3. The Bankhead-Jones Farm Tenant Act permits the refinancing of existing indebtedness in connection with the making or insuring of a building-improvement loan. This is not authorized by title V of the Housing Act of 1949. Many times an applicant has an existing mortgage with repayment terms which the applicant cannot meet if he undertakes the additional indebtedness necessary to improve his farm buildings. Unless some way is found to change the existing repayment schedule, it is not possible to make a title V loan. Under the Bankhead-Jones Farm Tenant Act, it would be possible to refinance this existing indebtedness on the same long-term basis as the new loan, thus enabling the applicant to receive assistance which he might not otherwise be able to secure.

Mr. Chairman, we certainly agree that there is a pressing need to provide loan assistance to farmers needing improvements in their farm dwellings and other farm buildings. However, we believe that our lending authorities should be confined to assisting those individuals who are bona fide farmers and who obtain a substantial portion of their income from this source. Our preference is the enactment of amendments to title I of the Bankhead-Jones Farm Tenant Act because of the opportunities to provide a more complete credit service to individual farmers through a single loan. We believe that these authorities would then be fully adequate to take care of the recognized need for improving farm housing and other farm buildings.

Mr. Chairman, I have with me the Administrator of the Farm Home Administration, and members of his staff, and we will be glad to answer any questions.

Mr. BROWN. We are very glad to have your statement, Mr. Scott. Are there any questions?

Mr. TALLE. Mr. Chairman.

Mr. BROWN. Dr. Talle.

Mr. TALLE. May I repeat a sentence in your statement, Mr. Scott:

We believe that our lending authorizations should be confined to assisting these individuals who are bona fide farmers, and who obtain a substantial portion of their income from this source.

I recall that there was some discussion about that last year, and it was pointed out by the Farmers' Home Administration as a problem. Here is a man who buys, say, 3 acres or less, perhaps; he does some gardening, or one thing or another. Is he a laborer in a city nearby or is he a farmer?

Mr. TALLE. I think you said last year that under the law you could not very well deny such a loan, even though it appeared to be rather obvious that the borrower was not a farmer. He was just living in the country.

Mr. MUMMA. Wait a minute. They supplement their income, and make possible the purchase of the house. They may grow strawberries. I believe that is a close problem.

Mr. TALLE. I rather think some borrowers are window-box farmers. No doubt there are legitimate truck farmers and the like. But it is a problem for the Farmers' Home Administration to make the distinction.

Mr. MUMMA. No, he is making a living. There is a book out, Doctor, entitled, "Five Acres and Independence."

Have you ever seen it?

Mr. TALLE. No, I haven't.

But my purpose was to point out the problem. That is what you are getting at, isn't it?

Mr. Scort. That is correct, sir.

Mr. TALLE. My second question was:

Do you have a good workable definition of the term, "family-size farm"?

Mr. ScoтT. I will ask Mr. Smith to answer that.

Mr. SMITH. Congressman, there is no definition in the statute, sir, with respect to "family-size farm."

From an operating standpoint, we have limited the service to those farms where the farm is adequate enough to, with the family's labor, supply them with sufficient income to retire their debts and maintain a reasonable standard of living.

Mr. TALLE. It is a pretty difficult definition to write, isn't it?
Mr. SMITH. Yes, sir. It varies, of course, in different farming

areas.

Mr. TALLE. Thank you, Mr. Chairman.

Mr. BROWN. Are there other questions?
Mr. MUMMA. I have a question.

Mr. BROWN. Mr. Mumma.

Mr. MUMMA. Up in my country raising broilers is quite an operation. A fellow could operate a pretty good broiler operation on 2

or 3 acres.

Would that be considered farming?

I had a case where a man was trying to get a loan under those cir

cumstances.

Mr. SCOTT. We, as a general policy, confine the assistance, in the case of poultry production of any type, to an extent that it is a part of a general farming business. We have not felt that it was appropriate for the Government to get into any lending in any capacity in that industry that would tend to encourage an expansion. We all realize that they have had those problems to deal with, and we try to have quite a conservative viewpoint there on the actual loans. They all have to be handled, of course, on an individual basis.

