fied by the fact that more than one fourth of all present unemployment occurs in this industry.

The 1926 level of total construction aggregated more than $7,000,000,000. The 1933' construction totaled less than 20 percent of this. Residential building accounts normally for 50 percent to 60 percent of total building. In 1933 residential building had declined 90 percent or to 9 percent of the 1926 volume. A normal residential construction year aggregated $3,000,000,000. In 1933 less than $300,000,000 was spent on new homes. In the last 2 years, not enough single homes have been built to replace those destroyed by fire alone. We have an annual need of 400,000 home units. In 1932 and 1933 the Department of Labor estimates that not more than 40,000 homes were built each year, or a bare 10 percent of the requirements.

This country is not overbuilt at the present time. A very definite need for homes exists that has been variously estimated by reliable sources from 800,000 to 1,500,000 single units. This need has not been apparent as a real demand because of lack of purchasing power, lack of availability of mortgage money, and the doubling up of families.

Regardless of the fact that we have had a depression, the country has continued to add to its population and also to the number of families during the last 3 years at the estimated rate of 350,000 families per year. Homes have probably been provided for not more than one third of the new families during this period and we have made no provisions at all for replacing those homes which have been destroyed by fire or have become obsolete. In addition, many thousands of our present homes are in vital need of repair to make them livable and healthy. I have seen estimates that postponed repairs and improvements to homes are accumulating at the rate of 2 to 3 billion dollars per year.

Some of the real property inventories now being made available by the Department of Commerce bear out these facts. For example, the reports on the little town of Nashua, N.H., indicate that in a total of roughly 4,600 homes, and the doubling-up of families and definite conditions of crowding were reported in almost one fourth (1,100) of them. More than 2,000, or almost half of these homes, needed minor repairs, 500 needed basic repairs in the structure to make them safely livable, and 90 of them were totally unfit for use. The farm housing survey made under the direction of the United States Department of Agriculture indicates that in one county in Kentucky 22 percent of the farm houses need to be completely replaced. In the same county 62 percent of the occupants of homes want an additional bedroom, 31 percent an additional living room, and 63 percent additional storage space. An even greater percentage of the homes indicated needed structural repairs varying from new foundations to new furnishing and including every conceivable portion of the house.

These facts do not lead to the conclusion that this country is overbuilt or that a market for products of the construction industry does not exist.

The question remains, Why is building not going ahead? Possible reasons, as indicated by an actual survey of conditions made, are (a) high cost of building, (b) lack of purchasing power, (c) lack of mortgage money, and (d) not profitable as an investment.

Those are the main reasons given as to why building is not going ahead.

Senator CoUZENS. What is that based on?

Mr. BROWN. C. W. Young & Co. made a survey and reported the statistics.

Senator COUZENS. Have you read Mr. Ackerman's articles in the Architectural Forum?

Mr. BROWN. I do not recognize those articles by name.
The CHAIRMAN. Very well. You may proceed.

Mr. BROWN. Only 10 percent of the people gave the high cost of construction as a reason why they were not building at the present time. A comparison of the changes in building costs during the past few years, using 1913 as 100, indicates the following: Building material prices in 1926 were 76 percent above 1913. At the end of 1933 they declined to 35 percent above 1913. In March of this year they were roughly 50 percent more than in 1913, or 25 percent less than in 1926. Building trades wages in 1926 were roughly 250 percent of the 1913 base. Wages had declined last year only about 5 percent from the 1926 level and have increased slightly during the first months of this year.

The total cost of building in 1926, roughly twice that of 1913, was in March of last year less than one third more costly than in 1913. In April of this year building is roughly half again as costly as in 1913.

To answer the question that building material costs are too high, I can compare them with commodity prices of basic necessities. Since March of 1933 the cost of wheat has been almost doubled and the cost of flour has gone up 75 percent. During this same period the cost of brick and cement have both gone up roughly 10 percent. In a period of a year the cost of wool and cotton which go into clothing has almost exactly doubled. The price of paint has been raised about 30 percent on the average. I could make similar comparisons with other commodities, but any general figures on commodity prices are apt to be misleading for they do not show the actual price at which transactions are made. The cost factor is relatively unimportant as an obstacle to a revival in construction.

