sophically, the truth is that this could be done privately, but it has not been.

Lincoln once said that the Government does for the people what the people cannot do for themselves or cannot do so well for themselves. In this instance, maybe the people feel they cannot do it so well and therefore, they have relied on this kind of insurance principle.

But I think the point has been well made by Senator Muskie and yourself that we can have honest differences of opinion. If you feel that some of these things ought to be abolished, surely we do not need a department. I want to say if you put up a department, it does upgrade the activities, and we have at least an honest understanding of our respective points of view.

NATIONAL ASSOCIATION OF MANUFACTURERS

Senator MUSKIE. Mr. Chairman, I suggest that this statement be placed in the record in full.

Mr. BELKNAP. Thank you very much.

(The prepared statement of Mr. Belknap follows:)

STATEMENT OF PAUL A. BELKNAP ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

My name is Paul A. Belknap. I am president and treasurer of the Charleston Rubber Co., Charleston, S.C. I am appearing before you as chairman of the Government economy committee of the National Association of Manufacturers and express the association's appreciation, as well as my own for this opportunity to state our views on proposed legislation to create a Department of Urban Affairs.

As you may know, the NAM is a voluntary membership corporation made up of more than 18,000 business concerns of all types and sizes throughout the United States. More than 80 percent of our membership is small business. In fact, 28 percent of the membership employ 50 or fewer persons; 46.5 percent employ 100 or less; and 83 percent have 500 or fewer employees. The association thus speaks for a broad, diversified, and substantial segment of the country's productive-and taxpaying-enterprises.

My statement is in opposition to S. 1633 and related bills, all of which have the common objective of creating a new Federal Department to be headed by a Secretary of Cabinet rank. According to these bills, the new Department would assemble under one general management the various Federal Agencies which deal with housing and urban planning, and it is to have such other functions, powers, and duties relating to urban affairs as may be deemed necessary to achieve so-called national purposes in this general area.

The

The argument which I shall submit here is based on a report of the association's Government economy committee entitled, "The Primrose Path of Centralism," published in September 1960. This report is the most recent expression of a longstanding association program to bring Government back home. original study under this title was published in 1950. The basic concept was further developed in a studv entitled "Main Street versus Washington. D.C.," issued in 1957. I mention these studies to indicate the time span and the sustained attention which we have devoted to the trend and the interrelationships of Government in our Union of States.

Two major principles have been evolved from these writings as part of NAM policy. These are:

(1) Security for the Nation and for the individual citizens in this critical period in world affairs requires that the national responsibility be limited to the truly national tasks.

(2) All governmental services and functions pertaining to the welfare of the people except those which can be performed only by the Federal Government should be handled by a lesser iurisdiction. In a country which seeks to retain a government as set up under our Constitution, the several public services should be performed by the smallest units competent to handle them atisfactorily and economically.

On the basis of the foregoing principles, my opposition to these bills rests on two specific grounds, as follows:

(1) The creation of a Federal Department of Urban Affairs would assemble into a permanent Department an array of activities which are not properly matters of Federal concern. It would thus contribute to a further diversion of attention and effort from those functions and duties which only the Federal Government can handle. It would, moreover, elevate to a status of permanent tenure various forms of Federal grants and supports which are, by their nature, temporary in purpose and usefulness.

(2) A Federal Department of Urban Affairs would establish a close working partnership between the Federal Government and the cities which would bypass the States, ignore the legal relationships between the States and the municipal corporations subject to their jurisdiction and control, and undermine the States' responsibility for their own operation and management.