If an operation has been going quite awhile and they need a little assistance to make some minor improvements, we feel it is in the interest of good farming practice to go along. But we certainly are extremely careful in anything that might properly be termed an expansion or question quite carefully the new ones entering into that operation.

Mr. MUMMA. That is what this man wanted to do. And he was a very deserving person.

Thank you.

Mr. BROWN. Thank you for your testimony, gentlemen.

You may be excused.

Mr. Scor. Thank you.

Mr. BROWN. The committee will recess, to reconvene tomorrow morning at 10 o'clock.

(Whereupon, at 12:07 p. m., the committee recessed, to reconvene at 10 a. m., Thursday, May 10, 1956.)

(The following letter was submitted for the record by the Office of the Assistant Secretary of Defense:)

Hon. BRENT SPENCE,

OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE,
Washington, D. C., June 4, 1956.

Chairman, Committee on Banking and Currency,

House of Representatives.

DEAR MR. CHAIRMAN: With further reference to the testimony of Mr. John H. Arrington on H. R. 10157 before your committee on May 9, 1956, I should like to present certain information which was requested for the record and to recommend certain technical changes with regard to the pending bill on the Housing Act of 1956.

In response to the committee's request for suggested language to exempt title VIII construction contracts from coverage under the Renegotiaion Act, the following is offered:

"Section 106 (a) (9) of the Renegotiation Act of 1951, as amended, be amended to read as follows: '(9) any contract awarded as a result of competitive bidding for the construction of any building, structure, improvement, or facility'."

With respect to the committee's request for more precise information on failure of Air Force military personnel to reenlist, the following is provided, based on data supplied by the Department of the Air Force:

Of the officers whose tours of duty ended during the current fiscal year, 50 percent of the pilots and 85 percent of the nonpilots failed to remain on active duty. Of all officers who left the service during this period, 95 percent were first lieutenants.

Among the airmen whose periods of enlistment ended between July 1955 and March 1956, inclusive, 65 percent or 107,300 failed to reenlist. Losses by rank were as follows:

Loss experience in selected technical specialties during fiscal year 1955 (the latest available) was as follows:

Personnel who retired during the periods covered are not included in the above figures.

It is also recommended that II. R. 10157 be amended to make it clear that the provisions of the Miller Act (40 U. S. C. 270a) are not applicable to title VIII housing. It appears more appropriate to provide for use of the FHA dual obligee bond form for both performance and payment bonds. The cost of the FHA bond is substantially less than the cost of bonds required by the Miller Act for public works, so that the proposed amendment will serve to decrease the

cost of construction and otherwise facilitate contractual relationships. Accordingly, it is suggested that the following amendment be added to the bill: "Section 403 (a) of the Housing Amendments of 1955 is amended by adding before the final sentence thereof the following: 'Any such contract shall provide for the furnishing by the Contractor of a performance bond and a payment bond with a surety or sureties satisfactory to the Commissioner and the Secretary of Defense, or their designees, and the furnishing of such bonds shall be deemed sufficient compliance with the provisions of section 1 of the Act of August 24, 1935, and no additional bonds will be required under such section'."

It is noted that S. 3855 as passed by the Senate contains the following language in section 108 (h):

"The second sentence of section 406 of the Housing Amendments of 1955 is amended by inserting after the colon immediately following the first proviso the following: 'Provided further, That such plans, drawings, and specifications shall follow the principle of modular measure, in order that the housing may be built by conventional construction, on-site fabrication, or factory fabrication, which ever the successful bidder may elect, or, in the case of a negotiated contract, whichever the contracting officer may determine to be in the best interest of the Government:'."

The Department of Defense supports greater use of the principle of modular dimensioning in building design and is currently undertaking exhaustive studies to determine the specific benefits which this system may produce in military construction. However, it is believed that certain provisions of the language proposed in the Senate bill would be unworkable and would severely handicap implementation of the title VIII program.

