4622 CONGRESSIONAL RECORD- HOUSE Mar ch 20

EX r ·E N S I 0 N S 0 F REMARKS Some Solid Facts on Imported Residual Comment. Actually, the real growth in now being used to haul it to markets for­ dependence on residual in New England, did merly considered immune, and further Fuel Oil not take place until cheap foreign oil be­ damage to the coal and railroad industries gan to come in in volume in the late 1940's. serving New England is threatened. In 1946, for instance, New England used only 3. The statement is made that the New EXTENSION OF REMARKS 30 m11lion barrels of residual, which pro­ England area "could never go back to coal, OF vided 24.6 percent of her competitive energy and must have increasing quantities of this requirementS. This was only about 9 mil­ product (residual) every year as its economy HON. ED EDMONDSON lion barrels more than was used in 1935. expands" (p. 3) . OF OKLAHOMA However, between 1946 and 1960, total re­ Comment. This statement is completely IN THE HOUSE OF REPRESENTATIVES sidual use increased to 71 million barrels, indefensible. New England could certainly and in that year it provided 31.1 percent of return to coal as a major fuel source, and Tuesday, March 20, 1962 her competitive energy. Coal, in the mean­ we are convinced that it eventually will have Mr. EDMONDSON. Mr. Speaker, it time, dropped from 54.7 percent of New Eng­ to do so. This switch could be made with is difficult to look objectively at any land's energy source in 1946 to 17.7 percent little impact on fuel costs, and it would in 1960. The big increase in that same pe­ surely be to the advantage of New England question involving an imported product riod came in distillate oils, largely used for in the long run since domestic coal is more which competes directly and often de­ home and commercial space heating and likely to remain a dependable, low cost and structively with an American product. which is not subject to the residual import stable fuel for New England in the future I am sure that my good friends from control program. Indeed, a very small than is imported residual oil. Certainly, if New England, who in the March 7 CoN­ amount of distillates is imported at all. Dis­ domestic coal and oil sources are dried up GRESSIONAL RECORD quoted liberally from tillates, as a proportion of the competitive because of imported residual competition, the New England Council on the sub­ fuel source for New England, increased from there would remain no check on residual 20.8 percent in 1946 to 42.4 percent in 1960. prices and they could be expected to soar ject of imported residual oil, would want In the same period gas increased from a neg­ to previously unreached levels. both the President and the Members of ligible amount to 8.8 percent. 4. Mr. Couzens challenges the use of the this body to look carefully at all aspects Note. In the same testimony Mr. Couzens term "dumped" to refer to imported residual of the import quota controversy. refers to the great loss of the home-heating and attempts to deny that it is "cheap" in I am equally sure that they are fa­ market by coal in New England, just as resid­ price by contending that it is not cheap at miliar with the testimony given by the ual oil appeared on the scene. This would the point of origin (p. 4). · New England council-through its fuels appear to suggest that the two are related. Comment. The price in Venezuela has committee chairman, Mr. ·. James S. Although opponents of residual controls been maintained, and thus that nation has have frequently attempted to confuse the suffered no cut in its revenue per barrel Couzens-before Subcommittee No.4 of facts by implying that residual controls af­ on residual shipped to the United States, the House Select Committee on Small fect the home-heating market, the fact is although the posted price there is consider­ Business, the chairman of which is the that residual is not used for such purposes ably lower than the U.S. domestic residual Honorable ToM STEED, of Oklahoma. and its price has no effect whatever on the price. However, the price for which foreign I am not so sure that they are familiar cost of home-heating oils. These are distil­ residual is sold within the United States has with the detailed and persuasive testi­ late oils, which are not imported· except in varied many times in recent years, practi­ mony of the Honorable PAT JENNINGS, negligible quantities. cally always being determined by what price our able colleague from Virginia, who 2. Mr. Couzens says that the conversion is necessary to capture the market, and this from coal to residual oil "has now progressed usually means, what price is necessary to appeared before the Steed subcommit­ to the point where the New England area is undercut coal. In the opinion of the do­ tee to answer, point by point, the testi­ almost completely dependent upon residual mestic fuels industries, who have seen their mony previously given by Mr. Couzens. oil. The economy could not survive with­ markets gradually whittled away by this Because it is a masterful refutation out it." predatory pricing practice, this method of of many points raised on this issue by This calls for two comments: disposing of a foreign product in American the New England Council and others First, if Mr. Couzens' statement is correct, trade channels constitutes "dumping." The who oppose these quotas, I believe it is in the threat of residual imports to national reference on page 5 to the ~ost of shipping the public interest to insert the full text security has indeed become critical. As he residual as against the cost of shipping coal of Congressman JENNINGS' statement in further points out, current residual demands is nothing but an obvious effort to confuse by New England can now be furnished only the issue. The only pertinent fact is the the RECORD, and am so doing. from foreign-oil sources. Virtually unlimit­ price at the point of consumption. It is also noteworthy that Chairman ed imports of cheaper foreign residual have 5. Reference is made to table I filed with STEED, at the conclusion of Congressman steadily dried up domestic production by Mr. Couzens' statement which reports the JENNINGS' statement, commented upon making it more and more unprofitable. results of public bidding by 15 public agen­ the great importance of the New Eng­ Thus, by his own testimony, it is clear that cies for residual oil in 1960. The conclusion land industrial complex, and further as­ a substantial portion of New England is now is that there was an increase of 25 cents serted: wholly dependent on a fuel source which in posted tank car prices, which affected would be closed in event of national emer­ their prices, from 1959 to 1960, and that No one yet has been able to make any sub­ gency, or political upheaval in major supply­ changes in the discounts allowed resulted in stantial showing that New England can hope ing areas. Certainly an those in Govern­ a weighted average cost increase to these 15 to get this fuel from these foreign sources ment concerned with defense procurement agencies of 48 cents per barrel between 1960 in time of emergency. and production planning must carefully note and 1961. Congressman JENNINGS' testimony fol­ this crucial situation, and bear it in mind Comment. The statement compares prices when allocating national defense contracts between 1959 and 1960, but significantly lows: which would have to be completed under fails to mention that 1959 was an extremely TESTIMONY OF CONGRESSMAN WILLIAM PAT conditions which might see a serious dis­ low price period, being considerably less JENNINGS BEFORE THE SUBCOMMITTEE No. ruption of the flow of foreign oil into that than the more normal year of 1958, for ex­ 4 OF THE HOUSE SELECT COMMITTEE To area. ample. According to the authoritative CONDUCT STUDY AND INVESTIGATION OF THE Second, although his warning is ample "Platt's Oil Price Handbook," the average of PROBLEMS OF SMALL BUSINESS COMMENT­ proof of the grave danger the Nation faces "lows and highs" for Boston tank car prices ING ON THE TESTIMONY OF MR. JAMES S. in its need to maintain essential production in the past 3 years have been: COUZENS, NEW ENGLAND COUNCIL under emergency conditions, it implies that 1958 ______$2.7138 The testimony of Mr. James S. Couzens, coal and natural gas are no longer important of the New England Council, before this fuels for any of New England's factories and 1959------2.5652 subcommittee on November 22, contains establishments. Actually, of course, residual 1960------2.6852 some rather surprising statements, which oil, despite its cheap dumped price, has Thus, the average posted 1960 prices was 12 must be examined more closely if we are to only usurped the market along the coast. cents (rather than 25 cents) higher than have a clear understanding of the impact of Inland, where residual is impossible or ex­ 1959, but 3 cents less than 1958. residual oil controls. tremely difficult to deliver, New England is In all such dJscussions of prices, however, Among them: still largely dependent on a healthy coal two basic facts must be kept in mind. First, 1. He states that residual oil appeared on industry for its industrial fuel. In the past, only the cargo price of imported residual re­ the New England scene "to 1·eplace bitumi­ the difficulty of delivery of this heavy flects import .prices and only an increase at nous coal for space heating, process steam, sludge-type oil has prevented its widespread this level, which has not occurred, would be and general use by industry" during the use in inland at·eas. However, new types of a true reflection of the impact of import twenties and thirties. specially heated and equipped trucks are controls; and, second, in any comparison of 1962 CONGRESSIONAL RECORD- HOUSE 4623 prices in recent years, it must be borne in ferent price differentials are quoted: 22 Y2 and were rejected. On a new request for mind that prices in 1959, particularly in the cents a barrel on posted price basis, 30Y2 bids, Mr. Dosse reported, they were able to late winter and early spring, were abnormally cents from "an investigation of price lists obta1n the 500,000 barrels at a price less low as a result of the tremendous infiux of of oil companies,'' and 41 cents as reported than $2.40 per barrel, which GSA considered imports which immediately preceded the by OEP. Then, by some strange ~easoning, reasonable, and the. contract was signed. It adoption of import limitations. Mr. Couzens takes the last quoted figure should be noted· that this is for oil delivered We have no way of knowing the accuracy (which, bear in mind, is for bunker C ship on a barge level basis, and not on a cargo of the statement that discounts decreased an fuel) and applies it to the price of residual level, which would be the only one to actu­ additional 23 cents, but if they did, the·re oil to four New England utilities, which he ally refiect any increase in import prices. again we find opponents of the oil import had already said were forced to pay 16 cents The wide variation of domestic prices­ program using a price change which is not a barrel more in the first quarter of 1961 which refiect distributor profits, transporta­ attributable to the controls in an effort to than in the same quarter of 1959. On this tion costs and other charges not connected discredit them. Changed discounts, delivery basis, he concludes that these four utilities with the price of the residual oil at oversea costs, profits and other factors making up paid $4 million more for 10 million barrels shipping points or to the cost of shipping­ sales prices used by importers and sellers of oil. He even translates this reported 41 is indicated by the range of bids to GSA, and after the oil has been delivered by tanker to cents difference in domestic and foreign the fact that the agency was able to purchase this country have no relationship to the im­ ships' bunkering oil prices to the total New its requirements at less than $2.40 per barrel port restrictions. Also, note that this dis­ England residual bill, and concludes that it after rejecting original bids of up to $2.90 cussion again falls back on what seems to be "places the present penalty on New England per barrel. an obvious attempt to confuse. It refers to for this program in the neighborhood of $28 10. An attempt is made to discount any a "posted price" increase of 25 cents between million annually." Thus is added a new interest domestic independent crude produc­ 1959 and 1960, then says that the additional figure to the $10 million, $20 million, and ers have in maintaining reasonable limits changes in discounts result