titles III and IV, which are designed to enable private enterprise in bringing home ownership within the financial reach of families of moderate income. The proposals contained in the bill are designed to perfect and strengthen the FHA system of mortgage insurance in order to enable families with modest incomes to acquire homes of their own.

In the past the great mass of American wage earners whose family incomes are in the lower half of the middle income range, have not been provided with good livable and durable homes within their financial reach. Those in this group who have attempted to acquire homes have found the financial burden to be too great for them and almost invariably lost in their struggle for outright home ownership. Others have found that what little housing has been built cheaply enough to fit the pocketbook of the moderate income families was not only cheap housing but was also poorly built substandard housing whose ownership, maintenance, and repair proved costly and in the end short-lived.

The great majority of American workers want to own homes. They have found economically sound home ownership to be beyond their ability either to attain or to hold for any substantial period of time. Speaking on behalf of this large and representative range of citizens of our Nation, the American Federation of Labor insists that effective measures proposed in S. 1592 be enacted by Congress to greatly enlarge the opportunity for home ownership to the mass of our wage

earners.

To achieve this objective of enlarging opportunities for home ownership, the American Federation of Labor submitted a specific program of modification of the existing FHA system as the first and foremost in its 10-point postwar housing plan presented to Senator Taft's subcommittee on housing of the Senate Committee on Postwar Economic Policy and Planning on January 15, 1945. This home ownership program comprises a set of far-reaching measures designed to stimulate, expand, and safeguard home ownership through modification and improvement of FHA insurance. The proposals the American Federation of Labor advocated then and advocates now

are

(1) Reduction in interest rates on home purchases. While the present provisions of S. 1592 reduces the maximum interest rate allowable under the FHA loan insurance system from 5 percent to 4 percent, the sponsors of the bill themselves indicate that a lower rate of interest should be sought. We believe that the maximum rate should be set at 31⁄2 percent, and urge the committee to give every consideration to this lower rate as both workable and best suited to the objectives of this legislation.

(2) Extend amortization of the home loan to 32 years from the present amortization set at a maximum of 25 years. This would make possible a further substantial reduction in monthly payments and is essential if the ability to buy homes is to be extended to families of moderate incomes.

(3) Safeguard the home buyer's investment in cases of default on monthly payments due to unemployment or other emergency, by allowing in such emergency cases a temporary moratorium on payments and making it possible for the home buyer to meet the lapsed payments later, by extending the life of the mortgage proportionately. This provision is most vital to give real security to the home buyer and prevent foreclosure and eviction resulting from temporary economic emergencies. The present provisions of S. 1592 are thoroughly workable and must not be modified.

(4) Assure soundness of home construction by requiring a builder's warranty to make good on any structural defects within a limited period after initial

occupancy. We strongly urge that the warranty provision of S. 1592 should be adopted in its present form.

Senator MURDOCK. Mr. Green, might I interrupt you right there? Mr. GREEN. Certainly, Senator Murdock.

Senator MURDOCK. I want to compliment you on the statement you have just made.

Mr. GREEN. Thank you, Senator.

Senator MURDOCK. My observation, Mr. Green, is this: One of the most important things in the whole housing set-up is the protection of the home owner against faulty construction and faulty material. Mr. GREEN. Yes, that is so.

Senator MURDOCK. If we do not give that protection the very foundation, as I see it, of our housing program will be washed out from under us.

Mr. GREEN. Yes, that would be true.

Senator MURDOCK. And that can be done by providing a proper warranty, and I think this bill takes care of that.

Mr. GREEN. Senator Murdock, I am mighty glad you have grasped that problem because we are very conscious of the situation and very deeply impressed that the need of a proper warranty against just such contingencies is most important. It would have a wonderful psychological effect upon contractors. They would be inspired to do a better job than they have ever done in all their business lives. Senator MURDOCK. And it would cut down, would it not, on cost of inspection?

Mr. GREEN. Yes, it would cut down on cost of inspection.

Senator MITCHELL. Mr. Green, I am glad to hear you say that. It has been testified before the committee that the warranty provision would chase contractors away from the housing contemplated by the bill. Do you think there is any justification for that criticism?

Mr. GREEN. I am just as certain as I am sitting here that there is no basis for that criticism; none whatever. You will find contractors actively seeking contracts under such conditions.