First, application of the modular system to designs already underway would result in costly revisions to plans and specifications. Inasmuch as architectengineer fees in many cases already approach the maximum allowed by statute, it would not be possible to expend the additional money required to accomplish redesign. Even in cases where such additional costs might be possible, the time required for complete redesign would seriously delay the provision of urgently needed housing.

Second, designation of the bidder, rather than the military, as the party to determine the construction method to be used would be inconsistent with the basic concept of competitive bidding and might result in impossible delay and confusion. In order to protect the best interest of the Government, determination of the most feasible method of construction, as well as design, must remain with the military; otherwise much time would be lost in reviewing bids based on infeasible systems. Moreover, if a number of bids involving different construction techniques and specifications were received, it might be necessary to obtain from FHA a separate appraisal and eligibility statement on each bid; this would, in effect, invalidate the FHA estimate obtained prior to bidding and result in considerable additional expense and loss of time.

It is believed that the present language of section 406 of the Housing amendments of 1955 is adequate to encourage the use of prefabrication, and that the studies already being made by the military departments in the use of the modular dimensioning system will soon provide sufficient experience to show to what extent modular dimensioning can successfully be employed, and just what will be the most appropriate procedures to be followed in introducing it into the title VIII program. Accordingly, it is strongly recommended that there be no change in the present provisions of section 406 of the Housing Amendments of 1955.

Although it is considered that new language on this subject is unnecessary, the following paragraph is suggested in the event the committee desires to amend the present provisions of section 406 of the Housing Amendments of 1955:

"In the design of the family housing and other repetitive-type buildings in the continental United States authorized by this act, the military departments shall, to the extent deemed practicable, use the principle of modular design in order that the facility may be built by conventional construction, on-site fabrication or factory fabrication."

The Bureau of the Budget has advised that it has no objection to the submission of this report.

Sincerely yours,

RICHARD A. BUDDEKE, Director, Legislative Programs.

HOUSING ACT OF 1956

THURSDAY, MAY 10, 1956

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,
NEW HOUSE OFFICE BUILDING,
Washington, D. C.

The committee met at 10 a. m., Hon. Brent Spence (chairman) presiding.

Present: Messrs. Spence, Brown, Rains, Barratt, O'Hara, Mrs. Sullivan, Messrs. Vanik, Talle, Kilburn, Widnall, Betts, Mumma, Nicholson, and Bass.

The CHAIRMAN. The committee will be in order.

We are honored today by having 2 mayors of 2 great American cities, and we are glad to have them come here and give us the benefit of their views and experience.

Mr. Clerk, call the first witness.

The CLERK. Mr. Chairman, the first witness is the Honorable Donald H. Mead, mayor of Syracuse, N. Y.

The CHAIRMAN. Mr. Mayor, you may proceed as you please. If you have a written statement, you may read it without interruption.

Mr. KILBURN. Mr. Chairman, I would like to say that coming from the northern part of New York State myself, we are especially delighted to welcome the mayor of our neighboring city of Syracuse. It is very nice of you folks to come down here and spend your time and effort on this matter.

STATEMENT OF HON. DONALD H. MEAD, MAYOR OF SYRACUSE, N. Y., REPRESENTING THE AMERICAN MUNICIPAL ASSOCIATION

Mr. MEAD. Thank you very much, Congressman.

Mr. Chairman and members of the committee, my name is Donald Mead. I am the mayor of the city of Syracuse, N. Y., and I appear here today on behalf of the American Municipal Association which represents 12,000 municipalities throughout the United States.

With me is Arthur J. Reed, director of our city's newly established office of urban renewal.

I am not an expert on the technicalities of housing legislation. My testimony will be that of a mayor of a city of 220,000 people, the center of a metropolitan area which had 340,000 people at the time of the 1950 census but has since left that figure far behind.

Since my last appearance before your subcommittee, we have accumulated another year of experience with the perplexing problem of blight elimination, arrest, and prevention.