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

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" approved 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 "Emergency relief and construction act of 1932" also carried under Sec. 1 Title 1 (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. If provision is not otherwise made for repayment 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 apportionment 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 indicated 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 made 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 UNAPPROPRIATED 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 ΤΟ APPORTION DEPRECIATION, ETC., ON

EQUIPMENT USED ON FOREST AND PARK ROADS

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.

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Mr. BUCHANAN. I mean oil and gas. As it now stands, you can charge for oil, gas, and services, but not for depreciation.

Mr. MACDONALD. Yes. The purpose of this provision is to make the use of equipment more flexible, so that one machine could be used where needed regardless of whether it was purchased originally from park road or forest road funds and make appropriate charges for depreciation.

Mr. BUCHANAN. Is there any law now which prevents them from doing that?

Mr. MACDONALD. Captain Curtiss, as I understand it, there is a ruling from the Comptroller General on this point.

Captain CURTISSs. We have a written opinion of the comptroller that the law does not authorize the depreciation charges. Mr. BUCHANAN. Have you got that opinion?

Captain CURTISS. Yes, sir.

Mr. BUCHANAN. You say you have the opinion?

Captain CURTISS. We have a definite opinion that we can not do it.

Mr. BUCHANAN. A written opinion?

Captain CURTISS. Yes, sir.

Mr. BUCHANAN. If you can find it, send it up to the clerk and let me look at it.

Captain CURTISS. We will do that.

GOVERNMENT ISLAND BUILDINGS

Mr. MACDONALD. We desire to file a statement with reference to the Government Island buildings. Those are buildings that are being constructed by the Bureau of Public Roads for the Coast Guards and the Forest Service and ourselves. An appropriation was made for certain buildings on Government Island, Calif., and placed under the direction of the Bureau of Roads, and this is a statement of the present status of that work.

Mr. BUCHANAN. Well, put the statement in the record at this point.

GOVERNMENT ISLAND BUILDINGS

Although the appropriation of $800,000 for this work was carried in the second deficiency act, fiscal year 1931, approved Marh 4, 1931, this fund did not become available for expenditure until the President accepted title to the 15-acre tract of land on Government Island on September 22, 1931. Plans were immediately started for the project. To expedite getting the work under way and to provide for orderly procedure that would not interfere with the operations of the United States Coast Guard, the Forest Service, and the Bureau of Public Roads, who were already occupying a portion of the island, using temporary war-time buildings, the construction work was divided into three main groups with a number of separate units under each group, as follows:

Group I. Preparation of site and general.

Grading and clearing site.

Sewer system.

Water system.

Auxiliary fire protection.

Repair of existing causeway.

Light and power system.

Reconstruction of spur track within reservation.

Roadways.

Fencing around entire tract.

The first contract under Group I was let on October 27, 1931, for grading and clearing the tract. This was followed by a contract for combination storm and sanitary sewers on November 27, 1931. Other contracts followed as rapidly as preparation of plans and status of the whole project permitted. As preparation of the architectural plans for the buildings required considerable time, in order to expedite the work the construction for each group of buildings was handled under two contracts, one for piling and foundations and one for superstructures for the buildings proper. Contract for the Group III building superstructures is being handled at the present time. All other major contracts have been let. It may not be possible to let contracts for some of the minor items, such as fencing around the tract and the surfacing of the roadways, until after June 30 next. For that reason and also to provide for the necessary supervision of any building work that may carry over until the fiscal year 1934 it is necessary to continue the funds available for expenditure during the fiscal year 1934. The estimated cost of the whole project at this time is $760,000.

Mr. BUCHANAN. This is simply projects heretofore commenced and not completed, and underway now, and all you ask is a continuance of a reasonable appropriation to be available for next year. Mr. MACDONALD. Yes, sir.

Mr. BUCHANAN. That is enough of that.

COMPARATIVE ROAD COSTS 1925-1929 BASE

Mr. MACDONALD. You may be interested in this chart which shows the trend of highway construction costs.

Mr. BUCHANAN. You mean per mile of road?

Mr. MACDONALD. Yes; this is on what we call a composite mile. It is figured on the basis of the different types of all Federal aid projects in the proportion that we have actually built them. The curve for the composite or average mile shows that our costs are now only about 58 per cent of the 1925-1929 average.

Mr. BUCHANAN. In other words, you have reduced the cost.

Mr. MACDONALD. It has been reduced 42 per cent. Unit highway costs have been coming down since 1923.

Mr. BUCHANAN. Of course, some of that reduction in cost went into reduced cost of all kinds of material.

Mr. MACDONALD. Yes, sir.

Mr. BUCHANAN. And labor, too.

Mr. MACDONALD. Yes, sir.

Mr. BUCHANAN. Did any of it go into improved methods of building public roads?

Mr. MACDONALD. I think that this drop represents the improved method.

Mr. BUCHANAN. What per cent is that?

Mr. MACDONALD. Well, that is about 40 per cent.

That is from

the high point of 1923 and represents largely improved methods of construction.

Mr. BUCHANAN. Forty per cent from the high point of 1923.