years to 32 percent for 50 years. There is also included in this analysis a comparison of the rents achieved at each of these interest rates with the comparable rentals now being achieved on a section 608 rental project at the same unit cost assumptions.

In conclusion of this general discussion of this middle-income housing proposal which we strongly support, I should like to make this general statement to the committee. We believe that this program, if enacted substantially in the form of the amendment, will be successful in attaining good additional housing for families of moderate income. We do not propose it as the final and complete answer to all of the housing problems of people in this income category. There is already in existence the insured mortgage program which has provided and will continue to provide suitable housing for many people of moderate income, and we are recommending other financial incentives in connection with it. The proposal here presented, we feel, is a much needed and desirable addition to the present housing programs of the Federal Government. It will, in short, round out our programs in the area where to date we are least well equipped to encourage and assist in obtaining volume production of good housing at costs within the paying ability of the middle-income third of American families, an area, in my judgment, of great and urgent housing need.

The volume which can be expected under the proposal is difficult to measure, particularly at the outset of such a program. Senator CAIN. Will you permit a question?

Mr. FOLEY. Yes.

Senator CAIN. What is our liability under section 608 loans, what is the total liability outstanding?

Mr. FOLEY. Senator, I am going to have to ask for that, I cannot carry those figures in my mind. Mr. Greene is here and he can prob

ably tell the total outstanding-you mean mortgage value? Senator CAIN. Yes; under section 608.

Mr. FOLEY. Do you have the figures there, Mr. Greene?

Senator CAIN. Well, may I venture what I think is a reasonably accurate guess? Is it about $2,000,000,000. A little less than $2,000,000,000?

Senator CAIN. A little less than $2,000,000,000.

Now, Mr. Foley, if we go on the assumption that this cooperative system becomes, if this should be approved, as successful-and I am sure we would all want it to be successful if this is passed-what is likely to happen to the Government's $2,000,000,000 of liability under section 608? Are we on the way here of attempting to create an unfair competitor to what the Government has already established?

Mr. FOLEY. We gave a good deal of thought to that, Senator, and it is my opinion, for what it is worth, as against the fact, of course, that no one can predict the future certainly, that it does not represent any considerable factor of danger. For one reason, while $2,000,000,000 is a lot of money and represents a lot of credit and a lot of risk, still when it comes to building houses, it does not represent a very large number of units as against the total inventory. And it is widely scattered throughout the country, which is one of the aims we had in promoting the 608 rental housing program, which I suppose is what you are chiefly concerned with.

Senator CAIN. I am just concerned with where we are really going here, and I know you are just as concerned as I am, Mr. Foley.

Mr. FOLEY. That is right, and we studied this very seriously. As I stated, this program if enacted, I think cannot be expected to spring swiftly into a large volume, for reasons I have outlined already. It will be gradual. If for instance the $300,000,000 of initial authorization has to be placed in housing at the $8,000 figure of cost, then it would result in about 35,000 units. Now, those will be coming into a market that is as broad as this Nation over a period of 1 or 2 or 3 years, depending on the speed of the program, and it could or should not be any material threat to the existing housing operations.

Senator CAIN. No; but I think still we should be concerned in terms of where we are heading in future by the adoption of this program. I am not saying that it is not a proper thing to do, but we should seriously consider the future. We are thinking here of a longrange 50-year program.

Mr. FOLEY. That is right, of course, and in that time you will be amortizing. And since the date involved in section 608 is a relatively shorter period, I do not think you will reach the situation where if the projects were completed in a given community there would be any difficulty. You will probably by that time reach a situation where you can recast your indebtedness and modify if necessary the carrying charges.

Senator CAIN. You are encountering some trouble in section 608's, are you not?

Mr. FOLEY. In some, yes; but not to an alarming degree, Senator. I think we would have to be honest and realistic, and, yes, we do expect some, I think it would be inevitable, but I think and I am sure the Commissioner of FHA agrees, there is nothing that appears alarming.

Senator CAIN. I was just told we have two-hundred-and-eightythousand-odd units constructed under section 608, which brings my question into a sharp focus.

Mr. FOLEY. And which you will agree is a relatively small fraction of the total housing supply; as against the needed housing it is also small.

Senator CAIN. Thank you.

Senator SPARKMAN. Go ahead.

Mr. FOLEY. This will depend to a large degree upon the speed and ability with which private individuals are found willing and able to join in well organized housing cooperatives. Much hard work and much sincere and honest desire to succeed on the part of such groups themselves is essential before a program of this type can move ahead in volume. I hope that the Congress and the public will take this proposal for what it is intended-a vigorous program for support of a relatively new private enterprise housing endeavor designed better to meet the needs of our middle-income families. In this connection, I should like to call the committee's attention to the President's summary of this proposal in his recent budget message. In that statement he said

Because of the limited American experience with housing cooperatives, this program initially must be viewed as experimental, and cannot be expected to attain a large volume in 1951. With proper Federal leadership and assistance, however, it offers real promise that middle-income families will be able to help themselves obtain good housing at costs within their means.

I am confident that substantial success can and will be achieved under the program contemplated by this amendment, when enacted, and assure the Congress the Housing Agency will spare no effort to accomplish the objective toward which it is directed.

Senator SPARKMAN. Let me stop you at that point, Mr. Foley. Can you come back this afternoon?

Mr. FOLEY. At your service, Senator.

Senator SPARKMAN. Is it agreeable with the members of the subcommittee for us to sit this afternoon?

Senator CAIN. Yes.

Senator SPARKMAN. There is available for our use, if we want it, room 39 in the Capitol. It is one of the Appropriations Committee rooms on the first floor of the Capitol. If there is no objection, we will meet there at 2 o'clock.

