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Kilgore Lehman

McCarran

Murray

NAYS-54

Ferguson

Flanders

Information for each of the military departments similar to that contained in the paragraph above is shown graphically on charts attached.

The Secretary of each military department is here to present pertinent information in support of its program as contained in this proposed authorization bill.

The Secretary of Defense considers H. R. 6375 to be of such urgent importance as to merit your consideration and favorable action before the close of this session of Congress.

The PRESIDING OFFICER. The question is on agreeing to the amendment offered by the Senator from Louisiana [Mr. LONG]. On this question, the yeas and nays have been ordered, and the clerk will call the roll.

The legislative clerk called the roll. Mr. SALTONSTALL. I announce that the Senator from Minnesota [Mr. THE] is absent by leave of the Senate.

The Senator from Maryland [Mr. BEALL], the Senator from Ohio [Mr. BRICKER], the Senator from New Hampshire [Mr. BRIDGES], the senior Senator from Indiana [Mr. CAPEHART], the Senator from Illinois [Mr. DIRKSEN], the Senator from New Jersey [Mr. HENDRICKSON], the Senator from New York [Mr. IVES], the junior Senator from Indiana [Mr. JENNER], the junior Senator from Wisconsin [Mr. MCCARTHY], the Senator from Connecticut [Mr. PURTELL], and the senior Senator from Wisconsin [Mr. WILEY] are necessarily absent.

If present and voting, the Senator from New Jersey [Mr. HENDRICKSON], the Senator from New York [Mr. IVES], and the junior Senator from Wisconsin [Mr. MCCARTHY] would each vote "nay."

Mr. CLEMENTS. I announce that the Senator from Virginia [Mr. BYRD], the Senator from New Mexico [Mr. CHAVEZ], the Senator from Mississippi [Mr. EASTLAND], the Senator from Louisiana [Mr. ELLENDER], the Senator from Iowa [Mr. GILLETTE], the Senators from Tennessee [Mr. GORE and Mr. KEFAUVER], the Senator from Arizona [Mr. HAYDEN], the Senator from Missouri [Mr. HENNINGS], the Senator from Alabama [Mr. HILL], the Senator from Minnesota [Mr. HUMPHREY], the Senator from Colorado [Mr. JOHNSON], the Senator from Arkansas [Mr. MCCLELLAN], the Senator from Oklahoma [Mr. MONRONEY], and the Senator from Georgia [Mr. RUSSELL] are absent on official business.

The Senator from Florida [Mr. HOLLAND] is absent by leave of the Senate, attending the Sixth Pan American Highway Congress at Caracas, Venezuela.

I announce further that on this vote the Senator from Florida [Mr. HOLLAND] is paired with the Senator from Minnesota [Mr. HUMPHREY]. If present and voting, the Senator from Florida would vote "nay," and the Senator from Minnesota would vote "yea."

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Frear

George

Green

Hickenlooper

Jackson

Johnson, Tex.

Neely Smathers Sparkman

Morse Mundt Pastore Payne

Potter

Reynolds Robertson

Saltonstall

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Beall

Bricker

Bridges Byrd

Capehart Chavez Dirksen

Johnson, Colo. Kefauver

Monroney

So Mr. LONG'S amendment was rejected.

The PRESIDING OFFICER. The bill is open to further amendment.

Mr. MORSE. Mr. President, before I offer an amendment, I wish to make a very brief statement for the RECORD in explanation of my vote on the last amendment.

As one who worked closely with the Senator from Louisiana [Mr. LONG] in recommending the creation, in the first instance, of this special office in the Department of Defense for a kind of watchdog surveillance over military installations, I wish to say that I voted against his amendment today because, in my judgment, the job can be done, and should be done, by the Assistant Secretary of Defense, who has been given jurisdiction over the subject matter. He is a civilian. He can surround himself with civilians, as far as his immediate advisers are concerned. There is no reason in the world, Mr. President, why the same job could not be done by that Assistant Secretary of Defense as could be done by a special Director of Military Installations, assigned to the Office of the Secretary of Defense. In each instance he would be a subordinate to the Secretary of Defense, and the final responsibility rests with the Secretary of Defense.

Therefore, although I am disappointed that the Assistant Secretary of Defense that the Assistant Secretary of Defense did not make a recommendation for a larger cut in the request of the Military Establishment this year, I do not feel that has anything to do with the question as to which office should do the job. I think we made a step forward in the reorganization plan by creating a special Assistant Secretary of Defense to handle this work and, as was pointed out in de

bate by, I think, the Senator from South Dakota, if he is not performing well, then we have a personnel question, but not a question as to the jurisdiction of the office.

