Mr. DEANE. I have been very much concerned about the interest rates, and I want to see every banker and every lender secure a fair return, but you gentlemen are primarily, I would think, interested in the farmer; isn't that true?

Mr. SMITH. That is right.

Mr. McLEAISH. I have been one myself for the last 25 years.

Mr. DEANE. Now, if you are faced with an administrative problem in administering title V, why don't you recommend amendments that would strengthen it, and bring you to the end that your applicants would be the type of bona fide farmers that you want?

Mr. SMITH. Congressman, we don't see the necessity for the duplicate lending authority, since we can serve bona fide farmers, insofar as need for credit for housing and other farm buildings is concerned, under the Bankhead-Jones Farm Tenant Act; we don't see the necessity for the continuation of the same authority in title V of the Housing Act.

Mr. DEANE. Will you continue to make direct loans under the Bankhead-Jones Farm Tenant Act?

Mr. SMITH. Yes; to the extent that we have annual appropriations, sir.

Mr. DEANE. Well, basically, then, so far as free enterprise, or the philosophy of lending is concerned, you are not departing from the philosophy of loans under title V on direct loans?

Mr. SMITH. That is right.

Mr. McLEAISH. That is to bona fide farmers.

Mr. DEANE. Well, I am interested only in bona fide farmers under title V.

One other question: Would you recommend that this housing for farmers be brought under the Housing and Home Financing Agency? Mr. McLEAISH. I don't quite understand that one.

Mr. DEANE. Well, would you be in favor of bringing the farm housing program

Mr. McLEAISH. You mean under the Federal Housing Administration?

Mr. DEANE. That is right.

Mr. McLEAISH. Well, now, the Federal Housing Administration has done, at least to me, some of that kind of financing. I think they have the authority to do some of it.

Mr. DEANE. What I am asking is, would you be willing to surrender the housing program that you are administering to the FHA?

Mr. McLEAISH. No; we would not want to surrender the authority that we have under the Bankhead-Jones Tenant Act. In other words, we would not want to be deprived of financing a bona fide farmer under the Bankhead-Jones Tenant Act because we can give him the kind of terms he needs, as far as years are concerned, whereas your FHA guaranteed loans are pretty much short-term propositions.

Mr. DEANE. I agree with you that you will not make very many loans under title I, because of the seasonal income of the farmers. These loans that you have been making under title V, some of them, I imagine, are on a quarterly basis, or semiannual basis; is that true? Mr. SMITH. The repayments have been annual payments, sir. Mr. DEANE. Whereas under title I the payments are on a monthly basis?

Mr. SMITH. Yes.

Mr. DEANE. And you will not have very many, if any, of those particular loans, and likely those particular loans would be made to men who have other income, other than on the farm.

Mr. McLEAISH. Yes; either that or men who are pretty affluent farmers.

Mr. DEANE. That is right.

Thank you very much.

The only warning that I would sound, Mr. Chairman, is the fact that I am skeptical that our rural housing program would be sufficient, under the Bankhead-Jones Act, even with amendments.

The CHAIRMAN. Are there further questions of Mr. McLeaish or Mr. Smith?

If not, thank you very much, gentlemen, for your assistance.

Mr. McLEAISH. Thank you, Mr. Chairman, and members of the

committee.

The CHAIRMAN. There are certain statements which have been submitted.

Without objection, the staff may have consent to insert in the record all the statements and matters which they might think would be helpful to the committee in connection with this study.

I believe that concludes the public hearings on H. R. 7839.

Mr. MULTER. Mr. Chairman, you will recall that I asked one of the agencies to furnish to us for the record forms of the open-end mortgage. I don't know whether it will serve any purpose to add them to the record.

The CHAIRMAN. I think we have it in Mr. Collins' testimony of yesterday.

Mr. HALLAHAN. We have a booklet which incorporates some forms which would be available to each member of the committee.

Mr. MULTER. Yes; I don't think there is any point in placing them in the record, then.

