which private enterprise has its greatest hope of accomplishing its ter of this housing program, which we think is the major part, that the are conflicting philosophies at large as to how this problem short a solved, and it is almost inevitable that in the office of the A trator there will be a man with a philosophy to either the proble housing viewpoint or the private-enterprise viewpoint.

In the past it has been the experience of business that that tõe has been most often filled by a man whose staff was fundamental I of public-housing sympathy. We have seen the Federal Hos Administration and the Home Loan Bank Board limited in the functions in indirect ways rather than direct ways, and we consi that it is a dangerous and unnecessary limitation on these agents

At the same time we also feel that there should be a coordination I the various agencies dealing with housing, and we think that a) ordinating board or council should be established consisting of the agencies that are primarily involved in housing; that the varies independent agencies, Federal Public Housing Authority, Home Log Bank Board, Federal Housing Administration, should be responsitie to that board as to matters of policy.

We would consider it appropriate for that board, if Congress decided that it should, to have its own subordinate staff to conduct matter of research and that type of thing.

But in the present bill the Administrator or his staff are set up independently of, responsible only for advising and consulting with this so-called Coordinating Council, and fundamentally the over-all housing programing is to be done by that office.

Our other approach, another part of the bill with which we have serious concern, is the public-housing aspect.

We consider that the problem of housing the lower-income groups has not been overstated at any point, either in the legislation or by the proponents of the public-housing legislation.

We agree that a substantial percentage of the population of our country is housed in inadequate housing conditions. According to the Bureau of the Census there are 32 million nonfarm living units in the United States; 8 million, or 25 percent, of these it is said are in need of major repairs, lack running water, inside toilet, or inside bath. That is approximately 25 percent of the total.

The Bureau of Census also reports that about 19%1⁄2 million of our 32 million units rent for under $30 a month. If you deduct the 8 million units which you would call substandard, that leaves 11% million units which have inside baths and inside toilets, running water, and are not in need of major repairs, renting under $30 a month.

It seems to us that this is evidence of the manner in which private enterprise can and ultimately will solve the problem of housing the low-income groups.

Our approach to public housing is one of being opposed to it because we consider that it is unnecessary, and that it is undesirable and that it is tremendously expensive.

This program that is outlined for 500,000 units would amount to approximately 6 percent of the Bureau of Census estimates of the substandard housing units. It would cost some $6,000,000,000. We do not think, therefore, that it makes a major contribution to the solution of the problem, but we do think that it commits the country to solving that problem almost entirely through Federal action, be

cause if the free enterprise cannot reach that low-income level, if it is necessary to do 500,000 units, then that argument has even greater validity with the extent to the other 72 or 10 million, or whatever it may be, and we are actually talking, when we are talking about this public housing program, of 1 to 50 to 60 billion dollars in potential and not 6 billion dollars.

We think two things can and should solve the housing problem. First, we consider that it is most important, the initial step is to add to the total supply of housing to increase that supply through the construction of new housing for rent or for sale, to add to the total supply.

Secondly, we consider that the substandard housing which now exists should not be allowed to exist. Most of it does exist in violation of existing health, safety and sanitation laws of the various communities in which it is allowed to exist. It operates in fact as a virtual subsidy on the part of landlords who are permitted to operate those properties in violation of the law.

We consider that if this program is approached vigorously from two ends, enforcing the local law to not allow stubstandard housing to exist, either requiring it to be vacated or put in condition

Senator BUCK. That suggestion was made earlier this morning, as you will recall, I think by the first witness. He felt that a lot could be done in that direction if the municipalities had laws which would require these substandard dwellings to be brought up or else torn down.

Mr. ROUSE. I think it might be possible for Congress to facilitate that program. I think, for example, in the Taft bill there is a provision which our association has not taken a position on, which I personally will not be opposed to, and that is the provision for Federal grants-inaid to cities with respect to urban redevelopment.

If it were made a condition of any such aid that a municipality had an organized and operating law-enforcement program, it would be a strong inducement to the cities to do what some have done. Chicago has taken steps. Baltimore has taken considerable steps in that respect.

But that this thing can be solved, it can be solved and should be solved on a local basis.

