ance up to 90 percent of the sales price. The cooperative purchase plan presently employed by FHA should be extended to cover multifamily units under this bill.

Either or both plans will provide for a financial return to the Government. Such a program will carry out the intent of the Lanham Act. It will provide exceptionally low-cost housing to veterans. It will provide a source of revenue through ad valorem taxes for the local communities and, finally, it will do what Mr. Foley says title II is supposed to do "divest the Government of ownership and management of war housing, both temporary and permanent.

The McGregor Act provides the legislation to transfer the remainder, if there are any remaining, of the veterans' reuse housing, and it will not cost the educational units 1 cent, except where the land is leased by the Government and not owned or leased by the educational institution.

The CHAIRMAN. Are there any questions?

Mr. MITCHELL. I would like to ask Mr. Summer a question.

You said that the housing now was within 6 percent of 1948. I wonder if you could comment on the reasons for the drop-off during the first months of the year and as to the reasons for the curtailment of housing this year?

Mr. SUMMER. I do not purport to know all the answers, but I think a lot of it is psychological. There was a feeling of uneasiness in the air in 1948, which carried into 1949, which affected all businesses. While this was going on the industrial concerns were faced with the wholesale and retail cutting down of inventory. I think it was primarily a result of that psychology of uncertainty.

Mr. MITCHELL. Do you think that the pick-up in housing indicates that that psychology is over now?

Mr. SUMMER. From being in the field and meeting with dozens and dozens of builders daily, I would say the psychology is different now. There is a feeling of optimism, but a continual desire to get down to the lower price and rent brackets in order to reach a larger market. I think the builders are now fully aware of the fact, and I think the FHA deserves credit for its drive on the question of economy, that the market is generally down low. The only exception is that they are building four-bedroom houses. There has been quite a demand for that, but the four-bedroom houses are selling at very little more than the two-bedroom houses were selling for a year or two ago. So I think the trend is commendable and I think the morale is excellent.

Mr. MITCHELL. You said, in talking of cooperatives, that you opposed the cooperatives in this country. You made that statement with regard to them.

Mr. SUMMER. I did not say that I opposed them in this country. I said they have not been overly successful in this country.

Mr. MITCHELL. I am wondering, in relation to that, what has happened to the real-estate board study of cooperative housing. There were a number of news stories during the first of the year that your association was studying that problem and would probably have a concrete program to suggest to Congress.

Mr. SUMMER. I can answer that question.

There was a group in our association that advocated cooperative housing as a solution, or as one of the solutions to a problem. But each time it was brought up before the board of directors it was over

whelmingly voted down. The majority of our members felt that it was not the solution. In other words, there was a difference of opinion, but the association never took any action in favor of it.

Mr. MITCHELL. Did your statement in regard to cooperatives in this country, and their success in this country, have any relation to Mr. Nelson's statement praising the work of the cooperatives in Great Britain?

Mr. SUMMER. Well, I think he emphasized Sweden.

Mr. MITCHELL. I remember one letter he wrote stating the success of the cooperative housing in Great Britain.

Mr. SUMMER. I frankly did not notice that. But I know he has made reference to the success of the cooperatives in Sweden and refers to that from time to time. But in this country, from my knowledge, they have not been overly successful except in periods of shortage and periods of boom.

Mr. MITCHELL. Is your knowledge on the basis of the study of the whole program or just on the basis of the knowledge of the East Paterson situation?

Mr. SUMMER. It is based on my knowledge of the area, which is New Jersey-New York, and, further, it is based on attending conventions at which the subject has been discussed and on which representatives from various parts of the country expressed themselves; so that I have no statistical data to offer today, but that is the information that results from attending hearings and meetings and conventions.

Mr. MITCHELL. The matter has been discussed generally and not as to specific projects?

Mr. SUMMER. That is right.

Mr. MITCHELL. Thank you.

The CHAIRMAN. Any further questions?

You may stand aside.

Monsignor O'Grady.

