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ambassadors, one of them by the name of Garza, the other by the name of Telles, from El Paso. We have another one just appointed and if the Senate confirms him, and I have no doubt that they will, we will have three.

Now, that is five appointments, for God's sake, for 15 million people. Now, what was your question about that, sir?

Mr. GOODLING. The only point that I was trying to make is that both Congressman Gonzales and Senator Montoya are respected men and they are

Mr. Chavez. No question about it, sir. But I said it was until they were elected by the Spanish-speaking voter and the understanding and considerate, non-Spanish-speaking American citizen, when they were elected by these people, then we had a voice in the Congress. But I am talking about administrative positions in Government. Now, if you have any questions about that during any administration, I would be glad to answer them.

Thank you very much, Mr. Chairman.
Mr. RESNICK. Thank you very much, Mr. Chavez.
I would like to announce the witnesses for tomorrow.
We will begin at 9:30.

Mr. Ross D. Davis, Assistant Secretary of Commerce for Economic Development; Mr. Roger Fleming, secretary-treasurer, American Farm Bureau Federation; Frank H. Murkowski, commissioner of economic development, State of Alaska.

I would also like to announce at this time that with permission of our distinguished chairman, Congressman Poage, we will have additional hearings on July 10, 11, 12, and possibly the 13th. They will commence at 1:30 p.m.

Mr. MONTGOMERY. Mr. Chairman, if we run a little ahead of time tomorrow, I have a statement—in other words, rather than getting people not to come up here, I would like to read a statement and put it in the record. I would like to read it, though.

Mr. RESNICK. I will be very happy to have you read that at the outset.

We are recessed until tomorrow at 9:30.
(Whereupon, at 11:30, the subcommittee recessed.)





Washington, D.C. The subcommittee met, pursuant to recess, at 9:35 a.m., in room 1302, Longworth House Office Building, Hon. Joseph Y. Resnick (chairman of the subcommittee) presiding.

Present: Representatives Resnick, Nichols, Montgomery, Goodling, and Zwach.

Also present: Hyde Murray, assistant counsel; Francis M. LeMay, staff consultant; and Martha Hannah, subcommittee clerk.

Mr. RESNICK. This hearing of the Subcommittee on Rural Development of the House Committee on Agriculture will now come to order.

At this time, we will hear from the Honorable Ross D. Davis, Assistant Secretary for Economic Development of the U.S. Department of Commerce.


ECONOMIC DEVELOPMENT, U.S. DEPARTMENT OF COMMERCE Mr. Davis. Thank you, Mr. Chairman. Good morning.

I come before this committee at a very appropriate time, in this sense, that Secretary Freeman is currently on a trip which he describes as a look, listen, and learn trip, which is taking him and his party through parts of Iowa, Mississippi, Alabama, and Indiana. He invited me to go along and I did. I was able to participate in this look, listen, and learn program in both Iowa and Mississippi. In Iowa, we traveled in four or five counties around Ottumwa, and in Mississippi, we traveled from Greenville

through Scott, Cleveland, Mount Bayou, Clarksville, Batesville, and I left at Oxford, Miss.

This was a particularly useful experience for me as a deskbound bureaucrat and a city boy as well. One of the things that was brought home to me is the identity of interests between the economic development activities of the Department of Commerce and those of the Department of Agriculture. I was, Mr. Chairman, extremely impressed by the many representatives of the Department of Agriculture who briefed us on this trip. It was quite evident that the Department of Agriculture has been instrumental in producing massive improvements in farming technology and in the quality of rural life.

I also was struck during this trip by the changes in agricultural activity that have taken place to date and the changes that are projected for the future. And, of course, what we see, at least in those parts of the country that I was privileged to visit, is an acceleration of the change from à labor-intensive activity to an essentially capital intensive activity. More and more farming and related activities are handled by machines, and the need for labor is steadily and rapidly decreasing.

One of the side effects of this
Mr. RESNICK. You mean the need for farm labor?
Mr. Davis. Yes, sir.

One of the side effects of this is the change in the character of the family farms. As I am sure you know and as one might expect, the family-sized farm is becoming increasingly large in order to take advantage of the potential for mechanization and to make a profit on increasingly slim area between cost and sales prices.

I got the definite impression that the Department of Agriculture is constantly reevaluating its role and objectives. This particular trip consisted not only of officials from the Department of Agriculture. but also officials from the Department of Commerce, from the Department of Transportation, from HUD, Labor, OEO, and SBA and other agencies as well, including the Bureau of the Budget. Now, what this seems to say is that the dimensions of the problems of rural development are changing, and we have an increasing recognition of the identity of interests between the so-called rural populations, the so-called urban populations, and those who reside and work in between.

Secretary Freeman, as you know, often speaks of the need for a better rural and urban balance, and I think that his trip and some of the things that may come out of it are one more evidence of an effort to reappraise where we are going generally and what we should be doing in rural, semiurban, and urban communities.

With your permission, I should like to turn now to my testimony. which makes many of these points.

Rural development can take many forms. It can bring to our rural communities many amenities and advantages found in urban areas. It can increase the efficiency and productivity of our farmers. Or through the process of economic development, it can diversify rural economies, creating jobs and increasing income for those workers who are being displaced by the pace of technological change and the patterns of national growth.

