has been made on an installment basis at 4-percent interest on the unpaid balance for a period of between 20 and 25 years. Most of these loans have been made for a very high percentage of current sale price which is greatly inflated. More than half of the current unprecedented volume of mortgage lending is sponsored by the Federal Government under legislation enacted by Congress. The Government must therefore assume much of the responsibility for any adverse effects of this type of lending. Prices of houses have advanced from 25 to 35 percent during the past 2 years. A large number of families of moderate and low income have been encouraged to assume mortgage debt which will be beyond their means when the present inflationary period is over, and is becoming increasingly burdensome as the cost of living goes up. Sellers and builders of houses have been enabled to make exorbitant profits. The Government has assumed and continues to assume contingent liabilities of great proportions. It is entirely inconsistent to restrict credit terms on automobiles and other consumer durable goods, partly to reduce the inflationary pressures, and partly to protect the buying public, and at the same time to make housing credit terms so easy as to stimulate inflation and encourage people to go too deeply in debt. Any antiinflationary program of the Government will lose much of its effectiveness so long as the Government sponsors the present inflationary housing credit program. Easy credit has greatly increased the effective demand for both old and new housing far beyond the supply and this has greatly inflated prices. In an effort to meet the demand and take advantage of this profitable market, builders have undertaken to construct a larger volume of housing than there are resources readily available to finish. As a result, published prices of materials have advanced and, in addition, a gray or premium market has developed for many building materials. In this competitive market, the services of labor are also being actively bid for and bonuses and other extras have become common. The predominant feeling in the building industry is that only by building at current rates or even higher can the housing shortage be met and only by keeping demand high can the current levels of production be maintained. The prices that are being established now, however, are too high for long-sustained building. At inflated prices of materials and labor and inflated profits for builders a few more houses may be produced than would be the case if prices and profits were lower, but that condition makes it less likely that the market next year, and the year after that, will be able to pay the prices necessary to keep building going at the rate needed to overcome the housing shortage and stabilize this segment of the ecenomy. An increasing number of families are being priced out of the market now, in spite of the extremely easy financing terms, even though their need for housing is very great. I If the easy credit situation were producing a substantial additional volume of housing at supportable values in the long run, it would be justified, but because of the limitations of labor and materials it produces, instead, a dangerously inflated market which cannot be sustained for both new and old houses. believe that by curtailment of credit for housing in closer relationship to the supply of labor and materials, the price trend would be reversed and a market for houses assured over a long period of years. Good low-cost housing cannot be built with high-cost materials and high-cost labor. Neither Government nor private industry can produce this miracle. For the reasons which I have stated, Congress should reconsider in the longerterm interest of the country the present policy and program of the Federal Government in the field of housing credit. I shall be glad to be of any assistance I can in making suggestions for changes in the present housing credit programs. At this time I am merely indicating the nature of some of the changes that seem desirable. Operations under the National Housing Act and the GI bill of rights are closely related in practice but not in law or in administration. These two programs sponsored by the Federal Government should be brought together so that appraisals are made by only one agency. The "100-percent loans" under the program of the Veterans' Administration for both old and new houses and the nominal 90-percent loans on new houses under title VI of the National Housing Act should be revised so as to reduce the demand for housing and thus bring prices down. This means that both buyers and builders should have more equity in their properties than under the prevailing lending policies so long as present inflationary prices continue for housing. Lending by members of the Federal Home Loan Bank System should be subject to greater restraints by the use of a conservative, uniform, appraisal system, and by selective restriction on the terms of their loans. Finally, from the long-range standpoint it is vitally important to prevent inflation in the housing field from getting any worse than it is. The greater the inflation, the more severe will be the aftermath of defaults, foreclosures, liquidations, and bankruptcy. Over the years the construction