United States. Congress. Senate. Special Committee.

Post-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) online

. (page 6 of 49)
Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 6 of 49)
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actually have all of those plans on the shelf in New York at present.
We don't. We have got some or all of them. And as far as I can
see, the effort would be made to start many of them just as promptly
as possible after the war with the greatest possibility really m the
highway and throughway field, simply because of their magnitude.

Congressman Fish. What do you mean by highway and through-
way?

Mr. Catherwood. The throughway system which is contemplated
in New York is what— to a layman such as mvself— would be described
as a special type of highway. It is distinguished from, the parkways
with which you are familiar. It is visualized as a great system of
three traffic lanes, I think, in each direction. It is called a through-
way as a technical name, partly arising from the fact that there is no
access to the road from the adjoining properties. There are no grade
crossings or entrances to the throughway. It might be described in
lay language to many people as a superhighway type of development.

Congressman Fish. Well, then, as I gather from you, if this emer-
gency should arise, you would probably be prepared to go ahead with
building highways and throughways ?

Mr. Catherwood. And some State institutions, some developments
in connection with parks, various school buildings — different items of
that nature.

Congressman Fish. That is all, thank you.

The Chairman. Mr. Eeece.

Congressman Reece. I am very much impressed with the initiative
and responsibility which the State administration has shown in its
relationship with the various subdivisions of government in the
State in helping to get this program set up.

And I felt, with the State government coordinating the effort of
and assisting the cities that much could be done in preparing the
plans. This is evidenced by what we have heard here today with
reference to the city of New York, and what you have said with ref-
erence to the State in other localities.

As I recall Mayor LaGuardia's testimony (and this returns to the
chairman's question with reference to the necessity for aid, Federal
aid and blue-printing, so to speak), he stated that one-fifth of the
city's program had been completed, and another one-fifth was more
than 50 percent completed, and only some 10 percent had not yet
been begun.



POSTWAR ECONOMIC POLICY AND PLANNING 1747

And this thought occurred to me, and that is why I want to get
your reaction to it. In order to be ready to move at the end of the
war, or when occasion should arise, is it necessary for the entire
public-works program to have been completed, that is, the blueprints?

Mr. Gather WOOD, I think the answer to your question, as I visual-
ize it, is that it is not necessary for the complete program to be in
plan, because there are, not only from the standpoint of the avail-
able supply of materials and that sort of thing, certain limits beyond
which you cannot go.

There are limits in terms of a large State highway or throughway
program, for example. There are just limits to the amount of work
that can actually be undertaken and processed there in any given
period, such as the first year after the war.

Actually, in terms of our New York State program, I think that
one of the very real values of it is that so much of the preliminary
work has been gotten out of the way and work could start relatively
promptly ; and could be followed by work for which plans were com-
pleted 6 months or a year from now.

Congressman Reece. The mayor's program called for an expendi-
ture of something over a billion dollars, and the plans are something
over 20 percent complete. That would indicate, I should think, that
the city is now ready to go forward immediately with the public-
works program calling for an expenditure of something over
$200,000,000, which is a substantial sum and which would give more
time for the completion of what has been begun.

For one, I was very much interested in what you had to say with
reference to the responsibility of the State and local authorities in
financing these projects insofar as lies within their power to do so.
And that fund is being set aside for that purpose by the State which,
I take it, you consider more or less a depression fund.

Mr. Catherwood. That, in a sense, is what it is.

Congressman Reece. That you are unable to spend, but able to
accumulate.

As the chairman of the full committee indicated by his questions,
States and the local governments now do not have the responsibility
in war expenditures that the' Federal Government has had to assume.
These are reaching staggering and stupendous figures or terms. But,
I do not believe you were present here this morning.

Mr. Catherwood. No ; I was not.

Congressman Reece. It is the inability, the possible inability of the
Federal Government to assume the financial responsibility that dis-
turbs me. I want to get your reaction to this aspect of it.

