Now, in the title II provision, subsection (5) of (C) states:

Bear interest at not to exceed 5 per centum per annum on the amount of the principal obligation outstanding at any time, or not to exceed 6 per centum per annum if the Administrator finds that in certain areas or under special circumstances the mortgage market demands it.

In other words, the language "up to 5 percent" is the language that we would prefer in title VI legislation, and not this part which refers to going above 5 to 6 percent. We have never used this part which permits us to go above 5 percent.

The CHAIRMAN. The point is that you have discretionary authority, in title II, to go up to 6 percent.

Mr. RICHARDS. We have authority to go to 5 percent

The CHAIRMAN. If you find, in certain areas, or under certain special circumstances, that it is required. We gave you in the bill that we passed discretionary authority with respect to title VI, 603's, to go up to 5 percent. It is almost identical language. Now, they made certain corrections in title II of this bill, and surely we should not do anything in this bill which is inconsistent. We did not intend to set up any different standards with regard to your discretionary powers. Mr. RICHARDS. I agree with you, and I suggest that the language that is used in title II would be entirely satisfactory in title VI, but the language in title II allows the Commissioner to go up to 5 percent without any special finding in certain areas and under special circumstances. And the language in the House bill as passed does not permit that. If the Commissioner had authority to go up to 41⁄2 percent, or whatever you might fix, in all areas, without outlining certain areas or special circumstances, that would be much more satisfactory from an administrative standpoint.

The CHAIRMAN. Would not the special circumstances in the area always be that you could not find a market for Federal Housing Administration-insured mortgages because of the competition of other securities? And you would have to meet that competition by adjustments in the interest rates?

Mr. RICHARDS. I do not know if you would find that in every area of the country.

The CHAIRMAN. Well, I think we put it in there to meet different situations in different areas, just as there are different interest rates on commercial paper in different areas, just as there are different interest rates on industrial obligations and on municipal obligations in different areas. I do not know how it would be possible for you to adjust an interest rate, nation-wide, unless you averaged all of the markets in the United States for any paper, industrial, commercial and Federal Housing Administration.

Mr. RICHARDS. Federal Housing Administration loans are reasonably liquid as indicated by the premium they have demanded over a period of time, and the premium does not appear to be greater particularly for a loan coming from one area than another area.

The CHAIRMAN. Well, let us put it this way: Regardless of whether it is the Senate language or the House language, you feel that you are given sufficient authority, and the situation is flexible enough so that

you can meet competition of other securities with Federal Housing Administration financing?

Mr. RICHARDS. I would prefer either the language as now in title II or the language now in S. 866 rather than the language in the House bill that was passed in the latter part of March. I do not believe that it would be practical from an operating standpoint to try to set different interest rates in different localities.

We had that in the very early days of Federal Housing Administration, and it was very shortly thereafter abandoned, and since that time we have had a uniform rate throughout the entire country for certain types of mortgages.

The CHAIRMAN. Mr. Richards, could you give us comparable figures with respect to starts this year as compared to the starts last year in this same period?

Mr. RICHARDS. They are considerably ahead of last year.

The CHAIRMAN. I understand.

Mr. RICHARDS. There were 96,000 starts in the first 3 months of this year as compared with 82,000 in the first 3 months of 1947.

The CHAIRMAN. When could we get the figures up to May 1st? Mr. RICHARDS. Preliminary figures through April 30 will be available about the 10th of this month.

The CHAIRMAN. Probably before we finish these hearings we could get those figures?

Mr. RICHARDS. Yes.

The CHAIRMAN. Would you keep it in mind to furnish those figures for the first 4 months?

Mr. RICHARDS. Yes.

Mr. BUFFETT. Mr. Chairman, would it not be interesting in that connection to have the previous figures over a period of years? Is this a new high or how does it relate to previous years?

The CHAIRMAN. I do not know as it would serve any purpose to go back beyond 1946. Since 1946 we have gotten into a little different position than we were in before the war, but if they can be easily obtained, it might be well to have them.

Mr. BUFFETT. I am trying to figure out what kind of a job the building industry is doing.

The CHAIRMAN. The 3 years we are most interested in are 1946, 1947, and 1948. Would that be all right?

Mr. BUFFETT. Yes.

Mr. BUCHANAN. Mr. Chairman, are these only Federal Housing Administration starts?

The CHAIRMAN. No, they are all starts.

Mr. RICHARDS. We can give you the Federal Housing Administration proportion if you wish to have that.

Mr. BUFFETT. Yes, I would like to see that.

Mr. BUCHANAN. Yes.

The CHAIRMAN. Will you break it down and give us the portion of Federal Housing Administration of the total?

Mr. RICHARDS. Yes. It has been running just under 39 percent of the total.

(The information referred to is as follows:)

Number of private nonfarm dwellings started and dwelling units started under Federal Housing Administration Inspection, 1946 to date

The CHAIRMAN. How do you gather that information, Richards?

Mr. RICHARDS. On the Federal Housing Administration part—— The CHAIRMAN. Or is that self-evident?

Mr. RICHARDS. Yes; and the other is Bureau of Labor Statistics. The CHAIRMAN. Are there further questions of Mr. Richards? Mr. NICHOLSON. Mr. Chairman.

The CHAIRMAN. Mr. Nicholson.

Mr.

Mr. NICHOLSON. What about materials to carry out this program contained in this bill? Are materials available?

Mr. RICHARDS. The materials situation, in my opinion, and from the reports that we receive from our field offices, is considerably improved over year ago. There are a few areas throughout the country where particular materials are still a little difficult to obtain in the quantities required, but insofar as the program provided through these amendments to the National Housing Act is concerned, I am of the opinion that there will be sufficient materials available to build the housing that might reasonably be expected to be built, barring some unforeseen condition, at this time.