Mr. President, I offer an amendment which I believe will be accepted at least by the committee of conference. I think the objective of the amendment bears out the point of view which I discussed at some length this afternoon as to the need for checking the military in regard to a tendency to build new buildings when old ones can be repaired and made satisfactory for use. I found when I was a member of the Committee on Armed Services that the military avoids opportunities of reconditioning and repairing buildings if it is felt money can be obtained with which to erect new buildings. Here is a chance to save several million dollars by repairing existing facilities rather than expending many more millions for building new facilities. Here is a chance to economize without in any way injuring the military program. I believe we can save a great deal of money by doing more reconditioning and repair work on military installations. Therefore, I offer the amendment which I send to the desk and ask to have stated.

The PRESIDING OFFICER. amendment will be stated.

The

The CHIEF CLERK. On page 2, in line 2, it is proposed to add the following:

Subject to the condition that the military will administer the authorizations for construction herein provided in accordance with a building program that will expend for rehabilitation construction at least $5,000,000 of the total $45,000,000 authorized for barracks and bachelor officers' quarters, in lieu of that amount for new construction.

The

The PRESIDING OFFICER. question is on agreeing to the amendment of the Senator from Oregon.

Mr. CASE. Mr. President, although I am not entirely sure how the amendment would be worked out in its entirety, I think the intent of the amendment is desirable, and I shall be glad to accept the amendment and take it to conference and see what we can do about it.

The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from Oregon [Mr. MORSE].

The amendment was agreed to. The PRESIDING OFFICER. The bill is open to further amendment.

If there be no further amendment to be proposed, the question is on the engrossment of the amendments and the third reading of the bill.

The amendments were ordered to be engrossed and the bill to be read a third time.

The bill was read the third time.

The PRESIDING OFFICER. The bill having been read the third time, the question is, Shall it pass?

The bill (H. R. 9242) was passed.

REPEAL OF SECTION 16 OF THE

FEDERAL RESERVE ACT

Mr. KNOWLAND. Mr. President, I move that the Senate proceed to the consideration of Calendar 1626, Senate bill 3268, to repeal the provisions of section

16 of the Federal Reserve Act relating to prohibiting the paying out by one Federal Reserve bank of the notes of another Federal Reserve bank.

The PRESIDING OFFICER. The bill will be stated by title, for the information of the Senate.

The LEGISLATIVE CLERK. A bill (S. 3268) to repeal the provisions of section 16 of the Federal Reserve Act which prohibit a Federal Reserve bank from paying out notes of another Federal Reserve bank.

Mr. BENNETT. Mr. President, the purpose of the bill is to facilitate the operation of the Federal Reserve System under the present setup.

When the system was established in 1913, it was assumed that each of the regional banks was an original bank of issue, and that the notes issued by each bank in each region were to be used to adjust the money supply in that region. Therefore, the law required that no Federal Reserve Bank could pay out the notes of any other Federal Reserve bank. That brought about quite a problem, because the notes traveled over the boundary lines of the various bank areas: and all these years each Federal Reserve bank in each district has been forced to sort out all the Federal Reserve notes that came to it and to return the notes that came to it from other districts. One bank could not reissue, for use in its own

district, notes that came from another

district.

Over the years, the setup of the Federal Reserve System has so changed that today there is no point in maintaining that distinction. Approximately threequarters of a million dollars can be saved annually in the cost of transporting the notes back to the original banks of issue.

This bill will permit each Federal Reserve bank to pay out notes of other Federal Reserve banks that are fit for circulation, rather than be required to send them back to their original homes, so to speak.

I am sure there is no controversy over this bill. It is a measure that will simplify the operation of the system. As I have said, the enactment of the bill will result in saving the Government approximately three-quarters of a million dollars annually.

The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from California that the Senate proceed to consider the bill.

The motion was agreed to; and the Senate proceeded to consider the bill (S. 3268) to repeal the provisions of section 16 of the Federal Reserve Act which prohibit a Federal Reserve bank from paying out notes of another Federal Reserve bank.

The PRESIDING OFFICER. The bill is open to amendment.

If there be no amendment to be proposed, the question is on engrossment and third reading of the bill.

The bill was ordered to be engrossed for a third reading, read the third time, and passed, as follows:

Be it enacted, etc., That the third paragraph of section 16 of the Federal Reserve Act, as amended, is amended by striking out the sentences thereof which read as follows: "Whenever Federal Reserve notes issued

through one Federal Reserve bank shall be received by another Federal Reserve bank, they shall be promptly returned for credit or redemption to the Federal Reserve bank through which they were originally issued or, upon direction of such Federal Reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal Reserve bank shall pay out notes issued through another under penalty of a tax of 10 percent upon the face value of notes so paid out.”

