It is a genuine pleasure to be with you tonight at the Boston College Business Administration Annual Alumni Association Banquet. I had some doubts when I first received my invitation from Father Joyce; for I remembered the advice of St. Jerome: "Avoid, as you would the plague, a clergyman who is also a man of business."
The prosperity reflected here tonight symbolizes the continued improvement which has this year characterized the general economic status of our State and nation. But we should no permit the warm glow of the banquet hall to dull our awareness of the depressed communities and declining industries which still remain in our State.
Economic facts.
For the hard facts of the matter are that while manufacturing employment in Massachusetts rose in the year September "54" to September "55" by over 22,000 jobs, nevertheless, depressed communities still exist amid this general level of prosperity. This is especially true in those cities and towns where the textile industry is concentrated. They continue to suffer large-scale unemployment and, also, they have suffered a general down-turn in their wage levels as a result of having to meet Southern competition.
During the first six months of this year, over 38,000 Massachusetts workers exhausted their unemployment benefits, and were forced to turn for assistance to the relief rolls, to charitable institutions or to other members of their families. The latest figures show a new groups of more than 30,000 still receiving unemployment benefits.
In Lawrence, more than one out of every five working men and women has been unemployed for several years; and in Fall River, Lowell, Fitchburg, Milford and the Southbridge-Webster area unemployment, bankruptcy, liquidation, migration, and other heavy economic loss have been all too common in these otherwise prosperous days.
Administration proposals.
Within the past few days, the Administration in Washington has announced new plans designed to bring new hope to our so-called distressed areas and industries.
I will say in all frankness, and without intending to exploit for partisan purposes the distress of Massachusetts businessmen and workers, that this State is growing weary of highly publicized announcements of Federal aid which, when the ballyhoo is over and the gobbledygook has been translated, boil down to little or nothing at all. This has been true regardless of which political party has been in control.
Proposals of 1953.
Approximately two years ago, another bold new Administration program was announced, you may recall, to bring aid to the labor surplus communities of Massachusetts and the country, with two chief features: first, defense contracts were to be channeled into these communities under a new kind of preference system; and, secondly, tax amortization certificates were to be granted to provide a fast tax right-off to industries willing to locate in these areas. I asked at that time whether these programs were not too little and too late; but, I nevertheless looked forward hopefully to whatever benefits they would bring to our State.
But what is the record after nearly two years? How many defense contracts have been channeled under this program into Lawrence, Fall River, Milford or Fitchburg? None! Not one dollar's worth of any kind of contract from any branch of the service. And, how many emergency tax amortization certificates of necessity have been awarded in the past two years to attract new industries to the labor surplus areas of Massachusetts? None! The much heralded program of two years ago, in short, was much like its predecessors under the Democratic Administration in terms of what it brought to the anxious businessmen and workers of our labor surplus communities - words instead of action, a stone instead of bread.
New Proposals.
Perhaps we can hope for more from the new program recently announced at Denver. But I am not encouraged by newspaper reports on its three new proposals: First, creation of still another new Government bureau to coordinate the work now being done. It is difficult to see how the coordination of very little can result in very much. Secondly, the agency would be empowered to make Federal loans for industrial development. But two years ago, the Administration and Congress established the Small Business Administration as the place to which businessmen could turn for credit not available from commercial sources. Yet, in more than two years of operation, the Small Business Administration has made only 29 loans in the entire State of Massachusetts, for a total amount of less than $1,300,000. Perhaps still another loan agency sill help; but the record is not encouraging.
Third and finally, the new program is to provide "technical assistance" to distressed areas to enable them to discover their "economic potential" and thus to help themselves. This is called a "Point IV Program" for the United States. But the Industrial Development Corporations which have done such a marvelous job in New Bedford, Lawrence and elsewhere in Massachusetts and New England have already made all the surveys of economic potential and all the appraisals of economic trouble which need to be made. Instead of being treated like some underdeveloped colonial stepchild, they want concrete action by the Federal Government based upon a realistic recognition of their needs.
If the Federal Government is truly interested in promulgating a real program for the alleviation of economic distress in our area, I would commend to their attention the following points.
1. First, Defense contracts should be channeled to bidders from areas of substantial labor surplus who are able, if given an opportunity, to match the lowest bids submitted from other areas. This policy of "bid-matching" was the major feature of the old Defense Manpower Policy Number 4; and despite continued resort to loopholes and legalistic sophistries, it had enabled New England labor surplus areas to obtain $14,000,000 in defense contracts - until it was quietly abandoned two years ago when the Administration under pressure from Southerners and Westerners announced it own new program, a program whose sorry results I have already described to you. Some say such a policy is inefficient and uneconomical. But thousands of square feet of empty plant spaces, row upon row of idle, deteriorating machinery, and endless lines of jobless men are not more efficient or economical. Allocation of defense contracts is at best a stopgap method of assistance; but surely we are as concerned about temporary problems of labor surplus as we are about the transitional problems of surplus agricultural commodities.
