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“(e) Debentures issued under this title shall be in such form and denominations in multiples of $50, shall be subject•to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Commissioner, with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $50, shall be adjusted by the payment of cash by the Commissioner to the mortgagee from the Military Housing Insurance Fund.

"(f) Debentures issued under this title shall be executed in the name of the Military Housing Insurance Fund as obligor, shall be signed by the Commissioner, by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date of default as determined in accordance with subsection (d) of this section, and shall bear interest from such date at a rate determined by the Commissioner with the approval of the Secretary of the Treasury, at the time the mortgage was accepted for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year, and shall mature ten years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by any Territory, dependency, or possession of the United States or by the District of Columbia, or by any State, county, municipality, or local taxing authority. They shall be paid out of the Military Housing Insurance Fund, which shall be primarily liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United States, and such guaranty shall be expressed on the face of the debentures. In the event the Military Housing Insurance Fund fails to pay upon demand, when due, the principal of or interest on any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof which is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such debentures.

“(g) The certificate of claim issued by the Commissioner to any mortgagee in connection with the insurance of mortgages under this title shall be for an amount determined in accordance with subsections (e) and (f) of section 604 of this Act, except that any amount remaining after the payment of the full amount under the certificate of claim shall be retained by the Commissioner and credited to the Military Housing Insurance Fund.

“(h) The provisions of section 207 (k) and section 207 (1) of this Act shall be applicable to mortgages insured under this title and to property acquired by the Commissioner hereunder, except that as applied to such mortgages and property (1) all references in such sections to the Housing Fund' shall be construed to refer to the ‘Military Housing Insurance Fund', and (2) the reference in section 207 (k) to 'subsection (g)'shall be construed to refer to 'subsection (d)' of this section 803.

“(i) The Commissioner shall also have power to insure under this title or title II or VI any mortgage executed in connection with the sale by him of any property acquired under this title without regard to any limit as to eligibility, time, or aggregate amount contained in this title or title II or VI.

“(j) Any contract of insurance executed by the Commissioner under this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved mortgagee.

“(k) In order to assure an adequate market for mortgages insured under this title, the powers of the Federal National Mortgage Association and of any other Federal corporation or other Federal agency hereafter established, to purchase, service, or sell any mortgages, or partial interests therein, may be utilized in connection with mortgages insured under this title.

"SEC. 804. (a) Moneys in the Military Housing Insurance Fund not needed for current operations under this title shall be deposited with the Treasurer of the United States to the credit of the Military Housing Insurance Fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States. The Commissioner may, with the approval of the Secretary of the Treasury, purchase in the open market debentures issued under the provisions of this titie. Such purchases shall be made at a price which will provide an investment yield of not less than the yield obtainable from other investments authorized by this section. Debentures SO purchased shall be canceled and not reissued.

“(b) Premium charges, adjusted premium charges, and appraisal and other fees, received on account of the insurance of any mortgage insured under this title, the receipts derived from any such mortgage or claim assigned to the Commissioner and from any property acquired by the Commissioner, and all earnings on the assets of the Military Housing Insurance Fund, shall be credited to the Military Housing Insurance Fund. The principal of and interest paid and to be paid on debentures issued in exthange for any mortgage or property insured under this title, cash adjustments, and expenses incurred in the handling of such mortgages or property and in the foreclosure and collection of mortgages and claims assigned to the Commissioner under this title, shall be charged to the Military Housing Insurance Fund.

"SEC. 805. Whenever the Secretary of the Army, Navy, or Air Force determines that it is desirable to lease real property within the meaning of the Act of August 5, 1947 (61 Stat. 774), to effectuate the purposes of this title, the Secretary concerned is authorized to lease such property under the authority of said Act upon such terms and conditions as in his opinion will best serve the national interest without regard to the limitations imposed by said Act in respect to the term or duration of the lease, and the power vested in the Secretary of the Department concerned to revoke any lease made pursuant to said Act in the event of a national emergency declared by the President shall not apply. Whenever the Secretary of the Army, Navy, or Air Force determines it to be in the interest of national defense, he is hereby authorized to sell, transfer, and convey at fair value (as determined by him), for use under this title, all or any right, title, and interest in any real property under his jurisdiction, notwithstanding any limitations or requirements of law with respect to the use or disposition of such property. The authority conferred by this section shall be in addition to and not in derogation of any other power or authority of the Secretary of the Army, Navy, or Air Force.

“SEC. 806. The second sentence of section 214 of the National Housing Act, as amended, relating to housing in the Territory of Alaska, shall not apply to mortgages insured under this title on property in said Territory.

"SEC. 807. Nothing in this title shall be construed to exempt any real property acquired and held by the Commissioner under this title from taxation by any State or political subdivision thereof, to the same extent, according to its value, as other real property is taxed.