STATEMENT OF RT. REV. MSGR. JOHN O'GRADY, SECRETARY, NATIONAL CONFERENCE OF CATHOLIC CHARITIES

Monsignor O'GRADY. The Housing Act of 1949 marked a very important advance in the housing program for the American people. It provides decent housing for the very lowest group of American wage earners at a price they can afford to pay. It makes an important addition to existing legislation providing for farm and home ownership in rural communities. For many years the Federal Government has been endeavoring to stimulate further development of the family-size farm. Since the home is an important element in the farm economy anything that stimulates home ownership is bound to help the farmer who is endeavoring to secure a stake in the soil.

The slum clearance section of the Housing Act of 1949 is bound to have a far-reaching influence not only on housing programs, both public and private, but also on the entire development of our cities in the future. The loans and grants provided by the Federal Government will stimulate vast schemes of urban redevelopment. It will mean the clearing of large sections of our slums. The cleared property will be used for new highways, for new facilities of all kinds, for com

mercial and industrial purposes, and for housing, both public and private.

The Housing Act of 1949, however, leaves uncovered the whole area of middle-income housing. The large segment of the field is of vital concern to those who have been interested in housing. By and large it includes families with incomes ranging between $2,200 and $3,750 a year. This represents virtually 40 percent of American families. Under present conditions, middle-income American families are finding it impossible to secure decent housing at a price they can afford to pay. It is inconceivable that we should have to have subsidized housing for our entire middle-income group. This would mean a subsidy for 40 percent of the people of the United States. The question might then be raised about increasing the subsidy from $3,750-a-year families to $5,000-a-year families. This would mean Government subsidy for more than 90 percent of the people of the United States.

Those of us who have worked on the Housing Act of 1949 accepted the principle of subsidy for the very low income groups because we could not find any other way out of the dilemma in which we found ourselves. We felt that society as a whole had a certain obligation to these groups; we felt that it would be possible for the Government to provide a temporary subsidy for the very low-income families without in any way endangering our free economy.

In 1940 the Subcommittee on Housing of the Senate Committee on Postwar Planning envisaged a housing program that would meet the needs of middle-income as well as of low-income groups. It really envisaged a broad housing program for all the people. The supporters of this program whose principles were thoroughly embodied in the Taft-Ellender-Wagner bill, believed that certain additions had to be made to the National Housing Act of 1934 in order to meet the needs of middle-income groups. They felt that private capital needed additional incentives in the way of longer periods of mortgage amortization, lower interest rates and guaranteed yield on large units of capital invested in housing in order to foster the building of more housing units for the middle-income groups.

With the passing of the Housing Act of 1949 practically all the provisions of the original Wagner-Ellender-Taft bill have been put into effect. Subsidized housing has been made available for the very low income groups. The insurance program of the FHA had been liberalized by previous legislation. We also have on the statute books provision for guaranteed yield on large units of capital invested in housing. When the Housing Act of 1949 was passed, those who promoted it believed that it should be followed by legislation that would give still greater incentives to private capital in the housing field. They believed that something further needed to be done in liberalizing the provisions of the act. Under present legislation it is possible to secure a 95percent insured mortgage on houses worth $6,000 or less. These mortgages have a life of 25 years. Under the bill now before the committee it is proposed to increase the maximum mortgage amount from $6,000 to $6,650. The maximum of $6,650 may be increased of $950 for each additional bedroom, up to a total of $8,550. In other words, the Federal Government would be prepared to insure 95 percent of the loans on houses ranging between $7,000 and $9,000. The length of the mortgage life would also be increased from 25 to 30 years.

There has been a great deal of criticism of FHA in recent years because of its failure to provide any program for suburban and semirural housing. Many families have been anxious to move out into the country where they could secure cheap land and where they could build houses without having to conform to rigid city codes. Under the present FHA program loans on these houses cannot be insured. The only guaranty available is that against 10 percent of the losses sustained by lending institutions. The bill under consideration would provide a new mortgage insurance program to stimulate suburban and semirural housing. The mortgage could not exceed $4,750 where the mortgagor is the owner-occupant, or $4,250 where the mortgagor is the operative builder.

The houses built under this new form of mortgage insurance would not have to conform to the regular provisions of the Federal Housing Administration in regard to economic soundness, neighborhood, and community facilities. The only provision required is that houses should be an acceptable risk.