Mr. NICHOLSON. You do not think that the ordinary business of building can be taken care of by private capital and private individuals?

Mr. RICHARDS. That is what the National Housing Act amendments provide for, the use of private capital and Government insurance. There are no Government funds used in connection with the construction provided for under the National Housing Act.

Mr. NICHOLSON. Three years ago you were not allowed to build a house, even if you could afford to pay for it. Has that big change come about in these last 2 or 3 years?

Mr. RICHARDS. All controls over both residential and commercial construction have been removed by Congress.

Mr. NICHOLSON. I see.

The CHAIRMAN. All of them?

Mr. RICHARDS. Yes, sir.

The CHAIRMAN. I thought you said "most".

Mr. RICHARDS. I am sorry. I meant to say “all”.

Mr. SMITH. Mr. Chairman.

The CHAIRMAN. Dr. Smith.

Mr. SMITH. Mr. Richards, the officials of the Federal Housing Administration came to Washington in 1939 and opposed quite strongly the nited States Housing Authority program. I notice that you and Mr. Foley have taken a position of approving so-called low rent housing by the Federal Government. What has caused that change? Mr. RICHARDS. Mr. Smith, I do not know where you received any information to the effect that I have endorsed that part of the bill, because my testimony only had reference to the amendments to the National Housing Act.

Mr. SMITH. Pardon me. I may have misunderstood you.

Mr. RICHARDS. I did not take it that I was expected to testify on the other parts of the bill, other than those referring to the amendments to the National Housing Act.

Mr. SMITH. I am sorry.

Mr. RICHARDS. I will be glad to express an opinion on it, if the committee wants to have me do so. My testimony only had reference to the provisions of the bill that affected the Federal Housing Administration, and those were amendments to the National Housing Act. Mr. SMITH. What is your opinion on the matter?

Mr. RICHARDS. I have not studied the bill with reference to the public housing features as thoroughly as possibly you or Mr. Foley or others have. However, I have felt this way about public housingI do not think that anyone who has followed my work in housing over a period of years could feel in any way that I might be classified as a "Public Houser", so to speak-but I have felt that somewhere in the whole picture there was a need for a time, at least, of some public aid. Now, whether this particular type of public aid is the most favor. able type of public aid or not, I am not prepared to say. I do feel, however, as Mr. Foley stated, that the primary job should be and is that of private industry, and my work over a period of years indicates that my feelings are along those lines. But I doubt very seriously whether the operations of private industry, with such legislative aids as they have at the present time, could be expected to meet the need of slum clearance and urban redevelopment that exists at the present time. Therefore, in some limited way I feel that there should be some form of Government aid to assist in meeting this problem. Mr. SMITH. In the form of low rent housing?

Mr. RICHARDS. That would provide low rent housing for those of an income level who could not be reasonably expected to pay an economic rent.

Mr. SMITH. Mr. Richards, does not experience show that once that program is put into operation there is no such thing as a limit? Mr. RICHARDS. Well, that gets into the operational end of it. appreciate the fact that there must be very difficult operating problems in connection with that, but it would seem to me that there could be methods established and set up which would make it possible to restrict the tenancy to those of a certain income level. But, as I say, I have not given extensive study to methods as to how that problem might be met. I have been busy, and engaged in thinking along the lines of how private enterprise could build the amount of housing

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necessary to meet the requirements of the field in which they are working.

Mr. SMITH. England, Austria, and other European countries started out on that basis. Now they have come to the point where, as in England, perhaps there will be no more private building whatsover. Mr. RICHARDS. Well, I do not know about that reference, but with reference to the use of a small amount of funds for public housing, I would be inclined to believe, Doctor, that with a proper legislative program, and with proper administration, that you could keep public housing in the realm where the Congress thought it should be. Again I emphasize that I have not been known as a "Public Houser". My whole activity in Government life has been in promoting and developing ways and means of having private industry assume this responsibility, with Government cooperation. But I do feel, honestly, that at the present time, and possibly for some time in the future, it is unlikely that private industry can carry the entire load.

In other words, without some sort of a subsidy or Government aid, some method that we do not have at the present time, private industry canont be expected to provide housing for rent or for sale to those of the lower income group. In other words, there seems to me to be a certain percentage of the people-and a very small percentagewho could not reasonably be expected to pay an economic rent or sales price for a home at the present time, and I think that there are various factors involved in the picture which would justify some type of Government cooperation.

As I say, I am speaking outside of my realm. My entire work has been with the Federal Housing Administration from the day I went to work for the Government. But you asked me for my opinion, and that is it.

Mr. BUFFETT. Is there any place in this bill where such a formula is set out, of what constitutes too low an income for an economic rent? Mr. RICHARDS. I have not studied the public features of this bill. I had not intended to present any testimony with reference to it, and I did not think I would be asked about it, so I am not in a position to testify with reference to the adequacy of the public housing features of the bill.

Mr. BUFFETT. You are only testifying on specific provisions, and do not pretend to endorse the bill in its entirety?

Mr. RICHARDS. I made that clear in my initial statement, a general endorsement of the provisions of the bill that affect the operations of the Federal Housing Administration.

Mr. SMITH. I am sorry, I misunderstood you, Mr. Richards.

Mr. RICHARDS. And in the last sentence of my statement, I say, "In my opinion, enactment into law of the proposed amendments to the National Housing Act will facilitate our housing objectives."

Mr. SMITH. Mr. Richards, the people who initiated this program, led very largely by Mr. Strauss of New York City-and others, of course set out with a program of constructing something between four and five million low rent dwelling units, which I estimated would