Thank you for the opportunity of testifying before you on this important legislation. The CHAIRMAN. Are there any questions? Mr. COLE. I have a question. On page 2 you state that the housing committee of the American Legion had not discussed veterans' housing. Mr. WHITTEMORE. There has been no meeting of the national committee of the American Legion this year. Mr. COLE. This year? Mr. WHITTEMORE. That is right. Mr. KUNKEL. What you would like to have is a secondary mortgage without recourse? Mr. WHITTEMORE. That is right. Mr. KUNKEL. If you do that, why should the Government not make the loans dieret? Mr. WHITTEMORE. That is entirely up to your opinion on private enterprise and other different controversial matters. Mr. KUNKEL. Where you just put private enterprise in to make a profit without taking any risk, then it seems to me it is logical to have the Government make the loans direct. Mr. WHITTEMORE. I think your point is very well taken, sir. Mr. COLE. Do you have any comments to make? Mr. WHITTEMORE. I have comments to make that would not be very polite, I am afraid. I do not know what Mr. Alessandroni's official position is in the national committee. He is a vice commander of an area that takes in the New England States. He is not a department commander and never has been. Why he was sent down here and how he was sent down here, I am not acquainted with. Mr. COLE. He came here under the auspices of the American Legion. Mr. WHITTEMORE. That is no doubt true, but I have no information as to exactly who sent him down here, and I know the statements he has made relative to my appearing or not appearing. I was here for the hearing, and, due to pressure in my own department-our convention comes up within another week-and my own business, I had to return to the State. I am sorry I was not here during the hearing. I would have been delighted to appear with or against him on this constructive matter. Mr. BUCHANAN. The statements Mr. Alessandroni made were his own personal statements rather than any authorized statements from the national housing committee of the American Legion of which you are a member? Mr. WHITTEMORE. That is right. The national housing committee has never recognized Mr. Alessandroni in any way whatsoever, in any capacity. The fact of the matter is that the housing program of the national housing committee of the American Legion has been so weak, shall we say, that the national commander has not even seen fit to call his national housing committee together because we have not had a meeting at all this year. Mr. COLE. Did you have any last year? Mr. WHITTEMORE. Yes. The CHAIRMAN. If there are no further questions you may stand aside. Mr. MITCHELL. Just one question, Mr. Chairman, if I may. On page 5 you outline the need for a 100-percent secondary market and say if that is done with the elimination of the April 30, 1948, date, "a tremendous amount of tied-up funds will again flow into the veterans' housing field." You are saying that in relation to the 4 percent interest rate? Mr. WHITTEMORE. As far as we are concerned, the interest rate is not the most controversial matter. The thing we are vitally interested in is the re-creation of a secondary market. Mr. MITCHELL. There would be plenty of money for 4-percent mortgages, then, if the secondary market were complete? Mr. WHITTEMORE. There is no doubt about it. Mr. MONRONEY. How would you get more GI housing by going back behind the 1948 date? Those houses are built, financed, and the mortgages are in the hands of the investors. Mr. WHITTEMORE. There was a greater sum tied up in that 1948 date than will be available now, if these other bills are passed, and if those frozen funds are released we will have more money available. Mr. MONRONEY. The Government would be buying these 4-percent mortgages. It would be like an endless chain. You would siphon the 4 percent into "Fannie Mae" and loan at 41⁄2 percent to the same fellows who held 4 percent. I do not see any headway there. If you do it for GI mortgages you have to do it for FHA mortgages, too. I can see some logic in your argument for opening up "Fannie Mae" as of the date of passage of the act, but I do not see how we can bail these people out, who were satisfied to invest at 4 percent, give them a chance to turn them in at the counter and make 41⁄2 percent on them. Mr. WHITTEMORE. Our contention was not meant to deal with those loans that were already existing. We were only interested in releasing those frozen funds. In other words, your bill now, I believe, provides $300,000,000. We are going to have to come back here again in January to get more money because that $300,000,000 will probably just about buy the paint on the houses that are even now pending in the applications. Mr. MONRONEY. If we go back behind this cut-off date and start mopping up all this prelending that is already outstanding, I do not see how we would be appropriating money to "Fannie Mae" from now on. I do not see any increase in housing that we would possibly get by picking up existing mortgages that are already financed by opening those up in "Fannie Mae". There is logic in your argument to open up new mortgages if you are having trouble getting them financed. Mr. WHITTEMORE. The intention was not to refinance existing mortgages, but I can see where that would enter into it. But, at the same time, it would be more or less up to the