ing there, and they are going to exceed our estimates, somewhat, but not dangerously so, and some slight adjustment there may be necessary. They are in that general range, however, and our return has been entirely satisfactory, that is, we expect to get 6 percent before depreciation and amortize in a period of somewhere around 33 to 35 years, and so far, we have no reason to doubt that we shall be able to do so. We have not sought any incentive. That is the point I want to bring out. We have not sought incentives, and we do not need any incentives. And so far as we are able to learn, the other insurance companies feel quite the same way.

With respect to their own activities, I might say that the insurance companies may have been hesitant to proceed in this field, and I think quite naturally so, because ordinarily an insurance company is not organized to undertake the initiation and the planning and the construction and the operation of a large-scale housing development. They are not staffed to do so, ordinarily. Its primary experience is in the appraisal of homes.

The CHAIRMAN. On some of the cooperative housing in New Jersey, they have beat your figures. The produced those rooms for $11 a month.

Mr. Gove. When?

The CHAIRMAN. When? They are in existence today.

Mr. GovE. Oh, yes; that is true. I have just recited our experience in Queens.

3

The CHAIRMAN. They built a very large one in New Jersey about years ago.

Mr. GovE. There are limited-dividend companies in New York under the housing law in which they have a partial tax exemption, in which the rents are $11 a room. That is not only cooperatives, but those that are not. But the cooperatives have this advantage, of course, they do not pay any return on the investment, that is, they get the return ordinarily in the form of reduced rents, such as the Amalgamated Clothing Workers Development in the Bronx, and another one down on Grand Street. They operate on that basis. It is very satisfactory for them. It is not strictly comparable with the other thing.

The CHAIRMAN. I am thinking in terms of housing rather than the ownership.

Then you concur in the statements made by Mr. Bestor.

Mr. GovE. I do, entirely, and I would add this, although I think he covered it, that if incentives are ever needed, I doubt very much that the yield insurance would be the kind of incentive that would be desired by insurance companies or acceptable.

The CHAIRMAN. Thank you both, gentlemen, very much.

Mr. GovE. I have prepared a very brief summary.

The CHAIRMAN. I think it would be helpful. It will be inserted in

the record.

(The summary referred to is as follows:)

THE HOUSING DEVELOPMENTS OF THE METROPOLITAN LIFE INSURANCE CO.

The Metropolitan Life Insurance Co. has built housing in four cities (New York, Los Angeles, San Francisco, and Alexandria, Va.) for 19,084 families. The company is now engaged in building three more communities (in New York) for 12,482 families.

When the work now under way is completed in 1947-48 the company will have built apartment homes for 31,566 families or approximately 100,000 persons and will have invested upward of $200,000,000. The housing is distributed as follows:

In each instance decision to build was based upon desire for permanent investment that would possess public value. Construction furnished many jobs for men in the building trades and manufacturing. It gave to thousands of average American families the opportunity of living in virtually suburban environment close to city business centers. It functioned effectively during the war providing homes for defense workers as well as for members of the armed forces.

The communities now being built in Manhattan has obliterated outmoded districts by the demolition of hundreds of tenements and other outmoded structures. They will revive residential values which lie in the land and help to check movement of families to outer districts. They will provide modern homes for thousands of war veterans who need them.

When housing shortage developed after World War I, the New York State Legislature authorized life-insurance companies to invest in housing to rent for an average of $9 a room monthly. Thereupon, the Metropolitan Life built 5-story, walk-up buildings, containing 2,125 apartments in Queens County, New York City, and quickly rented them. The low rental was made possible by exemption of buildings (not land) from taxation for 10 years. Exemption has long since expired but rentals today are less than the $9 a room originally authorized and the buildings have a long waiting list.

In 1938, the legislature again amended the insurance law. Life companies were authorized to invest up to 10 percent of their assets in needed housing. The plan of the Metropolitan Life to build Parkchester on 130 acres in the Borough of the Bronx, N. Y., helped to dispel the lethargy which lay upon the building field. Construction of this community containing 51 apartment buildings 7 to 13 stories high, 5-ramp garages, central heating plant, motion-picture theater, public library, post office, and shopping area furnished jobs for thousands of workers and 12,272 apartments surrounded by lawns and trees for families of moderate income. It was completed before the United States entered the war in 1941 and is fully occupied by a population of about 35,000 persons. Parkchester pays full taxes.

