You are declaring, if this becomes a law, that Congress declares a national housing policy which will do what? Line 7 of page 1 will— require a production of residential construction and related community develop ment sufficient to remedy the serious cumulative housing shortage.

To my knowledge, there has never been presented, to this committee or any Senate committee, the effect of our national economy of a policy of Congress requiring the production of a certain amount of residential construction. The Building Products Institute, in order to try to assist this committee has prepared an analysis showing what would happen in requiring the production of houses in this country to a certain figure. There has been a great deal of discussion of whether this Congress should force industry to build a million houses or a million five hundred thousand houses a year, and it is of great concern not only to the construction industry but to the entire economy as to how many houses should be required to be built by an act of Congress or by a national policy established by Congress. I will give you the high lights of our analysis.

If you require this industry to produce 1,500,000 houses each year, continuing right along, it will mean-and this analysis will document it for you that every house house in America will have to be demolished and replaced every 37 years on the average. In other words, before you undertake to require a production of housing I think this committee should seriously consider the effects of requiring a million and a half houses to be built every year by the construction industry and the effect on the economy.

Every 37 years, for a million and a half houses. Building at the rate of a million houses a year, the rate at which we are presently producing would mean that every existing house would have to be replaced every 77 years, on the average. That probably would be a reasonable turn-over in our housing supply.

At the rate of 750,000 houses we would have a turn-over of housing every 130 years.

These tables were prepared with these factors in mind: They provide, first, for the new families that will be formed and cover the years 1949 to 1960.

It also provides for the undoubling of a large number of doubled up families and a 4 percent vacancy reserve. They also provide for replacement of houses lost by demolition and disaster.

In other words, the tables figure out the need, based upon newfamily formation, 4-percent vacancy, undoubling, and replacement for demolition and disaster.

We have documented what 1,500,000 houses a year would do to this economy, what 1,000,000 would do to this economy, and what 750,000 houses would do to this economy.

I say that, before you enact a law requiring the production of houses to meet a need, this Congress should recognize that it is establishing a policy which could lead us into a depression in a very short time, because if you gear this industry up to a 37-year replacement you would have a very wasteful operation over the course of

years.

Mr. MULTER. Have you documented the number of houses that were built in the last 5 years, how many of those homes which will last even 25 years?

Mr. WHITLOCK. Do you mean under FHA and public housing? Mr. MULTER. Under any system you can think of—that were built in the last 5 years. How many of them will last 25 years?

Mr. WHITLOCK. We have had very close supervision by the Federal Housing Administrator over the terms of houses constructed with Federal Housing Administration insured loans and we have had very rigid supervision of the public housing which has been built. I have assumed that it is good administration.

Mr. MULTER. You are evading the question, though. How many of those houses, whether built under FHA or by private industry, will last for 25 years, let alone 37 years?

Mr. WHITLOCK. I have not documented it, but I have assumed that the regulations of the Administrator were such that we were getting good housing.

Mr. MULTER. Is there anything in the regulations that requires them to last 37 years-and that is the minimum number of years you have given us in your documentation.

Mr. BUCHANAN. What has been the experience of your industry relative to the years 1925 and 1926, when you hit your peak production period, with the attendant results in 1930?

Mr. WHITLOCK. Well, this industry suffers just the same economic conditions that every other industry suffers.

Mr. BUCHANAN. It was boom and bust, was it not?

Mr. WHITLOCK. Well, we have been through an economic depression in the thirties; we have been through a period of no building because of armament programs and a war. We have, since that war, come back to producing at the rate, now, of approximately a million dwellings a year.

Mr. BUCHANAN. You hope it lasts for 10 years, do you not?

Mr. WHITLOCK. We hope it lasts forever. It is our business. It is our bread and butter. We do not want to have a national policy which requires a production which will soon satiate this market and result in surplus manpower and materials on the market and create a depression.

Mr. BUCHANAN. What part of this legislation will satiate the market in the next 10 years? Certainly not the 500,000 public housing units.

