But for a period of time-is it a 25-year mortgage, or what is the length of the mortgage?

Mr. REILLY. Thirty-year mortgage.

Mr. PATMAN. For 30 years he would pay interest on this loan as though it were $10,000, when he actually didn't receive but $9,700, and he would be making a contribution of $300 to the permanent capital of the new FNMA?

Mr. REILLY. Well, we are opposed to that.

Mr. PATMAN. I understand you are, Mr. Reilly.

That is all, Mr. Chairman.

Mr. MERRILL. Mr. Chairman.

The CHAIRMAN. Mr. Merrill.

Mr. MERRILL. Mr. Reilly, do you think that the difference of 212 percent between the bond rate and the maximum mortgage rate, in this bill, is enough to assure a steady and adequate flow of private capital into this program?

Mr. REILLY. I would think so; yes, sir.

Mr. MERRILL. Is it your understanding that that rate can be adjusted to different regions?

Mr. REILLY. Yes; that is what we are recommending, a flexible rate, so that if the rate in an area will not produce the loans, the rate can be changed.

Mr. MERRILL. How small a region would that be?

Mr. REILLY. It would depend on the locality in the country. Some of these small-town moneylenders, they don't think in 42 or 5 percent, they think in terms of 6, 7, and 8 percent, and that is the reason for this Government guaranty on this FHA mortgage, with a flexible rate, recognizing that money costs more in those areas, it would work out all right. That is why the bankers feel that flexibility is necessary. Mr. MERRILL. The flexibility would not necessarily be on geographic areas, but on size of towns?

Mr. REILLY. Size of towns and available money.

Mr. MERRILL. Do you understand that there is anything in the bill that would prevent the President from determining the manner in which he would determine the variation?

Mr. REILLY. I think not. It is a broad discretion that he has, and I think that is what it should be.

Mr. MERRILL. Do you think there in any other method, other than giving this broad discretion to the President, by which we might bring about the necessary flexibility in the interest rate?

Mr. REILLY. I know of none at the present time, sir. I couldn't make any suggestion.

Mr. MERRILL. This is the very best plan

Mr. REILLY. That has been devised up to now.

Mr. MERRILL. Coming to another point, do you take the position, then, that public housing is the only solution for taking care of these displaced people?

Mr. REILLY. No, I think grants-in-aid can be of assistance, and not outright public housing.

Mr. MERRILL. Then, you mean to make a grant-in-aid instead of a more liberal loan?

Mr. REILLY. That is correct.

Mr. MERRILL. You would prefer to give a man a thousand dollars rather than give him a more liberal loan?

Mr. REILLY. I would not give him the thousand dollars to spend, but would make it available in some way to supplement what he can afford to pay.

Mr. MERRILL. Yes. You think the better plan would be to make a direct grant to one of these displaced persons, toward the purchase of a better home, so that the loan then would be sound rather thanMr. REILLY. But I would like to see private enterprise build the houses, and not the Government.

Mr. MERRILL. I see.

Thank you.

Mr. MULTER. Mr. Chairman.

The CHAIRMAN. Mr. Multer.

Mr. MULTER. When you say rather than Government build the hosuing, you don't mean that the Federal Government is building public housing; do you?

Mr. REILLY. No; I would rather let private enterprise do the job as far as it can rather than let the Government take them over and collect the rents and rent them out as public housing.

Mr. MULTER. Even where the municipalities build public housing it is private enterprise that built them.

Mr. REILLY. But private enterprise does not collect the rent. Rental is under a governmental operation.

Mr. MULTER. Do you mean, then, that the municipality or State, with or without Federal aid, should put up public-housing projects and turn them over to private enterprise?

Mr. REILLY. No, sir; I think private enterprise should do the building.

Mr. MULTER. Well, do you know of any public-housing project in any part of this country which was put up by private enterprise for private enterprise operations?

Mr. REILLY. I don't know of any where private enterprise did it. Mr. MULTER. And the reason they have not done it is because even where you give them tax exemption they cannot build any housing that will rent low enough to accommodate that lowest income group that goes into the public-housing projects?

