Another attempt to conciliate private enterprise which will be highly dangerous and an inflationary measure, is paragraph IV (b) of title III. This title would permit savings and loan associations to lend up to 15 percent of their assets on mortgages, without regard to type, location, or amount. If many of the savings and loan associations took advantage of this clause, the total amount of unsound loans being made would be large enough in total volume to become extremely unhealthy, and might force other unthinking lenders to reach for these loans in order to stay in business. This, of course. would be a powerful stimulus to the inflationary spiral. It would mean unsound loans and more foreclosures. We would soon have to be bailed out by another gigantic home-owners-loan operation such as we had in the thirties. I think this is a dangerous further loosening of the already too loose controls of savings and loan associations whose deposits, after all, let us remember, are insured by the Govern

ment.

I have confined by comments only to those portions of the bill which lie in my special field of competence and immediate interest. But do not think that these criticisms indicate disapproval of this bill. I think it is a great step forward for this country and I hope it will be passed without delay. It takes a long time to condemn, clear, and prepare land for rebuilding. I believe it has been 2 or 3 years since the first redevelopment bills were presented to the Senate. As I remember, those were the Wagner and the Thomas bills. We have already lost much valuable time. I urge that housing be recognized as the industry of paramount importance, that it is by strengthening title I; that the unsound parts of titles III and IV be changed, and then that that the bill be passed as quickly as possible. The time for talking about slum clearance is past-for the sake of the millions of people in this country who need homes and the tens of millions who will want jobs, the time to start is now.

I thank you very much.

The CHAIRMAN. Mr. Kramer, you have made a very fine statement. Mr. KRAMER. I thank you.

The CHAIRMAN. Any questions by members of the committee?

Senator MITCHELL. Mr. Kramer, I am wondering about the statement you made in regard to savings and loan associations. Do you suggest there an amendment of the 15 percent figure, or an amendment which would cover type, location, and amount?

Mr. KRAMER. At the present time as I understand it building and loan associations are subject to certain rules and regulations. Those would exempt them from those rules and regulations on 15 percent of their loans. I therefore think that portion of the bill should be eliminated entirely, and let them stay where they are.

Senator MITCHELL. Well, you emphasize with regard "to type, location, and amount."

Mr. KRAMER. That is the amendment, and I think that should be stricken; that that 15 percent should be stricken out entirely. They have to take into consideration, type, location, and amount in the district.

Senator MITCHELL. And that would be accomplished by striking out the 15 percent?

Mr. KRAMER. By striking out that clause of 15 percent in those regulations.

The CHAIRMAN. And leave that part of the law as it is?
Mr. KRAMER. That is correct.

The CHAIRMAN. Any other questions by members of the committee? (A pause without response.)

Thank you very much, Mr. Kramer.

Mr. KRAMER. And I thank you.

(Thereupon Mr. Kramer left the committee table.)

The CHAIRMAN. We will now hear Mr. Walter J. Mattison. You represent the National Institute of Municipal Law Officers, I believe. Mr. MATTISON. Yes. I should like to have the privilege of standing up, Mr. Chairman. I cannot think when I sit down.

The CHAIRMAN. You may either stand or sit down, just as you please.

STATEMENT OF WALTER J. MATTISON, CITY ATTORNEY OF MILWAUKEE, WIS., REPRESENTING THE NATIONAL INSTITUTE OF MUNICIPAL LAW OFFICERS

Mr. MATTISON. My name is Walter J. Mattison. I am city attorney of the city of Milwaukee. I have been connected with the city attorney's office of Milwaukee since 1916, with the exception of the period from 1932 to 1936, when the Socialists captured the city, and of course then we had to get out and go to work.

But I was a newspaperman for 11 years prior to that time. So I have had a splendid experience with respect to the administration of cities, and have had opportunities to watch the development of cities through this period of approximately 40 years.

I am a member of the National Institute of Municipal Law Officers. We just completed a convention here in Washington, and Lt. Comdr. Philip Hill, city attorney of Charleston, W. Va.-who, by the way, and we are boasting now perhaps, was one of the officers on the Lexington-Lieutenant Commander Hill will take up where I leave off in this discussion.

