Mr. LANTAFF. And the National Association of Manufacturers and the chambers of commerce.

The CHAIRMAN. Yes, and the Riehlman committee is still struggling with the question we had before us then.

Mr. OSMERS. Mr. Chairman, I don't like to interrupt this way in a philosophical discussion of the distribution of surplus property, but we are discussing here I know this is an interesting subject to get into questions which other committees are considering, and we should limit ourselves here to the subject at hand.

Mr. DAWSON of Illinois. And it wasn't pressure brought on the Congress that brought this material over.

Mr. LANTAFF. I don't believe we pressured ourselves.

Mrs. ST. GEORGE. Mr. Chairman.

The CHAIRMAN. Are there any other questions of Dr. King on the issue?

Mrs. ST. GEORGE. Mr. Chairman.

The CHAIRMAN. Mrs. St. George.

Mrs. ST. GEORGE. I would just like to call attention to one thing: I believe, Dr. King, in your statement you mentioned these trucks and so forth could be sent to the Philippines and could also be disposed of on the island of Guam. I don't think there was any question of sending them back to the United States.

Mr. KING. There was no question, as far as I know, of sending them back to the United States.

Mrs. ST. GEORGE. That is what I understood.

Mr. KING. As a matter of fact

Mr. LANTAFF. Since we keep bringing up this extraneous matter

Mr. OSMERS. Mr. Chairman, I am going to raise a point of order. The CHAIRMAN. Sustained.

Mr. OSMERS. Thank you.

The CHAIRMAN. Are there any other questions of Mr. King?
Mr. KING. Mr. Chairman, may I continue?

Can I answer Mrs. St. George?

The CHAIRMAN. If you wish. What do you mean? About Guam? If you would bear with us, this issue about surplus property doesn't seem to be the one involved here, and we have been discussing that.

If you would like to discuss that further with members of the committee, I will call a meeting this evening, say at half past 7, and we will go into the subject at length.

Mr. KING. I would just like to make a one-sentence statement, if I may.

The CHAIRMAN. Very well.

Mr. KING. That is, the United States Government later appropriated, I believe, hundreds of millions of dollars to purchase material to rehabilitate the Philippines because of the destruction of the property during the war, and here was the material that could have been used right there and it was wasted. Who is to blame for the waste, I don't know.

The CHAIRMAN. Why not forgive and forget?

Mr. McCORMACK. I just have one question to ask: Mr. King, do you consider the TVA, for example, is socialism?

Mr. KING. I consider that is socialism; yes.

Mr. McCORMACK. I just wanted to get your view.

The CHAIRMAN. You have it now.

Mr. Hamilton.

Mr. KING. Thank you very much.

The CHAIRMAN. Thank you, Doctor.

Will you identify yourself?

Mr. HAMILTON. Yes.

The CHAIRMAN. And then proceed with your statement.

STATEMENT OF RANDY H. HAMILTON, DIRECTOR OF THE FEDERAL AFFAIRS DIVISION, AMERICAN MUNICIPAL ASSOCIATION

Mr. HAMILTON. I am Randy H. Hamilton, the director of the Federal affairs division of the American Municipal Association, which is the national organization representing 12,000 municipalities in 44 States.

The American Municipal Association supports the principles embodied in H. R. 8832. We do so because the adoption of such principles will undoubtedly result in fewer acquisitions of federally owned industrial and commercial properties. This will result in the removal of fewer parcels of relatively valuable, taxpaying land from local tax rolls.

The property tax has traditionally been the chief source of revenue for most local governments in the United States. It is the mainstay of the local revenue systems, providing on the average of from 60 to 70 percent of local revenues. Diminution of the property tax base by accretions to the category of tax-exempt properties creates a serious problem to the public-finance capabilities of many municipalities. Resulting tax losses have aggravated already strained fiscal positions of local government. While the total value of federally owned property is only a portion of the value of tax-exempt property, it is important in amount and in impact. Increases in Federal industrial and commercial property holding intensify existing difficulties and add grave doubts as to the ultimate capability of local government in the United States to support itself from existing revenue resources; Three alternatives are present:

(1) Additional support, aid, and doles from Uncle Sam to support local government. We oppose this.

(2) Reassignment of revenue sources. as coming a long way in the future.

We favor this, but see it

(3) Full utilization of currently available revenue resources. We favor this and look upon the bills under consideration by this committee, this morning, to be in that direction.