Mr. WHITLOCK. No; but the policy is to require a production of residential construction, and I believe that before you declare it a policy of Congress to require a production, it is our duty to lay before you this analysis, for whatever consideration you care to give it, and raise the question that requiring a production means tampering with an economic system. There has been a great deal of talk about the housing need. That need has been expressed at from 5,000,000 down to 2,000,000.

Mr. BUCHANAN. This legislation is an attempt to solidify our economic system.

Mr. WHITLOCK. I suggest, then, before you attempt to do that, that you read this analysis. I would like either to submit it for the record or submit sufficient copies for the members of the committee. The requirement of production of houses is a very serious question. in our economic structure, because construction constitutes one-fifth of our economy. It is not only the construction industry with which

we are concerned, we are concerned with our entire national economy. This bill does not only affect the construction industry.

Mr. MULTER. You do not help us much, sir, if you tell us that we are requiring 1,000,000 houses to be built this year, and we will have to replace them in 37 years, if you do not tell us how long these houses are going to last. If they are only going to last 25 years, or less, we will have to replace them before that.

Mr. WHITLOCK. I wonder if I might suggest that you ask the supervising agencies of the Government, those who supervise the con

struction.

Mr. MULTER. I would rather get it from the private industry. Private industry is supposed to put up these buildings.

Mr. WHITLOCK. We are building them according to Government specifications of the Federal Housing Administration. I am certain that, where private industry builds public housing, which it does, they build it to the specifications of the Public Housing Administrator. Mr. MULTER. You do not have any idea how long they will last! You know there is not full and complete supervision by any Government agency required by legislation today.

Mr. WHITLOCK. Maybe you should require it, then.

Mr. BUCHANAN. Then, you are advocating controls over the building industry.

Mr. WHITLOCK. I am not at all. I am pointing out that if we have this Federal Housing Administration, and you say it is not any good

Mr. BUCHANAN. I did not say it was not any good.

Mr. MULTER. I did not say so, either.

Mr. BUCHANAN. Do not put words in our mouths. Do not distort the facts.

Mr. WHITLOCK. I would not want to do that.

Mr. BUCHANAN. You have not.

Mr. FOLGER. Mr. Chairman.

The CHAIRMAN. Mr. Folger.

Mr. FOLGER. In 1947 how many housing units were constructed?
Mr. WHITLOCK. 846,000, I believe.

Mr. FOLGER. What proportion of that was purely private enterprise, and what proportion was constructed under the Federal Housing Administration?

Mr. WHITLOCK. I am not quite accurate on the exact percentage, but I think 27 percent is about what the Federal Housing Administration covers.

Mr. BUCHANAN. It is 39 percent, is it not, Mr. Chairman ?

The CHAIRMAN. I thought it was 39 percent. I am told it is 33 percent.

Mr. GAMBLE. What percentage?

Mr. WHITLOCK. Less than one-third, 27 percent.

The CHAIRMAN. Mr. Fink says it is 33 percent.

Mr. GAMBLE. A lot more than that, I think. The percentage is higher than it has been.

Mr. BUCHANAN. According to Mr. Nelson's news letter, just issued. eight out of nine starts under FHA inspection in 1948 are financed under title VI

(The quotation from news letter referred to is as follows:)

BUILDING RECORD

The 35,555 dwelling units started in April established a new all-time record of units begun in any one month under FHA inspection, Federal Housing Commissioner Franklin D. Richards announced last week.

These exceed the March volume of 30,122 units by 18 percent and the previous high of 30,386 last October by 17 percent. They represent about 40 percent of all non-farm dwelling units started during April.

The volume of new residential construction started under FHA inspection for the first four months of 1948 was 104,698 units, more than twice the 42,032 units started during the same period of 1947.

Mr. Richards said that eight of nine units started under FHA inspection so far during this year are being financed under title VI. More than 34,000 of the new units are located in rental housing projects while a considerable proportion of the others are being built for rent, he said.

What agency does he represent?

Mr. WHITLOCK. National Association of Real Estate Boards.
Mr. BUCHANAN. Yes.

Mr. FOLGER. Mr. Whitlock, then there were nearly a million units constructed last year.

Mr. WHITLOCK. A little less than a million.

Mr. FOLGER. Yes. Eight-hundred-and-some thousand.

