Mr. COLE. That is not the point. You have so much money and you are not distributing according to States; you are distributing according to municipalities.

Mr. PATMAN. And according to need.

Mr. COLE. What difference is there between St. Louis and your town, with respect to need? Is there greater need in your town than in St. Louis?

Mr. PATMAN. Possibly the slum area is different, and the need would be greater in one than in the other. My desire

Mr. BANTA. Who determines what the need is?

Mr. PATMAN. The people such as in Michigan did not want this housing, and Missouri did not want it at all. Are you going to deny it to other States because these particular States do not want it? Mr. COLE. Why do you say that they do not want it?

Mr. PATMAN. For the very fact that they did not get it. They had opportunities to get it.

Mr. BANTA. I do not know of any city in Missouri that was offered a million dollars for slum clearance.

Mr. PATMAN. At one time any city that wanted money, under this fund, could get it.

Mr. COLE. Why should this money under this bill not be distributed equitably among the States according to their need?

Mr. PATMAN. I would not stand on any equitable distribution, but if one State does not want its share why should that money not be used in other States?

Mr. COLE. I will agree with that.

Mr. PATMAN. Then I will agree with you.

The CHAIRMAN. We have not established that as a matter of policy in the Federal Highway Act. If the States did not take that allotment up in 2 years, after 2 years, if the allotment for the highway program was not taken up, it still remained in the State for which it was appropriated, excepting that we would set up a new program from time to time. And the States have always been very critical of all the attempts to reallocate funds provided to them for highway purposes. Mr. PATMAN. I do not think the situation is comparable, Mr. Chairman.

Mr. SPENCE. There is a distinction there. As Mr. Patman said, in some cases it was offered and refused.

Mr. HULL. What about private enterprise

Mr. PATMAN. The most socialistic thing in this bill is that title VI, FHA, because the Government is right behind it. And yet the real estate people come here and advocate it. I am for it, too, and always have been in the past. But it is the most socialistic thing in the whole bil, and yet people come here and advocate it all the time and condemn 10 percent public housing.

Mr. BUCHANAN. And inflationary also.

Mr. MULTER. How can you say that when that is helping private industry?

Mr. PATMAN. With the Government's credit.

Mr. BOGGS. The Joint Committee on the Economic Report says it is inflationary, also.

The CHAIRMAN. Kentucky, with a population of 2,777.000, has 3,740 units. Covington, with a population of 62,018, has 398 public

housing units. Frankfort, with a population of 140,000, has 86; Lexington, 292. Louisville, which has a population of 319,077, has 2,670; Newport has 99.

Mr. SPENCE. Newport, which is adjacent to Covington, was offered public housing facilities and refused them.

Mr. WHITLOCK. Mr. Chairman, in answer to Mr. Gamble's question, I have had pointed out to me this paragraph in this analysis, to which I would like to call his attention:

Even in the large industrial areas, 57 percent of the houses were in the price ranges below $9,642, which corresponds closely to the figure of $9,515 previously calculated as the average price that the family with average income could afford. Yet, it is generally recognized that family incomes in the large industrial centers are higher than the national figures used in this comparison.

Mr. MULTER. Before we leave that, Mr. Whitlock, this comparison about which I was speaking before, and which is on the next-to-last page of the document you have submitted, is not intended to show that families with incomes under $2,000 bought houses that cost $4,322. You simply took the two sets of figures and put them side by side.

Mr. WHITLOCK. It was shown that they were built and available. Mr. MULTER. But there is nothing in this document which shows that families with incomes of under $2,000 bought these houses, is there?

Mr. WHITLOCK. No; there is nothing in there to show that. It shows that they were built in that price range and were available. The CHAIRMAN. The committee will have to recess to go to the floor.

This afternoon we have a conference with the Senate, so we will not be able to meet. If we get through with the conference early enough to make it worth our while, and if we are not in general debate on the Army Air Force appropriations, the committee and the witnesses will be notified so that we can meet. Frankly, as it looks now, we will not be able to meet this afternoon, so the committee will stand in recess until tomorrow morning at 10 o'clock.

(Whereupon, at 11:15 a. m., the committee recessed. to reconvene at 10 a. m., Thursday, June 3, 1948.)

GENERAL HOUSING

THURSDAY, JUNE 3, 1948

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee reconvened, pursuant to recess, at 10 a. m., the Hon. Jesse P. Wolcott, chairman, presiding.

Present: Messrs. Wolcott, Smith, Kunkel, Talle, Kilburn, Hull, Spence, Brown, Folger, Buchanan, Boggs, and Multer.

The CHAIRMAN. The committee will come to order.

Mr.

If it is agreeable to Mr. Whitlock, we will call Mr. West. Mr. West is from out of town and will not be able to wait. Whitlock will be back for further questioning later on. We will also try to meet this afternoon if we can get permission from the floor leadership.

Mr. West, you may proceed.

STATEMENT OF GEORGE W. WEST, PRESIDENT, FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION AND WEST LUMBER CO., ATLANTA, GA., REPRESENTING THE CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. WEST. Mr. Chairman, members of the committee, my name is George W. West. I am president of the First Federal Savings and Loan Association and of the West Lumber Co., both of Atlanta, Ga., and appear before you as a representative of the Chamber of Commerce of the United States, of which I am a director and also chairman of the construction and civic development department committee. The National Chamber represents all types of American business, large and small. Its membership includes not only those who are engaged, directly or indirectly, in the production of buildings and other structures, but also those who buy and use them for business and for residential purposes. I appear befor you, therefore, as spokesman for the American businessman generally, not simply for those who are connected in one way or another with the building industry.

