2. We recommend that section 1 (d) be revised to require the ponsor's contribution to non-Federal projects to be not less than 50 percent of the total cost of the projects, and that at least 25 percent of such total cost be contributed by actual cash expenditure by he sponsor.

3. We recommend that section 1 (d) be revised to make a distinction between the amount of the sponsor's contribution on construction projects and the amount required on nonconstruction projects. We recommend that the sponsor's contribution for nonconstruction projects be reduced to 10 percent of the total cost.

We submit this proposal because we are convinced that sponsors are now utilizing special revenues, such as gasoline tax, water revenues, and so forth, intended for construction purposes, as sponsors' contributions to construction projects in excess of the required 25 percent, and utilizing the surplus contribution thus created to finance the sponsor's share of nonconstruction projects for which regular local funds are much more difficult to obtain.

It is admitted that a large percentage of the W. P. A. workers who are now assigned to construction projects are totally unfit for this type of work. From the best advice we are able to secure, of the 2,300,000 W. P. A. workers about 600,000 are assigned to noncompetitive nonconstruction projects of various kinds, and that the balance, or approximately 1,700,000 are now assigned to the competitive construction projects. We believe that the number of workers that could be assigned to noncompetitive nonconstruction projects could be practically doubled if a lower sponsor's contribution were required on these types of projects. Such a transfer of additional workers to noncompetitive projects, such as recreational supervision, pest control, traffic control, educational projects of all kinds, and so forth, would greatly reduce the competition of W. P. A. workers with construction workers and permit the assignment of W. P. A. workers to projects more in keeping with their capabilities.

4. It is recommended that the W. P. A. Appropriation Act for the fiscal year of 1941 includes provisions which will provide two new types of projects: (1) To initiate and continue a census of the qualifications of the workers on W. P. A. rolls, together with a record of the industries from which they came; and (2) to carry on a program for the placing of workers on relief in jobs in private industry on work for which they are best qualified.

5. It is recommended that section 12 be so amended that the total cost of any construction project utilizing W. P. A. funds shall not exceed $25,000.

The present act places a $52,000 limitation on the Federal funds which W. P. A. may contribute to a non-Federal building project only, and places no limitation upon the amount of funds which may be contributed to other types of construction projects, such as bridges, highways, roads, and streets, waterworks, dams, flood control, airports, grandstands, sewage disposal plants, sewer systems.

The limitations of the present act failed to produce the effect anticipated by Congress and, instead, has actually increased the size and character of the undertakings by W. P. A. through their shift into these other fields of construction. Where previously W. P. A. constructed buildings probably not to exceed $500,000 in cost, it has now turned to the construction of million-dollar viaducts and bridges,

sewage-disposal plants, and other engineering projects involving the use of just as many skilled workers and modern equipment and nearly as large a proportionate cost for materials as in building construction. Some of these projects are of enormous size, running upward from $1,000,000 and cannot be completed during the fiscal year.

6. We recommend that in section 12, provision be made to prohibit the division of projects into partial units in order to qualify under the cost limitation.

Experience during the past year indicates that the purpose of the present limitation has in some cases been defeated by the dividing of a project into several smaller projects.

7. We recommend that section 12 be revised to eliminate the exemption from the total cost limitation of projects for which bond issues were voted prior to the date of July 1, 1939.

8. We recommend that your committee write a provision into the 1940 relief appropriation bill prohibiting the use of "blanket projects" for construction, under which numerous individual projects of a widely dissimilar character over a wide geographical area are combined. We suggest that each separate W. P. A. project be required to have individual approval.

This recommendation is submitted because, under their administrative authority, W. P. A. has inaugurated a practice of developing blanket projects covering a miscellaneous variety of work spread over a wide geographical area into one project application. When such applications are approved, the local administrator apparently has the authority to increase allotments to any of the units as long as he does not exceed the total amount approved for the whole blanket project. Under this blanket project he also appears to have the authority to select, reject, or discontinue any of the individual projects at will.