Mr. REILLY. That is right. It is economically not sound.

Mr. MULTER. I think the rule is almost uniform throughout the country that no family earning more than $2,000 a year in income may enter a public-housing project.

Mr. OAKMAN. Mr. Chairman, that is not the case.

Mr. MULTER. Where their income goes up they may not be put out but they should be. The regulations require it.

Do you know of any place where they move in in the first instance where they have greater income?

Mr. OAKMAN. We have them with as high an income as $300 a month in public-housing units in Detroit.

Mr. MULTER. Well, I am sure there is something wrong with your public-housing project, then.

Mr. OAKMAN. For a single man, or a couple without dependents, you are possibly right, but if they have 3 or 4 or 5 children it goes up very rapidly.

Mr. MULTER. Almost 90 percent of the figures I have seen in the regulations stop just under $2,000 as the maximum income per family.

If there are any other than that in your area you should know, but I think it is violative of the principles set up in all these public-housing projects.

Mr. OAKMAN. Mr. Chairman, may I put that in the record, the scale for Detroit? I imagine it would be somewhat uniform throughout the country.

Mr. MULTER. You will find it set forth in the President's Advisory Committee's report on housing.

The CHAIRMAN. Scale of income? Can't we agree as to an average? Mr. PATMAN. I know that a lot of them have much larger incomes after they get in there.

Mr. MULTER. They should be put out. I think you will find the figures in exhibit 9, page 297, of the President's Advisory Committee's report, and if there is no objection we might insert that page in the record at this point, Mr. Chairman.

Mr. DEANE. Mr. Chairman, I understand that was inserted the other day.

Mr. HALLAHAN. It is already in the record.

The CHAIRMAN. Apparently it is already in the record.

Mr. MCDONOUGH. Will you yield?

Mr. MULTER. Yes.

Mr. MCDONOUGH. Do you believe that in the administration of a public-housing program that none but those who earn up to $2,000 a year should be admitted-not more than that?

Mr. MULTER. Yes, the lowest income group are the only ones that should be accommodated in public housing.

Mr. MCDONOUGH. And that after they are admitted, if their earnings increase to the extent, we will say, of $50 or $100 a year, that they should be ordered out of the public housing?

Mr. MULTER. Well, you have got to draw an arbitrary line somewhere.

Mr. MCDONOUGH. I am asking your opinion.

Mr. MULTER. Whatever is the limit for eligibility. When they get beyond that eligibility they should be given a reasonable time to find quarters outside of the project. That is what we do with them in New York City.

Mr. MCDONOUGH. Don't you think that there is a tendency on the part of the individual not to seek a better job and to stay within the earning limit of the public-housing specifications?

Mr. MULTER. That has not been our experience in New York City. Mr. MCDONOUGH. How many have you moved out after you put them in?

Mr. MULTER. I think our moving rate in public-housing projects in the city of New York is the greatest moving rate we have in the city. They move in and out frequently. And they are moving in and out frequently because they must move out. They get beyond the eligibility limitations and are required to move.

The CHAIRMAN. Will you yield?

Mr. MULTER. I yield.

The CHAIRMAN. You say $2,000 should be the maximum. I understand that at the present time, a short time ago, some months ago, the average was $2,600. The rate of income is set by the Public Housing Authority. We had the figures here once that the average income to be eligible for occupancy in a public-housing project was $2,600.

Mr. MULTER. I don't want to be put in position of appearing to quibble, but we cannot sit here and say whether it should be $2,600 or $2,100. But these agencies are in a position to determine what is the lowest income group and take care of them. Whether it is $2,000, or $2,100, or $2,600, isn't important. The important thing is that we establish the principles that the lowest income group can be taken care of only, and that is what should be done.

The CHAIRMAN. Wait a minute; I don't understand that the public housing is intended to take care of the lowest income people. Then you get down into relief. You have a social problem there.

We have to set an annual contribution, on some basis, on public housing.

Mr. MULTER. I thought we had gotten beyond discussing the philosophy of whether or not it was wise to supply housing to the lowest income group or the people who had the lowest income.

