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hard shape.

Mr. MacDONALD. The direct employment on the road; yes.

Mr. Hart. I am acquainted both with the country and the city quite a lot. The man who lives in the country can generally go out somewhere and get some fuel if he is out in the country. He has raised vegetables. He has something. He may keep chickens and he may have a plot of land with a cow or two on it and may even feed a couple of hogs and have his meat, but when you get a man in the city paying rent, and when he runs out of work he has not one thing to turn to. My sympathy should be with the country man. My interests are all in agriculture, but a fellow with rent staring him in the face and nowhere to get food can only go to the city hall and ask for help and he gets $3 or $4 and I am telling you he is in awfully

Mr. MacDonald. Of course, I would not argue the question in any event but this has been very helpful in the way of providing labor throughout the country.

Mr. Hart. Of course, that is true.

Mr. MacDonald. I quite agree with the difficulties existing in the cities. We just completed a little study of the finances in Illinois and we find that the city of Chicago has piled up one loan after another amounting to hundreds of millions of dollars

Mr. Hart. The city of Detroit has expended more for relief than the Federal Government. I mean in direct relief.

Mr. MacDONALD. I imagine that is so.

Mr. Chairman, the effect of the Federal appropriation on employment has not only shown itself through the employment on Federalaid projects but as construction projects have been financed with the Federal funds the States have taken their funds that would normally go for the construction of new Federal-aid roads and have used them to spread out on maintenance work and other work and so there is no way to completely separate the influence of the Federal funds from the State funds.

In June, 1932, due to decreased funds the direct employment on State and Federal highway work was only 280,636, or 82,846 less than in June, 1931.

Due to the $120,000,000 emergency funds made available in July, the employment increased to 374,405 in September which was 17,788 more than were employed directly on State and Federal highway work in September, 1931.

Mr. BUCHANAN. 'Well, there is no doubt that the emergency highway fund gave a great deal of employment to those who needed it. Where is the Federal Government going to get the money to appropriate those funds?

REPAYMENT BY STATES OF LOANS MADE UN

ER VARIOUS ACTS

Mr. SANDLIN. What is to become of the appropriation made in the South for road purposes? You have to take care of this $80,000,000 do

you not?

Mr. MacDonald. Yes, sir; we have approximately $16,000,000 per year to be deducted until 1937 on account of the first emergency appropriation after which the deductions will be at the rate of $12,000,000 annually for 10 years on account of the second emergency.

Mr. BUCHANAN. You begin in 1935 on the charity loans.

Mr. MacDONALD. Of this $300,000,000 relief appropriation there been about $71,000,000 loaned to date which must be repaid by deductions from Federal aid beginning in 1935.

Mr. SANDLIN. That is out of the $80,000,000.

Mr. MacDONALD. It is to repay loans made by the Reconstruction Finance Corporation from the $300,000,000 relief loan fund.

Mr. SANDLIN. But, to pay back those $80,000,000.
Mr. MacDonald. To pay back this $300,000,000 relief fund.

Mr. SANDLIN. Let us clear up the $80,000,000 and the $120,000,000 first.

Mr. MacDonald. We have three funds to pay back, the first emergency of $80,000,000 will be paid back by 1937 at the rate of $16,000,000 per year. Deductions on account of the second emergency begin in 1938 at the rate of $12,000,000 per year, but in 1935 we have to pick up this $300,000,000 relief fund and pay back those loans at the rate of 20 per cent per year, or 20 per cent of the States' apportionment of Federal aid. In other words, whichever is the smallest is paid back. Now, that would mean that actually the full 20 per cent of this allotment would not be paid back because some States will draw more heavily than others, and no State would have to pay back more than 20 per cent of its Federal aid allotment, so, if you deduct 20 per cent of the entire Federal aid allotment, you would deduct the maximum that would have to be paid back on account of relief loans under the $300,000,000 appropriation.

Mr. Hart. Let me ask another question. This paying back furnishes a good reason for the continuation of Federal appropriations for aid to the States and recommends a continuation.

Mr. MacDONALD. I do not see that it does or does not.

Mr. Hart. As far as I am concerned, I would like to vote for an act that would give them this amount of money and have it stop. Here is your set-up on this 20 per cent deal. You take away from them 20 per cent and give them 80 per cent. That is what the Federal Government is doing.

