in that very area thousands of units. They didn't go to the trouble of relaxing regulation X on the units under construction, so that those units are endeavoring to compete with these 6,000 units that will have this relaxation of regulation X, and it seems to me that you don't get housing units built and made available to people who need them in these critical areas.

Mr. COLE. Do you have any other reports on it?
Mr. SPIEGEL. We have numerous such reports.

Mr. COLE. Will that be in some of the letters which you will insert? Mr. SPIEGEL. I will certainly get those and make them part of the record.

Mr. COLE. I wish you would do that, I am particularly interested in the operation of the critical areas committee, and the relaxation of the regulations with respect to it in its operation, as to whether it is effective or not.

Now, I have requested information from the committee concerning the problem. I notice they have denied the applications of 8 areas, or 18 communities..

Now, do you have any letters from any of the people in those 18, where they have denied their applications?

Mr. SPIEGEL. I know of one experience I think it was Dayton, Ohio where they called this group in and asked them whether they wanted it declared a defense area, and the builders decided they didn't, because there were plenty of homes available.

Mr. COLE. The people in the area themselves didn't want it.
Mr. SPIEGEL. That is right.

Mr. COLE. I am talking about an area that had made an application and had been denied by the committee here in Washington.

Mr. SPIEGEL. I have no personal knowledge of that, but I will endeavor to get that information for you.

Mr. COLE. Any information you can put in the record with respect to that will be very helpful.

Mr. SPIEGEL. I will be glad to.

(The information referred to is as follows:)

Hon. BRENT SPENCE,

NATIONAL ASSOCIATION OF HOME BUILDERS,
Washington, D. C., June 12, 1951.

House of Representatives, Washington, D. C.

DEAR MR. SPENCE: In accordance with the request made during Mr. E. M. Spiegel's testimony in behalf of this association on June 7, we are sending you a copy of a compilation of excerpts from typical replies we have received relative to the effects of credit controls as they have been applied to the home-building industry.

This is to be incorporated in the record following Mr. Spiegel's remarks.
Respectfully yours,

JOHN M. DICKERMAN,
Legislative Director.

SURVEY ON EFFECTS OF RESIDENTIAL CREDIT CONTROLS

EXCERPTS FROM TYPICAL REPLIES, MAY 29 TO JUNE 5, 1951 San Angelo, Tex.-E. Gordon Perry, president, Home Builders Association of San Angelo

Regulation X has already curtailed sales and the construction of new homes in this area of the Nation more than 75 percent. In fact, it has almost brought the home industry to a standstill and is creating serious unemployment.

Memphis, Tenn.-Margolin Bros. Supply Co.

We, as builders of a large number of homes in the $7,000 to $10,000 range, estimate that the effects of regulation X will result in a reduction of 80 percent of our previous volume.

Boston, Mass.-St. Paul Construction Co.

Many of the builders with whom I have been talking this matter over with within recent weeks tell me that they are finishing up their projects and have no future plans for building; the few that are contemplating business in 1951 are going to concentrate on higher priced homes only. One particular builder in this territory who has been operating continuously for the last 40 years is auctioning off the major part of his contracting equipment and plans to go into semiretirement until this situation straightens out./

We, ourselves, have been stopped dead on our construction work. We have no future plans and do not know which way to turn.

Sheffield, Ala.-Chamber of Commerce

We, of the Chamber of Commerce of Sheffield, Ala., would like to take this opportunity to use every means at our command, through, your organization, to get regulation X repealed.

The housing situation in our city and county still remains a tremendous problem and as of this date with very little relief in sight. Our city is primarily an industrial city with the majority of wage earners being on a salary. Under regulation X our salaried people are virtually eliminated from even thinking of building a home for themselves and their families.