The plan to build Parkfairfax in Alexandria, Va., was inspired by the almost desperate need for housing accommodations in the Washington area during the war and was encouraged by the Government. The community occupies 200 acres and has an occupancy ratio of less than 10 families to the acre. It has been completely occupied since it was opened in 1943 and like Parkchester is a complete expression of private enterprise.

Parklabrea was designed to provide 2,620 badly needed apartments in Los Angeles, and Parkmerced to provide 2,531 in San Francisco. But war needs curtailed construction. With WPB authorization Parklabrea was completed to the extent of one-half (1,316 apartments) and Parkmerced to the extent of twothirds (1,687 apartments). All suites have been occupied since 1944 and hundreds of families await opportunity to move in. Both developments pay all taxes and will be fully completed when conditions are favorable.

All these communities were developed upon vacant land. Stuyvesant Town, Peter Cooper Village and Riverton were conceived upon a totally different basis, the reconstruction of city neighborhoods which had become obsolete to the detriment of the municipality.

Stuyvesant Town and Riverton were built under the provisions of the amended redevelopment companies law of 1943 which the legislature passed in an effort to stimulate the rebuilding of outmoded urban areas by private capital. Steps taken to this end represent the joint cooperation of the State, the city of New York, and the Metropolitan Life Insurance Co.

The Stuyvesant Town plan will cover 18 city locks, within walking distance of Fifth Avenue. Twelve- and thirteen-story apartment buildings surrounded by lawns, trees and recreational sections will give 8,755 families (about 24,000 persons) an environment of sunlight and openness which will be suggestive of outlying neighborhoods. There will be stores and garages. The area is bounded by Fourteenth and Twentieth Streets, First Avenue, and Avenue C (East River). More than 3,000 families were evacuated from the area, without a single eviction, so that the work could proceed. Over 500 old buildings were demolished on this site alone.

Riverton is being built in Harlem, long in need of housing. The area consists of six blocks bounded by One-hundred-thirty-fifth Street and One-hundred-thirtyeighth Streets, Fifth Avenue and the Harlem River. Most of the old buildings demolished were of the shabby industrial type. Now under construction are 13-story structures which will house 1,232 families (about 3,500 persons). Riverton's buildings, lawns, trees, and paths will wipe out an ugly spot and give Harlem one of the distinctive apartment sections in Manhattan at moderate rents.

Peter Cooper Village, like Parkchester, is being built under the provisions of the insurance law of the State. It abuts Stuyvesant Town on the north and will occupy seven blocks bounded by Twentieth and Twenty-third Streets, First Avenue and Franklin D. Roosevelt Drive. Its 15-story buildings will accommodate 2,495 families (about 7,000 persons) in a virtually suburban setting overlooking the East River. Six hundred of its apartments are to be reserved for United Nations' personnel.

A substantial number of Stuyvesant Town and Peter Cooper Village buildings will be ready this year. In all probability, all of Riverton will be completed this year. For Stuyvesant Town apartments alone, 160,000 letters have been received and over 100,000 of these writers are now being interviewed. All three communities will be rented on the basis of veterans' preference.

The CHAIRMAN. We will next hear Mr. Herbert Nelson.

STATEMENT OF HERBERT U. NELSON, EXECUTIVE VICE PRESIDENT, NATIONAL ASSOCIATION OF REAL ESTATE BOARDS, CHICAGO, ILL.

Mr. NELSON. Mr. Chairman and gentlemen of the committee, I am appearing on behalf of the National Association of Real Estate Boards, in opposition to Senate bill 866, the Taft-Ellender-Wagner bill.

We have 900 local real-estate boards, and my task is to visit as many as I can. Our people around the country at the meetings that I have attended have asked me to say certain things to this committee on their behalf.

One thing they say, that in response to the Republican slogan of last November, they say they have had enough, and they do not want any more controls or any more legislation which will inject the Federal Government into private business and into housing.

They suggest further that a good many laws need to be repealed, and a constructive program for Congress might be the repeal of many of the laws that now exist.

The CHAIRMAN. That is a statement we have heard many times in political campaigns.

Mr. NELSON. Yes, sir. One thing is very clear to all of us, and that is that the best of building and developing housing, it needs a rest from constantly changing rules and Federal laws.

