dispatch, we must meet it with recognition of the problems which prevail today.

For that reason we earnestly solicit your favorable consideration of this program.

Mr. Chairman, with your permission I would like at this time to also file a statement made by Mr. Ed E. Reid who is the executive director of the Alabama League of Municipalities on behalf of the American Municipal Association. He could not be here. Chairman DAWSON. That may be done.

(The statement referred to follows:)

STATEMENT OF ED E. REID, EXECUTIVE DIRECTOR, ALABAMA LEAGUE OF MUNICIPALITIES, ON BEHALF OF THE AMERICAN MUNICIPAL ASSOCIATION

Mr. Chairman, I appear in support of the proposal to establish a Cabinet-level Department of Housing and Urban Affairs. To me, as to many others, the need for such a Department has long since become self-evident. This proposal has widespread public support, as well as the endorsement of many experts in the field of government. For example, I am told that the creation of a new Department of Urban Affairs was one of the principal recommendations of the group of experts assembled by President Kennedy for his Task Force on Housing and Urban Affairs under the Chairmanship of Joseph P. McMurray.

It is true that many years ago this Nation was predominantly agricultural but for many decades the trend of population has been toward the cities. According to the latest census, only one-tenth of our families now live on farms.

I would like to make it clear that in referring to this shift in population I am not saying simply that because the farmers have a Department that therefore the cities and towns should also have one. The reasons go far deeper than that. And may I add that I regret the statements of some who almost seem to begrudge Agriculture its own Cabinet post? Personally, I do not share this view in the least. The Department of Agriculture is doing a splendid job of aiding rural America. Its programs of research, development and economic

assistance has been of tremendous benefit to farming. They have been of vital importance in maintaining the health of this all-important segment of the economy and they have contributed substantially to improving everyday life on the farms. I greatly admire the dedicated work of the Department of Agriculture and I am hopeful that the problems of our towns and cities can receive the same top level Federal attention through the creation of a Department of Housing and Urban Affairs.

Certainly Federal responsibility in the field of urban affairs and the need for a large measure of Federal leadership is well established. This is not a form of running to Washington for help to meet problems which should be settled at the local level. Municipal government fully accepts its own responsibility and is making every effort to meet the needs of its citizens. However, the fact that more than two-thirds of our population and 75 percent of the Nation's productive capacity is located in urban areas means that the well-being of these communities is of prime concern to the Federal Government.

It must be recognized that local government faces a serious handicap in many fields because of a fact with which I am sure you are familiar-the overrepresentation of rural areas in State legislative bodies. In a great many States, seats in the statehouse were apportioned many years ago when our population was predominantly rural. For example, my own State of Alabama has not been reapportioned since 1901 and some other States go back even farther than that. It is only natural that State legislators are often unsympathetic to the problems facing cities. This means that we have to work in the legislative halls for a better understanding of the problems we face and that we have to work hard to assure that our urban citizens receive a fair shart of tax dollars they contribuate to all levels of government.

Another important reason why the Federal Government must accept its reresponsibility for assistance in meeting municipal problems is the fact that, for better or worse, the Federal Government has preempted the major sources of tax revenues. There are those who argue that tax soures should simply be turned back to local government and let them handle their own tax problems. Certainly local government should not be starved of tax revenues of its own but I do not believe it likely that the Federal Government will abandon its sources of tax revenues. One special advantage that the Federal Government has in imposcing taxes is that they apply to all parts of the country equally. When a single State or city raises its taxes it is faced with the danger that some business firms may be driven to other locations. This competitive problem puts a premium on avoiding tax increases even at the expense of skimping on public services. The Federal tax pattern avoids this dilemma.

Certainly Federal programs to aid housing and other community needs are well established. The Federal Government has committed itself to a number of important long-range urban programs. Without this Federal leadership many, perhaps most, communities today would not be able to meet the public needs of their citizens as well as they do.