in a weighted $375 million that have previously been used on residual imports. The following three average increase in cost of 48 cents between to "prove" damages to New England from statements, which were, of course, easily 1960 and 1961. It is not at all clear just residual import controls. Indeed, there available to Mr. Couzens in that they have what years are being used for comparison. seems to be no end to the variety of figures been previously published, completely con­ 6. Mr. Couzens again falls back. on a com­ that they use to prove import control dam­ tradict any such belief: parison of the cost of bunker C fuel oil for age. Just this week the United Press quoted Mr. James F. West, president, Texas Inde­ foreign ships' bunkering in U.S. ports with my esteemed colleague, Representative pendent Producers & Royalty Owners As­ the so-called world price (which any oil THOMAS J. LANE, of Massachusetts, as wiring sociation: expert will admit does not exist) in a further President Kennedy that present restrictions "Unlimited infiux of residual could seri­ attempt to show that the controls have un­ on residual imports cost New Englanders ously impair the economics of the entire duly increased U.S. prices (p. 6). more than $217 million this year, another domestic oil industry and could completely Comment. Previously, a large portion of new addition to the figure-juggling game. destroy that industry segment which is cur­ foreign ships bunkering in U.S. ports came 8. The statement is made that because of rently engaged in production of crudes from nonbonded stocks, or what is now the restrictions on one fuel, the price of competi~ adaptable primarily for residual fuel users." quota controlled areas. Since the control tive fuels "is bound to react," the inference Mr. George V. Meyers, executive vice pres­ program, however, this has largely shifted, being that the price of coal to New England ident, Standard Oil Co. of Indiana: · and most international bunkering is being has risen sharply. A general coal freight "We believe the continued control of re­ done from bonded stocks, in order to free rate increase of 7 cents per ton in 1960 is sidual imports is necessary in the interests the nonbonded to compete in the domestic even cited (last line, p. 7 and top of p. 8). of national security. * • • Unrestricted im­ U.S. market. Residual sold for ships bunk­ Comment. The 7-cent-per-ton increase ports would have an adverse effect upon the ering must compete pricewise with residual relative to the price of fuel in New England domestic oil industry." prices in other ports of call, and prices for is, of course, inconsequential, and added less Mr. Minor S. Jameson, Jr., executive vice crude and other petroleum products. For than 1 percent to the cost of coal to New president, Independent Petroleum Associa­ example, crude prices in the U.S. average England users. tion of America: about $1 per barrel higher than they do in As a matter of fact, coal prices to New "Reasonable limitations on imports of re­ most foreign markets. Also, bunker C prices England consumers have been declining dur­ sidual fuel oil serve the interest of national in different world ports vary widely, and ing the operation of the residual import security because unrestricted imports result obviously not because of U.S. import controls. control program. A study of fuel costs to in • * * reduced funds available for petro­ Platt's Oilgram Price Service reported Sep­ utilities along the east coast, taken from re­ leum exploration and development in the tember 28 that recent average f.o.b. prices ports to the Federal Power Commission, United States." paid by Japanese buyers of bunker C ranged shows that in every State except one the av­ These very clear and convincing comments from $2.20 at Los Angeles and Singapore to erage price of utility coal declined between on the importance of residual import limits $1.30 in the neutral zone,l $1.80 in Vene­ 1958 and 1960. to the domestic petroleum industry have zuela and $1.75 in the Persian Gulf. Thus, Examples: been backed up in the strongest manner by it is a fallacy to attempt to use the price a statement presented to this committee Qifferential for ships bunkering oil (with the Price per ton just this week by Mr. Alvin C. Hope, presi..: bonded price for foreign ships established by State dent of the Independent Petroleum Associa­ competition between sellers in U.S. and in 1958 1960 tion of America. His testimony was subse­ foreign ports) to prove any conclusions about quently endorsed by Mr. Jack M. Campbell, t]'.S. prices for .residual imported for use as secretary of the Haison committee of Co­ Connecticut_ ____ ----______---_--_ ;fuel domestically. $10.42 $9.71 operating Oil & Gas Association, speaking for Massachusetts __ ------­ 10.40 9. 55 7. The figures used to arrive at a pur­ Rhode Island._------11.95 10. 18 17 separate domestic oil and gas associations. ported increase in residual costs to four utili­ New JYorkersey ______------______-- _ 9. 56 9.37 11. Mr. Couzens states residual represents ties (p. 7) are really confusing. The 9.95 9.29 such a small part of the yield from domestic North Carolina ______8.05 7.23 .statement attempts to show that these utili­ Florida ______8.45 7. 41 refineries that it is "a little ridiculous" to ties, which use about 10 million barrels of assign a major role to residual as affecting residual per year, have had to pay some $4 the price of crude oil. million more annually for this fuel, to the 9. In another attempt to show that the Comment. Although domestic refineries detriment of their electric customers to control program has penalized consumers, have greatly reduced the amount of residual whom the added costs are passed on as rate Mr. Couzens declares that the General Serv­ oil remaining in a barrel of crude, to about increases, and this higher cost is blamed on ices Administration in Washington "was.un­ 11 percent on t he average, it does not follow controls on imports. · able to receive any bids for its fuel require­ that the revenue they receive from that Comment. This is a razzle-dazzle juggling ments for the coming heating season," and residual is not an important part of their of figures which is, to say t he least, mislead­ that "finally, after great pressure and plead­ profit situation, or that they would not pro­ ing. First, Mr. Couzens says that OEP ing" they were able to purchase 500,000 bar­ duce a higher percentage if the market had studies clearly show that between the first rels at $2.395. Citing a previous pur­ not been usurped by low-priced foreign quarter of 1959, just prior to import con­ chase of 600,000 barrels at an average cost residual. trols, and the first quarter of 1961, the cargo of $2.16, Mr. Couzens concludes that GSA In fact, Representative WALTER ROGERS of price of residual had increased 16 cents per thus paid a "penalty" of 23 cents a barrel Texas, in a speech before the recent session barrel to New England utilities (line . 8, "only because of the import restriction pro­ of Congress, stated that there are a great p. 6). Next, he says that the price for re­ gram on residual oil." many wells in Texas and Louisiana produc­ sidual "for re~;~ale" in New England increased Comment. GSA itself presents this picture ing low gravity crude which is suitable 30 cents a barrel between July 1959 and in a slightly different light. Mr. William primarily for residual fuel and asphalt March 1961 (from $1.97 to $2.27), and, final­ _Dosse, Chief of the Buying pivision of GSA's products. ly, he discusses at length the comparative region 3 in Washington, said Monday (Nov. In a speech on the House fioor in August, price for bonded and nonbonded bunker C 27.) that GSA had never .face.d any prob­ Representative RoGERS said that a spot check . ~u~l for ships' b:Unkering. H~re, three · dif- .lem .in obtaining the fuel it needed, but of more than 7,000 wells in Texas showed that the initial bids asking as high as $2 .90 ··that approximately one-fourth of them were 1 One qf the Middle East countries. per barrel were considered well out of line in this category. 4624 CONGRESSIONAL· RECORD -HOUSE March 20 Congressman RoGERS further stated: believe that if the oprogram is to be con­ mechanical equipment to make possible "Texas crude supplies a significant propor­ scientiously administered, any such revision lower production costs per ton of coal. Why tion of the Nation's residual supply, and in in the program would require substantial did the new markets not materialize? The 1960 Texas refineries yielded a total of 58.6 policing not now necessary." answer is that ·there occurred a dumping of million barrels of residual fuel. At the same 13. Mr. Couzens again brings up and dis­ competing fuels .at cutrate prices in coal's time, under the liberal residual import re­ cusses at some length the contention of the two remaining large and growing markets, striction now in effect, the import of resid­ New England Council that imported residual namely, t~e electric utility and general in­ ual oil into our own district III jumped from oil has not harmed the domestic coal indus­ dustrial markets. 3 million barrels in 1959 to more than 14 try, and that all the unemployment in the ''One of these competing fuels is natural million barrels in 1960." coal fields today is principally due to mecha­ gas when sold under interruptible contracts From the producer standpoint, every bar­ nization of the mines and not to residual · for large boiler use at prices usually set just rel of imported residual oil displaces a bar­ imports. In trying to prove this case, he also_ low enough to undercut the delivered price rel of domestic crude from which it other­ asserts that residual could have had little of coal. The other is imported residual oil, wise would have been made, or an equivalent effect on coal mine employment since "there· similarly dump priced, and thus enabled to amount of natural gas or coal. has been practically no increase in the use capture millions of tons of coal equivalent If residual quotas were removed, it could of residual in the last 10 years" (pp. 1Q-ll). markets o:-- the east coast and in New Eng­ only serve to further reduce the amount of Comment. The total volume of residual land which coal would otherwise supply," domestic crude produced each year. used in the United States has changed but Senator RANDOLPH's letter continued. 12. Mr. Couzens' testimony seems some­ little in the past 10 years, but the volume of "It is an unchallenged fact that every ton what naive when he says that "the only residual used in region 1 (the east coast, of coal replaced would have been produced serious and justifiable complaint the domes­ which is the only area appreciably affected by by an American miner, whatever the rate tic producers have in connection with resid­ residual imports) had increased from 208 of productivity at which he worked. To ual imports is that some of this oil might be million barrels in 1948 to 332 million barrels write, as did the editor of the Saturday used as a refinery stock," and then suggests in 1960. Thus, total consumption in this re­ Evening Post, that 'as is fairly plain to most that the remedy for this is to remove all gion increased by 124 million barrels during people, the thing which has cost jobs to residual controls. that 12-year period, although consumption miners is automation,' is to avoid other Comment. If residual legally imported to in the rest of the country was declining by truths and is to indulge in exaggeration and be used only as fuel is now finding its way an almost equal amount. Meantime imports oversimplification. into refinery feed stocks, it is difficult indeed into the east coast were increasing by 160 "Notwithstanding the employment figures to see how taking off all controls and letting mUlion barrels a year. It happens that the quoted in your editorial, the U.S. Bureau of in as many mlllion barrels of residual as east coast is the area in which imported re­ Mines estimates that the total number of importers want, with no system of controls sidual is so seriously damaging coal, and the men employed in the bituminous coal and whatever, would serve to halt such a practice. above figures on increases during the past 12 lignite mining industry declined from 228,635 Actually, of course, this is the serious area years speak for themselves. in 1957 (when productivity averaged 10.59 in which complete removal of residual· con­ As for Mr. Couzens' renewed attempt to tons per man-shift) to 169,400 in 1960 trols would jeopardize the crude control blame coal's unemployment problems on (when productivity