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dustry gets geared up to it. But you can do that, they say, without any legislation, so then why any legislation? Well, simply because it means that you will get seven or eight, and in Cincinnati you won't get under eight, as I said, in my judgment, for at least 2 years, and ten-thousand dollar, and on up, houses. It means the cream of the market. It means that they will do the same thing they did before, build for the cream of the market, and in my community builders will make 20 percent profit. At least, that is what comes from certain of the builders there who have indicated that they did in the last building boom. And I don't think that is what we want.
The greatest need is below that, for veterans and for middle- and low-income families, and that is why we need some kind of legislation. And besides, let us not forget that we are not talking for 1946 and 1947. You are proposing a long-range problem slated really to meet the housing problem of America, and it won't be solved in 2 years, and in my judgment it won't be solved in 10. If we see the end of the slums in 20 years, I'll die in peace.
I also want to point out there that if builders and those working with them insist upon going along their own way as they have done before, they may very well count on another crash in the building industry, because they are going to overbuild in that high-priced market, leave all the rest of the market unmet, and the thing will crash of its own weight once more. We ought to learn from experience.
They say that the 32-year mortgage period is economically unsound because of the fact that there is a short period at the beginning when they say, according to certain standards, that the value of the property won't be equivalent to the loan. Well, I would like to submit several arguments on that point: in the first place, that the vast percentage of these homes are not going to be foreclosed. These people are going to buy homes because they want to buy them, and they are going to hold on to them. And remember that we have got a lapse provision, if this bill goes through as is proposed.
I would like to call your attention also to the fact that the very purpose of the insurance principle is to spread the risk, and it won't be all these houses during the early period of their life. I don't know why the greatest depreciation is figured in the first years of the life of the building, anyway. I thought the greatest depreciation came in its wind-up years. And I submit also that the economic soundness of an appraisal of the whole structure of FHA depends upon a whole lot of other things far more than it does upon that exact number of years of amortization.
For instance, supposing if these $8,000 houses that I am talking about 3 years from now can be reproduced at $6,500 or $6,000, I submit that that is a far greater element of risk. And if we are going to accomplish this thing somebody has got to take some risk somewhere along the line anyway.
There is the objection to lapsing payments that it should not be required.
Well, I submit that the HOLC lapsed payments and that their experience is very satisfactory, and it showed in fact that the chances for ultimate full payment were better when they did have a reasonable and intelligent proposal for lapsing payment.
Senator MITCHELL. What do you think of the argument which was made both by the Housing Commissioner and by the bankers here, that
we are already allowing lapsed payments; therefore we don't need the mandatory provisions of the law?
Mr. MARQUETTE. Well, I say to that what was said by one of the other Senators here: that if that is so, why not make it a requirement so the home owner has some asurance and he doesn't depend upon the whim of an individual institution. And I also say that a lot of institutions don't do it, and there is no uniformity at all. Who is going to guar
Senator MITCHELL. But your experience in housing would indicate to you that that mandatory feature would lend strength to the stability?
Mr. MARQUETTE. Absolutely. And also I think that the home buyer has a right to that kind of assurance. Everybody says "home ownership." and we are giving all this protection in the past, and I am all for it, and I don't retract on that or question the wisdom of the FHA at all, but I do point out that all the assurances there were given to the lender. Now, that isn't the fellow to whom we are trying to say, "Go and buy your home. That makes for stability of the community. You will be a better citizen." And I agree to it, but I think he has a right to a little protection too.
Senator ELLENDER. Now, taking the other view, do you not think that the fact that you make it mandatory will cause a lot to take advantage of whatever time the bill provides?
Mr. MARQUETTE. No. You mean of the owners who would take advantage of that even if they didn't need to?
Senator ELLENDER. Yes; the fact that it is there, let us say for 2 years or 3 years. The tendency would maybe be to postpone and take advantage of this time.
Mr. MARQUETTE. I don't think so.
Senator ELLENDER. You don't think so.
Mr. MARQUETTE. That may be a matter of judgment, and I don't known whether you think that.
Senator ELLENDER. Well, that would be
Mr. MARQUETTE. But those who do might have-might be right. I would think not, because I believe that the mass of people who buy homes buy them in good faith and want to pay for them as fast as they can, and have no possible reason for wanting-where do they get? They have to just keep on paying that much longer.
