indicated in recent years that even 35,000 units might seem to it

excessive.

Mr. COLE. Mr. Bolling, you have sat on this committee with me, and know some of the things I have said about public housing in the past.

Let me say this: The Federal Government is now proposing, in this bill, programs which will dispossess people from their homes in these slum areas, both through urban redevelopment, slum clearance and

rehabilitation.

The Federal Government then has the responsibility, in my judgment, to take care of those people who will need, and who cannot find, decent homes. We have a certain responsibility in that area, and until we can find such a plan which will assist those people, I am not willing to say that we wipe it all out, I never have been.

Mr. BOLLING. Well, I am not in any way raising any question as to your sincerity on this proposal.

Mr. COLE. I know that.

Mr. BOLLING. We might have had some disagreements before, but we have always been able to have them on an honorable basis. The thing that has disturbed me a good deal is the fact that almost immediately after the President's program was submitted to the Congress in his housing message, there were items in the newspapers which would make it very convenient for people who wanted to be in a position of going along with the President, and yet at the same time were opposed to public housing, to say "Well, the President is really not very much for this."

Mr. COLE. The President is very much for it, I will say that.

Mr. BOLLING. He is enthusiastically for it and is very anxious to see the 35,000 units included in the next 4 years.

Mr. COLE. That is right.

Mr. BOLLING. There can be no question about this regardless of the quotations which we have seen in the papers and attributed to him by others.

Mr. COLE. That is correct.

Mr. KILBURN. Mr. Bolling, I didn't suppose Congress had anything more to do with this 35,000 units.

Mr. MULTER. We have a great deal to do with it.

Mr. BOLLING. Yes, there is an appropriation.

Mr. KILBURN. I mean this committee.

Mr. BOLLING. I would say it was the responsibility of this committee to deal with this matter.

Mr. KILBURN. We don't need any more legislation, do we?

Mr. BOLLING. No, except to repeal the appropriations rider which was imposed upon us: that is also true in the case of housing research. This raises a very fundamental question of whether or not the rules of the House are to be followed and that there not be legislation on appropriation bills, or are we to give up our jurisdiction as the legislative committee on this subject?

Mr. MCDONOUGH. Will you yield?

Mr. BOLLING. Certainly.

Mr. MCDONOUGH. Do you believe that public housing should be built or advocated by the Federal Government in areas where the Mr. COLE. I would like to insert a comment on that matter from areas have not requested it and there is no evident need for it?

Mr. BOLLING. I would prefer not to try to make a specific answer to that at this time. I am familiar with the situation in Los Angeles, and I don't think there is any particular point in getting into the very complicated merits of that particular argument. Obviously

Mr. MCDONOUGH. I just asked the question.

Mr. BOLLING. Obviously the Federal Government cannot build public housing in areas where the community takes no action.

Mr. MCDONOUGH. I beg your pardon. There have been cases in the United States where they have imposed it on them.

Mr. BOLLING. Not at this moment.

Mr. MCDONOUGH. I agree not at this moment.

Then let me ask another question: You believe, in connection with public housing, that the public housing units should be built in the areas that is within the 35,000 units per year-in areas where a demand is made by the municipalities, the States, or counties, for such housing? A demand for public housing units?

Mr. BOLLING. Mr. McDonough, I have to point out that I think 35,000 units is totally inadequate.

Mr. MCDONOUGH. That is beside the question.

Mr. BOLLING. No, it is not. It is very much to the point. I think the point of the question is to indicate that there is so much demand for the 35,000 units in certain areas that it obviously should not be considered for other areas.

Mr. MCDONOUGH. I didn't mean that. If we were to build, let us say, a hundred thousand units, and the demands were for 90,000 units, do you think those 90,000 units should be built only in those areas where the States, cities, and counties have requested they be built?

Mr. BOLLING. I must not be able to understand the law, but I understood that this was in effect a cooperative program which required, in many cases, enabling legislation by a State legislature and then action by a local group. I don't understand what you mean.

Mr. MCDONOUGH. Well, in other words, I understand from what you say that you don't believe that the Federal Government should go into an area and build public housing where there is no cooperation on the part of the local interests, by ordinance, by law, or by

Mr. BOLLING. It depends a great deal on what you mean by interests. Mr. MCDONOUGH. Well, there have been areas where they have used their influence to convince the local people that public housing should be built in their area, and the people don't agree with it.