MODIFICATION OF DUTY ON IMPOR

TATION OF WOOD DOWELS

Mr. KNOWLAND. Mr. President, I move that the Senate proceed to the consideration of Calendar 1615, House bill 2763.

The PRESIDING OFFICER. The bill will be stated by title, for the information of the Senate.

The LEGISLATIVE CLERK. A bill (H. R. 2763) to amend the Tariff Act of 1930, so as to modify the duty on the importation of wood dowels, and for other purposes.

The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from California that the Senate proceed to consider the bill.

The motion was agreed to; and the Senate proceeded to consider the bill.

The PRESIDING OFFICER. The bill is open to amendment.

If there be no amendment to be proposed, the question is on the third reading

of the bill.

ing, and was read the third time.

The bill was ordered to a third read

The

The PRESIDING OFFICER. question is on the passage of the bill.

Mr. MORSE. Mr. President

The PRESIDING OFFICER. All in favor say "Aye"; all opposed say "No." Mr. MORSE. Mr. President

The PRESIDING OFFICER. The "ayes" have it, and the bill is passed. seeking to obtain the floor. Mr. MORSE. Mr. President, I was

The PRESIDING OFFICER. The Chair recognizes the Senator from Oregon.

Mr. MORSE. I should like to ask the Senator from Colorado for an explanation of the bill.

Mr. MILLIKIN. Mr. President, I am told that in the Northwest there was a time when manufacturers of brooms imported their lumber under certain classifications and rates. Within the past year or two there developed a court case in which the Customs Court, in looking into that situation, classified the broomsticks in a way that carried a rate that was slightly higher than the one the folks in the broomstick business had been accustomed to pay. They wish to have the rate restored to the old rate. That is the purpose of the bill.

Mr. MORSE. I am in favor of new brooms, of course.

Mr. MILLIKIN. Yes, I understand that the Senator from Oregon wishes to sweep clean with them; and I am told he makes a good "broom" in his section.

I should say that it will be desirable to reconsider the vote by which the bill was passed, because I notice that the Senator from New Jersey [Mr. HENDRICKSON], whom I have tried to reach, has

an amendment which I think could be taken to conference.

Mr. KNOWLAND. Mr. President, I ask unanimous consent that the vote by which the bill was passed be reconsidered.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. MORSE. Mr. President, ordinarily I would have no objection to that procedure. However, we are in the closing days of the session; and when we get a ruling as fast as the announcement of the Chair that the bill had been passed, with a Member of the Senate addressing the Chair before the Chair had anywhere nearly reached the end of his announcement, I make the point of order that there has been no vote on the bill. From a parliamentary standpoint, I maintain that my addressing the Chair before there was any announcement of the vote made the announcement of the Chair relative to a vote, insofar as having any binding effect is concerned, without any force or effect in the Senate.

Mr. KNOWLAND. Mr. President, I do not agree with the Senator from Oregon. I wish to say, however, that it will be helpful, both to the Senate and the officials at the desk, as well as to the Presiding Officer, whoever he may be, if we may have order in the Senate, so that in handling legislation of this kind the Presiding Officer may be able to hear what is going on. The Senator and I have both presided. We know that frequently there is a great deal of milling around. Sometimes it is difficult to know whether a Senator is addressing the Chair, talking with his neighbor, or preparing to leave the Chamber.

Mr. MORSE. I agree with the Senator, except that in this instance there could not have been any doubt about what the Senator from Oregon was doing. One does not call out "Mr. President" when he wishes to converse with his next door neighbor. So I raise the point of order that there has been no official vote on the bill as yet.

Mr. FULBRIGHT. Mr. President, a parliamentary inquiry. The PRESIDING Senator will state it.

OFFICER. The

Mr. FULBRIGHT. What bill is this? Mr. MORSE. The Senator from Colorado says it is the "broomstick bill." A copy of it has not yet reached my desk, but I take his word for it.

The PRESIDING OFFICER (Mr. BENNETT in the chair). The Chair is advised that his predecessor in the chairthe switch having been made during this discussion-was about to rule that the vote had not been completed, and that therefore there was no vote.

For the benefit of the Senator from Arkansas, the clerk will state the bill by title.

