A-85985, MAY 26, 1937, 16 COMP. GEN. 1043

A-85985: May 26, 1937

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ARE AVAILABLE FOR LOANS TO A RURAL REHABILITATION COOPERATIVE ASSOCIATION FOR THE CONSTRUCTION. ARE IN ACCORDANCE WITH THE REQUIREMENTS OF EXECUTIVE ORDER NO. 7143. IS A COMMUNITY PROJECT INSTITUTED BY THE DIVISION OF SUBSISTENCE HOMESTEADS OF THE DEPARTMENT OF THE INTERIOR PURSUANT TO SECTION 208 OF TITLE II OF THE NATIONAL INDUSTRIAL RECOVERY ACT. THIS PROJECT WAS TRANSFERRED TO THE RESETTLEMENT ADMINISTRATION WHICH. DUTIES OF RESETTLEMENT ADMINISTRATION WERE TRANSFERRED TO THE DEPARTMENT OF AGRICULTURE UNDER THE SUPERVISION. IS IN AN AREA DEVOTED PRINCIPALLY TO AGRICULTURAL AND MINING OPERATIONS. THE PROJECT WAS INSTITUTED FOR THE PURPOSE OF REHABILITATING A GROUP OF APPROXIMATELY 250 RURAL FAMILIES IN THE COUNTY WHO HAD BEEN LEFT STRANDED BY THE CURTAILMENT OR DISCONTINUANCE OF COAL MINING OPERATIONS IN THE VICINITY AND WHOSE ONLY ALTERNATIVE WOULD HAVE BEEN TO GO ON RELIEF.

A-85985, MAY 26, 1937, 16 COMP. GEN. 1043

EMERGENCY RELIEF APPROPRIATION ACTS, 1935 AND 1936 - LOANS TO RURAL REHABILITATION PROJECT COOPERATIVE ASSOCIATION FOR FACTORY CONSTRUCTION, ETC. FUNDS MADE AVAILABLE BY THE EMERGENCY RELIEF APPROPRIATION ACTS OF 1935 AND 1936, 49 STAT. 115, 1608, AND ALLOCATED BY THE PRESIDENT FOR AN APPROVED RURAL REHABILITATION PROJECT, ARE AVAILABLE FOR LOANS TO A RURAL REHABILITATION COOPERATIVE ASSOCIATION FOR THE CONSTRUCTION, EQUIPMENT, AND OPERATION OF A FACTORY FOR THE BENEFIT OF THE HOMESTEAD MEMBERSHIP, PROVIDED ASSOCIATION MEMBERSHIP AND SUPERVISION, LOAN INTEREST RATES, MATURITY DATES, AND REPAYMENTS, ARE IN ACCORDANCE WITH THE REQUIREMENTS OF EXECUTIVE ORDER NO. 7143, AUGUST 19, 1935.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, MAY 26, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 3, 1937, AS FOLLOWS:

THE WESTMORELAND HOMESTEADS PROJECT (SH-PA-3) MT. PLEASANT, PENNSYLVANIA, IS A COMMUNITY PROJECT INSTITUTED BY THE DIVISION OF SUBSISTENCE HOMESTEADS OF THE DEPARTMENT OF THE INTERIOR PURSUANT TO SECTION 208 OF TITLE II OF THE NATIONAL INDUSTRIAL RECOVERY ACT. BY EXECUTIVE ORDER NO. 7041, DATED MAY 15, 1935, THIS PROJECT WAS TRANSFERRED TO THE RESETTLEMENT ADMINISTRATION WHICH, AFTER JUNE 16, 1935, WHEN AUTHORITY TO CONTINUE OPERATIONS UNDER SECTION 208, SUPRA, CEASED, CONTINUED CONSTRUCTION OPERATIONS AND ADMINISTERED THE PROPERTIES AS A RURAL REHABILITATION PROJECT IN ACCORDANCE WITH THE DECISION OF THE COMPTROLLER GENERAL OF JUNE 3, 1935 (A-61714).

