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ADDITIONAL APPROPRIATIONS FOR EMERGENCY

PURPOSES

THURSDAY, JUNE 7, 1934

UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C.
The subcommittee met at 10 a.m., in the Committee Room of the
Capitol, Senator Alva B. Adams (chairman) presiding.

Present: Senators Adams (chairman), Glass, McKellar, Hayden,
Byrnes, Overton, Hale, Dickinson, and Townsend.
Senator ADAMS. The committee will please come to order.

574332

ETTEE OF THE COMMITTEE ON APPROPRIATIONS

K.

ALVA B. ADAMS, Colorado, Chairman

FREDERICK HALE, Maine
R, Tennessee HENRY W. KEYES, New Hampshire

L. J. DICKINSON, Iowa
ith Carolins
, Maryland

KENNEDY F. REA, Clerk

STATEMENTS OF HON. HAROLD L. ICKES, SECRETARY OF THE

INTERIOR; COL. HENRY M. WAITE, DEPUTY ADMINISTRATOR,
PUBLIC WORKS ADMINISTRATION; EBERT BURLEW,
ADMINISTRATIVE ASSISTANT AND BUDGET OFFICER, DE-
PARTMENT OF THE INTERIOR; F. J. C. DRESSER, SPECIAL
ASSISTANT TO THE ADMINISTRATOR; E.

ADMINISTRATOR; E. H. FOLEY, JR.,
ASSISTANT GENERAL COUNSEL; H. T. HUNT, GENERAL COUN.
SEL; C. R. CHAMBERS, DIRECTOR, ECONOMICS AND STATISTICS
DIVISION

Senator ADAMS. Secretary Ickes of the Interior Department is here, and I assume that we had probably better take up title II of the bill, if that is the part that he is interested in, if it is agreeable to the other members of the committee.

Senator MCKELLAR. What page is that, Mr. Chairman?
Senator ADAMS. Page 62.

EMERGENCY APPROPRIATIONS

GENERAL STATEMENT

Now, Mr. Secretary, we will be glad to have your views.

Secretary Ickes. There are one or two suggestions, Mr. Chairman and gentlemen of the committee, that I would like to make.

As the bill came over from the House, I understand that it gives the permission to the President to draw on the unobligated balance of the Reconstruction Finance Corporation for relief and for P.W.A., with a limitation, however, of 500 million dollars for the P.W.A. I want to suggest respectfully that we cannot foresee at this time whether there should be a limitation of that sort. I think we should have no limitation, but it should be left to the discretion of the President to draw on these unobligated balances for P.W.A. If there should be a situation whereby the financial and economical situation should be

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come drastically worse in the next few months and it seems necessary to throw money into public works, the money would not be available and it would be necessary to reconvene Congress in special session.

Out of that 500 million dollars, 41 million dollars, according to the bill, would go for naval construction, and $2,500,000 for the Treasury Department to complete the public buildings under allotment already made, which would leave a maximum of $456,500,000, for new allotments, if the maximum authorization is to be used.

We have applications pending now for non-Federal projects totalling about $3,500,000,000—that is exclusive of Federal projects—and a good many of these projects are exceedingly good ones, such as water works, sewerage, and public buildings. To go ahead with those projects would not only mean reemployment, but would add to the capital assests of the Nation. It would encourage the heavy industries, and if we had a reasonable amount to go ahead with now, we would avoid the risk of a slackening in employment which if it should come very early in the winter or late in the fall, might have a bad general effect.

I do not think that there is any disposition anywhere whatever to spend this money recklessly. We are hopeful that a generous amount will be available for the Public Works, and by far the greater portion of that we would want to devote to non-Federal projects. The committee understands on projects of that class we make grants of 30 percent, and we lend 70 percent on approved securities, so that 70 percent would be coming back with interest at 4 per cent.

Our organization after it started to function has been operating very efficiently, and these projects began to pile in on us, and finally we shut them down on the 28th day of February. We made that the dead line. Since then we have not received any, but we have now pending those received before that date.

Senator MCKELLAR. What unexpended balance have you now?

Secretary Ickes. We do not have any. We have allocated all of the $3,300,000,000 as of the 1st of January. Since that time certain projects have been rejected for one reason or another, and we have realloted the money just as fast as we could.