Hackensack, N. J.-Home Builders Association of Northern New Jersey

A considerable (over 40 percent at present) slump in selling new homes has occurred. This is due to the fact that pre-X commitments have nearly all been used up or terminated and the full effect of these drastic credit controls is now being felt. This is applicable in all price ranges but is heaviest in the low-cost field. Low-cost housing in this area will practically be eliminated due to these restrictions since it will be impossible to sell them. (Low-cost housing in this area is at about $10,000 since this is a high-cost area subject to stringent building codes.)

The need for housing, particularly medium- and low-cost homes in Bergen and Passaic Counties is constantly increasing as evidenced by the ever-expanding defense manufacturing and indusrial plants with an accompanying increase in personnel.

Butler, Pa.-Town & Country Builders

Regulation X has reduced our sales from an average of 10.58 houses per month in 1950 to 2.4 per month in 1951.

Regulation X has, because of the higher down payment, eliminated the group who are critically in need of housing and whose earning power will not permit occupancy of the rental units available because of the high rent demanded. This group, composed of young ex-GI's, are forced to double up with relatives or live in undesirable housing. Our experience this year indicates that this group are forced to pay as rent a higher price than the monthly payment required to purchase a home.

Houston, Tex.-Embe Building Co.

We construct in the neighborhood of 100 houses annually selling in the $9,000 to $10,000 bracket. Our sales tools have been primarily FHA and Veterans' guaranties, and a check of our recent sales shows that only 10 to 20 percent of our buyers have been able to avail themselves of a home under the regulation X pattern as set by the FHA. Veteran home buyers appear able to pay down as much as $600 or $700 in the purchase of their new home and beyond that are unable to even consider a home purchase at this time.

Memphis, Tenn.-Home Builders Association of Memphis

Of particular interest is the May 1951 comparison to May 1950, during which month we first felt the full effects of regulation X and controls. You will note that the home building in May 1951 dropped off $2,575,276. Trom May through the balance of the year we foresee comparative decreases and an indication that we will build less than 50 percent of the homes that were constructed during 1950. We estimate there are only 700 homes under construction at May 31, 1951, as compared with 2,021 units under construction May 31, 1950, and 1,130 units under construction May 31, 1949.

Concord, Calif.-Diablo Annex Builders

We tried to do our part in building a low cost quality two-bedroom home to sell for $6,950, a record in this part of the country, but $1,450 down, as required by regulation X, is too much for the average workingman. I would say an equity of $500 to $750 down would be a fair and equitable basis on which to sell new homes. Hempstead, Long Island, N. Y.-Long Island Home Builders Institute

In the first place, let me cite to you the fact that my remarks embrace the counties of Kings and Queens in the city of New York, and the counties of Nassau and Suffolk, all four of which are located on Long Island. It should be noted that

the population of thoese fur counties is in excess of 5,200,000.

In the first 4 months of 1950, compared with 1951, these are the starts in housing construction, privately financed, including both one- and two-family homes for sale and multifamily apartment dwelling units:

From the above, the following facts are apparent: (a) The 1951 starts during the 4-month period in the four counties have already taken a 46.6 percent drop compared with the 1950 starts, or almost 20 percent greater reduction in volume than was contemplated by regulation X on a national basis.

(b) Particularly significant, as well as startling and dangerous in its many implications, is the tremendous reduction in the total of starts in Brooklyn and Queens within the city of New York. Here the reduction is 76.8 percent for the two counties combined as compared with 1950. Its particular significance lies in the fact that these are two great residential counties of the city of New York, in which there is usually a preponderance of rental accommodations, as distinguished from homes for sale.

During 1950 a total of 64,000 dwelling units, both for sale and for rent, were started in these 4 counties. On the basis of the 19,868 starts in the first 4 months of 1950 in those counties, it is evident that the starts during the last 8 months were on a rising average monthly scale. However, the 1951 figures for the first 4 months for all 4 counties already show a 46.6 percent reduction in volume of starts, despite the fact that there was a tremendous backlog of preregulation X commitments outstanding.