“SEC. 808. The Commissioner is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of this title.”

SEC. 2. Sections 1 and 5 of the National Housing Act, as amended, are further amended by striking out the words "titles II, III, VI, and VII" each time they appear and inserting in lieu thereof the words, "titles II, III, VI, VII, and VIII”.

Sec. 3. Section 212 (a) of said Act, as amended, is further amended by striking out the words “effective date of this section,” and inserting in lieu thereof the words "effective date of this section, or under title VIII,”.

SEC. 4. Section 301 (a) of said Act, as amended, is further amended

(1) By striking out of paragraph (1) the words "under title II, or title VI” and inserting in lieu thereof the words "under title II, title VI, or title VIII”; and

(2) By striking out the period and adding the following proviso at the end of paragraph (1) (E): : Provided, That such aggregate amount paid by the Association shall not include any amount paid by it for a mortgage or mortgages which are insured under title VII of this Act; and.”.

SEC. 5. (a) Section 1 of the Act of July 30, 1947 (61 Stat. 675), is hereby amended to read as follows:

"The Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force, or their designees within their respective establishments, are authorized to sell and contract to sell, under such regulations and at such prices and for such periods of time, as the Secretary concerned may prescribe, to purchasers within, or in the immediate vicinity of, naval or military activities, such utilities and related services as are not otherwise available from local private or public sources.

(b) Section 2 of said Act is hereby amended to read as follows: “The utilities and related services authorized to be sold under this Act are: (1) electric power, (2) steam, (3) compressed air, (4) water, (5) sewage and garbage disposal services, (6) gas (natural, manufactured, or mixed), (7) ice, (8) mechanical refrigeration, and (9) telephone service; and the proceeds received for any such utilities and related services sold pursuant to the authority of this Act shall be credited to the appropriation or appropriations currently available for the supply of such services: Provided, That any utility or related service provided and sold under the authority

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of this Act shall not be so provided unless it is determined that the utility or related service is not at the time of such sale or contract to sell available from a private or other public source, and that the furnishing thereof is in the interest of national defense."

(c) Section 3 of said Act is hereby amended by deleting the words “The Secretary of the Navy and Secretary of War” and substituting therefor the words “The Secretary of the Army, the Secretary oføthe Navy, and the Secretary of the Air Force”.

(d) Section 5 of said Act is hereby repealed.

The CHAIRMAN. The first witness is Secretary Symington of the Air Force.

Have you a prepared statement?
Secretary SYMINGTON. I have, sir.

The CHAIRMAN. You may proceed with your statement, Mr. Secretary

STATEMENT OF HON. STUART SYMINGTON, SECRETARY OF THE

AIR FORCE

Secretary SYMINGTON. Mr. Chairman, we appreciate the opportunity to appear before the committee on behalf of the National Military Establishment in support of this legislation to provide homes for our military personnel.

The National Military Establishment considers that the enactment of this legislation is essential to the continued efficiency of the armed services. Present housing facilities for military and civilian personnel of the National Military Establishment are so totally inadequate in numbers as to fail utterly in meeting the demands. This proposed legislation would greatly stimulate construction by private enterprise of housing units needed by the National Military Establishment.

In order to attract and hold the highly trained, experienced, and technical personnel now required by the Departments of the Army, the Navy, and the Air Force, it is essential that this personnel be afforded an opportunity to live comfortable and normal lives insofar as military duty permits on a reasonable parity with the average American citizen. Most of them do not now have this privilege.

For example, in my travels to various bases, some of the conditions we have found are almost unbelievable. At Mather Field, Calif., families are living in converted barracks-type buildings where it is necessary to use community bath and cooking facilities. The same applies to Mitchel Field, N. Y. At Chanute Field, Ill., there are several families living in a converted mid-Victorian house where only outside toilets are available. I could name many more specific examples of which the above are typical.

By the very nature of the service, military personnel must be always on order. They must proceed to designated places at designated times for varying durations. As a result, they are considered transient to the community in which they reside. Under the terms of the existing National Housing Act, transients are not considered sound business risks for housing. Many of our people are unable to find quarters at all. Others are forced into slum areas or make-shift dwellings too inadequate to have been considered a part of the available and livable housing facilities of the community in the first place. Moreover, any adequate accommodations that may be available command a price far beyond their means. With the enactment of this legislation, we

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intend to give priority to caring for the need of quarters for junior officers and noncommissioned officers who are most affected by these conditions.

The result of this situation on the effectiveness of our armed forces is incalculable. Separated families and squalid living conditions combine to produce very poor morale. The resulting problems of replacement and excessive training costs seriously jeopardize the effectiveness of our efforts to provide adequately for the defense of the Nation. The same housing difficulty also greatly retards our efforts for personnel procurement.

