pragmatic flexibility of the system to find new and different answers from one area to another.

I believe we have a set of regional governments in the United States which must play the principal role in developing and implementing a strategy for national development. They are called the States.

In making this assertion, I am fully aware that the States have provided little active leadership or assistance in coping with the problems engendered by the massive rural-urban shift of population and that they have indeed been the chief culprits in some aspects of the problem. The assertion is made simply because to do the job that must be done there is no alternative.

It is doubtful that the Federal grant-in-aid system, as it is currently constituted, is up to the job. Categorical grants-in-aid were fine so long as the National Government addressed itself, from time to time, to rather narrowly defined specific unmet needs in the Nation as a whole.

But, today, our national grant-in-aid system covers the entire waterfront of domestic policy and its structure has become too cumbersome and, in many cases, redundant to be used in any broad-scale attack on our urban and rural problem.

Nor does it appear that the existing techniques for Federal, State, and local cooperation will continue to be appropriate. At the moment, the Federal grant-in-aid system is essentially "passive" in nature. It requires that an applicant have the initiative and the know-how to take advantage of an extremely complex system. It is fair to say that real expertise of this kind can be recruited only by the larger cities. Thus, the rural areas, bemused by these complexities and, lacking technical staff, are much less capable of making effective use of the system.

We must find a way to fill this leadership void. There are several ways to do it. But the essential leadership must come from the States. It is they, after all, who have many of the primary powers under the constitutional system to do something about the problems which currently afflict us. There are those, embittered by past State inaction and the seeming inability of State governments to get public approval in their attempts at modernization, who claim that the States are incapable of doing the job.

Until recently, they could point to malapportioned legislatures; to how special interests seem better able to hold sway in the halls of the State capitols; to archaic State constitutions; and to the fact that in many States, property rights seem to have preference over individual rights.

But when all this is said and done, it does not answer the problem. We are not concerned with the past; we are worried about the future. And there is no substitute for strong States in attacking our problem.

Local government is a creature of the States. And if we are prepared to recognize that new local governmental arrangements are required to deal with our rural and urban population problems, then the State legislatures must play a principal role in the attempt to correct the problem.

The States are the prime administrators of our political system. They make and enforce most of the laws. They build and repair most of the

highways. They oversee and support most of our schools and many of our colleges and universities. They administer most of our health and welfare programs; the larger part of our prisons and courts.

Because they have the powers and the tools needed to meet the problem, the States must be strengthened, not weakened, in their capacity and determination to deal with the problem.

It is in the national interest not only to enact "model cities" programs to loosen up the rigidities of the grant-in-aid system and facilitate a comprehensive approach to metropolitan problems; it is also in the national interest to enact "model States" programs and "model district" programs for nonmetropolitan areas.

We must foster preparation of State and area strategies for development which can convert Federal assistance to communities from a "passive" program, as it is at present, to an "active" one; one in which the States and localities have determined where urbanization must be strengthened and where growth can be induced; one in which, based on these determinations, public resources at all three levels of government can be concentrated to carry out the objective. One that attempts to determine what future can be attained in a local area and provides a concrete year-by-year program and budget to realize that future. No more the awaiting of haphazard project-by-project applications from applicants who know how to fill out forms. That is not good enough to do the job.

The States, because of their powers, must assume major responsibility for preparing these regional strategies employing all their legal and financial powers in the process. But the National Government should be prepared to help them.

As one way, we have heard a lot of talk about the possibility of substituting some "block grant" approach for the Federal categorical grants-in-aid. But there is considerable reluctance on the part of many to hand State governments blank checks from the National Treasury unless the Nation, as a whole, can be sure that the national interests will be served. There is, after all, an enormous unevenness in competence and capacity from State to State.

The Nation has a right, as a prerequisite for making dramatically increased resources available to the States, to require that they "beef up" their competence.

