Mr. MULTER. I refuse to believe you can't get Government officials on the local level, whether municipal or State, or on the Federal level, who will do their job. I don't believe all Government officials are bureaucrats who don't give a darn for the public or their obligation.

Mr. SCOTT. I am sorry. I did not mean to give that impression. I simply say that it is one of the characteristics. This property is not owned and operated privately. It is owned and operated by the Government, and in New Jersey our experience has been that rather than evicting those who were discovered to be over income they simply raised the rent. In Jersey City they raised it to as much as $150 a month and many tenants are still there paying $150 a month. This is no longer low-rent housing.

Mr. MULTER. Won't those tenants prefer to buy your house?
Mr. SCOTT. They should.

Mr. MULTER. Any other questions?
Thank you very much, Mr. Scott.

Mr. Scort. Thank you, sir.

Mr. MCDONOUGH. Mr. Scott, before you leave, I think the question of the inability or the inactivity on the part of the housing authority is something that we ought to look at, because we have set up the authority of a public housing authority and the States have likewise set them up. I think it is true in all of the States-it is in Californiathat when it becomes a public housing authority, under the Federal law, and in cooperation with the State, that it becomes an independent agency. It has the right to issue bonds; it has the right to acquire property; it has the right to proceed within the purview of the Federal law, and insofar as the enforcement of removing people who have exceeded the income limit, that the Federal Government ought to step into the picture and not say, as Mr. Multer has said, that it is strictly up to the local authority to enforce the thing because if the local authorities have to attempt to enforce what the Federal Government is attemping, or should be enforcing, you get a clash of authority and jurisdiction where nobody gets the responsibility.

You have got an unusual enigma here, with the public housing authority set up by Federal law, and in cooperation with the State, and becoming an independent agency, having responsibility to nobody but themselves.

How are you going to enforce the law under those circumstances? Mr. MULTER. Very simple.

Mr. MCDONOUGH. What would do, deny any further public housing authority to that agency?

Mr. MULTER. You could do that, too.

Mr. MCDONOUGH. That is just what you don't do. The housing authority is set up, and if you extend the number of units in any subsequent legislation

Mr. MULTER. There is one sphere of activity where I thought this Republican administration was doing a good job, right there in the Federal housing agency, which includes the Public Housing Administration. I think Mr. Slusser, in charge of that administration, is doing a good job.

Mr. MCDONOUGH. I think he is doing as good a job as he can under the kind of legislation the Democratic administration gave him.

Mr. MULTER. I get a little heated when people tell me this program isn't well conceived and well administered.

Mr. MCDONOUGH. You find violations of it.

Mr. MULTER. You find violations of laws of every kind everywhere in the United States.

Where was that family living that is earning $23,000 a year?

Mr. Scorт. There was a family living in the Miravlac Manor project in Elizabeth, N. J. The husband was a truck owner, an operator of a fleet of trucks. The fleet was, I believe, three trucks. His reported income was $23,000 a year. He was not evicted. He moved voluntarily, and he bought a property in Clark Township, N. J., for more than $20,000, and he paid all cash.

Mr. MULTER. Did he move voluntarily after getting a notice to get out?

Mr. SCOTT. He got a notice.

Mr. MULTER. Then it wasn't voluntary. He was told to get out or be put out so he moved out voluntarily?

Mr. Scort. No. I wish that was so. They serve all of the overincome tenants with a notice automatically. We had a situation develop in Elizabeth where we found there were 340 overincome tenants. We wanted to know why those tenants were not being put out to make room for the eligibles, and also how many eligibles did they have. We discovered they had exactly 38 eligible families in their tenant selection pool, so it became obvious the reason they weren't evicting the overincome tenants was because they had nobody to fill the vacancy and it would be very embarrassing since at that very moment they were pressuring for 500 additional public-housing units.

Now, they blamed it on the district court judges, and we asked for an appointment with the district court judges, and we met with them, and after outlining the situation the judges said that it was not their fault that these evictions were taking 3 and 4 years, and these are families that had been overincome for that period of time. It was the fault of the counsel for the housing authority who had requested them not to evict the tenants. That was the situation.

Mr. MULTER. Of course, there were some cheats among the builders, were there not, in the FHA program?

