Mr. WOODRUM. It is true that these amounts we have had of $65,000,000 for 1934, $60,000,000 for 1935, and $60,000,000 for 1936 were made on the theory of having an emergency building program for the purpose of stimulating the building industry and relieving unemployment, as well as the furnishing of necessary housing facilities.

NECESSITY FOR PROJECTS IN ESTIMATE PROPOSED FOR 1938

Mr. TABER. Admiral, how really necessary are most of these projects? Are they not getting along pretty well without them? Admiral PEOPLES. No, sir; I should say not.

Mr. TABER. Suppose you spot two or three projects on this big sheet here that are really needed.

Admiral PEOPLES. I think Mr. Purdum mentioned one at Carville, La. Then, you might pick the case of the Appraisers' Building at San Francisco that is being proposed.

Mr. TABER. Do they not already have pretty good quarters?
Admiral PEOPLES. No, sir; that building is about 60 years old.
Mr. TABER. Have they not been rebuilt in that time?
Admiral PEOPLES. Not for this purpose.

Mr. TABER. Not for the post office?

Admiral PEOPLES. I was referring to the Appraiser's Building. The project contemplated here for San Francisco, as an eligible project, contemplates putting the Immigration Service in a new building with the appraiser stores. The Immigration Service is now quartered on Angell Island. They have to maintain a ferry and other service that is running at a cost of about $70,000 a year.

Mr. MARTIN. They figure they could save $70,000 a year if they discarded the ferry service and consolidated their activities in one building on the mainland.

Mr. TABER. Going on down the line, we have the Boston garage: Do you really need a garage of that size in Boston, along with the rented garages?

Admiral PEOPLES. They have need of these garages. This is a good financial or bsuiness investment in the saving of rentals. I think additional garage quarters should be provided there.

Mr. TABER. I wonder if that could be possible.

Admiral PEOPLES. It is a self-liquidating proposition.

Mr. TABER. You have an item here for the Chicago Annex Building, involving $2,200,000. That looks pretty large.

Admiral PEOPLES. Yes, sir; it will save the rental of space.

Mr. TABER. You have another one at Dayton, Ohio, that is pretty big. Then, you have an item for Fort Worth, Tex., for another one of these narcotic farms.

Admiral PEOPLES. No, sir; that is an extension under a previous authorization.

Mr. TABER. It is another one, anyway.

Admiral PEOPLES. It is the completion of the same one.

Mr. TABER. Do you mean this is new construction.

Admiral PEOPLES. A part of it only is new construction.

Mr. TABER. Would it not be better to wait on the larger part of that until we see how the Lexington project pans out? Should we not do that before we go in too deep?

Mr. MARTIN. That $1,750,000 is the balance under a limit of cost of $4,000,000. The first stage of the project is under contract, and

the item we have before us is for the second stage. The balance that is to be appropriated will be used for the second and last stage of the work.

Mr. TABER. In Detroit, you have three substations of some kind or other: What do you do there now? Are you occupying rented quarters?

Mr. PURDUM. Yes, sir; rented quarters.

Mr. TABER. Would this save much expense?

Mr. PURDUM. Yes, sir. I think it is one of the best investments the Government has made to build Government-owned station buildings in large cities. In many of these places, they will be self-liquidating in a comparatively short time.

Admiral PEOPLES. In the case of many of these substations, the savings in the matter of rentals have made the projects self-liquidating in a period of 3 years.

Mr. TABER. What do you do with them? There is nothing here that indicates present quarters or that tells how they pay their rentals. In Detroit it would run $12,000, for instance, and the interest and sinking fund on those figures you have got would run to $29,800. That would not exactly be justified.

Mr. MARTIN. In Detroit I think you will find that the post office has in mind redistricting the area, and that the present quarters are not considered adequate.

Mr. PURDUM. I would like to make mention of Charleston, W. Va. That project has been deferred from year to year. I am personally familiar with it. There is great need at Charleston W. Va. This is a very meritorious case.

Mr. TABER. Why has it been deferred?

Mr. PURDUM. Because we did not have money enough to go around. I am personally familiar with the conditions at Charleston; the conditions are bad; and something should be done there as soon as sufficient funds are made available by the Congress.

Mr. TABER. You have $3,000,000 for Omaha and $2,000,000 for Seattle. Why do you need those right now?