Mr. MacDONALD. Yes.

Mr. Hart. Making a 100 per cent appropriation, retaining 20 per cent of it and giving them 80 per cent.

Mr. JUMP. But it establishes equality between the States in that way.

Mr. Hart. I do not care what it does. I would wipe it all out and get rid of it. They are building roads now with this Federal money paralleling one another, and it is an economic waste.

Mr. MacDONALD. We are not building any roads that are economic wastes with Federal money.

CONSTRUCTION OF ROAD FROM BAYPORT TO CASSVILLE, MICH.
Mr. Hart. Have you got any money in a road from Bayport to
Cassville, in Michigan?

Mr. MacDONALD. I do not know.
Mr. HART. Have you got your record there?

Mr. MacDONALD. Not by individual projects; no, sir. I mean not here.

Mr. Hart. There is not even a farm on the whole 15 miles.
Mr. MacDONALD. There evidently is traffic there.

Mr. HART. You start in at Bayport and you go to Cassville along the swamp, along a bay. You start from nowhere and you go nowhere.

Mr. JUMP. Is that a Federal aid road?
Mr. HART. I think it is.

Mr. MacDONALD. It could not be a Federal aid road unless it was one of the main roads of the State and on the Federal aid highway system.

Mr. Hart. They built that road because they got Federal aid somewhere else. They would not have had the money.

Mr. MacDONALD. They would not have had any money if the road users had not paid it in. If the State built it they used the income from the auto license fees and gasoline taxes.

Mr. Hart. The taxpayer paid it in, not the motorists. The taxpayer paid it in through the use of gasoline.

Mr. MacDonalD. The point I am making is that in Michigan they do not use property taxes for State highway work.

Mr. Hart. No; but it is a tax nevertheless. We have a large percentage of our population that can not buy license plates.

ANNUAL DEDUCTIONS FROM FUTURE FEDERAL AID APPROPRIATIONS

TO STATES FOR PUBLIC ROADS

Mr. BUCHANAN. Mr. MacDonald, we have gone into this subject. Now, I want you to make a statement as a part of your testimony showing what deductions, definitely determined, will have to be made from the appropriations hereafter to be made for public roads, from allotments to different States, starting with the $80,000,000, one fifth per year and expiring, put down the time it expires. Then take your next deduction of $300,000,000 and start when the act starts and the percentage of deduction from that, and then take the loans, the loan the Reconstruction Finance Corporation gives the cities, States, and towns, and so forth, for unemployment or charity. In that statement, on the last item mentioned, your statement should state "To be deducted from allotment." Put that in the record so as to give the House a clear picture on that. The House ought to have that when it gets to the point of considering another authorization for public highways.

Mr. MacDonald. All right, sir.

Approximate possible annual deductions from future apportionments of Federal aid

for highways under existing legislation

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1 The act of Dec. 20, 1930, is sometimes referred to as the first emergency act. Among other appropriations for public works it carried an appropriation of $80,000,000 to be apportioned among the States under the provisions of the Federal highway act as a temporary advance of funds to meet the requirements of such act as to State funds required on Federal aid projects. It was further required that the sums so advanced be reimbursed to the Federal Government over a period of five years commencing with the fiscal year 1933 by making deductions from future apportionments of Federal aid,

** The act of July 21, 1932, known as the “Emergency relief and construction act of 1932” approred July 21, 1932, carried under sec. 301 (a)(1) an appropriation of $120,000,000 to be apportioned to the States under the provisions of the Federal highway act and as with the first emergency appropriation of $80,000,000 to be available for matching regular Federal aid funds in lieu of the State funds ordinarily required. It was further required that the sums advanced to the States under this appropriation be deducted from future apportionments of Federal aid over a period of 10 years beginning with the fiscal year 1938.

