project which is being undertaken by a New York City local of the Amalgamated Meatcutters and Butcher Workmen, A. F. of L., will accommodate almost 300 families, and the monthly payments in this project will average about $65 a month. Anybody who knows the astronomically high rents which are being asked in new apartment developments in New York City knows what substantial savings these projects represent.

This is what two A. F. of L. unions have done even before the enactment of this legislation. In part, they have been able to get their projects under way because they are large unions operating under a favorable State law and able to secure funds fairly readily. Most unions would not be able to duplicate what they have done unless they received the kind of assistance and the favorable financial terms which will be made possible under this bill. But I know that, as soon as this legislation is enacted, A. F. of L. unions throughout the country will be among the most active groups in their communities in organizing cooperative housing projects.

Mr. Chairman, I have a supplemental statement that I would like to read, relative to the recommendation contained here about making a separate administrator under this particular law to administer cooperative housing on an equal level with home-financed and Federal public housing.

Senator SPARKMAN. Go right ahead.

Mr. GRAY. While I do not want to comment on those sections of the proposed amendment which relate to FHA-insured mortgages, I do want to bring to your attention the need for amendment of section 212 of the National Housing Act. That section, as you know, provides for a predetermination of wage rates for laborers and mechanics employed in the construction of projects undertaken in accordance with the provisions of section 207 of the act. We believe that section 212 should apply to all FHA-insured buildings, but we find it is not being enforced even in the limited way in which it is now written. I cannot believe that Congress ever intended to make to labor so idle a gesture as section 212 has turned out to be, because of the way in which it has been interpreted and administered by the Federal Housing Administration.

We have in the past few months called any number of flagrant violations of the prevailing-wage provisions of the act to the attention of Administrator Foley and Commissioner Richards, and have asked that apppropriate steps be taken to correct those violations. Our attempts to make this section of the act mean something have come to nothing. Please let me read from a letter written to me by Commissioner Richards on October 31, 1949, in reply to a letter from me, bringing to his attention long-standing and glaring violations of section 212, and you will see what I mean. I quote:

While this administration is not equipped to police or enforce the payment of prevailing wages by private contractors nor is it charged with such duty by the act, I can assure you that we have no desire or intention to accept the statutory certificate by the contractor if we have reason to believe that it is not in accordance with the facts.

I cannot agree with Commissioner Richards on his assumption that Congress gave FHA no responsibility for the enforcement of the prevailing-wage provisions of the act. I urge that there be written into the act a specific provision directing the FHA to assume that responsi

bility. One of the most commonly encountered methods by which contractors get around the provisions of section 212 is to employ journeymen at the rates established for apprentices, and then assign them to journeymen's work.

When one widespread practice of this nature was recently called to the attention of Commissioner Richards, and proved to be substantiated by the facts, the only satisfaction we received from him was a letter in which he stated as follows:

Acting under a misunderstanding of the proper procedure, the contractor, if he had had a doubt as to the ability of the applicant to perform a journeyman carpenter's work, hired the man on a probationary period of 1 week at a rate of $1.25 per hour. If at the end of the week the man proved capable of doing journeyman carpenter's work, his pay was raised to $1.50. If he proved incapable of performing a journeyman carpenter's work, his services were terminated. When I tell you that on this particular job the minimum rate established for carpenters was $1.50 per hour, you can see what the contractor gained by his "misunderstanding" of the proper procedure. The FHA did nothing to secure payment of the difference in the rate paid and the rate established to the men who had been deprived of their rightful earnings.

I urge also that there be written into the act some limitation upon the daily and weekly hours of work and a provision for overtime pay in excess of those established hours. Long hours of work, at straighttime pay, are now customary on many projects.

I submit that such practices, for which FHA disavows all responsibility, are completely contrary to both the letter and the spirit of section 212 of the act, and I urge again that you help us to correct this manifest injustice done to labor through administrative interpretation. If it must be spelled out, I urge your committee to recommend that this be done.

Senator SPARK MAN. Thank you very much, Mr. Gray.

Let me ask just one question:

You point up two or three-three, I believe-amendments that ought to be made. One of them has to do with the separate constituent agency; another has to do with the-I have forgotten what the second one was; and the third is the one you have just mentioned, but relating it specifically to the constituent agencies.