We ask this committee not to recommend passage of S. 866 in its present omnibus form for the following reasons:

1. It would authorize firm and contingent demands on the Federal Treasury aggregating well over $9,000,000,000 and it would launch this program at a time when every effort must be devoted to curtailing Government expenditures and reducing the national debt.

2. It is an exceedingly long and complex omnibus bill which is clearly understood neither by the public nor by most Members of Congress.

3. It would set up new power and authority over private building operations to a dangerous degree in the face of recent experience clearly demonstrating the futility of centralized controls over building operations.

4. It would add to inflationary pressures by increasing the demand for housing without in any way adding to the supply of labor and materials, which impose effective limits on building volume.

5. It would launch the Federal Government on a program of subsidies for slum clearance and public housing of incalculable proportions.

6. It would give the Federal Government responsibilities best carried out by State and local authorities.

7. It would subordinate the Federal Housing Administration system of mutual insurance for private home mortgages to the demands of a welfare activity, and thus jeopardize its continued stability. 8. It would prolong the housing shortage.

The businessmen of the Nation have a direct interest in the prompt solution of the present housing shortage. Housing problems have a close and appreciable influence upon employee morale and efficiency, and obstruct the free flow of migrants from areas of labor surplus to those. where more workers are needed. Housing costs are a substantial factor in the cost of living, and, therefore, in the determination of wage rates and of costs. The sooner the Nation can get back to a normal balance between housing demand and supply, the better it will be for business as well as for the country as a whole. It does not follow, however, that businessmen automatically favor all measures that have been proposed to cope with the present housing situation, for which the war is primarily responsible. On the contrary, they are keenly aware of the danger that the pressures involved could lead to rash and precipitate action which would do more harm than good to the economy as a whole.

Housing is by no means the only problem which confronts us today. We also have to learn how to live with a greatly enlarged Federal debt burden, several times greater than anything hitherto experienced. We also have to protect ourselves from the possibility of foreign aggression in an era of strange and horrifying weapons which carry the threat of wholesale destruction with little or no advance warning. We also have to deal with many other proposals for Federal financial aid in such diverse fields as flood control, highways, hospital construction, airport development, medical care, stream pollution, education, and others too numerous to list.

It is not difficult to demonstrate, with respect to any one of these programs, that the general welfare of the Nation is involved and that the cost is only a relatively small proportion of the national budget. Collectively, however, the question of how much can and should be spent for all such purposes must be faced. The National Chamber has taken the position that the fiscal health and stability of the Nation require a sharp reduction in Federal expenditures, and that consequently a clear line should be drawn between those projects which are of first necessity and those which are merely desirable, but could be deferred. Such action was also recommended in the report of the Joint Congressional Economic Committee on May 19 last. If admittedly desirable undertakings should be postponed, how

much less justification is there for embarking upon the costly and questionable housing program which would be initiated by the TaftEllender-Wagner bill?

No exact estimate of the total cost involved in the Taft-EllenderWagner bill can be made because of the looseness and vagueness of its financial provisions. Tabulating the commitments specifically mentioned gives a grand total of slightly over 92 billion dollars, which includes both loans and grants, but not administrative expenses nor contingent liabilities that would be assumed by the Federal Government. Nor does it include the cost of the research program authorized in title III.

Breaking down this 912 billion dollar total, we find that a little more than 22 billion will be in direct loans and credits and will, in theory at least, be repaid over periods ranging as long as 45 years. But in the meantime they will add to the outstanding public debt, already a heavy burden to the American economy. In this connection, it is interesting to note that S. 866 at several points specifically authorizes the Secretary of the Treasury to resort to public debt transactions to meet the demands of the Housing and Home Finance Administrator for loan funds.

The balance of the 92 billion dollars, approximately 7 billion dollars, represents direct and irrecoverable expenditures by the Federal Government for housing in the form of grants and contributions. Proponents of the bill argue that this expenditure would be spread over 45 years. This is true, but the spread would not be even. During the initial stages of the program, in the next 5 or 6 years, the total amount involved would be nearly three billion dollars, including both loans and grants.

In addition to the important financial angle, there are many other reasons why S. 866 is bad legislation. For one thing, it brings too many major proposals together in a single package. It proposes not only large-scale, long-term subsidy programs for Government-owned housing and for slum clearance, but also many significant changes in the economics of privately financed housing construction. While some of these are intended to stimulate home construction, the bill offers no essential legislative aid in the housing field that is not available in other legislation already passed by either the House or the Senate. Each of these ideas should be given careful consideration on its merits, a procedure which is impossible when so many are combined in an omnibus bill of this type.

Another highly dangerous feature of the Taft-Ellender-Wagner bill is the extent to which it concentrates further authority over home construction, both public and private, in the Federal Government; in most cases in the hands of the Housing and Home Finance Administrator. The extent of these new powers can only be appreciated by a thorough study of the bill, since they are granted in separate sections of its many titles. Let me list some of the more significant of these new powers:

1. With respect to privately financed residential units eligible for Federal Housing Authority insurance, currently comprising a substantial percent of residential construction, the Administrator can vary the proportion of coverage (p. 13, line 19); can vary the upper limit of cost (p. 14, lines 6 ff); and, with the concurrence of the Secretary of the Treasury, can vary the interest rate (p. 3, lines 21 ff).