industry, which is a major outlet for investment and supports a wide variety of related manufacturing, transportation, and distributing activity has been characterized by violent upswings and downturns. If greater stability could be introduced into this field, it would go far toward achieving the national objective of stabilizing production and employment at high levels. The more the backlog of demand for housing is filled at exorbitant prices now, the smaller will be the cushion under the entire industry when prices come down and, therefore, the more intense the deflation in the industry will be. Manifestly, this is not in the best interest of the general economy, and what is not good for the country as a whole is not good for any group-veterans, or otherwise. As has been well said, there is no such thing as easy credit-true, it is easy to get into debt but the easier it is to get in, the harder it is to get out. That applies to all of us, including war veterans. Hon. CHARLES W. TOBEY, WASHINGTON, D. C., March 9, 1948. United States Senate, Washington, D. C. DEAR SENATOR TOBEY: Millions of Americans have been urging prompt action by Congress to secure passage of the Taft-Ellender-Wagner housing bill. They have been following closely the hearings of the Joint Congressional Committee on Housing, the individual reports that have been made to the committee, and legislative recommendations such as those put forward by Senator Joseph McCarthy, of Wisconsin. It is the belief of these citizens that the joint committee's report will have a definite bearing on legislation to follow. It is their fear that efforts will be made by a minority to prejudice the report against public housing and the TEW bill. Many representatives of national organizations have followed the development of a housing program with care. As citizens who are vitally concerned, we have developed the attached statement of what we believe to be the essentials of a housing program. We urge that the joint committee follow such brief, straightforward recommendations, calling for legislation in the pattern of the TaftEllender-Wagner bill. The necessity for perfecting amendments to the TEW bill is recognized, in order to bring it completely up to date. At the same time we know that the vast majority of the people understand the TEW housing program as one of integrity and usefulness to all citizens. If they are to be faced with substitute legislation in a different framework, the vast groundswell of public opinion favoring adequate housing legislation will be dissipated. It is, therefore, in a spirit of complete cooperation that the attached statement is submitted to you, in the hope that it will serve as a useful tool in the joint committee's deliberations. Representatives of the following national organizations agree with this state ment: American Association of Social Workers. American Association of University Women. American Council on Education. American Home Economics Association. American Veterans Committee. Congress of Industrial Organizations. Council for Social Action of the Congregational Christian Churches of the Council on Christian Social Progress of the Northern Baptist Convention. Department of Christian Social Relations, Women's Division, Methodist Church. Federal Council of the Churches of Christ in America. League of Women Voters. National Association of Housing Officials. National Association of Jewish Center Workers. National Conference of Catholic Charities. National Congress of Parents and Teachers. National Council of Housing Associations. National Council of Jewish Women. National Council of Negro Women. National Farmers Union. National Institute of Municipal Law Officers. National Public Housing Conference. National Urban League. National Women's Trade Union League. Veterans of Foreign Wars. Respectfully yours, Rt. Rev. Msgr. JOHN O'GRADY, Executive Secretary of the National Conference of Catholic Churches. ESSENTIALS OF A HOUSING PROGRAM GENERAL PRINCIPLES The acid test of experience has demonstrated that any realistic hope for an adequate solution of our deep-rooted problems must be predicated on an effective, hard-hitting attack on all fronts. Reliance upon temporary and emergency palliatives or their extension will not suffice. Nor will reliance on vague generalizations or promises. Implicit in any national housing objective is the goal of a decent home and a suitable living environment for every American family. As a corollary, but equally important goal, is the development of a stable and healthy home building industry which can make its full contribution toward a prosperous economy of maximum and sustained production and employment. There should be a national housing policy-established by the Congresswhich sets as the fundamental objective the realization, as soon as feasible, of the goal of a decent home and a suitable living environment for every American family, which calls for every feasible aid to enable private enterprise to meet more of the total housing need, and which clearly recognizes the necessity for Federal assistance for the special problem areas of slum clearance and the provision of adequate low-rent public housing for families with incomes so low that they cannot otherwise be decently housed in new or existing private housing. SPECIFIC PROGRAMS NECESSARY Exhaustive analyses and reanalyses over the years and the hard facts of experience indicate that translation of the foregoing goals into concrete realization requires the integrated combination of the following specific programs: 1. Housing research.