I may say that I am in agreement with you, and, of course, as you know, in title III of S. 2246 we did provide for a separate constituent agency. However, in the event the majority of the committee or the majority of the Congress decided against that and put it on the same basis that we put slum clearance and research and development in the Housing Act of 1949, that within itself would not be sufficient to cause you to withdraw your approval from the legislation as a whole?

Mr. GRAY. No; it would not. Such a large part would be favorable. We certainly urge your committee to give consideration to including that amendment. You see, under the Bacon-Davis Act, after the Labor Department redetermines the wage rate, they have no enforcement department. It becomes the responsibility of contracting agencies of the Government. That makes that law just a farce.

For instance, you can take the armed services; they had about 30 men making wage surveys. The appropriations have been cut in the Labor Department. The last check I made indicated they had seven people only devoting part of their time to making wage surveys. When, under Bacon-Davis, they do redetermine a wage rate for a

public-service contract the Army engineers and the rest are there with the data they have gathered, convincing them they are wrong. If they don't succeed there they are down to the Armed Services Committee of the House and putting the data before Mr. Vinson, and finally, in many instances, convincing him that Bacon-Davis is wrong. The agency charged with the responsibility by statute cannot get sufficient money from Congress to carry out the intent and purpose of the law. It is the same in FHA housing. They will even tell us, "What are you worried about? This is a nonunion contractor; he doesn't employ your men." But he competes with our employer. If he can pay 25 to 30 cents an hour below the rate, what chance does a competing contractor have to compete?

Senator SPARKMAN. Thank you very much.
Mr. GRAY. Thank you.

Senator SPARKMAN. Mr. Rodney M. Lockwood. Mr. Lockwood, we are glad to have you with us. pared statement?

Mr. Lockwood. Yes.

You have a pre

Senator SPARKMAN. You may proceed in your own way, sir.

STATEMENT OF RODNEY M. LOCKWOOD, PRESIDENT OF THE NATIONAL ASSOCIATION OF HOME BUILDERS

Mr. LOCKWOOD. My name is Rodney Lockwood. I am president of the National Association of Home Builders, and have been engaged in the business of building homes in Detroit, Mich., for a number of years.

For the sake of the record, I may say that the National Association of Home Builders is comprised of the membership of 127 affiliated local builders' organizations in as many cities throughout the country. This membership, with a certain number of builder members in areas where no local home-builder organizations exist, totals approximately 15,500 men. They build by far the largest part of the housing constructed in the urban areas of the Nation.

The members of our association in every State are the producers of the American home in volume-sometimes called the merchant builder but always the entrepreneur. By this method, this industry produced over 1,000,000 new homes in 1949-an all-time record. This is enough to house a city of 333,000 people, about the size of incorporated Birmingham, Ala., every 30 days. Stating it another way, on an average, enough housing was produced every day in 1949 to accommodate approximately 11,000 persons. This tremendous production, added to that of the other postwar years, means that accommodations for more than 13 million Americans have been provided in more than 312 million new homes since the end of the war. It is significant that this is more than three times the housing production of the rest of the world combined, not counting the countries behind the iron curtain, about which little can be known or believed in the way of housing claims.

The industry is not only proud of its record-breaking volume, which we hope to exceed in 1950, but it is particularly gratified by the success we have had in building units within the means of the middle- and lower-income families. FHA figures show that of all the houses financed through FHA's standard financing in 1948, more than one

half were bought by families in the $2,000- to $4,000-income group. We are confident that when the information on 1949 is compiled it will show a still higher percentage of housing going to the lowerand middle-income groups, due to an increasing emphasis placed by the industry on low-cost housing in the year just passed.

This national association in February 1948 launched a Nation-wide low-cost-home program, popularly known as the "economy-home program." Early last year the Housing and Home Finance Agency began to lend its cooperation and that of its constituent agencies. During these 2 years thousands of builders all over the Nation designed and built lower-cost homes by the hundreds of thousands. The effect of this drive is yet to be fully reflected in the statistics which are always months behind the accomplished fact.