Mr. HALLAHAN. We could do this: Extract that part of the mortgage form which deals with this matter.

Mr. MULTER. That would be a good idea because the documents themselves are fairly lengthy.

Mr. HALLAHAN. Yes. The references are fairly small.

(Open end mortgage provisions, discussed above, appear at p. 453.) The CHAIRMAN. I wonder if it wouldn't be advisable to let the matter jell a little over the weekend before going into executive session, because I assume all the members of the committee will want an opportunity to read the transcript of the hearings and mark them up.

So we will close the public hearings as of now, and we will stand in recess until Monday morning at 10 o'clock; we shall go into executive session.

(Whereupon, at 12: 28 p. m., the committee adjourned.)

(The following statements were submitted to the committee:)

STATEMENT SUBMITTED BY LT. GEN. WILLARD S. PAUL (RETIRED), ASSISTANT TO THE DIRECTOR FOR NONMILITARY DEFENSE, OFFICE OF DEFENSE MOBILIZATION Mr. Chairman and members of the committee, the following statement is submitted in support of H. R. 7839, with particular reference to sections 803 and 701. The Office of Defense Mobilization is concerned with this proposed legislation because of the impact of Federal housing programs on the attractiveness of

American cities as targets for enemy attack. We believe that sections 803 and 701 of the bill before you, taken in conjunction with its other provisions, will enable the Administrator of the Housing and Home Finance Agency to foster progressive reduction in the target value of these cities and thus lessen the likelihood that they will be the objects of enemy action.

It is well known that a large portion of this country's industrial capacity, both in terms of production facilities and trained labor forces, is now concentrated in a limited number of our major cities. The 1950 census revealed that two-fifths of the Nation's entire population and over half of all persons employed in manufacturing lived in the 40 largest metropolitan areas. Despite the current trend to the suburbs, most of the homes of those people and the facilities used in production lie within the lethal range of attack which a ruthless enemy might launch against our cities.

Such concentration in limited areas is a continuing source of danger to this country. Fortunately, it can be materially lessened over the years if the future growth of American cities is guided into proper channels.

As is well known to this committee, the United States is now undergoing a period of great expansion. The construction rate for urban dwellings is running in excess of a million units a year and the building of homes and apartments is being matched by the construction of stores, factories, schools, churches, streets, and all the other elements that make up city structure; the equivalent each year of a complete new metropolitan community the size of Philadelphia.

The more this new construction is concentrated in the already densely populated sections of our larger cities, the more profitable they become as enemy targets and the more vulnerable to crippling damage becomes the Nation that depends on them for a substantial part of its industrial production. Conversely, the more this new construction can be used to decrease densities in central cities and build up outer suburbs and smaller cities outside of the potential damage areas, the less attractive become the central targets. The more the American industrial and population target is diluted, the more difficult it is to attack decisively and hence the less likely it is to be attacked at all.

For the past several years, the Federal Government has urged industrialists to locate new defense-supporting plants a safe distance from potential target zones in major cities and this movement has had wide support. But industry cannot operate without labor and there is need for definite encouragement to builders to erect housing in outlying suburbs and communities that serve the dispersed factories.

Action is also needed to hold the density of new in-town housing developments to the lowest practicable level and to improve standards of spacing and construction so as to minimize the threat of blast damage and conflagration. We believe that much can be accomplished in that direction within the framework of the proposed housing bill.

Section 803 of the bill states that all Federal agencies having powers, functions or duties with respect to housing shall exercise them, consistent with applicable provisions of law, so that they will “facilitate progress in the reduction of the vulnerability of congested urban areas to enemy attack." This enables the Administrator to utilize the various measures under his jurisdiction in a manner to promote national security.

The President's Advisory Committee on Government Housing Policies and Programs, on page 11 of its report, recommended that “A close relationship should be established between housing and defense officials and when defense criteria affecting urban vulnerability are established, studies should be made of all housing programs to insure conformance. Additional legislation should be proposed if necessary." The recommended studies are being undertaken by staff members of the agencies concerned. If these studies indicate that housing legislation should be modified or new legislation introduced to accomplish the desired purpose, appropriate recommendations will be made.