increased to 13.25 tons). program. Mr. Elmer Bennett, who was Under mechanization, that has been most effec­ During this same period, total imports into Secretary of the Interior during the unsuc­ tively answered by Senator JENNINGS RAN­ the United States of foreign residual oil in­ cessful voluntary crude control program DOLPH in recent days. In a letter to the edi­ creased from 173 million barrels to 234 mil­ which preceded mandatory controls, and tor of the Saturday Evening Post answering lion barrels annually, according to Bureau during the first 22 months of the present an editorial which showed a surprising of Mines statistics. I have been unable to mandatory crude and residual programs, has lack of knowledge and contained a surprising find comparable Government reports on the recently disclosed the difficulties of prev.ent­ amount of misinformation on the import growth of dumped natural gas sales under ing evasions of the intent of the voluntary control program, Senator RANDOLPH did a interruptible contracts. A special study, crude import program through the use of masterful job of outlining just how residual however, by the American Gas Association residual and unfinished oils as refinery imports have contributed materially to coal of 17 pipeline companies and their custom­ industry unemployment. The Senator sent a ers showed that by 1959 slightly more than stocks. copy of this communication to President In a letter responding to a question from 50 percent of all their industrial sales were Kennedy, incidentally, and in his covering on an interruptible contract basis." Mr. Joseph E. Moody, president of the Na­ letter urged that no action be taken to elim­ tional Coal Policy Conference, Inc., Mr. (The AGA said that such sales totaled inate or materially change the quota system 2,645,917 million cubic feet, and this is equal, Bennett suggested that only a large scale as it related to crude and;or residual oil "be­ Federal police force inquiring into the day­ in total heating value, to approximately 100 fore competent committees of the Congress million tons of coal.) to-day details of oil refineries and admin­ have completed studies of these matters now istration could prevent serious diversion .of underway." · "The figures relating to coal mining deal residual to refinery feed stock if all import At this point I would like to quote the fol­ only with direct employment in the mines. controls on the latter were removed. This, of lowing pertinent section on coal mine un­ They do not include the thousands of men ~ourse, would quickly wreck the crude im­ employment from Senator RANDOLPH's letter who are employed as a result of the mecha­ port control program, and would just about to the magazine editor: nization of mines, namely, the men who wreck the domestic crude producing indus­ "To state or write that unemployment in must service the equipment above and be­ try. the coal industry is wholly attributable to low ground; those employed by the machin­ "No one doubts that nearly all the mem­ automation and does not result at least in -ery manufacturers (and here it is interest­ bers of the oil industry would comply with part from residual oil import competition ·ing to note that the largest payroll in the the letter and the spirit of the program and other considerations reflects a failure to New England State of New Hampshire is even if important derivatives were ex­ take into account all the facts inherent in that of a company manufacturing coal min­ empted," Mr. Bennett declared. "Neverthe­ the problem of unemployment in the coal­ ing equipment); the men who mine the less, only one 'bad apple' could taint the en­ producing regions. iron ore and those who process it into steel; tire industry, and vigorous policing would be "Certainly mechanization of the mines has and those in many other industries which necessary to avoid such an unfortunate oc­ resulted in the need for fewer workers to supply or depend upon coal. currence. I assume that an exemption for produce coal than before mechanical equip­ "Thus, it is not alone a question of em­ residual fuel oil would not apply to such oil ment was installed. But it has likewise been ployment in West Virginia and other coal imported for refining purposes. Yet who is a reason why the coal industry has been able mining States; rather, the problem involves to see to it that exempted fuel oil is not to hold its mine site prices relatively firm a question of employment in virtually all further processed through domestic refiner­ for the past 10 years and thus remain reason­ States. ies? I was advised that there is available ably competitive. · "It seems incredible to me, therefore, that evidence that partially refined crudes and "But greater productivity would have been anyone would seek to deny the fact that reconstituted crudes composed of residuals balanced by more market demands for coal predatory pricing on the part of (1) the pipe­ enriched with lighter ends were imported and total employment would not have been line distributors of natural gas and (2) 1m· as exempted materials, such as residual fuel severely affected by mine mechanization had porters of foreign residual oil has .destroyed oils, during the period of voluntary controls. it not been for two principal developments. thousands of jobs in the coal industry. It The competitive cost advantage of imported "The first stemmed from technological is unfortunate, unfair, and untrue to charge oils is so large that one must assume there progress which made inevitable the shift that all coal mining employment losses have will be a few who will seek to avoid controls from coal to other fuels by railroads, once been due to coal mine mechanization alone. over Imported crudes. In fairness to those coal's leading customer, and for space heat­ "Consider these facts, too: One ton of who comply with the program, I do not see ing in homes, apartments, and institutions. coal is equal in heating value, on the aver­ how elaborate policing can be avoided if These changes cost the coal industry mil­ age, to 4,162 barrels of residual oil. Thus, any major derivative such as residual fuel lions of tons of production and sales and the 234 million barrels of residual oil im­ oil is exempted from import limitations. reduced coal mine employment by thousands ported in 1960 were .equivalent to 56 million "It therefore follows that, in my personal of jobs. But they would have been offset .tons of coal, which at the present produc­ opinion, the success of the oll import con­ in large degree if the industry had been able tion level of 13.25 tons per man-day, equals trol program would be jeopardized if residual to realize expected new markets from the the displacement of 4.2 million man-days of fuel oil were exempted therefrom. I further investment of billions of dollars in modern labor in the mines. 1962 CONGRESSIONAL RECORD- HOUSE 4625 "It is not understandable how any editor, during the Passover Festival which com• replacement for blood plasma in Army mathematician, statistician, propagandist, memorates the exodus from Egypt by the medical installations. oil importer or-anyone else can arrive at any Jews and their freedom from slavery is a Before joining the U.S. Department conclusion other than that there is a major most important part of the observance and of Agriculture as a research chemist in foreign intrusion into the fuel markets of Jews have strictly observed this dietary rule the United States, a major part of which all through history. Jews have baked matz­ 1941, Dr. Jeanes held a fellowship from could be filled by American coal," Senator oth privately in Russia but this practice was the Corn Industries Foundation for work RANDOLPH declared. prohibited by your Government as a form of in the National Institutes of Health for 14. Finally, Mr. Chairman, I would like to private enterprise. This latest decision by 2 years. Prior to that she served for 5 conclude these comments on the testimony the Soviet affects one-half million Jews in years as head of the science department of the New England Council with a look at Moscow alone. I strongly protest this cruel of Athens, Ala., College and for 2 years a somewhat startling observation Mr. and vicious move by your Government. as instructor in chemistry at the Uni­ Couzens makes on page 12. In lt, he pre­ What lies behind the decision to prevent a versity of Illinois, where she earned her dicts that the eventual increased coal re­ people from obtaining the unleavened quirements by electric utilities in other por­ bread-matzoth-which they must have in Ph. D. Dr. Jeanes is a native of Waco, tions of the United states will (and I quote connection with their religious observance? Tex., and did her undergraduate work his filed testimony) "will more than offset a Surely, denying the Jewish people such a at Baylor University. complete loss of their entire market on the simple and staple commodity is uncalled for In presenting . the award to Dr. eastern seaboard." and can only be looked upon as one more Jeanes, Secretary of Ag-riculture Orville Mr. Chairman, I think the real objectives harassment and bitter blow inflicted upon Freeman said: of the New England Council are now quite the Jews in Russia. One can only assume plain for all to see. They are not just seek­ that the increasing reports of persecution of Scientists have been bringing honors to ing a free access to residual oil; they are Jews in the Soviet must be true. I urge the Department of Agriculture throughout actually looking to a "complete loss" of the that you do what you can to bring about a its history. entire coal market on the eastern seaboard. reversal of the order involved so that the Dr. Jeanes, we are particularly happy to I find it incredible that the New England Jews in your country will be permitted to have your work recognized during the De­ Council can honestly believe this catastrophe follow their religious traditions and ob­ partment's centennial year. It gives us an would work for the best interests of New servances. opportunity to recall that USDA was the England. Certainly, with coal eliminated first great public agency authorized to use as a competitive fuel and as a price bal­ I sent a copy of my telegram to Secre­ science to gain practical ends. Thus the ance to the cost of oil, there would be tary of State Rusk and urged that he Department has been a prime force back of nothing whatsoever to stabilize fuel prices to immediately issue a protest to the Soviet the scientific agriculture that has enriched New England's consumers, large and small. Union, in an effort to prevent this latest our national economy and contributed· to Not only would New England be completely blow against religious freedom. the health and well-being of people around dependent on foreign oil (which, you will the world. recall, Mr. Couzens testified she is already}, The Department's responsibility for re­ but also she would be completely at the search on food and other questions of con­ mercy of the oil importers for supplies and sumer interest has drawn a large number prices. Dr. Allene Jeanes Honored by of able women scientists to our laboratories. Under such conditions, if the international Dr. Jeanes, you and other women scien­ oil companies decided to raise the price of Department of Agriculture tists in the Department, have made it quite imported residual oil sold in New England to clear tnat the ability to excel in the quest $3 a barrel, $4 a barrel or even more, there EXTENSION OF REMARKS for knowledge is a quality of the individua~. would be absolutely nothing New England's OF Your own record is distinguished by the fuel consumers could do but pay it or shut courage, dedication, and high competence down their plants and heating equipment. HON. ROBERT H. . MICHEL that mark the outstanding scientist in every Mr. Chairman, the complete loss of the OF ILLINOIS field. east coast market by the U.S. coal industry could be of benefit to no one except the few IN THE HOUSE OF REPRESENTATIVES Mr. Speaker, in conclusion, I am ex­ tremely gratified to point up Dr. Jeanes' big oil importers to whom it would give a Tuesday, March 20, 1962 stranglehold .on the fuel market and on the scientific accomplishments and very economy. Mr. MICHEL. Mr. Speaker, Dr. Al­ proud to claim her as one of my con­ If Mr. Couzens really intends to suggest lene R. Jeanes, one of the six honorees stituents. what his statement implies that coal should at the Federal Women's Award dinner, be willing to give up its entire east coast February 27, has no measure of the num·­ market, it raises a real question of for whom