The CHAIRMAN. I understand that the lowest income group has never been taken care of in public housing, and that is why some of us have objected to the program. You held out that public housing is, in fact, slum clearance, and you have played upon this idea that public housing is slum clearance throughout the years.

Mr. MULTER. I for one

The CHAIRMAN. You and I know that public housing is not necessarily slum clearance, and that we do not take care of the lowest income people. We might as well be realistic about it.

Mr. MULTER. Mr. Chairman, there are two different matters to be taken care of. One is clearing the slums, and I haven't heard anybody who is opposed to that.

And quite apart from the clearing of the slums is the other problem of taking care of those who cannot buy or rent housing within which to live. That is the lowest income group, isn't it?

The CHAIRMAN. No, it is not the lowest income group.

Mr. MULTER. What is it?

The CHAIRMAN. You don't take care of the lowest-income group in public housing. So you can't say public housing takes care of the lowest-income group.

Mr. MULTER. Whom do you take care of, then?

The CHAIRMAN. You take care of no one who does not qualify on the average of income of more than $2,600.

Mr. MULTER. Isn't that the lowest income group?

The CHAIRMAN. No.

Mr. MCDONOUGH. Mr. Multer, in your welfare administration in New York City, or any of the other States of the Union, there is the agency for the counties or the States that contract the rental of houses for people who are eligible for aid. We are doing it in Los Angeles County by the hundreds of cases, finding homes for those people who cannot or will not earn enough money to take care of themselves and their families. But the Federal Public Housing Agency of the Federal Government is only, if at all, taking care of those groups that the county and State don't take care of on relief. Mr. MULTER. The Federal Government, as such, does not house anybody. It makes contributions to the States, and for these publichousing projects, and every public-housing project is run either by the State or the local municipality.

Mr. MCDONOUGH. Yes. But under very strict regulations of the Federal law.

Mr. MULTER. That is right.

Mr. MCDONOUGH. But it only takes care of those people that the States and counties cannot take care of, and those that are between that maximum and minimum wage.

Mr. MULTER. Who takes care of what the city and State does not take care of?

Mr. MCDONOUGH. That is what you say public housing is supposed to do.

Mr. MULTER. I did not say any such thing.

Mr. MCDONOUGH. Well, you tell me who it does take care of.

Mr. MULTER. Your public-housing program, as the Congress has set it up, as your Federal statute sets it up, provides for loans and grants to States and the local municipalities, which, in turn, build the public-housing projects. You cannot name a single Federal publichousing project that the Government is running, or that the Government has built, meaning the National Government.

Mr. MCDONOUGH. Who do the public-housing authorities take care of?

Mr. MULTER. They are intended to take care of the lowest income group. Those who cannot otherwise get housing because of lack of

income.

Mr. MCDONOUGH. That is where you are wrong. They are not taken care of in public housing.

Mr. MULTER. Maybe we are talking about different things. What is the lowest income group?

Mr. MCDONOUGH. There are many categories.

Mr. MULTER. There are not. For the purposes we are talking about the lowest income group is the lowest third of the earners of the country. You have the middle income group, the highest, and the lowest.

Mr. MCDONOUGH. What is the line of demarcation?

Mr. MULTER. Approximately $2,000.

Mr. MCDONOUGH. Everybody below $2,000 should be taken care of by public housing; is that what you mean?

Mr. MULTER. I did not say that. In some areas they take care of them, and in some it is less. Those who cannot take care of themselves, those who cannot get decent housing ought to be provided for in the public-housing projects, and no one else. And if any in those projects are earning more and have gone into second class, they don't belong there and should be ousted.

Mr. MCDONOUGH. So that eliminates the charitable organizations of the States and counties.

Mr. MULTER. It does not.

Mr. MCDONOUGH. Say the lowest income groups, below $2,000. That takes care of all the rest.

Take a man

Mr. MULTER. How does it take care of all the rest? who is earning $10 a month, and his rent is $40 a month. How does he pay that? The county charitable organization pays the difference. Mr. MCDONOUGH. He has to go to a charitable organization in the State.

Mr. MULTER. What has that to do with the problem we are talking about?