But if the Federal Government continues to assume the responsi-
bility which we heretofore have felt should fall primarily upon the
State and local government, this would have a tendency to undermine
the initiative of those governments, and they soon become accustomed
to coming to the Federal Government for whatever they want. Is
there any danger in that regard, do you think?

Mr. Catherwood. Well, I think that there is. Congressman. I think
we are faced with a type of situation where in any event, there are
functions that are going to have to be taken over and expanded by the
Federal Government in the future, expenditures coming out of the
war situation, terms of aid to veterans and that sort of thing.



1748 POSTWAR ECONOMIC POLICY AND PLANNING

From the standpoint of the ahility to finance the function as well as
from the standpoint of maintaining, as far as is practicable to do so,
our Government in units tliat at least in some defjree are closer to the
citizen, it is essential to develop a little greater i)articipation or little
greater feeling of responsibility on the part of the citizen.

I do not think I am reactionary in terms of opposing every and all
proposals for Federal expenditures, but I think the approach, the
point of view, the philosopliy back of the decision as to where the pri-
mary responsibility should rest is exceedingly important.

Congressman Keece. I was somewhat disturbed at the mayor's state-
ment, that New York City was unable to finance its public works pro-
gram, and if it sliould be financed, it would have to be by participation
of the Federal Government. If it is true of one city, it is apt to be
true of another city. And as Mr. Colmer indicated in his f}uestion
earlier, the Federal Government has had to assume the responsibility
for the cost of the Avar, which placed a debt burden upon us that we
heretofore have tliought ourselves incapable of assuming. We are
now hopeful that we can carry it and ultimately discharge it. I would
not speak with any great assurance on that, but I anx hopeful at least.

The Federal Government has assumed that tremendous burden over
a period of years Avhen the States' and municipalities' income had in-
creased without any proportional increase in expenditures and if they
now are unable to carry their own responsibilities, it is disturbing. If
the responsibilities have to come back to the Federal Government,
then it is really disturbing to me.

Mr. Catherwood. And one wonders where we come out if that is the
case.

Congressman Reece. I think that we cannot go on the theor^^ that
distance lends enchantment because some time we will reach the end
of that road. If we have credit, it is easy to borrow and spend. But
we cannot go continuously on that theory.

If a municipality requires a public expenditure, if it can go to the
Federal Government, it does not immediately meet the impact of hav-
ing to pay for that expenditure, although the municipality knows that
it is going to be paid, or it Avill have to be paid for sometime by some-
body. But, it does not appear visibly and in a concrete way that the
expenditures are going to have to be made.

Therefore — and that gets back to my earlier statement^ — it is easy
under those circumstances, or at least easier, for a city to keep moving;
keep spending without adequate provision being made for paying back.
Whereas, if they assume the responsibility, they plan as they go; and
planning, as I see it, consists of more than making a blueprint. It is
also paying for the bill.

Sometimes, in connection with the planning, I think we have a
tendency to discount too much one phase of the planning — that is, to
pay for it.

Mr. Catherwood. Well. I think your remarks are very pertinent
there. They remind me of an element or two of our situation that I
think might be of interest to the connnittee.

Of course, as pointed out, a large part of the New York City postwar
program is being financed outside the State-aided program, and en-
tirely by New York City, as far as the preparation of plans is con-
cerned. So far as the municipalities within the State are concerned,
some of them are doing nothing in the preparation for postwar plans,



POSTWAR ECONOMIC POLICY AND PLANNING 1749

and some of them are proposing a lot more in the preparation of post-
war plans than the municipalities have any funds m sight to take care
of it.

Insofar as our action as the State commission is concerned, our
funds have been limited and not available to broadcast extensively.
We have limited for the most part our approval of projects by munici-
palities to those that had a good prospect of being financed within the
relatively near future.

Of course, it is true that New York City and the other cities in the
State are faced with certain limitations. We have in this State a
constitutional debt limit, and we have a constitutional limit.
Congressman Reece. You are very fortunate.

Mr. Cathekwood. Our municipalities have been fortunate in terms

of maintaining extremely good credit standing irrespective of one's

philosophy in one direction or another on this question of public works.