In fact, Federal assistance has probably been most helpful to small and medium-size communities. Our very largest cities, such as New York, Chicago, or Los Angeles, can afford specialized departments devoting full time to the many needs of their citizens. Smaller communities, however, can obtain the benefits of special departments and technical experts only if some larger jurisdiction, such as the Federal Government, bears the overhead cost. I am sure that most mayors of small and medium-size cities feel grateful for the help they have received from Federal agencies in dealing with the complexities of modern urban living.

As one who has worked for years with municipal governments, I am well aware of the range of problems which arise at the municipal level. As our population has soared, these problems have grown in intensity. As our people have come to expect increased services and even higher standards of service from local government, the scope of problems has widened.

To meet these pressing and widely varied needs, a host of programs have been developed both at the local and the Federal level. Some of these programs were once regarded as radical but are now taken for granted, while every year new needs, such as air pollution control, are arising.

Perhaps this committee is familiar with the national municipal policy statement adopted by the American Municipal Association this year. I think that the statement, which covers 31 pages, demonstrates the variety of problems which concern our cities.

I recognize that no one department could or should encompass all the concerns of local government. Naturally there are some programs properly dealt with by other agencies or departments. However, it seems apparent that there could be a great improvement in efficiency if more of these functions could be combined into a single agency of government. I am sure that the members of this committee are familiar with the problem which faces the mayor who comes to Washington and discovers that he must seek out a half-dozen different agencies to get answers to his problems.

For instance, today, when a mayor comes to Washington to see about a community facility loan, it is necessary, at the very least, that he contact the Housing and Home Finance Agency, the Community Facilities Administration and the Department of Health, Education, and Welfare. For housing assistance, frequently his contacts must be made with the Public Housing Administration, FNMA, FHA, the VA and the Wage and Hour Division of the Labor Department, the Bureau of Public Roads and HEW.

Often he deals with people in the Federal Government who have never even met other officials working on closely related problems. And, all too often, there is the natural feeling in Government that the program of a different agency or department is entirely someone else's concern. The Government official who has responsibility for successfully carrying out one program naturally cannot be expected to give full consideration to the programs of other departments. An overall Department of Urban Affairs by centralizing responsibility, to the maximum extent possible, would help greatly to solve this problem.

In addition, there is a great need to have programs dealing with housing and municipal development dealt with at the same high levels in Government as are other basic policy matters. All too often, we have seen these programs needlessly sacrificed by the veto of some other Government agency. A major example of this appeared during the tight money periods of the past few years. On several occasions fiscal and monetary authorities set out on a policy of tightening the money supply presumably to avoid inflation. This may have been perfectly good and desirable but there are many who feel that such a policy bore too heavily on our housing programs. As soon as interest rates went up, mortgage money for FHA and VA loans, which finance the bulk of modest-priced housing, began to disappear. Thus homebuilding was sharply cut while large corporate borrowers could ignore the higher interest rates because of offsetting tax considerations and the ability to pass these higher costs on in higher prices. Similarly, municipal governments generally found themselves at a particular disadvantage in tight money periods.

On this point I would like to quote briefly from the distinguished economist, Arthur E. Burns, former Chairman of the Council of Economic Advisers under Mr. Eisenhower. In his book "Prosperity Without Inflation," written after he left office, Dr. Burns had this to say:

"When the Government embarks on a restrictive credit policy, it does this with a view to restraining the growth of total expenditure, not to benefit one type of activity or to injure another. In practice, however, some branches of activity, such as those in which the Federal Government itself is engaged, are untouched by general credit restrictions. In other activities, such as consumer installment buying, the effects are seriously felt only after a very substantial lag. On the other hand, small businesses and the homebuilding industry are apt to feel the impact of general credit restraints fairly promptly and more keenly. But not only do general credit restrictions have selective effects, it also appears that these effects may interfere with some key objectives of national economic policy-such as the extension of homeownership, the promotion of sound neighborhoods, and the maintenance of an environment in which small and new businesses, which are a vital source of innovation in our economy, have a reasonable opportunity to survive, prosper and grow."

