The CHAIRMAN. Unless there are further questions, you may stand aside.

Mr. FOUNTAIN. Mr. Chairman, I would like to ask one question of Mr. Williamson.

I noticed in your testimony the other day, on page 17, you made the comment

In this connection the committee's attention is respectfully invited to section 11 of the existing public housing law which provides a formula for capital grants alternative to annual subsidies, not to exceed 25 percent of the development or acquisition cost of the project.

I wonder if you would elaborate upon that a little bit? I am not familiar with that particular provision of the statute.

Mr. WILLIAMSON. In the public housing law you have two methods of financing public housing. One is through annual contributions, and the other is through capital grants. Now, this particular 25 percent section, as I recall that section it was at the option of the local community upon the approval of the PHA, but the law did provide for capital grants in lieu of annual contributions, and the capital grant idea has never been employed since 1949. In the 1937 act, there was à 10 percent local cash contribution. The United States paid 90 percent of the development cost, and the local government 10 percent, but it never worked, and in hearings before this committee, in 1938, a member of this committee asked the PHA administrator, Straus, why he was apparently circumventing that 10 percent cash requirement. He replied that it was the desire of the President to get these projects going quickly, in order to put people to work, and that too many of the communities had to raise money through an issuance of bonds or to raise their debt limit, and couldn't put up the 10 percent, but the idea of the local cash participation in public housing was always in the law, but never utilized.

Mr. FOUNTAIN. I am sorry, I didn't get in earlier. I had to leave another committee meeting to get here.

You may have already covered this, you or someone associated with you today: Have you given testimony as to the extent to which local municipalities might encourage owners of these dwellings in slum areas to bring them up to standard by the enforcement of local ordinances with respect to health, sanitation, sewer and water requirements, and so forth?

Mr. WILLIAMSON. That is a major plank in our whole program. It is the object of our Build America Better Council. Unfortunately you came in after Mr. Stewart left the stand. He is secretary of our Build America Better program, and he spends considerable time visiting various city councils, We have members of our councils in every large city, and we have a State organization to try to bring about a greater realization on the part of local governments, that they must accept responsibility by adequate code endorsement, adequate inspections, to prevent the spread of blight and to bring about the rehabilitation of existing properties.

Mr. FOUNTAIN. Do you have any figures indicating the effect enforcement of the various codes now in existence throughout the country might have in increasing the number of dwellings suitable for occupancy?

Mr. WILLIAMSON. I am sure Mr. Stewart has the answer on the

tip of his tongue.

Mr. STEWART. As to the number of enforcement actions that are taking place, and the number that can take place?

Mr. FOUNTAIN. No, if the codes now in existence were enforced, how many dwellings throughout the country now considered below standard would be brought up to standard?

Mr. STEWART. Well, we think that within 5 years all of them could be made to comply with the city ordinances. That would not be an unreasonable demand to make of any city based on what some cities have done. Not all of them could be made to comply except by being demolished. It is impossible to given you a nationwide average on what percentage of all dwelling are beyond salvage, but one figure does pop up in a number of cities, and it is 10 percent.

The city that has done the most proportionwise in its city with code enforcement I think is Charlotte, N. C., and they find that for every 10 that they can bring up to standard they find 1 that they cannot bring up to standard, and their yardstick, as written in their ordinance, is simply this: That if the inspector finds that it would cost more than half the value of the dwelling to make it comply with the law, he must order it demolished. If he finds it would cost less than half, he must order it to conform.

On that basis it is 10 percent. In Los Angeles, an entirely different kind of city, Mr. G. E. Morris, who administers the program for the city, has found the same ratio to exist. He say that 90 percent of the dwellings in that city that now violate the code can be made to comply with the code.

Mr. FOUNTAIN. Mr. Williamson, I noticed on page 22 of your prepared statement here today you also suggested the advisability of a thorough investigation of the 811 housing authorities, are now receiving what you describe as "new subsidies," demanding an accounting of its stewardship, and so forth, and to examine into the special privileged class which is being subsidized.

Do you know whether or not any such investigation has ever been made?