Mr. LaGuardia made the statement in the House committee this morning that, quoting Senator Taft, 30 percent of our population needed to be housed in subsidized-housing units. That is rather an appalling future, if we are looking forward to 30 percent of our population living in Government-subsidized units, and I think it is a truthful figure. I think we are, if we are going to solve this problem through Government on housing, I think step by step we will reach 30 percent, and I think that each step we take makes it increasingly necessary to take the additional step, because you move private enterprise further and further away from the problem, and you also take away from the local communities any feeling of responsibility for handling the problem themselves. It becomes a problem which is recognized as being one of Government solution.

Senator BUCK. That is one of the worst evils.

Mr. ROUSE. We think so. We think that it is a dangerous thing in several respects.

First of all, it means if 30 percent of our population, that is about 40,000,000 people, that means 40,000,000 voters or whatever number of voters there are in 40,000,000 of our population, who are dependent for their housing on the local administration in that community. and it is certainly susceptible of political maneuvering.

Secondly, it is all of these low-cost rental-housing projects are dependent upon a person not earning more than a certain amount of money to live there. We think it becomes a damper on initiative to provide that kind of housing, and make one of the qualifications, and it should be if there was going to be such housing, that he maintain a low income.

We think also that there is something fundamentally unsound about segregating people by income group in the large housing projects.

I would like to just make one further comment, sir, and that is with respect to the often made statement that private enterprise cannot solve this problem because it cannot build for the low income groups.

There is no question that that is true. They cannot build for the $30 a month and probably not for the $40-a-month occupant, but we do not see the virtue, per se, in a new house for every tenant or every occupant of a living unit.

In a public-housing project it is only the first group of tenants who have new houses. Thereafter it becomes second-hand housing. The present public housing is not new housing to those tenants now moving in. We consider generally that the standard of housing provided by private enterprise when it becomes second-hand is infinitely better and at lower cost.

It is interesting to note that the limit in the Taft bill on the cost per room of public housing projects is $1,750. Theoretically they are constructed with a great deal of sacrifice to appointment, lot coverage, and amenities. Yet that happens to be the same for private enterprise. The Colonial Garden types, such as you see around Washingington, which is entirely a different type of housing, but the two limits in the two bills are the same, and the quality of housing provided within that same limit by private enterprise cannot be compared with the quality of housing provided by public housing projects. Senator BUCK. Thank you, Mr. Rouse.

Mr. ROUSE. Thank you, sir.

(The prepared statement of Mr. Rouse is as follows:)

STATEMENT ON BEHALF OF MORTGAGE BANKERS ASSOCIATION OF AMERICA, BEFORE SENATE BANKING AND CURRENCY COMMITTEE BY JAMES W. ROUSE, CHAIRMAN, FEDERAL LEGISLATIVE COMMITTEE OF THE MORTGAGE BANKERS ASSOCIATION OF AMERICA ON S. 866

On behalf of the Mortgage Bankers Association of America I appear before this committee to render such assistance as we may be able to give with respect to the consideration of pending legislation. It is our understanding that your attention at this time is particularly directed to S. 866.

By way of identification, the Mortgage Bankers Association is an organization of approximately 1,200 mortgage lenders, including all of the leading life insurance companies, their principal mortgage loan correspondents and many banks and building and loan associations.

I appear as the representative of the Mortgage Bankers Association as I happen to be chairman of its Federal legislative committee. When I am tending my own business I am a partner in the Moss-Rouse Co., a mortgage company in Baltimore, Md.

We have reviewed the bill under consideration and compared it with the general housing bill of 1945. It is our belief that the changes in the proposed legislation do not materially affect the fundamental characteristics of the earlier bill.

The Mortgage Bankers Association is sincerely and deeply concerned with the housing problem of the Nation-with the severe shortage of housing for veterans and with the deplorable conditions in the slums and blighted areas of our cities. This is not overstated in title I of the bill. It is one of our most impelling domestic problems. *

When we fail to concur in the legislation offered it is not because we disagree I with the necessity for solution but because we consider the method of solution tinadvisable or ineffective.

Such is our position with respect to title II of the bill which would establish a National Housing Commission, a National Housing Administrator, and a Coordinating Council. We share with the authors of the bill the belief that coordination of our national housing policy is essential. We differ only as to how it should be accomplished.

There is a basic conflict of philosophy among people dealing with the problems of housing as to the extent to which housing problems can and should be solved by direct Government action-public housing-and the extent to which they can and will be solved by private venture and community action.

