off, if you want to put it that way. My objection is not to the figures, but to the accumulating, claiming that you add them together. Senator FULBRIGHT. Add them both.

Senator TAFT. You cannot do that.

Mr. DECKMAN. Just to defend myself on that, we in bookkeeping set up the assets and the liabilities, and you set them up to balance out. That is the form I have used here. If you wish to eliminate, I will check this subsidy as the cost of $2,100,000, and that is 200-percent cost on a million-dollar project.

Senator TAFT. On the same basis we might say our obligations to the veterans today amount to $300,000,000,000, because it is going to cost at least $5,000,000,000 a year for the next 60 years. It is costing $7,000,000,000 now.

On the same basis of cost we are paying the veterans who are a limited group also $300,000,000,000, if you will add up every annual thing. That is not the way you figure your Government expense.

Mr. VINTON. On the $5,000 bought under ordinary financing, the man will pay out $9,500 in the interest and amortization by the time he is through.

Mr. DECKMAN. He will own the house and they will not be playing political football with tenants and one thing and another, as you get up to one-third of the population living in Government-owned and operated houses. We have instances called to my attention where mayors of cities are living in public housing, and all of the other people in it. It is subject to a great deal of danger from the political philosophy of this country.

Senator MCCARTHY. Mr. Chairman, this is getting slightly off the subject, but I think it is tremendously important on the over-all question of housing.

I would like to get Senator Taft's and Mr. Deckman's idea on this. I have had the impression-and Mayor LaGuardia and Franklin Roosevelt both conceded this is true when they appeared on the stand— I have had the impression that one of the reasons why we have been so short of housing is because of the restrictive practices indulged in by your building trade-unions and your conventional-type builders, in other words, that in this particular type of industry there seems to be no conflict between labor and management, if you can call it that. It seems to be to the interest of both of them to indulge and cooperate in this restrictive practice. I just wonder what you think about that.

Mr. DECKMAN, I would say that the home builders who build the great bulk of the homes in this country went on record in Chicago here about a month ago, in which they condemned the very practice on the part of labor.

Here in Washington about 85 percent of our housing is built with what we call class B labor, which is not the restricted class A union labor, and they work open shop.

I am not familiar with the rest of the country, but here in Washington there is nothing done on the basis of trying to keep the cost of housing up. The builders have to build for the market, and if they keep the cost up, the market shrinks; so it is illogical to think that the builders would try to keep the cost up.

Senator MCCARTHY. Have you made any studies? Are you aware that Thuman Arnold, before he was promoted, had a tremendous num

ber of indictments against certain labor unions, against certain municipalities, against, I believe, certain builders? I am just wondering if you have gone into that question at all.

Mr. DECKMAN. Mr. Lusk has.

Mr. LUSK. I think what you are referring to occurs in the case of unions and general contractors. The general contractor, of course, is a commission man. He makes so much on the job he does. In the case of home building, it is done by a principal. Ordinarily in Washington we build three or four homes a year by general contractors. The others are principals, speculative builders, and so forth. They have no reason whatsoever to approve of any kind of featherbedding contracts of which you spoke. It is the general contractor, who is quite different from those who build homes.

Senator MCCARTHY. I am just probing for information, you understand. Are you of the opinion that there are tremendous numbers of such practices indulged in on a very wide scale?

Mr. LUSK. Yes; I am.

Senator MCCARTHY. That does increase the cost of housing.

Mr. Lusk. Not very much in housing, because, as I say, housing is built by principals, with exceptions.

If an electric refrigerator is put in, there must be a drain for an ice box.

Senator ROBERTSON of Virginia. You said you were going to give us an alternate plan...

Mr. DECKMAN. I will pass to that. I think it is quite clear that there is the $2,000,000 cost for the $1,000,000 project here. The tax exemption locally would be another 100-percent cost, and the deficit financing is a matter of my own which I point out that if the Government is borrowing money each year, in order to meet its obligations, which it has done up to this year for the past 15 years, then every year it has to pay interest on money it borrows to pay this subsidy, and that interest compounds, as it goes along, and it is a part of the cost of this sort of proposition where this was all brought into being under the deficit-financing thinking.