If we could project the declining rate of starts during the first 4 months of 1951 into the remainder of the year, I think it will be safe to estimate that our original prediction will turn out to be correct. That original prediction was that in the Long Island area regulation X would have the effect of reducing 1951 total volume of starts between 60 and 75 percent of the total starts for 1950; therefore very considerably in excess of the projected reduction planned through the institution of regulation X.

Birmingham, Ala.-Richard Hail Brown, NAHB regional vice president

I think Birmingham is a fairly typical city. I think Broadmoor, consisting of 300 homes in the very center of a circle of heavy industry of the Birmingham steel area, ranging in house prices from $7,900 to $9,500, is typical. I think it is also typical because of its extremely splendid mortality rate in the foreclo

These people are steelworkers, miners, truck drivers, etc., with an average income of about $275 per month. They pay for their homes and are maintaining them beautifully.

I have examined nearly all of the credit records of all of the purchasers of these houses personally. It is my firm opinion that not more than 15 out of the 300 could have bought then or could buy today these houses under regulation X. * * * Today in Birmingham we face a situation where that if regulation X was immediately removed and all other encouragements made it would be 6 months before we could start laying down houses in any appreciable quantity.

Detroit, Mich.-Builders Association of Metropolitan Detroit

Building permits in Detroit have fallen 32 percent in April over March, which is against the seasonal trend-and May will even show a larger drop. There is

no doubt that under present regulations, and the mortgage money situation, that building will become progressively less and less each month and by early fall be practically nonexistent.

Atlantic City, N. J.-Atlantic Home Builders Association of New Jersey

In our section of New Jersey-since it went into effect-it has entirely paralyzed our industry.

GI's

In our section we have been building on an average of 500 houses a year. and others were in very bad need of this housing; but, since regulation X went into effect, they have been unable to meet the financing requirements; therefore a large number of these homes are still on the market for sale. West Memphis, Ark.—J. W. Rich Construction Co.

Home building is at a complete standstill in this territory immediately, unless regulation X is lifted and some of the companion credit controls. Our firm has built 1,100 units in West Memphis since 1945. We are now completing everything under the old regulations and have only seven houses on the boards under regulation X.

Good business will not permit our taking the chance of erecting homes for sale to the public when we know that the large down payments required are simply not to be had in a community such as ours.

Kansas City, Mo.-Home Builders Association of Greater Kansas City

House sales have nearly ceased entirely. ments are doing any volume business at all. large cash payments required.

Only those with prior GI commit-
The buying public do not have the

Collingswood, N. J.-Home Builders League of South Jersey

Last year, the great majority of the homes sold in the southern part of New Jersey were sold to persons in the working class who made small down payments and who purchased a two-bedroom house with room for two additional bedrooms on the second floor at an average monthly carrying charge of about $55 per month and a down payment including settlement costs of an average of about $350. In our particular area we found that the great majority of the workers were able to pay this down payment and the monthly carrying charge required. The picture has now completely changed because only a few have the present average required down payment of about $1,300, and there being about $7 a month difference in carrying charge between a 20-year and a 25-year loan, this factor also eliminates a considerable number of prospects not earning sufficient to pay the additional $7 per month.

Davenport, Iowa-Quad City Association of Home Builders

It is our experience, in this area comprised of the cities of Davenport and Bettendorf in Iowa, and Rock Island, Moline, and East Moline in Illinois, that houses selling from $15,000 to $20,000 have a much better chance of finding buyers under regulation X than houses selling at $12,000 or less. This is the farm implement center of the world, with plants owned by International, Deere, Case, and Minneapolis Moline. We also have the newest and largest sheet mill of the Aluminum Co. of America, and Rock Island Arsenal, the largest of our Government plants.

It is our firm belief that the best interests of the Government would be served by lifting restrictions of regulation X from the low-cost field. This will permit private capital to erect houses in the price brackets which are most sorely needed, and will take care of great numbers of workers employed in the plants which are manufacturing essential materials.

