30th of June-23.1 percent, which is well under the 25-percent figure given us as guidance by Congress.

UNEXPENDED BALANCE

Senator MCCLELLAN. As I understand it, of all past appropriations, at the end of June this year there will be 23 percent unexpended of the last year's carryover and of this year's appropriation..

General STURGIS. Yes, sir.

Senator MCCLELLAN. Out of this carryover and this year's appropriation there will be unobligated only 12.5 percent?

General STURGIS. That is our estimate.

Senator MCCLELLAN. That is on the basis of the six-hundred-someodd million dollars you had to begin the fiscal year with, including appropriations and the carryover funds?

General STURGIS. Yes, sir. We think this is a graphic illustration to comply with the wishes of Congress.

The budget estimate for fiscal year 1955 totals $444,322,000 and is broken down by appropriations as follows:

Senator HAYDEN. How does this general investigation compare with the amount of money available during the present fiscal year? General STURGIS. General Chorpening will furnish that.

General CHORPENING. The total in fiscal 1954, under "General investigations," was $2,867,500 for examinations and surveys.

Senator HAYDEN. So the budget estimate is a little less than that. General STURGIS. The amount provided for general investigations will permit very limited progress on the program of examinations and surveys and on the collection and study of basic data. The amounts provided for the Arkansas-White-Red Rivers Basins and the New England-New York surveys contemplate the completion of these investigations by the end of fiscal year 1955. Progress on examinations and surveys will be limited to a small number of important investigations which will result in recommending projects necessary for transportation and major industrial activities, the protection of important defense establishments, the protection of agricultural productivity, and the general economic welfare of the Nation.

I consider it highly important that such investigations be carried to completion as soon as practicable, in order that such high priority projects as are determined to be feasible, can take their proper position in the civil-works program.

CONSTRUCTION, GENERAL

The amount requested for the "Construction, general," appropriation provides minimum amounts for continuing the projects presently

under construction; for initiation of 20 new projects, features of projects, or resumptions; and for carrying on the program of advance engineering design. In our efforts to curtail expenditure during fiscal year 1954, a number of the projects before you have been stretched out so that actual completion will be delayed beyond the time originally contemplated.

These delays are proposed to be continued and the amounts requested do not contemplate making up these delays during fiscal year 1955. Among the more important delays contemplated in the 1955 budget are those relating to the initial power production at some of the larger multiple-purpose projects. For example, the power production at the Dalles Dam will be delayed for 1 year; at Gavins Point Dam for 6 months; at Buford Dam for 1 year; and some of the later units at the Chief Joseph Dam will be delayed 1 year.

While you will be interested in the number of projects being provided for during the fiscal year 1955, I think you will also be interested in the trend of the number of Corps of Engineers projects appropriated for during the past several years. Chart No. 3 is an interesting chart in this respect and indicates this trend by showing the number of projects appropriated for each year since fiscal year 1947.

Beginning in 1947 [pointing] 146 projects were appropriated for and by 1949 the number increased to 249 projects. Since that time the trend has been continually reduced until in 1954 it was 82 projects. Senator HAYDEN. Does that mean that unless some new projects are authorized and the work goes on, you will have to break up the organization that you have?

General STURGIS. It certainly is having a most serious effect. We foresaw that last year. One of my major efforts has been to broaden the base of our program and spread our work throughout the Nation to include many authorized projects we have which are highly justified and which the people are very anxious to have, particularly those of low cost; several millions of dollars instead of hundreds of millions. I have an interesting description to show you of just exactly how the number of projects have continuously decreased and the reason why.

Senator HAYDEN. My general interest is this: I have always had great faith and pride in the Corps of Engineers and the men they have gathered together, civil and military, to do the work. I do not think there is any finer organization in the world. To let them get out of work and have to break it up, if we ever did need their skills in time of emergency, we would have to gather them together. There ought to be enough left to keep a reasonable cadre busy.

General STURGIS. Let me say that it is having, at the present time, a very serious effect. Take our Pittsburgh district. We know that in a few years as I indicated in my statement before, although I did not specifically mention the Pittsburgh district but I did mention the deterioration on our civil works such as the canalized portion of the Ohio River, this district will be required to handle our needed replacement program.

With the 50 to 60 million tons of commerce and increasing in that river, if one of those present locks and dams, say the guide wall falls into the river, it is going to have a tremendous economic impact upon that region and we must be prepared to take the necessary action..

There are industries by the hundreds that are dependent on water transportation to convert their goods into finished products.

In answer to your question, we know, therefore, that these projects have to be replaced sooner or later. We hate to see a large fluctuation in this old district. The Pittsburgh district has many people with 10 to 30 years' employment. If we let them go, we know we will never get them back. As I mentioned earlier, the salaries which they can get in private industry with the shortage of engineers makes it very doubtful they will ever come back to the corps. So it is having a very serious effect.

You will note that in 1947, the second year after the war, 146 projects were appropriated for; and by 1949, shown on the chart, the number increased to 285 projects. Beginning with the Korean conflict and the concurrent policy of no new starts, the number of projects was continually reduced until fiscal year 1954 when there were only 82 projects. With the 20 new starts in the 1955 budget, this trend has been stopped, but the downward trend in appropriations continues. We have indicated this situation earlier to the Bureau of the Budget. We think that the wisdom of putting additional projects in is well worth recognition.

CONTINUING PROJECTS

There are 67 continuing projects provided for in the 1955 budget estimates, and the amounts budgeted provide for completion or essential completion of 17 of these 67 projects during the 1955 fiscal year. With the 20 new starts, the 87 projects in the 1955 budget is slightly more than in the 1954 budget. This is less than 30 percent of the number of projects in 1949, although the appropriation is 70 percent of the 1949 appropriation.