As far as the matter of administration is concerned, the difficulties of administering it, that does not impress me. FHA now examines the plans and specifications. It makes appraisals, and it inspects buildings during the course of construction. Well, now, they can demand certain proof of compliance with the provisions of this act. That doesn't impress me as being a very important argument.
Also, there is objection to the warranty. I am not impressed with that argument either. I think that we have had in every building boom a lot of jerry-building which has been a disgrace and ought not to be permitted, and I think that the time has come to make a step in this direction, especially where a lot of aids are being given to promote home building by private enterprise. I think that we should begin to ask something in return, and I don't think that the provision is unreasonable, and I do think that builders will take advantage of it. I don't think they will shy away from it. And if they do go to other
lending facilities, then the time is going to come when we have got to make some of these standards applicable to others that make loans than those who come under FHA.
Senator MITCHELL. Do you feel that the home owner will demand the waranty?
Mr. MARQUETTE. I certainly do.
Senator MITCHELL. If it is in this bill, do you think that he will go to the other lender who does not have that?
Mr. MARQUETTE. I certainly do not. I think that anybody who has any sense at all, wanting to buy a home, I think it would be one of the best things that possibly could be done for him to have some assurance that he is buying a decent project, and I think it will come to have very great respect.
Senator MITCHELL. Do you disagree with the Housing Commissioner who indicated that most of the people don't have much sense? Mr. MARQUETTE. No, I don't. I have, myself, great confidence in the combined and the over-all judgment of the American people.
Senator MITCHELL. You have been working probably more closely than anyone we have had before the committee so far with the people themselves.
Mr. MARQUETTE. I think I have, and I think I know them. I go in and out of tenement houses every day of my life. And I want to say that the argument that the bulk of these people that we talk about in the low-income area are socially undesirable people is not tenable. I have a group of home advisers, women who do nothing else than teach tenants proper housekeeping, and work with owners on the management problems related to the management of tenement property, and we have made actual surveys to find out what percentage of the families in our worst housing areas are actually the type of what they call undesirable-they're rowdy, undesirable for their neighbors; they don't pay their rent; or they are destructive, or something of that kind—and it averages about 32 percent for whites and about 7 percent for Negroes, about 5 percent all over. And the same thing is shown in the public-housing project, that it is a very minimum.
Senator MITCHELL. Would that actually cover the group that Mr. Mahan used here? He said the handicapped, the indigent, the pauper, and the laggard.
Mr. MARQUETTE. Yes; that's right.
Senator MITCHELL. He said 20 percent.
Mr. MARQUETTE. Well, I think he is a way off.
Senator MITCHELL. That can't be borne out by experience at all, in your judgment?
Mr. MARQUETTE. Not at all. Not at all. That goes up way beyond the percent that was covered by public relief during the height of the depression. What happened to all that? What happened to that great group that was called ne'er-do-wells and were assailed because they hung around and leaned on their picks and their shovels, and so forth? Senator MITCHELL. Did a pretty good war job, didn't they? Mr. MARQUETTE. They did an excellent war job, and they disappeared, and the only ones on our relief rolls, which are about 2,000 now instead of the 20,000 then, are the kind that he was talking about, and that is a very, very small percent of the total population.
Then there is the question about the firm commitment, the argument
against a firm commitment. It is now 80 percent, if I understand correctly, and this proposal is that it be raised to 85 percent. Well, if I understand correctly, also, during the war we gave a 90 percent firm commitment, and I didn't see any serious kick-back or trouble from that.
Now I want to go on with one more thing, and I will rapidly return to my paper and finish. I am going to the paper first.
The urban redevelopment sections give private operators their only possible chance of rebuilding blighted areas. Now, I think that for this reason: That the States and the local communities cannot finance the loss on the purchase of its purchasable value and its sale and its re-use value. They can't do it and they are not going to do it, and either the Federal Government will share, as you proposer, or there won't be any urban redevelopment.
And I will make one other prediction, and that is that there has got to be a tax benefit for urban redevelopment if urban redevelopment is to reach the lower-income group of the rental housing, as they did in New York State. A great many States-Ohio says no, they will have nothing to do with it. Well, if they don't there won't be any urban redevelopment in housing of the middle-class people by
Senator ELLENDER. Even though the Federal Government should aid, as provided in this bill?