Mr. MARTIN. There is considerable congestion in the Omaha building. It is an old building, and we should not spend a large sum for rehabilitation. You have a large number of permanent activities in rented quarters at Omaha.

Mr. TABER. 'You are not very bad off on your postal item. The present building takes pretty good care of the post office there, does it not?

Mr. MARTIN. No, sir; it is quite congested.

Mr. LUDLOW. What is the economic justification for constructing Federal buildings for purely post-office purposes in places that just have $10,000 receipts, in these small places? Is it not true, speaking entirely from the economic standpoint, that you can rent suitable quarters in a town of that size that would answer all the needs of the Service at a mere fraction of what a public building would cost?

Admiral PEOPLES. It can be done, but we have found that from an economic point of view, considering the investment made in the small building as well as the large one I will give you some figures on that.

Mr. LUDLOW. Of course, I know there is a certain advantage in a community to have a public building, but that is probably from a

patriotic standpoint, or some angle of that kind. But viewing it entirely from an economic angle, what is the situation in that regard? Admiral PEOPLES. From the period from March 1933 to December 31, 1936, of 918 public-building projects completed and occupied, the total cost was 278 million dollars, less the estimated sales value of the supplanted buildings of 19 million dollars, making a net cost of 258 million dollars.

Based on the estimated annual rental value of the additional space furnished, and so forth, the net return, including the allowance for depreciation and the estimated annual income as the result of rentals saved, is 3.88 percent of the total investment covering the whole program.

Mr. LUDLOW. You have a large number of eligible projects here in the 23 million dollars. How do you determine the priority of eligibility? How did you make up this particular list?

Admiral PEOPLES. All of the eligible projects are on this list.

Mr. LUDLOW. I mean those that enter into the 23 million dollars. Admiral PEOPLES. Under the policy followed heretofore of spreading the work equitably throughout the country, there is one project that will go to each congressional district. The priority of the project within the district depends very largely upon the needs of the Post Office Department.

Mr. LUDLOW. And aside from the geographical element you try to select the most necessitous cases?

Admiral PEOPLES. Yes, sir; we do.

TUESDAY, MAY 18, 1937.

ANNEX TO FEDERAL BUILDING AT ATLANTA, GA.

Mr. WOODRUM. Admiral, I want to go a little bit further in connection with the hearing we had yesterday.

Some members of the committee had an informal conference with Congressman Ramspeck of Georgia and a committee from the city of Atlanta with reference to their situation at Atlanta, Ga.

It was represented to those of us who conferred with these gentlemen that they were in a very desperate situation down there, and I wondered if you could give us briefly your viewpoint on that situation. Admiral PEOPLES. The particular proposition you refer to, as I understand it, sir, is in connection with the bill introduced for the construction of a Federal building at Atlanta, Ga.

Mr. WOODRUM. Yes.

Admiral PEOPLES. There are two properties there that are leased, I think, by the Government at the present time at very reasonable rentals, which include housing for the emergency agencies, and while it is true that some of the permanent agencies there will have to continue paying rental for some time to come, we have believed that now is not the time to proceed with construction of a $3,000,000 building at Atlanta.

For that reason the Treasury Department wrote a letter to the chairman of the Committee on Public Buildings and Grounds of the Senate, which I might read to you. It sets forth the situation in great detail.

This is with reference to the matter at Atlanta. The letter says: ATLANTA GA., May 13, 1937.

DEAR MR. CHAIRMAN: Further reference is made to your letter of April 13, enclosing a copy of bill S. 2070, to provide for an annex to the Federal building at Atlanta, Ga., and asking the views of this Department in connection with the bill. There are two Federal-owned buildings in Atlanta, with a combined floor area of 423,094 square feet, entirely occupied by permanent agencies, with one exception. The Government is also renting commercial space, 129,034 square feet for permanent agencies and 85,616 for temporary activities, a total of 214,650 square feet, at an annual rental of $120,255, the average rate paid being 56 cents per square foot. This is considered a very reasonable cost. A portion of this space, amounting to 92,088 square feet, is located at 10 Forsyth Street in a building which was leased by the Procurement Division for a period of 5 years, under the authority of Public, No. 351, approved August 27, 1935, 49 Statute 885, at an annual rental of $58,752.12, being $0.638 per square foot, and includes operation and maintenance charges.

