Until this program is enacted, however, we recommend strengthening of the existing FHA 213 cooperative housing program by enactment of H. R. 5663 introduced by Congressman Patman. The major provisions of this bill would:

(a) Restore the previous provisions which allowed mortgages for cooperative housing on a replacement cost rather than value basis. This change has necessitated such large downpayments that it has crippled the cooperative housing program. We urge return to the previous provision.

(b) Establish a $50 million revolving fund in the Federal National Mortgage Association to make available financing for cooperative housing projects unable to procure financing in the open market.

(c) Restore the post of assistant commissioner of FHA for cooperative housing.

(d) Increase the maximum mortgage on cooperative housing projects from $5 million to $30 million in order to permit construction of large projects.

As a representative of the cooperative league is here this morning, and will amplify this considerably. I will merely say at this time that we endorse the enactment of this bill.

We understand that a number of bills have been introduced to encourage construction of housing suitable for elderly single individuals and couples. We have not given detailed consideration to these proposals, but we recognize that the problem of making available suitable housing for the aging is becoming ever more serious. Two promising approaches to this problem are: (1) The provision of units for the aging in low-rent public housing, over and above the units we have recommended for the existing program, along the lines of Congressman O'Hara's proposal; and (2) assistance for cooperative housing for the aging. We urge that the committee direct serious attention to this issue.

Purchasers of homes under the FHA and VA programs should be given protection through a lapsed payments plan. This would establish a revolving fund out of which monthly payments could be maintained in the event a home buyer is forced to miss monthly payments by unemployment, illness, death in the family, or other emergency. The mortgagor would be expected to make slightly higher monthly payments to make up for the lapsed time and reimburse the revolving fund.

The Federal Government should not provide financial assistance for projects which involve substandard wages for any employee. We, therefore, ask that housing built under the FHA and VA programs, as well as all other programs involving Federal financial assistance, be made subject to the requirements for the payment to all employees of wage rates prevailing in the locality, as determined by the Secretary of Labor.

In conclusion, adoption of the recommendations we have made would provide the impetus for a bold fundamental attack on the Nation's housing problem. We are convinced that enactment of these proposals would assure a rate of housing construction sufficient to meet otal housing requirements; it would bring good housing within the inancial reach of all families; and it would provide the basis for fareching replanning and redevelopment of our urban communities.

Finally, it would assure that housing would play a full role in helping to achieve and maintain economic prosperity.

We urge your committee to give these proposals your sympathetic consideration and to recommend their enactment to the Congress. Mr. Chairman, I have attached to my statement the resolution on housing unanimously adopted by the 73d convention of the American Federation of Labor held last September, and I respectfully request that this resolution be included in the record of the hearings. Mr. BROWN. It may be made a part of the record.

(The resolution is as follows:)

RESOLUTION ON HOUSING UNANIMOUSLY ADOPTED BY THE 73D CONVENTION OF THE AMERICAN FEDERATION OF LABOR, HELD IN LOS ANGELES BEGINNING SEPTEMBER 20, 1954

Whereas the current housing construction rate of about 1 million units a year must be doubled to make available livable homes to the nearly one-third of American families forced to live in dwellings below even minimum standards for family living and to meet the additional needs of our rapidly expanding population, and

Whereas a doubled rate of housing construction is essential to help maintain economic prosperity and full employment, and

Whereas the overwhelming proportion of the additions to our housing supply must come from new construction and cannot be made available by haphazard paint-up and patch-up schemes such as the socalled "urban renewal" program sponsored by the administration, and

Whereas the requirements of low and middle-income families who have the most desperate need for decent housing at rents and selling prices they can afford have been virtually ignored in Government programs of financial assistance to private speculative builders, and

Whereas Congress, in the Housing Act of 1954, has tragically weakened the Nation's housing program by:

(1) Limiting low-rent public housing construction to a token 35,000 units for 1 year despite overwhelming evidence that only low-rent public housing can make available decent homes to low-income families at rents within their means. (2) Providing additional incentives to speculative builders to continue to concentrate on construction of high-priced houses while doing nothing to assist construction of moderate-priced homes that workers and other middle-income families can afford.

