Between 1929 and 1934, about 1,000,000 families lost their homes through mortgage foreclosures. After that, despite the FHA aids, home ownership was on the decline. Once burned, people did not want to be burned again. Having no certainty of a future stable income, they were reluctant to tax their financial ability, depending on current earnings for investment in a home which may be lost. The simple provision of S. 1592 would prevent foreclosure and eviction of families of home buyers who face a temporary emergency. The temporary aid by the Government in time of emergency would mean that the family would stay in the home, that the lender would be protected against loss, with the Government not losing a cent in the transaction. This provision is administratively no more difficult than any other form of economic security. It should stand as it is now written in the bill.

Builder's warranty: If each FHA insured home carried with it a warranty for sound construction, the home buyers would overwhelmingly demand only homes which carry FHA protection. The warranty provision of S. 1592 should be adopted in its present form.

Senator MURDOCK. Mr. Bates, might I interrupt you right there to ask whether you think the warranty system is adequate as at present written into the bill?

Mr. BATES. I am sure it is, Senator Murdock, but we left the technical details of the bill for discussion by Mr. Shishkin. Senator MURDOCK. All right.

Senator RADCLIFFE. Mr. Bates, several questions occur to me as you go along, but I thought you would rather finish your statement before I propound them. Is that your wish?

Mr. BATES. All right, Senator Radcliffe.

The CHAIRMAN. You may proceed with your statement.

Mr. BATES. Protection against deficiency judgments: In many jurisdictions, home buyers who have been unable to keep up payments on their homes and are forced to move are liable for the unpaid balance on a home in which they no longer live and their wages are subject to garnishment for the benefit of the lender. We believe it is important that families who have put in their life savings in an attempt to acquire a home and who after several years of paying for the home are no longer capable of maintaining payments should not in addition to their loss of savings be subjected to the threat of a deficiency judgment for the balance of the payments on the home they no longer possess or oссиру.

I should like to submit to the committee for its favorable consideration an amendment to S. 1592 which would provide wage earners with necessary protection against such deficiency judgments. I ask the permission of the committee to have the amendment we propose inserted in the record at this point.

The CHAIRMAN. The suggested amendment will be made a part of the record at this point.

Mr. BATES. It is as follows: On page 34, insert the following, after line 12, and renumber the following sections:

SEC. 404. Section 204 (g) of the National Housing Act, as amended, is hereby amended by adding before the first proviso a comma and the following: "except that no claims under deficiency judgments shall be pursued to collection against a mortgagor who was the owner and occupant of the property at the time of insurance under section 203 unless the Administrator determines that the mortgagor practiced fraud on the Federal Housing Administration or the mortgagee”.

Prevailing wages: Congress has already recognized the soundness of the proposition that not less than prevailing wages be paid on construction work which is made possible through Federal aid extended directly or indirectly. This requirement applied to all construction financed with Government aid in whole or in part and applies to large-scale projects insured by the FHA under the National Housing Act itself. During the war the maintenance of not less than prevailing wages was assured on the major portion of construction carried on in every community.

The argument that the establishment of prevailing wages in connection with the FHA insurance on individual homes is administratively difficult is without real merit. Determinations of prevailing wages are made on the basis of periodic surveys in each locality as a matter of course. No separate determinations are therefore necessary in connection with the construction of an individual home or a group of homes. Nor is there any greater difficulty in the enforcement of minimum standards than in the assurance of other terms and standards on which the Government justly insists as the condition of its public aid.