Mr. MARQUETTE. Even though you give this aid because it has nothing to do with anything but land cost; it does not apply to building costs at all, and private enterprise unaided can't-maybe your yield insurance provision might prove me wrong, if that is sufficiently effective.
We again recommend, as we did in our memorandum submitted on October 8-I am talking about urban redevelopment-1945, to Senators Taft and Wagner, when the old bill was first introduced, that consideration should be given to requiring that when land is sold, as contrasted with leasing, to private corporations for redevelopment there should be incorporated in the deed, provisions, including the right to recapture, in order to insure compliance with the community plan.
Now, the opposition:
Despite this concrete evidence in the bill itself of the intent to give every practicable aid to private enterprise, certain groups are bitterly opposing this measure and are carrying on adverse propaganda throughout the country, branding Senate bill 1592, as it was branded here today, as a public housing bill. The difference of opinion between these few self-interested groups and sincere advocates of a sound national housing program is basic and fundamental. The opposition is so violently antagonistic to public housing that they appear to be intent upon doing their utmost to kill S. 1592, no matter how beneficial. it is to private enterprise. Everybody knows that if the public housing provisions were eliminated the opposition would dissipate forthwith. Opponents seem to be not in tune with the public temper which will no longer accept the situation in which the health of millions of American children is sapped by slum living. They seem not to realize the ingratitude, indeed the impossibility, of saying to our returning soldiers go back to the slums-and remember, the same percentage of veterans as of other people lived in slums, and they are going right back
to slums with no hope of getting out of them unless we have a real program-crowd up with some other family, live in a basement or an attic, until the housing shortage abates; and then private enterprise will do the job if Government will just let it alone.
The issue is drawn: The bill recognizes the predominant place of private enterprise and proposes to give it every feasible encouragement to serve a larger part of the total need than ever before, but it also provides a very limited amount of public housing to meet the needs of the low-income group who cannot be housed at a profit.
This bill, in its essentials, has the support of a tremendous cross section of American public opinion-civic agencies, women's clubs, municipal officials, citizens housing councils, Negro organizations, religious groups, labor, and public-spirited citizens in all walks of life. Support of this kind for S. 1592 emphasizing, as it does, the predominance of private enterprise, should be enough to convince any fairminded citizen of the falsity of the accusation so frequently made in the past that those who believe some measure of public housing necessary are out for an unlimited amount of Government subsidy and want to drive private enterprise out of the home-building business. This accusation is now shown up for what it is-simply a blind to cover up the opposition's intense hatred of any forthright effort to take the poor out of slums through public housing-the only program that has ever given them a decent chance for housing within their means.
And I submit at this point the fact that the groups who are opposing this whole bill now have been on record, most of them for lower interest rates, 4 percent, for 90 percent mortgages, for 90 percent firm commitment-not 85 percent but 90 percent firm commitment-for one centralized housing agency, for aids to research, for urban redevelopment-all of which you have in the bill. And yet they are opposed to this project.
Now, another argument that I might mention right here that is made, for this is going to be made if it has not been already, and this is simply bound to appear before you, and I am going to say it nowan argument to draw a red herring across the trail and say that this is bad business because it is going to be bad for the veteran. He has got the GI bill of rights measure that's in his favor, and you come along with this and open up more of the market. You are going to have more competition and take more housing away from him, and I think it is absolutely untenable.
The GI bill of rights is going to reduce the cost of housing; it is going to simplify purchase by the veterans. And by the way, if I mistake not, some of the very ones who are opposing this bill and now will be appearing as the protagonists of the veterans wanted to have the provision that there be appraisal of the values of these houses before they be sold to veterans, eliminated. The provisions in this bill that encourage the production of lower-rental housing and of housing for sale at lower cost will do more than the GI bill of rights for veterans, and the only way you are going to meet the housing problem for them or anybody else is to meet the housing problem in its entirety. And I am all in favor of every single benefit that you have given them, and as far as I am concerned if you wanted to put in here a provision that gave them priority insofar as these special provisions are concerned, that will be O. K. with me. I am all for the veteran, but let's not get distracted by any of that kind of argument.