What about mortgage money and the value of building as an investment? The almost total lack of mortgage money and the unprofitableness of any investment in construction are indicated by more than 50 percent of those replying to the questionnaire as reasons why they are not undertaking building projects at the present time. The answers to these two objections lie within this housing act. It is an underlying purpose of this act to make mortgage money available where there is now a shortage and to make that investment more profitable by reducing the cost of obtaining mortgage money and eliminating the unsound practices of the past. Capital invested in land and building declined from an average of $61,000,000 a month in 1926 to practically zero in 1933. Any man who has attempted to obtain mortgage money on worth-while property from almost any source in the past few years can testify to his inability to obtain such a loan regardless of the worth of the property.

A large industry association recently checked this situation with a survey on which they received reports from a sample of the

country's building supply dealers, covering more than 1,700 dealers in 883 counties of the 48 States. In practically 75 percent of the cases, no first mortgage money was stated to be available. In 124 counties out of the 883, there were located no lending institutions of any nature. Seventy-six percent of the dealers reported a very definite need for 75 percent amortized loans as the type most necessary to stimulate any form of building. Should mortgage credit be made available, these dealers, representing a sample of about 9 percent of the total dealers in the country, indicate a market would be immediately opened for 275,000 homes and more than 250,000 farm buildings.

By opening up new sources for mortgage money where it is not now available and by insuring mortgages on new and existing homes, this bill should again induce private capital to make an investment where in the past few years it has been unprofitable and even hazardous.

A lack of purchasing power is stated by roughly one fourth of the people who replied to this questionnaire as another reason why they are not building. Increasing the purchasing power of this country depends upon putting people back to work and I have already shown that this can best be done by stimulating the construction industry where the greatest unemployment today exists.

We come back to the question, How is this housing act to put people back to work? It is designed to accomplish two things: First, to assist in immediate recovery through the rapid employment of men in a Nation-wide modernization and repair program, and, second, to encourage permanent reforms in our mortgage structure which will assure a continuation of this employment through the stimulation of new home building on a sound basis over a long period.

There are 26,000,000 homes in this country, a large percentage of which not only are in vital need of repair work to maintain their usefulness as homes but practically every one of which can be renovized or improved. These homes can be made more comfortable and healthful places in which to live. Proper improvements will increase their value and protect the investment which the owners have made. The normal large construction job requires a considerable amount of estimating, engineering work, and planning which may require as much as a year to 2 years before men are actually put to work in the field and in the factory supplying the materials. The average home-modernization project or building-repair job can be quickly planned and estimated, and men may be put to work within a few hours to a few weeks from the time when the home owner desires to proceed. It is evident that the drafters of this housing act recognize this important time factor and by providing definite incentives in the way of advantageous credit terms and by providing a definite program for stimulating this activity in all types of buildings and homes have produced a sound plan from which substantial results can be obtained most quickly.

A modernization program amounting to possibly $750,000,000 a year over the next 2 years would stimulate an employment of more than 1,000,000 men for 4 months of each of these years. This is the immediate need, and each month of delay adds to the burden of our relief program that much more. Unquestionably, the plan requires

a careful program of selling in every community in order to speed its effectiveness.

The portions of this act providing for mortgage insurance and the establishment of mortgage associations, as well as the insurance of building and loan association deposits, should promote a flow of private capital into the most important part of the construction industry and within a period of a very short time return the operation of the construction industry and return the employment within this industry to a better balance with that of other industries. The effect should be pyramided many times beyond the direct influence upon the construction industry and the durable-goods industries through the stimulation of purchasing power of this group with resulting effect upon every industry in this country. This plan serves to eliminate many of the mortgage evils of the past, resulting in unwise speculation and excessive mortgage money costs, which have frightened private capital away from investment in this field during the past few years.

