large housing program benefits not only the slum dwellers but business in general. If the average businessman sometimes shows a lack of intelligence and foresight, he always has his sense of opportunism developed to a high degree. In a housing program there are land to be bought, houses to be built, and tenants to be selected. Each step holds great possibilities for the politician and the businessman. The real estate operator has land to sell. The banks have bad mortgages which they are anxious to have rescued. The architect has plans for sale. There are building contracts to be awarded. The inhabitants of the slums are tumbling over themselves to get into the developments, which means that there will not only be the usual jobs for those in control to give out, but apartments as well. This last plum is a new brand of political fruit which has enormous possibilities for exploitation. Imagine the golden opportunities latent in a $500 million housing program in New York City. Commissions, profits, fees, jobs, and finally, apartments for at least 200,000 voters. It is a bonanza beyond the wildest dreams of the most optimistic politician. The fear of possible political exploitation is almost the only justified one which I have heard the opponents of public housing express. I confess that it has made me hesitate at times, and my 4-year experience with the New York City Housing Authority, in which time we built apartments for about 5,000 voters, has not served to allay my fears. If Tammany Hall's political philosophy ever crept into the New York City Housing Authority, I firmly believe that a public housing program would be doomed, not only in New York, but throughout the country. This is neither an academic nor a futile warning. The danger of political exploitation is inherent in public housing and instances have already occurred which constitute a real danger signal in themselces. Mr. CARR. I bring that in because I do not think you can treat that lightly. Senator TAYLOR. You would not suggest that has anything to do with the sponsorship of this bill? Mr. CARR. I am not suggesting that. I am trying to point out, Senator, that you are faced with this situation: Local public-housing authorities are practically a political entity unto themselves as they are now set up. We are having an argument here in Arlington now as to whether they should establish a housing authority so that the FPHA can let them have the two projects that they have in that county. Senator TAYLOR. Has there been any evidence of political favoritism in allotting apartments and houses and units? Mr. CARR. I cannot prove it. I can say that in California, in the Vallejo project out there we had circulars at one time I do not have them with me-in which the tenants were organizing the vote in the national election, and in their own literature they pointed out that they must vote this way or that as a group. I do not think I have to illustrate the point. Mr. Post, an outstanding advocate of the public-housing system makes that statement himself. Here is what happens if you put in a local housing authority and make it completely a political entity unto itself. It is in a position to promote public housing beyond the desires of the community. That is what is worrying these gentlemen in Arlington right now, and that is the way most of the authorities are set up. In New York City they are trying to give it back to the city, and the public housers and the people in the Authority and many of the people interested in public housing are raising the cry, "If you give it back to the city, it is bound to go back into ward politics.' So it is somethng to think about. If I may, I would like to let Mr. Lusk present his charts now. Senator BUCK. We will be very glad to hear from you, Mr. Lusk. STATEMENT OF RUFUS S. LUSK, OF WASHINGTON, D. C., ON BEHALF OF NATIONAL ASSOCIATION OF HOME BUILDERS Mr. Lusk. My name is Rufus S. Lusk. My office address is 1508 H Street NW., Washington, D. C. For almost 20 years I have conducted a real estate statistical and publishing business. In addition I am president of the Washington Taxpayers Association, and the secretary of the Building Owners and Managers of Metropolitan Washington. I was retained by the National Association of Home Builders in the spring of 1946 to make a study of the effect of the public-housing program upon the financial structure of American cities and also to ascertain, as nearly as possible, what the cost of this program, as outlined by its advocates, will be to this country. As Mr. Carr pointed out, the 500,000 units will have very little effect, either upon the building business, private ownership, or rental or owned property, or upon the tax structures of our city. Gentlemen, that is not the program. The 500,000 units proposed in this bill is merely the public housing camel's nose in the tent. In 10 years you would not be able to see his tail. We made a very careful study of the very statements, testimony, books, and pamphlets written by the public housers over the last 15 years and it is abundantly evident, not only from what they say, but what they have done, that they have no intention of stopping with this 500,000. The very minimum is at least 5,000,000; 10,000,000 is probably the goal. The CIO wants to build 18,000,000. I have here with me in the prepared statement a few of these quotations which I wish to put in the record. I will not read them to you. In most every instance we give you chapter and verse and time, the statement was made, but that is only part of it, of their actions, and when I say their actions, I mean those who believe in public housing and advocate it both in and out of the Government. They indicate even more clearly that they want a vast