I might make the observation right here that all during the defense and the war programs the building trades organizations agreed with the Government on stabilization of wages. While that agreement was in effect, the agreed wage, established by the War Labor Board or its subsidiary boards, became the maximum wage scale also. All through the program, when there were demands made for the services of men, which might naturally lend themselves to demands for exorbitant wages, for wages above the legal wage scale, the building trades cooperated with the Government to the fullest extent, and workers were sent all over the United States to work at the prevailing wage of each community as determined by the Labor Department under the Bacon-Davis Act. Real estate men and home builders, not covered by the prevailing wage requirement, have constantly sought to secure workers and work them at a wage scale far below the prevailing wages in the area. And on most FHA projects the builder would use the prevailing wage of the building trades in estimating the cost of the job, and then secure a loan at 110 or 115 percent as based upon labor cost, and when they would start out on construction they would work the men on the job for 30 and 40 or 50 percent less than the prevailing wage. All during those years an effort was made to have the prevailing wage inserted in all FHA loans, but we were unable to get that done. It was inserted into law with respect to projects costing over $16,000, but I can tell you how they evaded the law, or violated the law. It was by dividing a project that would cost, say, $300,000, up into 19 multiples, so that each one of the projects would be just under $16,000. When there were three or four men for every job the real estate men and home builders would force workers in areas to work for a wage below the prevailing wage.

But now the shoe is on the other foot. If you had the prevailing wage provision in FHA loans now, it would be of material aid in stopping the universal trend that will creep into the building of homes, because of the desire of these real-estate men and home builders to get their projects finished. In the face of manpower shortage, they will go out and pay a wage way above the legal wage scale requested by the Government in the area.

Senator BANKHEAD. Do you think that amendment would prohibit such practice?

Mr. BATES. It would certainly prohibit it now, because if they did it they would be answerable to the Treasury Department when they filed their income-tax return-I mean, for every amount they paid over the legal wage scale.

Senator BANKHEAD. If you do not add anything to the amendment it would seem to me to be the minimum.

Mr. BATES. It is now both the minimum and the maximum as long as we have any governmental regulation over wages.

Senator RADCLIFFE. In the absence of any such amendment, will they pay more or less?

Mr. BATES. They will pay more.

Senator RADCLIFFE. Do you mean ordinarily?

Mr. BATES. NO. When they cannot get sufficient men they will pay more, but when there are two men for every job they will cut wages down and pay less.

Senator RADCLIFFE. The comment I have heard is that they have paid too little.

Mr. BATES. They did generally. And when there are more men than jobs, they will pay far less, and are likely to get inferior workmanship.

The CHAIRMAN. You may resume your statement, Mr. Bates.

Mr. BATES. I ask that a prevailing wage amendment recommended by the American Federation of Labor be given favorable consideration by this committee, and that the text of the amendment we propose, be inserted in the record at this point.

The CHAIRMAN. Very well. The amendment may be incorporated in the record at this point.

(The amendment is as follows:)

Amendment to S. 1592, proposed by the American Federation of Labor, to Provide for the Maintenance of Minimum Wage Standards under all Forms of FHA Insurance

On page 31, insert the following after line 12:

"MINIMUM WAGE STANDARDS

"SEC. 318. Section 212 (a) of the National Housing Act, as amended, is hereby amended by deleting the words "section 207 or section 210" from the first sentence and inserting in lieu thereof the words "any section"."

MUTUAL HOUSING

Mr. BATES. We appreciate your favorable consideration of this amendment.

We also consider important the proposal embodied in title IV of S. 1592 to enable private enterprise to serve families of moderate income by providing for FHA insurance of private financing of home ownership of rental projects under a cooperative mutual home ownership plan. Cooperative housing is not new. Mutual home ownership has been tested by experience and has demonstrated its soundness. The existing home ownership projects in different parts of the country have shown that where the individual family is unable to assume financial responsibility for home ownership, a cooperative enterprise

jointly undertaken by a number of families makes possible lower costs per family, the spreading of the individual risk, and lowering of the financial burden. The patent soundness of the mutual ownership formula prompts us to recommend that the limitation now in the bill, limiting the operation of the plan to families of small incomes, should be removed.