Do you think that should be done in any part of the United States? Mr. BOLLING. I think it depends on the specific facts and conditions in that particular area. I see no reason for me to make a general answer which is designed to be applied to a specific situation.

Mr. DEANE. Will you yield?

The CHAIRMAN. I wonder if we haven't gone somewhat afield from the question of FNMA. I notice that there is a chapter in this proposed legislation on public housing, and perhaps we could delay this discussion until we get to that-I hope.

Mr. BOLLING. I will defer to your wishes, Mr. Chairman.

The CHAIRMAN. I can assure you that you will have an opportunity to revert to this question, Mr. Bolling.

Mr. DOLLINGER. I had asked Mr. Cole a question before, and I think the record ought to show the answer, Mr. Chairman.

Mr. COLE. I am sorry, we will provide it.

Mr. DOLLINGER. Would you also, at that time, Mr. Cole, indicate in what areas would $7,000 houses be built, and the minimum price at which you can build housing in areas such as New York City, Chicago the larger cities.

Mr. COLE. Yes, sir.

(The data referred to above are as follows:)

It is impossible to predict with any degree of precision what percentage of the expected 1954 new nonfarm housing production will be $7,000 houses. Based on experience since 1950 and assuming generally stable prices, an estimate of 10 percent seems reasonable. On the assumption of a million nonfarm housing starts in 1954, this would produce approximately 100,000 units priced at $7,000 or less.

It is also not possible to predict the communities in which builders will be successful in producing a significant number of houses under $7,000. It is pertinent to note, however, that in 1950 the FHA insured the mortgage financing on new dwelling units on which FHA appraisals placed values below $7,000 in practically every major metropolitan community. The year 1950 is the only recent year for which these data are available on a locality basis. Although prices have risen since then, data on the percentage of under $7,000 houses constructed during 1950 in the larger metropolitan areas will suggest the volume of low-cost housing which might be built in these areas in 1954. The following table lists 20 metropolitan areas ranging from the east coast to the west coast in the northern half of the country, showing for each the number of new dwelling units on which FHA-insured mortgages during 1950 under section 203 and the proportion of these units which had valuations below $7,000.

Although the property standards are somewhat less exacting under the section 8 program, it may be pertinent to observe that there has been insured mortgage financing under this section 8 program in all insuring office jurisdictions in the continental United States, with the exception of Wilmington, Del.; Bangor, Maine; Milwaukee, Wis.; New Orleans, La.; and Sacramento, Calif. Among the more active localities have been the suburban areas of New York City and Detroit, where insuring office totals of 1,359 and 2,973 dwelling units, respectively, had been insured by December 31, 1953, under the section 8 program.

Even in localities where a substantial volume of new construction in prices of $7,000 or less might be difficult, the section 221 program could be expected to operate effectively in the production of decent housing through rehabilitation of existing structures which could be financed with a $7,000 mortgage.

The $7,000 ceiling for section 221 mortgages may be expected to encourage builders to make special efforts to provide housing which is within the financial capacity of a majority of the families which would be displaced by urban renewal operations. For families which can afford higher priced homes, liberal terms would be available under section 203 for mortgage amounts in excess of $7,000. For these families of somewhat higher incomes, the downpayment requirements and somewhat larger monthly payments involved under section 203 should not be a serious deterrent to rehousing operations.

The CHAIRMAN. Are these further questions on this matter of FNMA?

Mr. BOLLING. I have one question on FNMA when it gets back around to me, Mr. Chairman.

The CHAIRMAN. Mr. Bolling, you have the floor on this question. Mr. BOLLING. I gathered from your statement, and from what you said in answer to some questions, Mr. Cole, that you felt it was extremely important to get the Government out of absolute control of the secondary money market in the housing field?

Mr. COLE. No, I can't answer that "yes" or "no." I feel it is extremely important that the Federal Government get out of a truly secondary market facility. By that I mean, that which can be operated to assist in the even flow of funds, through the regular market operations.

Mr. BOLLING. Now, I am interested in finding out, and tying down, this: Apparently your most important mission is to assist as you can, within certain limitations, in achieving housing construction?