-The Federal Government can supply real leadership for the attack on high building costs by undertaking an effective program of technical and related research and studies on housing. This should be both for the purpose of locating those areas where progress in the reduction of building costs can best be made, and for correlating and implementing the efforts being made by all interested groups in the area of technical research to stimulate and promote reductions in housing costs and the sustained production of housing. There should be created within the housing agency of the Government a unit with adequate powers and sufficient money authorizations to carry out such a program on an effective basis. 2. Incentives and aids directly related to the construction process.-The Federal Government can likewise aid considerably in the reduction of housing costs through special financing aids in connection with the construction process itself. Typical areas where such aids promise real results is in large-scale continuous building operations, particularly where on-site fabrication is possible, and in the application of modern industrial processes, such as prefabrication. The FHA insurance programs are well adapted, through appropriate extension or modification, to provide the aids needed in this connection. 3. Home ownership generally.-Home ownership must be made available to families of more modest income than is now possible, or has been possible in the past. Toward this end, hand in hand with the attack on building costs, there must be supplementary programs with respect to the other area of basic housing costs; that is, financing of home ownership. This means liberalization in all three areas of financing cost: (1) Percentage of housing cost that can be financed through loans; (2) the period for amortization of the capital loan; and (3) the interest rate charged. In this area also, FHA's existing programs provide the best base for the programs needed. 4. Home ownership through nonprofit cooperative housing.-Accomplishments in agricultural and other fields through cooperative effort indicate that nonprofit cooperative organizations would be an excellent medium for attaining very promising results in connection with making home ownership available, on a sound basis and within their means, to families of modest income. Special incentives, therefore, should be made available for this type of home ownership, particularly in the initial shaking-down period of a new program. Such incentives should take the form both of liberalized financing aids and of special secondary market backing until this program has had the opportunity to attain general acceptance. 5. Rental housing.—This area, generally neglected in the past, presents even more challenging problems than that of home ownership for families of modest income and, therefore, requires an even greater concentration of special efforts. In the past such efforts as have been made in this area have been with respect to mortgage financing, and efforts in this connection must continue, but on a basis more related to the needs of families of modest income. In addition, the heretofore neglected area of equity financing of rental housing must equally be given real attention, and aids must be provided to open up this area on a scale and on terms necessary to meet our rental-housing needs. Thorough study indicates yield insurance to be the instrument best adapted for this purpose. 6. Low-rent housing.―The stark fact is that, despite years of congressional and other investigation, there still has been advanced no alternative program that will provide decent housing within the means of our lowest-income families. There must be an unhesitating and unequivocal rejection of any housing program that will provide aid for all except those who need aid the most. Accordingly, there must be an extension of the present low-rent housing program with such modifications as are necessary to adapt the program to current cost and related conditions. 7. Slum clearance and urban redevelopment.—A comprehensive housing program requires as a necessary feature a direct attack on the problem of the high costs involved in the assembly and clearance of land in blighted and slum areas. This problem area is clearly of national as well as local concern and warrants substantial Federal financial support. 8. Veterans. Clearly, the housing needs of veterans merit first call on our attentions although at the same time it must be recognized that such attention must be in the framework of our total housing program because the veteran himself is especially going to be affected by what happens in the over-all housing situation. Toward this end, aids to veterans should be in the context of an overall housing program through special preferences and aids provided in that connection. Typical instances of how this should be done are by providing first preference for veterans of low income in admission to low-rent housing projects, special liberalization of aids for veterans' cooperative housing, and special aids for disabled veterans. 