does the New England Council speak. ber of lives saved by . the research of Foreign Fellowships for Medical which she is a leader. The number Students surely runs into thousands. Her con­ tribution is dextran, a chemical replace­ EXTENSION OF REMARKS Russia Deals · Another Blow Against ment for blood plas~a. Dr. Jeanes is a chemist in the North­ OF Religious Freedom ern Utilization Research and Develop.:. HON. JAMES ROOSEVELT ment Division of the U.S. Department of OF CALIFORNIA EXTENSION OF REMARKS Agriculture, Peoria, Ill. She conducts OF research in carbohydrate chemistry IN THE HOUSE OF REPRESENTATIVES HON. JACOB H. GILBERT · leading to new industrial and medical Tuesday, March 20, 1962 uses for starches and sugars derived from Mr. ROOSEVELT. Mr. Speaker, an OF NEW YORK cereal grains. · increasing amount of attention is be­ IN THE HOUSE OF REPRESENTATIVES The path by which Dr. Jeanes ing paid by the public today to person­ Tuesday, March 20, 1962 achieved international recognition began to-person relationships between our citi­ in 1943, when she was assigned to study zens and those of other countries. For Mr. GILBERT. Mr. Speaker, I am the nature of dextrans, gummy carbo­ shocked and dismayed over the latest this reason I was particularly interested hydrates formed in sucrose by bacterial to learn the details of the foreign fel­ Soviet move in its current campaign of action. She then devised a rapid and persecution against Jews in Russia-the lowships program administered by the reliable technique for identifying and Association of. American Medical Col­ denial of matzoth~ which prevents the characterizing dextrans. Jewish people from carrying out their leges through a grant from Smith Kline In 1950 when this country faced a & French Laboratories of Philadelphia, traditional Passover observance. critical need for blood plasma during the I sent a telegram, today, to Soviet Am­ and I believe my colleagues will also find Korean conflict, Dr. Jeanes pointed out this information of interest. bass~dor Anatoly F. Dobrynin which that dextrans might be used to replace In the 3 years since Smith Kline & reads as follows: or extend blood plasma. French Laboratories originated its pro­ According to an article which appeared in She led the research team of 50 bac­ gram, 92 American medical students the press the Chief Rabbi of Moscow has told his congregation that no matzoth would be teriologists, biochemists, and engineers have received Smith Kline & French fel­ available from: the state pperated bakeries that developed dextran as a blood plasma lowships under which senior medical stu­ ·this year. Matzoth is the Jews' tradition~! replacement. The success of the re­ dents visit remote areas of the world for unleavened bread; eating of unraised bread search led to ~he use of dextran as a a minimum of 10 weeks of work and 4626 CONGRESSIONAL RECORD -HOUSE March 20 study. They learn how medicine is prac­ 'by a ,Lieutenant Fitzgerald, who accompanied I do not know exactly how SBA got into me, that they knew an American Congress­ the act. I have been concerned with this ticed in cultures greatly different from man was coming and were prepared for us. problem since early 1959 and I have found our own, they study diseases not com­ The loudspeaker began to blare out from an no groundswell of clamor for Federal help mon in the United States, and they gain adjoining area with a sharp and long tirade from contractors, small or large. SBA by its firsthand experience as to the acute ne~d in English against the United States, calling own admission has polled only 976 of the for medical knowledge in distant lands. us warmongers and worse. After about 10 nearly half m111ion contractors in this coun­ In addition, they serve as informal good:­ minutes of this, they put on a musical record try. Only 401 of the 7,300 members of AGC will ambassadors for the United States. of a famous American song, and one which I have been polled. This seems a very minute The fellowships are, of course, confined thought was particularly appropriate since I figure upon which to base a Federal control had just seen the great wall dividing East program. to the medical field, for Smith Kline & and West Berlin. The song-"Don't Fence SBA did enter the field, though, in the French Laboratories believe that medi­ Me In." ·mid-fifties. Its :flrst effort was canceled cine in all its aspects presents one of the - Now, I don't want to leave the impression by the Comptroller General who sti11 holds best possible avenues toward increased ·that there is any connection whatsoever to your old-fashioned belief that contracts understanding among nations. between what happened there and what I should be advertised and then let only with There is no doubt that all concerned am going to discuss today. But I was re­ open, free and competitive bidding. benefit immeasurably from this unusual minded about this incident because I know But SBA kept working and included re­ that you people in the construction industry pair, maintenance and construction in the clinical experience. "don't want to be fenced in" either. 1958 Smalf Business Act. This, incidentally, And today I am going to talk to you about was a parenthetical insertion. · a fellow who wants to be big brother to SBA then called a hearing to enlarge its all of you. And in the process, he's going authority and issue new regulations. The Address of Hon. Phil Weaver to build a fence around your industry, and hearing lasted 20 minutes and only one con­ one we'll find hard to break down. tractor showed up. The lack of interest was This big brother wants to lead you by the ·unfortunate but it can be traced to the EXTENSION OF REMARKS hand across the river and into the Promised fact that, up until then, SBA had been talk­ OF Land. In this Nirvana of Government sub­ ing only in terms of contracts for $50,000 or sidy and support, you don't even have to less. Based on this brief hearing, SBA HON. MELVIN R. LAIRD tend the store. Big brother will mind your ·jumped this figure from $50,000 to $500,000 OF WISCONSIN business for you. Of course you'll pay !or as automatically being set aside. IN THE HOUSE OF REPREjSENTATIVES it-with more than cash-but it ought to be At this point, early in 1959, I entered the fun while it lasts. picture. I protested to the Secreary of De­ Tuesday, March 20, 1962 Other than tax dollars, the only thing fense and SBA. The Secretary heeded the Mr. LAIRD. Mr. Speaker, our col­ big brother wants is your right to grow advice of his construction experts and in and expand. You will have to deed over July 1959, tossed the program out. league, the gentleman from Nebraska, But bureaucrats don't take· defeat that PHIL WEAVER, has for the past 3 years to him your birthright and your heritage. In return you will be assured of Government easily. They tried again, only this time they or more been studying the growing jobs and you will be shaded from the heat approached their hand-picked men who were threat to the construction industry and of competition by an umbrella of Govern­ acting as "small business advisers" to the the American taxpayers of increased ment subsidy. Secretary. controls in the construction field. These This big brother, :r;>tterned after the I have talked -with one of these men and I controls are exerted by the Small Busi­ character of George Orwell's novel, "1984," found him totally and blissfully ignorant of is the Small Business Administration in construction. He couldn't even understand ness Administration and involve the that there are such items as weather and setting aside of contracts for exclusive Washington. Only this month, SBA issued soil conditions to be considered. I asked bidding by small contractors. a new leaflet outlining their plans for you, your industry and your future. this man why, if his program of set-asides Mr. WEAVER has become known as an was so good, such men as General Itschner Let's look at what "Big Brother" is offer­ and Admiral Peltier were so opposed to it. outstanding authority on the subject and ing, and here I quote directly from that as such was invited to address the annual His reply startled me. He told me simply, leaflet: "They don't have a social conscience." convention of the Associated General "The SBA will guide you in presenting Here was a man whose obligation was Contractors of America at Los Angeles, your qualifications to contracting agencies, to help create quickly, · effectively and effi­ on February 28, 1962. I have received help you prepare bids and assist you with ciently a strong national defense through a copy of that address and feel that it any questions you may have concerning military base construction. He also owed is well worth the time it would take for provisions of contracts or with any problems the taxpayers at least the courtesy of trying you may have in obtaining related draWings to do this economically. But instead, his our colleagues to read and analyze. The and specifications. The agency can ·also address follows: main concern was for a social conscience. guide you in such matters as job scheduling With this kind of man to guide him, the ADDRESS OF HON. PHIL WEAVER OF NEBRASKA and help you locate qualified subcontractors Secretary gave in, and in the summer of Mr. Chairman, distinguished guests, my and sources of materials and equipment." 1960, set-asides were back. Almost at once colleagues in the House of Representatives SBA also says it will provide management some far-fetched thing began to happen. who are here today, and members of your services and technical advice if you don't You know about the Sheppard Air Force organization, it is a real pleasure for me to know how to run your construction :flrm Base Hospital, a $4¥2 million job. A legiti­ be present and address this group. As you after you get a contract. And if SBA's men mate small contractor bid low, but was know, I am from Nebraska and serve on the fall fiat, "Big Brother" is handy with a knocked out on the basis of technicalities House Appropriations Committee. It was my checkbook to bail you out. and was declared not responsive because of privilege last fall during the course of defense If the Corps of Engineers questions a con­ size. Regardless of the merits of this ruling subcommittee work, to visit and inspect tractor's responsibility or reliability or or whether he was big or small, one grim some of our troop units in Germany as well ethical standards, he can run to SBA and get fact remains-that little bureaucrat's whim as some of our other Western European bases. a certificate of competency-and a bureau­ cost the American taxpayers-you people After all, as our committee chairman, GEORGE crat's whim overrules the sound and careful here-$165,000, or a waste of 15 percent. MAHON, of Texas, says, "We have to know practices of experienced contracting omcers. There's the Norfolk, Va., dredging case where what is being done with the money we handle All this may sound pretty. But let's ex­ a big outfit bid $1.09 per cubic yard, but was in various appropriation bills and we want amine it further. declared not responsive. A small firm got it, to do what we can toward providing the best SBA defines a small construction firm as for $2 per cubic yard. That deal cost you possible defense programs for the United one independently owned, not dominant in $7,280, or a waste of 83 percent. States." its field and one which did less than $5 Despite this kind of evidence, SBA says In this connection, rd like to say with million worth of work over a 3-year period it just doesn't happen. And yet, based on pride that the men and women in our on the average. experience and sound judgment, and years defense units are topnotch people. They I'd like to say here that there is no single of construction field work, the Corps of Engi­ are dedicated and skilled. You can be abso­ :flrm, or group of firms, which dominate con­ neers tells me it will cost in excess of 10 lutely assured our Nation's defense is in good struction. There are no Du Ponts in this percent additional each year. A conserva­ hands, from the privates to the top com­ industry. Not a month goes by but what a tive estimate is that it will coBt us $160 mil­ manders. big firm loses out on a contract award to a lion annually. At any rate, while in Berlin, I went over to much smaller firm. Every big fellow knows The very people SBA is supposed to help, the eastern sector to visit the Garden of Re­ that on every job he is competing not only find themselves in a pretty weird situation membrance. The Russians there have a with other big firms but with every other too. There was one small