BY EXECUTIVE ORDER NO. 7530, DATED DECEMBER 31, 1936, AS AMENDED BY EXECUTIVE ORDER NO. 7557, DATED FEBRUARY 19, 1937, THE POWERS, FUNCTIONS, AND DUTIES OF RESETTLEMENT ADMINISTRATION WERE TRANSFERRED TO THE DEPARTMENT OF AGRICULTURE UNDER THE SUPERVISION, CONTROL, AND DIRECTION OF THE SECRETARY OF AGRICULTURE.

THIS PROJECT, LOCATED IN THE WESTERN PART OF PENNSYLVANIA IN WESTMORELAND COUNTY ABOUT EIGHT MILES SOUTH OF GREENSBURG, THE COUNTY SEAT, AND ABOUT THIRTY-EIGHT MILES SOUTHEAST OF PITTSBURGH, IS IN AN AREA DEVOTED PRINCIPALLY TO AGRICULTURAL AND MINING OPERATIONS. THE PROJECT WAS INSTITUTED FOR THE PURPOSE OF REHABILITATING A GROUP OF APPROXIMATELY 250 RURAL FAMILIES IN THE COUNTY WHO HAD BEEN LEFT STRANDED BY THE CURTAILMENT OR DISCONTINUANCE OF COAL MINING OPERATIONS IN THE VICINITY AND WHOSE ONLY ALTERNATIVE WOULD HAVE BEEN TO GO ON RELIEF. THE PLIGHT OF THESE FAMILIES WAS TYPICAL OF THE DISTRESS WHICH THEN PREVAILED AND WHICH STILL EXISTS THROUGHOUT A LARGE PORTION OF THE RURAL DISTRICTS OF WESTERN PENNSYLVANIA, WEST VIRGINIA, AND OTHER STATES AS A RESULT OF THE ABANDONMENT OF WORKED OUT COAL MINES IN THOSE AREAS.

IN SELECTING FAMILIES FOR THIS PROJECT PREFERENCE WAS GIVEN TO THOSE ON RELIEF OR OF LOW INCOME WHO WERE LIKELY TO GO ON RELIEF, WHO HAD ONE OR MORE CHILDREN OR OTHER DEPENDENTS, AND WHO COULD NOT OBTAIN NECESSARY LOANS FROM OTHER GOVERNMENTAL AGENCIES OR FROM PRIVATE SOURCES.

AS NOW CONSTITUTED THE PROJECT CONSISTS OF ABOUT 1,500 ACRES WHICH ARE BEING UTILIZED AS FOLLOWS: 252 HOMES HAVE BEEN CONSTRUCTED EACH ONE HAVING A TWO ACRE GARDEN TRACT. ABOUT 224 HOMES ARE OCCUPIED, THE TOTAL POPULATION OF THE PROJECT BEING ABOUT 1,500. THE REMAINING ACREAGE IS DEVOTED TO A CROP FARM OF ABOUT 650 ACRES, A HOG FARM, A LARGE POULTRY FARM AND A DAIRY.

AT THE PRESENT TIME THE AGRICULTURAL POSSIBILITIES OF THE PROJECT ARE BEING EXPLOITED TO THE FULLEST EXTENT PRACTICABLE. THE MAXIMUM YEARLY INCOME WHICH CAN BE DERIVED FROM THE GARDEN TRACT OF EACH HOMESTEAD IS IN THE NEIGHBORHOOD OF $150.00, WHILE THE ESTIMATED INCOME FROM DAIRY, POULTRY, AND HOG ACTIVITIES WILL NOT YIELD MORE THAN AN AVERAGE OF $400.00 PER FAMILY. A NUMBER OF THE HOMESTEADERS HAVE SUCCEEDED IN OBTAINING INCOME NEEDED TO SUPPLEMENT THIS AGRICULTURAL INCOME THROUGH EMPLOYMENT IN THE SURROUNDING TERRITORY, BUT THE OPPORTUNITIES FOR SUCH EMPLOYMENT ARE TOO LIMITED TO PROVIDE EMPLOYMENT FOR THE BULK OF THE HOMESTEADERS. FOR THESE REASONS AN ACUTE PROBLEM OF UNEMPLOYMENT AND INSUFFICIENT INCOME IS IMMINENT UNLESS MEANS ARE FOUND IN THE NEAR FUTURE TO PROVIDE ADDITIONAL EMPLOYMENT ON THE PROJECT. THE FOLLOWING TABLE BASED ON LATEST AVAILABLE FIGURES SETS FORTH THE EXISTING EMPLOYMENT SITUATION. (IT IS TO BE NOTED THAT IN ADDITION TO THE ACTIVITIES BEING CARRIED ON AT THE PROJECT BY THE GOVERNMENT, CERTAIN ENTERPRISES ARE CONDUCTED BY A COOPERATIVE ASSOCIATION WHOSE MEMBERSHIP IS RESTRICTED TO HOMESTEADERS. THESE ENTERPRISES INCLUDE A DAIRY, POULTRY, HOG, AND CROP FARM AND A TRADING POST):