The LEGISLATIVE CLERK. A bill (H. R. 2763) to amend the Tariff Act of 1930, so as to modify the duty on the importation of wood dowels, and for other purposes.

Mr. FULBRIGHT. What has that to do with broomsticks?

Mr. MILLIKIN. Mr. President, if the Senator will give me his ear for a moment, I will explain.

In the northwestern section of the country-and this is an unfortunate time to be wasting time-broomstick makers have been importing their lumber from Canada. Under the former practice such lumber took a certain tariff rate, which was satisfactory to the broomstick makers of the Northwest. A Customs Court decision reclassified the broomsticks and called them wood dowels. Ordinarily a dowel is considered as a piece of wood which is used in putting furniture together

Mr. FULBRIGHT. I know what a dowel is.

Mr. MILLIKIN. Perhaps some other Senators do not.

I insist upon saying what a dowel is. A dowel is a piece of lumber fastened in a desk or other piece of furniture when it is not desired to use nails, screws, or bolts. That is the purpose of a dowel. The classification as dowels resulted in some increase of duty. The people in the Northwest who make the broomsticks want the old classification and customs treatment restored, which this bill would do.

Mr. FULBRIGHT. Then the bill would make it easier to import broomsticks?

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Mr. FULBRIGHT. I congratulate the Senator. I could imagine that that was the purpose of the bill.

Mr. MILLIKIN. The junior Senator from Colorado is for it. The Senate FiThe Senate Finance Committee is for it. The House Ways and Means Committee is for it. The House is for it. The Senator from Arkansas, who is in the wood business, is the only one who does not know what a dowel is. [Laughter.]

Mr. President, on behalf of the Senator from New Jersey [Mr. HENDRICKSON] I offer the amendment, which I send to the desk and ask to have stated.

The PRESIDING OFFICER. The amendment is not in order. The third reading of the bill has been ordered.

Mr. MILLIKIN. That is all right. It will be taken care of in some other way.

Mr. KNOWLAND. Mr. President, I ask unanimous consent that the order for the third reading of the bill be rescinded, so that the bill may be open to amendment.

The PRESIDING OFFICER. Without objection, it is so ordered.

The clerk will state the amendment offered by the Senator from Colorado [Mr. MILLIKIN] for the Senator from New Jersey [Mr. HENDRICKSON].

The LEGISLATIVE CLERK. At the proper place in the bill it is proposed to insert the following:

Paragraph 1615 (a) of the Tariff Act of 1930 is amended by inserting before the period at the end thereof a semicolon and the following: "and articles, previously imported, with respect to which the duty was paid upon such previous importation, if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means, after having been exported under lease to a foreign manufacturer, and (2) reimported by or for the account of the person who imported them into, and exported them from, the United States."

SEC. 2. The amendment made by this act shall be effective as to articles entered for consumption or withdrawn from warehouse for consumption on or after the date of enactment of this act.

Mr. AIKEN. Mr. President, what is the effect of this proposed legislation on clothespins?

Mr. MILLIKIN. That is what I am about to discuss.

Mr. AIKEN. It does reduce the duty on clothespins, does it?

Mr. MILLIKIN. No-nor the duty on the things which clothespins are used to hang up.

Mr. AIKEN. I merely wanted to be assured that the proposed legislation would not ruin the clothespin business. Mr. MILLIKIN. No. The clothespin business is all right, so far as I know.

This is another liberal amendment. It provides that if a person pays duty once, let us say, on some cloth in an automobile and sends the automobile across the border to be worked on, when it comes back he will not have to pay duty a second time on the same goods.

This amendment was submitted by the Senator from New Jersey [Mr. HENDRICKSON]. It has been pending for a long time. I have been trying to reach him to find out whether or not he is still "panting" for the amendment. I cannot reach him, but in order to save time I am assuming that he is.

The LEGISLATIVE CLERK. A bill (H. R. 7664) to provide for the development of the Priest Rapids site on the Columbia River, Wash., under a license issued pursuant to the Federal Power Act.

The

The PRESIDING OFFICER. question is on agreeing to the motion of the Senator from California.

The motion was agreed to; and the Senate proceeded to consider the bill, which had been reported from the Committee on Public Works with an amendment, on page 4, line 12, after the word "thereto.", to insert "Power surplus to the requirements of the licensee and other non-Federal marketing agencies within the economic marketing area, as may be economically usable to the Federal system, may be made available to and may be purchased by the Bonneville Power Administrator at rates not higher than the rates charged such non-Federal marketing agencies, and under such terms and conditions as shall be mutually agreeable to the licensee and the Secretary of the Interior. The Administrator may use funds in the continuing fund, established under the provisions of section 11 of the Bonneville Project Act of August 27, 1937 (50 Stat. 731), as amended, to purchase such power. Such power may be commingled with power from Federal dams in the Columbia River system for which the Bonneville Power Administrator has been des

I am glad to take the amendment to ignated marketing agent and shall be conference.