I. A DEPARTMENT OF URBAN AFFAIRS WOULD FURTHER DIVERT FEDERAL ATTENTION AND EFFORT FROM THE TRULY NATIONAL TASKS

The principle of division of labor in government

In these days of increasing world tension, expanding demands for public services, and excessive taxation to support government, we should apply in the fullest degree the principle of the division of labor in distributing the responsibilities of public affairs. We have three levels of government-Federal, State, and local (including county governments, representatives of which have testified against this proposal); and both efficiency of operation and economy of cost require that all public functions and services which can be handled by local governments, or by joint State-local action, should be so handled. Only those matters with which the States and/or their local units cannot deal should be left to Federal responsibility. In other words, the Federal sphere of action and obligation should be limited to the truly national tasks.

The division of labor which I have been emphasizing here was clearly perceived by the men instrumental in drafting and promoting the Constitution. In No. 45 of the Federalist Papers, Madison wrote:

"The powers delegated by the proposed Constitution to the Federal Government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce, with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.

In No. 14 of these Papers, Madison said:

***** it is to be remembered that the General Government is not to be charged with the whole power of making and administering laws. Its jurisdiction is limited to certain enumerated objects, which concern all the members of the Republic, but which are not to be attained by the separate provisions of any. The subordinate governments, which can extend their care to all those other objects which can be separately provided for, will retain their due authority and activity."

As the Constitution finally emerged, various powers of nationwide application and significance were specifically delegated to the Congress. Included among these national tasks were such matters as the regulation of interstate commerce, the postal system, bankruptcy, naturalization, and the currency system. However, by far the most important of the truly national tasks today are national defense and foreign affairs. These duties involve problems of transcendent importance for ourselves and for all nations on both sides of the Iron and Bamboo Curtains. In two World Wars the United States demonstrated its economic strength and earned a high position among world leaders. Our economic might is still superior, although Government interference with the operation of free market forces, through excessive taxation and other impediments, has prevented the Nation from realizing its full growth potential. But for some time there has been growing uneasiness abroad with respect to our leadership qualifications, and at home, with respect to our overall national security effort.

The major source of the loss of stature abroad and of the faltering confidence at home is our failure to recognize the need for a better division of labor in American government. Instead of leaving to the States and their local units the

responsibility for public functions and services which are within their collective competence to perform and pay for, the centralizing trend of the past 30 years has greatly extended Federal jurisdiction. Federal authority to finance and control has spread over ever-wider areas which cannot, in any logical sense, be regarded as truly national responsibilities.

Truth and consequences

The most damaging immediate consequence of uninhibited Federal expansion is that it diverts Federal time, attention, and energy from those truly national tasks, which are now so important and difficult. These should be recognized as the full-time Federal job, yet in the present scheme of things, defense and foreign affairs are only a part-time job. This was clearly indicated by a recent, rather routine, news commentary:'

"President Kennedy will take personal charge of battle for what his people call the big five, when he gets back to White House Monday. The five: Foreign aid, education, housing, farm, and highway bills. President's desk is piled high with other problems he must tackle, too.

"Plans for Government reorganization, maritime reorganization, sensitive decisions on glass imports and textiles, civil defense reorganizations, unemployment."

All of the time and energy that the President and his advisers must expand in dealing with matters not properly germane to the truly national tasks is a deduction from their capacity to study thoroughly the great problems of diplomacy and defense, to think out the essentials of firm, consistent policy in these areas, and to weigh with utmost care the long-range as well as the immediate implications and consequences of their decisions.

For years the cost of national defense and military assistance has exceeded $40 billion annually. Now it is a $45 billion operation: the largest by far, in the free world. The President is its managing head by virtue of being Commander in Chief. The executive officers in charge of very much smaller private activities are obliged to give full time and attention to their management, and where they are negligent or incompetent, the results are often apparent. the President of the United States has to carry his job as head of our Defense Establishment as a part-time job, which in effect makes it subordinate to the demands of much less-important matters or to the political exigencies of the moment.

Yet

We can't afford to divert the time and energy of our top officials into so many byways of national effort that they are simply unable to deal adequately and competently with the big issues. When are we going to face up to the plain fact that in the cold war we are dealing with hard, tough professionals who are playing for keeps? We must be as tough as they are. We can't depend on hearsay, improvisation, or just spending more money.