Mr. WILLIAMSON. No, sir. It has not been made. The only way we can get evidence as to what the housing authorities are doing is by studying the annual reports, and we tried to obtain 400 copies of reports. We selected about half of the 811, and through our local real estate boards we were able to obtain only 40, but we feel that there is ample justification to find out from the list of the projects where they are not using the contract subsidy, whether they are actually saving that subsidy at the expense of not housing those in the greatest need.

We have always contended, and the proponents of public housing on the floor of the Congress have admitted, that public housing was not intended to go down into the lowest income groups or the people with no income, but that the project had to be financially feasible. We have contended this: That in order to make it financially feasible it may be necessary to be sure that you have some people who are in public housing, who can pay enough rent in order so that the subsidy would be sufficient. But we also contend that it is a rather strange phenomenon that many public housing projects don't use the subsidy,

but yet the rent ranges don't go down. Instead of going down to the neediest people they go up into higher income groups.

We think the Asheville case is just an example of a technique which is set forth in the Public Housing Administration manual.

In Corpus Christi we tried to find out how many people receiving welfare assistance in Corpus Christi, Tex., are in public housing. We have been unable to obtain the facts from the welfare agency. We do know this: That the Corpus Christi public housing not only uses no subsidy, but returns a profit, and we contend that that is the best example that we have of this drive toward the socialization of family shelter, because when you end up with the Government owning-the Government as the landlord, and owning the shelter, and you don't need the subsidy, then it has no characteristic of welfare, and you have pure socialism.

Mr. FOUNTAIN. No further questions, Mr. Chairman.

The CHAIRMAN. We have a large schedule here today, and we are running late. I hope we are concluded with this witness now.

If there are no further questions, will you stand aside?

Mr. MULTER. I have no further questions, but I am not going to let some of the statements this gentleman made go unchallenged on this record. I don't know who he meant by one of the proponents of the public housing on the floor admitted that public housing was not intended to reach the lower classes.

Mr. WILLIAMSON. That is Senator Sparkman and Senator Taft. footnoted in the statement.

Mr. MULTER. I don't want to engage in argument on the subject, sir. I want the record to indicate that in appendix K of your own typical example of a public housing project, you show 91 unemployed out of 395 persons occupying that housing, and one other thing I would like to have the record show: That the move-out rate in the nationwide public housing for fiscal year 1954 was 27.6 percent, indicating the people that move into public housing do not stay there, but as soon as they can afford better housing they do get out.

That is the history of public housing throughout the country, where it is properly administered by the local public authorities.

The CHAIRMAN. You may stand aside.

Will you call the next witness?

Mr. FINK. Mr. James Rouse, Mortgage Bankers Association, accompanied by Mr. Sam Neal.

The CHAIRMAN. Identify yourself.

STATEMENT OF JAMES W. ROUSE, PRESIDENT, JAMES W. ROUSE & CO., BALTIMORE, MD., ACCOMPANIED BY SAMUEL NEAL, GENERAL COUNSEL

Mr. ROUSE. My name is James W. Rouse. I am president of James W. Rouse & Co., of Baltimore. We are mortgage bankers, representing life insurance companies and savings banks in the investment of their money in mortgages on real estate.

I do not have a prepared statement. I am talking from brief notes. I am on the board of governors of the Mortgage Bankers Association, which is a trade association of mortgage bankers such as myself and the life insurance companies and savings banks which we represent.

With me is our general counsel, Mr. Samuel Neal.

We support most of the provisions in the House bill. Briefly running down them, we support the extension of title I, the increase in the insurance authorization to the Federal Housing Administration, with some minor proposals on the settlement-change in method of settlement of claims, in the event of losses or foreclosures in FHA mortgages. That is an improvement in the procedure, merely a mechanical device; the increase in section 207 from $5 million to $1212 million and limiting that to a single sponsor in a given market area, the increase in section 220 to $50 million seems to us appropriate for the kind of projects that are contemplated, and we strongly support the increase in grants under urban renewal to $500 million.

The phase of the bill to which I would like to direct most of my remarks is the provision which would tend to relax two tests which have been set up for Federal assistance in slum elimination.

I think that they would be important weakenings of a program which has in it great potential. I think it would mean a retreat from a very strong and hopeful concept of slum elimination in the country.