It is a long term undertaking to build houses. It takes months and sometimes 2 or 3 years to develop a project, and if we have new legislation every few months, which changes the regulations or which changes the methods of financing, it is almost impossible to go ahead, and so if we could get an opportunity to go ahead and build and tend to business, instead of worrying about what the Government is going to do to us

The CHAIRMAN. I do not want to cross swords with you at all. In a very polite way, you are making a statement which is a conservative statement, and a conservative point of view, and from you point of view it is a good statement, but we have to consider the public point of view and the fact remains that the genesis of this legislation was due to the fact that private business has not taken care of the housing situation, and very dramatically has not done so. Therefore, we look around for human means to take care of it.

You are against it, and we understand that, but that is not all there is to it, when you make a platitude like that; there is something more to it.

We have a need in this country for housing. We may not be wise in our procedure, but the point is that we have an objective here to try to give adequate housing to a host of people who do not have housing today. Many of them are veterans. It is not what the realestate owners think about this, or the associations. We are the Congress of the United States dealing with the general welfare. So we canont just dismiss it, as you say, just make a pronouncement that private business can take care of this thing. They have not taken

care of it.

Mr. NELSON. We have not been given an opportunity. That is our point.

The CHAIRMAN. Go to Chicago with me any morning. Look out the window and see the most discouraging exhibit in this country of slum situations in Chicago, unfit for cattle to live in, mile after mile, as you come in from Englewood there. That is the cause that is burning in our hearts.

I cite this because there are two points of view, and you cannot dismiss it lightly by saying "We can take care of the thing," because you have not.

Mr. NELSON. We oppose this bill because it is an omnibus bill which is difficult, I think, for Congress and for the people to understand; it includes too many subjects.

Last year, when the Senate passed substantially the same bill, I was unable to find more than one or two Senators, except those who had drawn the bill, who had ever read it. It was passed by a voice vote.

Legislation of such comprehensive character passed in that way obviously cannot be understood or digested by our people.

We believe, Mr. Chairman, that if Congress will have confidence in the industry and in business, and permit us to go ahead, we can overcome not only the housing shortage but solve most of the prob lems that you are concerned with in connection with slums.

I would like to direct a few remarks to the matter of title IX, public housing, which involves $4,753,000,000 of Federal credit in the 45 years that the commitments cover.

We feel threatened by this added huge public expenditure. We feel threatened by the combination of rent control and public housing which has been so disastrous in European countries; the technique of dispossessing the middle class, consisted of controlling the income through rent control, and when construction stopped, public housing began, and we saw that happen in Germany and in Italy and in Austria and in France and, of course, now in England, where public enterprise is building four out of every five houses.

The way this technique functions is well illustrated in a story that I have here from the Herald Tribune on Sunday. The Government that we assisted in setting up in Italy, which has its headquarters in Rome, has now decreed that shelter rents or rents shall be 212 percent of the family income. That now applies to Rome, and will soon apply to all of the cities.

This information comes from Mr. Dickens, who is an officer of the Surplus Property Administration there. It is published in last Sunday's Herald Tribune. I assume that it is correct. It is very specific, and it points out that if you have an income of $100 a month, your rent is $2.50 a month, and that apartments now are renting under this new law as low as 53 cents in Rome.

You may say these European precedents should not bother us, but we notice how these things come into our own country and are advocated by very powerful groups here.

We have in Mr. Nathan Strauss, who as the Administrator of Public Housing here for 3 years, on the radio now advocating that the Federal Government build two houses out of every three for the next few years.

And we have Mr. Charles Abrams, who has written this book on The Future of Housing, a wealthy lawyer, who is a philosopher and deep thinker of public housing, advocating that the cities build half of all the housing in the future with funds derived from the Federal Government, and that the cities can do it so much cheaper and save everybody 30 percent because cities can function more efficiently than private enterprise, according to him.

We do not brush that off, Mr. Senator, because these things have a way of coming true, and this group is backed by powerful labor groups, powerful social groups of all kinds, and it is entirely possible that the entire private housing industry of this country can be destroyed by programs of this kind.

And another $4,752,000,000 of Federal credit is a long step toward just this kind of a program of socializing all of our housing and destroying the home-building industry as it now exists.

So we have been very much concerned with this problem.

At the Public Housing Conference in Chicago, which I attended recently, I heard nothing else but the needs of expanding this program and getting more and more local housing authorities, trying to get one over here in Alexandria and to take care of 132 houses. They want all of this machinery to take care of those houses which ought to be sold anyway.

So we are concerned about this whole matter, and we pray the committee not to extend this program now, and many of us feel that the whole present public housing should be liquidated, and this public housing should be sold, because it has not served its purpose. It has