Senator BYRNES. Mr. Secretary, what we want to know is what amount of money would be made available by the language contained in this section, in this provision, making available to the President the unobligated balance and of the Reconstruction Finance Corporation and the Federal Emergency Relief Act, and these other acts. What is the estimate of the amount that would be made available?

Secretary Ickes. There is a figure here. They say it would be about $2,000,000,000.

Senator BYRNES. Now, is there any break-down of that $2,000000,000 for the information of the committee?

Secretary IcKes. I believe not.

Senator BYRNES. Showing under what action of Congress that money was made available?

Secretary IcKES. We have approved now over 1,300 non-Federal projects.

Senator BYRNES. Mr. Secretary, I do not mean to go into detail, but the question has been asked and I know that we would like to know, as nearly as possible, the amount of money that is made available by this bill.

Secretary Ickes. They say that it is about $2,000,000,000.

Ils worse in the next few months and it seems necessary y into public works, the money would not be available

e necessary to reconvene Congress in special session. 300 million dollars, 41 million dollars, according to the for naval construction, and $2,500,000 for the Treasury o complete the public buildings under allotment already ould leave a maximum of $456,500,000, for new allotnavimum authorization is to be used. blications pending now for non-Federal projects totalling 100,000—that is exclusive of Federal projects and a diese projects are exceedingly good ones, such as water e, and public buildings. To go ahead with those projects

mean reemployment, but would add to the capital ation. It would encourage the heavy industries, and conable amount to go ahead with now, we would avoid Eckening in employment which if it should come very ter or late in the fall, might have a bad general effect. k that there is any disposition anywhere whatever to - recklessly. We are hopeful that a generous amount

for the Public Works, and by far the greater portion I want to devote to non-Federal projects. The comnds on projects of that class we make grants of 30

lend 70 percent on approved securities, so that 70

coming back with interest at 4 per cent. ion after it started to function has been operating and these projects began to pile in on us, and finally wn on the 28th day of February. We made that the - then we have not received any, but we have now eived before that date. LLAR. What unexpended balance have you now?

Senator BYRNES. In this, we know about the direct appropriations. We would like to know so far as possible the amounts that will be made available by this language, which makes available the unobligated balances in other funds. Now, having arrived at the $2,000000,000, you must have had some estimate to have reached a total.

Mr. BURLEW. That is based upon 70 percent and 30 percent.
Secretary ICKES. I do not know the answer to your question.

Senator BYRNES. Well, in line 6, may I say that this language is found-line 6, page 63:

Provided, That any savings or unobligated balances in funds of the Reconstruction Finance Corporation may, in the discretion of the President, be transferred and applied to the purposes of the Federal Emergency Relief Act of 1933. That is one.

I would like to knowSenator Glass. Well, Secretary Ickes is not supposed to be able to answer that question. I think that Mr. Jones would be the one who could be expected to come up here and answer that.

Senator BYRNES. If the Secretary does not know, he cannot answer it, and we want to know who does, so that we may have the information. I know that Members of the Senate have expressed to me their desire to know how

much money we are making available. Senator GLASS. I should think that either Mr. Jones or the Director of the Budget would be the proper person to ask that question.

Secretary Ickes. I should think either Mr. Jones or the Director of the Budget.

Senator DICKINSON. It is my understanding that Chairman Jones of the Reconstruction Finance Corporation told Chairman Buchanan that under this language there would be available about $4,000,000,000 from which they could draw.

Senator Glass. How much?
Senator DICKINSON. $4,000,000,000.
Secretary ICKES. Under the language that I have referred to?
Senator BYRNES. Under the language that I have read.

Senator DICKINSON. Yes; $4,000,000,000 of this would be permitted to stand in blanket form. Senator BYRNES. Suppose we go on.

I have read only one provision:

And/or title II of the National Industrial Recovery Act, and any unobligated balances in appropriations (including allocations of appropriation) of the Federal emergency appropriation of Public Works may, in the discretion of the President, be transferred and applied to the purposes of such Federal Emergency Relief Act of 1933.