Continued Federal acquisitions of industrial and commerical properties are particularly unjustifiable. They are distasteful to local government because in many, many cases these properties are leased out to private operators who use Government ownership as a cloak for tax immunity or as a springboard to a competitive position in the industry.

Estimates by the Bureau of the Budget show the value of industrial defense-production facilities owned by the Federal Government in the fiscal year 1954 to be about $2.4 billion of Federal personalty and $9 billion in real property. All told about $11.5 billion in taxexempt Federal property is in this one category alone.

Information regarding total revenues which local government would receive if this property were in a tax-paying status indicates

that it would be in the nature of $125 million per year, for only those commercial and industrial type properties covered by H. R. 8832 and the related bills.

It is impossible to present to this committee unfortunately a complete list of properties which are located in municipalities and which are affected by these bills for the very simple reason that no inventory of Federal property exists. We commend the work of this committee during the past year in this regard. Your efforts have resulted, at least, in a start being made on the problem of inventorying Federal property. It is regrettable, however, that such little progress has been made in the past 15 months since this committee first initiated steps in this direction. We hope that the Federal executive agencies which are now handling this matter will give it a high priority in order that the Congress and the public may have a more firm basis for discussion on this matter and for legislation correcting it.

For the record, however, we should like to present some of the statistics from our files regarding tax losses suffered by local communities as a result of Federal acquisition of industrial and commercial property.

Mr. Chairman, with your permission, I will simply hand this to the clerk so as to make it available and save the committee's time. The CHAIRMAN. It may be received.

(The statistics referred to are as follows:)

Representative cases of surplus real property transferred to Federal agencies out of surplus inventory, resulting in discontinuance of tax payments to local governments

Representative cases of surplus real property transferred to Federal agencies out of surplus inventory, resulting in discontinuance of tax payments to local governments-Continued

Mr. HAMILTON. In summation, I should like to say that the municipalities of America support these bills because the real property tax is the backbone of their revenue systems. The backbone is being broken, in many cities, because of continued Federal acquisition of industrial and commercial properties. Without this revenue backbone, local government cannot support itself. It will become weak and totter.

If local government in the United States is weakened, just so is the structure of our Government weakened. If local government totters, then failure of our traditions and heritage of local government, and individual initiative will fall by the wayside and be replaced by a centralized government-bureaucratically all powerful.

We regard a cessation of Federal acquisition of valuable industrial and commercial properties with their consequent removal from local tax rolls, as essential. We think these bills are a step in that direction. Thank you.

I shall be happy to try to answer any questions the members of the committee may have.

The CHAIRMAN. Do you have any questions, Mr. Osmers?
Mr. OSMERS. No; I haven't any.

The CHAIRMAN. Mr. Dawson.

Mr. DAWSON. The Government went into the business of buying large tracts, building large buildings and equipping them with machines calculated to furnish the Army with necessary war materials that they had to have. Private industry was not in position to meet the challenge of war. That was the responsibility of the Government. What would you have substituted for the steps taken by the Government in World War I and prior to World War II in order to meet the threat that the Nation was facing then, which challenged its existence? Mr. HAMILTON. I am making no criticism, Congressman Dawson, of past history. I am merely making a plea for correction of existing difficulty in the future.

I do not criticize the Federal Government's acquisition policies regarding war production potential during the war. However, I can give you cited examples where such production facilities, which were built by the RFC, paid taxes. They were transferred as surplus as a result of the war's ending; later transferred to private enterprise, which turns out civilian goods as well as military goods, and makes a profit on those because that particular plant is in a tax-free status. Mr. HILLELSON. Congressman Dawson, could I ask a question, or would you yield?

Mr. DAWSON of Illinois. Yes.

Mr. HILLELSON. That relates to 5605, doesn't it, Mr. Hamilton? Mr. HAMILTON. That is correct.

Legislation has come from this committee to correct that particular situation, and we very much commend the committee and Congressman Hillelson as a freshman Congressman for getting the bill through the Congress. We are very hopeful it will pass the Senate as well, since it has passed the House.

Mr. OSMERS. Mr. Chairman, I want to point out while it is true. the Government did build under such circumstances as that during the war it has, in some instances, become a continuing policy and it is a trend that must be stopped.

I would say this: Had it not been for the magnificent private enterprise and free labor system we have in this country we would never have been as successful in the production of war material as we were. I think it is a good ststement, Mr. Chairman.

Mr. CONDON. Mr. Hamilton, would you be critical of a situation. that occurs in my town of Richmond, where the Maritime Commission owns Richmond yard 3?