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The extent to which the Government will be called upon to meet these commitments varies widely.

I take it they used the word “widely" advisedly, although they could have said “wildly.”

The outstanding public debt, for example, carrying specific maturities, is a direct Government liability, as are most unliquidated obligations incurred against appropriations and contract authorizations. But for all other commitments in this table the Government's liability is only contingent. Whether the Government is called upon to meet those claims, and the amount of eventual disbursements, is dependent upon a variety of factors, including the value of the assets pledged to secure the liability, the trend of prices and employment, and a variety of other economic circumstances.

While the Budget Bureau has been furnishing this financial data to the House Appropriations Committee for many years, the foregoing is the first known instance of the Bureau accompanying the data with an explanatory statement concerning the Government's contingent liabilities.

The same House hearings show that Mr. Franklin D. Richards, Commissioner of the Federal Housing Administration, testified, in substance, that during the 2 years prior to his testimony his agency had guaranteed large housing loans,

under pressure, without adequate appraisals of the property tendered as security; that this occurred because Congress ħad not appropriated sufficient funds for enough manpower; and that “FHA insurance funds may assume a loss that they otherwise would not have to assume.

At a still later date a clearly inspired article in the Evening Star quoted FHA officials as having said that because Congress had appropriated insufficient funds the agency was having to operate without an adequate force to inspect construction projects where the agency had insured loans. Manifestly, as suggested by Mr. Richards at the time, there was no excuse other than pressure for insuring loans without adequate appraisals of the security, thus incurring unnecessary loss to the Government.

Figures furnished the House Appropriations Committee by the Budget Bureau show that to June 30, 1948, the public debt and contingent liabilities totaled more than $425,368,000,000. Since July 1 last, when the current fiscal year began, we have been and still are indulging in deficit spending totaling more than $3,709,000,000 at January 3, 1950, or more than $29,500,000 for each Government workday, more than $3,679,000 an hour, and more than $61,300 per minute. The total public debt and contingent liabilities as of now is astronomical, and the public debt bids fair soon to reach the debt limit of $275,000,000,000 last fixed by Congress.

The President's 1951 budget message and his January Economic Report promise more of the same, and it seems certain that no one can successfully laugh off the item of “contingent liabilities,” for, as the Budget Bureau intimates, a considerable part of them will mature into absolute debt and be presented to the taxpayers for payment.

It is my sincere belief that the American people are at their limit of patience and endurance of burdensome taxes for the perpetuation and expansion of the public housing program and many other squan

dermania schemes which the Federal Government, with the aid of a passive Congress, has undertaken, and it is becoming more and more apparent that, at some not too distant date, many legislators may be called to answer for their votes in favor of such programs.

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I further believe the people desire a reestablishment of our oncerevered Republic, of stopping the spending craze, and of permitting American industry and labor once again to bring us prosperity such as we have never known, without so-called Government aid and interference.

It was recently said that when the Constitution was signed the signers were not affixing their names to an application for social security.

Mr. Chairman, if I may, briefly, I would like to refer to an FHA project around Alexandria. The Evening Star of January 14, 1950, reported that Messrs. Brygarden, Jr., Herman W. Hutton, and Earl J. Preston as owner-builders are constructing an apartment-house project just outside of Alexandria to house 5,600 persons, consisting of two-bedroom units to rent for $71.75 to $74 per unit and 542 oneroom apartments to rent for $60.75 to $63 per unit, or a total of 2,100 units.

The reported total project costs are to be 15.5 million dollars, and it is, and I quote, “one of the first having medium rent to be built under the FHA program since the end of the war.” That looks rather close to me like an apparent intended duplication of the FHA work that you are providing for your newly created organization. The story had this to say—that the Federal Housing Administration's district office has committed itself to insure a $13,846,000,000 mortgage on the property at the completion. Construction financing with FHA insurance was provided by Investors Diversified Service, Inc., which will also supply the permanent FHA financing.

So, with the 15.5-million-dollar over-all cost, the unit costs will amount to $7,305, and the unit cost on the basis of FHA's guaranteed loan of $13,846,000,000 will average $6,754 per unit, leaving a unitcost difference of $785.30 attributable to the $1,654,052 of apparent private financing.