(3) Taking only incomplete and largely ineffective measures to inject urgently needed safeguards in the programs of Federal assistance to speculative builders and mortgage lending institutions despite the shocking evidence of widespread frauds in the mortgage insurance program administered by the Federal Housing Administration which have permitted unscrupulous builders and contracts with the connivance of FHA officials to despoil building trades workers, consumers, and the Government of hundreds of millions of dollars: Therefore be it

Resolved, That the delegates to the American Federation of Labor Convention assembled in the City of Los Angeles, Calif., go on record as urging the Congress to enact a housing program which will make possible a doubled rate of residential construction and will assure especially that the urgent needs of low and middle-income families for decent housing accommodations within their means are met. This program should include:

(1) Resumption of the low-rent public housing program at an annual rate of at least 200,000 units a year.

(2) An expanded urban redevelopment program providing necessary financial assistance to cities for slum clearance, replanning, and rebuilding of metropolitan

areas.

(3) Increased Federal assistance for housing for middle-income families through reduced interest rates and lengthened amortization periods. These homes should meet adequate standards of space, construction, and availability of community facilities. Priority for assistance under this program should be assigned to genuine cooperative and nonprofit housing.

(4) Full protection of consumers in all housing programs involving Federal financial assistance in any form including:

(a) A strenghtened mandatory builder's warranty against any structural defects that may develop within the first 2 years after completion of the house. (b) A "lapsed payments" plan permitting home purchasers to postpone regular payments for a limited period when forced to do so by unemployment, illness, death in the family, or other unpreventable causes.

(c) Establishment of an advisory committee to the Housing and Home Finance Agency representing labor, home owners, tenants and other consumer interests. (5) Requirements for payment of the prevailing wage to all workers engaged in construction under federally assisted housing programs; and be it further Resolved, That the American Federation of Labor take action to secure introduction and enactment of this program early in the next session of Congress. Mr. BROWN. Mr. Wolcott?

Mr. WOLCOTT. No questions?
Mr. BROWN. Mr. Multer?

Mr. MULTER. No questions.

Mr. BROWN. Mr. O'Hara?

Mr. O'HARA. I wish to congratulate the witness on the very splendid statement he has made on the housing problem.

My concern has been, as you have outlined to all of us, that we have a housing program that has not reached the low-income or the average income group of the American people, and apparently we are making no progress in meeting the need of that group.

I always have had confidence in the ingenuity of private industry in America, and I know that has always been true of the American Federation of Labor. Now, why is it that with all the ingenuity we have in the construction field that builders have not devised some kind of a residence that can be built and sold to this great number of people who have an income of $75 or $80 a week? I know you have given much thought to this. What is your conclusion?

Mr. SEIDMAN. Yes, sir, we have given a great deal of thought to this problem.

Of course, not everything has been done by any means to improve the efficiency of the construction industry to the point where the actual construction costs can be reduced to the lowest point that might be cbtainable, and more can be done along these lines. However, I do not by any means want to underestimate the actual increases in efficiency which have occurred in the construction, particularly, of the large scale housing projects. A great deal is being done along those lines. You may have seen an article in Business Week, a week or two ago, which describes the on-site prefabrication methods which are being used to reduce costs.

We think that a major problem is the financing cost. We believe that the real problem is to reduce the monthly payments on the mortgage.

Now, you can do this in 1 or 2 ways or a combination of these 2 methods: You can either increase the amortization period, the period over which the purchaser makes the payments on the mortage-in other words, you divide the total amount over a longer period-or you can decrease the interest rate, or you can do both.

The tendency during recent years has been to increase the amortization period. We think the amortization period can be increased still further. But we wish to point out that the longer a person is paying interest, over an amortization period, the more he is paying, in the long run, for that house.

At the present time it is likely to run to 21⁄2 and even 3 times the original selling price, as it is given to him when he buys the house. Therefore, we say that the only way in which this problem can be met, in a way which would actually reduce the costs to the purchaser, and at the same time not force him to carry, over the long-term period, a cost which is far greater than the item which he is buying, namely the house, is to not only extend the amortization period but also to reduce the interest rate.

We think that this is entirely feasible. We think that the interest rates are too high in view of the lack of risk to the lender.

Mr. O'HARA. I was interested in your observation that if the interest rate were decreased, in the manner in which you have suggested, it would bring the cost of a home down to some considerable extent. How much would it reduce the cost, say, on a $10,000 home.

Mr. SEIDMAN. Well, it would depend

Mr. O'HARA. You gave some percentage figure, if I recall correctly. I think you said it would reduce the cost a third.