contractor in beautifully set up arena banked with flowers contractor in the Nation. That's the way Washington, D.C. He bid on a job at Dulles and shrubbery where many Russian soldiers this business grew, before SBA imposed its International Airport and won the contract. who died in the attack on Berlin are burled. ~ontrols, and that's the way it still wants to The award was protested and it took him 90 This is to honor their war dead. I was told operate today. good-weather days of legal wrangling, and 1962 CONGRESSIONAL RECORD- HOUSE 4627 a good deal of expense, to convince SBA he •28,36.6",2:16_ The second set of figures showed portant need for the residents not only was really small. A week later another award. that as of June 30, 1961, there were 78 bor­ of Quincy but of several neighboring was made to this firm, and again SBA rowers delinquent in excess of 6o days, an­ knocked it out. Having just· adinitted the other 59 loans in the process of-liquidation, communities. south of Boston. firm was small. SBA reversed itself; and the­ for a total of 137 or over 17 percent of all The Quincy Patriot Ledger has lived net loss to the taxpayers was $192,000. construction business loans made. Total un­ up to the fundamental goals of a news:_ There was a case in my congressional dis­ paid balance was $4,282,223, or 14 percent of paper: it has labored diligently to dis­ trict in Nebraska. The Stewart Construc­ the face value of the original loans. .Any seminate fairly the news of our com­ tion Co., of Lincoln, bid low-at about commercial bank or bonding company with munities, our Nation and the world. $400,000 on a dam project. The next lP.W this kind of record would go broke. lnci~ While many newspapers throughout bid was $465,000. "I:he second bidder pro­ dentally, there are copies of these figures tested and SBA's original ruling was against available for you. the United States of similar circulation Stewart. Their grounds were that a inan - I am wondering if these figures· don't pro­ have. been threatened with failure m of some means in Lincoln had invested some vide for us the real clue, the real reason, why have go-ne under in the last decade, I am money in both Stewart and in a big, un­ SBA is attempting to tak.e control ot the happy to report that the Quincy Patriot related company. He was not major1ty construction industry and become big Ledger is enjoying good health. This is stockholder of either firm. But. SBA de­ brother to all of you.. I believe someone in due, I am red to believe, in no small de­ cided in its infinite wisdom that Stewart SBA took. a look at the bad balance sheet gree, to the fact that the Quincy Patriot was an affiliate of the larger firm. That's and decided to do something to hedge these Ledger has always tried to be a · good like saying that if you invest in Joe Jones' poor-risk loans. They wanted to make sure little machine shop down the street and also they looked good to Congress and could con­ newspaper. in General Motors, then Joe and G.M. have tinue to build and expand their empire and Steeped in the history of our land as become affiliates, and that Joe Jones can their power. So 'they initiated the set-aside Quincy and neighboring communities no longer qualify as small business. program to insure the loans. are, the Quincy Patriot Ledger has al­ Stewart finally won. But it took their at­ I would like to reiterate several points I ways demonstrated a keen awareness. of torney two expensive trips from Lincoln to have touched on today. the problems America faces. It has Washington and 2 months of good-weather First, SBA now is concerned with ~mall never neglected-but rather has spoken time to fight the case. There has been a re­ contractors. I want you to think a bit about out forcibly as well on-the many local sultant and perhaps costly delay in the what the future may hold-it may well be project. that tomorrow SBA will replace this with issues affecting the lives and welfare of The SBA hearing on Stewart's appeal was concern for the teeny-weeny contractors. the residents of its communities. closed to the press. It soon became appar­ Second, SBA is creating for you artificial I would like to cite particularly the ent why this secrecy was invoked. Stewart's competition, financed b-y G<>-vernment anniversary issue itself which contained lawyer had uncovered the fact that SBA has money, supported by Government subsidies, many outstanding articles of lasting sig­ two sets of rules by which your companies, and protected by a new set of Government nificance. There was a history of the your industry, and your life are being run. controls. South Shore, by Physician-Historian One set is open, published in the Federal In this connection I'd like to point out Henry F. Howe, that was truly a master­ Register. The other set is secret and how easy it would be for anybody to enter known only to SBA personnel. This secret the construction fie:d to compete with you piece. It touched on the events of im­ set of rules, called SBA-400, Policy Manual, under this program. I have a brother in the portance in the district from the pre­ was not open for your inspection. In short, insurance business in Lincoln. If my colonial days to the present and must you enter the game with only the referee brother suddenly decided he'd like to become have been extremely valuable to high knowing the rules. You don't know whether a construction contractor-believe me, he school and college studehts because it you've stepped out of bounds or have sent has no experience in that field-all he has certainly was exciting for those of us an 11legal receiver downfield until after the to do is form a corporation, get turned down whose classroom days are a little bit be­ fact. You can only guess that there are such by the local banks, and then apply to SBA things as boundaries and illegal receivers. for a loan. He'd be in business. hind us . . It is, of course, obvious. that an You are bound by a set of secret rules and Third, under this size-ceillng subsidy American cannot be proficient in the it's going to cost you a lot of time and money program, I'd caution you to ms.ke no plans knowledge of his own land unless he is to find out when, where, and how you've vio­ for expansion. If you do expand, SBA will familiar with the history of the South lated. them. make sure you won't get any further Gov­ Shore communities in the Common­ Not content with this power to control ernment jobs, and you'll be cut back to wealth of Massachusetts. And, Mr. you and your industry, SBA came .back last size. Speaker, the section in the special year and won power to interfere between you The only cure for this is through legisla­ edition that was devoted to the press-­ and your subcontractors. I'm not going to tion. There are already bills in both the dwell on this, but if you haven't read the House and Senate to provide this relief. pational and worldwide-would buoy new rules and examined the new situation, My suggestion to you is that you write to the spirit of any skeptic who feels that you are in for a rude shock. I'm sure Biil your Congressman or Senator. If you're in ~he days of true journalism are past. Dunn and others here wlll be talking about Washington, talk to him about it. If he The many articles in that section pro­ this problem in much more detail with you vi$its home, buttonhole him. Tell YQUr vided .us with a. clearer understand­ during this convention. story. Tell it often. Speak out strongly. ing of the problems of the press itself If you don't-if no action is taken, I can I'd like to address myself to one other J:~,nd how the leaders in journalism are point. We've already seen that this. SBA assure you, the construction industry is striving to sunnount them. program is costly and wasteful. we•ve seen digging its own grave. that the people it is supposed to help can International contributors included: find no help from SBA in too many cases. John W. K. Dumoga, foreign news editor Now we come to another matter. In a press of the Daily Graphic in Accra, Ghana; release dated January 31, 1962, SBA states, Patriot Ledger 125th Anniversary Edi­ Eljas Erkko, publisher of the Helsingen in part, and I quote: Sanomat, Helsinki, Finland; Dr. Alberto "It is noted that as of December 31, 1961, tion, Januuy 6, 1962, Quiacy, Mass .. Gainza Paz, proprietor and director of only $4,789,000 have been charged off against La Prensa, Buenos Aires, Argentina; all business loans made by SBA since the in­ EXTENSION OF REMARKS Frank Moraes, editor of the Bombay ception or the financial assistance program. Dr. This figure represents about one-half of 1 OF Express, Bombay, India; Urs percent of the $909,970,000 disbursed as ioans Schwarz, editor of the Neue Zurcher to small business." · HON. JAMES A.. BURKE Zeitung, Zurich, Switzerland, and Don­ · What are the real facts, as they affect con­ OF MASSACHUSETTS ald Tyerman, editor of the Economist, struction? Well,· last sUm.mer I asked SBA IN THE HOUSE OF REPRESENTATIVES London, England. Edward W. Barrett, two questions: How many construction loans Tuesday. March 20. 1962 dean of Columbia University Graduate they had made, and how many were delin­ Sehool of Journalism; Barry Bingham~ quent in excess of 60 days or were in the Mr. BURKE of Massachusetts. Mr. president of the Louisville Times and the process of liquidation. I chose the 60-day Speaker, it is indeed an honor for me to Louisville Courier-Journal; Melvin Berg­ delinquency figure on the advice of experts call to the attention of the Members of heim, program officer of the Govern­ from the General Accounting Office who said that any loan delinquent that -long was a your House a milestone recently mental Affairs Institute; Herbert Bruck­ bad one. achieved by a great newspaper in the er, editorial page editor of the Hartford On September 18, 1961, I received a reply Commonwealth of Massachusetts. Courant, and Dr. Vannevar Bush, noted from SBA Administrator John Horne. He The Quincy Patriot Ledger has just scientist; Erwin D. Canham, editor of enclosed two sets of figures. One sheet celebrated its 125th birthday, and in the the Christian Science Monitor; J. Mont... showed that as of June- 30, 1961, there were many years of its publication, it has gomery Curtis, director of the American 774 construction company loans, totaling served a noble purpose and met an 1m- Press Institute; Louis Lyons, curator of CVIII--292 '4628 CONGRESSIONAL RECORD- HOUSE March 20 the Nieman Foundati'on at Harvard nation of all nations." This· line has overlords, the more these sturdy people University; Ralph McGill, editor of the been followed by his Red disciples who clung to their ethnic and national ideals Atlantic Constitution, and Michael J. have viewed · the aspirations of racial and longed for the day of their inde­ Ogden, executive managing editor of and national groups as convenient tinder pendence. Finally, this came about in the Providence Journal and the Provi­ for lighting the fires of international 1918, w.hen the czarist regime in Russia dence Bulletin. revolution-but not as factors to be con­ was overthrown. On March 25 of that Two distinguished members of the sidered in the treatment by the Soviet year the Byelorussian National Republic faculty of Harvard University contrib­ Government of the peoples under its own was proclaimed, with its capital at Minsk. uted an entire section on "Planning the domination. The independence of Byelorussia was rec­ South Shore's Future." The findings If the Byelorussian people were given ognized by the governments of several 'and . recommendations of Profs. Reg­ the right of self-determination pro­ countries, and it looked as if the new inald Isaac and Francois C. Vigler will claimed by Lenin, I wonder if they would state was on its way to full sovereignty be an immense help to the local, State, elect to stay within the Union of Soviet in historic Byelorussia. Unfortunately and Federal officials who are constantly Socialist Republics? There is much the independence thus proclaimed did concerned with the intelligent planning evidence indicating that they would not. not last long. Russian Communists at­ of our public and private services to The Soviet Republic of Byelorussia is tacked it early in 1921, the country was meet the needs of an expanding and inhabited by some 10 million White Rus­ overrun by March o: that year, and the more mobile population. sians, different in many respects from Byelorussian independence vanished. The Quincy Patriot Ledger knows the their compatriots in other parts of the Since then more than 10 million Byelo­ history of the South Shore; it knows Soviet Union. The