I would like to take just a minute to review with you the origin of the workable program idea which was in the Housing Act of 1954. It stemmed from the President's Advisory Committee. A subcommittee of that committee probably made as thoroughgoing and I believe objective a study of the housing program in the country as has been made. It was over a period of several months.

The membership of that committee was quite diverse. It included representatives of labor and architecture and builders and bankers, real estate men and bankers, and it called before it the best informed people it could find in the country, and simply to address the problem to them of: How can we develop the program that will be the most. effective in eliminating slums? Letters were addressed to directors of planning commissions, the administrators of redevelopment agencies and housing authorities, builders, real estate men, bankers, asking them to shed light on this same idea, of: How can we put together a program that really will be of maximum effectiveness in eliminating slums?

That committee, which consisted of personalities that were very much disagreed on some of the more controversial aspects of housing came together and recommended to the whole Committee and the whole Committee recommended to the President a test to which all Federal assistance programs should be put, and that was that a committee, a city, before being eligible for Federal assistance of any kind-section 220 of the FHA, urban-renewal grants, public housing grants— should have faced up to its slum problem and have presented to the Federal Government a workable program for slum elimination.

That idea was so unanimously held by the people to whom the Committee talked, that the strongest advocates of public housing, who appeared before the Committee, including Phil M. Klutznick, the former Administrator of the Public Housing Administration, agreed that it was reasonable to require a city to face up to its problem before being eligible for Federal aid.

The thinking was this: That we have been developing in the past 10 or 15 years a number of tools with which to attack slums.

We have learned a great deal in the last 10 or 15 years about what it takes to go in, eliminate slums, demolish them and turn the land to

new use. We have learned what can be accomplished through the program in the housing authorities. We have learned what can be accomplished through code enforcement. It has come on us as separated programs, and individually, operating alone in many cities, there is a failure of a city to take advantage of the full potential that it has.

If a city is simply taking Federal aid for the purpose of slum clearance or for the purpose of Federal housing and is going in and clearing this slum area, but is not at the same time-if it does not at the same time have a program for enforcing occupancy controls, in the area out beyond that, for rigid code enforcement, in housing areas that can be saved, for zoning controls, to prevent neighborhoods from deteriorating, for decent planning, to see that new communities are developed with some protection-if the city hasn't been willing to do those things, then in many instances the Federal public assistance program is simply transferring slums from one area to another.

It is clearing slums here and driving that congestion and that fire on into the woods. Therefore, it seems to be fundamental to a Federal program that it should be the kind of effort, in whatever form it was going to be accepted by the city, that it would lift the city's total program to a total attack on slums, which could constitute the elimination of slums over a period of years.

It was recognized that the needs of various cities would vary widely. Some cities would want a public-housing program. Some would need extensive elimination of slums through urban renewal grants and others would be able to solve their problem extensively through rehabilitation of existing structures, but the workable program concept said: Whatever you do, as a city, before you qualify for Federal aid, you must come in and show us that you have faced up to your total slum problem and have taken steps all along the line-occupancy controls, code enforcement, planning, zoning, as well as the direct slum elimination through demolition.

It was contemplated at the time that there would be strong resistance to this. There would be some cities that were anxious to get some particular phase of the program and would say: "Well, we want it." And when they found they were frustrated in that effort they would protest. We knew that some agencies of the Federal Government would find themselves frustrated because the FHA, for example, might want to go in with a section 220 program, rehabilitate a given area, but if they can't really eliminate all of it. if there are some buildings that are so bad they must be demolished, and there is no process for demolishing it, the FHA should not go in with a long-term mortgage insurance program where there isn't the opportunity for long-term neighborhood survival.

We said to these people, as they came before that Subcommittee of the President's Advisory Committee: "There will be protests about this. Do you think the line should be held? Do you think it is a reasonable qualification to demand of a city?"

And it was well recognized that there would be these difficulties, because they are the difficulties of cities doing their own job-difficulties in some instances of the Federal agencies doing their own jobs. Some of the problems that are developing with respect to the administration of the workable program concept, I think that if we maintain the concept, and let the pressures accumulate, we will find there is bad