The PRESIDING OFFICER. The question is on agreeing to the amendment offered by the Senator from Colorado [Mr. MILLIKIN] for the Senator from New Jersey [Mr. HENDRICKSON].

The amendment was agreed to. The amendment was ordered to be engrossed and the bill to be read a third time.

The bill (H. R. 2763) was read the third time and passed.

LEGISLATIVE PROGRAM

Mr. KNOWLAND. Mr. President, for the information of the Senate, the next bill which I shall move to make the unfinished business will be left as the unfinished business until tomorrow morning at 11 o'clock, when the Senate will reconvene. Tomorrow there will be a calendar call for the consideration of measures on the calendar to which there is no objection, beginning at the point at which the previous call of the calendar was concluded. When the calendar call is completed, the Senate will then resume consideration of the unfinished

business.

The PRESIDING OFFICER. What is the pleasure of the Senate?

DEVELOPMENT OF THE PRIEST RAPIDS SITE ON THE COLUMBIA RIVER, WASH.

Mr. KNOWLAND. Mr. President, I move that the Senate proceed to the consideration of Calendar No. 1668, House bill 7664.

The PRESIDING OFFICER. The bill will be stated by title for the information of the Senate.

sold by the Administrator in accordance with the provisions of the Bonneville Project Act at established rate schedules."

ORDER FOR RECESS TO 11 A. M.
TOMORROW

Mr. KNOWLAND. Mr. President, I ask unanimous consent that when the Senate completes its labors tonight it stand in recess until 11 o'clock a. m. tomorrow.

The PRESIDING OFFICER. Without objection, it is so ordered.

ORDER FOR CALL OF THE
CALENDAR TOMORROW

Mr. KNOWLAND. Mr. President, I ask unanimous consent that tomorrow, immediately following the usual morning hour, there be a call of the calendar for the consideration of measures to which there is no objection, beginning at the point where the previous call of the calendar was concluded, with the understanding that bills for which no committee reports are available to the Senate and to respective calendar committees will not be considered.

The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.

THE FHA AND OTHER PROGRAMS

Mr. SPARKMAN. Mr. President, 20 years ago, the Democratic Party initiated many programs that have brought untold benefits to the American people.

Particularly have these programs, such as REA, farm parity, TVA, social security, guaranty of bank deposits, and

others, helped the masses of people of proximate 40 cents per month per $1,000 of this Nation.

One of the greatest of these Democratic programs is the Federal Housing

Administration created to make home ownership possible to the millions of lowand middle-income families.

That FHA has, overall, done a magnificent job is practically unanimously admitted today.

An article of July 1 in the American Banker tells in eloquent terms some of the achievements of FHA. I ask unanimous consent that the article be inserted following these remarks.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

JOHNSON OF DIME SAVINGS BANK SAYS FHA HAS BEEN GREATEST BOON TO HOME BUYER

The Federal Housing Administration "has been the greatest boon ever conceived to benefit the home-buying public," it is declared by George C. Johnson, president of the Dime Savings Bank of Brooklyn, which originates and holds more home mortgages than any other savings bank in America.

Mr. Johnson's comment was made as the FHA observed the 20th anniversary of the formation of that Federal agency. Pointing out that "the FHA is one of the very few Federal agencies that has cost the taxpayer nothing, and, in fact, has operated at a profit," the banker stated:

"Until establishment of the FHA in June of 1934, the purchase of a home was extremely difficult for the average family. Usually it was necessary to scrimp and save for many years to accumulate the high downpayment until then required, ranging from 35 percent to 50 percent. Then, when this money was finally accumulated, a 3- or 5year straight mortgage was written at high interest rates. When the mortgage came due at the end of that short term, few homebuyers were able to pay it off and the mortgage had to be renewed, for which large fees were charged. Frequently unscrupulous lenders would foreclose, since such action was entirely within their rights if the mortgage was not paid when due. It was rare that the average family of moderate means was able to own its home free and clear.

"But all that was changed with the advent of the FHA. It brought with it an entirely new concept of mortgage financing, and has made homeownership possible for millions of families. Today, nearly 60 percent of the families in America either own or have substantial equities in the homes in which they

live.