central government russians are living under the oppressive what must be done in this modern has sought by every means to wipe out Soviet totalitarian regime. During all world; and it is prepared to contribute the differences in language, culture, and that time they have suffered under in­ what journalism so ably can contribute tradition which distinguish these peoples describable conditions, and have lost to the welfare of our citizens. And so, from their fellow citizens. nearly all their worldly possessions. But as it continues its daily service, we wish The Soviet Government argued in 1945 they have not abandoned their ultimate it success because we realize how vital that all the Soviet republics should have goal for freedom and independence. it is to the retention of our liberties seats in the United Nations General As­ There in their historic homeland, while that we have a free and energetic press. sembly. It succeeded in obtaining seats working hard under the almost unbear­ for both the Ukraine and Byelorussia. able Soviet system, they ardently look If they, themselves, maintain that Byelo­ forward to the day of their liberation russia is a truly independent, sovereign and freedom. On this 44th anniversary Byelorussian Independence Day state-and this is the criterion for a seat of their independence day let us all hope in the U.N. General Assembly-then for the freedom of the Byelorussian EXTENSION OF REMARKS they should allow Byelorussia to be inde­ people from Communist totalitarian OF pendent. If Byelorussia is not sovereign tyranny. and independent-and we all know that HON. SEYMOUR HALPERN it is no~then it should not have a seat OF NEW YORK in the U.N. General Assembly. IN THE HOUSE OF REPRESENTATIVES We can hope that the self-determina­ Student Hostility Tuesday, March 20, 1962 tion of peoples will some day become a universal reality-in 'jhe Soviet Empire EXTENSION OF REMARKS Mr. HALPERN. Mr. Speaker, this as well as in other parts of the world. OF Sunday, March 25, is the 44th anni­ versary of the proclamation of independ­ HON. WAYNE L. HAYS ence of the Byelorussian Democratic Re­ OF OHIO public. This nation, populated by one Byelorussian Independence Day IN THE HOUSE OF REPRESENTATIVES of the oldest Slavic peoples, remained Tuesday, March 20, 1962 free and independent for a short 3-year EXTENSION OF REMARKS period before _it was overrun by the Mr. HAYS. Mr. Speaker, under leave trampling boots of the Soviet Red Army OF to extend my remarks in the RECORD, in 1921. HON. DANIEL J. FLOOD I include an excerpt from the Presi­ We in the free world should never dent's press conference on February OF PENNSYLVANIA 21 concerning foreign students. There permit these brave, albeit enslaved, peo­ IN THE HOUSE OF REPRESENTATIVES ple to think that their plight has been is no better way to eliminate the root forgotten. Especially at this time of the Tuesday, March 20, 1962 causes of foreign student hostility to­ year, when the Byelorussian counterpart Mr. FLOOD. Mr. Speaker, the Byelo­ ward the United States than by bringing to our July Fourth approaches, it is im­ russians are one of the smaller and less key student leaders here to see for them­ portant that we take time out to note known of Slavic peoples. This is partly selves what America is really like and by this event. sending our best graduate students and because they have always been inter­ professors to foreign universities to in­ Ever since 1918 when the Byelorus­ mingled with more numerous and pow­ terpret our society accurately to their sians became an independent nation fol­ erful other Slavic peoples, and partly students and faculties. lowing the collapse of czarist domina­ because for centuries they have been sub­ tion, the tiny nation has been riding jected to the oppressive yoke of foreign­ Since 1949-50 the number of foreign a politically rocky road. Its short-lived ers. For centuries their far more power­ countries served by our exchange pro­ independence ended with a Soviet prom­ ful neighbors, the Russians, have done grams has nearly trebled, whereas the ise of greater things, but what developed all in their power to subdue them and number of exchange grantees has less was more than four decades of oppres­ assimilate them, while trying to repre­ than doubled. In short, our exchange sion, degradation, and complete denial of sent them to the world as Russians. But program at present budget levels is self-determination. history shows that the Byelorussians­ spread. so thin over vast and critically Mr. Speaker, as we look briefly at the the White Russians, or Ruthenians, as important areas of Africa, Latin America, history of these valiant people, we in the they are sometimes called-formed a dis­ and Asia that we are failing to grasp ex­ u.s. Congress should take this oppor­ tinct national group in their homeland, ceedingly important 0pportunities to im- tunity to hope and pray that somedaY­ east of Poland and west of Moscow, long prove America's position in the world. we hope soon-Byelorussia can once before the formation of the modern Rus­ It would be the height of folly for our again join with other nations of the sian state. Since that event, early in Nation not to make the modest extra in­ world as a free and independent modern times, Byelorussia became part vestment to do the job right. With the member. of the .Russian Empire. Fulbright-Hays Act as our base and with As far back as 1914, V. I. Lenin, found­ The autocracy of czarist Russia could the budget the President has asked for, er of modern international communism, not eliminate the Byelorussians as an we can make rapid new gains on this held out to subject peoples the promise ethnic group. The more the Byelorus­ fron'tier of foreign relations in the next to uphold "the full right to self-determi- sians were oppressed by their Russian year. 1962 CONGRESSIONAL RECORD- HOUSE 4629 The excerpt follows: statement reflecting the party's policies from public debt receipts which bypass STUDENT HoSTILrrY &n major issues confronting our Nation. the constitutional appropriation proce­ Question. Mr. President, the Attorney In this connection. the committee in­ dure. General, your brother, sir, has encountered'. vited counsel and advice from Repub­ Twelfth. Oppose foreign aid to any evidence CJ! a certain- amount of hoatllity lican Members of the House of Repre­ nation supplying strategic goods includ­ from student groups in various countries. sentatives, including myself. ing agricultural products to Sino-Soviet Inasmuch as this has. happened be!ore with I was happy to· respond and it occurs nations including Cuba. other American visitors in the past adminis.­ to me that Republican leaders in the Tbirteenth. Oppose foreign aid to any tration, have you given any thought to what State of Washington and the citizens in foreign country which unfairly and ca­ it is about us that students in particular the First Congressional District, which priciously seizes property owned by seem to resent? Answer. One of the reasons that I was I represent~ have a right to know my American citizens. anxious to have the Attorney General make personal views. Therefore, I am making Fourteenth. Oppose Federal subsidies the trip was because of this very rather- curi­ my recommendations public. in any Government program not related ous factor, because you would feel that stu­ It will be obvious from the list of sug­ to national defense. dents who are intellectually curious would gestions which I have made to the com­ Fifteenth. Oppose further encroach­ be attracted by- a. free society which gives mittee. and which follow, that these ment of the Federal Government into that intellectual curiosity a chance to de­ policies and views of mine differ sharply those areas of responsibility guaranteed velop rather than a totalitarian society. from the policies and opinions of the to the several States under the Constitu­ Therefore, as you know, in the Attorney present administration and the majority tion. General's schedule on nearly every occasion he has spoken at colleges and universities. of the Democrats in the Congress. On SO I am sure he will have some views of the other hand, as I have pointed out to that. What has also interested me is the the committee, they offer a positive and Operation Amigo-Democraey in Action stereotype of the United States. It is a view constructive base on which to formulate of the United States almost 50 years old. alternatives to the Kennedy program EXTENSION OF REMARKS There is no doubt that it is Marxist under our two-party system: OJ' oriented, and even in those cases where they First. Support a firm foreign policy may not be Communist, there are many ex­ HON. DANTE B. FASCELL planations for it. with respect to the international com­ In the first place these were colonial areas. munistic movement based on winning OF FLORmA They were held under subjugation in many the cold war. · IN THE HOUSE OF REPRESENTATIVES cases by Western powers. The road to revolt Second. Support a strong domestic was in many cases because the Communists policy within the framework of the Tuesday, March 20, 1962 were most active. They dominated the Constitution that will protect every Mr. FASCELL. Mr. Speaker, Mayor thinking. I don't think that the students American against loss of individual free­ Robert King High, of Miami, Fla., has have caught up with the tremendous changes asked me to relate to the Nation the sue­ which have taken place in the United States dom through socialism and the welfare in the last 50 years, or with the fallacies in state. cess story of Operation Amigo. I am in­ the Marxist system which have become obvi­ Third. Support a Federal fiscal policy deed honored to be able to speak of this ous in the last 20 years. based on no further peacetime increases fine operation in understanding to my In addition, I don't think we are able to in the national debt ceiling and includ­ colleagues. emphasize those facets of American life ing a planned system for reducing the Mr. Speaker, 29 young students from which should be most attractive. r said national debt. Honduras and Ecuador are presently in yesterday that the University of California. Fourth. Support reduction in the size Miami, Fla., on Operation Amigo, a pro­ has more Nobel Prize winners than the So­ and cost of the Federal Government as gram which is an outstanding example viet Union. They find in this country, and of democracy in action. there are 40 or 50 of them, a climate which against expanding bureaucracy and cen­ permits them to function most effectively. tralization of Government in Washing­ These students represent the third And all of the cultural efforts here, all of ton, D.C. wave of Latin amigos to visit our coun­ the intellectual efforts, all our great schools Fifth. Support a policy designed to re­ try under the sponsorship of the Miami and universities, these are the part of the turn Federal aid programs to State and Herald and the Greater Miami schools. story we ought to tell. local control. Operation Amigo, which has been I think the Attorney General attempted Sixth. Support an embargo on the sale commended by world leaders, deserves to communicate that, but of course, he :ls the fullest attention and support of my one voice. But he is attempting-as you of all strategic goods including agricul­ colleagues, and I would like to detan the know-it is better to light a candle than to tural commodities to any nation unless curse the darkness. I do agree with. you the President determines such nation is foundation and pz:ogress of this out­ that this is one of the most serious and I not controlled and dominated by the in­ standing community effort. think in many ways stimulating problems ternational Communist movement. Operation Amigo came to life in De­ we face-how to tell our story in a way cember 1961 in a small office of one of that makes it new and exciting to young Seventh. Support a foreign trade the country's most outstanding news­ students and also have them examine ob­ policy which assures effective protection papers, the Miami Herald. Operation jectively under the light. of present circum­ of American industries distressed eco­ Amigo is the brainchild of Mr. Don Shoe­ stances the serious. failures of the Marxist nomically as a result of cheap foreign maker, editor of the Miami Herald, Mr. system, which can be told from the wall of imports. George Beebe, managing editor of the China. I think tha.t is our job. I think Eighth. Support and reaffirm Republi­ Herald and Dr. Raul Beraun, a leading the trip has been worthwhile for that pur­ can principles of upholding and defend­ pose