CHART NUMBER OF EMPLOYABLES (AVERAGING TWO PER FAMILY) ------------ ----- 491

--- EMPLOYED OUTSIDE THE PROJECT -------------------------------------- 140 EMPLOYED BY COOPERATIVE ASSOCIATION ------------------------------- 31

TOTAL REGULARLY EMPLOYED ------------------------------------ 171

--- EMPLOYED ON GOVERNMENT CONSTRUCTION ------------------------------- 53 EMPLOYED ON COOPERATIVE CONSTRUCTION ------------------------------ 31 EMPLOYED BY R.A. MANAGEMENT --------------------------------------- 3 EMPLOYED BY W.P.A.--- OFF SITE ------------------------------------ 7

TOTAL TEMPORARILY EMPLOYED ---------------------------------- 94 UNEMPLOYED -------------------------------------------------------- 226

PROSPECTIVE UNEMPLOYED WHEN CONSTRUCTION IS COMPLETED ------- 320

THUS WHEN CURRENT GOVERNMENT CONSTRUCTION IS COMPLETED IN THE NEAR FUTURE, UNLESS ADDITIONAL EMPLOYMENT IS PROVIDED BY THE INAUGURATION OF NEW ACTIVITIES, MORE THAN SIXTY-FIVE PERCENT OF THE EMPLOYABLE REHABILITATION CLIENTS ON THE PROJECT WILL BE WITHOUT EMPLOYMENT TO SUPPLEMENT THE LIMITED INCOME AVAILABLE FROM AGRICULTURAL OPERATIONS.

THIS NEED FOR ADDITIONAL EMPLOYMENT AND INCOME CANNOT BE MET BY THE EXPANSION OF AGRICULTURAL ACTIVITIES. NO ADDITIONAL LAND IN THE LOCALITY IS AVAILABLE FOR AGRICULTURAL OPERATIONS, AND THE PRESENT LAND IS BEING USED AS INTENSIVELY AS POSSIBLE. INASMUCH AS THE AGRICULTURAL POSSIBILITIES OF THE PROJECT ARE NOW BEING EXPLOITED TO THE UTMOST IT IS CLEAR THAT THE REHABILITATION OF SIXTY-FIVE PERCENT OF THE HOMESTEADERS CANNOT BE ACHIEVED EXCEPT BY THE INTRODUCTION OF INDUSTRIAL ACTIVITY TO SUPPLEMENT THEIR LIMITED AGRICULTURAL INCOME.