The Home Owners' Loan Corporation is occupying, under a 5-year lease expiring September 30, 1939, 48,304 square feet at an annual rental of $10,999.92, which is 23 cents per square foot. By reason of these favorable leases, it will be seen that it is to the interest of the Government to continue to rent space rather than make a large investment at this time for a new Federal building.

The policy of the Treasury and Post Office Departments is to recommend buildings in large cities where rentals are excessive, or where adequate commercial space is not available. The present space situation in Atlanta appears to be satisfactory to the Government from the cost standpoint. The future requirements of permanent and temporary Government activities located in Atlanta are difficult to forecast, but it is believed that the space needs of permanent activities will not exceed the capacity of the two Federal buildings and the area provided under existing 5-year leases.

If, however, Congress decides to authorize an additional public building in Atlanta at this time, it is suggested that no mention be made in the legislation of any specific location.

In view of the situation at Atlanta, the Department recommends that the legislation proposed by S. 2070 be not enacted.

The proposed legislation is in conflict with the program of the President.

Very truly yours,

Mr. TABER. How much of this 23 million dollars carried in the Budget estimate is necessary for the carrying on to completion of the projects that are already under way, or under contract?

Mr. MARTIN. That amount is $6,505,000.

Mr. TABER. And the balance is for new projects?

Mr. MARTIN. With the exception of $1,500,000 for major repairs and small extensions which are not contemplated under the annual appropriation, and $500,000 as an additional sum to augment the 10 and 15 percent authority we have had heretofore.

BALANCE OF FUND FOR AUGMENTATION OF LIMITS OF COST

Mr. TABER. That $500,000 is the whole of the augmentation that you estimate will be required in order to put you in a position to let contracts?

Mr. MARTIN. Yes, sir.

Mr. WIGGLESWORTH. What is the size of the fund referred to under the emergency construction paragraphs we are considering, that is the fund established by the Emergency Act of 1935, as augmented by the Deficiency Appropriation Act of 1936.

Mr. MARTIN. The original fund was $2,500,000, which Congress authorized to be transferred from the Public Works Administration to the Secretary of the Treasury. That we have augmented by $500,000 under the authority contained in the act approved June 22, 1936, making the 3 million dollar fund at present.

Mr. WIGGLESWORTH. Which is intact now?

Mr. MARTIN. Which has been obligated up to within about $200,000. Admiral PEOPLES. There is a balance of $189,000.

Mr. WIGGLESWORTH. So there is roughly $200,000 available for augmentation of the limits of cost.

Mr. MARTIN. For prior projects; yes, sir.

Admiral PEOPLES. We have a complete itemized list of each of those augmentations. That is in the record. That is a list from the beginning in 1934 down to date.

TEMPORARY TECHNICAL EMPLOYEES

Mr. WIGGLESWORTH. The authority to employ by contract or otherwise without reference to the civil service or classification act has been carried in every one of these bills heretofore?

Admiral PEOPLES. Yes, sir.

Mr. WIGGLESWORTH. That is essential from your point of view? Admiral PEOPLES. It is essential because they are temporary employees; they are taken for the period of the job, and when the job is finished the appointments are revoked.

Mr. MARTIN. Out of a total number of employees of 2,049, 1,026 are temporary employees.

Mr. TABER. How much of that force will fade away with this reduction?

Admiral PEOPLES. There are about 200 going now, some have already left within the last few days. Mr. Reynolds, can you tell the committee how many more will go soon?

Mr. REYNOLDS. I think as to the temporary technical force, that is, the architects and engineers, that practically all of them will be released by the end of this year.

Admiral PEOPLES. There will be nearly 800.

Mr. TABER. All of the temporaries will go.
Admiral PEOPLES. Yes, sir.

Mr. REYNOLDS. We will keep some of these men, Mr. Taber, until a little later on because the construction of these buildings is at its height now, and quite a number of temporary people are employed with respect to construction activities.

ESTIMATED MONTHLY EXPENDITURE OF FUNDS FOR LAND AND CONSTRUCTION FOR 1938

Mr. TABER. Have you, in the table you have submitted to us, given us a monthly schedule of how the funds will probably flow out of the Treasury next year?

Mr. MARTIN. We have furnished a statement similar to that required last year by this committee showing obligations up to date