The general testimony from abroad is that our image there is one of hesitation and uncertainty, of constantly leading from weakness, of habitually wooing the Russians with more concessions, of having little faith in our own strength. We have asked for this reaction; we have built industriously toward it over the years; we have let our top management so overload itself with domestic cares that attention to the truly national tasks has suffered, involving detriment not only to our international status, but to the survival of our country and its character.

II. THE PROPOSED DEPARTMENT WOULD BYPASS AND DEMEAN THE STATES, AND MAKE VASSALS OF THE CITIES

Democracy works from the bottom up

One of the great virtues of our American political system is the freedom of the people, acting through their local and State governments, to determine the range and scope of public services, and the pace and price at which they shall be undertaken. Self-government presupposes free choice of action, which includes the privilege of deciding not to do something as well as to do things. This is a fundamental of democracy which we, and many of the other free nations, are trying to help extend among the peoples of the world. It is thus contrary not only to our long-established traditions, but to the ideological framework of our present international relationships, for government to impose dictates and commitments from the top down. The truly democratic process works.

1 "Heard in Washington," World-Telegram & Sun, June 10, 1961. ~

from the bottom up. Hence it is always justifiable in our political structure to presume that the functions and services being performed locally are being performed according to the wishes of the voters. When the people, in whose name and for whose benefit such services are supplied, use neither voice nor vote to have those services supervised or supplied by the top layer of government, the appropriateness of local action-and the non-Federal nature of the functions-is in fact acknowledged.

The principle of noninterference of government

Thus, there is a corollary to the principle of the division of labor among our three levels of government, which I have already mentioned. It is a second principle equally fundamental and important to the continued successful operation of a union or federation of States. This is the principle of mutual noninterference by either party with the agencies and instrumentalities of the other. The two structural parties to the compact of federation under the Constitution are the States, collectively, and the Federal Government. It was understood from the beginning that there could be no validity to, or effective operation of, our Federal system if either of these parties were permitted to impede, impose on, or interfere with the other.

The establishment of a Department of Urban Affairs would set up within the Federal Government a permanent, powerful vehicle which would impede proper State relations with the cities, impose on the authority of the States, and interfere with local prerogatives and determinations. It would constitute a bypass of the States and a direct line of potential dictatorship to urban areas. All municipal corporations are, legally, creatures of the several States and they have always been regarded as agencies and instrumentalities of the State. They are subject to an extensive body of law and regulations developed by the various States in recognition of this relationship and of the obligations devolving upon the States under it. The States are responsible for the financial management of all local units within their respective borders, exercised through control of their revenues, debt, and accounting procedures. Where Federal programs are set up to be handled by local officials, a direct line of authority is established between the Central Government and the subdivisions of the States. Whether this influence be "leadership" or "control," it is a direct interference with State instrumentalities and a violation of a basic rule of sound FederalState relationship.

The Federal Government has already been guilty of violating the principle of noninterefernce by bypassing the States and engaging in direct dealings with the cities and local school districts. This should not be considered a precedent for creating a Federal Department of Urban Affairs. On the contrary, it should be held that such action would greatly compound existing guilt. First, it would introduce an unequivocal, across-the-board Federal-municipal partnership. Second, direct Federal support to local units would undermine State obligation and promote further shirking of State responsibility.

The need for State leadership

Director of the Bureau of the Budget David Bell, in his testimony before the House Committee on Government Operations, May 24, 1961, said that the States should assume positive leadership in the future in dealing with problems of urban areas. He is quite right in this. But hope of it is practically foreclosed by his emphasis on Federal leadership. The same is true of the language of S. 1633 which declares, as part of the purpose of the bill, that a Federal Department is desirable to "give leadership within the executive branch in securing the coordination of the various Federal activities which have a major effect upon urban, suburban, or metropolitan development and redevelopment." In the first place, the leadership which is needed in this respect is State, not Federal. And in the second place, effective leadership is not divisible. To the extent that it is established within the executive branch it will be forfeited at home, and control with it.