program of urban and also rural housing built in this country. Mr. Carr referred to our District of Columbia development bill which resulted from almost a year's hearings before a Senate subcommittee of the District Committee, headed at that time by now Mr. Justice Harold Burton. There was a great deal of bad feeling and much controversy, but finally the private enterprises said, "All right, we will agree in this bill to public housing in the District of Columbia provided the bill states that only the lowest 20 percent income earners will be eligible to become tenants of these publicly financed, owned, and operated homes." That brought a furious battle. Those who advocated public housing did not want the tenants confined to that low-income group. That provision was cut out in the Senate, put back in by the House, and now is part of the law. Under that bill which we agreed to, over 200,000 people in Washington, the lowest fifth in the income group, would be eligible for public housing, but they were not satisfied with that. They wanted at least, as proved by their own statements and their own actions, to be able to house at least, or have eligible for housing almost half of our population. I want to show you a few of these charts, gentlemen. I stated that it was not their purpose to house just the lower or the lowest income groups. Here is what has actually happened. This chart shows the percentage of tenants on relief in 1944 in public housing projects scattered all over the country, from Atlanta to Washington, D. C., Los Angeles, and so forth, almost 14,000 units-7.6 per VALLEYVIEW HOMES OUTHWAITE HOMES CEDAR CENTRAL APTS WINTON TERRACE TRUMBULL PARK HOMES CHICAGO, ILL JANE ADDAMS HOUSES YELLOW MILL VILLAGE OLD HARBOR VILLAGE ELYTON VILLAGE CLARK HOWELL HOMES 20 PROJECTS AVERAGE FORT DUPONT WASHINGTON, DC WASHINGTON, DC RED HOOK PROJECT ELM HAVEN PROJECT CLARKSDALE PROJECT RAMONA GARDENS PROJECT NELTON COURT PROJECT PARKSIDE ADDITION LINCOLN PARK PROJECT Senator BUCK. When you say "they," to whom do you refer. Mr. LUSK. I am referring to the various advocates of public housing, the CIO, the League of Women Shoppers, the National Public Housing Conference, the National Association of Housing Officials, and a great many more, both in and out of the Government. CHART NO. 1 ATLANTA, GA. BIRMINGHAM, ALA BOSTON, MASS. CHICAGO, ILL JANE ADDAMS HOUSES CHICAGO, ILL TRUMBULL PARK HOMES CINCINNATI, OHIO CLEVELAND, OHIO DENVER, COL DETROIT, MICH NEW YORK, NY. statement was inaccurate. You said 33 percent. It looks like it must Senator TAYLOR. Your chart is inaccurate as to Chicago, or your Those figures, incidentally, are taken mingham, Ala., where it was zero. be 38 percent. Mr. LUSK. Perhaps that is correct. CHART No. 2 These figures on the next chart, No. 2, were prepared from photostatic copies of questionnaires gotten out by the Federal Public Housing Administration. Let us see what are the earnings of these same families. This is 1944 and wages have gone up considerably since then. The average earnings were about $1,860 per annum among these something over 13,000 tenants. The lowest was in New York, in the Red Hook project, where they earn about $1,300. The highest was Detroit, where it was something over $2,600. Now we come to what it costs to house these people. It may be that some of you gentlemen are not familiar with the original financing methods of public housing units. I will not go into it. It is very complicated, so complicated that the House Banking and Currency Committee took a whole year finally to understand it. We have prepared this chart here which is the result of 2 or 3 months of intensive work on the part of four or five people to try to make the total cost of housing one family in a public housing unit over a period of 45 years which this bill provides for. I will explain to you exactly where I have gotten each one. Most of them are official. Some of them are estimated, and I will explain that. Here is the happy tenant as a guest of Uncle Sam, more or less, living in this home which has a total cost over the 45-year period of $23,400. Where does that money come from to pay to house that family for a period of 45 years? The tenant on the average, you understand, pays $12,700 into the building and maintenance of that house. Senator ROBERTSON of Virginia. How much is that per year? Mr. LUSK. It runs I think $26 a month. I have it here. It is $23.63. That leaves a difference which has to be made up somewhere. It may come in the form of a subsidy, in the form of exemptions on taxes, and so forth, but there is this difference, $10,700, which must be made up in some form by other than the tenant. Here is where we get the cost of $23,400 for this housing of this family over the life of this dwelling. I assumed here that the cost of a completed dwelling on the average is $7,500. That is a very modest figure. The last project let in New York was $10,000 per unit. That money is borrowed by the local public housing authority and of course it has to be repaid. The interest over the 45-year period on the loan that is borrowed by the local housing authority to build the house is $5,500. Senator ROBERTSON of Virginia. Is that the interest that the Government guarantees? Mr. LUSK. Yes; the Government guarantees that, and pays it by means of a subsidy which it pays to the local housing authority. Now, this interest I have put down here, Mr. Chairman, is more than the amount estimated by the Federal Public Housing Authority. They estimate that the interest on the money borrowed over a period of 45 years Senator BUCK. What rate is that? Mr. LUSK. This is 3.21, the average rate which Government bonds have paid for the last 26 years, and I think it is reasonable to assume |