AFTER AN EXAMINATION OF MANY POSSIBILITIES IT APPEARS THAT THE MOST SUITABLE INDUSTRY FOR THE PROJECT, CONSIDERING EMPLOYMENT OF POSSIBILITIES AND PROSPECTS FOR PROFITABLE OPERATION, IS A FACTORY FOR THE MANUFACTURE OF PANTS. UNLIKE OTHER BRANCHES OF THE NEEDLE TRADES INDUSTRY THE PANTS MANUFACTURING BUSINESS IS NOT SEASONAL. IT IS EXPECTED THAT THE HOMESTEADERS WILL BE EMPLOYED FROM 45 TO 48 WEEKS EACH YEAR. PRELIMINARY ESTIMATES INDICATE THAT A FACTORY BUILDING CAN BE CONSTRUCTED FOR APPROXIMATELY $65,000.00. SUCH BUILDING, PROVIDED WITH NECESSARY EQUIPMENT AND OPERATING CAPITAL, WOULD BE ADEQUATE TO GIVE EMPLOYMENT TO BETWEEN 225 AND 250 PERSONS. WITH A WAGE SCALE BASED UPON THE MINIMUM STANDARDS FIXED BY THE SECRETARY OF LABOR PURSUANT TO THE WALSH-HEALEY ACT, IT IS ESTIMATED THAT THE TOTAL ANNUAL LABOR PAYROLL OF THE PLANT WILL BE ABOUT $151,200.00. THIS WOULD MEET SUBSTANTIALLY THE EMPLOYMENT AND INCOME REQUIREMENTS OF THE COMMUNITY. IN VIEW OF THE COMPARATIVE SIMPLICITY OF THE VARIOUS OPERATIONS AND THE EXPERIENCE OF THE INDUSTRY IN COMPARABLE LOCALITIES, IT APPEARS THAT THE HOMESTEADERS COULD BE TRAINED EASILY FOR THIS WORK.

AFTER A CONSERVATIVE ANALYSIS OF ALL PHASES OF THE ESTABLISHMENT AND OPERATION OF THIS FACTORY AND A SURVEY OF THE EXPERIENCE OF OTHER FACTORIES IN THIS FIELD, THIS PLANT, IN THE ABSENCE OF UNFORESEEN CONTINGENCIES, MAY BE EXPECTED NOT ONLY TO CARRY ITSELF, BUT TO RETURN A PROFIT TO THE HOMESTEADERS.

ON THE BASIS OF THE ABOVE ANALYSIS, IT IS PROPOSED THAT A LOAN TO BUILD, EQUIP, AND OPERATE THE PLANT, BE MADE TO A COOPERATIVE ASSOCIATION OR GROUP AGENCY WHICH MEETS THE REQUIREMENTS OF EXECUTIVE ORDER NO. 7143, DATED AUGUST 19, 1935. MEMBERSHIP IN THIS ASSOCIATION WILL BE LIMITED TO HOMESTEADERS, WITH NOT MORE THAN ONE MEMBER FROM EACH HOMESTEAD FAMILY. THUS ANY PROFITS WHICH THE PLANT MAY EARN WILL INURE TO THE BENEFIT OF THE HOMESTEADERS. IN ACCORDANCE WITH THE PROCEDURE APPROVED IN THE COMPTROLLER GENERAL'S DECISION OF MAY 19, 1936 (NO. 73755), PROPER SAFEGUARDS WILL BE CREATED TO INSURE ADEQUATE SUPERVISION OVER THE EXPENDITURE OF THE LOAN PROCEEDS AND THE ESTABLISHMENT AND OPERATION OF THE PLANT BY COMPETENT EXPERIENCED MANAGEMENT SO AS TO PROTECT THE INTERESTS OF THE GOVERNMENT AND OF THE HOMESTEADERS.

IT WOULD APPEAR THAT, UNDER THE CIRCUMSTANCES SET FORTH ABOVE, THE PROPOSED LOAN, ENABLING THE COMPLETE REHABILITATION OF THE RURAL FAMILIES IN QUESTION, IS AUTHORIZED UNDER THE TERMS OF EXECUTIVE ORDER NO. 7143, SUPRA. YOUR ADVICE IS RESPECTFULLY REQUESTED AS TO WHETHER YOUR OFFICE WOULD BE REQUIRED TO OBJECT THERETO. A REPLY AT YOUR EARLIEST CONVENIENCE WOULD BE APPRECIATED INASMUCH AS IT IS IMPERATIVE THAT WORK ON THIS FACTORY BE INITIATED AND THAT ITS OPERATION BE STARTED AT THE EARLIEST POSSIBLE DATE IF A SERIOUS UNEMPLOYMENT CRISIS AT THE PROJECT IS TO BE AVERTED.

THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 APPROVED APRIL 8, 1935, 49 STAT. 115, IS IN PART AS FOLLOWS:

THAT IN ORDER TO PROVIDE RELIEF, WORK RELIEF, AND TO INCREASE EMPLOYMENT BY PROVIDING FOR USEFUL PROJECTS, THERE IS HEREBY APPROPRIATED, OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, TO BE USED IN THE DISCRETION AND UNDER THE DIRECTION OF THE PRESIDENT, TO BE IMMEDIATELY AVAILABLE AND TO REMAIN AVAILABLE UNTIL JUNE 30, 1937, THE SUM OF $4,000,000,000, * * * THIS APPROPRIATION SHALL BE AVAILABLE FOR THE FOLLOWING CLASSES OF PROJECTS * * * (B) RURAL REHABILITATION AND RELIEF IN STRICKEN AGRICULTURAL AREAS * * * $500,000,000. * * *

BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1936, APPROVED JUNE 22, 1936, 49 STAT. 1608, IT WAS PROVIDED:

TO CONTINUE TO PROVIDE RELIEF AND WORK RELIEF ON USEFUL PROJECTS, IN THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS * * * $1,425,000,000, TO BE USED IN THE DISCRETION AND UNDER THE DIRECTION OF THE PRESIDENT, TOGETHER WITH SUCH UNEXPECTED BALANCES OF FUNDS APPROPRIATED AND MADE AVAILABLE BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 AS THE PRESIDENT MAY DETERMINE, WHICH ARE HEREBY REAPPROPRIATED AND MADE AVAILABLE FOR THE PURPOSES OF THIS PARAGRAPH * * *: PROVIDED, THAT THIS APPROPRIATION SHALL BE AVAILABLE FOR THE FOLLOWING CLASSES OF PUBLIC PROJECTS, * * * (J) RURAL REHABILITATION, LOANS AND RELIEF TO FARMERS AND LIVESTOCK GROWERS, $85,500,000: * * *

EXECUTIVE ORDER NO. 7143, AUGUST 19, 1935, IS IN PART AS FOLLOWS:

BY VIRTUE OF AND PURSUANT TO THE AUTHORITY VESTED IN ME BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, APPROVED APRIL 8, 1935 (PUBLIC RES. 11, 74TH CONG.), I HEREBY PRESCRIBE THE FOLLOWING RULES AND REGULATIONS GOVERNING THE MAKING OF LOANS BY THE RESETTLEMENT ADMINISTRATION:

SEC. 1. LOANS MAY BE MADE BY THE RESETTLEMENT ADMINISTRATION * * * (B) FOR SUCH OTHER PURPOSES AS MAY BE NECESSARY IN THE ADMINISTRATION OF APPROVED PROJECTS INVOLVING RURAL REHABILITATION OR RELIEF IN STRICKEN AGRICULTURAL AREAS.

SEC. 2. LOANS FOR THE PURPOSES MENTIONED IN SECTION 1 (B) HEREOF MAY BE MADE BY THE RESETTLEMENT ADMINISTRATION EITHER TO INDIVIDUALS OR TO SUCH BONA FIDE AGENCIES OR COOPERATIVE ASSOCIATIONS AS THE ADMINISTRATION SHALL APPROVE: PROVIDED, HOWEVER, THAT SUCH LOANS SHALL BE MADE TO SUCH AGENCIES OR ASSOCIATIONS ONLY UPON CONDITION (A) THAT THEY IMPOSE NO INEQUITABLE RESTRICTIONS UPON MEMBERSHIP OR PARTICIPATION THEREIN, AND (B) THAT THEY BE SO CONDUCTED UNDER THE SUPERVISION OF THE RESETTLEMENTADMINISTRATION AS TO PROTECT ADEQUATELY THE INTERESTS OF THE MEMBERS OR PARTICIPANTS THEREIN.

THE RULES AND REGULATIONS PRESCRIBED BY THIS EXECUTIVE ORDER WERE EXTENDED AND MADE APPLICABLE TO TRANSACTIONS FINANCED WITH FUNDS APPROPRIATED IN THE EMERGENCY RELIEF APPROPRIATION ACT OF 1936 BY EXECUTIVE ORDER NO. 7396 OF JUNE 22, 1936.