"This has been accomplished through low downpayments, low interest rates, and longterm self-amortizing mortgages, all of which were developed by the FHA as one of its cardinal policies.

"Foreclosure is extremely rare today," Mr. Johnson's statement continues. "During the past 20 years, the FHA has insured more than 20 million loans aggregating nearly $31 billion. Total foreclosures last year on all types of home mortgages were less than 21,500. This compares with 252,000 foreclosures in 1933, the year before the FHA was established.

"It must be remembered that the FHA does not lend money. It simply guarantees that the mortgage lender will not lose in the transaction. Because of this insurance, it is possible for lenders to write mortgages with lower downpayments and for longer terms than would be possible under most State banking laws.

“Actually, the FHA is a first-rate example of Government and business in partnership with no cost to the taxpayer. The FHA has reduced the formerly extremely high price of mortgage credit by spreading the risks over the entire Nation. Because of the ap

mortgage insurance which the FHA receives from the borrower, the FHA has operated at a profit through the 20 years of its existence.

Early this year, the FHA announced that

it had repaid to the United States Treasury the $65,500,000 advanced to set up its insurance program, plus $20,350,000 interest at 24 percent.

"The Dime Savings Bank of Brooklyn has supported the FHA program from its inception and today we have nearly 13,000 FHAinsured loans in our mortgage portfolio with the current balance in excess of $86 million. Relatively few of these 13,000 home buyers

would have been able to embark on homeownership had it not been for the FHA. In addition, we hold more than 21,000 homemortgage loans guaranteed by the Veterans' Administration, and these 2 types of Government-backed loans account for approximately half of the 67,600 home-mortgage loans now held by our bank.

"The home-building industry is a cornerstone in the American economy, since 1 out of every 6 persons gainfully employed depends upon that industry for his livelihood, either directly or indirectly. In turn, the FHA is a cornerstone in home building, and has been for 20 years.

"This agency must never be allowed to become a political football, nor allowed to be shoved aside into some minor position in the Federal Government. Instead, I sincerely hope that by the end of another 20 years, the FHA will have helped make homeownership possible for millions more American families."

THE ECONOMIC OUTLOOK Mr. SPARKMAN. Mr. President, newspaper headlines this morning paint a rosy economic picture: "Employment for June up 1 Million-New Construction Sets a Record."

News reports indicate that unemployment did not rise as usual between May and June, that total employment rose from May to June by a million to 62.7 million, that the factory workweek increased, and that between May and June initial unemployment claims under State unnemployment insurance systems declined 5 percent.

Such news being in refreshing contrast to that earlier in the year, has tended to create an atmosphere of everything as rosy and that from now on we may expect recovery.

Mr. President, I am not a prophet of gloom or a prophet of doom, and without attempting to predict or forecast what is likely to occur in coming months it seems clear that some word of caution as to the meaning of these headlines is desirable. In fact there has been a startling decline in the farm sector of the economy. Only last week the Department of Agriculture announced that the farm parity ratio declined from 91 percent in May to 88 in June-the lowest point since March 1941-13 years ago.

I digress to call attention to the fact that just a few days ago it was announced that the price of steel was going up $3 a ton. That simply means that the price of farm machinery and is going up and the pinch is going to implements which the farmer must buy become tighter as between the low prices the farmer will receive for his farm products and the high prices he will have to pay for the things he must buy.

Furthermore, unemployment is still 5.1 percent of the civilian labor force. Or, in other words, unemployment in June was 3,347,000, compared to 1,562,000 a year ago. These figures are from the Bureau of the Census and do not include those thousands on involuntary part-time work. When allowance is made for the usual seasonal movements in employment, it is apparent that we did a little better than hold our own in June.

The most recent survey by the Department of Commerce and the SEC of business intentions to invest in plant and equipment indicates a continuance over the next 3 months of the recent trend toward moderately lower levels of such investment. The prospects are for further reductions in Federal Government expenditures in coming months-probably as great or greater than the normal increase in expenditures by State and local governments.

These are but some of the evidence that would cause one to be somewhat cautious in appraising the economic outlook in spite of these rosy headlines of today. A distinguished committee of private business, labor, and agricultural leaders, of the National Planning Association, has just released an appraisal of the economic outlook which points soberly to the fact that

Economic activity has been leveling cff at a rate of production which is about $15 billion below the rate of reasonably full employment activity. *** Unemployment is still about 52 percent of the civilian labor force. * And looking at the now visible factors of demand it is difficult to see what forces of the market under present programs and policies would be likely to lift business activity to the full employment level.