In the case of the veteran, FHA figures show that more than 76 percent of all veterans buying new homes under the veterans' housing program combination FHA-VA-insured loans have incomes of less than $4,000 and more than one-half (51.6 percent) have incomes of less than $3,500. The Federal Reserve Board, in its Survey of Consumer Finances (June 1948), reported that the median price paid for new homes was between $7,500 and $8,500-or well within the ability of middle-income families to pay. No figures have been compiled on income of veterans getting section 501 loans, but I believe most of them are in the middle-income group.

There are no Government figures, to our knowledge, available on the incomes of purchasers of non-FHA-insured or non-VA-guaranteed homes. We know that the bulk of such housing is built in the smaller communities of the country and in the semirural areas where neither the FHA nor the VA are as active as they are in the metropolitan areas. Generally speaking, housing in such smaller towns and rural nonfarm areas is in a lower price class than the metropolitan housing. Therefore, we believe that if a complete national count were taken of family incomes of those who have been housed by the industry during 1949 the national averages or medians would be even lower by a substantial margin than those we have quoted above.

Since our members produce such a substantial volume of the Nation's housing, we are well qualified to discuss the impact and the long-range significance on our industry, as well as upon the home-buying public with which we deal daily, of the proposals contained in the amendments to S. 2246 here under consideration.

In opposing the cooperative-housing portion of those amendments, we wish at the outset to make our position with respect to cooperatives perfectly clear. We are not, and have never been, opposed to housing cooperatives as such. They are, after all, free individual enterprise in the fullest sense of the word. So long as they are purely groups of individuals acting cooperatively to do that which they could do individually, we see nothing inherently undesirable in such a program being carried out. However, such groups as a class should not be provided, directly or indirectly, with Government subsidies or special financing or tax devices available only to them and not freely available to all other citizens or forms of business enterprise.

The cooperative-housing proposal here under consideration contains, in our considered judgment, highly undesirable, and we should say dangerous, proposals which should not be confused with the legitimate encouragement of cooperatives. If enacted, these proposals may

lead to consequences which should be clearly understood by this

committee.

Let us examine briefly what is, in essence, proposed in this particular amendment. We are sure the provisions of the amendment have been discussed in full by the preceding witnesses. As you know, a National Mortgage Corporation for Housing Cooperatives would be established within the framework of the Housing and Home Finance Agency. That such a corporation is in effect a part of the United States Government, by virtue of the very complete controls exercised by the HHFA, cannot successfully be disputed. This Corporation would be empowered to make loans up to $2,000,000,000 for the production of for-sale or for-rent housing by nonprofit cooperatives. The bulk of its initial capital would be obtained from the Treasury with the balance being obtained from the long-term investment market through the device of 100 percent Government-guaranteed debentures. Proponents of the plan hope to achieve substantially lower rates of interest which are passed on to the cooperatives in the form of 50- to 60-year loans at approximately 3 percent. The operations of the cooperatives would be rigidly controlled, including the rents and the sales prices of the houses. Certain savings would be achieved by the cooperatives due to their general tax exemptions which are not available to other forms of enterprise. There are $25,000,000 of preliminary direct loans for planning and organization available from HHFA at low rates of interest and of course there is no assurance that the money will be returned. There are no limits on the value of the units to be produced but the loan from the Corporation can be for 100 percent of the total cost. The housing is supposed to be made available to families of moderate income, estimated as the middle one-third according to total money income from all sources of all families in the locality.

At the outset we must point out that this amendment was first disclosed only 11 days ago. It contains proposals which, in our judgment, vitally affect the following:

(1) The home-buying public for years to come-that is, the manner by which homes are to be acquired;

(2) The vast and complicated home construction industry-that is, its form and methods of doing business; and

(3) The Federal Government-that is, in its relation to the production of housing, its participation in and control of the industry, and its financial liabilities for many years in the future.

We are firmly convinced that this is unwise legislation and should be rejected for the following reasons:

1. The amendment puts the Federal Government into the business of mortgage lending directly. This is not a proper function for government. The device of a corporation controlled by the Administrator of the Housing and Home Finance Agency, which is merely a subdivision of the Federal Government, is a thinly disguised form of direct lending. Essentially there is no difference between the Treasury issuing bonds, the proceeds of which are used to make direct Federal loans and the proposal here to use 100 percent Governmentguaranteed debentures issued by a Government corporation. The ultimate liability is the same; the control by government is the same; the inducement to purchase by the investing public at a lower rate of interest is the same.