It appears that the average annual rental of the 2,106 units on the basis of full occupancy will be about $1,776,564. Allowing for interest, taxes, and depreciation, but not mentioning insurance, which FHA requires, taxes and depreciation being at, say, 6 percent annually, the first operating cost will be about $930,000, leaving about $846,564 for operating expenses on the basis of full occupancy against their later figures, at least 300 units being set aside for State and local taxes, leaving on the basis of full occupancy $546,564 a year, or an average of $295.90 per unit.

Since the owner-builders agree to furnish all utilities except electricity, it is assumed that water and other services will cost per year as follows: Per unit, water and sewer, $36; heat, $75; maintenance and management, $52; total per unit, $199, leaving a possible operating profit of $600.50 per unit on the basis of full occupancy or a total annual operating profit of $127,413, which is about 8 percent of the $1,654,052 of private investment in the property, and slightly more than eight-tenths of 1 percent of the project cost.

I may say that most real-estate people tell me they figure an occupancy of 80 to 90 percent. This project has all the earmarks of real temptation, (1) to construct the project for less than the insured loan and pocket the difference, or (2) for the owners to milk the completed project as long as possible, then to throw it back on FHA because of its guaranty of about 90 percent of the project costs.

I am not predicting that that is going to happen, but I suggest those as two possibilities. It would be interesting to know what the contractor will receive and to know whether the FHA's guaranty agreement provides that a deficiency judgment may be taken in event of default and ultimate foreclosure.

Some Government loans I happen to know do not admit of deficiency judgments. As I see this present bill, it will establish a new general agency. I am wondering, if the functions proposed to be conferred upon the new agency are adopted, authorized, why the same functions cannot be authorized by an enlargement of the powers of FHA; and, secondly, and I think by no means least, it will be a further step by the Government toward building up cooperatives. Already we have a large number of cooperatives in the country, and their annual income is between 8 and 9 billion dollars a year, much of which, perhaps the greater part of it, by far, pays no taxes.

And, indeed, it has come to my attention in several instances where corporations switched over to cooperatives for the purpose of evading the payment of taxes.

Those are things I mention that you gentlemen might want to consider.

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Thank you.

Senator SPARKMAN. Thank you, sir.

Are there any questions? There are some I would like to ask, but it is only 10 minutes until time to start voting in the Senate, so I will have to hurry.

Mr. BARGER. Thank you.

Senator SPARKMAN. Edgar Brown, representing the National Negro Council. Your statement is not too long? We have only 10 minutes until we start voting in the Senate.

I hate to press you into such a short time.



Mr. Brown. Mr. Chairman, I wish to bring up this question that we had once before of guaranteeing employment in these construction projects affecting so many people so that there will be no discrimination on account of race in employment by builders benefiting from Federal legislation.

I heard the Federation of Labor representative here today. Most of the building-trade unions that he represents do not permit colored workmen, outside of hod carriers, to work on these jobs.

With this vast amount of money the Government is spending, the colored people, one-tenth of the total population and contributing to the general taxes, as every other American citizen, ought to be guaranteed in this legislation the right to work without racial discrimination by these unions.

We are concerned as to whether this proposed legislation does anything to prohibit these unfair labor practices.

Senator SPARKMAN. I don't believe there is any such provision in the bill; no. In fact, I don't think there has been anything like that in any of our legislation.

You realize, of course, that the Government is not going to build these projects. That is a matter of private contracting between the


cooperative and anyone that they want to get to build it. Neither does the legislation say that they must use union labor or nonunion labor or any other type of labor. That is a matter that I personally do not

. feel the Federal Government has any business in legislating. In other words, we are not directing a cooperative as to how they shall go about building their houses. If they want to build it themselves, it is all right with us. Mr. Brown. The Government is guaranteeing the loans 100 percent. Senator SPARKMAN. That is true. It would be a guaranteed loan.

Mr. Brown. Why should the Federal Government continue to wink at these labor people's discrimination practices against other American citizens and still benefit from this legislation? In the publichousing bill on which we asked you to specifically prohibit racial discrimination, nothing specifically was set forth. Now, we hear of certain white people complaining about discrimination. The white people are now contending in Charlotte, N. C., that you are discriminating against them down there by building only Jim Crow units for Negroes.