alone. Lima attorney and prominent Peruvian ing the Constitution of the United States civic leader. These three men devised and maintaining representative govern­ Operation Amigo as a vehicle to offset ment in accordance with the principles communism in Latin America to give set forth in the Constitution, the Decla­ future Latin American leaders a look at Recommendations to the JoiD.t Commit­ ration of Independence, and the Bill of life in a working democracy such as ours. . tee on Republican Principles Rights. The program was launched with the Ninth. Support the return of consti­ Miami Herald sponsoring the program in EXTENSION OF REMARKS tutional responsibilities and powers to cooperation with the Greater Miami OP the legislative branch of Government as schools under the guidance of an ad­ opposed to the ever-increasing growth of visory committee. Offers of help im­ HON. THOMAS M. PELLY power in the executive branch. mediately poured in from such sources OF WASHINGTON Tenth. Support civil rights as related as former Ambassador William D. Faw­ IN THE HOUSE OF REPRESENTATIVES to discrimination because of race, creed, ley; Ultima Hora and Le •Prensa, two of color. or condition of servitude. Lima, Peru's leading newspapers; from Tuesday, March 20, 1962 Eleventh. Oppose any new back-door the Lima television station, channel13; Mr. PELLY. Mr. Speaker, the 1962 gpending financed programs together and from Aerolineas Peruanas, S.A. joint committee on Republican prin­ with a gradual elimination of outstand­ Edison senior high school was selected ciples is engaged in drafting a general ing. obligations of Treasury borrowing as host for the first pilot group of 4630 CONGRESSIONAL RECORD- HOUSE March 20 amigos, as Miami Herald President: and friendship, understanding, · and peace recipients of. dividends and interest, and Publisher J{)hn S. Knight donated $1,000 throughout the world. We~ as Members the personnel of the. Internal Revenue to finance the travel expenses of five of the U.S. Congress, can and should Service will be forced to wallow through amigos from Peru. do everything within our power to foster a jungle of difficult and obscure rules. John McMullan, Miami Herald as­ and support the principles of Operation The income tax structure of the sistant managing.editor, flew to Lima to Amigo. ·United States is already incredibly com­ organize the first group and help select By their own admission, these amigos. plex as anyone brave enough to tackle students. He was swamped with Peru­ the future leaders of Latin America, have the job of filling out his own income tax vian youngsters ·who wanted to see the acquired a new understanding of life in form 1040 each year knows. democratic system of the United States a democracy. A few of their statements . To all these existing complexities and in action. McMullan and a Lima com­ will suffice to illustrate the understand­ burdens the bill proposes to add this per­ mittee carefully selected teenagers who ing which the Miami Herald, the schools fectly unnecessary withholding tax on were desirous of uniting a visit to the of Dade County and the people of Dade dividends and interest. United States with their future Peru­ County are promoting through Opera­ One of the foremost reasons why this vian responsibilities. It is a tribute to tion Amigo. Statements such as, "There complex withholding system is unneces­ the leaders of Operation Amigo that in­ is a great difference between a real de­ sary is that the Internal Revenue Serv­ cluded in the first group were also mocracy and a country that just pre­ ice is shifting to the use of the new elec­ youngsters with a hostile misunderstand- tends to have democracy. You have the tronic data-processing machines. The ing of the United States. . ·best democracy and the best country." membership of this House is generally In Miami, the community immediately "Americans are not at all like we pic­ familiar with the steady progress of the responded to the plan of Operation ture them in Peru, they actually · are Internal Revenue Service toward put­ Amigo. The student government presi­ warm, generous, and hospitable." "I was ting every taxpayer's tax accounts on dent of Edison Senior High School said, all wrong about the United States." tape and keeping his complete tax his­ "We had more offers of homes for the Mr. Speaker, Operation Amigo is a tory on tape. This conversion of the students to live in than we had actual program designed to bridge the language Internal Revenue Service to automatic amigos." barrier, to wipe out misinformation and data processing is moving rapidly. Within a few short weeks of the organ­ to destroy communism's anti-American When it is completed there will be no . ization meeting at the Miami Herald, 48 lie. room on the Federal statute books for a pioneers in inter-American understand­ The people who have made this pro­ blunderbuss type of collection apparatus ing were on their way to Miami. The gram a success deserve the highest offi­ like the proposed withholding tax on reaction to Operation Amigo among the cial recognition and all of the support dividends and interest. inter-American community of nations was thrilling. Government officials, possible to make this program not just That the new automatic data-process­ school groups, communities, private citi­ an operation of Dade County, Fla., but ing installat~ons of the Internal Revenue zens all across the American Republics truly an Operation Amigo of the hemi­ Service can cope with the problem of sphere. I call upon my colleagues to lend the underreporting gap on dividends and asked to participate. their support. Each group of amigos spends 2 weeks interest, is shown by a speech made as in the United States participating in early as April 1961 by a senior admin­ Dade County school programs, symphony istrative official of the Internal Revenue concerts, picnics, and other programs Service. Speaking to the Tax Institute · which transcend the language barrier. Is the Treasury Withholding on he said 'that electronic automatic data­ The second group of amigos was Withholding 1 processing equipment gives to the Inter­ hosted at Southwest High School and the nal Revenue S.ervice, and I quote: "a present group from Honduras and Ecua­ tool for a much more effective matching EXTENSION OF REMARKS of information documents--particularly dor is participating at Curley and Notre OF Dame, the first Catholic schools· to join forms 1099-with tax returns so as to in this fine hands-across-the-border HON. JACKSON E. BETTS enable us to tighten up enforcement and program. thereby reduce very substantially the OF OHIO gap between dividend and interest pay­ Five more groups of Latin amigos are IN THE HOUSE OF REPRESENTATIVES scheduled to come to Florida before May ments, on the one hand, and the amounts Tuesday, March 20, 1962 of such income reported on returns." 1. These groups will be from Guate­ He further noted this, and I quote: mala, El Salvador, Costa Rica, Colombia, Mr. BETTS. Mr. Speaker, if the and Peru. One of the important changes needed to Revenue Act of 1962, H.R. 10650, is en­ make the information system an effective President Kennedy, speaking of acted into law, the tax complexities of substitute for withholding is to obtain tax­ Operation Amigo, has said: the present tax statute will be greatly payer account numbers on all forms 1099 It's a wonderful idea. An excellent ex­ compounded for millions of American and similar documents. ample of how individual Americans can play citizens who have income from dividends a significant role in hemispheric affairs. We and interest. The compounding of these That important change has taken need more help of this kind. complexities will arise from section 19 place. In October 1961, H.R. 8876 be­ of the bill which deals with withholding came law. This act authorizes the use Typical of the reaction from our Latin of account numbers for taxpayers. And American friends is a statement from of income tax at the source on interest and dividends. the Ways and Means Committee report the consul g.eneral of Peru, ~ernando on H.R. 8876 said: Pastor: · A clue to the added complexity that will ensue from the enactment of these The bill is designed to improve enforce­ Operation Amigo will bring together withholding proposals is found in the ment and collection of internal revenue strangers who will become understanding taxes by facilitating the expanded use of friends. fact that the statutory rules proposed automatic data processing equipment by the in the bill begin on page 183 thereof and Internal Revenue Service and by enabling Operation Amigo, Mr. Speaker, will not continue through page 229. It must, of the Service to match information returns be measured by yardstick methods or by course, be realized that these almost 50 now filed with tax returns. dollars and cents, but by a change from pages of complex statutory rules will be revolution to evolutionary democratic followed by an even greater number of In discussing the taxpayer account governments in the future of Latin pages of regulations to implement the number bill on the Senate floor, on Sep­ America. statutory language. tember 23, 1961, the distinguished chair­ An understanding of democracy in ac­ The withholding tax on dividends and man of the Senate Finance Committee tion is the goal of Operation Amigo with interest that is included in this bill will said: the vehicle being the hearts and minds be one of the greatest administrative This legislation, the Treasury testified, of teenagers, both in the United States would result in closing loopholes so that monstrosities ever inflicted on the In­ those who are now avoiding the payment of and in Latin America. ternal Revenue Service and the taxpay­ taxes would be compelled to pay by operat­ .· Mr. Speaker, we must not fail our ing public. Payors of dividends and in­ ing this new number system through com­ future generations in their desire for terest, and the many, many millions of puting machine". 1962 CONGRESSIONAL RECORD- HOUSE 4631 He further said: · reporting until payments are made in that were presented by the Treasury The tax revenue, the Treasury testified, the year 1965. Certainly as to any tax- ~ast spring. The Treasury was then urg- would be increased by $5 'billion. payer "apprehended" by the machines mg what they called a simplified system for the year 1965 for failing to report which would not require payors to give And he added: dividends and interest it is a simple mat- payees e · ts f t ·thh 1 The Treasury has told me it is the largest r ce1p or ax Wl e d and loophole closing bill that has ever been ter to then pick up his 1963 and 1964 would not permit payees to file ar{y ex- proposed. returns and check the completeness of emption certificates with payors. his income l'eporting for those years. I t· 1 It is, thus, clearly shown that the In- J t th 'd bl k n par lCU ar, the Treasury made the us e Wl e pu ic nowledge that point that the withholding tax system t ernaI R evenue Service has the working taxpayers from now on will have to com- the administration wished to sell would tools now in its hands to close any gap bat these machines will be an adminis- be made unduly complex if payees were on the underreporting of dividends and trative weapon operating in terrorem to permitted to file exemption certificates interest: Automatic data processing and force scrupulous care in the reporting of to claim exemption from the withhold- the authority to use taxpayer account dividends and interest. ing tax. numbers with this electronic equipment Mr. Speaker, here is a very simple way to trace, automatically, any underreport- to avoid the multitude of evils of a with- This original Treasury position in op­ ing of income. holding tax system on dividends and in- position to exemption certificates can It is beyond belief that instead of using terest-and a very inexpensive way. be found in the administration state­ these presently at hand modern tools to Why do we not accept it and use it? ments on pages 11, 39, and 277 of the check underreporting of dividends and Why must we further complicate and hearings of the Committeee on Ways interest, the Victorian administrative confuse the life of the American taxpay- and Means. Yet the bill in its present monstrosity of a withholding tax system er? Why must we further complicate form would provide for several forms of is also to be imposed as a millstone on and confuse the already very difficult exemption certificates to be used by dif­ th ks · d. ·d ferent types of payees to escape tax with- e nee of both taxpayers and the In- m 1v1 ual income tax