I would like to confine my discussion as much as possible to the urban redevelopment portion of the bill, and allow Mr. Hill to cover the other portions. Mr. Hill was the chairman of the public housing committee of our National Institute, and I was the chairman of the committee on elimination of blighted and slum areas in cities.

I might say that our organization includes 417 cities in this country. Yesterday I heard our president say that our clientele include about 60,000,000 residents in the particular cities that we represent. So I say in those 417 cities we probably have the sum total almost of the blighted area and slum area question in the country.

I testified several years ago before the Lanham committee of the House of Representatives on this very subject, at the time when they were discussing the creation of jobs for returned veterans and returned war workers. At that time I pointed out that the greatest promise possible for reaching the minimum number of jobs necessary to sustain our economy was right in the redevelopment of cities.

As you may recall, about that time the question of what the national economy will total was up, and your Committee on Economic Development as well as your Commerce Department, suggested that there was the probability of approximately a $140,000,000,000 economy. The Brookings Institution at that time suggested that all they could

then see was about a $123,000,000,000 economy. It was generally conceded that the difference between the two estimates, which is $17,000,000,000, represented whether or not we would have ample or limited employment.

I pointed out to that Lanham Committee, and would now like to point out to you, that the possible employment in redeveloping our cities is almost unlimited. If we want to sustain the national economy in this country at the high figure we are aiming for, it seems to me that one thing we must take into consideration is the fact that that economy cannot be sustained unless there is a tremendous building program in this country.

I know it has been suggested that there will be construction of homes at least to the extent of $8,000,000,000, and that that is because of the housing shortage. Both in the Brookings Institution analysis and in the Commerce Department analysis, they took into consideration the previous peak in the building industry, which never amounted to more than about a billion dollars a month. And that in itself, according to the Brookings Institution, would not be suf ficient to sustain the economy. But I say if we could devise ways and means of rebuilding our cities, eliminating our blighted areas and slum areas, I am satisfied that we could put into the national economy an additional $8,000,000,000.

Mr. Reynolds, testifying before the Lanham Committee, suggested that 80 percent of construction costs goes into salaries and wages. If that is true, with an admitted $40,000,000,000 program ahead of cities in elimination of blighted and slum areas, and if we could spread that over a period of 5 years, that would mean the expenditure of an additional $8,000,000,000 a year. And if that 80 percent does enter into salaries and wages, you would know that there would be employment for a very considerable number of individuals, up to 5,000,000, depending upon how it is actually done.

But that is not the only contribution the construction industry offers. It is generally conceded that for every man-hour of work created in the building industry, it creates an additional 3.4 man hours in the parallel or in the consumer goods industry. So I con fidently say if we could start some kind of construction program in cities that would create employment for a number of millions of mer that would, with the impetus it gives to other employment, bring us the $17,000,000,000 necessary over the Brookings Institution estimate and possibly enough to sustain our economy.

I would like to give you a picture of what our cities are up against. Understand me thoroughly, please, when I say that I am firmly of opinion the greatest part of this problem in every city in the country is going to be met by private enterprise.

It is true, and members of the committee have repeatedly suggested that there are types of citizens that are in need of public assistance. But we do not believe that public housing, or housing for the low-income group alone, will solve the problem in our cities. We are of opinion that we have to start a general construction program in the cities that will encompass all types of housing, whether housing for those in need of public assistance or those who are fully able to pa the prices necessary in order to live decently in adequate housing.

Mr. Kramer made a suggestion about the $5,000 guaranty of percent. I am not a public housing man but am rather inclined to

disagree with his statement. I believe that one of the outstanding features of this bill is the fact that you are giving for the first time in the history of this country an opportunity to a man to go in and become the owner of his home. I mean, by merely paying down $250 in the first instance, and then in the shape of rent and a long amortized loan, with a low interest rate, you are giving him the opportunity to become a selfrespecting home owner. And there isn't any question but that there will be millions in this country who will actually want to take advantage of that very situation.

My only criticism of that is that I do not believe you put the figure high enough. I recognize the fact that what Congress wants is to start a building program for those who would be able to afford to live in homes of $5,000 or under. But the fact remains that in some sections of the country that may not be and probably is not true. In some sections you could probably build homes for $3,000, or $4,000, or $5,000, but there are other sections-and I have in mind at the moment my own city, where it would be utterly impossible to build the type of home you could probably build in the South for $4,000, to build that type of home, with all the necessary protections, in my own city.