Now, would anyone here have any information as to the unobligated balances of the Federal Emergency Administration of Public Works?

Secretary ICKES. We do not have any unobligated balances.
Senator Glass. That is exactly what he said.

Senator BYRNES. So that then under that you do not have anything and therefore any $4,000,000,000 must come under the first sentence of the Reconstruction Finance Corporation. We will have to get Mr. Jones of the Reconstruction Finance Corporation up here.

Secretary ICKES. Yes.

Senator DICKINSON. There is another phase of this thing. Do you expect to conclude there?

Senator BYRNES. No.

s. We do not have any. We have allocated all of () as of the 1st of January. Since that time certain en rejected for one reason or another, and we have ey just as fast as we could. s. Mr. Secretary, what we want to know is what would be made available by the language contained this provision, making available to the President lance and of the Reconstruction Finance Corporaral Emergency Relief Act, and these other acts. ate of the amount that would be made available? - There is a figure here. They say it would be 00. - Now, is there any break-down of that $2,000ormation of the committee? I believe not. Showing under what action of Congress that vailable? We have approved now over 1,300 non-Federal Mr. Secretary, I do not mean to go into detail, as been asked and I know that we would like to possible, the amount of money that is made avail

They say that it is about $2,000,000,000.

Senator DICKINSON. Go to the next paragraph, which says:

The Reconstruction Finance Corporation is authorized to buy any bonds or other obligations issued by beneficiaries of grants from the Federal Emergency Administration of Public Works, for the purpose of construction, financed in whole or in part by such Administration.

Which I take it would mean that any securities or bonds, or municipal bonds, city bonds, State bonds, that the Public Works Administration has received, which according to the record here is some $400,000,000 are to be turned over to the Reconstruction Finance Corporation, and in your behalf, as an unobligated balance.

Secretary ICKES. But as I understand, if they buy any of the securities, and then we sold any of them, the proceeds would go into the Treasury and would not come back to us.

There is one proposal that I would like to make today about the appropriation, and that is that it be made a revolving fund; if any bonds are sold, we would like to have the money come back into the Public Works.

Senator ADAMS. Mr. Secretary, you understand if this $3,000,000,000 you have allocated, as to the loans you have made, they will repay that money and that is available for reallocation?

Secretary ICKES. No, I understand that that goes into the Treasury. I would like to have it made available for reallocation,

Senator DICKINSON. I think that you wll find there would be opposition to any revolving fund. We have had enough of them.

Senator BYRNES. The Reconstruction Finance Corporation is forced to buy?

Secretary ÍCKES. It does not have to buy.
Senator BYRNES. It could buy?

Secretary Ickes. It could buy only to the extent that it had funds available to purchase those, but it does not have to buy.

Senator ADAMS. If that is turned over to them, you would get that much from the Reconstruction Finance Corporation,

Secretary ICKES. But it is a matter of discretion with the Reconstruction Finance Corporation, as I understand.

Senator BYRNES. All right, Mr. Secretary.

Senator ICKES. As I understand the language of this new act, if they take these bonds, that money would come back to us. Am I correct in that?

Now, as to the bonds that we have already taken, even if the Reconstruction Finance Corporation should buy them from us, then the proceeds would go into the Treasury and not come back into the Public Works fund, as I have said.

Senator DICKINSON. Then, are we to understand that this provision simply arranges matters to where you advance 30 percent, and the municipality or civic unit puts up 70 percent, and that the Reconstruction Finance Corporation will take the 70 percent off of the hands of the Public Works Administration and pay that out in cash, which is a method of financing; is that your understanding?

Senator BYRNES. May I ask

Senator GLASS. Now, Senator Dickinson, I call your attention to the matter that you say according to that report from Mr. Jones he would have available, subject to transfer, $4,000,000,000. I have a statement here from the Director of the Budget saying that the available balance in the Reconstruction Finance Corporation would be $1,700,000,000.