Perhaps under a "model State" program national assistance should be provided to each State initially to develop the staff, the strategy, and the program designs for State development before any substantial funds are made available for implementation.

But once a State has demonstrated its ability to act with sophistication, intelligence, and foresight to shape its future development, urban and rural, the Congress might then make available a rather substantial sum to help the State and localities carry out the strategy.

There are numerous ways in which to determine the level of Federal assistance that might be provided. One way might, for example, be to provide to a State, 10 or 20 percent in additional Federal funds over and above the normal Federal grant-in-aid allocations which it presently receives under existing Federal grant-in-aid programs.

The Nation could monitor the progress and success of their efforts for a while before taking steps to provide additional assistance.

Obviously, such State plans for urbanization and development depend, in the final analysis, upon our ability to break down the parochialism which hamstrings intelligent development and public policy in many local areas.

We must convince the people that more is to be gained in incomes and employment by a cooperative "pooling" of resources and facilities in an area with a dwindling population and tax base. We must be able to show rural areas that to meet the competition they must build quality area schools, area hospitals, area water systems, area sanitation systems instead of the low quality, extremely localized facilities at present. And I might say that to the extent that Federal assistance is the culprit in fomenting continued construction of these obsolete facilities, it should be terminated. By broadening the geographic scale of our efforts in less urbanized areas, we also stand a better chance of recruiting the scarce technical talent required-talent no small community can afford.

Occasionally, we hear the charge that our States and localities will be incapable of organizing appropriate areawide districts, determining the appropirate growth centers and investments in such areas. This is

nonsense.

The Appalachian States have already done it. And if the 13 States of Appalachia can do it, the Nation can do it.

It is obvious that in undertaking such a program for national development, there are many things that must be done that are interstate in character. The design of new transportation systems, water reSource programs, education programs near State lines, require a regional, rather than State approach.

In recent years, Congress has recognized that there are large interstate areas of the country which have common problems that are not defined by State boundaries. Therefore, it has authorized the establishment of a number of interstate-Federal commissions whose primary purpose is economic development. If the experience under the Appalachian regional development program is any guide, these are significant new experiments in American federalism and their implications for the future are important.

But we should take a closer look at these efforts to see if their political utility does not extend far beyond economic development.

Each region of the country has specialized problems that are unique. Each region of the country tends to share certain priorities that differ considerably from other parts of the country.

At the moment, we establish our regional priorities through legislation based on some kind of "common denominator" which represents a "problem median" for the Nation as a whole. But a vocational education program that might be appropriate to meet the urgent needs of the South may be unnecessary in the middle-Atlantic region or the upper Midwest. We must devise new ways for bringing our national programs more in tune with regional and local priorities. Frankly, interstate-Federal commissions could serve this purpose and bring a higher degree of relevance into the Federal grant system. This is work. ing in Appalachia and it can work elsewhere.

The comments offered by the President's National Advisory Commission on Rural Poverty concerning the delineation of these regions are, in my opinion, well taken. The Commission observed that we

should draw the boundaries of our regions not around "problems," but around natural economic, social, and political regions, implying that, in many cases, the State lines are the logical boundaries.

It is quite possible that by fractionalizing our States in the current Federal-interstate development commissions we are fragmenting broad scale State attacks on the rural and urban population problem.

If that is so, we should rethink the way we are setting up these regions. In addition, the desirability of developing a national set of such regions-perhaps as many as eight or ten, embracing all the States ought to be explored.

Because such commissions will be made up of the Governors and a representative of the President, we might give them broad responsibilities for administering and allocating grants-in-aid in their region. This would break down much of the inflexibility and redundancy of our present system.

It may be, for example, that in the Middle Atlantic area the principal problem is not so much economic development as it is, say, the development of a rapid transit corridor from Washington to New York City.