For instance, you could not live in Wisconsin; at least, you could not live comfortably in Wisconsin, unless you had an adequate basement under your home.

The National Housing Administrator in Wisconsin tells me that as far as G. I. bill homes are concerned, the average cost of such a home in the metropolitan area is approximately $8,000, and that the average cost of the same kind of home in outlying territory is about $6,500.

I have talked to builders in Wisconsin and they have assured me that in order to build an adequate home it would be necessary to raise that figure possibly to $6,000; and that $1,000 additional would not necessarily, in view of the advance in prices of other commodities and the advance in wages, I mean would not necessarily contribute very much to inflation.

Nevertheless, a $5,000 home can be built but it would not be the kind of home the average returning veteran, and the average returning war worker, and the average individual who wants to build a permanent home, would like.

I believe it might be well for this committee to consider the advisability to up that figure to $6,000. I make that recommendation with full knowledge of the fact that what you want is to build low-cost housing.

As far as the cities are concerned, the pattern in every city in this country is practically the same. In the beginning you have your business area, in the downtown section, with houses built mostly around it. As time goes on the city spreads out, and possibly because of unwise regulations or possibly for other reasons, the interior portions of the city start to deteriorate. That gives rise to a lower type of tenancy. You have slum areas in what should be the best average: portions of cities.

In the city of Milwaukee, in the downtown area, we have our most valuable commercial district. In 1930 that district paid 26 percent of all taxes of the community, but got back in governmental service only 5 percent of the taxes paid, meaning a clear gain of 21 percent. of the total taxes of the community, which helped to lower the

Senator BANKHEAD. Do you mean State and municipal taxes?

Mr. MATTISON. Yes; I am speaking of ad valorem taxes now. In other words, it meant that 21 percent of the total taxes paid in this very valuable area was used in lowering taxes in other areas of the city.

Now, that is the side of the commercial areas. On the other side we have the blighted and slum-clearance areas. We find that the actual taxes paid in those areas is only 6 percent of the total taxes, and yet the governmental costs of administering that area are 45 percent of the total taxes paid in the city.

You see, our problem is to sustain this high assessment district on the one side, in the commercial area, and if possible eliminate as much as possible of the burden on cities which is causing our taxes to rise continuously.

Senator MURDOCK. Mr. Mattison, in that connection would you be good enough to enumerate some of the factors that enter into that additional cost you refer to?

Mr. MATTISON. Yes; I will be glad to do that. In our city we have just completed an investigation of 9,000 persons who live in the blighted area, and that constitutes 1.5 percent of the city. We found that in this group as far as crime was concerned-and I am now talking about the 1.5 percent of the city's population-it accounted for 22 percent of the arrests among adults for criminal homicide, robbery, aggravated assault and burglary. Half of the arrests for prostitution and vice were from this particular group.

As far as syphilis was concerned, in our investigation, the death records in that particular group, I mean the 1.5 percent of the city's population, we found that the death certificates assigning syphilis as cause of death were just 10 times the rate in the balance of the city. Senator BANKHEAD. That is the concentrated area of the city of Milwaukee; is it not?

Mr. MATTISON. Yes, sir; that is the area we wish to eliminate if it is at all possible.

Senator BANKHEAD. Is it generally known as the slum area?

Mr. MATTISON. We have never tried to call it a slum area, and yet we realize it has assumed slum proportions. We have always been rather proud of our city in saying we have no slum area. But when we go into that area we uncover this type of situation.

We have a bad blighted situation as distinguished from a poor slum situation. I will go into further details about that matter a little later on, but now would like if possible to try to complete my answer to Senator Murdock's question.

In the matter of illegitimacy in that area, we find that 17 percent of the children born out of wedlock are illegitimate as compared with 2 percent of unmarried mothers in the city as a whole.

In regard to tuberculosis, we find the death rate per 100,000 population just five times more in that area than in the city as a whole.

With reference to infant mortality, among the blighted-area group it averaged exactly double the rate for the city. And the total death rate for that group was 50 percent higher than in the city as a whole. Now, a further sidelight on conditions in that area: In spite of the fact that we do provide them with special public facilities of every conceivable type, including a supervised playground, social center, public library branch, a child welfare clinic,