$ The Emergeney relief and construction act of 1932" also carried under Sec. i Title I (Relief of Destitution) authority for the Reconstruction Finance Corporation to make available out of the funds of the corporation the sum of $300,000,000 to be used in furnishing relief and work relief to needy and distressed people and in relieving the hardship resulting from unemployment. Il provision is not otherwise made for repayinent of the relief loans made, the corporation shall be reimbursed with interest at 3 per cent per annum by making annual deductions, beginning with the fiscal year 1935, from future Federal aid authorizations for highways in an amount equal to one-fifth of the loan to any State or one-fifth of such State's apportion. ment of Federal aid, whichever is the lesser, until the loan with interest is repaid. If the whole $300,000.000 should be loaned and made a lien on Federal aid apportionments with a proportionate distribution among the States deductions would necessarily be made under the provision relating to one-fifth of the Federal aid apportionment for highways since this figure would be less than one-fifth of loan. The estimated deductions under this item with an annual authorization for Federal aid highways of $100,000,000 would be a maximum of $20,000,000 per year until the loans were repaid. For a larger or smaller Federal highway authorization the maximum annual deduction would be correspondingly increased or decreased. The deductions indi. cated in the table are the maximum that could be made under an annual authorization of $100,000,000 for Federal aid for highways. No estimate has been marie of interest charges which would operate to extend the period of payment. According to a report of the Reconstruction Finance Corporation the loans under Title I to November 30, 1932, amounted to $76,777,306, of which about 93 per cent or more than $71,000,000 was a charge against future Federal aid for highways.

UNEXPENDED BALANCE OF APPROPRIATION FOR ROADS ON UNAPPRO

PRIATED PUBLIC LANDS, ETC.

Mr. BUCHANAN. I notice here on page 306 of the bill that the balance of $2,000,000 provided in the act, the balance unexpended for roads on unappropriated or unreserved public lands, nontaxable Indian lands, is continued for another year. That is the sole purpose of that, to make it available for expenditure in another year.

Mr. MacDonald. Yes; there is a relatively small balance in those funds.

Mr. BUCHANAN. And, the purpose of this is making roads going across public lands and Indian lands.

Mr. MacDONALD. Yes, sir.
Mr. BUCHANAN. Put the amount of the balance in the record.

Mr. MacDoNALD. Our estimate is that about $12,560 will be unobligated.

Mr. BUCHANAN. On page 313 of the bill is another appropriation continuing the making available all next year of the balance of $3,000,000 appropriation on unappropriated or unreserved public lands, 'nontaxable Indian lands, and so forth. What is the balance in that appropriation?

Mr. MacDONALD. We have a small balance on that.
Mr. BUCHANAN. Well, put in the amount of the balance,
Mr. MacDONALD. It will be about $12,000.

PROPOSED LEGISLATION TO APPORTION DEPRECIATION,

EQUIPMENT USED ON FOREST AND PARK ROADS

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Mr. MacDonald. Mr. Chairman, I have a little legislation I would like to have the committee consider. It is not a very important item but I think it would be desirable legislation to have.

Mr. BUCHANAN. On what appropriation? Administration? Mr. MacDONALD. No; it is a general item. Mr. BUCHANAN. All right. Mr. MacDonald (reading): Provided further, That whenever performing authorized engineering or other services in connection with the survey, construction, and maintenance or improvement of roads for other Government agencies, the charge for such services may include depreciation on engineering and road building equipment used and amounts received on account of such charges shall be credited to the appropriation concerned.

That could go in following the automobile section.

The purpose of this, Mr. Chairman, is to allow us to apportion depreciation or rental charges on equipment used against forest and park roads. We have forest roads and park roads that are continuations of each other and we are not permitted under present laws to charge the depreciation to the two different funds in proportion to the use of equipment.

Mr. BUCHANAN. In other words, you cooperate with these services in the construction of roads.

Mr. MacDONALD. Yes, sir; with the Forest and Park Service.

Mr. BUCHANAN. Yes; and you use your machinery in that cooperation.

Mr. MacDONALD. Yes, sir, we use Government machinery.

Mr. BUCHANAN. And, you are not permitted to charge for depreciation in such bureaus and reimbursing your fund.

Mr. MacDONALD. Well, if we have a machine that is bought out of forest road funds and we use that machine for park road work, we may not charge the park funds with the use of the machine.

Mr. BUCHANAN. As it now stands you can charge for the actual charge.

Mr. MacDonald. Yes, we can charge the actual operating costs but can not charge depreciation.

Mr. BUCHANAN. Can you charge for the actual cost of the operation as it now stands? Mr. MacDonald. Yes, for actual operation costs. 14913932

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