The section of the bill dealing with veterans' cooperatives represents some advances over the cooperative housing section of the Housing Act of 1948. Under the act now on the statute books, the insured mortgage cannot exceed 90 percent of the estimated value of the property except in the case of cooperatives whose membership consists primarily of veterans. In this latter case the insured mortgage may be 95 percent of the replacement cost on December 31, 1947. Under H. R. 5631 veterans of World War II can secure a guaranty of 100 percent of the current replacement cost of the property on a 40-year mortgage. For cooperatives having a smaller number of veterans as members the percentage would be lower. If none of the members are veterans the mortgage could not exceed 90 percent of the replacement cost.

A unique feature of H. R. 5631 is that which calls for a carefully selected staff of specialists to work under a new assistant commissioner in the Federal Housing Administration in giving technical assistance to cooperatives. This type of assistance is absolutely essential to the success of cooperatives. It is essential in order to get the proper type of organization that is so necessary for the success of cooperatives.

The improved financing and the veterans' cooperative housing program embodied in titles I and II of H. R. 5631 are important steps ahead in bringing housing within the reach of the middle-income group. But they leave uncovered at least 40 percent of American families with incomes between $2,000 and $3,750 a year.

I believe that further steps are necessary in order to reach the middle-income group. I am not assuming that any one step alone is sufficient to attain this objective. We must always keep in mind the possibilities of reducing housing costs through the use of new materials and more up-to-date methods of house construction. We must keep in mind various ways and means of encouraging families to build their own homes with the use of their own labor. For this reason I am very much interested in the new aids to be provided under this bill for housing construction in suburban and semirural areas. This will encourage many people to share in the building of their own houses. For a number of a years many people in the United States have been dreaming about the possibilities of cooperatives in the housing field as they have in other fields. I believe the time has come when the

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American people should take a new look at the possibilities of cooperatives in a great variety of fields. They may provide us with an additional method of saving our free economy. Many people in the United States are inclined to jump from the individual and the family to the State. They assume that if the individual or the family is not able to perform any needed service they should look directly to the Government.

It is my belief that this philosophy is entirely unsound. If we are to retain our freedom we must encourage all sourts of groups and organizations in between the individual and the State. This should include not only organizations operating on a purely economic basis but all sorts of cooperative and nonprofit organizations. I believe that Government should encourage these organizations because in the long run they may be necessary to save us from a state that would deprive us of our liberties.

If, as I assume, there is a large area of the housing field that is not covered by the Housing Act of 1949 or by the program of the Federal Housing Administration even if Congress should provide it with the new implements included in titles I and II of H. R. 5631, the people of the United States must face the question as to what they are going to do about it.

Many people are hoping against hope that a drop in prices may enable private business with the present implements that are available to it to provide housing for our large middle-income group. Title III of the bill now before this committee sets up a new program that is designed to meet, in good part at least, the problems of the middle-income group. I know there is quite a debate as to how far the program will reach down into the middle-income group. We have had long debates as to how far cooperative housing will reduce the $90-a-month payment on the $9,000 house to be built with FHAinsured loans. Mr. Raymond Foley contends that it will reduce the payment by around $20 a month. Mr. David Krooth contends that it will reduce the monthly payment by $30 to $35. From what I can gather from the long discussions of this topic I have decided to cast my lot with Mr. Krooth.

The cooperative housing program included in title III of the bill under consideration calls for what really amounts to 3 percent straight Government loans, 60-year mortgage life, or the useful life of the house, whichever is the lesser, income limitations to be administered in such a way as not to exclude the leadership of various cooperative groups, a separate constituent agency within the Housing and Home Finance Agency, and a program of technical service to cooperatives to aid them in developing their program.

Those of us who have been interested in cooperative housing programs recognize fairly well the difficulties ahead. We have had only a limited experience in cooperative housing in the United States but there is a great interest in it on the part of veterans' organizations and of labor throughout the country. These groups are enthusiastic about the possibilities for cooperative housing. They want to form cooperatives. They already have formed a number of cooperatives. Few of them, however, have been able to make very much progress due to the lack of technical guidance.

Cooperatives, however, need more than technical guidance; they need an inspired leadership. I believe that today they will provide