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 predominately rural. For example, my own State of Alabama has not been reapportioned since 1901 and some other States go back even farther than that.

SHARING TAX DOLLARS

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 share of tax dollars they contribute to all levels of government.

Another important reason why the Federal Government must accept its responsibility 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 sources 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 imposing 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.

MEETING PUBLIC NEEDS

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-sized 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-sized 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.

FEDERAL-LOCAL PARTNERS

To meet these pressing and widely varied needs, a host of programs has 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 and water pollution control, are arising.

Perhaps this committee is familiar with the national municipal policy statement adopted by the American Municipal Association for this year. I think 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 major 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 major 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.

SOMEONE ELSE'S CONCERN

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 modestpriced 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.

MORE EQUITABLE POLICY

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 in 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.

NEED PULLING TOGETHER

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 field 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.

PROBLEMS IN COMMON

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 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 may considerations it is impossible for him alone to give these municipal problems the time and detail which they merit.

The Alabama League of Municipalities, 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 its 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.

SMALLTOWN PROBLEMS

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 HHFA 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 to these communities.

(1) 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.

(2) 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

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.

(3) Advances are available for public bodies to enable them to plan needed public works. These advances are interest free, and become repayable when and if the planned facility is placed under construction. Through March of this year, of the 2,920 applications received under this program, 1,064 came from communities under 5,000 population and 2,290 were from communities under 50,000 population.

(4) Public housing has also assisted a great many of our small cities. As of September 30, 1960, the number of communities with low-rent public housing projects or with fund reservations looking toward such projects totaled 1,503. Of these, 734 were places of less than 5,000 population and 1,310 were places of less than 10,000 population.

(5) In the preparation of community plans, more than 1,500 cities of under 50,000 population-most of them much smaller than this-have been given financial assistance through grants made by the Housing Agency to State governments under the urban planning assistance program.

GROWTH OF COMMUNITIES

Mr. Chairman, I am well aware that the creation of a new Cabinet post is a serious undertaking. It is not something which can or should be done to fit some planner's idea of an organization chart. In the early days of our Nation there were only five Cabinet posts-the Departments of State, Treasury, War, the Attorney General and the Postmaster General. Since then, as the need arose, additional departments have been created. Under the pressure of our national development, the Department of the Interior was created in 1849, followed by Agriculture in 1862, Commerce and Labor in 1913 and the Department of Health, Education, and Welfare in 1953.

In recent decades there has been increasing attention at the Federal level to urban problems. Federal housing legislation now aids a substantial part of homebuilding activity; Federal contributions are made to housing for lowest income groups; grants are available to help communities rebuild slum areas; and Federal loans are available for community facilities and other purposes. I hope that this committee will agree that the time has come to officially and formally recognize the growth of cities and their problems by creating a new department which will combine the multitude of existing functions aimed at urban development and urban survival.

Senator HUMPHREY. Senator Williams and Mr. Ryan are here. We will hear Senator Williams first and then you, Congressman Ryan, if agreeable.

Senator Williams, I am going to have to ask Senator Muskie to chair the meeting for a little while. I must go to another meeting for the purpose of getting a quorum. I will be right back.

Go right ahead.

STATEMENT OF HON. HARRISON A. WILLIAMS, JR., U.S. SENATOR FROM THE STATE OF NEW JERSEY

Senator WILLIAMS. Thank you, Mr. Chairman, members of the committee. I appreciate this opportunity to testify in support of legislation that I feel is vitally needed and most necessary and one of the most important new developments in this session of Congress.

I know you have other witnesses and I will try to be brief. I will probably be most efficient if I do read this short statement that I have prepared.

I don't think there is any need to belabor the fact that the problems of urban and metropolitan area growth have run riot. We all know that our metropolitan areas-central cities to outlying suburbs-are scarred with incredible gashes of poverty, ugliness, confusion, and

waste.

The urban crisis of slums, traffic congestion, city crime, minority group ghettos, polluted air, water shortages, suburban sprawl, disappearing open space, rising welfare costs, declining tax bases, roadside slum towns, and neon nightmares are tolerable only because we must live with them day in and day out. But this makes them no less acute. Indeed, as Dr. Conant said in referring to the problem of teenage idleness in our slums, they add up to social dynamite.

The question is: Are we going to continue our hesitant, almost furtive approach to these problems, hoping the vested interests and the mythmakers of the preindustrial age won't notice, or are we going to acknowledge the existence of an urban America and make a bold new start with the instruments necessary to the task in this 7th decade of the 20th century?

For years now we have been tiptoeing toward a more comprehensive approach to the ills of urban living, trying to avoid suspicion that the mythology of a rural America was being changed.

The only trouble is that the problems are rapidly outrunning our backhanded approach to them.

It is significant, I think, that the agency most concerned with problems of urban development has nothing in its title to indicate that fact. Who would ever guess that the Housing and Home Finance Agency represents our best effort to identify the center of governmental concern with our urban and metropolitan areas?

The same surreptitious approach has characterized most of HHFA's programs affecting urban areas, frequently with costly results. Starting out with the FHA and low-rent public housing programs back in the thirties, we have been steadily tinkering ever since, broadening old programs here, adding a new program there, but never consolidating or coordinating these programs to any appreciable degree for fear, I suggest, of awakening some slumbering giant.

In 1949 we added a slum clearance program and ever since we have been quietly trying to stretch and broaden that program-to overcome limitations imposed by the strict definition of blighted areas, to embrace commercial along with residential renewal, to foster planning on a communitywide rather than on a project-area basis. But we still lack a program of sufficient flexibility for the task of reshaping 18th and 19th century cities to meet 20th century needs.

We have quietly initiated programs to help promote comprehensive urban planning, to solve the problems of relocation to aid in the rehabilitation of existing structures, to meet some community facility needs.

But in the same 10 years that HHFA has struggled with insufficient means to patch up past mistakes and revitalize our cities, we have put more than half as much new and unspoiled land to urban use as we had in all the previous years since the founding of the country.