SMALL BUSINESS IN SMALLER CITIES AND TOWNS TUESDAY, MARCH 21, 1967 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON URBAN AREAS OF THE Washington, D.C. The subcommittee met, pursuant to recess, at 2:15 p.m., in room 2359 Rayburn House Office Building, Hon. John C. Kluczynski, chairman of the subcommittee, presiding. Present: Representatives Kluczynski, Irwin, Horton, Burton, and Evins. Also present: Representatives Multer, Dingell and Smith of the full committee; Representative Mize of Kansas; Gregg Potvin, subcommittee counsel; Myrtle Ruth Foutch, clerk; and John J. Williams, minority counsel. Mr. KLUCZYNSKI. The hearing will come to order. The hearings will resume today to receive testimony from a particularly distinguished panel of witnesses. For our first witness this afternoon, we are most honored to have appearing before us a distinguished American and administrator of outstanding capabilities. He has served with distinction as Governor of his State of Minnesota and has earned warm praise for his 6-year stewardship of one of the largest and most complex departments of the Federal Governmentthe U.S. Department of Agriculture. It is both a privilege and a pleasure at this time to recognize the Secretary of Agriculture, the Honorable Orville L. Freeman. It is a pleasure to have you with us, Mr. Secretary. The floor is yours. TESTIMONY OF HON. ORVILLE L. FREEMAN, SECRETARY OF AGRICULTURE Secretary FREEMAN. Thank you very much, Mr. Chairman, distinguished members of the House Small Business Committee, and ladies and gentlemen. I am delighted to be here. It is not often I have an opportunity to appear before this distinguished committee. I do appreciate your courtesy in hearing me and the very generous introduction that the chairman has so graciously accorded me. In my presentation I hope to do three things: to point out the direction in which we are being swept by an unplanned and, in a sense, involuntary mass migration from country to city; to offer for your consideration what I believe to be a promising alternative; 79 f and, above all, outline the possible dimensions of a new national policy to restore balance and sanity to our future national growth. I. OUR GROWING URBAN-RURAL IMBALANCE Two generations ago, more Americans lived and worked in rural areas than in cities. It was not until 1920 that urban population caught up with rural population in this country. For many years, the movement from the land to the cities was healthy. The growth of the great urban centers was a key factor in the phenomenal economic development of this Nation. But then the pendulum overswung. Today 140 million Americans-seven out of every 10 persons—are crowded onto just 1 percent of our land and the result is urban blight. On the other hand, only 57 million people-three out of 10-live on 99 percent of our land, with a double share of the Nation's poverty. And the mass exodus continues. Each year, 3 million more Americans jam into our already overcrowded cities. They shoehorn their way into the impersonal concrete and steel towers of an apartment complex. They fight their way through traffic and exhaust fumes to gaze longingly at holes gouged in the raw and muddy earth where new housing subdivisions rise in ever-widening rings from the center city. Or they count themselves lucky if they can find a not-to-exorbitantly-priced cold water flat that protects them from the elements, but offers little haven from boisterous neighbors and marauding rats. Why? What is there about the city that attracts people so? In a word-jobs. Jobs in research, in advertising, in industry. Jobs as machinists, as secretaries, as executive assistants. Jobs in hospitals, in department stores, in office buildings. They come in search of jobs that offer higher pay and greater opportunity for advancement, or, in some cases, they come simply on the possibility of a job-any job at all that will enable them to feed and clothe themselves and their family and to live in dignity. For this, they pay a heavy price. They say goodby to old friends, severe lifelong church affiliations, and leave behind family homes and familiar surroundings. In the cities, they are forced to make further sacrifices. No longer can they roam downtown sidewalks and parks at night without fear. They have to rise earlier in the morning, drive farther to work, and return home later at night, giving them less time to spend with their families. They have to cope with all the problems that come from having too many people in too little space-increased traffic, smog, inner city decay, the loss of individuality, rising tax rates, more demands, and less incentive for response. In the words of Mayor John Lindsay of New York City: Our cities exact too much from those who live in them. They are not only increasingly expensive places in which to live and work; more and more, the price of city living is being paid by a sacrifice of fundamental personal freedoms. The massive problems this population exodus has created in our cities are well known. But few people are aware of the equally acute impact this has on the towns and small cities of the American countryside. The loss of people means a loss of customers and less business for firms up and down Main Street. The tax base to support roads, schools, and other public services declines or, at best, fails to keep pace with increased costs of rendering such services. In many small communities there are now too few people to support the business establishments, medical, dental, and other professions, churches, and essential civic institutions needed for adequate living. This is one of the reasons why almost half of the Nation's poverty is concentrated in the countryside, where only 30 percent of the people live-why the proportion of substandard homes is three times as great in rural America as in urban America-why schools in small towns have less money to spend per pupil on education than big city schools. This lack of opportunity-this disillusionment-feeds on itself. Each year it drives an increasing swell of humanity into metropolitan complexes. If present trends continue unchecked, by the year 2000, most Americans will be crammed into five superstrip cities. One will stretch from present-day Boston south to Washington, D.C., and will be "home," if you can call it that, to 56 million people. Superhighways and mass transit systems will eat up increasing amounts of urban land in the frantic race to keep our cities mobile. There will be three times as many automobiles on our streets and highways and they will be contributing three times as much smog to the air. The pollutants produced by industry, sewage plants, and land development will be much greater-and even more localized and concentrated. The congestion, the tensions, the urban sprawl will in crease. II. THE ALTERNATIVE But does this have to be? I say, no. I take direct issue with the notion that continued mass migration from country to city is inevitable. I take direct issue with the concept that tomorrow's America must consist of a few huge megalopolitan complexes strung together by superhighways