Mr. SCOTT. I don't know, sir. I think that there was an investigation, and

Mr. MCDONOUGH. That is another subject.

Mr. MULTER. Of course it is. Because of a few frauds and cheats who were doing some building we are not going to stop the entire FHA program, and just because there are a few cheats who are getting into public housing projects, or staying there when they shouldn't stay there, I don't think we should stop the public housing program. I thing the analogy is perfect. I am sure you would be the first one to say don't stop the FHA program because you happened to convict 1 fellow or you caught 1 fellow cheating who was doing the building or borrowing.

Mr. SCOTT. Mr. Congressman, I don't think you can draw an analogy betwen public housing and the FHA. The FHA does not build and own and operate any housing of any kind.

Mr. MULTER. The builders do. The builders borrow the money on the insured mortgages.

Mr. SCOTT. But there has been no loss to the taxpayers.

Mr. MULTER. There hasn't been any loss?

Mr. SCOTT. No, sir.

Mr. MULTER. You mean on the overall program the Government didn't take a loss?

Mr. SCOTT. That is right.

Mr. MULTER. More than one project went into default and the Government took a loss on that project due to the cheat and fraud.

Mr. Scort. That is right, but they are charging an underwriting premium for that purpose.

Mr. MULTER. The point is you don't want the whole program stopped because we catch one thief in that program, do you?

sir.

Mr. SCOTT. I wouldn't want to see the FHA program stopped; no,

Mr. MULTER. And even if you should happen to convict somebody who had been connected with the FHA program as a Government official you wouldn't stop the whole FHA program, would you?

Mr. SCOTT. No, I would not.

Mr. MULTER. Why should you say we should stop the public housing program because one man in some organization or some local administration isn't doing his job?

Mr. SCOTT. This is not an isolated case. This is the rule rather than the exception.

Mr. MULTER. I don't agree with you, sir. I don't think you can substantiate it with the facts.

Mr. SCOTT. I have many facts to substantiate that. We have editorials in New Jersey constantly deploring the fact that these overincome tenants are not being put out to make way for the eligible tenants who should be able to gain occupancy.

Mr. MULTER. Most respectfully, sir, editorials are not evidence in any court and they should not be taken as evidence by any committee.

Mrs. GRIFFITHS. I want to reiterate I don't want Michigan included in this group of people who are defrauding the situation because we aren't. The administration of the city of Detroit is doing a very good job, and I don't like your making the statements that make it look as if Detroit is not doing a good job.

I would like to ask you one question, too: Has the United States Chamber of Commerce ever appeared before the Postal Committee of the House and asked that mail pay its way?

Mr. SCOTT. I would have to defer to Mr. Fitzpatrick on that. Mr. FITZPATRICK. I can't answer that.

Mrs. GRIFFITHS. Could you supply the answer?

Mr. FITZPATRICK. Yes.

(For information requested, see p. 461-462.)

Mrs. GRIFFITHS. You would be opposed to our subsidizing thirdclass mail?

Mr. FITZPATRICK. I can't answer the question.

Mr. MULTER. If there are no other questions, thank you very much, sir.

Mr. Scorr. Thank you, sir.

Mr. FINK. The next witness is Mr. Earl W. Smith, president of the National Association of Home Builders.

Mr. MULTER. Mr. Smith, will you identify yourself and your associates?

STATEMENT OF EARL W. SMITH, PRESIDENT, NATIONAL ASSOCIATION OF HOME BUILDERS, ACCOMPANIED BY GEORGE GOODYEAR, BUILDER, CHARLOTTE, N. C., CHAIRMAN, DIVISION OF GOVERNMENTAL AFFAIRS; AND HERBERT COULTON, COUNSEL, NATIONAL ASSOCIATION OF HOME BUILDERS

Mr. SMITH. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, my name is Earl W. Smith and I am an active home builder from El Cerrito, Calif. I am happy to have this opportunity as president of the National Association of Home Builders to present to you the views of our association on H. R. 5827, the housing amendment of 1955, and the related bills now before you.

I have with me Mr. George Goodyear, on my left, a home builder from Charlotte, N. C., who is chairman of our division of governmental affairs.

On my right is our esteemed counsel, Mr. Herbert Coulton, who may help me as I go along.