Mr. COLE. That is right.

Mr. BOLLING. I am curious as to whether the view that it is important to get the Government out of this particular limited field, this aspect of FNMA's operations, is in your mind more important than getting housing?

Mr. COLE. No, it isn't, Mr. Bolling, or I would not have recommended the second part of FNMA.

Let me say one more thing, so I won't be misunderstood: If we talk philosophy, I am very much interested in the people of this country having the opportunity to do the job of buying, building, lending, that to me is America. I don't want to do anything to stop, to curtail that advance of the people doing the job, so I want to put the program on the basis of helping the people to help themselves. But I still say that there is a responsibility on the part of the Government, yet, to help the people accomplish this objective.

Mr. BOLLING. The point I am getting at is this: I wanted to be sure that there was no rigidity in your attitude with regard to this particular recommendation.

Mr. COLE. No.

Mr. BOLLING. I take it that it is considered to be experimental and that if it fails, there would be no hesitation to return to another system that has a chance to work.

Mr. COLE. Certainly, if it fails, I hope I will have the courage enough to say that it has failed. I will, however, be looking for other areas in which we can assist the people to help themselves, to look for another facility to accomplish the objective.

Mr. BOLLING. I think nobody could disagree with that, but one of the things that slightly disturbs me is that if this present proposal were not a success, and it failed to achieve its purposes, its sound purposes, then you might come up with an indefinite series of experiments, all of which could fail, which would have a very serious effect, or which could have a very serious effect on the building of houses in certain relatively specific localities.

Mr. COLE. Mr. Bolling, you know, I have a feeling that a failure to help the people help themselves is far less damaging to our country than a failure-than the Government establishing a program which fails.

In other words, I would rather take a chance in failing on a program which would help the people help themselves, than helping on a program for the Government, to control and operate it.

Mr. BOLLING. I hope you wouldn't be willing to do that over 14 or 15 experiments.

Mr. COLE. I would be willing to do it for a hundred experiments. Mr. BOLLING. In this same field?

Mr. COLE. I would do it in a thousand experiments, Mr. Bolling. Mr. BOLLING. With the potential disastrous effects on construction of housing over a period of years?

Mr. COLE. If you add that last statement, of course not, I would not propose a program which I thought had a potential disastrous effect on housing, no. Of course, I couldn't do that.

Mr. BOLLING. That is all, Mr. Chairman.

The CHAIRMAN. Mr. McDonough.

Mr. MCDONOUGH. Is it your hope for this new plan of Fannie May, Mr. Cole, that the secondary mortgages will eventually, if your plan works, be handled by private capital, rather than Government subsidy?

Mr. COLE. Yes.

Mr. MCDONOUGH. And in the course of arriving at that, under the plan which you suggest, that the present outstanding secondary mortgage market will be taken care of those that are now so-called "sour" mortgages will be taken care of?

Mr. COLE. I can't agree with you about the "sour" mortgages, Mr. McDonough.

Mr. MCDONOUGH. Then let me explain that point. Do I understand you to say that Fannie May should purchase only those marketable mortgages that the banks and other financial institutions will not purchase?

You

Mr. COLE. No; not on the basis of soundness, but on the basis of not being willing to go into the area, let us say, as one reason. see, a bank located at a remote

Mr. MCDONOUGH. Well, that would be refusing to purchase. Mr. COLE. But not on the basis of a "sour" mortgage, Mr. McDonough. An institution in one area of the country does not want to loan in another area of the country, for very practical reasonsservicing, distance from the office, and all of those things. And so, they naturally hold their money back or invest in other areas.

I wouldn't say these are "sour" mortgages which FNMA has been buying.

Mr. MCDONOUGH. In other words, they are mortgages in which the normal financial institutions do not want to invest, although they are sound mortgages, in your opinion?

Mr. COLE. The best evidence of that is the record of practically no loss which FNMA or the FHA have had on these mortgages.

I should point out, Mr. McDonough, along that line, a very interesting thing has occurred in FHA. I wasn't around Washington at the time when it was set up. but there was a great deal of resistance to FHA mortgage insurance on the basis that these mortgages were unsound, and also on the basis of the long-term amortization and low downpayment.

FHA has proven that long-term mortgages are sound.