administrator whether or not that was done, would it not? Mr. MONRONEY. Oh, no. If you open it up, they dump them right on us. That is one of the problems we had a year ago when we were threatened with an increased interest rate up and down the line on FHA and GI loans, too, and it was one of the reasons why they put the cut-off date in: so that they could not dump a wholesale amount of 4-percent mortgages on us and immediately turn around and use money they had gotten from "Fannie Mae" to make 41⁄2 percent loans. Mr. WHITTEMORE. The remedy would seem to be an increase in the fund available to "Fannie Mae" for the purpose of financing new GI homes. Mr. MONRONEY. Unless there is more evidence introduced than I now see, I cannot see how we would be gaining a single house by opening up that cut-off date. Mr. WHITTEMORE. At that date there was close to $3,000,000,000 frozen in that sum-considerably better than $2,000,000,000-and the purpose of our making that request was to reactivate and release those funds. But if we are wrong in our contention we are perfectly willing to go along with an amendment to the present bill that will grant us additional sums without us having to come back here in January and ask for more money. Mr. MONRONEY. I think you can depend on the Congress. Any time we support "Fannie Mae" authorizations we will keep the authorizations of "Fannie Mae" deposits up. Mr. WHITTEMORE. There is one question: In our section of the country there is no saturation of veteran demand. It is the demand of those whose average pay of $204 a month is not in a position to qualify under the loan in the present set-up because the payment is something like $58.75 a month, and he cannot make it. Mr. MONRONEY. I agree on that point, but I do not see the other. Mr. WHITTEMORE. That probably was a hasty generalization that we did not take too much cognizance of. At the same time, we meant well. We will trade it for an increase in authorization. The CHAIRMAN. Are there any further questions? You may stand aside, Mr. Whittemore. There is a roll call in the House and the Members will want to answer their names. We have two bills on the Consent Calendar. That should not take very long. I understand the next witnesses are from out of town. We will try to get through with them this morning, if we can. We now have Mr. Bates, of the American Federation of Labor. You may proceed, Mr. Bates. STATEMENT OF HARRY C. BATES, CHAIRMAN, HOUSING COMMITTEE, AMERICAN FEDERATION OF LABOR Mr. BATES. I am very glad to have this opportunity to discuss with you a subject of deep importance to organized labor-the question of housing. Certainly there is no subject closer to the heart of the average worker than the home to which he returns after a day's work. So often adequate housing means the difference between sickness and good health, between juvenile delinquency and obedience to the law, between broken homes and happy family living. For these reasons, the American Federation of Labor has long interested itself in the problems connected with housing and housing legislation. Although the chief reason for my appearance here is to support H. R. 5631, the bill recently introduced by the very able chairman of this committee, I want first to congratulate the members of this committee for their efforts in behalf of the recently enacted Housing Act of 1949. As you know, the A. F. of L. has strongly supported the new housing law as well as the various bills which have preceded it in the other sessions of Congress. We are most gratified that the long fight for passage of this legislation has been won. Now, for the first time, we have the opportunity to start erasing the adjective "ill-housed" from President Roosevelt's famous phrase about the "ill-fed, ill-clothed, and ill-housed" part of our population. This is an accomplishment of which we can be truly proud. The bill now before you goes one step further by developing a truly comprehensive housing program for all the American people. The heart of the Housing Act of 1949 is a subsidized program of public housing and slum clearance aimed at the low-income groups in our population. The heart of this bill is its title III, establishing a nonsubsidized cooperative housing program for the so-called moderateincome families. Although we support the entire bill, this is the section which I particularly wish to discuss. After I have finished, Mr. Henle, secretary of the A. F. of L. housing committee, has a few technical comments on the bill. But, before continuing with my statement, I want to say that we are particularly pleased that the main principles in title III of this bill are also contained in similar bills introduced by some 50 Congressmen, including a majority of the members of this committee. Who are these "moderate income" families and why does their housing problem need special attention? The Federal Reserve Board's latest survey of consumer finances gives us the estimated distribution of the Nation's income in 1948. According to this study, 30 percent of the consumer "spending units"-a "spending unit" is defined as "all persons living in the same dwelling and related by blood, marriage, or adoption, who pooled their incomes for their major items of expense"-had incomes of $2,000 or less in 1948. The top 30 percent comprised all families with incomes over $3,750. In between were 40 percent of American families with