As you know, the National Association of Home Builders is the sole spokesman for the organized home building industry. We now have over 33,000 members in 225 affiliated State and local home builders associations in all parts of the country. We estimate that our members in these local associations together with a number of buildermembers in cities where no affiliated association has yet been formed, build by far the largest part of the housing constructed in the urban areas of the country.

I might insert a word: Mr. Congressman Patman asked the previous spokesman who represented who. I think in this particular instance I pretty well speak for the average small builder. Possibly we represent a somewhat different look to the home building industry this year. We feel our particular job is to build homes, and I should say parenthetically there are a lot of questions that I have noticed raised here today and a lot of rather expert answers.

I am a very minor expert in a very narrow field. I can show you how to build a pretty good house at low cost. Beyond that, I am not an expert.

I will continue with the prepared testimony: Much of the proposed legislation now before you consists of technical amendments and extensions or an enlargement of existing housing programs. Therefore, within the time available, I would like to confine this testimony wholly to the key proposals affecting the home building industry without discussing all of the detailed provisions in H. R. 5827 and related bills now before you.

Federal Housing Administration amendments:

1. NAHB supports increase of the FHA insurance authorization. By far the most important of these amendments is section 6 of H. R. 5827, authorizing an increase of $4 billion in FHA's general mortgage insurance limit. We strongly support this proposed increase and urge its passage. Continuation of the FHA mortgage insurance system, made possible by this amendment, is vital both for the home building industry and thousands of future home buyers and for the continued prosperity of the national economy.

It is essential, however, that this increase be in an appropriate amount. We are not sure this is the case. We appreciate that Con

gress may wish to reexamine FHA's maximum insurance limit each year, but on the basis of FHA's own figures-in the HHFA sectionby-section analysis-the amount of $4 billion seems inadequate.

FHA's prospective net use of insurance authorization during fiscal 1956 is estimated to come within $1.2 million of the proposed $4 billion increase. If the use of remaining authorization during fiscal 1955 or the anticipated use during fiscal 1956 has been underestimated by just 120 new or existing houses with insured mortgages of $10,000, FHA will not have sufficient insurance authorization to last the year out.

This is too close for operating convenience. As a practical matter, it means that FHA's operations will come to a quick halt if their insured loans during this fiscal year or next come within 200 to 500 units of their estimates. Not even 1 month's operating leeway is provided by the proposed increase. This could be a serious underestimate of need since during fiscal 1956 the impact of the Housing Act of 1954 will be reflected in an even greater volume of applications than the current rate, upon which the FHA's estimate of need is apparently based.

There is no reason why FHA should exist from crisis to crisis, or why the Congress should be required to hurry through supplemental authorization merely because of an inadequate increase at this time. This increase in authorization in no way affects either the national debt or the budget. Certainly it should be in a larger and more adequate amount.

if

I might break way from the prepared testimony for a moment, I may. Each year the Congress and this committee certainly is aware that it seems almost each year for the past several years we have run pretty well into the heavy construction period of the year to find that FHA was running out of authorization.

We have had to take up the time of Congress at that time and slow down the building operation across the country for supplemental authorization. I am going to ask Mr. Goodyear, if he will, to indicate the problems as of last year, and the current year's operation, which would seem to indicate that this $4 billion will be considerably short of covering the basis for this ensuing year.

George, would you care to comment?

Mr. GOODYEAR. In the supplemental appropriation last year, there was about $5.8 billion authorized for FHA's insurance program. With the $4 billion this year, the prospective net use of the insurance authorization during fiscal 1956 is estimated to come within $1.2 million of the proposed $4 billion increase.

If the use of remaining authorization during fiscal 1955 or the anticipated use during 1956 has been underestimated by just 120 houses, either new or existing, with insured mortgages of $10,000, FHA will not have sufficient insurance authorization to last the year out.

This is too close for operating convenience. As a practical matter, it means that FHA's operations will come to a quick halt if their insured loans during the fiscal year or next come within 200 to 500 units of their estimates.

Not even 1 month's operating leeway is provided by the proposed increase. This could be a serious underestimate of needs since during fiscal 1956 the impact of the Housing Act of 1954 will be reflected in an even greater volume of applications than the current rate, upon which the FHA's estimate of need is apparently based.