Those Innits, of course, do place certain limitations on the ability

of the nuniicipality to finance public works in the future.

Congressman Reece. You referred to a certain type of public
works, primarly a Federal responsibility, wdiich amounts I should
ratlier think, to a large program of highway construction, through-
ways, bridges, overpasses and underpasses, hospitals which Mr. Fish
referred to, and airports, a program requiring billions. So, it occurs
to me that there would be a rather wide field for expenditures on the
part of the Federal Government for projects for which it has pri-
marily a direct responsibility.

And I assume, JNIr. Cliairman, that sometime we will have some
presentation on just what that program may involve in connection
with the whole public works program. I had not intended to take so
mflch time.

Mr. Catherwood. On that point, Mr. Chairman, I am not in close
enough touch with the programs and activities of the Federal Govern-
ment to know how much progress has actually been made there. But
as you men probably know, there is a tremendous amount of time-
consuming work that goes into the proper preparation of plans for
an agency of the State government, or for an agency of the Federal
Government. It is not done overnight.

As many of you know, in terms of appropriations w^ork, a proposal
comes up and is developed ; ideas are changed on it maybe over a series
of years; finally the appropriations are made and the detailed plans
are drawn. When progress has been actually made in the preparation
of the shelf for these Federal projects, there will be a very real oppor-
tunity right there to be sure that we are in a position to undertake
construction at a time wiien it will be most helpful in the post -employ-
ment situation.

Congressman Reece. I have completed my questions, except I might
make one reference to my conception of our highway requirements.

I am impressed that our highway development is still in its infancy
and there are tremendous expenditures that will be required in the
reasonably near future to make an adequate system of through high-
ways.

The Chatrmax. Mr. Wolcott.

Congressman Wolcott. ]Mr. Commissioner, your thought is that it
is advisable for the Federal Government to accelerate its plans and
clarify its policy. I think the latter has given us perhaps more



1750 POSTWAR ECONOMIC POLICY AND PLANNING

concern than anything else. I wish, if you would like to, that you
expand on that and tell us how Congress would be able to develop a
policy which might be helpful to the States in laying out their
program.

Mr. Catherwood, I do not know whether my point of view would
be helpful or not. But I can give you what I think is the reflection of
the problem, as we see it on the part of small business as well as large
business in New York.

There is tremendous uncertainty in the minds of business as to
what the Federal tax policy will be after the war. I do not pretend
to know, or attempt to say to what degree it is feasible to clarify and
state that policy at the present time.

But the uncertainty Ihat faces business from that standpoint is
such that if it were possible to outline and clarif v and state in advance
at least part of the intention with respect to Federal tax policy, it
would be most helpful from the standpoint of business which, by and
large, within the last year, has been making rather remarkable strides
in its own efforts to plan for the postwar period.

It is the same type of uncertainty wherein businessmen fear that the
Federal policy with respect to the use of federally financed war plants
will have the eifect of Government competition with them in their
business. I do not know how far that can be defined in advance. But
it is the type of uncertainty that makes it difficult for business to
plan and anticipate the future as effectively as it otherwise would.

I am afraid that is so general as to not be very helpful in terms of
actual problems that confront you gentlemen. But that is the sort of
thing to which I referred.

Congressman Wqlcott. Well, if Congress were to enact a general
policy that it desired to cooperate with the States in the solutioiT of
our economic problems, that would not be very helpful, would it?

Mr. Cathekwood. It would not accomplish a great deal, in and of
itself.

Congressman Wqlcott. It would naturally follow that the Fed-
eral Government would help the States if it was necessary. Unless
you become somewhat more definite, then we would not accomplish
our purpose.

Now, I thought you perhaps might mean that the Federal Govern-
ment could lay out a framework program for highway construction,
we will say, and determine a formula for the distribution and the
allocation of Federal moneys.

Then, of course, we run against the situation that the States will
want us to get even more specific than that; they will want to know
how much Federal money they are going to have under any particular
formula, so they can make their plans accordingly.