I think that next, probably, the Catholic people will be protesting and saying they are discriminated against, then probably the Lithuanians, and the Irish people, ad infinitum.

I wondered if you had worked out some plan by which you could tell us just what group was going to be discriminated against, how much, and just who is going to be the almighty arbitrator, of what an American citizen should suffer discrimination next under this legislation, despite his tax receipts and honorable-discharge papers.

I would like to submit a statement, Mr. Chairman.

Senator SPARKMAN. We will be glad to have your statement. It will appear at the end of your oral statement.

Let me say this: that it seems to me that in the statement you made you have pretty well pointed out the difficulty that we would get into if we did write into law just how these various things should be done, or if we did try to set up an arbiter of the sort you recommend. However, you and I have discussed that before.

Mr. Brown. You have publicly and officially insisted on such unfairness. Do you believe there is anything in the legislation that you have passed that permits the administrators to continue racial discrimination ?

Senator SPARKMAN. I don't know that the Administrator is permitting any racial discrimination. As you well point out, the objection on that, in North Carolina on that project there, was that they were taking care of the Negro people but not taking care of the white population.

Mr. Brown. Up to date they haven't taken care of either one.

Senator SPARKMAN. Ordinarily, you don't think of discrimination working that way,

do you? Mr. Brown. You often talk about doing something equally, but the Negro never benefits, and now others are beginning to see it works hardships to all concerned. It just isn't right.

Senator SPARKMAN. There they were building a 400-unit development for Negro occupancy, and none for whites. That was the objection. It was not the people down there who objected.

Mr. Brown. They hastened to correct it when the situation was reversed.

Senator SPARKMAN. It was the Public Housing Administration here saying that this was an imbalance.

Mr. Brown. When they discriminated against the white people, they did something about it. The President issued an order, as you know. Separate racial units and segregation which you think is not discrimination, must have been racial discrimination or they would not have issued this order.

We would like to believe that you as legislators do not wish to constantly continue this practice. The executive department is attempting to stop this racial discrimination by appropriate orders and public exposure. After the executive department proceeds to stop this discrimination, I have noted statements, by those handling housing legislation such as this committee, saying that it is the view of Congress that they did not intend to stop segregation and discrimination on the basis of color. This is a sad commentary.

I don't think there is anything you can pass here under your oath of office and the Constitution of the United States that permits you and others to now and again broadcast statements across the countryI have heard and seen you on television declaring—I mean the present subcommittee chairman—that the southern Members of Congress didn't intend and that your influence would never be used in Congress to stop discrimination in these housing projects, despite they are being built with Federal funds, all the taxpayers' money.

We think that you are violating your oath of office and the Constitution and the Supreme Court decisions outlawing private restrictive covenants and that certainly somebody ought to call a halt to people who continually veto the Supreme Court and the President's order that there shall be no discrimination either in private or public housing in our democracy.

We desire to find out whether in this legislation you propose to continue this discrimination by inference, and proclaim later your beliefs in segregation based on race and color of American people.

Senator SPARKMAN. Well, in the first place, I have never said that we didn't intend that there should not be discrimination. What I did say was that it was not the intent of Congress that any regulation should be issued forbidding segregation. I still say that. It was not contemplated.

But where you and I differ is that I do not think that segregation constitutes discrimination. In those areas where they want segregation, let them have it. In those areas where they don't want it, why, we don't try to interfere with them.

I do recall, and you were present, I think, before the subcommittee of the Committee of the Economic Report, when a witness from New York testified that the worst racial segregation was in the heart of the city of New York-in Harlem.

He said it was impossible to break down their barriers of racial segregation. The only difference between Alabama and New York is that we come out and say, “Yes, we do have segregation.” In New York City they say, “No, we don't have segregation," when as a matter of fact you know that, practically, they most certainly do have it. So the witness testified.

Mr. BROWN. That witness didn't know what he was talking about. Senator SPARKMAN. The point about housing is that under this bill,


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