great mass of urban families. The 1951 census reveals that 58 percent of the urban families of the Nation earned between $2,500 and $6,000 a year, before taxes, and 452 percent earned between $2,500 and $5,000. This section of the population constitutes the great bulk of the potential housing market. A program which does not provide housing that is marketable to the families in this income range cannot encourage an expansion of housing supply.

A realistic appraisal of the percentage of family income which should go into housing expense-including cost of utilities and home maintenance is 20 percent. This 20 percent allowance was thoroughly weighed in a special study made for the President's Advisory Committee on Housing and is reproduced on pages 282 to 290 of the committee's report.

The 20 percent figure applied to the $2,500 to $6,000 a year income group-which contains the bulk of the potential new housing marketwould allow a $42 to $90 outlay for housing a month. Taking into account some of the tax factors, this is the amount these families can reasonably be expected to pay for all housing costs. In weighing the significance of these figures, it should be borne in mind that total housing expense is roughly twice as much as the cost of mortgage payments applicable to interest and the retirement of principal.

The income of the bulk of potential consumers we know; what these people can spend each month we know; the final ingredient, then, is the cost of the house. We firmly believe that the housing industry, as presently constituted, cannot provide housing for less than $12,000 per unit-or perhaps as low as $10,000, under unusually favorable conditions-if the housing is to be adequate and well-constructed, on fully developed sites and with proper facilities for wholesome family living. There is no evidence that standard and fully-completed housing can be furnished for less in the major urban areas of the Nation.

I would like to add here that I am afraid some of the concepts you gentlemen have heard from representatives of the administration, and perhaps from others, as to what a standard house is, are based on a very solicitous attitude toward the people of our great Nation. My idea of what a standard house is is one that I would like to live in, and not one that some poor neighbor of mine might be relegated to. And I think the growing trend to rationalize this problem by suggesting that the bulk of the American people can live in totally inadequate neighborhoods, with inadequate facilities, with inadequate space, is one which should not be encouraged.

Mr. MCDONOUGH. Will you yield at that point?

In other words, you don't object to any one living, who is satisfied to do so, in a so-called inadequate house, which you consider inadequate?

Mr. FISCHER. I don't object to it, but I object to a program which does not make it possible for him to have a choice.

Mr. MCDONOUGH. Well, if he had a choice, and was still satisfied to live in the kind of a house that you did not think was adequate, you would say that he was satisfied?

Mr. FISCHER. Certainly. But I think that the Government, in its operations, should lend its weight toward providing a kind of housing that people who could attain that kind of housing would want.

Mr. MCDONOUGH. Don't you think that this bill provides that?, Mr. FISCHER. No, I do not.

Mr. MCDONOUGH. What do you think out to be done to the bill to make it more adequate?

Mr. FISCHER. If I don't cover that-I wish you would come to it later.

The CHAIRMAN. I wonder if Mr. Fischer could be permitted to proceed with his statement to its conclusion.

Mr. MCDONOUGH. Very well, Mr. Chairman.

Mr. FISCHER. A sound housing program must be realistically based upon the existing costs of housing, not on a vague hope of more favorable price development in the future. The consumer cannot purchase a hope or a promise; he can only purchase a house that can be produced now in a place near enough to the location of his employment.

The monthly cost of a 40-year 100-percent mortgage is furnished by FHA to the advisory committee-page 94 of the report. If we assume a 41⁄2 percent loan and the normal FHA insurance charge, but no special extras such as service charges, we find that a $10,000 house would involve a housing cost of $82 a month. Since the $10,000 price is surely a rockbottom figure, we see that a 40-year amortization allowance could substantially stimulate home buying by families with incomes between $4,900 and $6,000 a year. We believe this to be important and strongly recommend that loans be made available on this basis. Apparently this is not now contemplated under the proposed legislation.

However, even such a provision would leave the bulk of the problem still unresolved. The need is clear-the monthly cost must be brought down substantially below the $82 figure, not by cheapening the house, neglecting the site development, or choosing undesirable neighborhoods or leaving the house half completed.

There are many ways to reduce monthly housing costs including efficient land assembly and development, efficient building methods, etc. But the major area in which the Federal Government can operate most effectively to reduce overall housing costs is financing.

Interest rates can be reduced, primarily by the skillful use of Government credits and guaranties. There is no sound reason why the Government which now guarantees billions of dollars in outstanding mortgages cannot borrow money directly, lend it to the consumer and use the income from the consumer to pay off the obligations incurred. This would enable sharp cuts in interest charges.