Mr. WHITLOCK. Yes.

Mr. FOLGER. Is it your opinion that the country will not stand more than a million a year without disrupting the construction industry?

Mr. WHITLOCK. My position is this: Today we are building at the rate of approximately a million houses a year. We have a material supply adequate to handle that, except for the uncertainties of the effect of the European relief program on such items as steel, and some of those things, which have not yet been fully determined. We anticipate a sufficient supply of material, but not a great surplus of material in all lines. We have a situation where labor is short, and where the Government is undertaking, through apprentice training programs, to encourage veterans and others to come into the building industry and become skilled craftsmen. We have a tight situation in labor, we have a situation in materials which is just on the borderline. The industry is producing a million houses a year. If we are required to gear this production up to a million and a half houses a year, we then would be requiring additional labor, which must come from some other segment of the economy. We are gearing up the production of materials, and when we study it we find that there is a possibility that in a very short time we would find the housing need met and a surplus of houses left over, which would create unemployment for the people we would have attracted from other segments of industry and an overexpansion of productive facilities. We would like to produce a million and a half houses a year, in a sustained market. We believe that if it is going to be the policy of this Congress to require a production of houses at any figure, it raises a serious question as to what it does to the construction industry economy and what it does to the national economy.

Mr. FOLGER. What do you mean exactly by requiring that one and a half million units be constructed? Congress cannot make private enterprise construct a million and a half homes.

Mr. WHITLOCK. I am calling your attention to Senate 866, at line 7, page 1, which says: "It shall be a national policy to require a production of residential construction," and I am saying that in the discus

sions which have ensued around this bill, we have heard figures of a million and a half homes. The Joint Housing Committee talked of one and a half million homes. We have been trying to study the effect of a requirement of production of houses by a congressional policy declaration under S. 866, and we are greatly concerned about the effect of that requirement on the industry and the national economy. Mr. GAMELE. I think there is another factor which comes into this situation. The bills which have just been passed at the request of the Army and the Navy for a considerable amount of building not only in the United States but offshore, that, too, is going to affect this situa tion, besides the European recovery program. I do not know what the net effect will be, but I know it will have some effect.

Mr. WHITLOCK. We have been given no figures, Mr. Congressman, from any source, as to what the effect of the steel requirements to be shipped out will be, and so on.

Mr. GAMBLE. What I am saying is any added requirements are going to put an additional strain on an already strained market.

Mr. WHITLOCK. It is going to make for a tighter situation, and with all of the loosening up of credit, which Senate 866 produces, and greater demand at home and a fanning out of this material all over the face of the world, it is going to continue a situation which is not going to reduce prices, or allow us to get our costs down. And it is not going to get us more houses.

Mr. TALLE. Mr. Chairman.

The CHAIRMAN. Mr. Talle.

Mr. TALLE. Is there anything in this bill, Mr. Whitlock, which if enacted into law, would result in an increase in production of materials?

Mr. WHITLOCK. I see nothing in here that will do anything to increase the supply of building materials.

Mr. TALLE. Is there anything in it that will promote an increase in apprenticeship training?

Mr. WHITLOCK. There is nothing here that will increase the supply of skilled workmen through apprenticeship training.

Mr. TALLE. Of the three things needed in building-materials, men and money-we have been short of materials and labor ever since the war. There is certainly not a shortage of money, is there?

Mr. WHITLOCK. Not at all.

Mr. TALLE. Credit has been ample, has it not?

Mr. WHITLOCK. Mr. Foley testified before the Senate committee in 1945 that there was no more credit needed.

Mr. TALLE. The only effect of making credit looser would be to drive prices higher.

Mr. WHITLOCK. That is right.

Mr. MULTER. Mr. Whitlock, you had in mind, of course, the research provisions of the bill under title III.

Mr. WHITLOCK. I do not know where research does anything toward improving the amount of manpower, and I do not know whether research does anything toward improving the present supply of building materials.

Mr. MULTER. If research increases production, that does not help! If research decreases the cost of materials, that does not help?

Mr. BUCHANAN. Beginning on page 35, line 9. Do you not think that objective will result in an improvement in the methods of pro