The balance between the powers, responsibilities, and rights of Central and State Governments which was originally contemplated was expected to hold fairly even through insistence by the States and by the Federal Government upon their respective constitutional spheres. Thus each would be a check on too great concentration of power on either side.

No adequate countering of Federal insistence on power has come from the States. They have. rather, aided the concentration of responsibilities in the Central Government. And they have thus aggravated the difficulties of the

cities. Instead of insisting on less Federal takeover of functions and less Federal use of the country's financial resources, the States have substantially abdicated their own, and consequently much of the cities' operational and fiscal strength. By not exerting leadership and by acquiescing to a steady expansion of Federal undertakings in matters properly belonging to the composite Statelocal jurisdictions, the States have contributed to a considerable collapse of the original constitutional design.

The centralizing pressures which have produced the present imbalance between Federal and State responsibilities have stemmed over the past generation from the doctrine of "liberalism." In today's context that term is a complete perversion of the original concept, and might better be called "centralism." This, I believe, is a more definitive word for the rampant assumption of Federal jurisdiction, the massive dollar persuasion of Federal grants, and the false assertion that State and local governments lack both the fiscal capacity and the competence to deal with their problems.

The “national interest” gambit

Underlying the trend toward ever greater concentration of power and authority at the Federal level is the further assumption, also false, that the Federal Government is the chief custodian of the general welfare and that every situation involving the national interest is inherently and automatically a matter of Federal responsibility and a warrant for Federal action, expenditure, and control. The Nation's interest is no mandate for action by the National Government. As a matter of fact, the Nation's interest in the education of its children, the housing of its families, their health and comfort, use of leisure time, cultural advancement and so on is no warrant for government at any level to provide all these things. Nor is it any warrant for the Federal Government to help cities run their affairs simply because so large a proportion of the population now lives in urban areas. This is equivalent to saying that the more people who live in one place, the less they are able to think for themselves and handle their own problems. Whether more people live in urban or rural areas has nothing at all to do with how municipal affairs can best be managed or the cost met. The attitude that Federal action can solve everything-and should solve anything of widespread, or claimed "national" concern-is an outgrowth of the centralist doctrine that the Federal Government always knows best. This is like saying no group is able to manage its own affairs but needs Federal leadership. It implies distrust of the people and contempt for their ability.

Actually, the American became what he is, not because his government so legislated and provided, but because he and his fellow countrymen undertook and did for themselves what no government representatives could or should do for them. This relates not only to American free institutions and enterprises, but to our Federal system of government. It has not been Federal leadership, but the independent decisions and competition among the States and their subdivisions that brought forth the flexible, pertinent answers to community needs throughout the country. Central management promotes uniformity, regimentation. It stifles the very inventiveness and genius that is the American trademark.

The home rule charters of cities have been designed to afford maximum local freedom and flexibility in dealing with local affairs. Home rule will be increasingly supplanted by rule from Washington if a Department of Urban Affairs is established.

An extremely pertinent example of the impostion of Federal authority over the State's instrumentalities has been revealed with respect to the New York Port Authority. The executive director of this creature of interstate compact has just been sentenced to jail for contempt of Congress-for challenging and refusing to accept Federal authority. The judge's opinion said that the port authority was considered a "national asset" and therefore the Congress had authority "coextensive with any threat to national interest" and that "Federal interest" was sufficient to justify congressional scrutiny of the authority's records. Since Congress had approved the compact setting up the authority, it was maintained that Congress had a continuing responsibility to make certain its provisions were being followed.

Here is a potent lesson for any local official who is under the illusion that Federal leadership, guidance, or help with urban affairs will not mean Federal control. In a Federal-local partnership, there will be no question that the biggest power is the boss.