2. Secondly, Existing programs of aid to businessmen in such areas - including tax amortization certificates and business loans - should be greatly accelerated. I have already indicated to you the shocking paucity of those programs under the past two administrations. But they could become significant sources of assistance. For New England desperately needs new businesses, large and small, if her economy is to expand instead of contract - and I am sure that many of you know from personal experience how important to the firm establishment of a new business are the availability of extra credit and the opportunity for a favorable tax treatment during its early years. The Small Business Administration - cripped by legislative ceilings and administrative delays - has not yet fulfilled the needs that required its creation. And the Tax Amortization program, far from aiding New England, has distributed its tax favors in excessively disproportionate amounts to industries expanding or locating in the South and other areas competitive with New England.
3. And this leads me to my third point: Congress and the Administration must take steps to end unfair competition from tax inducements and substandard wages. In addition, removal of the tax exemption presently granted to so-called "industrial development" bonds issued by states and municipalities - largely in the South - in order to build these tax-free factories long overdue. Under this tax-exempt status, we in the North are paying a subsidy to assist Southern states to industrialize at our expense.
Some of you may recall that earlier this year, a Brookhaven, Mississippi industrial development firm attempted to lure one of this State's oldest manufacturing concerns with a letter offering these three, among other, inducements: No capital outlay for a modern new factory; Complete tax exemption for 99 years; and, finally, "The finest labor, 98% native born, who will lower your average industrial wage rates $.55 to $.95 (an hour) below Northern states…". Substandard wages as well as tax gimmicks constitute means of unfair competition. The national minimum wage has been raised to at least a more decent level; but Congress and the Administration have not yet acted on a bill introduced by Senator Payne and myself to revise the Walsh-Healey Act, which the Fulbright Amendment has rendered almost meaningless by requiring New England businessmen - who pay the prevailing wage rates of their industry as determined by the Secretary of Labor - to compete for Government contracts with Southern industrialists who have tied up the whole Act in Court in order to escape those wages.
4. Fourth, the Federal Government should take prompt action to eliminate current rate discrimination against New England and the Port of Boston. Last year, despite all local efforts to revitalize the Port of Boston, the tonnage passing in and out of the Port was below the level of 1952 by more than 700 million pounds. Other ports - such as Baltimore and New Orleans - have taken an increasing share of the nation's port trade away from Boston, which once ranked second in the nation but ranked 12th in importance at the beginning of last year. It is unthinkable that this decline should take place at a time when the Federal Government is shipping millions of pounds of foodstuffs and other commodities to our friends abroad. And, yet the Port of Boston has been almost totally disregarded by these operations. It is even more unthinkable that Boston should lose ground to ports which are hundreds - and in some instances thousands - of miles further away from European and South American ports of destination; and yet discriminatory rail freight rates on goods shipped through Boston have been not only continued but required by the Interstate Commerce Commission.
A new effort must be made to obtain for Boston her fair share of the tremendous Government export program. But still more important - important to the progress of the entire New England economy - the ICC must reverse its recent decisions discriminating against Boston and denying to her the natural advantages of her location. As long as dried skim milk which the Federal government is shipping in great quantities can be shipped from Minneapolis to the port of Norfolk for $.03 cheaper on every hundred pounds than it could be sent to the port of Boston, we are going to get very little of that business. If the ICC REFUSES TO act - and the New England and Middle Atlantic regions have lacked fair representation on that agency for a number of years - then it will be up to the Congress to remove this inequity. Other rail, trucking and ocean rate policies also appear to discriminate against Massachusetts - these too must be changed.
5. Fifth - The Federal Government should immediately take steps to make New England a leader in the development of low-cost atomic power. Congressional authorization for such a step is already provided in the amendment which I succeeded in having attached to the Atomic Energy Act of last year; and the erection of an atomic reactor power facility in Western Massachusetts has already been proposed. More than any other single section of the country, New England needs abundant and cheaper electrical energy. Low-cost atomic power which because of our high power volts will be economically feasible here before any other areas of this country could halt the migration of our industry to the Tennessee Valley and other low-cost power areas. It could provide the basis for the development of an entirely new type of New England industry. And, it could revolutionize the work, day and home life of every family in Massachusetts. We should not expect too much too soon - but I hope all of us in this room will live to see a new and better New England - free from bankruptcies, free from unemployment, free from poverty and free from economic fear or distress - arise as the result of harnessing the atom.
With your help, I hope to see action in the coming years on these five points and others.
The ultimate dependence for the prosperity of New England rests in New England and not in Washington. But, as long as the Federal Government continues to play such a major role in the economic life of our country, it is important that its policies be directed along lines that will assist our economy and strengthen our industrial life.
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