Commentary Magazine

Depressed Area Aid

To the Editor:

. . . As an industrial sociologist long concerned about unemployment and economic development, and as the one in charge of the Area Redevelopment Administration’s field operations in distressed areas, I want to thank you for publishing Dan Wakefield’s article, “In Hazard” [Sept. ’63] . . . It provides a renewed explanation of the need for a program that goes beyond surplus food handouts, unemployment compensation, and reliance on total exodus from such areas as a “solution” to their problems . . . .

One criticism I have of the article, however, is Mr. Wakefield’s apparent lack of information about the ARA’s accomplishments to date in eastern Kentucky, especially in view of his quotation from an ARA official who said he would never go there because “these places depress me.” . . . I know from my own records of ARA field activities in eastern Kentucky, over the past twenty months, that at least four hundred man-days have been spent there by employees of our agency—experts and technicians in the field of economic and community development . . . . They have been there, and will continue to be there, to analyze economic area potentials, to service applications for financial assistance to industrial-commercial projects, public facility projects, and technical assistance programs, needed to attract industry and other job-creating enterprises. In addition, ARA has called in specialists from Agriculture, Interior, and other Federal agencies.

To date, ARA has lent about $3 million to private companies, mostly new ones, for projects that will make possible about 750 jobs in eastern Kentucky. A dozen or more projects are now being processed for that area. In addition, the agency has financed, on a grant basis, the construction in the Hazard area of a Wood Utilization Center for the University of Kentucky, aimed at the exploitation of the growing timber resources of that area, at a cost of $642,000 and involving the creation of 300 jobs. If full impact will not be felt for some years; . . . this is what economic development entails. An entirely new economic base has to be created.

Economic development also involves the provision and maintenance of community facilities without which private industrial and commercial activities cannot thrive. Toward this end, ARA made possible the continued operation of the five eastern Kentucky UMW hospitals that were about to close down, which would have meant the loss of more than 2,000 direct jobs (not counting those whose livelihood depends on the employment of these hospital employees) and the loss of vital health services in that area. Because of this impending economic and community shock, ARA granted nearly $4 million to the Presbyterian Board of National Missions which will create a non-profit organization to keep the five (not four) hospitals in business in eastern Kentucky. Two thousand direct jobs saved are nothing to sneeze at and many of these are in the Hazard area. The above cited jobs saved and created through ARA assistance do not include those resulting from the several training programs financed under both ARA and MDTA, currently numbering more than a thousand persons in eastern Kentucky. . . .

All of these activities are only the first steps toward economic rebirth. Obviously they are not sufficient in quality or quantity, but they are necessary first steps, if only to kindle the dormant hopes and aspirations that are . . . indispensable if regional programming . . . is to have the advantage of local momentum and receptivity.

. . . Mr. Wakefield’s statement that “In Perry County . . . ARA had created no new jobs . . .” is based on the misconception that ARA unilaterally initiates and/or allocates jobs—as if ARA were some kind of WPA program under which it might be possible to “make work.” To repeat, ARA is an economic development program, not a relief program: its aim—as defined by the Act which created it—is to assist local and regional economic development committees in their self-analyses of obstacles and potentials in their area, and to process applications for viable industrial-commercial, and public facility projects (which must be tied in with private employment possibilities, e.g., water and sewage for a metal fabricating plant) that need financial assistance otherwise not available from private lending sources. The law further sets a limit of 65 per cent in ARA loans to private developers, with the remainder to come not only from the employer himself but also from some public or quasi-public local development fund. This latter requirement in and of itself is an obstacle to quick-and-easy “job-creation” by a federal agency. Furthermore, such an agency—in the short run—can only respond to such local initiatives as may or may not exist, actively or latently, in a given area. The long-run prospects lie in the tedious process of stimulating interest, initiative, knowledge, and organization, among all the social and economic segments that have to be put together for successful economic development, including private and public, local, state, and federal organizations . . . .

I hope this brief resumé of what just one government agency is doing in eastern Kentucky, and elsewhere in Appalachia, provides your readers with some indication of the efforts of federal and state governments, along with progressive private interests, to apply the techniques of a “domestic Marshall Plan and AID” to America’s own areas of high, chronic unemployment and rural poverty.

Harold L. Sheppard
Assistant Administrator
for Area Operations
U.S. Department of Commerce
Washington, D.C.



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