There are Government agencies established to implement programs representing each of these philosophies.

We believe that it is not good administration to establish a supervisory or coordinating echelon, in the form of a single office, over these various agencies. We believe that the agencies should be independent in the pursuit of their assigned missions; that they should not be influenced as to their freedom or effectiveness by the philosophy of an administrator and his staff and that their activities should be coordinated and the over-all housing policies molded by a coordinating council alone. We sincerely urge the revision of title II of the bill along such lines.

There is one further aspect of the proposed bill on which we solicit the committee's attention. It is title IX which would authorize a program of 500,000 public housing units.

We do not minimize the problem of adequately housing the lower-income groups. We consider it a matter of national disgrace that a large percentage of our population lives in the filth and wretchedness of our urban slums. It has been estimated that over 8,000,000 families are housed in living units needing major repair or lacking in minimum facilities for health and sanitation. It is the immensity and the urgency of this problem that we call particularly to the attention of the committee in considering the program proposed.

If the problem is of the size and scope represented, and we believe with the proponents of the measure that it is, then consider carefully the size of the program which this bill would launch. It would account, over a 4-year period, for a solution of less than 6 percent of our national housing problem. Does this constitute a realistic or effective program?

It is contended that public housing for the lower-income groups is required because private enterprise cannot reach this level of our population. If this be so then the solution of our national problem will involve not 500,000 units and $6,000,000,000 but millions and millions of units and tends of billions of dollars. The program proposed commits the country to a policy of governmental solution of this basic housing problem, yet it fails utterly to offer a solution. It attacks an elephant with a pea shooter. It would spend $6,000,000,000 for a 6-percent solution. We see no validity in the arguments in its behalf.

We have admitted the problem yet we oppose the solution suggested by the bill. Is there another solution? We think there is. We think there is a less expensive, more effective, and economically sounder solution.

According to the Bureau of the Census as reported by the Director of the Office of Economic Research, Federal Works Agency, there are approximately 32,000,000 nonfarm living units in the United States-8,000,000 (25 percent) of these are in need of major repairs, lacks running water, inside toilets or inside bath, but 191⁄2 million rented for less than $30 per month in 1940. In other words 111⁄2 million units or more than one-third of our total nonfarm housing units did not need major repairs, had running water and inside baths and rented for less than $30 per month. Therein lies the solution to our housing problem. There is the contribution now being made, without Government subsidy, to housing the lower-income groups.

Most of the substandard units in the country continue to exist as substandard units in violation of the health and building laws of our cities. They operate in

effect under a continuing subsidy by being permitted to violate the law and Congress is asked to appropriate billions of dollars to solve the problem thus created, with this bit of background.

We submit most earnestly the proposition that:

1. We must add to the total supply of housing as rapidly as possible. This is being done now to the limit of the materials and labor available.

2. We, the country, through our local communities, and supported if necessary by Government inducements to do so, must enforce adequate health and building laws to force substandard housing to meet minimum standards of health and safety or be vacated,

By this means augmenting the supply and enforcing the law-the total housing supply can be increased to meet the national demand and substandard housing will be denied its current subsidy of operating in violation of the law. If we increase the supply of housing to meet the demand and at the same time eliminate the substandard housing from our urban slums we will come much closer, much sooner, to the objectives of this bill than by the apparently ambitious elaborately expensive but largely ineffective program proposed in title IX.

Can this be done immediately? No, But it can begin as the present critical shortage of shelter is relieved and it can continue day by day until we have made substantial progress in the solution of our basis national housing problem. Surely

it offers a better and earlier hope than the 6-percent, 4-year, $6,000,000,000 solution now under consideration.

To sum up, we urge your rejection of title IX of the bill, not because we disagree with the existence or the size of the problem involved, but because we consider that the solution proposed is unrealistic; that it will make no substantial dent in our national problem; that to solve our problem by subsidized housing must mean the ultimate expenditure of tens of billions of dollars; that such a program is unnecessary, and that the problem can and should be solved by business and community action.

Senator BUCK. The Chair wishes to announce that the committee will recess at this time, to meet tomorrow morning at 9:30 o'clock, when Mr. Herbert Nelson, of the National Real Estate Boards, will be heard, as well as other witnesses.

(Thereupon, at 3:35 p. m., the committee recessed, to reconvene Thursday, March 27, 1947, at 9:30 a. m.)