We ask for these restrictions in order to retain whatever construction market may now exist. Present Budget recommendations for public works will this year decrease this type of expenditure $1,000,000,000 which, if not taken up in some manner, will put 500,000 men now working on construction jobs on relief. Full impact of this will be felt by July 1. In other words, if, through inducements you may offer, the municipalities find it to their monetary benefit to place projects in excess of $25,000 through W. P. A., you will eliminate entirely this possible market to us and make it necessary for W. P. A. to take over 500,000 of our men.

We present this testimony in utmost sincerity. The material which we are presenting has been carefully gathered and we are prepared to substantiate all statements made. We are sure that they sustain the recommendations which we have made and which we believe to be absolutely sound. We, therefore, ask your consideration and trust that they will merit your favorable action.

(The following statistical material was submitted by Mr. Zachry in support of his statement:)

CONSTRUCTION STATISTICS

Basic information from publications and estimates of construction and real property section, Division of Economic Research, Department of Commerce

VOLUME OF NEW CONSTRUCTION (IN MILLIONS OF DOLLARS)

VOLUME NON-WORK-RELIEF PUBLIC WORKS BY SPONSORSHIP

Compiled by Associated General Contractors of America, Inc., April 1940.

AUTHORITIES USED IN COMPILATION

Item I is the sum total of items II and IV.

Item II: Average for 1926 to 1929 from table 4, reprint from annual review number, Survey of Current Business, February 1940; 1932 to 1938 from table I, reprint from Survey of Current Business, August 1939; 1939 from table 4, reprint annual review number, Survey of Current Business, February 1940.

Item III: From Division of Business Review, United States Department of Commerce; 1926 to 1929 average from table 4, reprint annual review number. Survey of Current Business, February 1940; yearly figures 1932 to 1938, inclusive, taken from table 5, August 1939, reprint from Survey of Current Business; 1939 total public works volume is an adjustment from a preliminary estimate of 2,800 made by the Construction and Real Property Section, Division of Economic Research, Bureau of Foreign and Domestic Commerce; trends observed by us indicate that States, cities, and municipalities are constructing not more than 20 percent of their 1926 to 1929 volume solely from their own funds, justifying a reduction of $200,000,000 from the $2,800,000,000 preliminary estimate.

Item III (a): From table 5, reprint from Survey of Current Business, August 1939.

Item III (b): From Construction and Real Property Section, Division of Economic Research, Department of Commerce, estimates of sponsors' contributions to work-relief projects, part of which are included in item I.

Item IV: Balance after deductions of (a) and (b) from item I.

Item V: 1926-1929 average from table 3 (a) of document "Construction Activity in the United States, 1915-37," Bureau of Foreign and Domestic Commerce; 1932 to 1938, inclusive, from table 5, reprint Survey of Current Business, August 1939; 1939 figure from estimate of Construction and Real Property Section.

Item VI: Item VI is the balance from item II less item III.
Item VI (a): Public Roads Administration.

Item VI (a-1): From Construction Activity 1915-37 and table 5, reprint Survey of Current Business, August 1939, with 1939 figure and estimate of Construction and Real Property Section.

Item VI (a-2): Balance from (a) less (a−1).

Item VI (b): From Estimate of Construction and Real Property Section, Division of Economic Research.

Item VI (b-1): From table 5, reprint Survey of Current Business, August 1939, excepting 1939 figure, which is estimate of Construction and Real Property Section.

Item VI (b-2): Balance from (b) less (b−1).

Item VI (c): Is balance of item IV less items IV (a) and IV (b).
Item VII: Is the total of items III, IV (a-1), and IV (b-1).
Item VIII: Is total of items IV (a−2) and IV (b–2) and IV (c).
Item IX: Total of item VII (a) and VII (b).