I should like to discuss the process of economic development in the following terms:

1. Economic development will not succeed if it is merely viewed as a program to bring jobs to the farm. Raising incomes or creating new employment opportunities on substantial scales requires a change in the whole pattern of rural life. To achieve the benefits of economie development, we must be prepared to pay the necessary costs-social as well as economic.

2. Economic development through industrialization requires an intensive as opposed to an extensive production organization. In other words, it requires a certain degree of “clustering” of people and the means of production. In a way, rural economic development depends on a growth center theory, in which investments are concentrated to bring about self-sustaining growth process.

3. EDA attempts to bridge rural and urban interests in ways which I will describe briefly.

The problem of achieving economic development in lagging areas of rural America is extremely complex. The size and force of the problems facing these areas would overhelm any short-term eifects that might be generated by a single project or by a project-by-project scattering of Federal funds over the countryside.

There are many different conditions which define a lagging or economically distressed area. The Public Works and Economic Development Act lists several as criteria for an area's eligibility to receive financial assistance from our agency. We will have about 850 so-called qualified areas during the next fiscal year. However, most of the areas qualified for EDA assistance fall into two basic categories.

1. Areas with an industrial base or with a mixed agriculturalindustrial economy where unemployment is the key factor or evidence of distress. There will be 398 areas eligible under this criteria in the coming fiscal year.

2. Rural areas basically dependent on agriculture where family income is the major measure of economic health. Approximately 300 areas will be eligible in this category on July 1.

Mr. RESNICK. If I may just interrupt you at this point, we heard from a witness yesterday who pointed out that in making up this criteria for special rural areas, you do not count agricultural workers. The Bureau of Labor Statistics of the Department of Labor does not count these seasonal workers. So, therefore, in areas where really there might be accute unemployment or underemployment were these people counted, they are not counted and, therefore, it does not show up

Mr. Davis. Let me respond to your question this way, Mr. Chairman. I do not feel comfortable with or satisfied with the present definitions of the problem which are stated somewhat mechanically in statistical terms. Moreover, I think we are all increasingly aware that the statistics on which we base these determinations are unsatisfactory for a variety of reasons, which range from inaccurate to overexaggerations. This problem is not pressing in the context of the economic development administration activities for one simple reason: Last year, we had 1,200 places eligible for EDA assistance. Our budget for last year permitted us to do something in only 325 of these areas.

Mr. RESNICK. In other words, roughly 25 percent?

Mr. Davis. Yes, sir. This means that within the broad framework of defining the problem, we have more business, if you can put it that way, to take care of than we have funds. Therefore, I think these definitions should in due course be refined, and we will, I expect, make some proposals along these lines. But until we are able to devote more resources to this problem, the definitional aspect of the problem is not pressing.

We have found that as Government assistance is offered, and as the economy expands, the rural areas, as opposed to the more diversified urban economies, respond comparatively slowly. As a result, these rural low income areas will make up 36 percent of the 850 areas on the EDA qualification list during the new fiscal year, compared with 27 percent of these same areas during the fiscal year now ending.


Mr. RESNICK. In other words, the rural counties, because of lack of leadership and one thing and another, got less of whatever little money there was.

Mr. Davis. Well, I think the problem, as I explained here, stems more from the fact that the characteristic problem of rural areas is that of low income, and low income is a much more difficult problem to deal with than' unemployment. We, in effect, de-designated on reevaluation 150 counties for the coming year. All 150 counties or areas were in the unemployment category. We did not de-designate any low-income areas.

Mr. RESNICK. In other words, these are the working poor?
Mr. Davis. Yes, sir.

Mr. RESNICK. These are people who are poor, perhaps because there is no State minimum wage as we have heard in the testimony from Arkansas. A man can work for 50 cents an hour, so even though he is working and continues to work, he is still poor.

Mr. Davis. That is part of the answer.
Mr. ZWACH. Mr. Chairman?
Mr. RESNICK. Mr. Zwach?

Mr. Zwach. Would these not also be the underpaid farmers that are not fully compensated for their work and effort in production and investment? Would that not be a lot of your rural poor that you are referring to? It is not workers.

Mr. Davis. There is no question but what the low income characteristic of many farm operations weights these family income figures which guide our qualification process.

Mr. RESNICK. If the gentleman would yield, I would like to point out that the Department of Labor does not take these people into consideration. The Department of Labor completely ignores agricultural workers and agricultural income. Therefore, this is based purely on the commercial picture. As our witness pointed out these farmers and seasonal workers are simply not included in these figures. They are the forgotten men. A farmworker cannot be counted as unemployed because he does not collect unemployment insurance; therefore, he does not exist.

Mr. Zwach. But, Mr. Chairman, this testimony this morning is the Department of Commerce and they are talking about economic development in rural areas. Mr. RESNICK. Yes, I know.

Mr. Zwach. I would like to just state that the basic problem of rural poverty is lack of rural income and in the development, certainly farmers themselves need to be considered seriously.

Mr. RESNICK. Oh, I agree, Mr. Zwach. One of the main causes for rural poverty is the lack of income to the farmer. Now, while I am very sympathetic with the plight of the farmer, I think we must realize that for somebody who is picking melons in Texas for 40 cents an hour, it does not make any difference whether the farmer is getting a penny a melon or a dollar a melon. He still gets his 40 cents an hour. And the vast majority of the people in the countryside are no longer affected by the farm price, because they really live beyond the farm

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