(4) The individual needs of the many different kinds of people now living in or moving into our urban centers. These needs include such fundamental concerns as literacy, job-training, education for urban family life, education for retirement, and learning how to be a good citizen of the city, respecting its laws and enjoying its many cultural and recreational resources. Second, the proposed Department should develop new programs slowly and in consultation with citizen groups in every part of the country. Specifically, we urge a year's study of urban life, after the creation of the Department has been authorized before its new programs and organizational framework are crystallized. If the Department is created, we shall offer our services to encourage thoughtful and widespread studies that will bring authorities on urban problems and citizen groups together to pinpoint our problems and formulate suggestions for the Department to consider. Third, the proposed Department should seek, either by itself or in concert with other Departments, the establishment of a cooperative program of education for urban life that permits and encourages Federal, State and local agencies to make grant-in-aid to a common program. The success of the Cooperative Extension Service in rural areas over the past half century suggests that a comparable focusing of resources and effort can be successful on the urban scene. 44 We need an educational service for urban life that can help to guide urbanization in this country toward goals that all Americans understand and support and by means that enlist the personal energies of millions of Americans in the regeneration of our cities. When this occurs, we shall have an urban America of which we can be proud, in which we can be confident and to which we can commend the support of generations yet to come. EUGENE I. JOHNSON, Chairman, Community Development Section Adult Education Association, U.S.A., and Member of the Administrative Board, Community Development Division, National University Extension Association. Senator HUMPHREY. We thank you very much for your patience in staying with us. It was a very good summary for our afternoon's deliberations and discussions. Mr. MIAL. We certainly wish you luck in this very important enterprise. Senator HUMPHREY. Are there any questions? Senator MUSKIE. No questions. Senator HUMPHREY. We shall hold the record open from this date for 1 week. I would suggest that we look into this situation relating to Governors. We may want to ask them to come in and testify. think it might be a good idea. This hearing is now adjourned. (Whereupon, at 6:25 p.m., the committee adjourned subject to the call of the Chair.) (The following communications are placed in the record at this point by direction of the chairman :) Hon. JOHN L. MCCLELLAN, COMPTROLLER GENERAL OF THE UNITED STATES, Chairman, Committee on Government Operations, U.S. Senate. DEAR MR. CHAIRMAN: Mr. O'Brien of your staff informally requested our report and comments on S. 1633, entitled "A bill to establish a Department of Urban Affairs and Housing, and for other purposes." We have no firsthand information concerning the necessity for or desirability of establishing a Department of Urban Affairs and Housing, and since the provisions of the bill involve matters of policy for determination by the Congress and would not affect the functions of our Office, we have no comments with respect to its merits or recommendations regarding its enactment. However, if the bill is to receive consideration, there are several matters which we would like to bring to the attention of the committee. We consider legisla tion establishing a new executive department to be permanent legislation which will continue to be applied to new and changing conditions and that items having only transitory significance should be included in other legislation. * * Section 7(g) authorizes the Secretary of the proposed Department "to establish a working capital fund, to be available without fiscal year limitation, for expenses necessary for the maintenance and operation of such common administrative services as he shall find to be desirable in the interest of economy and efficiency in the Department We believe that existing legislation contained in section 502 (c)(3) of the Housing Act of 1948, as amended, 12 U.S.C. 1701c(b) (3), provides for similar authority in that it permits the establishment of a single consolidated administrative expense fund which may include funds for administrative expenses of various agencies or officers including funds available to the Administrator, Housing and Home Finance Agency, and the Commissioners of the Federal Housing Administration and the Public Housing Administration in carrying out their functions, powers, and duties. Since authorization for the consolidated administrative expense fund provided in section 502(c)(3) of the Housing Act of 1948, as amended, would appear to be transferred to the new Department under section 5(a) of the bill, we question whether establishment of a working capital fund would not duplicate some of the functions of such consolidated fund. Also, it is our view that the budgetary and appropriation processes followed in financing activities through annual appropriations provide the best means for effective congressional control unless there are special circumstances which require a departure from this process. In special instances, we have endorsed funding methods outside the regular appropriation structure. Such endorsements were made only on a clear showing of need and demonstrable merits in terms of more efficient operation of the activity than can be attained through approppriation financing. On the basis of discussion with officials of Housing and Home Finance Agency we understand that this revolving fund will not be a very large fund and it will not be used to finance the entire administrative operation of the department created by this act, but will be limited mainly to the purposes enumerated in section 7(g) of the bill. Under these circumstances we offer no objections to the creation of the revolving fund. Section 7(g) also provides that in addition to amounts apppropriated to provide capital for the working capital fund, the fund shall be capitalized “by transfer to it of such stocks of supplies and equipment on hand