running through endless miles of empty land. I say it is folly to stack up three-quarters of our people in the suffocating steel and concrete storage bins of the city-while a figurative handful of our fellow citizens rattle around in a great barn full of untapped resources and empty dreams. I do not advocate that we abolish our cities. Much has been done, and much is being done by this administration, to alleviate the troubles of urban America. Had I the time, I would like to review with you the great strides made in the war on poverty, the advances in urban redevelopment, the gains made in offering more training and education to our citizens in the great metropolitan areas. What I am saying is that until the forced influx of people is stopped *** and turned around *** the fight to save the cities can never really be won. There is an alternative-a promising one that permits us to solve the problems of both city and countryside with one vigorous stroke. I suggest that we generate new opportunity in the countryside by using it to solve the problems of our cities. To be perfectly clear about this, I am not advocating the depopulation of the cities nor am I suggesting that we encourage runaway industry or piracy of existing plants and firms. I am urging that growth in rural America come from new plants involved in national expansion. We can use the space and the resources of the countryside to make possible a more civilized and enjoyable life for all Americans. Furthermore, I would like to call on the Nation's small businessmen in the small towns and broad countryside to take the lead in bringing about this rural renaissance. They are the decisionmakers. They have the capacity and knowhow to get the job done. They also have a personal stake in whether their community grows and prospers. By joining forces and pulling together, we can revitalize hundreds of existing small towns and build hundreds of new planned communities that offer their own sources of employment, that provide a favorable climate for the development of businesses and services on Main Street, that have modern schools and a nearby college, that boast a medical center and cultural and entertainment facilities. The new planned communities of which I speak would be built from scratch-planned for future growth. Public loans and grants could be concentrated in the area to promote growth and to encourage private investment by industry and business. Manmade lakes formed by watershed project reservoirs and Corps of Engineer dams provide an excellent locale for such new planned communities. Such communities would help ease the constant pressure of population expansion in our cities. They would permit city officials to attack problems of racial unrest, crime, and inner city decay without having gains, however meager, undercut by a constant influx of newcomers into the slum area. For, in a very real sense, the poverty problem of our cities is a problem transplanted from rural America. Urban slums are peopled largely by displaced rural migrants who sought in vain to earn a living in the countryside and finally fled to the city in desperation. We have the opportunity, with our tremendous national energy and enterprise, to take into hand the changes that are going on in our environment-to control and direct these changes so that we build a good life and a great society for all. But this will not just happen. We must make it happen. III. A NATIONAL POLICY I believe the Congress, the administrative branch, and the American people should begin now to formulate a national policy that will lead to rural-urban balance-a policy that will enable people to choose freely and without economic sacrifice whether they will live, work, and play in the city or in the countryside. The whiplash of economic necessity which today relentlessly drives desparate people into our huge cities must be lifted from the bleeding back of rural America. What do I mean by a policy or rural-urban balance? What is involved? One major component would have to be new programs and policies to generate new jobs in our smaller communities. Over the past 15 years, national economic growth has created more than 13.5 million new jobs in the United States. But, in effect, all of these new jobs have gone to urban areas. The number of rural jobs remained fairly constant, with losses in agriculture and mining canceling out gains made in business and industry. This was one of the major factors behind the migration that brought depopulation and decline to many smaller communities, and contributed to overcrowding and congestion in our cities. To stop this outmigration, our economists and population experts estimate we shall need 550,000 new jobs a year in rural America, or in cities within easy commuting distance of rural areas. Figuring a capital investment of $10,000 per job, this means a new business investment of $5.5 billion per year. Most of this money must, of course, come from private industry and the investor must have sound economic reason for locating in rural areas. Therefore, as one component of this new national policy, we should give serious study to the possibility of a tax incentive plan to encourage business and industry to locate new plants and facilities in rural areas. This might include an increased tax credit for machinery and equipment investments. It might also include accelerated tax writeoff for businesses locating in small communities with high underemployment or a high percentage of families with low incomes. Not only would this encourage new businesses to locate in rural areas, it would help businessmen already there to expand as new opportunities and new markets opened up. Another possible component of this national policy might govern the awarding of contracts and building of public facilities to disperse people and opportunity to smaller communities, where feasible. Let me cite one example to indicate what is involved here. Several years ago, the Department of Agriculture made a study which showed that out of $28 billion in prime military contracts awarded that year, 23 percent went to one State alone. This created well over 1 million jobs in that State, primarily in urban areas. On the other hand, to create jobs in rural areas under the area redevelopment program we spent $267 million throughout the entire Nation, or less than 1 percent of the money expended on defense contracts in the one State alone. You can well imagine how this inbalance in Federal investment added to the population pressures in the cities of that one State, and how it hurt business activity and drained people from smaller communities there and in surrounding States. Another dimension of the new policy would be to expand planning on multicounty lines. For the past 6 years the Department of Agriculture has been working with organizations of private citizens to stimulate commnuity developent projects in rural areas. We call these local groups rural areas development committees. We find that many of the frustrations and pitfalls that these local groups encounter in their development efforts stem from the lack of |