If the mortgage market and a free flow of capital is not reestablished, the construction industry cannot expect much building in the balance of this decade. It has been estimated by one very reliable source that under present conditions, and if we do nothing, we can expect no more than $2,000,000,000 of annual construction over the next decade, or not more than 25 percent of the average annual volume during the past decade. This adjustment in the size of the construction industry to one quarter of its former size will result in a permanent unemployment roll of 2,500,000 men in the building industry alone. The only possible support which these men can obtain will be from the dole or some other form of relief which must throw a burden upon every other citizen of the country, or get back to the land and get support for themselves.

If the provisions of this bill are put into effect, it is estimated that the annual construction market can absorb in the next decade a considerable portion of the present 2,500,000 unemployed in the industry. Construction volume should then amount to 2 to 3 times present estimates or a total of from 4 to 6 billion dollars annually. These predictions do not indicate an immediate return to a construction volume comparable to that of the last decade, but they indicate an adjustment of the industry to a new level which should enable us to provide employment for the majority of those now unemployed and assist in the stabilization of all other industries.

Housing represents in normal years 60 percent of the total construction industry. This bill will stimulate the major proportion of that industry by encouraging the free flow of capital from private sources. The balance of construction can well obtain its financing from existing private sources when a sound investment basis is demonstrated.

The long-term phase of this program places the construction industry in a position to expect a normal volume of business with a normal level of employment if the mortgage market is opened up as designed, if the home owners will borrow, and if the investors will lend their money. Results from this plan cannot be expected rapidly since a careful program of education for communities, for the farmer and for the home owner must be carried out to encourage efficient planning and maintain standards of design and constructin that will

provide a worthwhile investment for the home owner's fund. This program of education must reach every factor in the construction industry in order that the evils of the past may be eliminated and a sound structure built for the future.

The provision of new housing for our people and the badly needed. repair of existing homes are far more than economic necessities. The health, morals, citizenship, and the basic standard of living of our entire people are vitally affected and influenced by the houses in which they live and the homes in which they raise their families. No estimate can be made of the wealth which would be added to this country by eliminating crowded housing conditions and making more healthful the many city and farm homes which are now inadequately provided with what many of us call the ordinary conveniences of our civilization. It is my belief that the essential repairs of old homes and the stimulation of construction of new homes made possible by the passage of this act should alone warrant its support and careful consideration.

I cannot predict the immediate success of any of the major phases of this act to bring about recovery or permanent reform in this great industry but I can foresee greater possibilities for a stimulation of recovery and a return to a normal basis over the next decade of the durable-goods industries through the operation of this plan than by any other program yet devised. This act does not involve a program for the benefit of any one industry, but by stimulating a new volume of business in the large group of industries which provides new homes and better homes for the people of this country, I can see one of the most powerful means for returning to work a very substantial portion of those now unemployed, for broadly stimulating increased buying power and for encouraging the return of private capital into sound investments. The results should be farreaching, not only in an immediate effect but in providing a permanent stablizing and corrective influence on our country's greatest market for goods and services of all kinds.

Senator COUZENS. On yesterday it was testified here that about 33 percent of the defaults in the case of mortgages was due to unemployment. Would the durable goods industries be willing to subscribe to an unemployment fund to insure income for these workers?

Mr. BROWN. Do you mean in the next depression?
Senator COUZENS. No; now.

Mr. BROWN. An insurance fund has to be built up.

Senator COUZENS. Wouldn't you be willing to commence subscribing to such a fund, or, I mean, would not the durable goods industries be willing to subscribe?

Mr. BROWN. I do not know that I could speak for the durable goods industries, but for my own company I would be in favor of it. I think the time is coming when industry is going to employ some form of unemployment insurance.

Senator COUZENS. You have given a good deal of time on the durable goods industries committee. Would you object to taking up with them this matter and see if they would endorse that plan inasmuch as they have endorsed this plan?

Mr. BROWN. I will take that up with them.