Sweden stood first with 32 per thousand of population. I believe that figure is correct. New Zealand came next with perhaps 31.5 per thousand; Canada came next with 24; the United States next. They didn't give the figures, but we can figure it out. In 1949 we built a million units, and with a 150,000,000 population, which runs 6% for each thousand of population.

Mr. LOCKWOOD. Thank you.

Senator SPARKMAN. The other thing I was talking about was the houses, the family units that you have built. Of course, I agree with you that it is an admirable trait in the American people to want to own their own homes. Yet, there are many millions of families who never will be able to own their own homes, or who due to circumstances at the present time are not able to own their own homes, and they must live in apartments. You know that, of course.

Mr. LOCKWOOD. Not necessarily apartments, but in rental units. Senator SPARKMAN. Yes; in rental units. That is all right. You know, of course, that in many areas of the United States there has been a terrible drag in the construction of rental units, and it is that table that I want to insert in the record, and it is a table with reference to the section 608 housing projects, and the price range in which they have been built.

For instance, a very large volume of the section 608 rental projects have been in the bracket of more than $100-a-month rent. I think this would be an appropriate place to put that in.

Mr. LOCKWOOD. I hope that table contains rents of the vast number of rental units, nonsection 608, that have been provided.

Senator SPARKMAN. This table relates only to section 608.

Mr. LOCKWOOD. The largest part, Senator, of the lower-cost rental housing has been provided by the remodeling and rebuilding of existing dwellings.

(The information is as follows:)

Distribution of monthly rentals in sec. 608 VEH housing projects covered by commitments issued January to June 1949 in selected insuring offices

Senator SPARKMAN. We would be glad to have any statistics that you have on that. I realize again that you go into fields where it is not too easy, I assume, to get accurate statistics. We would be very glad to have anything that would throw more light on this.

You were saying that you didn't see where a cooperative could save money. Here are some of the—

Mr. LOCKWOOD. In construction costs.

Senator SPARK MAN. Oh; on construction costs. We weren't talking about the individual builder; we were talking about removing the middleman.

Mr. LOCKWOOD. I can see where the cooperatives, with 60 years' term of amortization as compared to that with 25, has a tremendous advantage.

Senator SPARKMAN. Of course, by the very existence of corporate life, don't you believe that a longer period of amortization is justified? Mr. LOCKWOOD. I don't believe a building has any longer life if it is a housing cooperative as against a private builder.

Senator SPARKMAN. You don't mean 25 to 30 years is the life of a building?

Mr. LOCKWOOD. No; but you don't extend the life of the building by having it built under a cooperative plan.

Senator SPARK MAN. You don't think our amortization period has been tied to the life of the building, particularly, heretofore, do you? Mr. LOCKWOOD. No. Seemingly, in sound mortgage financing, the term of a home loan bears some reasonable relation to the life of the security.

Senator SPARKMAN. Certainly it should not run the danger of overextending it.

Mr. LOCKWOOD. That is right.

Senator SPARK MAN. In Stockholm, when we were talking there, to the private lenders-bear in mind, not to the government people, but to the bankers, the private lenders-we were told that they made their loans on structures up to 60 years for wooden, 100 years for permanent structures, stone or brick or durable material. We expressed some surprise, every one of us did, and these bankers said, "Why, why should we worry; we can take you out in the city and show you houses that have been standing for several hundred years."

Mr. LOCKWOOD. I take no issue on the point that the term of mortgage insurance program under FHA, limited as it is to 25 years, certainly doesn't begin to approach the limit of reasonable risk based on the life of the building. All I say is that this legislation is discriminatory because it attempts to give to the middle third of people who will form a certain type of group organization a special 50-year term, special benefits, which they say we cannot risk giving to the ordinary citizen in the lower third or the upper third, who does not form a cooperative organization.