**

This committee then goes on to point out that if at best the economy moves sidewise this will mean not stability but growing unemployment and danger of a new downturn.

So far no factors have appeared in the situation to warrant the conclusion that demand will automatically rise significantly over the next 12 months. Yet during this time we can confidently expect an increase in the labor force of over one-half million and an increase in output per man-hour of between 2 and 3 percent. The problem, therefore, is to find means of stimulating renewed growth in demand which will absorb this growing labor force at rising levels of efficiency, for if demand does not rise above present levels we can be confident that in early 1955 unemployment will be higher.

Moving sidewise is not good enough, and that is the only interpretation one can rightfully give to today's headlines.

ILLEGAL TRANSPORTATION AND

EMPLOYMENT OF ALIENS

Mr. WATKINS. Mr. President, on Monday of next week the Subcommittee on Immigration and Nationality will open 3 days of hearings on S. 3660 and S. 3661.

I have prepared a statement with respect to these two bills, including some statistics on the number of illegal entrants and apprehensions, which I

should like to call to the attention of the Senate. I do not intend to make my statement at this time, but I ask unanimous consent that the statement I have prepared may be printed in the body of the RECORD at this point in my remarks.

There being no objection, the statement was ordered to be printed in the RECORD, as follows:

STATEMENT BY SENATOR WATKINS

On Monday of next week the Subcommittee on Immigration and Nationality will open 3 days of hearings on S. 3660 and S. 3661. These bills have acquired the title of "The Wetback Bills," and they have the effect of providing the Attorney General with much needed and, in my opinion, long overdue weapons which he has described as necessary in order to assist him in bringing to an end the continuing mass violations of our borders by aliens who enter the United States illegally in search of employment.

The first of these bills (S. 3660) would make it unlawful for any person to employ any alien when he has knowledge that the alien has not lawfully entered the country; the second (S. 3661) would authorize the seizure and forfeiture of any vehicle or vessel used in bringing in, landing, or transporting such aliens in violation of law.

It is a shocking fact that at a time when we are all concerned, and rightly so, with measures to protect our internal security, the borders of the United States are practically wide open to anyone who desires to enter the United States unlawfully. During 1953, there were over 1 million apprehensions of aliens illegally in the country, and for each apprehension it is conservatively estimated that at least 1 other border violation occurred without detection, meaning an average of over 5,000 border violations daily.

With the force available, the Immigration and Naturalization Service has done a good job, but the apprehension statistics, which I requested from the Department of Justice, demonstrate beyond dispute that the border patrol is fighting an uphill and ever enlarging battle.

I now insert at this point in the RECORD those statistics which show the steady increase in Mexican border apprehensions from 7,438 in 1940 to 899,294 in the first 11 months of this fiscal year 1954:

Border patrol apprehensions, Mexican border districts

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The Mexican border, where most violations occur, is over 2,000 miles long. At the present time the Attorney General has augmented the regularly assigned border patrol force in this area for a special drive against wetbacks. Ordinarily, however, the Immigration Service assigns approximately 750 men to guard this border, and at any one time there are no less than 200 men on duty. It is apparent that any program which relies solely on enforcement against the alien migrant to close this border effectively will be extremely costly and time consuming. The Attorney General believes, and I agree, that this border can be brought under control without a tre

mendously large increase in the appropriation if we proscribe those activities which most directly induce and encourage this mass migration.

Not all of the contributing factors to this wholesale invasion are within our control. For example, because of the economic disparity between the United States and Mexico, countless Mexicans cross the border illegally, eager to work at wages far below those that our domestic workers are willing to accept, and yet to the wetbacks far more than they can earn at home. In addition, while braceros may enter the United States pursuant to the International Agreement with Mexico, far more workers apply for admission than can be absorbed in the legal program. Many of those turned down come anyway.

However, some of the factors are exclusively within our control, and it is at these that the instant measures are aimed. Neither the International Agreement with Mexico nor the immigration and naturalization laws permit aliens to compete for employment with our domestic workers. They provide that employers who are unable to obtain sufficient domestic workers at the prevailing wage rates may apply to the Secretary of Labor for permission to secure alien agricultural workers. If the Secretary of Labor finds a domestic labor shortage in the area of employment and that the importation of alien labor will not adversely affect the prevailing wage rates, Mexican or other alien labor may be contracted to fill the shortage. In the case of Mexican agricultural workers, a special law applies and the contracts are under Government supervision and contain employment guaranties established by the Migrant Labor Agreement with Mexico.