Chart No. 4 is even a more interesting chart which, I think, will explain this anomaly. Examination of the amounts provided for the various projects-again over a period of years since 1947-shows that a major percentage of our construction funds has been increasingly applied to large multipurpose projects.

Let me indicate that. This top line is the total construction appropriations, annually 1947-54. That is the blue line. It reached a peak in 1950. The black line represents the amount of money in each year that has gone to multipurpose projects. So you can see probably a third or a fourth of the money, a little better than a third, went into multipurpose projects.

MULTIPURPOSE PROJECTS

As this steps up, it increases. The multipurpose projects demand a large amount of money, increasing all the time. We find ourselves in this year 1951 with probably 60 percent of the total appropriation in multipurpose projects. This continued at about that 60-percent level, but still left a substantial amount of money to put on the numerous small projects around the country.

What happened in this last year is a sudden drop in the ceiling, which means that your multipurpose projects are about to come into fruition; if you appropriate $20 million you are going to get a revenueproducing project of $20 million annually. There is a demand for that project, naturally.

We find ourselves today with $200 million out of $300 million of our money going to multipurpose projects and only a relatively small amount of money on other projects throughout the country, which accounts for the small number of worthwhile projects we have been able to build.

Senator MCCLELLAN. Is this not the situation: that that is occasioned by reason of the fact that your multipurpose projects cost a great deal more, generally, than do those that are constructed for a single purpose? Once the multipurpose projects are started, it is absolutely essential that larger appropriations be made until they are completed? General STURGIS. That is absolutely correct.

Senator MCCLELLAN. If they are to produce revenues, such as hydroelectric power, the sooner you get them completed and into operation and production, the sooner we begin to get a return on the investment?

General STURGIS. Yes, sir. And usually the less years you construct it in, the more economical it is. But that is the point I am making, sir, just your point; namely, that in this sudden reduction of the budget, it does not provide for the rest of the projects throughout the country.

Senator MCCLELLAN. In other words, the nonmultipurpose projects, like the projects for a protection of a certain area, a levee here or a flood wall there-those are the projects that have suffered the most? General CHORPENING. Or small navigation projects.

Senator MCCLELLAN. They have suffered the most in this tremendous reduction in the budget?

General STURGIS. We have a project out in St. Louis that has a benefits-to-cost ratio of 13 to 1. Of course, it is obvious that no one had a crystal ball to indicate the effect of the Korean war and these multipurpose projects were started. All the projects were going along on probably a reasonable division of money between large multipurpose projects benefiting entire regions and a large number of smaller projects benefiting the entire country. If there could have been a recognition of the principle which the Senator has stated and transitioned the appropriations downward for multipurpose projects, then this situation would not have existed.

Senator MCCLELLAN. In the 1954 budget, actually about two-thirds of the expenditures are for multipurpose projects, whereas only about one-third are for the nonmultipurpose projects. That is about the exact reverse to what the situation was in 1947?

General STURGIS. Yes, sir. Might I point out, sir, that the multipurpose appropriation level has not varied greatly, whereas the amount for other projects has very greatly diminished compared to the amount available for the smaller projects in other years.

This trend began, as you can see, in 1947. Although these multipurpose projects are highly desirable and very economical from an overall viewpoint and although they should be completed as soon as practicable, if for their power revenues alone, the sudden curtailment of total appropriations has a distinctly undesirable, if not unforeseen, effect.

The chart makes it clear that the ever-increasing funds necessary to complete the multipurpose projects, started before Korea, have left less and less available each subsequent year for smaller highly justified projects nationwide as the appropriation ceiling continues downward.

This is the major explanation for the sharp trend downward in the number of projects shown on the previous chart.

However, it is not necessarily an argument against multipurpose projects. The point is that no one could foresee the Korean war, and as long as appropriations continued at the 1949-50 level, the decrease in the number of smaller projects would not have had too heavy an impact on the Nation as a whole.

Since an individual multipurpose project takes several years of appropriation buildup before it affects greatly the character of the appropriations structure, by the same token it also takes several years to adjust the multipurpose part of the program to a new situation of heavily reduced appropriations. If, of course, it could have been possible to transition the appropriation ceiling downward more slowly, the effect on the smaller projects would not have been so drastic.

RISE IN COST INDEX

Another factor, of course, adversely affecting the number of smaller projects in connection with the situation I have just described, has been the continuing rather sharp rise in the cost index of construction. This is shown by the next chart, chart No. 5.

You have seen this type of chart before, sir, so I merely indicate the upward trend during the year although it has leveled off in the last half.

Senator MCCLELLAN. That chart indicates that since 1940 the cost of construction has gone up 200 points?

General STURGIS. Say about 260 index points. The cost has not gone up that much percentagewise but the index has risen.

General CHORPENING. About 211⁄2 times.

Senator MCCLELLAN. It costs 211⁄2 times to construct a project now as it would have cost in 1940?

General CHORPENING. That is correct.

General STURGIS. I might say, sir, in connection with that year 1947 that the cost index shows a rise from 450 to 600 points. There is a substantial increase there even in that period.

Senator MCCLELLAN. It has increased about 40 percent since 1947? General STURGIS. About 50 percent, sir. That gain is the factor I am speaking about. That is an additional factor affecting the number of smaller projects we can afford to have. The money we have for them is much less and does not go as far.

BIDS FOR CONSTRUCTION

Senator HAYDEN. What is your recent experience with respect to bids for construction? Is there keen competition among contractors at this time? Recently it seemed to be leveling off.

General STURGIS. From talking to my division engineers and from my inspections in the field, the competition is getting a bit keener— I would not say it was really tough yet, but it is definitely getting keener than it was.

Senator MCCLELLAN. There is more competition in bidding?

General STURGIS. I think so. Certainly, the prices are better. We have gotten some remarkable prices.