return form 1040? holding. How the payors of dividends t~r~al Revenue Service. A new rela- That automatic data processing makes and interest and the Revenue Service t1ve y inexpensive administrative en- withholding taxes unnecessary is further can possibly keep the administration of forcement tool is to be abandoned, and shown by Commissioner Caplin's Febru- huge administrative expense burdens are ary 16 Dallas speech in which he re- this tax, and their records, in any sem- to be imposed on the taxpaying public, ported that the ADP installations will all blance of order with these exemption on payors of dividends and interP.st and be in and functioning by January 1, 1965. certificates circulating, is beyond my on the Internal Revenue Service. The He said: powers of comprehension. accounts and records of all taxpayers The only relationship that exists be- Automatic data processing is being in- tween the o f · t t d d" · and the Internal Revenue serv1·ce are to stalled at an accelerated rate, and we expect d d d thpay rs o t meres an !VI- be scrambled. The Service is to be to have all nine service centers operating by en s an e more han 30 million re- forced to process and clear mo.ny, many January 1, 1965. • • • Early evidence from cipients of dividend and interest income millions of tax credit claims each year our pilot Atlanta installations indicates that is a mail relationship. Payees are often · and to process, clear and write checks tax administration has the greatest tool in just strange names on a mailing list. on many, many millions of refund claims its history. Under the bill as reported by the Com­ each year. The proposed withholding taxes would mittee on Ways and Means, the payees The administrative waste will be fan- not be effective until the year 1963-and will be entitled to an automatic credit tastic in scope-just because this admin- tax returns for those years are due April of tax withheld, and entitled-in theory istration refuses to use, or even admit 15, 1964. The period for making addi- at least-to receive refund checks for · the existence of, the tools it now has in tional assessments on returns filed in tax overwithheld without too much hand-electronic automatic data proc- April 1964 does not expire until April difficulty and redtape delays-if they file essing and taxpayer account numbers. 1967. refund claims. Payors are made person- This is the same administration that Two years before that date the ADP- ally liable for the tax to be withheld. told the · Senate Finance Committee, in taxpayer account numbers system of Yet in that picture, exemption certifi­ order to secure the taxpayer account leg- mS-will be functioning on a nation- cates, without any administrative con­ islation, that that statute would be· the wide basis. The IRS Commissioner has trol whatsoever are to be allowed to cir- biggest loophole closer in history-by just said this. culate. tracing quickly under-reported income. In April 1961 Assistant Commission- A payor company which may be a What I have just said will probably be er-now Deputy Commissioner-of In- bank paying interest or a corporation countered with this type of argument: ternal Revenue, Bertrand Harding, paying dividends, to many thousands of Our automatic data processing instal- stated that automatic data processing people in each case, is supposed to enter lations are not yet complete and we just plus the use of taxpayer account num- into an elaborate correspondence with started the use of taxpayer account bers would give a perfect simple sub- people who wish to file the new exemp­ numbers when the new law was passed stitute for withholding taxes. · He stated: tion certificate and then separate its in the fall of 1961. one of the important changes needed to payments of interest or dividends be- But suppose several years do elapse make the information system an effective tween those on which tax is withhold­ before the Internal Revenue Service has substitute for withholding is to obtain tax- able and those not subject to withhold­ these collection and enforcement tools payer account numbers on all forms 1099 ing tax. fully installed, oiled, and operating. and similar documents. The payee who has received a pay- These withholding taxes on dividends H.R. 8876 enacted in October 1961 au- ment under an exemption certificate on and interest are not to begin until Jan- thorized the use of taxpayer account which no tax has been withheld is sup­ uary 1, 1963. Income tax returns for the numbers. So IRS now has all the tools posed to be honest enough to report that year 1963 are not required to be filed un- it needs to avoid the cumbersome col- payment in full and not also claim an til April1964. Internal Revenue Service lection method of a withholding tax. automatic credit on the ground that 20 has 3 years from April 1964-that is,-un- And Commissioner Caplin, as noted percent has been withheld. He can po­ til April 1967-to use its electronic rna- above, has just stated that January 1, . tentially claim both an exemption and a chines for the purpose of automatically 1965, the system will operate on a na- refund because there will be absolutely and almost . instantly tracing under- . tionwide basis. no Government records showirig whether reporting of dividends and interest by The fact that the IRS is developing any tax has been withheld. The payee every taxpayer. its automatic data-processing plant is is given a marvelous enticement both to And if it be argued that the machines already having its persuasive effect on escape the 20-percent tax withholding will not be geared to do this job as to taxpayers who may have been cavalier by his payor and then pick up another dividend and interest payments in the in any way on underreporting items of 20 percent by claiming an automatic year 1963, there is a perfect counter to income. It will assuredly catch them on credit, or by filing a claim for refund- . su·ch a position. . _ _ omis.sion of income items like dividends both of which the Treasw.Y assures its Let us assume, to be Very extreme, that and mterest. will be processed practically automati- the machines will not };)e geared up to The withholding tax provisions in the . cally. I do not believe that taxpayers automatically and quickly trace ·under- Revenue Act of 1962 are not the same · will deliberately resort tO ·such a dodge 4632 CONGRESSIONAL RECORD- SENATE March 21

but it would seem 1nevit~ble that strch a This involves B.lsG th~ niilltons and mil­ 'visions'. an administrat1ve monstrosity, result woUld freqnentlr prevail through ltt>ns of senior citizens in this 'CG.untty -and -confusing the ·accounts .and records innocent act. · Who are living 'On smBJ.l sums of invested of payors, pe.yees and -the Internal Reve­ It ls wen kn0w·n that. the parors of tn-ootne--usualiy dividends and intereSt. nue Service. And-these provisions still intel"e'st and 'di\'itlends intn~~ases ha:\'e Twenty percent of their sup.ptmt muney do not give the broad relief from over­ lreen forced 1n ~nt ~ear-s tG turn the 1s to be ·coneated :and pUt into the public \VithhoHiing tor Whi~h their -s:p-oh.sors are entire ~rayment operation over to rn'Od­ till •n:d then doletl ~ut ·to them mUCh Mmin.g: ·Probab!I.Y no more than 10 per­ ern machinery. Any lange pa,ving a:~ent later .in the forms of tefun:ds or credits-­ cent, .· probably as low as 5 percent, of will tell you that machines how available at the m-ercy of the red tape lnUl ~f a tbe· P~o-:ple · on whom· there will be over­ to him cran barely ta:n the present Federal 'agency. Dm:ing the interim they withnoldi.ng of :tax ~re completely . im­ traffic, ·and that if they h-ave ·to be ,rtJ.Ust ·:fi;gure out some 10ther way to meet mu~e to ineome tax. The remaining 90 worked :twice to .sep:ar.ate "exempt from thei-r rent and fOOd obligations. to 95 percent are people who cannot fiie honexe:rflpt · p·aymen~ the administra­ The exemptian certificate rules in the a~ :ex~~ption certificate and honestly tive chore becomes almost imtyossible. bill are a poor so}i> ·in this r-egard.. They ·.state that they will <>we no income tax. The paying agents will also tell you that are limited to children under 18 and to As to these Pe-ople., including the many they have difficulty getting these ma­ persons who are wil1ing to state that millions of senior ~itizens, as to whom 'Chihes -and to the extent that they ,must they w.ill owe zero Federal income 'tax. tax will be over-withheld, and whose secure new -equipment just f<>r their But the vast majority 'of people wh'o will standard of living is to be contracted by pre$ent needS they fl·ave to wa;it months be -a«eeted. by ove.r•wathholdini' of tax this weird tax eollection device-they are or yeam for it. on divid.ends and mterest are people Who ro be .surrendered t0 the administrative Eq)Q.llded provtsi()trs permit·ting the have some tax li-'ability. Th-ey cMmt>t jungle of -an antiquated. and completely USe 'Of exemption oortifrcates were has­ ravo-1d withholding by making a state­ unnecessary tax collection device. tily added .by the COmmittee

wh~te th~r-e l-s s-adne-ss, In~Y' w~ bring l should Jike to th.a.nk 'Reverend M.us­ SENATE joy: lor Thy mercy and tor Thy truth's pratt for being with us; and. through the ,sake. .Amen.. 'CONMEsstONAl. 'RE{Zoim_. I wish to call the w ED'NESI}A y' MARCH .21~ 198'2 atten'tiofi ·of my COlleagUes and the at­ (Le.gUs · consent) the .read-ing of the ica, to which Reverend Muspratt has th~ 'expirati~n ~f th~ N~ss. antt wtts ·Journal <>f the proceeding;S 'of. 'Tuesday, eome to complete his research on the ca\lted to or-tter iby the Pre-sid-ent l)to March. 20., 1962, was -dispensed with. ancient home of the Penn Iamily over· tel'fitxn·e. seas. R-ev. 'Osc-ar Mu'Sptlt'tt, -vi~'al" ·of 'Pe:nn, ~ktn-gh-atn~hir~. IDYgland, utt~l'ed the ORDER FOR RECESS UNTIL 9 A.M. ft)'l\'OWifig ·Pl"aYer: TOMORROW ANNOUNCEMENT OF 'COMMrr.t'EE HEARlN'G ON N"OMlNA'l'IONS OF The pr-ayer .is adapted .!.rom William M't. MANSFI~. Mr. P!re'S1dent, I Penn's prayer for Phi1adelphta, ln l.I6S4: a'Sk ·un:antm~u'S ~n~~fit that When. 'the JOHN 'K. 'REGAN AND .lOl.tN W. 0 Almighty God\ our Heavenly .Father, Senate completes its busin'e.Ss toua~., Jt OLIVJm FOR .APPOINTM:ENT TO we oommenG. this Nation to ~h.y merciful ~tand in recess until ~ t>\c1ook ~tom.~r.row THE .FEDERAL JtiDI'CIARY care. brant that her people may be kept :ntor-fiintt. Mr~ SYMINGtz'ON. MI'. Pt~tdent-­ f·rom the evl1 that woald overwhelm 'Tke -I?R:ESlDENT pro tempoce. With­ Mr. M!ANSFLELO. M'r. Presitte-n:t, I them; th.at ·taithttfl to the God Of .all out o'b}etW>n, it is so 'Ordered. ~reltl tG th~ ~senator from . M~OU'tl. mercies. they may stand ln the day of Mr. SYMINGTON. I thank. the ma­ tr~al; that their ehlidren may be .blest jOrity leader. of the l~ra; and that their people~ saved O:PENJ.NG PRAYEN. BY nEV. OSCAR Mr. President, ~t the re(llles-t Of .my by 1Us power, may be .preser"ed ro the MUSPRATT colleague from Missouri :[Mr.. LONG], I end~ Mr. GLAltlt. :Mr. Presldent-- ;announ~e. Jfor h1m, that tllreYe will be a Bless Thy servants, the President <>f M.r~ MA'RS'Fl'ELD. Mr. P.resident, I .meeting of the sut>eomm.ttte'e t>f the the United States and all others In au­ yield briefly to the iSen.ator fr-0m ,Penn- JUdiciary Committee to 'tOlYstdel" the thority. Crant that ev-er ct>i'l'Sc1ou.s of sylvania. . nomihati~ll'S t1>f the .Hono'tabl~ John lC. thei:t aecountability to Thee, theY wlll Mr. CLARK. l Ap,p-reciate the ebuttesy Regan rantt the Honorable John w. Oli­ alw~s ta1thtu11~ fulfill their duty to ~Ul>­ :ot my tri~nd, the ma.Jorlty leader, 1n '\'er, l~t 'ttp})btntm~nt .tt> the Fet:lel:Al .tule, ;yielding briellY to m~ so that I mAY say ~iar): at ~ o'-clook this 'eVening 'Or ;as ·soon and so secure the 'People .trO"m the abut~e Jtrst a word :t·or the ttEcORD. thel'eat~l" ~'8. .based. t>fl \h'e situ-ati'on m of power that they ma-y be f~e by the1r Mt. ~sltlent, -n~v. Os~ar Muspratt, th-e 1Sen:atJe, tire subeOmmittee can ·meet. just ob~dlert~e. alld the magi~tra.tes ~-ver ~lea--r t>f Pehn, t>f 13-u~kinghamsltire, The hle-eUntt \VlU be held in room 2'300 t>f be b.otro-rable :tor their jUst -adm1nishit­ Enoglanc1, who deli'V~red the momrn.g n. Thrtmgh J'~SU'S Chti'St, 'btrr l ;O':td. 'fl'ta'Ye't, which l ~hou~ht lllos't aJ>pro­ I tn'Rll:k the mttjt>.tit~ lettd~r ·ror his Anren. priately was adapted from. th~ 'famous ·cou.rlesy in Yi~ldin~. And trom St. 'Francis of Asslsi: ~rayer t>1 Wlniam Penn, of "Whom we Lord, -make us instruments or Thy Pllilaf Amedtra, New l3ninSWick, th·ere is darkness, fila~ we brihg light; C'al'fi~ t'O f>efill'S:9'1Vania.. 'M,J., tYan-smitting:, 'f>tm;uant to l'aw~ a re-