Item IX (a): 1933 to 1935, inclusive, from table 7, reprint Survey of Current Business, August 1939; 1936 to 1939, inclusive, from table 6, reprint annual review number, Survey of Current Business, February 1940, Bureau of Foreign and Domestic Commerce.

Item IX (b): Estimates of Construction and Real Property Section, Division of Foreign and Domestic Commerce.

ESTIMATE FROM 1941 BUDGET APPROPRIATIONS

Item II: An assumption that private construction would equal 1939.
Item IV: Is the sum total of items V and VI.

Item V: Is total of Budget estimates, 1941 General Public Works Program.
Item VI: Is total of items VI (a), VI (b), and VI (c).

Item VI (a-1): From Budget estimates, 1941 General Public Works Program. Item VI (c): Is an assumption in accord with the trend of three previous years as to the volume of non-Federal public works which will result solely from nonFederal funds unsupported with Federal grants or aid.

Item IX (a): One billion dollars is the figure generally referred to in the press as intended for Work Projects Administration work-relief projects.

Item IX (b): Is the same proportion of sponsor funds to Federal funds as was estimated for previous years.

Mr. WOODRUM. Does anyone wish to ask Mr. Zachry any questions? Mr. O'NEAL. I would like to ask Mr. Zachry what his opinion is on the question of whether or not these projects would be engaged in

except through the instrumentality of the W. P. A. The statement is often made that almost all of these projects that W. P. A. engages in would never be built or undertaken unless W. P. A. furnished Federal money to the sponsors of the projects. It is claimed that unless a major part of it was put up by the Government agency, the construction work would not be undertaken. What is your opinion as to that?

Mr. ZACHARY. As long as there is an opportunity to get additional money, or additional Federal money for construction work, the municipalities will naturally look to that source for funds.

Mr. O'NEAL. Suppose those funds were not available, can you state what percentage of that construction work would probably be undertaken. If there were no W. P. A. funds, what percentage of it, would you say, would be gone ahead with without the Federal Government assisting in the financial operations at all?

Mr. ZACHRY. We figure that at least 50 percent of it would have been provided for if there had been no other course for them to follow. Mr. LUDLOW. You recommend a reduction from $52,000 to $25,000 in the limitation of Federal participation in building projects.

Mr. ZACHRY. Yes, sir.

Mr. LUDLOW. Would you extend that limitation to all kinds of construction?

Mr. ZACHRY. Yes, sir; all construction projects.

Mr. LUDLOW. Does your association comprise not only building contractors, but general construction contractors?

Mr. ZACHRY. It comprises all types of construction; yes, sir.

Mr. LUDLOW. What percentage, would you say, would be building construction?

Mr. ZACHRY. I would say about 30 percent building construction, 40 percent highway construction, and 30 percent heavy or engineering construction.

Mr. LUDLOW. You spoke awhile ago about the division of projects into various units in order to secure increased Federal participation. Mr. ZACHRY. Yes, sir.

Mr. LUDLOW. Do you know of any specific instances where that has been done?

Mr. ZACHRY. Yes, sir; we can give many specific instances.

Mr. LUDLOW. Are any of you gentlemen from Atlanta? I think all Members of Congress have received letters with regard the situation at Atlanta, alleging that the law had been circumvented by dividing projects into various units, thereby getting a larger Federal participation than would otherwise have taken place.

Mr. ZACHRY. None of us are from Atlanta, but I am sure we can give you a reference about that. We will have some other witnesses who will present specific instances of that kind.

Mr. CANNON. Mr. Zachry, I notice you spoke of displacements. You say you object to W. P. A. doing construction work because, as you say, it will displace men that you are now employing.

Mr. ZACHRY. That is correct.

Mr. CANNON. If we do not increase the appropriation, of course, we do not extend the program. That being true, how would it displace men you have now in employment?

Mr. ZACHRY. Because our public-works program this year is $1,000,000,000 less than last year, and we are seeking to regain that