Mr. SEIDMAN. It might reduce it as much as a third in terms of monthly payments, particularly if combined with a longer amortization period.

Mr. O'HARA. That is one way of bringing housing more within the reach of our low-income people.

Mr. SEIDMAN. Yes, sir.

Mr. O'HARA. We can't reduce the costs of construction at the present time. We can't reduce the labor costs. But we can reduce materially the cost of homes by a different system of planning, lower interest rates, and possibly the establishment of a new assistance program by the Government. Does this follow the lines of your suggestions, which I have found most constructive and helpful? Is that your suggestion?

Mr. SEIDMAN. Yes, sir, Mr. O'Hara; that is the suggestion we are making, and we think further efforts can be made and are being made to reduce construction costs, but we don't think they can be reduced fast enough or low enough to meet this fundamental problem.

Mr. O'HARA. Am I correct in this? The American Federation of Labor is interested in the continuance of the construction trend? Mr. SEIDERMAN. Yes, sir, we want expanded construction. Mr. O'HARA. And your interests, in this regard, are exactly the same as those of private industry, the builders?

Mr. SEIDMAN. I am sure that in that regard our interest is the same as that of the builders. Not only do we have a large proportion of our membership in the building industry, but we are also interested in housing as consumers of housing.

Mr. O'HARA. I recall that back in the 1920's that the depression was hastened and deepened by the curtailing of construction. We do not want that to happen again, but it can happen if we continue to build only homes which are beyond the financial reach of many of our people in the modest-income group.

Mr. SEIDMAN. I believe that is true. I think that what is happening today is that many of the people who are purchasing housesyoung veterans, and young people generally, are buying houses at costs that they really can't afford. They are paying one-third and one-fourth of their total income for housing, and even more, just

because that is the cost of the only houses available. But I think we will come to a day of reckoning.

Besides that, it is the families even below that level that have the greatest need for housing, and as Mayor Clark emphasized, those people can't even begin to purchase houses.

Mr. BROWN. Will you yield?

Mr. O'HARA. I yield.

Mr. BROWN. Mr. Seidman, you live in Washington?

Mr. SEIDMAN. Yes, sir.

Mr. BROWN. Could you come back next Thursday and finish your testimony? We have some out-of-town witnesses who must leave today.

Mr. SEIDMAN. I will be glad to do that.

Mr. BROWN. If you don't care to do it, we will go ahead. But we have the mayor of Syracuse and he wants to get back. Is it all right with you to appear next Thursday?

Mr. SEIDMAN. Certainly. I will have no further statement at that time, but there may be some further questions. I will be glad to

return.

Mr. BROWN. Will you return at 10 o'clock Thursday morning? Mr. O'HARA. I have concluded my questioning, Mr. Chairman, but there may be other members of the committee who wish to question Mr. Seidman. He has been of great aid to us and his testimony has been outstanding.

Mr. BROWN. Yes, sir; we will expect you back at 10 o'clock on Thursday, Mr. Seidman.

Mr. SEIDMAN. Thank you, Mr. Chairman.

Mr. BROWN. We will hear now the mayor of Syracuse, Mr. Donald Mead.

Mr. MULTER. Mr. Chairman, by way of introduction of Donald H. Mead, the distinguished mayor of the city of Syracuse, in our great State of New York, may I say that the mayor has made a very fine record as a public servant in our State legislature, and then the people of his city elected him as their mayor, where he continues to do a good job, and even though I am of the opposite political faith, I wish to welcome one whom I consider to be a very good public servant. Mr. MEAD. Thank you.

Mr. BROWN. You may proceed, Mr. Mayor.

Mr. MEAD. Thank you very much.

STATEMENT OF HON. DONALD H. MEAD, MAYOR OF THE CITY OF

SYRACUSE, N. Y.

I am Donald H. Mead, mayor of the city of Syracuse, N. Y., and a member of the executive committee of the American Municipal Association, which represents 12,000 municipalities across the Nation. I am speaking to you today in behalf of that association.

I am also accompanied by my executive secretary, Mr. Richard F. Torrey, and there are also present two staff members of the American Municipal Association.

Last year I had the honor of representing the American Municipal Association in testimony on the Housing Act of 1954. Even at that time, with only a few months service as mayor, I could appreciate the importance of urban renewal legislation. Now, a year later, I am in a