You can throw it out and we still have 300-percent cost by taking the subsidy and the tax exemptions at the local level.

The plan that I wish to offer is based on the fact that no one, either public or private, can economically build a building and rent to a man who cannot afford to pay rent. That statement I do not think can be refuted.

The only way that we are going to house the low-income people in good used housing which has been going on since all of us can remember, and in my case I only lived in a new house once, and then my father died and we had to sell it. I did not think the Government had to come along and do anything about it. We moved into a second-hand house of my grandfather, and I have been living in one ever since.

In these used houses there is only one thing wrong-and this is the crux of the whole thing. We do not have housing codes which take the old houses off at the bottom level or make the owner who is renting it fix it up and meet minimum standard requirements.

In automobiles we pour in automobiles at the top. We have State laws to take off the automobiles at the bottom, which are unsafe to drive, and consequently we have more automobiles in this country

than all of the rest of the world put together, and they are almost a necessity to the same people that are making $1,000 a year or less. Any by that system we give everyone within reason an automobile. The same thing is true of housing. If we have housing codes, we will clear up a great part of these slums and the natural development of the city then can take place. What happens is that here in Washington we have had contractors who attempted to clear slums. They formed companies for that purpose. They limited themselves to 6 percent dividends and they would go in and acquire a block with the exception of four or five houses. The people who owned these five or six houses were smart enough to realize that they could hold them up, so the program broke down.

If we are going to have private enterprise work, we have to give them the tools to work with. This is what you have to give them: You have to give them access to land that is cleared through the power of eminent domain by a public body. We do not mean to give it to private enterprise individually. We had a bill passed here in Washington after months of testimony in which this pattern is already in effect. They are asking Congress for $20,000,000 as a revolving fund to get under way, which you may have seen in the

paper.

There is a local agency composed of local citizens called the redevelopment agency. They pick out a spot, after public hearings, of a slum they will clear up. The Park and Planning Commission draws the plan of that slum, and they submit it to public hearings.

The general public decides whether they approve it or not, and any changes, and it is finally approved. The land is then cleared. Under the clearing of it, some of it may be for low-rent housing. We do not think that the public housing and slum clearance have any connection whatsoever. It is a tail that has been tied onto this kite of slum clearance, and in most of these slum areas, they are next to good business areas, such as I pointed out over next to the Capitol, where big apartment houses could be built, and the land would bring more money than what it costs to clear them.

If low-rent housing is to be used, the plans for the housing will be offered to private enterprise to build under a given rent ceiling. We do not believe that private enterprise should have the advantage of this cleared land, and then be able to build on it and rent it at any price they want."

That in some cases will entail this write-down we are talking about. You can call it subsidy to private enterprise or a subsidy which I think it is to the general welfare of the city to get rid of the slums, which is the only cost that we anticipate.

When private enterprise has to meet these rents, this type of housing is at your lowest level, the type that will be fully rented whether depression, good times, or bad. It is the best type of housing there is from the standpoint of paying off.

There is no reason why, if public housing can get 45 years for the Government housing, or 60 years, as they did before, that private enterprise should not be insured up to 33 years under FHA, which we propose. They will have to build under building codes which public housing does not now do, and they will have to meet all of the requirements.

At the same time we propose a lower interest rate, not as low as the public housing, although here in Washington the builders agree to build 24,000 of these units, and one loan company here got together with others, and pledged the financing for it at as low as 32 percent interest rate on it, and that money amounted to $70,000,000.

There are ample facilities under the plan we have in Washington to do the job. The only other thing is that we propose in a 95-percent loan on the houses under $5,700 cost, which will be in this bracket. Now, then, that is giving to private enterprise the tools to do the job, and out of this low interest rate, long-term financing, you will get your low rent.

Senator TAFT. Will you get it? That is the question that I absolutely deny. I never have seen a figure that could prove it. That is the crux of the whole business.

Mr. DECKMAN. The $4,000 house which is in this book called "The Answer to Public Housing," I was checking through before this hearing, it is right in the middle of the book.

Senator TAFT. Do you think you can build one now in Washington for $4,000?

Mr. DECKMAN. I am talking about relative figures. This house here costs $3,000, and the land and everything, sold for $4,000, the profit, and with $390 down payment, the monthly amortization was $25 a month.

It certainly is reasonable that when you get up to $5,000 a unit for that or $6,000, and amortize it over 33 years and give them 32 percent money, that you are going to get down around $35 or not more than $40 for your rent, and they will be able to pay full taxes, and pay off the loans and everything.

Senator TAFT. Admit that, $35 to $40; these are prewar figures, I take it, this $4,000 house.

Mr. DECKMAN. I am talking about a $6,000 house. This $4,000 house that I had in my book was purely an analysis based on comparable costs, and showed the 25-year

Senator TAFT. I want to get this clear. You say that this house can be rented at $35 or $420 a year, or could be. A $6,000 house would be

Mr. DECKMAN. I would say between $35 or $40 for a $5,700 house that we propose when materials become available.

Senator TAFT. I would say that would be impossible under any financing.

Mr. DECKMAN. Three years and 312 percent

Senator TAFT. Absolutely impossible to rent at that figure.

Senator SPARKMAN. Suppose it rents for $40 a month, $480 a year, how much is the man who is getting $1,000 a year going to live in it? Mr. DECKMAN. That is what I am coming to; by this housing code, we make all of the housing good housing, do we not? That is the crux of it.

Senator SPARKMAN. Would that be a national housing development?

Mr. DECKMAN. These people who wish to clear up the slums would promote the national program for the States and municipalities to pass housing codes to clear up the slums by making the owners who own these buildings do the job that they are trying to make the taxpayer do. Then we would clear up to the point where only the worst

cases of some so difficult that we would have to enter with our plan of using the local body in this other means.

The rents today, median rent of this country is $27.88, and the urban rent is $30.25 a month, and this is old good used housing, because 89 percent of it is not in need of repairs, and 71 percent needing major repairs have private bath and private flush toilets. These are census figures of 1945.

Senator CAIN. May I interrupt? One point, if I understand, that you are making is that let us assume by way of argument that you have a Federal low-cost housing program, that if at the same time you do not have local laws that see that houses are currently maintained, you are building slums faster than you can replace them. Mr. DECKMAN. Exactly so.

Senator TAFT. This is what worries me, Mr. Deckman. You have these slum dwellings and on the figures that I have given, you have five to six million families paying $15 a month or less. The moment you clean up those slums where do those people live on $15. They pay $15. That is all they can afford to pay.

Mr. DECKMAN. What they are doing today, public welfare at the local level takes care of them because public housing does not do it. Senator TAFT. That takes care of a handful. We have 5 percent or something less than that.

Mr. DECKMAN. But this is the balance of our solution.

Senator SPARKMAN. Of course, if you are going to shove those 6,000,000 families on public welfare-down in my State we are doing everything we possibly can now for public welfare, and I know we are going to be asking the Federal Government to come in with the fourth category on public welfare. So what is going to be the difference in subsidizing housing and paying it out in public welfare?

Mr. DECKMAN. Do you not realize that if you clean up these buildings, and allow private enterprise to build at any level, at the top, as Senator Taft pointed out, and I agree, what we need in this country is housing. We do not need $10,000 or $12,000 houses. We need houses in every bracket, and if we get that in there in the way of building houses, and get competition, and the old houses are made good, it will drive their rents down.

When you get down to these figures, my 1944 figures of the BLS shows

Senator MCCARTHY. See if I have your thought. Let us take a slum area here in the city of Washington in which the renter is paying $10 or $15. Your thought is that you can wipe out that slum area, build rental units that will cost a total of $480 a year and that then the individual who is paying $10 or $15 can afford to pay no more, that he will then be taken care of by whom?

Mr. DECKMAN. By public welfare; that is being done now.
Senator MCCARTHY. Have him go on relief.

Mr. DECKMAN. That is exactly what is happening. Out of the 4,000 that we are paying half a million dollars rent for in Washington, we only found 60 of them living in public housing. They were all being housed in private housing by public welfare.

Senator MCCARTHY. Let me interrupt. Then your thought to narrow it down is this, that we will clean out the slums, destroy the $10 and $15 rental units, rebuild units that will cost $40 or $50 a month, and that the people who are now paying $10 or $15 a month,