or on order as the Secretary shall direct." We believe that a means of valuation, such as cost or, where applicable, cost less depreciation, should be provided for the stocks of supplies and equipmen to be transferred to the fund. Section 8 would, among other things, abolish the Federal Housing Administration (FHA) and the Public Housing Administration (PHA), and section 5(a) of the bill would transfer their functions to the proposed Department of Urban Affairs and Housing. Pursuant to provisions of the Government Corporation Control Act (31 U.S.C. 841 et seq.) these agencies are subject to an annual audit by the General Accounting Office. Since the agencies will be abolished if the bill is enacted, the provisions of the Government Corporation Control Act will no longer apply. Accordingly, we believe that references to FHA and PHA should be deleted from the Government Corporation Control Act. Also, we wish to point out the Government Corporation Control Act still lists the Federal Public Housing Authority (a predecessor organization of PHA) as a wholly owned Government corporation. As this entity is no longer in existence, we suggest that reference to it should also be deleted from the Government Corporation Control Act. If after establishment of the department it is intended that the General Accounting Office be required to continue its annual audits of the functions now carried out by FHA and PHA, appropriate provisions should be included in this bill. Section 8 of the bill does not provide for the abolition of the National Voluntary Mortgage Credit Extension Committee which was created pursuant to section 603 of the Housing Act of 1954. We are not certain whether it is the intention of the bill to retain this Committee and its functions. Also, since the National Housing Council is to be abolished by this section and no provision is made in section 5(a) of the bill for the transfer of the Council's function, it is not clear whether such transfer is intended. We believe therefore that the status of both the National Voluntary Mortgage Credit Extension Committee and the National Housing Council should be clarified. The bill does not contain a provision for disposition of the Federal investment in the Public Housing Administration's capital stock of $1 million presently held by the Secretary of the Treasury. This capital stock was originally issued by the U.S. Housing Authority (predecessor organization to PHA) pursuant to the U.S. Housing Act of 1937. Since enactment of the bill would terminate the existence of the Public Housing Administration as a legal entity, even though its functions would continue to be exercised by the new department, we believe the bill should be amended to provide for the repayment to the Government, as funds are realized or available, of its investment in the Public Housing Administration as represented by the capital stock of that Administration. Section 9 requires the Secretary of the proposed department to make a report to the President for submission to the Congress on the activities of the department during the preceding calendar year. Since agencies are generally required to report their financial operations for fiscal years ending June 30, we believe agency administrative procedures would be simplified if reports on agency activities were also prepared on a fiscal year basis. Further, we be live that the preparation of activity reports on a fiscal year basis would permit users of such reports to relate an agency's program activities to its financial operations. Accordingly, we would suggest that section 9 be revised to require activity reports to the Congress on a fiscal year basis. To show that provisions of law have been previously amended, the words "as amended" should be added after references indicated below. DEAR SENATOR HART: On behalf of the Michigan Chapter of the American Institute of Planners, I am writing to urge the establishment of a Department of Urban Affairs. Our institute, which is the professional organization of city and regional planners, has a vital interest in the proper development of our urban areas. The tremendous problems involved in the rebuilding of much of our cities, and the guidance of new growth, requires the greatest amount of coordination at every level of government. A Department of Urban Affairs recognizes this need, and, though the exact nature of all the duties of such a Department will have to be developed over a period of time, the present proposals will establish the centralized framework much needed on the Federal level. Respectfully, EDWARD J. HUSTOLES, President. U.S. SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, June 21, 1961. Hon. HUBERT H. HUMPHREY, Chairman, Subcommittee on Reorganization and International Organizations, Senate Committee on Government Operations, Room 3304, New Senate Office Building, Washington, D.C. DEAR MR. CHAIRMAN: As a cosponsor of S. 1633, I want to take this opportunity to urge favorable consideration of this bill. I believe that the establishment of a Department of Urban Affairs and Housing is long overdue. The Housing and Home Finance Agency, which as you know would form the core of the proposed new Department spent $4.6 billion in the fiscal year 1960. The expenditures of HHFA were exceeded only by the Departments of Agriculture, Defense, and the Treasury. I cite these figures to illustrate the magnitude and importance of HHFA's operations which certainly deserve to be organized within a Department with Cabinet representation. Moreover, the creation of this new Department is justified by the fact that 70 percent of our population lives in urban areas. We all know that our urban population has been traditionally underrepresented in State legislatures and in the Federal Government. I am hopeful that means will be found to correct these inequities in the State legislatures. Meanwhile, with the introduction of S. 1633 by the very distinguished senior Senator from Pennsylvania, Senator Clark, we in the Congress have an opportunity to insure that urban areas will have more equitable representation in the Federal Government. Given the problems which face our municipalities, it is high time that those who have the important task of governing our cities have one central place in the Federal Government where they can seek intelligent