Mr. FOLEY. Senator, may I refer back to the question asked by Senator Long about the statistics about income in the beginning? I misinformed him on what was covered by the table. I find on referring to it that it shows total nonfarm as well as urban.

Senator SPARKMAN. Thank you. We will recess until 2 o'clock this afternoon.

(Thereupon, the subcommittee recessed at 12:35 p. m., until 2 p. m. of the same day.)

AFTERNOON SESSION

Senator SPARKMAN. I think we had better get started. Other members will be here later.

There is a quorum call going on in the Senate, and some will probably be detained for that.

Mr. Foley, if you will resume the statement, take up on page 25 where you were ready to discuss the amendments to section 207 of the National Housing Act?

Mr. FOLEY. Thank you, sir.

At this time I wish to refer briefly to the amendments to S. 2246 relative to title I and section 207 of the National Housing Act.

The amendments to title I would extend on a permanent basis the FHA program for insurance of modernization and repair loans. Up to the present time this program, which has been self-sustaining since July 1, 1939, has been kept in existence, except for one short period between April 1, 1937, and February 3, 1938, continuously over the past 15 years, through a series of extensions and renewals by Congress of the expiration date of this title. The present authority under title I expires on March 1, 1950.

The amendments to title I recommend that the program be placed on a permanent basis. The amendments would provide for periodic adjustments in the amount of the Government's maximum liability to each lending institution, and thus prevent the Government from assuming a disproportionate amount of risk with respect to the title I loans of the institution.

The amendments to section 207 of the National Housing Act relate to the regular FHA permanent mortgage insurance program for rental housing, as distinguished from the emergency temporary program for rental housing under section 608, which is due to expire on March 1 of this year. The amendments have the twofold objective of facilitating the production of rental accommodations of adequate size suitable for

family living, and the production of such accommodations within the means of families of moderate income. To assist in meeting these objectives, the amendments would provide special mortgage insurance benefits for rental units of lower cost and of adequate size for families with children.

Mr. Walter Greene, the Acting Federal Housing Commissioner, is here and is prepared to explain these amendments in more detail and to discuss with you the FHA operations under them.

I strongly recommend these proposed amendments, and I have been authorized by the Director of the Bureau of the Budget to advise that their enactment would be in accord with the program of the President.

Before concluding my testimony, I would like to bring to your attention one further legislative proposal relating generally to the housing programs of the Federal Government under existing and additional legislation. In connection with proposals affecting particular housing programs, questions have been raised as to whether statutory maximum amounts for the housing loans authorized to be made or guaranteed by the Federal Government may not prove to be too high in the event of changed economic conditions. It has been suggested that the legislation affecting these programs require lower maximum amounts under prescribed conditions. The objectives of these suggestions are desirable.

I believe that the housing credit aids provided by the Federal Government, which affect such a large portion of our national economy, should be closely geared to changes in economic conditions and to the Government's general economic and fiscal policies. It seems clear that legislation designed to accomplish this purpose through the curtailment of housing credit would be very ineffective, however, if it is applicable only to a portion of the housing programs of the Govern

ment.

As administrative decisions under such legislation would necessarily require individual judgment and the weighing of various economic factors, it is essential, for the purposes of uniformity, that one official be made responsible for all such decisions. Since not all of the Government's housing programs are administered by one agency, it would appear most logical to place any such control of housing credit in the President. This is also desirable because the exercise of such control involves judgment and decisions on over-all fiscal and economic policies beyond the scope of the functions of the agencies administering housing programs. Of course, the President would have the benefit of the advice and assistance of various agencies of the Government having an interest in such decisions.

I therefore recommend for your consideration legislation which would authorize the President to reduce at any time the maximum authorized amounts or maximum maturities of any type of loans for housing which may be made, insured, or guaranteed by any agency of the United States. This action should be authorized upon the President's determination that it is necessary or desirable in order to coordinate the housing functions and activities of the Federal Government with its general economic and fiscal policies, taking into consideration the effect it would have on conditions in the building industry and upon the national economy.

I have a draft of a proposed amendment to S. 2246, for consideration by your subcommittee, which would give this proposed authority to the President. I have been authorized by the Director of the Bureau of the Budget to advise that the enactment of this recommended amendment would be in accord with the program of the President. (The amendment referred to follows:)

AMENDMENT TO S. 2246

1. Insert after line 23 on page 100 the following new section:

"SEC. 604. The President may, at any time or times, reduce, for such period as he shall specify, the maximum authorized principal amounts, ratios of loan to value or cost, or maximum maturities of any type or types of loans for housing which may be made, insured, or guaranteed by any department, independent establishment or agency in the executive branch, or by any wholly owned Government corporation or by any mixed-ownership Government corporation as defined in the Government Corporation Control Act, upon a determination, after taking into consideration the effect thereof upon conditions in the building industry and upon the national economy, that such action is necessary or desirable to coordinate the housing functions and activities of the Federal Government with its general economic and fiscal policies."

2. Change "604" in line 24 on page 100 to “605”, and “605” in line 3 on page 101 to "606."

I have also been authorized by the Director of the Bureau of the Budget to advise that there is no objection to the presentation of this statement for consideration by your subcommittee.

Mr. Chairman, before I request that you permit Mr. Greene to present his statement, may I take this occasion to thank the chairman and the committee for the splendid cooperation that the Agency has always had from its staff in the attempt to work out these various problems, and for the treatment that I, as a rather frequent witness before this committee, have always had.

Senator SPARKMAN. Thank you, Mr. Foley.

You will stay here until Mr. Greene finishes with his statement; will you not?

Mr. FOLEY. Yes.

(The tables referred to by Mr. Foley follow:)