Corning, N. Y.-Chemung Valley Homebuilders Association

I have taken the occasion to consult with other local builders in regard to future plans. Without exception, they contemplate drastically reduced production until such time as regulation X is realistically adjusted to the needs of the current situation. Indeed, some contemplate no future production until such time. This is the current situation in an expanding community where housing already is critically needed.

Charlotte, N. C.-Marsh Realty Co.

By now it should be a well-known fact that not less than 75 percent of the potential prospects for homes will completely dwindle for the most part by regulation X and the companion credit restrictions of FHA and VA.

Chicago, Ill.-Chicago Metropolitan Home Builders Association

With its increased production activity, the action of Government agencies in restricting housing is having a disastrous effect. Preregulation X commitments which have been keeping housing close to an even keel have now begun to taper off and, for the first time in the city's history, housing starts in April were less than those in March, and May will show an additional decline. A canvass of some two dozen builders has produced a uniform reply to the effect that workmen just cannot raise the down payment required under regulation X and sales of homes are, accordingly, tapering off to an alarming extent. The purpose of the Government to have housing ready in advance of defense production needs is being entirely defeated.

Tulsa, Okla.-Otis E. Nidiffer, Inc.

Out of a project of 183 houses, it has become necessary for me to drastically curtail building at this writing, due to the effect of regulation X on our sales.

In the Tulsa area there are several thousand men out of employment due to the slowing down in building. Within the past week I have laid off approximately 100 workmen on my present project and in all probablity will in the next few weeks lay off additional workmen if we are not given some relief on regulation X in order that we may move our merchandise.

Orinda, Calif.-Boies & Soule, real estate

Just prior to regulation X, we undertook a project of 38 veteran homes, requiring $1,000 down, the buyers, to be earning not less than $95 per week and well employed. These houses were sold out before the foundations had all been poured. We then offered 12 similar houses on comparable and better lots next to the 38 first homes. These latter 12 houses are under regulation X requiring $2,500 down. So far after many weeks of offering them, we have sold but three. We have additional improved lots all in this desirable location, but in view of our sales experience under regulation X, we intend to lay off our crew of 35 men and stop building. Most of these men will probably have to join the 60 unemployed carpenters who were waiting for jobs in the Martinez union hall last week. Chicago, Ill.-E. C. Mahoney Construction Co.

Now that preregulation X commitments are petering out, home sales have dropped off in my own organization and in others approximately 75 percent and we have all been required to curtail our programs to meet these pressing condittions.

With a constant demand on the part of industrialists to produce more housing so that they can engage more help, we appear at the present time to be totally incapable of meeting these requirements.

Unless some action is taken to relieve the situation, the defense program in the entire area will be greatly hampered.

Midwest City, Okla.—Tom Poore, home builder, developer

Enclosed herewith is a copy of study prepared by the agricultural industrial development service, Oklahoma A. & M. College, Stillwater, Okla., showing the effects of regulation X on the home-building industry in Oklahoma City and Oklahoma County.

The report bears out our first fear almost completely since during the period from October 1950 to May 1, 1951, only 183 lots have been recorded for development as compared to 2,269 lots recorded for development in the preceding 7-month period. As for the second fear, the trend from lower-priced housing to highpriced housing has been established, but has not yet fully developed because Oklahoma City builders succeeded in having some 1,900 lots declared hardship cases under VA regulations because of substantial installation of improvements prior to the effective date of regulation X; therefore, practically all of our building has been under regulations in effect prior to regulation X. Since the effective date of regulation X, only 122 starts have been under regulation X and nearly all of these have been in the high-priced bracket. It is also significant that only 15 percent of those applying for GI loans could have qualified under regulation X, thus indicating that the buyers of housing under $10,000 are being deprived of the opportunity of home ownership in a community where housing of the lowerprice range is desperately needed for those who will do the national defense production job.

Florence, Ala.-Chamber of Comm merce

Regulation X has virtually stopped the construction and purchase of homes by the middle- and lower-income class of citizens of the great Muscle Shoals area."