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what about all these vast amounts of supplies that were in the hands of the Government and what should be done about it, and it was discussed by our advisory committee, and the advice we gave was adopted by the executive committee of the National Association of Manufacturers, and the advice was this: That the Government should negotiate with the people that produced these articles and should sell back to the people that produced the various articles the things that were still available at the best prices that they could afford to pay, and it was agreed that the men would buy the things back at reasonable prices, and then that the companies would sell those things in the open market, to the best of their ability.

So, that was taken care of effectively as a scientific method of handíing it with a minimum of loss to anyone concerned.

Mr. Dawson of Illinois. But if they didn't give prices that would pay the Government to bring it back, then it would still be left on the Government's hands, wouldn't it?

Mr. King. If the stuffMr. Dawson of Illinois. If the manufacturers did not offer prices which would enable the Government to bring it back, then it would be left on the Government's hands in those foreign places, wouldn't it?

Mr. King. That is correct.
Mr. Dawson of Illinois. And that is what happened, isn't it?

Mr. King. The people offered prices that would enable them to buy it back at their cost. They couldn't offer prices to buy it back at more than their cost of manufacture; obviously not.

Mr. Dawson of Illinois. So, then, in that case the Government was left with all of this material, under the agreement with the manufacturers, in foreign places and with no place to bring it back, no market for it back home?

Mr. King. There were many things that were used, and there was no particular market for them back home; that is correct.

Mr. LANTAFF. Mr. Chairman,
The CHAIRMAN. Yes, sir, Mr. Lantaff.

Mr. LANTAFF. In connection with the surplus that you have mentioned, the reason that was not brought back into the United States was because of the congressional mandate that was put into effect because of pressure from both business and labor prohibiting the reimportation of those articles into the United States.

The CHAIRMAN. Would the gentleman yield right there?

Mr. LANTAFF. So, you couldn't bring back into the United States those trucks you are talking about without going to the Department of Commerce and getting an import license, and, of course, the pressures on the Department of Commerce were to keep out as much of that as possible in order to encourage the rehabilitation of our own industry in those fields. Much of it was brought in under certificates from the Department of Commerce after certain findings had been made.

The CHAIRMAN. Will the gentleman yield there?
Mr. LANTAFF. Yes.

The CHAIRMAN. You will recall, if at that time you were on the committee which had that question under consideration, that at the hearing, Secretary of Labor Schwellenbach, Secretary Vinson, and

Mr. Judd. Also Secretary of Commerce Wallace.

The CHAIRMAN. That is right. You were there, too, and representatives of organized labor, the big unions, all appeared.

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 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.

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:: 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. We favor this, but see it as coming a long way in the future.

(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

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Representative cases of surplus real property transferred to Federal agencies out of

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ALCOA, Maspeth, Long Island. Navy--- September 1950.- $150, 245
Amco Magnesium, Wingdale, FW... October 1948.. 36, 410

Long Island.
Curtis-Wright, Kenmore..

FWA. April 1949.

49, 968 General Motors, Tonowanda.. GSA. December 1949..

74, 040 Grumman Aircraft, Port Washing. GSA. October 1950 18, 263

ton. Morgenthaler Linotype Co., Brook GSA. September 1952.

50, 020 lyn. Symington-Gould, Rochester....

FWA... December 1948..

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41, 436

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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.

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