"KINSON. Go to the next paragraph, which says:

: Ertion Finance Corporation is authorized to buy any bonds or other

ib: beneficiaries of grants from the Federal Emergency Adminis- Works, for the purpose of construction, financed in whole or in ministration, ce it would mean that any securities or bonds, or municv bonds, State bonds, that the Public Works Adminisceived, which according to the record here is some are to be turned over to the Reconstruction Finance nd in your behalf, as an unobligated balance. hes. But as I understand, if they buy any of the then we sold any of them, the proceeds would go into nd would not come back to us.

proposal that I would like to make today about the and that is that it be made a revolving fund; if any we would like to have the money come back into the

ws. Mr. Secretary, you understand if this $3,000,000,000 Eed, as to the loans you have made, they will repay that

is available for reallocation? us. No, I understand that that goes into the Treasury. have it made available for reallocation. inson. I think that you wll find there would be

y revolving fund. We have had enough of them. NEs. The Reconstruction Finance Corporation is

That is far away from $4,000,000,000.

Senator DICKINSON. Well, I am simply giving you the information that comes to me by word of mouth.

Senator Glass. This comes directly from the Bureau of the Budget.

Senator BYRNES. Maybe we can get that information from Mr. Jones.

Senator DICKINSON. It is easily available.
Senator ADAMS. Go ahead.

Secretary IcKES. Here is a statement that I would like to read. It is very short. The bill states that the amount available under the first paragraph for public works shall not exceed the aggregate of $500,000,000, but a subsequent paragraph authorizes the Reconstruction Finance Corporation to buy obligations issued by beneficiaries of grants by the P.W.A. for the purpose of construction to be financed in whole or in part by the Public Works Administration.

In other words, the $500,000,000 new public works money, or perhaps more accurately the $456,500,000 new public works money, can be paid out entirely by way of grant with the Reconstruction Finance Corporation supplying the remaining 70 percent or more. As is stated in the House report on the bill, this will make public works funds for financing construction by public bodies cover a larger number of projects than would otherwise be possible. If this authority were exercised to the limit, it is possible for the Public Works Administration to assign to the Reconstruction Finance Corporation about $266,000,000 worth of bonds of public bodies now receiving grants and loans, which would make available 30 percent grant money for projects having an aggregate value of about $2,000,000,000.

We have approved over 1,300 non-Federal projects for which no money is available and there are more than 5,000 applications pending. This type of project is direct public benefit. It furnishes permanent improvements and increases the capital assets of the country.

It must be pointed out that supplementary Reconstruction Finance Corporation money will not, under the terms of the bill, be available for railroad loans or loans to provide institutions, or allotments for Federal projects.

I do not believe the limitation of $500,000,000 for public works allotments is justified in the emergency. I therefore recommend that the provision beginning with line 16, page 63, be deleted from the bill.

RAILROAD SECURITIES

1.8. It does not have to buy.
Es. It could buy?
s. It could buy only to the extent that it had funds
whase those, but it does not have to buy.
s. If that is turned over to them, you would get
the Reconstruction Finance Corporation.
-s. But it is a matter of discretion with the Recon-

Corporation, as I understand.
s. All right, Mr. Secretary.

As I understand the language of this new act, if
Donds, that money would come back to us. Am I

bonds that we have already taken, even if the Re-
nice Corporation should buy them from us, then
d go into the Treasury and not come back into the
1, as I have said.
-son. Then, are we to understand that this pro-
nges matters to where you advance 30 percent, and
r civic unit puts up 70 percent, and that the Recon-

Corporation will take the 70 percent off of the
ic Works Administration and pay that out in cash,
of financing; is that your understanding?

May I ask-
Now, Senator Dickinson, I call your attention to
ou say according to that report from Mr. Jones he
ble, subject to transfer, $4,000,000,000. I have a
om the Director of the Budget saying that the
n the Reconstruction Finance Corporation would

The authority for the Reconstruction Finance Corporation to buy bonds is limited to obligations issued by beneficiaries of grants, which does not include the railroads. This authority should undoubtedly be extended by adding to page 63 a new paragraph beginning after line 24, page 63, as follows:

The Reconstruction Finance Corporation is authorized to purchase any bonds or other obligations to aid in the financing of such railroad maintenance and equipment as may be authorized by the President, through the Federal Emergency Administrator of Public Works, or through such other agencies as he may designate, and as may be approved by the Interstate Commerce Commission as desirable for the improvement of transportation facilities.

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