LAND ASSEMBLY FOR REDEVELOPMENT OF CITIES

Another vital program contemplated in the bill is the far-reaching plan for large scale redevelopment and rebuilding of our cities under locally approved plans envisaged in title VI. This program, sometimes called "urban redevelopment," is designed to enable private enterprise to participate in the clearance of slums and the preparation of land for rebuilding of blighted areas along with the public effort to discharge the community responsibility for ridding cities of slums. The program would combine Federal and local aid to bring down the cost of acquiring the land to a point where its reuse would be made economicaly feasible and practicable. Redevelopment plans would be formulated by the local community itself. In accordance with these plans privately financed housing would be built for the upper income and middle income families and public housing would be provided for families of low incomes while commercial developments in the cleared areas would also be made possible.

The enactment of this title would give our cities and towns their first opportunity to meet the needs of future growth on the basis of a comprehensive long-term plan. It would safeguard many of our cities from further deterioration of their downtown areas and would provide a large outlet for private investment and accord this investment a full share of participation in the rehabilitation and improvement of entire communities.

PUBLICLY AIDED LOW-RENT HOUSING

Labor is especially emphatic in its demand for the enactment of title VII which provides for the resumption of the low-rent public housing program undertaken before the war under the United States Housing Act enacted by Congress in 1937. This title provides for a modest 4-year program authorizing annual contributions of $22,000,000 a year to help reduce the rents on low-rent public housing projects undertaken by local housing authorities. We recognize that this program is extremely small and by no means corresponds to the large and demonstrated need for publicly aided low-rent housing and slum clearance. We urge that at least this modest start be made at once as an essential part of the total program of better housing for families of all incomes.

The American Federation of Labor is proud to claim its share of responsibility in focusing public attention, during the past decade, on the urgent need to stamp out slums and to provide good housing for those whom private enterprise cannot decently house.

Experience under the United States Housing Act of 1937 has fulfilled the hopes and justified the confidence of all of us who supported that measure. That act has made it possible for communities to

clear slums and to rehouse families whose incomes were so low that they had to live in slums. This program has been carried forward under the sound principle of local responsibility for construction and management. It has provided adequate safeguards against Government competition with legitimate private enterprise. Finally, it has recognized the necessity of Federal annual contributions which, together with local contributions, made it possible to bring the rents of decent homes within the reach of families who had lived in slums. Based upon this record of performance, and based upon the even more compelling needs which exist today, we are more convinced than ever before that the program embodied in the United States Housing Act is sound and that it should be expanded.

We note with favor the provisions of the bill which are intended. to encourage the local enlistment of private capital in substitution for Federal lending. We note with favor the provisions for preference of veterans who are equally in need and eligible for the houses that would be built. Our main concern about the provisions on public housing is that the program which is proposed is so extremely small when measured against the enormous needs for low-rent housing with which we are still faced. Both in terms of housing needs and in terms of achieving the desired levels of employment and business activity, we urge an increase in the size of the program so that it will measure up to the full size of our national needs.

The programs of public housing and urban redevelopment are of far-reaching significance to the community and to the whole society. The social problems connected with the bad environment of slums are recognized as threats to health, safety, morals and social stability. Those who have not lived with and among the workers-who have not seen at first-hand living conditions among workers in all industries in all part of the country-may not realize the profound significance of bringing decent homes within the reach of the lowerincome wage earners.

Nothing can contribute more to the welfare and morale of the American people than an opportunity for all of them to have a healthy home in which to raise their families and their children. Both from the viewpoint of the family and the national welfare, it is vital that such homes be made available not only to those who can afford to pay the full cost of such homes, either through purchase or rental, but also to those who cannot afford to pay the full cost. Government aid-Federal and local-is necessary to make such homes available to these low-income families within their means.

The program of low-rent housing administered by local housing authorities under the framework of the USHA law has been under attack on the part of certain elements of private home-building industry. A careful appraisal of all charges and criticisms made against the public housing program demonstrates them to be unfounded. The overwhelming majority of the American public has watched the development of the publicly aided projects and is firmly convinced of the value of this program to the community. Most charges against the program have been prompted by the allegation that public housing competes with private investment. This charge is false. It cannot be borne out by any credible evidence. There has not been, there will not be, and there not be any possible competition between pub