We are in a quandary here as to how far we can go in the develop-
ment of a policy without creating contractual obligations on the part
of the Federal Government to pay a definite amount. We have no
more information as to the needs of the States than the States have,
themselves, and this committee is trying to find out what the States
need, as I understand it, and try to put them into the broader picture.

In that respect could you tell us, or do you want to wait until Mr.
Moses takes the stand, how much the State's share of the $15,000,000
which was allocated last year for highway planning has been utilized?



POSTWAR ECONOMIC POLICY AND PLANNING 1751

1 think New York must have gotten probably $3,000,000 from the
Federal Government.

Mr. Catherwood. I do not happen to be familiar with that, Con-
gressman, That does not come within the scope of onr commission.
It is handled through the department of public works.

AVhile we maintain an interest and try to have data on all such
projects within the State, I know that Charley Sells, our superintend-
ent of public works, has been actively in touch with the agencies of
the Federal Government in relation to this highway planning. I
cannot tell you how far that has actually gone.

Congressman Wolcott. This might become an embarrassing situa-
tion to this Postwar Committee. I understand, of that $15,000,000
we made available some time last summer to be allocated to the States
under the Federal Highway formula, a third, population; a third,
roads and bridges; and a third, area, that less than two-thirds of
that money has been used by the States. We would put ourselves in a
very peculiar position if we were to recommend the appropriation of
a few more million dollars to supplement this fund, which is already
made available, when the States have not in fact made use of that
money for planning pur})oses.

I was wondering about that. You say that is handled through the
public-works department ?

Mr. Catherwood. I regret that I am not acquainted with the answer
to your question.

Congressman Wolcott. That is all I have.

The Chairman. Mr. Folsom, who is the staff director of the com-
mittee, has a few questions he would like to ask at this time.

Mr. FoLSOM. So far as your planning in New York State is con-
cerned> you pay half the cost and the municipalities pay the other half ?

Mr. Catherwood. Substantially; yes. We limit the State's con-
tribution to 2 percent of the estimated construction cost of the project,
and we do not pay more than half of the planning cost. The munici-
palities pay the remainder, whether the remainder should run more than

2 percent or not.

Mr. FoLSOM. It would run about half ?

Mr. Catherw^ood. Yes.

Mr. FoLSOM. That plan, as I understand it, is in effect in only one
or two States. Do you know of any other State? I think Michigan has
such a plan.

Mr. Catherw^ood. I have a faint recollection that California had
something of the kind, but I am not certain.

Mr. FoLSOM. Since so few States have it, do you think if the Federal
Government

INIr. Catherwood. Excuse me. I have some reservations on that,
altliough it would certainly have the effect of stimulating the prepara-
tion of the plans. Whether you can get that stimulation without it, T
am not certain. AVhether, in getting stimulation and the preparation
of plans, you set in motion some forces which anticipate Federal aid
on construction and have an inclination to rely on Federal aid for con-
struction may be desirable or undesirable, depending on one's point of
view.

Mr. FoLSOM. Do you think it ought to be on a 50-50 basis ?



1752 POSTWAR ECONOMIC POLICY AND PLANNING

Mr. CxVTiiERwooD. If the Federal Government were undertaking a
program of that kind, it would seem to me to be essential tliat there be
substantial State and/or local contribution.

I have seen an inclination on the j)art of some of the municipalities
in New York State, in view of the limited financial aid that we pro-
vide, to think in some instances that there is going to be a gift of
some kind along the line some place. Occasionally there is the attitude,
''Well, let's get in line," rather than to consider the matter on the basis
of real needs, and their ability to make really effective use of the aids
in question.

Mr. FoLSOM. You mentioned that New York State has been able to
accumulate a surplus of $140,000,000 because of the war conditions,
primarily. It is your impression that the cities and municipalities have
all been, within the past 3 years, able to accumulate surplus funds.

Mr. Catiierwood. I cannot give you any statistics on that. But I
am certain that the facts show that municipalities have improved their
standing — if from no other point of view, at least in terms of beginning
to make substantial reductions in their outstanding indebtedness.