incomes ranging from $2,000 to $3,750. These are the "moderate income" families. Included in this group are the vast majority of union workers and their families. For example, in May of this year, weekly earnings for the average factory worker totaled $53.08. Assuming 52 weeks of employment, earnings for a full year would amount to $2,760. Of course, many workers do not receive 52 weeks' pay during the year, especially during such periods of rising unemployment as the present. The housing problem facing these families can be simply expressed: they are too poor to afford the housing constructed by private builders and too rich to be eligible for public housing. Let me discuss this in more detail. It has long been recognized that American families should be spending no more than 25 percent of their income for housing. This means, roughly, that a maximum of 1 week's earnings in every month should go to pay the family's housing bill. For our "moderate income" families, this means an expenditure of $40 to $70 a month, with most of the families able to afford only $50 to $60. The same Federal Reserve Board study shows that in 1948 the average (median) price paid for a new house was between $7,500 and $8,500. In fact, combining new and existing housing, the median price was between $7,000 and $8,000. Even at these prices, the monthly payments required for these houses would be in the neighborhood of $75 to $85, far more than the $50 to $60 that most factory workers can afford to pay. Also, it should be noted that, although the median price was in the $7,000 to $8,000 range, in many communities no decent houses were available at less than $10,000, and the lowest figure is only obtained because it includes the much lower-priced rural housing, which is, of course, not available to urban factory workers. The situation with regard to private rental housing is certainly no better. According to data obtained from the Housing and Home Finance Agency, the estimated rental in 1948 for a $9,000, 42-room unit in FHA rental projects insured under section 608 was about $100, including services and utilities. Clearly, this will not meet the budgets of the overwhelming majority of "moderate income" families. But neither are these families eligible for public housing. According to the latest figures computed by the Public Housing Administration, in the first half of 1948 the average income of families admitted to public-housing projects was $1,481, or only $28 a week. The average income of all families living in the projects who were eligible to continue living in them was $1,594, or $31 a week. The net result is that despite the tremendous gains which have been made in the housing field, particularly those which have now been made possible by the passage of the Housing Act of 1949, millions of "moderate income" families are still largely untouched by any housing legislation. Some means must be found to provide decent housing facilities for family living at rents or monthly payments of $50 to $60 per month, and it is toward this goal that title III of H. R. 5631 is aimed. I will not attempt to describe in detail the program provided for by title III of the bill. Let me simply say that representatives of the American Federation of Labor have spent many long hours working with other public-interest groups trying to devise a housing program to satisfy the needs of "moderate income" families. All of us insisted from the very start that this be a nonsubsidized program, a program that would not cost one cent of the taxpayers' money. We think that a solution has been reached in title III which would make possible large-scale rental housing projects by cooperative and other nonprofit corporations. These projects would be financed by direct loans from the Federal Government at the going Federal rate of interest (now 2% percent), plus one-half of 1 percent for administration, for an amortization period of up to 60 years, but not to exceed the useful life of the project. We firmly believe that this cooperative housing program will meet the practical test of providing decent housing that "moderate income" families can afford. Under this program, total monthly payments or rents can be reduced to as low as $50-$60 by savings which would be achieved in at least four ways: (1) reduced monthly financing costs through the lower interest rate and the longer amortization period, (2) savings through the nonprofit feature, (3) savings because of an extremely low vacancy rate comparable to the experience in public housing, and (4) reduced operating and maintenance expenses made possible by avoiding luxury services to tenants and arranging for a certain amount of tenant maintenance. In addition, States and localities could make major contributions toward the achievement of additional savings by granting partial or complete tax exemption to cooperative and nonprofit housing groups set up under this program. The bill wisely provides for a new separate constituent unit within the Housing and Home Finance Agency, the Cooperative Housing Administration, the head of which will be appointed by the President with the advice and consent of the Senate. We believe that this is a most significant feature of the bill, because without a separate constituent unit we are convinced that this pioneer program would never receive the recognition and independence so necessary for its success. |