9. Farm and rural housing.-Despite its magnitude, attention to the urban housing problem must not be allowed to mean diversion of attention from the problems of farm and rural housing where conditions are equally bad. Effective programs must be developed to meet the special needs of families in these areas. VETERANS OF FOREIGN WARS OF THE UNITED STATES, Senator CHARLES W. TOBEY, Chairman, Senate Banking and Currency Committee, MY DEAR SENATOR TOBEY: The national housing committee of the Veterans of Foreign Wars met in Washington, D. C., March 20 through 22, to consider, among other things, the report of the joint congressional committee submitted to the Congress on March 15, 1948. The committee noted that the recommendations submitted by Senator Flanders when phrased in legislative language took the form of amendments to the so-called TEW bill. As you may know, this organization is mandated to support the TEW bill with certain amendments. The amendments suggested by the Veterans of Foreign Wars in October of 1947 are similar or in line with many of those recommended by the joint congressional committee. Our housing committee feels that the joint committee report, embodying within it the principal points for action recommended by the VFW housing committee, offers the most comprehensive approach to a solution of the housing shortage now affecting millions of World War II veterans. The TEW bill, as amended by the Flanders amendments, appears to be the only housing measure of wide scope with any possibility of favorable action by the Eightieth Congress. While some of its features may not be wholly acceptable to all interests concerned, it does appear to be a progressive and sound step toward the building of homes and rental units for veterans at a price or rental within the income of the average World War II veteran. After careful consideration, the VFW housing committee strongly recommended through the commander in chief and the national legislative committee that every effort be made to support and encourage immediate passage of the TEW bill as amended by the Flanders amendments. The legislative service has therefore communicated with all VFW departments and posts urging that members of our organization correspond with their congressional representatives requesting support of the amended TEW bill. We hope that the support of our members will be effective and that we can rely upon the continued support of yourself and the members of your committee. Very truly yours, OMAR B. KETCHUM, Director. UNITED PACKINGHOUSE WORKERS OF AMERICA, The Honorable CHARLES W. TOBEY, Senate Office Building, Washington, D. C. MY DEAR SENATOR: We address this communication to you to urge that you aline your influence and your personal vote in support of immediate, constructive national action to meet our housing crisis. This organization, possibly more than any other in the country, counts among its membership working men and women who live in overcrowded, unhealthful areas of blighted housing. The workers who are compelled for lack of adequate alternative facilities to live in the areas around the meat-packing plants of Chicago, Kansas City, and similar urban centers, or who are crowded into the restricted Negro housing facilities in these and other cities, symbolize the tragic scope and intensity of the housing crisis of this Nation today. This union is attempting so far as is possible in its collective-bargaining negotiations to give to its members the financial basis necessary to make possible some slight alleviation of these and related conditions which they face. A complete solution to their problems-and to housing problems of the Nation generally-requires, however, that at the same time effective Government action be taken to supplement and support the efforts of individuals and groups. For a number of years the proposed legislation which has become known in the current congressional session as the Taft-Ellender-Wagner bill has held forth to these people some hope that a program of national action might be developed which would promote some progress toward more adequate housing for the Nation. Year after year that hope has been frustrated. This year the plea for its enactment is made on a basis more urgent than ever before. The Joint Committee on Housing has submitted its final report on this subject. Senator Flanders, of Vermont, has offered certain amendments intended to bring the Taft-Ellender-Wagner bill up to date. We sincerely urge that you lend every possible support and assistance for prompt consideration and enactment of the bill with these necessary amendments. We particularly urge that you oppose and defeat the efforts of those who have announced their intention to eliminate from the proposed legislation the provisions covering public low-rent and rural-housing facilities. It should be quite obvious in any objective analysis that removal of these provisions would seriously cripple the effectiveness of any purported housing program. Respectfully yours, LEWIS J. CLARK, Secretary-Treasurer, UPWA-CIO. The CHAIRMAN. The meeting stands recessed subject to the call of the Chair. (Thereupon, at 12 noon, the committee adjourned subject to the call of the Chair.) |