Yet even this, while helpful in enabling more people to enter the new housing market, is not sufficient to do the entire job. It is, therefore, desirable to develop methods of making loans which are not retired during the first years of their existence. A system of one private loan, and one Government loan, with the former treated conventionally and the latter held intact with payment of interest only is a common practice in some countries and can be worked out here on a practical basis.

In fact, there are any number of methods to bring monthly payments down to the ability of the average family to pay-if the Congress wants to achieve this objective. We are suggesting that the key question is the objective itself. Once a firm decision is made that new housing must be made attainable to the bulk of the families in the $2,500 to $6,000 income brackets at a monthly cost approximating 20 percent of their earnings, the methods can and will be found.

We again emphasize the special role of Government in such a program. We favor Government-aided research which seeks out every possible method of producing better housing at lower prices. But we know that this is a long-range objective. The area in which Government must primarily operate now is in investment. This is the role it can most usefully and immediately perform in behalf of both consumers and producers.

It would be highly desirable if private investment funds were available, without any Government guaranties. But if we are serious about securing an expanding housing program we cannot be romantic about long ago. Let us face the facts of present-day life. The billions of dollars of annual investment in new housing that are needed cannot be obtained without the involvement of our Federal Government.

This fact should cause no great concern.

Government involvement in stimulating private housing in no sense represents a raid on the Treasury. On the contrary, the funds are borrowed from private sources; the interest charges are paid by the housing consumers; the credit risks are backed by sound real-estate properties, and the overall program, if properly constructed, helps produce a level of economic activity and prosperity which contributes to the tax revenue flowing into the United States Treasury.

Halfway measures will not work. We urge the Congress to be both courageous and realistic and to write a program which is sufficiently comprehensive to be effective.

Even the best conceived program to bring home ownership to the bulk of the American people will not solve the entire housing problem, however, since there will remain hundreds of thousands of families at the lower end of the income ladder who cannot be served by private housing no matter how the burden is eased. For this group there is no solution except a form of direct Federal subsidy. This is the basic conclusion Senator Taft reached after years of study. The President has declared that the Taft public housing program should be continued. The advisory committee has so declared. No feasible alternatives have been suggested.

We are disturbed, therefore, that this housing bill does not include the legislative provisions necessary to return to the Taft program of 135,000 public housing units a year with a permissable rate of 200,000. Our country can afford and indeed must adequately house all of the families of the Nation. Public housing is a sound method of providing decent shelter for those who cannot afford to do so themselves. The Taft program places a maximum reliance on private enterprise and local responsibility and involves Government support only to the degree necessary and essential to the safety and welfare of the Nation as a whole.

In conclsion we repeat our urgent and emphatic recommendation to this committee, that in view of the imperative needs of the economy for stimulation at this time that nothing less than the full housing program so long identified with the name of the late Senator Robert A. Taft be authorized by Congress and promptly put into effect by the housing agencies of our Government.

As a postscript, let us make clear for the record that we have not attempted in this testimony to deal with several vital matters which should be included as parts of a comprehensive housing program. For instance, there are the special aids required for the handling

of minority problems, the stimulation and support of the cooperative housing program, provisions for builders' warranties to give the consumer a measure of protection against faulty construction and methods to encourage moderate rental housing.

We know that many organizations with which we cooperate are appearing before you and will deal specifically with most of these particular problems on the basis of specialized knowledge and experience. We hereby identify ourselves with the widespread interest in these special problems and in a general way support their recommendations.

We appreciate the oportunity to express our viewpoint here. We have avoided a detailed item-by-item discussion of the proposed legislation because we know others will cover the field extensively. Furthermore, we feel that the central problem of getting down to "brass tacks" in constructing a genuine new housing program for America is so important that the particular emphasis we have given in this presentation is fully warranted.

(The statement by Mr. James G. Thimmes is as follows:)

HOUSING FOR AMERICA

Statement by

James G. Thimmes

Member, The President's Advisory Committee on Housing

The material in this pamphlet is the text of a letter addressed by James G. Thimmes, a member of President Eisenhower's Advisory Committee on Housing, to the President. In the letter, which was sent on January 8, 1954, Mr. Thimmes expressed his individual views, on behalf of the CIO, on a number of issues reviewed in the Report of the President's Advisory Committee. Mr. Thimmes, in addition to being chairman of the CIO housing committee, is a vice president of both the United Steel workers of America and the Congress of Industrial Organizations.