Since the law does not license the indiscriminate employment of foreign laborers by any person, the legislation I am sponsoring does no more than (1) fill a gap by striking at those who knowingly exploit unauthorized sources of labor, and (2) add an additional workers to enter the United States in violadeterrent to those who actively assist such tion of law. The Attorney General, in his recent press release announcing his intention to seek legislation such as this, reported:

"Our experience has shown that these aliens are attracted to the United States pri

marily because they know they can obtain employment. Under present law it is not forbidden to employ these people, even though they are here illegally. While the alien runs the risk of fine and imprisonment, the volume of traffic is so great that it has been impossible to impose criminal sanctions except in cases of repeated and flagrant violations. Most are permitted to depart voluntarily.

"It is apparent that at present there is a need for additional deterrents to the continuThe proposal ing growth of this traffic. would strike this problem at its source by making the knowing employment of aliens illegally in the country and any payments to them for services rendered unlawful. It is self-evident that if jobs are not offered or available, most of these people would not seek illegal entry."

With respect to the need for legislation to permit the seizure of vehicles used in transporting such aliens, Mr. Brownell had this to say:

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"While section 1324 (a) (1) and (a) (2) of title 8, United States Code, makes transporting (such aliens) a felony, our experience has shown that the threat of criminal prosecution alone has not proven a sufficient deterrent to many persons who engage in this illegal activity. The principal but not exclusive target of this measure is the flourishing business of transporting aliens who migrate to this country illegally from Mexico in search of employment. In some cases, transportation starts in Mexico and ends at the prearranged place of employment. In most cases, however, the aliens are contacted in Mexico, directed to report

at a designated place in the United States, where they are met and transported by 'wildcat' taxicab drivers or illicit labor contractors to unscrupulous employers who have agreed in advance to employ these people.

"It is apparent that were it not for the assistance of illicit labor contractors who contact and provide the necessary transportation for alien workers to places of employment in violation of law, many aliens would not enter the United States illegally. Taking away their vehicles and vessels will effectively bring these illegal activities to a halt."

S. 3660, entitled "The Illegal Employment of Aliens Act of 1954," makes it unlawful and contrary to the public policy of the United States for any person to employ, or offer to employ, or continue to employ, or to pay or to cause to be paid any money or thing of value to any alien when the employer knows or has reasonable grounds to believe that the alien is an illegal entrant. The bill does not, however, impose criminal liability on every knowing employment of such aliens. In this respect, recognition is given to the fact that in times of emergency farmers and other employers do occasionally require and do employ all available workers no matter what the source.

For a single violation, the bill imposes no fine or penalty. It employs the injunctive processes, which in other areas have proven most effective as a means of compelling compliance with laws, such as this, which are primarily regulatory in nature. In a case of violation, the Attorney General is authorized to apply to a Federal district court for a restraining order, and upon a proper showing the court may enter a temporary or permanent injunction or other order. Only in a case of violation of a court order or, in other words, a second knowing violation of the law in the face of an injunction, could criminal contempt proceedings be instituted.

The bill not only prohibits employment of such aliens, but expressly prohibits all payments to them. This language serves a dual purpose. It will put the alien on notice that if he enters illegally and secures employment, and the employer discovers his illegal status, he can make no claim for wages. Making it unlawful to pay such aliens will remove the major inducement which initially causes them to seek unlawful entry. On the other hand, persons who continue to violate the law by knowingly employing and paying such aliens will bring themselves within the well-recognized rule of tax law that payments contrary to the public policy of the United States and prohibited may not be taken as "ordinary and necessary" business expenses for tax pur(See, e. g., Commissioner v. Heininger poses. (320 U. S. 467); Textile Mills Corp. v. Commissioner (314 U. S. 326).) In this respect the law would be no different from many other cases where payments which contravene public policy are disallowed, such as certain lobbying or advertising expenses or payments made to minors in violation of the Fair Labor Standards Act.

S. 3661, entitled the "Illegal Transportation of Aliens Act of 1954," is patterned after chapter 11, title 49, United States Code, entitled "Seizure and Forfeiture of Carriages Transporting, Etc., Contraband Articles," and the recent amendment to section 1 of title VI of the act of June 15, 1917 (40 Stat. 233, as amended), which authorizes the seizure of arms and ammunitions of war and the vehicles or vessels used in exporting or attempting to export them in violation of law. Public Law 264, 83d Cong., 1st sess., 67 Stat. 577.

Sections 2 and 3 contain well-supported findings of fact, a statement of the need for this measure, and definitions. Section 4 contains the seizure and forfeiture power and includes the normal safeguards in cases where common carriers may be involved or

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