There are also provisions under New York State law, but I do not
know how far the municipalities have taken advantage of it — I am
afraid not nearly as much as they should — where the municipalities
can set up reserves in order to make use of revenues at the present time,
and earmarking them for future public works.

Mr. FoLSOM. You think, then, that the cities and municipalities
-of the State could finance a reasonable public-works program of their
own and pay it off themselves ?

Mr. Catherwood. On public works — thinking of construction costs
now — yes. Although the answer, or the question, basically depends
on the definition of the word "reasonable." It is my conviction that
the cities, certainly a great majority of the cities in New York could
finance, in a period of a year or two after the war, public works to an
extent that would exceed those that would normally be constructed in
a period of that length.

Now, when you expand that further and talk in terms of a public-
works program that would be large enough to be a really big factor
in combating a severe depression, then you begin to get into the range
where I don't think au}^ one is ])repared to say that the cities and States
can necessarily finance a public-works program of that magnitude.

Mv. FoLSOM. Of course, it is pretty much guesswork as to what
type of situation we will face after the European war is ovei'.

Mr. Catherwood. There are many differences of opinion there as
to whether it is "boom" or "bust"; or how long and how big a transi-
tion period there will be.

Mr. FoLSOM. Do you agree with the mayor when he says that no city
in the country can finance a public-works program?

jNIr. Catiierwood. I regret I did not hear the mayor. Bu!, I don't
think I am in agreement with the conclusion that no city in the countrj^
could finance a public-works program after the war is over.

Mr; FoLSOM. Those are all the questions I have to ask.

The Chairman. Mr. Colmer.

Congressman Coljier. There is a distinction, is there not, between
the ability of the States and of the municipalities, in their ability to
finance their own construction?



POSTWAR ECONOMIC POLICY AND PLANNING 1753

Mr. Catherwood. Yes, sir.

Congra'^sman Colmek. I made reference earlier to the fact that many
of the States had increased their reserves: but it has also been my
observation that many of your municipalities, because of war indus-
tries coming within their confines, have expended substantial sums to
meet those added burdens. Do you agree with that ?

Mr. Catherwood. Yes, sir.

Congressman Colmer. That is all.

The Chairman. We want to thaidv you. Commissioner, for your
appearance here this afternoon.

Mr. Catherwood. I wish to express my appreciation for the op-
portunity, from my standpoint, of a very interesting discussion with
your committee. If there should be other information with which we
can supply you that would be helpful to you in your consideration of
this important problem, please do not hesitate to call on us.

The Chairman. Thank you.

Mr. Fish.

Congressman Fisii. Mr. Chairman, there are two gentlemen here
representing Delaware County and they want to get back this evening.
I wonder if we could not hear them briefly at the present time.

The Chair3Ian. If there is no objection, we will hear from them at
the present time. Mr. Harry M. Walton of Sidney. Please state
your name for the purpose of the record.

STATEMENT OF HARKY M. WALTON, JR., REPRESENTING
DELAWARE COUNTY, N. Y.

Mr. Walton. Harry M. Walton, Jr., of Sidney, a representative of
Delaware County, N. Y.

The Chairman. You may proceed, Mr. Walton.

Mr. Walton. Thank you, Mr. Chairman. I am rather embarrassed
in appearing here today, following all the very able men that you have
had appear before you, particularly in view of the fact that they have
so veiy complete and definite plans prepared.

Just a word to explain our situation. Delaware County is one of
the largest counties in New York State. It is primarily a rural county ;
the largest milk-producing county in the State of New York.

We have only one community in the county that has a substantial
industry, and that happens to be Sidney, in which I live. We have
there a branch of the Bendix Aviation Corp.

Delaware County, being a rural county, is very much limited in the
tilings that it can do by reason of the tax limitation. By that, I mean
the amount of money they can raise by tax cm the farmers is small,
by reason of the limitation of indebtedness that the constitution of the
State imposes. We have found that we really do have problems there.
There are things that we need and that we cannot possibly do, unless
W( get State or Federal aid.



Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 6 of 49)