Section 701 of H. R. 7839 is of particular interest in this regard because it would tend to stimulate State and local action to plan for lowered urban vulnerability on a metropolitan basis. Workable and adequate plans for reducing the target value of major cities generally can be worked out most effectively in terms of the entire trade territory. When this is done, new industrial, commercial and residential growth in the outer portions of the territory can be developed in a way that will contribute to the city's economic support without increasing its. target value.

Unfortunately, the outer areas in which new growth is most appropriate are often the ones least equipped by past experience to deal with urban problems

and there often is no agency with sufficiently broad jurisdiction to plan and guide the development of all parts of the trade territory as a single economic unit. The provisions of section 701, through the stimulus of Federal aid, should help to overcome that deficiency.

It is not our purpose at this time to suggest specific measures for the reduction of urban vulnerability that might be taken under this bill. They will be the responsibility of the departments and agencies exercising housing functions and, in many cases, are still to be worked out on the basis of the studies to which we referred earlier. It is our belief that H. R. 7839 and particularly sections 803 and 701 will provide opportunities for constructive action, which will promote security against attack and improve the Nation's peacetime supply of housing at the same time.

STATEMENT OF WILLIAM E. MURRAY IN BEHALF OF FLORIDA SUN DECK HOMES CO., LEISURE CITY, FLA.

In 1949 Florida Sun Deck Homes Co. of Miami began to get inquiries from people who desired to retire and come to Florida to live out the remainder of their days. Since this was nothing particularly new in the history of Florida, not much attention was paid to it. The requests, however, continued to come in increasing volume, and, in 1950, some investigation was made on the subject of retirement housing. To find out if there was a demand for this or not, we placed ads in the leading papers east of the Missouri River. We expected to get some replies. What we got was so great that no matter how the letter was addressed, we got it. Mail sack after mail sack of inquiries came in. The mail clerks did a remarkable job, for there were letters simply addressed "Florida Sun Deck Retired Homes" and nothing more, yet we received them. On the first ad that we placed in these papers we received over 50,000 inquiries. The amount is way over 200,000 now and still climbing. Let us say to you that we are very certain that if any of the congressional offices got 50,000 letters about one subject, you would try to do something about it. Since this demand is general and nationwide, it is felt that you are entitled to know what was done. This demand on the part of our neighbors throughout the United States was indeed a challenge. With what little resources we had for research, it developed that the concept of retirement had changed materially in the last number of years. We found that employers have set up an arbitrary retirement age of 65 where wage earners have to retire whether they want to or not. It appeared that some type of housing would be needed to take care of these particular classes of our citizens since they were no longer in a position to pay the rents which are in effect throughout the country. We felt, personally, that anything we could do to provide a retirement home for people, to which they could look forward with a ray of hope rather than dread, was a worthwhile contribution to America. In the consideration of this problem, there are certain human traits that must not be ignored.

We were able to determine that the vast majority of people who retire do not want to move from the locality in which they live. This is due to the fact that they wish to be near their family ties and among friends of many years standing. It does not mean, however, that what they want is the answer to what they can do. During the last 15 years people planning to retire have placed their money into those investments that 15 years ago seemed to be a source of a good income in the future. These investments have simply not worked out. For example, in the late thirties, savings and loan associations paid dividends of 4 percent and 5 percent. Now they are from 2% to 3% percent. This means that the anticipated income has been cut around 30 percent, but this is indeed not the worst side of the picture. While the income went down, the cost of living went up. Hence, due to the situation which many of these people now find themselves in, they are obliged to forego the luxury of what they want to do, and must follow some way out of their economic plight.

We also found that there were many people who wanted to get away from the cold weather in certain parts of the country and be able to enjoy a less severe climate.

Therefore, we went to work on the problem, and since no other subdivider or developer in the United States had ever tackled or attempted to do this sort of a job, there was no criteria to work from or to.