Senator MITCHELL. In other words, a contractor who is going to build a jerry-built house will build that sort of house anyway? Mr. GREEN. Yes, sir.

Senator MITCHELL. A poor contractor will build a poor job. Mr. GREEN. Yes. And this would have a wonderful effect upon contractors. It would put them on their toes. They will be more careful when constructing houses to do the job right.

Senator MITCHELL. Thank you.

The CHAIRMAN. You may resume your statement.

Mr. GREEN. I now come to

(5) Protection against deficiency judgments against home buyers who have been unable to continue payment on their home. We are prepared to submit to the committee an amendment to S. 1592 which would provide wage earners with necessary protection against such deficiency judgments.

The CHAIRMAN. The committee will certainly consider that proposal.

Mr. GREEN. Thank you. We will be glad to submit our views on it for the committee's consideration.

Senator MURDOCK. Does not your warranty provision have a direct relationship to that very proposition?

Mr. GREEN. Yes. It is all blended in.

The CHAIRMAN. You may proceed.

Mr. GREEN. I now come to our next proposal:

(6) A requirement that not less than the prevailing wages be paid on all home construction subject to FHA insurance. The principle that minimum labor standards be required as a condition of FHA insurance has already been established by Congress. The prevailing wage requirement under the present statute is in effect but is limited to projects valued at $16,000 or more, leaving the majority of wage earners in the home construction field without this essential protection of minimum wage requirement. We ask and insist that the payment of not less than the wages prevailing in the locality be made applicable to the construction of all homes subject to FHA insurance as a matter of sound public policy and economic necessity. Destruction of wage standards under competitive pressure must not be sanctioned by the public aid given in the form of the mortgage guaranty. Experience has shown that unless such a safeguard is established minimum wage standards are destroyed. Substandard wages produce substandard homes. I strongly urge this committee to insert a prevailing wage amendment in titles III and IV of S. 1592.

The CHAIRMAN. I might say, Mr. Green, that I propose to offer such an amendment for the consideration of the committee after we finish the hearings.

Mr. GREEN. Thank you, Senator Wagner.

I now come to our next proposal-no; this is a continuation of my statement:

Further testimony of the representatives of the housing committee of the American Federation of Labor will deal with other vital aspects of this comprehensive legislation such as the provision for cooperative mutual home ownership, plan for families of moderate income, the important urban redevelopment program, the porgram for rural housing, the provisions dealing with the disposition of permanent public war housing, and the special recognition given to the need for homes on the part of returning veterans which appears throughout

the bill.

In addition to the endorsement of these plans and programs, I would like to stress especially the need for a clear-cut endorsement and unhesitating enactment by the Congress of title VII of the bill, which provides for the resumption of the low-rent public housing program to be administered by local housing authorities. This title provides for an extremely modest low-rent housing program with Federal aid under a greatly improved plan which would perfect the operation of the program and enlarge the participation of private investment in the development of this supplementary but essential phase of housing activity.

Let me also stress the importance of the provisions of the bill which would call for orderly fact-finding and research, a current inventory of the housing need conducted by local communities with Federal aid, a coordination of their work and for careful planning for the future. Before the Housing Census of 1940, which the American Federation of Labor helped to initiate, we knew little about the realities of our Nation's housing needs. The fact-finding titles of S. 1592 are indispensable to sound planning for the future.

The American Federation of Labor strongly supports the provision of the bill, which it has long advocated, that all activities of the Federal Government relating to housing be consolidated in a single permanent National Housing Agency. Under the plan embodied in

the bill, the work of planning, programing, and over-all policy would rest in the hands of the National Housing Agency itself, whereas the major operating responsibility would be placed in the hands of the constituent agencies. Wartime experience has demonstrated that the efficiencies and economies made possible by such consolidation would do much to serve the public interests in dealing with housing as a major national concern.

In the name of the homeless war veteran, who holds to his hope for a good postwar home, in the name of millions of other Americans now living in crowded and cramped quarters in all parts of the land, in the name of our children and our children's children, I call upon Congress to act with promptness and dispatch in approving this legislation and assuring better homes in every community to meet the housing needs of every American family. It is up to our Seventy-ninth Congress to lay the foundation for better life in a prospering peacetime America. It is up to our Seventy-ninth Congress to enact S. 1592 as the cornerstone to our Nation's postwar reconstruction.