assistance. I know that many of the mayors in my own State of Rhode Island have expressed exasperation with the present system whereby they must hop from Agency to Agency whenever they have occasion to deal with the Federal Government. Such a situation is particularly regretable when there is vital need for Federal leadership in the field of urban affairs. Such problems as air pollution and water pollution obviously cannot be handled solely by local or State governments— the geographic scope of these problems is nationwide. For all these reasons, Mr. Chairman, I am proud to be a cosponsor of S. 1633, and I urge speedy and favorable consideration for this bill by your subcommittee and the Congress. Warm regards. DEAR MR. MCCLELLAN: Attached is a statement on S. 1633, a bill to establish the Department of Urban Affairs and Housing. I would appreciate it very much if you would review this statement and make it a part of the record of the hearings on this bill. Cordially yours, CLARENCE R. MILES, Manager, Legislative Department. STATEMENT OF THE CHAMBER OF COMMERCE OF THE UNITED STATES ON S. 1633 The National Chamber views S. 1633 as the most potentially destructive threat to the traditional concept of American constitutional government in a great many years. The National Chamber opposes the proposed bill as a bid for usurpation of State and local prerogatives in direct conflict with the spirit of the 10th amendment to the Constitution. While the stated objectives of the bill are to encourage, foster, coordinate, and promote the needs and interests of urban areas and the people residing therein, these must be viewed against the probability that the bill would result inthe supplanting of local and State powers by Central Government control. The superior powers of the Central Government to tax and spend could first vitiate and later render inoperative State, county, and local governments. This may appear as a strong indictment if S. 1633 is viewed mainly in the light of elevating the Housing and Home Finance Agency to Cabinet status. However, there are several other indications of the intended scope of the programs for which S. 1633 would provide the initial mechanism. Senator Joseph S. Clark of Pennsylvania introduced this bill with the following words: ***** This bill in itself adds no new programs or operations, nor does it transfer to the new Department any functions now vested in any agencies other than the Housing and Home Finance Agency. It simply elevated the status of that Agency-just as the Federal Security Agency was elevated to become the Department of Health, Education, and Welfare and assigns to the new Department additional responsibility for leadership in coordination of all of the activities of the Federal Government as they affect urban areas. ** The enthusiastic sponsorship of S. 1633 by Senator Clark is a factor which should be given careful consideration. On repeated occasions, Senator Clark, undoubtedly with deep conviction, has advocated far-reaching changes in our form of government. It should be realized that, however highly motivated, adoption by the Congress of the philosophy espoused by Senator Clark would mark a new and radical departure from our present federated system. In a speech delivered on February 15, 1961, in St. Louis, Mo., Senator Clark made the following statements: "*** Area problems of shelter, industrial and commercial redevelopment, transportation of goods and people, water supply, sewage disposal, education, police and fire protection, recreational facilities, public health, the administration of justice, delinquency and racial tensions have overwhelmed outmoded local and municipal units of government, created centuries ago. 66* ** Our local government structures, survivals of the 18th century, are just not suited for the decisionmaking processes involved in solving metropolitan area difficulties in the 20th century. The structure of local government in America tends to inhibit rather than facilitate the application of intelligence to the solution of human problems. And yet, not enough people are prepared for the drastic changes that are needed. This is political lag, in opinion and in organization, and it must be eliminated before we can succeed * * *." "*** Consider next the States and ask the same question: Are our States, at present, efficient instrumentalities for the application of human intelligence and compassion to human problems? The answer is that they are not * 66# **Next in economic matters, our modern industrial Nation has become economically one community with whose problems 50 federated States cannot deal effectively. Competition among States for industry tends to defeat the adoption of desirable social legislation, penalizing progressive States and rewarding backward ones * "*** We are going to have to make drastic changes in the structure and programs of State governments if they are to carry their share of the burden of building a prosperous America ***." [Italic added.] The national chamber has been concerned with community development for many years and its view is much more optimistic than that expressed by Senator Clark. The national chamber recommends that the Congress permit the Nation's States, cities, and other communities to retain jurisdiction over their own community development affairs. S. 1633 would foster a negative approach to urban problems. It would tend toward increasing Central Government intervention in local community development affairs, thus weakening local initiative and responsibility and narrowing the leadership resources and citizen participation applied toward solving urban problems. The national chamber has set forth in the "Community Development Series," and in the "Erie Workbook for Community Development Action," tested principles and procedures for solving urban problems through the use of local resources and local responsibility. These publications have been supplied to this committee. Within the past year these principles and procedures have been used successfully in Erie, Pa., where more than 300 community leaders contributed to the analysis of community problems, the selection of priority projects for organized community effort, and the initiation of action for solving community problems. Because the local responsibility approach to solving urban problems is much |