Senator SPARKMAN. That is the very point that I tried to make; that the difference is that in the cooperative you have a continuous body; you have perpetuity; you have just what you have in a corporation.

Mr. LOCKWOOD. You have just as much perpetuity in any housing accommodation.

Senator SPARKMAN. No, sir; because when the individual moves in or out, that individual has to look after putting the successor in, but in the case of the cooperative the cooperative is there, you know it is going to continue to be there, and the building is not going to be vacated.

Mr. LOCKWOOD. Stripped of all frills, legal techniques, the same continuity exists as exists in a cooperative housing project in any ordinary project for this reason: that there is a valuable piece of

property which someone the occupancy of which is valuable to someone, and it is freely transferable and under all laws the impetus to its transfer is there, both in trying to realize some of the value already invested and in terms of owner; or if the mortgage lander has a large investment in it, the impetus to securing its occupancy is there, also.

I don't think you can make any case on that point that there is a perpetuity advantage in cooperative housing. If the housing isn't desirable it will not be occupied, whether cooperative or non. is desirable, it will be occupied.

If it

Senator SPARKMAN. I won't argue further. I will say I don't fully agree with you. Or I will say this: if you are correct, then we are highly unrealistic in our present Government-insurance program in cutting the period of the loan down to a maximum of 25 or 30 years, because we know that the average house is going to last a whole lot longer than that.

Mr. LOCKWOOD. I will agree with you; that it is unrealistic. I have always so contended.

Senator SPARKMAN. We agree on that point, and this is probably a good place to quit.

Senator Bricker's administrative assistant wants to ask a question. Mr. MINOR. Mr. Lockwood, I know you are familiar with S. 2246 as it was reported by the Banking and Currency Committee last August. You know there was a section which was called the cooperative housing insurance section in title I of the bill.

Now, in view of what you said about the difference between direct lending and Government insurance, and assuming that there is a problem here for cooperatives which they are unable to meet under purely private financing, is it your judgment that this section would probably take care of that problem?

Mr. LOCKWOOD. I don't exactly know which title you refer to. There was a cooperative housing title in section—

Mr. MINOR. Here it is.

Mr. LOCKWOOD. In the bill as reported from the committee, which involved direct lending as well, it contained a cooperative title which was equally objectionable as the amendment here introduced. I have assumed this amendment is intended to take the place of that title of 2246.

Mr. MINOR. This title provides for FHA insurance.

Mr. LOCKWOOD. This is FHA insurance for housing cooperatives? Mr. MINOR. That is right.

Mr. LOCKWOOD. I don't see that there is any particular objection to that. The FHA insurance program for housing cooperatives, so long as it is not given any preferential differential in the interest rate or the term of amortization, as compared with other FHA loans, is certainly not objectionable, and as long as it is put on a sound basis. Mr. MINOR. That is all.

Senator SPARKMAN. Thank you very much. We have three more witnesses.

Mr. Harry S. Barger.

Will you identify yourself for the reporter, please?

STATEMENT OF HARRY S. BARGER, ON BEHALF OF THE NATIONAL ECONOMIC COUNCIL

Mr. BARGER. Mr. Chairman, I am Harry S. Barger, appearing for the National Economic Council, Inc., in opposition to S. 2246, a bill designed to provide additional Federal financing of homes for middleincome families. The council is a private, nonprofit organization of business concerns and individuals who believe in, advocate, and would like to see a sound National Government.

I have filed wth the clerk a little pamphlet stating the purposes of our organization which I assume will be given to the members of

the committee.

Presidents Van Buren and Cleveland said it was not the function of the Government to support the people, but the duty of the people to support the Government.