It is the belief of the CIO housing committee that these views on our national housing situation will be of interest to people in every phase of housing activity. The CIO believes that these issues take on special significance in 1954 because housing constitutes a major field in which adoption of proper policies and programs can serve to combat the menacing growth of unemployment and recession.

MR. THIMMES' LETTER TO PRESIDENT EISENHOWER

I wish to express my appreciation for the opportunity you have given to me to participate in the Advisory Committee on Government Housing Policies and Programs. It was for me a welcome and valuable experience. The presentation of the ideas and proposals of organized labor have contributed, we feel sure, to a more complete consideration of the Nation's housing problems.

The report issued to you is significant. While I join in the report, I do not agree with some of the recommendations and regret some significant and serious omissions. However, the fact that there has been a wide area of agreement can be useful to you and the Congress in developing a fully comprehensive program to meet the housing needs of the people and the Nation's requirement of a high level of house-building activity.

We of CIO are disturbed at persistent indications that Government officials and industry spokesmen are setting their sights for the coming year for too low. A goal of a million new housing units during the coming year will not contribute the new homes needed to attack the problem of adequately housing the people of America; nor will it enable the housing industry to provide enough jobs for its own employees and related industries to fully use housing as an antidepression weapon.

We recognize that the mere statement of a goal, such as the 2 million annual rate advocated by the CIO convention, will not of itself bring about the desired level of housing production. But the statement of the goal will enable the Government to plan its own program in such manner as to encourage the types of homes, the price levels, and the financing means to enable its achievement.

We urge therefore that the goal of 2 million units be adopted and that each item in the housing program be evaluated accordingly. My comments on the committee report are made with this objective.

PUBLIC HOUSING

We

We welcome the committee's endorsement of the public housing program. hope that the partisan bitterness that has surrounded this subject in the past will now be ended and that an objective determination can now be made regarding the rate of public housing required by the Nation.

Thorough examination of all factors reveals that the original goal of the 1949 act of 135,000 units a year is modest. A larger program could be jusitfied to catch up with the lag of the past several years. However, there can be little doubt that the 135,000 unit program can be sustained. It will make a real dent in meeting the pressing needs of low-income families. It will be a valuable aid to the total building industry and the overall need of a high level of housing production. It will produce wealth which will constitute a firm asset to the Nation; in fact, the Federal subsidy required may be repaid eventually out of rental income if the committee's recommended legislative changes are accepted. Because slum clearance and redevelopment of the great urban centers are urgently required, full resumption of the public-housing program is especially necessary. We are confident that the redevelopment and slum clearance goals agreed to by all of us will not be achieved unless adequate provision is made for housing low-income families. A small public housing program will not sustain a widespread redevelopment program. Community support will not be readily available unless slum dwellers can be adequately rehoused at prices within their means.

In fact, a small program of 20,000 or 35,000 public housing units does not justify the overhead required to develop further public housing. We of CIO consider a continuation of this token-size program as being tantamount to no public housing program at all.

LOW INCOME PRIVATE HOUSING

The public-housing program was never proposed as the total answer to the problem of slum clearance or of fulfilling low-income family housing needs. The major responsibility for providing housing for low-income families has always been, and appropriately, reserved for the traditional methods of private enterprise activity. The committee recognizes, however, that private enterprise cannot meet the problem without substantial Government aids.

We believe that the Government's program should be based on encouraging large-scale new construction of homes for low-income groups. We believe that 135,000 public housing units is only a start in this direction and other methods must be provided. We endorse the idea of using long-term mortgages, low downpayments and advance commitments to builders to encourage the workings of private industry provided that the Federal Housing Administration takes special care to assure high standards of construction and does not become a party, wittingly or unwittingly, to high pressure sales methods which push people into housing costs beyond their means. Only disaster could follow if new slums were built or if economic strangulation were imposed on low-income families.

We recognize that there may be some reluctance to face up to the reality of what a low-income family really is and how important this group is to the achievement of a high rate of home construction. For the purpose of planning an overall housing program, families with incomes up to $5,000 are clearly low income. They are not eligible for public housing but they do need adequate housing and they do constitute the great mass of consumers with unfulfilled housing requirements. It is in the $3,000 to $5,000-per-year group that the major reservoir of desirable and available consumer demand must be recognized.

Therefore, I strongly urge that the liberalized long-term mortgage recommendations be extended far enough to include this entire group. To do this, the price of the housing covered by such a program must go as high as $10,000, especially in the higher cost areas.