In another area, the principal problem may have to do with marine pollution. In some other, a group of environmental difficulties. In others, it may be economic and social distress. Through the Federalinterstate approach, we could design into the Federal system a greater capacity for dealing with real problems by providing to elected and appointed policymakers rather than administration the kind of planning, allocative, and administrative responsibilities embodied at present in limited fashion in the Appalachian Regional Commission.

To assure full accountability to local aspirations, within each State and each region we should establish area development districts conforming to the labor sheds and service areas of centers for growth. This would not only compel us to view the rural and urban problem as inextricably linked; it would eliminate the artificial dichotomy in National and State attention to the urban-rural problem which currently besets us. It would also facilitate recognition at the local level of the need for the rural areas, the suburbs, and the city center to work together if they are to receive Federal and State assistance.

In other words, we are striving toward a new and better way to use the American Federal system.

As John Gardner, former Secretary of Health, Education, and Welfare has put it so well:

The old system of governmental arrangement-unmanageable city government, inadequate State government, disjointed relations between Federal, State and local levels, and uncoordinated Federal programs-is dying.

Meanwhile one can see at all levels the groping attempts to create a new system-a system that will be less wasteful of resources, that will profit by the advantages of large-scale organization, and will give a wider range of American easy access to the benefits of our society.

So, in summary, let me offer these recommendations:

1. That we clearly enunciate a national recognition that urbanization on some scale in our rural areas and not "back to the farm" movement is a part of the answer to a better population distribution in the United States.

2. That we recognize that our lack of a broad and consistent poliev for national development has contributed in part to the decline of

many of our rural areas and congestion in the metro areas and the waste of human and physical capital that implies.

3. That our present national objectives, as embodied in piecemeal statutes and programs, are contradictory and, in some cases, selfcanceling.

4. That a substantial reassessment must be made of public programs at all levels to determine how they-collectively-can be employed to promote the future healthy development of the country.

5. And that we develop new administrative and financial arrangements to tackle the problem systematically. This includes preparation of specific strategies for each area by the local people and the States with new forms of Federal assistance.

Our basic objective, is it not, is to provide equality of opportunity. We want to assure that no American child is penalized for being born in the wrong place.

So, let us stop this foolish talk about "two Americas"-one urban, one rural. They are tied together. They are interdependent. They are indivisible. If we recognize that, as well as the need for liberty and justice for all, we might just meet the minimum national objective contained in the Pledge of Allegiance.

Senator HARRIS. Thank you, Ralph. We will now hear from H. Ralph Taylor who is Assistant Secretary of HUD.

Biographical Sketch: H. Ralph Taylor

Assistant Secretary for Model Cities and Governmental Relations, Department of Housing and Urban Development; experienced as a consultant on urban renewal and development for both private and public agencies; served as president of Taylor-Hurley Associates and H. R. Taylor Management Corp., a private consulting firm; past director of New Haven Redevelopment Agency, under Mayor Richard C. Lee: past vice president, in charge of development activities, for a major private developer, James Scheuer of New York City; served as assistant director of the Somerville Housing Authority, the first urban renewal project in Massachusetts.

STATEMENT OF H. RALPH TAYLOR, ASSISTANT SECRETARY FOR MODEL CITIES AND GOVERNMENTAL RELATIONS, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Mr. TAYLOR. Thank you, Senator Harris.

When Governor McKeldin finished his delightful and revealing statement, I felt grateful that there would be someone intervening between local government and Federal Government in the program. But I am not so sure I am glad that Mr. Widner came in between, because he too, is a very tough act to follow. He has made a presentation that says, as I listened to him, that the regional commission and the States should be viewed as new, experimental, and hopeful vehicles for problem solving.

I hope he is right. I think we should encourage that kind of movement.

But the key problem today remains the credibility gap between those who describe the potential of the States and their performance.

Unfortunately, in too many areas, in too many parts of our country, the States, as they did this summer at the Governors' conference, on the SS Independence, walk up to and even open the door that leads to problems of the 20th century. Then in terms of positive action, they very