Mr. Chairman, I feel that if housing and other municipal programs had been represented at the Cabinet level when these major decisions were made, a more equitable policy might have been worked out without hampering the objective of restraining price increases.

The programs of the Housing and Home Finance Agency involve billions of dollars. These programs affect every community on our Nation. They have a major impact on our national economy, on the strength and well-being of our Nation, and on the welfare of all of our people.

It is obvious that these programs can and must be administered better than they are within the loose organization in which they were placed in 1947. They

need and must have the same kind of leadership that we have already in the fields of agriculture, natural resources, labor, commerce, and the rest.

The need for pulling together the then-existing programs was obvious during World War II, when the National Housing Agency was set up to make sure that the Nation's housing resources were channeled toward the single goal, victory. After the war, the need for directing the housing programs toward the postwar goal of better housing for our citizens was equally obvious, and the Housing and Home Finance Agency was created to meet that need.

As the urbanization of the Nation increased, and as we learned more about the problems facing us in the new world after the readjustment period, we came to realize that our goals must include not only better housing but the whole complex of things that have resulted from a new pattern of living and a changing technology.

Thus, the Congress has assigned to the Housing Agency since the end of World War II a whole array of new programs concerned with the urban development and redevelopment. And from this has arisen the demand that the agency administering these programs be appropriately placed in the Federal structure, so that the full potential of these programs can be realized.

There is one point which I cannot emphasize too strongly. Some people unfortunately seem to identify a Department of Urban Affairs only with large cities. This impression is completely mistaken. To be sure our large cities have some special problems, as do small communities. However, cities of every size have many problems and aspirations in common. I feel confident that a Department of Urban Affairs and Housing would not be administered simply to benefit the larger metropolitan areas.

In fact, I believe smaller communities would benefit most. Big cities have money to get planners, contact people and Washington representatives, whereas the small towns of America are not blessed with this wealth of specialized personnel to assist in unraveling the redtape that inevitably develops when the varied Federal departments are involved. The result is that many cities and towns must depend on their Congressman and with so many considerations it is impossible for him alone to give these municipal problems the time and detail which they merit.

The Alabama League, of which I have been executive director since it was established in 1935, represents all Alabama communities, regardless of size. These communities range from very small towns up to the metropolitan area of Birmingham with a total population of over 600,000, but most of them are small, by "big city" standards. I would not be testifying in support of this measure if I did not believe that all of these communities would benefit.

I think it is important to point out that the Housing and Home Finance Agency does recognize small community problems, and makes special provision for them.

The certified agency program in the Federal Housing Administration and the facilities which the voluntary home mortgage credit program offers to small communities are examples of this. The particular problems of small communities have been recognized also in the arrangement made by HFA to adopt the concept of the workable program for community improvement to the needs of cities of less than 5,000 population and in the Public Housing Administration manual relating to the management of low-rent public housing projects of 200 or less units.

In Alabama, we find that the housing agency programs help the smallest of our communities, and this is true in other parts of the country as well. A few figures will illustrate the importance of the programs which would be placed in the new Department of Urban Affairs and Housing to these communities.

Urban renewal, through which the Federal Government bears two-thirds of the cost of acquiring slum areas and preparing the land for reuse, is typically thought of as a "big city" program. Yet, in March 1961, 93 of the 483 local public agencies participating in the urban renewal program were serving communities of under 10,000 population, and 203 of these local agencies were serving communities of fewer than 50,000 persons.

Public facility loans are made to communities which cannot secure funds in the private bond market upon reasonable terms. Over 90 percent of the loans under this program have been to communities of less than 5,000 population and for the construction of such basic public works as sewer and water systems. The typical applicant under this program has been a town of about 1,000 persons, which needs $200,000 to finance an essential public works project, and which has never before issued bonds or planned and built a public facility.