In short, Mr. Chairman, there are three very pressing reasons why the National Military Establishment feels that this legislation is urgently needed. First, there exists a morale problem that seriously bears upon the effectiveness of our defense measures. Second, we are having grave difficulty in acquiring the personnel that we need; and third, we are having equal difficulty in keeping those that we do get.

Modern Warfare demands a much higher percentage of qualified specialists than at any time in the past. Such men, stable and serious as a class, are deeply interested in their homes and families. They are also amply qualified to succeed in civilian life. It is these men, the ones we need most, that we cannot attract or expect to keep if military careers prove å handicap in providing adequate homes for their families.

The housing erected as a result of this legislation would not alone solve our entire housing problem any more than adequate housing alone would suffice to attract into service the number of competent engineers and technicians that are urgently needed. The measure being considered today, however, is designed to provide immediate relief. The basic requirement is, of course, for the erection of a sufficient number of adequate public quarters to house all military personnel. This is a long-range requirement, the fulfillment of which is of necessity a lengthy process. But the problem is immediate and pressing. This legislation would operate, in the shortest possible time, to provide an invaluable aid in easing this grave difficulty.

This plan has the approval of the entire National Military Establishment. The Housing and Home Finance Agency will suggest a few technical amendments and the Bureau of the Budget has advised that enactment of this legislation with the proposed amendments would be in accord with the program of the President.

Mr. Chairman, unless there are any questions, I would like to call on Mr. Zuckert, Assistant Secretary of the Air Force.

The CHAIRMAN. The condition you described there has been conveyed to me by many officers who are anxious to see this legislation enacted.

Mr. KILBURN. What is it going to cost the Government?

Secretary SYMINGTON. The bill will not cost the Government money. It cuts in free enterorise, so it does not have to come in as part of the military appropriation.

Mr. KILBURN. How much will it cost?

Secretary Symington. That would depend on how many contractors would want to build how many houses if it were enacted. All will be built by private contractors.

Mr. KILBURN. How would you vote?

Secretary SYMINGTON. I would vote very strongly in favor of this bill, sir. I know the Air Force figures better than the other services. We need 121,000 houses if we are going to do any kind of a housing job. In 1947, we built 4,318 houses; in 1948, we didn't build any; in 1949, we built 907.

In many of our units, where we finally train expert technical sergeants in the handling of jet engines, we have a reenlistment rate as low as 7 percent. Where we have decent housing, we have as high as 75 percent. We are throwing away a lot of the taxpayers' money and we are not giving adequate housing to the expert noncommissioned officers.

The CHAIRMAN. If there are no further questions, Mr. Secretary, you may step aside.

Assistant Secretary Eugene M. Zuckert will be the next witness.

Mr. ZUCKERT. I am Eugene M. Zuckert, Assistant Secretary of the Air Force, sir.

The CHAIRMAN. You may proceed.

STATEMENT OF HON. EUGENE M. ZUCKERT, ASSISTANT

SECRETARY OF THE AIR FORCE

Mr. ZUCKERT. Mr. Chairman, I am especially glad to be here today

I to present the Air Force position on this legislation, because it is a matter that I consider to be of primary importance to our national defense situation, and particularly so to the United States Air Force. The finest weapons and equipment are useless without qualified personnel to maintain and use them. We have a very grave personnel problem in the Air Force. The enactment of this bill would go a long way toward solving that problem. This would greatly increase the efficiency of the Air Force, and his increase would be accompanied by a considerable reduction in expense for training personnel.

Our present lack of housing is proving a serious obstacle to our retaining on a long-term basis the number of trained and qualified officers and airmen we must have to operate an efficient Air Force. For instance, in fiscal year 1949, over one-third of our airmen have been or will be eligible to leave the service through discharge. Surveys indicate that no more than 60 percent of these are reenlisting. One of the greatest single causes of this serious, expensive loss of trained personnel is the deplorable housing situation throughout the Air Force.

The Air Force presently has only 17,954 housing units of all types, including conversions of temporary wartime barracks, for family occupancy. Of these, but 6,397 are considered adequate. We require housing for 121,000 families.

We have a map which shows you what the national situation is now. Mr. Brown. How many did you say you have now?

Mr. ZUCKERT. 17,954. We need housing for 121,000 families. As I said, sir, the map will show you the stations at which we have a serious housing situation. You can see it is a national picture. It is not an isolated picture.

Mr. BROWN. Why haven't these houses been built?

Mr. ZUCKERT. Because we built up so fast from a small force to 2,000,000 military people during the war. We are many times bigger than we were. We were on a temporary basis during the war. We

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