The FHA did not have any records with which to give a rating from the credit standpoint. Indeed, it was a shock to some lenders to have a mortgage offered to them, from a man and wife who were over 65, to run for 25 years. Now, on

snap judgment, all of us who have negotiated loans on houses would dismiss a loan application for 20 to 30 years from a person over 65 with the thought that the applicant was sure optimistic if he thought he would live that long. However, a careful study indicates that it is not so out of order as it would first appear to be, particularly in a project such as Leisure City. For every retired person who dies there is a constant increasing number of people who are retiring, and they can, and do, buy the equity in the house. We have had some deaths. The houses were resold to other people who had retired, and so the chain goes on and on.

As was said above, the FHA did not have any records with which to give a rating from the credit standpoint, and there was simply not available any credit experience for this type of buyer. Now, they do have some credit background, and it is good. No borrower under the FHA loans is delinquent. Most of them are paid several months in advance, and they seem to want their monthly payments in the hands of the lender on or before the 1st rather than on the 15th of the month. Neither did the FHA have the amortization tables worked out for the low loans that some of these people needed. These things have been overcome

now.

We were able to get several hundred acres which were selected for what we thought to be sound reasons. If we were to take care of people on a low monthly payment, we obviously had to get away from high-priced land; yet we had to be close enough to a community so that they could have access to churches and merchants dealing in the necessities of life. The land which we selected was 21⁄2 miles northeast of Homestead, Fla., and on U. S. 1.

We did not know what kind of housing facilities or what kind of housing units people who were going to retire would prefer. After considerable experimenting, offering various types of floor plans which ranged from a 2-room, 1-bath house with 1 bedroom and 1 living room that was also the kitchen and dining room, to a 7-room, 2-bath house with a swimming pool; we have found that the average couple does not want to lower their standard of living. What they want is comfort * *but they do want limited space. They do not want a lot of rooms to take care of. We found out that these people desire a very large living room; 1 bedroom which must be of good size; a kitchen-dining combination of not less than 80 square feet; a good tiled bathroom; and ample closet space. Indeed, the people buying these houses demand larger closet space than that which the FHA minimum property requirements specify. They also want a carport and plenty of room in the utility room. These people are very insistent that there be plenty of window space to afford sunlight and ventilation.

There seems to be some pretty sound reasoning on the part of these people in their desire for a one-bedroom house. It cannot be stated too strongly that the love and affection these people have for their children and other relatives is great; yet they do not want to issue a standing invitation for their relatives and friends to come down and use that extra bedroom in the winter. Rather than have two very small bedrooms, they want a large one, with the extra space in the living room. They want just 1 bedroom to take care of, not 2; and just 1 bedroom to furnish, not 2. Any demand for the second bedroom seems to be met by the use of modern sofas in the living room.

There are a great many people in Leisure City who can afford to own houses over $30,000, yet they want one bedroom. When company comes, they simply take them over to one of the very modern motels that have been built or enlarged, within a mile of their home. It works out fine for everyone. In fact, since we started this development, two large motels have been built, and every other one within a mile, enlarged.

Along with the creation of the type of house these people want, a certain lending pattern developed which seems to run very consistently throughout the entire development of over 500 houses. These people pay more cash on the downpayment than has been the custom for the last 8 years.

In section 1 of Leisure City, which consisted of 311 houses, the number who paid cash, or so much cash that all they needed was a 50-percent direct-reduction loan, was 21 percent. These direct-reduction loans were made by one of the Federal savings and loan associations. The interest range was from 5 to 61⁄2 percent. The term from 7 to 15 years. In section 2, the percentage is reaching 44 percent. Our experience tells us that these figures on cash sales and low conventional loans are the keystone of the proposed legislation we are suggesting. It is the answer to the repayment of construction funds.

In the consideration of the amount of loan, the fixed income is more important than any other factor. A 95-percent loan on a fixed income is far better than a 60-percent loan where the buyer can be laid off or be the victim of the other