BY EXECUTIVE ORDER NO. 7530, DECEMBER 31, 1936, AS AMENDED BY EXECUTIVE ORDER NO. 7557, FEBRUARY 19, 1937, THE POWERS, FUNCTIONS, AND DUTIES THERETOFORE VESTED IN THE RESETTLEMENT ADMINISTRATION AND IN THE ADMINISTRATOR AND DEPUTY ADMINISTRATOR THEREOF WERE TRANSFERRED TO THE SECRETARY OF AGRICULTURE TO BE EXERCISED AND PERFORMED BY HIM.

IN VIEW OF THE CIRCUMSTANCES STATED IN YOUR LETTER IT APPEARS THAT THE WESTMORELAND HOMESTEADS PROJECT IS AN APPROVED PROJECT INVOLVING RURAL REHABILITATION OR RELIEF IN A STRICKEN AGRICULTURAL AREA, AND THAT THE PROPOSED LOAN, IF OTHERWISE PROPER, MAY BE CONSIDERED WITHIN THE PURVIEW OF THE PROVISIONS OF SAID EXECUTIVE ORDER NO. 7143, EXPRESSLY AUTHORIZING SUCH LOANS TO BONA FIDE AGENCIES OR COOPERATIVE ASSOCIATIONS "FOR SUCH OTHER PURPOSES AS MAY BE NECESSARY IN THE ADMINISTRATION OF APPROVED PROJECTS INVOLVING RURAL REHABILITATION OR RELIEF IN STRICKEN AGRICULTURAL AREAS.' ACCORDINGLY, YOU ARE ADVISED THAT THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE MAKING OF SUCH A LOAN FROM FUNDS ALLOCATED BY THE PRESIDENT FOR SAID PROJECT UNDER THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 OR THE EMERGENCY RELIEF APPROPRIATION ACT OF 1936, PROVIDED THAT SUFFICIENT EVIDENCE IS SUBMITTED IN SUPPORT OF ANY SUCH EXPENDITURE TO ESTABLISH COMPLIANCE WITH THE CONDITIONS STIPULATED IN SECTION 2 OF SAID EXECUTIVE ORDER NO. 7143 AS TO MEMBERSHIP IN, AND SUPERVISION OF, THE ASSOCIATION, AND THAT THE LOAN AGREEMENT COMPLIES WITH ALL THE REQUIREMENTS AS TO INTEREST RATES, MATURITY AND REPAYMENTS STIPULATED IN SECTIONS 3, 4, AND 5 OF THE SAID EXECUTIVE ORDER. THE INSTANT CASE IS DISTINGUISHED FROM THAT CONSIDERED IN DECISION OF SEPTEMBER 11, 1935, A- 64822, TO THE ADMINISTRATOR, RESETTLEMENT ADMINISTRATION, HOLDING THAT THE APPROPRIATION MADE BY SECTION 208 OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 205, BEING SPECIFICALLY AVAILABLE ONLY FOR "MAKING LOANS FOR AND OTHERWISE AIDING IN THE PURCHASE OF SUBSISTENCE HOMESTEADS," WAS NOT AVAILABLE FOR ERECTING A FACTORY BUILDING IN CONNECTION WITH A SUBSISTENCE HOMESTEAD PROJECT AT REEDSVILLE (ARTHURDALE), W.VA., IN THAT THE PRESENT PROPOSAL IS NOT FOR THE GOVERNMENT TO ERECT AND OPERATE A FACTORY BY VIRTUE OF ANY SUPPOSED AUTHORITY IN SECTION 208 OF THE NATIONAL INDUSTRIAL RECOVERY ACT, BUT TO MAKE A LOAN TO A COOPERATIVE ASSOCIATION FOR RURAL REHABILITATION UNDER THE BROAD POWERS CONFERRED ON THE PRESIDENT BY THE LATER EMERGENCY RELIEF APPROPRIATION ACTS OF 1935 AND 1936, SUPRA, AND THE EXECUTIVE ORDERS PROMULGATED THEREUNDER.