The CHAIRMAN. That is a splendid statement, Mr. Green.
Mr. GREEN. I thank you.

The CHAIRMAN. Any questions by members of the committee?

Mr. GREEN. If you will pardon me a moment, Mr. Chairman, I have a letter from the secretary of the building and construction trades department, American Federation of Labor, endorsing the bill, which I would like to read into the record. May I do so, Mr. Chairman? The CHAIRMAN. Certainly.

Mr. GREEN. This is addressed to the chairman of this committee:

Hon. ROBERT F. WAGNER,

Chairman, Senate Committee on Banking and Currency,

United States Senate, Washington, D. C.

DECEMBER 3, 1945.

DEAR SENATOR WAGNER: I am writing en behalf of the building and constructiontion trades department of the American Federation of Labor in support of S. 1592. The building and construction trades department strongly urges prompt adoption of this important measure.

The building and construction trades department believes it to be extremely Important to assure the payment of not less than prevailing wages on all homes insured by the FHA. The prevailing wage requirement at the present time extends only to large scale rental housing on projects valued at $16,000 or more. The principle of maintaining not less than prevailing minimum wages on work on which financial aid is extended by the Government in the form of loans or loan insurance has already been firmly established by Congress. Lack of a prevailing wage requirement with respect to a portion of home construction under the FHA system has resulted in the past in destructive wage competition at the expense of building and construction workers. We are confident you will agree that it is imperative to extend the present prevailing wage requirement already written into the National Housing Act to all insurance of homes under the FHA plan.

It is our hope, therefore, that you will introduce an amendment of S. 1592 providing that the prevailing wage requirement of the National Housing Act be extended to all types of FHA insurance.

Sincerely your,

HERBERT RIVERS,
Secretary-Treasurer.

I have dealt with that in my statement, Mr. Chairman, and you have assured me that you will present such an amendment.

The CHAIRMAN. Yes. Any questions by members of the committee? Senator MITCHELL. Mr. Green, you are suggesting stop-gap hous

ing for veterans. Have you any specific suggestions along that line to offer to the committee?

Mr. GREEN. I have not at the moment, Senator Mitchell, but will be glad to offer some specific suggestions later, and send them to the chairman.

Senator MITCHELL. We would be glad to have them.

Mr. GREEN. That is important, I realize, and I will be glad to offer some suggestions.

The CHAIRMAN. Thank you very much, Mr. Green.

Mr. GREEN. That you for the opportunity of coming up here.
The CHAIRMAN. We are delighted to have you come.

Mr. GREEN. Thank you.

(Thereupon Mr. Green left the committee table.)

The CHAIRMAN. We will now have the pleasure of hearing Mr. Harry Bates, who is also an old friend of mine. He is the chairman of the committee on housing, American Federation of Labor, and has been for some time, as I recall. We will be glad to hear from you. Mr. BATES. I thank you.

The CHAIRMAN. You may proceed.

STATEMENT OF HARRY C. BATES, CHAIRMAN, HOUSING COMMITTEE, AMERICAN FEDERATION OF LABOR, WASHINGTON, D. C.

Mr. BATES. For the past 10 years the housing committee of the American Federation of Labor has kept in close touch with the housing needs and problems facing wage earners in some 900 communities throughout the United States. Local housing committees of central labor unions and activities of our affiliated organizations enable us to keep currently informed about the housing requirements of wage earners' families throughout the country.

The responsibility of our housing committee is to express the interest and serve the requirements of wage earners in all trades and occupations for better housing for them and their families.

More than one-fifth of the wage earner's income is spent for shelter. Workers have a vital concern in housing as producers, as consumers, and as citizens. It is the function and the duty of the A. F. of L. Housing Committee to place before Congress the views which are representative of the largest single group of Americans who have had the opportunity to consider and give democratic expression to their views and judgment on this matter so vital to them through the representative channels of the trade-union movement.

The general housing legislation now before you has the overwhelming support of the American Federation of Labor membership. Housing is today, and for the years to come will remain, an issue of paramount importance to every American family. The decision Congress is about to make with regard to long-term housing policy will vitally affect the every course of the economic and the political life of our Nation. What Congress is about to do with regard to this legislation will be carefully watched and well noted by most families throughout the land. This is one issue on which the American people are prepared to make sure that the public interest is truly served by legislation and will tolerate no sacrifice of the public interest to accommodate special interests.