More and more people are reaching the conclusion that it is not a proper, constitutional function of the Federal Government to provide a home for every family in the land, the recited policy of Public Law 171, enacted during the first session of the Eighty-first Congress, to the contrary notwithstanding; also, that it is not a proper function of the Federal Government to attempt to provide social security for every citizen from the womb to the tomb. Manifestly, the only person having even a close approach to absolute security is the man in jail for life; but, if and when the Government reaches the point where it cannot longer support and maintain the jail, that man's security is gone. Such programs stretch the general-welfare clause of the Constitution beyond all semblance of reason-that clause has already come to mean a "class or group-welfare clause." The general-welfare clause has even been given extra territorial application: It is invoked to justify burdensome taxation of the American people for the relief, rehabilitation, and uplift of most all peoples of the earth-almost all but Russia, and she is busy making us spend the United States to destruction.

To June 30, 1948, through the ill-fated, disreputable, and wasteful Ickes-Tugwell housing ventures, and still later ones, the Federal Government had spent and incurred contingent liabilities aggregating more than 16.7 billion dollars; but nothing like the approved and expected housing units were ever produced. About all that resulted was a continuing and growing demand by minority groups, acquiesced in by political leaders and public officials, for more and more of the same. Add that expense and contingent liabilities to expenditures and contingent liabilities authorized for housing since June 30, 1948, and the total will be a close approach to 35 or 40 billion dollars for public housing, while the bill under construction will add other billions.

Past emphasis has been on slum clearance; but it seems safe to say that, if local officials had enforced their building codes, health regulations, and had resorted to remedies at their command, there would have been fewer if any slums to clear.

President Pierce said in vetoing a bill designed to further furnish support for the indigent and insane in the States that he found nothing in the Constitution which made the Federal Government the great commoner of all the people.

Nobody has ever given any reasonable excuse for passing on to Federal taxpayers generally the cost of clearing slums that were permitted by local officials.

Prior congressional hearings and reports have shown that completed Federal housing projects have been used and misused for purposes other than that of housing persons Congress intended to help, and they have served classes of persons never meant to be served.

I might say that Baltimore, Cincinnati, Atlanta, and other cities are taking steps to obviate that situation of official cognizance of avoidance of slums before they appear by a more strict interpretation or observance of their present regulations.

Frequently, many housing projects produced at Federal expense have been used to house high-income people, political bosses and hangers-on, even high-salaried Federal employees who have enough pull to obtain occupancy at subsidized low rentals. How can we ever expect then public housing to be better than it has been in the past so long as it is produced with public funds and is operated and managed by political-minded human beings who derive their income from the Federal Treasury?

In 1941 it was found that there were six federally financed housing projects in New Orleans, La., which were operated by overstaffed and unnecessarily costly management organizations-they had established management set-ups before ground was broken for construction of the projects. A financial statement of those projects, prepared in connection with applications for permanent USHA financing, showed anticipated project receipts exactly equal to anticipated operating

expenses.

When asked whence would come the funds for interest on USHA loans, answer was made that the interest would come from the Government's maintenance and operation subsidy. The largest real-estate firm in New Orleans said it would be glad to rent, manage, operate the projects, and oversee repairs, for the usual rental-management fees of 5 percent of the rentals, but the projects remained under political management.

It was also learned that the New Orleans projects (and many others) had been financed with the proceeds of so-called short-term notes which USHA procured the local housing authority to issue and sell to bidders offering to buy them at the lowest rate of interest. They were unconditionally guaranteed, as to both principal and interest, by USHA and they were paid by that agency at maturity.

It was reported that USHA guaranteed those short-term notes to the extent of $3,000,000,000. The proceeds of the short-term notes financed the acquisition and construction periods of the projects, and the local housing authority sponsors paid not one penny of interest during those periods, notwithstanding the United States Housing Authority Act specifically provided that interest at the going Government rate plus one-half of 1 percent should be paid for USHA funds.

Some folks will claim that contingent liabilities mean nothing, that they will entail no cost or loss to the Government; but it is noteworthy that in reporting to the House Appropriations Committee on the public debt and contingent liabilities at June 30, 1948, the Budget Bureau had this to say concerning contingent liabilities: