Senator ROBERTSON. Would you give us some estimate of what you think the expense is going to be under this bill?

Mr. FOLEY. I am afraid I cannot offhand, but I will be glad to file with you, Senator.

(The statement follows:)

Financing under S. 866-The maximum cost to the Federal Government of programs provided for by the bill is shown in the columns which are headed "Annual contributions"

1 In outstanding insurance and commitments to insure. 2 To establish insurance fund; funds to be supplied through Reconstruction Finance Corporation. 3 Loan funds to be obtained through issuance of obligation by National Housing Administrator. Loans must be repaid within 5 years except that $250,000,000 may be used for definitive loans repayable within 45 years. The $250,000,000 definitive loans authorization consists of an initial authorization of $50,000,000, increasing by a like amount at the beginning of the second, third, fourth, and fifth years after enactment, respectively.

Annual contributions under any contract limited to periods not exceeding 45 years.

5 Loan funds to be supplied by Reconstruction Finance Corporation. Authorizations consists of $25,000,000 initial authorization, with additional authorizations of $50,000,000, $75,000,000, and $100,000,000 for second, third, and fourth years, respectively.

Maximum total amount payable annually during each of the 10 years next succeeding third year after enactment.

Senator ROBERTSON. I think that would be interesting.
Senator BUCK. Any other questions?

Senator TAYLOR. Yes, Mr. Chairman, I would like to ask a question.
Senator BUCK. Senator Taylor.

Senator TAYLOR. Mr. Foley, do the administrative provisions of the Taft housing bill represent the Budget Bureau's views, the President's views, or your own views?

Mr. FOLEY. As I have stated-insofar as I have expressed myself upon them the views expressed represent my personal views growing out of my experience.

As I indicated at the conclusion, because of the brief time we have been allowed, we have not had the opportunity for the usual clearances. Senator TAYLOR. Mr. Chairman, I do not want to take up time; we are supposed to adjourn now, but I do have a few questions Í should like to ask for some information.

Senator BUCK. We will take the time.

Senator TAYLOR. I do not know much about housing. I have never owned a new house in my life. In fact I have never owned a house in my life. I am paying on two of them at the present time so I do have a little knowledge of it from that point of view.

Could you give us the number of privately financed rental units completed in 1946 to rent for above $60 and from $52 to $60, from $40 to $50, and below $40? Could you give us those figures?

Mr. FOLEY. I could provide you with them, Senator. I could not, of course, hope to

Senator TAYLOR. How soon could you get them?

Mr. FOLEY. Within a short time. Within, I would say, a couple of days; they would be estimates, probably.

You are probably quoting from a list of questions that you have already sent me in a letter I received last evening; is that correct? Senator TAYLOR. Yes.

Mr. FOLEY. I have not had any opportunity since to develop that information but will be very happy to.

Senator BUCK. Will you see that the Senator gets those figures? Mr. FOLEY. I will, sir; so far as I will be able to provide them. Senator TAYLOR. That will be fine.

Senator BUCK. Thank you, Mr. Foley.

(The following was later received for the record:)

Hon. RAYMOND M. FOLEY,
Administrator, National Housing Agency,

MARCH 17, 1947.

Social Security Building, Washington, D. C.

DEAR MR. FOLEY: We are very anxious to obtain from you immediately the following facts:

1. Please give the number of privately financed rental units completed in 1947 to rent for (a) above $60, (b) $50 to $60, (c) $40 to $50, (d) below $40. 2. Please give the same information regarding rental units started in 1946.

3. Please give the same information regarding construction permits granted for the first 2 months of 1947.

4. Please give the number of rental units under $50 per month which are likely to be built under present law in 1948.

5. Please give the number of rental units which you anticipate that the Taft bill as introduced, if enacted at once, could provide in 1947.

6. Please give the number of rental units which you anticipate that the Taft bill as introduced, if enacted at once, could provide in 1948.

7. If the Taft bill is enacted at once and appropriations are granted, how long, in your opinion, would it take for large-scale public and private rental housing to get under way?

8. Do you agree with the proposal for financing cooperative housing contained in the Taft bill?

9. How do you justify a 90-percent mortgage for individually owned homes in planned communities made possible through group action when you support a 95-percent mortgage for individual homes in scattered lots?

10. What is there in the Taft-Wagner-Ellender bill that will provide rental housing for the income group slightly above the public housing group?

11. Do you agree with the opinion that an emergency no longer exists and that the housing crisis will be substantially alleviated in the coming year?

12. How fast do you feel that the present doubling up of families can be relieved

in the coming year if the present Taft bill is passed?

I would appreciate a reply from you in writing at the soonest possible moment so that I can have this information available during the current hearings of the Banking and Currency Committee on housing.

Sincerely yours,

GLEN H. TAYLOR.

Hon. GLEN H. TAYLOR,

NATIONAL HOUSING AGENCY,

OFFICE OF THE ADMINISTRATOR, Washington 25, D. C., March 27, 1947.

United States Senate, Washington, D. C.

MY DEAR SENATOR TAYLOR: The purpose of this letter is to reply to the questions in your letter of March 17.

Questions 1, 2, and 3:

These questions request information as to rental housing starts and completions during 1946 and permit issuances to date during 1947.

On the basis of the data available to us, we estimate that, out of approximately 670,000 permanent new dwelling units started in 1946, some 143,000 were rental units. Of approximately 453,800 such units completed during 1946, it is estimated that 80,000 were offered for rent.

No exact data are available as to their distribution by rental ranges, but an approximation based on incomplete information follows:

In addition to the foregoing, some 64,500 private conversions and 220,200 publicly financed units under the temporary re-use program were started last year. About 45,300 conversions and 114,800 temporary re-use units were completed. Substantially all of the temporary re-use units were offered for rent at $40 per month or less, including utilities.

During the first 2 months of 1947, Federal permits were issued for 17,445 rental units, including 3,336 conversions. The break-down of proposed rents for these units follows:

Questions 4, 5, and 6:

These questions request our views as to the probable effect of the Taft-EllenderWagner bill, in its present form, on the amount of rental housing to be produced and the rents at which it might be made available during the balance of 1947 and 1948.

Let me make it clear initially that my support of the bill, and specifically of its rental housing features, is not predicated primarily on its merits as an "emergency" measure. While we all recognize that there is a current housing shortage, and that certain emergency measures (especially with respect to necessary reconversion adjustments in building materials production) have been and continue to be necessary, I believe that there is a real danger in addressing ourselves exclusively to immediate problems and to measures designed for immediate effect. The bill, I think, is constructively addressed to a long-range view of the problems. After the National Housing Act was passed in 1934, it was more than a year before any significant number of builders and lenders began to take advantage 1 Estimates on permanent starts and completions are derived from building permit reports and sample surveys by the Bureau of Labor Statistics. The local building permit records (which in turn are the basic source of the BLS figures) do not provide information either as to proposed tenure or as to rents or sales prices. It has been necessary, therefore, to develop estimates of the number of rental units by analysis of available data as to type of structure. Rent ranges have been estimated in the main from records of priority authorizations.

of the mortgage insurance made available with respect to new construction under the provisions of title II. After the title VI amendments to the National Housing Act were approved on March 28, 1941, it took nearly a year before builders began to take full advantage of the more liberal mortgage insurance provisions. Similarly, after the enactment of the United States Housing Act it was considerably more than a year before large-scale construction was actually under way. However, the aids to rental housing contained in S. 866 are not greatly different from those in the widely discussed S. 1592, which was before the Congress last year, and it is probable that builders, lenders, and municipalities are better acquainted with them than they were with the provisions of the earlier legislation at the time it was adopted. Accordingly, there may be a more rapid response to the passage of the present bill than was had in the case of these earlier pieces of housing legislation.

It is proper to note, before suggesting what the volume of rental housing construction may be in 1947 and 1948, that S. 866 does not give and apparently is not intended to give to the Government any direct control over the volume of residential construction. The level of construction achieved depends primarily on the condition of the economy and the activities of private enterprise and local government. The bill would put the Federal Government in a position to aid and encourage the achievement of a higher and more stable level of residential building.

Assuming generally good economic conditions, a continued improvement in the supply of building materials and labor with some accompanying downward adjustment in costs which would enable the industry to meet its goal of 900,000 to 1,000,000 new starts in 1947, it would seem reasonable to expect that 20 to 25 percent of these starts might be rental units, without the aids provided in S. 866. If S. 866 is passed now, it should be possible to start about 25,000 public housing units during the year which could not be built otherwise.

Given sustained good business conditions throughout 1948, but without the Taft-Ellender-Wagner bill and the present financial resources under title VI, the industry would do well to hold up to the level indicated above for 1947. With the additional stimulus which would come if S. 866 is enacted, the production of rental housing should be substantially increased, depending on the time of passage and the speed of application. I must point out, however, that the situation simply does not warrant predictions as to the volume of construction in future periods. There are many uncertainties, especially with respect to the vital matter of excessively high costs. Various estimates are made, some running as high as 400,000 rental units, including both public and private, in 1948. But I should not feel justified, in view of the many doubtful factors and of the critical elements of the situation which are by nature not within our control, in identifying a figure as a forecast on the part of NHA.

It should be recognized, of course, that an unfavorable turn in business, a significant rise in costs, continued material shortages, extensive managementlabor troubles, or other unsettling influences which could bring about a decline in total home-building activity, would have their impact upon rental housing volume as well and perhaps especially in this sector because of the large investments involved.

Question 7: If the Taft bill is enacted at once and appropriations are granted, how long, in your opinion, would it take for large-scale public and private rental housing to get under way?

As I indicated above, previous experience with major legislation of this sort suggests that the full advantages of the bill in encouragement of private rental housing construction will not begin to be immediately realized. The Federal Public Housing Authority advises me that, in their opinion, deferred public projects (i. e., projects on which some substantial part of the preliminary work and planning have already been done) could be under construction in 4 or 5 months. Newly authorized projects could be put under construction in 9 or 10 months.

Question 8: Do you agree with the proposal for financing cooperative housing contained in the Taft bill? In general, I do. You will find my comment on this matter at page 28 of the mimeographed material prepared for the committee, a copy of which is attached for your convenience.

Question 9: How do you justify a 90-percent mortgage for individually owned homes in planned communities made possible through group action when you support a 95-percent mortgage for individual homes in scattered lots?

I assume that by "individually owned homes through group action" you are referring to a situation in which legal title to the land and buildings comprising the home is not owned by the individual, but is vested in a cooperative association, and where the interest of the individual is limited to ownership of stock or membership in such association and a proprietary lease which is subject to a blanket mortgage given by the association.

I think that such a distinction is appropriate because of the fundamental difference in the background of available experience. With respect to individually owned homes, we now have had extensive experience on a 90-percent mortgageloan basis under FHA's existing title II small-home program. It is on the basis of this extensive experience and practical study that we have concluded that a 95-percent mortgage on this type of home is now in order. I have publicly stated that in my opinion mutual ownership projects present very large possibilities for contribution to the solution of the housing program. But they have not yet been given sufficient trial and testing to develop the best methods of setting them up, the type of charter provisions best suited to the purpose, and, particularly, the best protective measures in the interest of the participants themselves. I believe that this developmental experience will be most constructively gained if the equity requirement is maintained on the same basis as rental projects under the present FHA program, at least during the development of the required experience. Such a procedure will, I believe, promote wider interest and participation by lending institutions throughout the country. A procedure of adequate testing is also desirable from the point of view of those participating in such cooperative ventures because of the risks they assume of loss resulting from default in payments by the other participating members a risk that is not present in connection with individual home financing. Finally, there is clearly an element of special financial risk involved in that the individual occupant's personal interest is attached to the association rather than to his own home as in the case of singlefamily financing. The importance of this element can best be tested by experi

ence.

Question 10: What is there in the Taft-Ellender-Wagner bill that will provide rental housing for the income group slightly above the public housing group?

The bill, in its present form, does not provide directly for aids to rental housing production for the income group slightly above the public-housing group. As you know, the theory of the 20-percent-gap provision in the bill is to assure the establishment and maintenance of a policy under which subsidized public housing will not be provided at any income level which, under the prevailing conditions, could be served by private enterprise. I am aware that this provision is regarded by some as working an inequitable hardship on those whose incomes fall within the 20 percent gap. On the other hand, resistance to the extension of Federal aid to low-cost housing has centered primarily around the fear of competition between subsidized public housing and the operations of private enterprise. The proponents of this provision take the view that it is necessary as a means of eliminating this fear and thus making it possible for the Federal Government to aid in meeting the most acute portion of the need.

Moreover, it must be remembered that it is the policy and purpose of the bill to seek an adequate and stable volume of production of good housing at progressively reduced costs. To the extent that this objective is realized, the accommodations available to families in the income level immediately above those served by public housing will gradually be improved, both in quality and in price.

Question 11: Do you agree with the opinion that an emergency no longer exists, and that the housing crisis will be substantially alleviated in the coming year?

On the contrary, I have made it clear that in my opinion a housing emergency still exists. There are large numbers of families still without a home, although they have a roof of some kind over their heads. It still requires extraordinary efforts by both public and private agencies to find even temporary accommodations for families with children who have been evicted from their homes.

At the start of this year it is estimated that some 2,200,000 married couples in nonfarm areas were sharing houses with other families. There were in addition some 300,000 married couples living in hotels, commercial rooming houses, and similar places. Even if the building industry achieves its goal of completing 1,000,000 new units this year, and there is a sufficient volume of conversions to take care of those married couples living in hotels and commercial rooming houses