These mortgages are fairly well distributed. That is, the life insurance companies hold about $6,600,000,000; the Savings and Loan Associations $4,750,000,0000; the Mutual Savings Banks $4,297,000,000; Commercial Banks $4,344,000,000. And the fraternal societies and associations and organizations, which are largely through the Middle West, are also becoming an important factor in the mortgage field. The detailed figures are as follows:

Total mortgage debt in the United States as of Dec. 31, 1944

Urban and farm mortgages of private agencies and others:

We are of the opinion that any legislation designed to assist the housing program should give encouragement to all the important lending groups which include the life insurance companies, the mutual savings banks, commercial banks, and trust companies. We must not overlook the fact that there are almost 150,000,000,000 dollars in liquid assets in the hands of individuals which will eventually find their way into purchasing power and investment.

There are approximately 70,000,000 life insurance company policyholders; likewise, there are about 45,000,000 savings depositors; there are somewhere between 8 and 10 million members of fraternal organizations. There are also the millions who purchase War and Victory Bonds. These are thrifty Americans whose interests must be protected against inflation and future loss.

The superabundance of investment funds on one hand and the ultimate $300,000,000,000 national debt presents a situation which makes it essential for private enterprise and Government, alike, to take whatever steps are necessary to avoid inflation which would bring eventual loss to those millions of thrifty citizens.

The most extravagant estimates of new housing requirements are 12,500,000 in the next 10 years; most estimates are about half that number. We can, therefore, make the deduction that the people now requiring housing, although their needs are acute because of the building restrictions of the last 5 years are relatively few in relation to our entire population. This does not mean that we should not take a sympathetic attitude toward the housing situation and do all within our power to correct it, but at the same time we must maintain a stable economy.

We have talked to thousands of builders within the last few months in search of information which would help us to solve this important national problem and the universal response from builders and material men is the same from all sections of the country. It can be stated simply as follows: The building industry is ready and willing to proceed in the most active building program that this country has ever known, but the industry wants to move with the minimum governmental control and restraint, and above all, without governmental competition.

Secondly, if the uncertainties in the Office of Price Administration could be cleared up, it would be the greatest help that could come to the building industry, and it would seem to us that with the assistance of the Federal Housing Administration, the OPA could develop a formula on rent restrictions for new construction which would further encourage active building. I personally am rather inclined to believe that if private enterprise and governmental departments could hold firm at the lending level and all restrictions be lifted on rents for new construction, the present housing shortage could soon be relieved.

As to public housing, our association has gone on record as opposing public housing, and we are definitely of the opinion that the credit of the Government should not be used for the development of housing needs except in case of catastrophe. We are naturally going to be asked the question: "How about housing for the lower income groups?" and as this bill pertains, in a large measure, to housing for the lower income groups, we feel that this question should

be answered here.

We would direct the committee's attention to the fact that the average cost of all types of dwellings has been reduced from $4,385 in 1930 to $3.263 in 1912. The averages were distorted by war housing in 1943; however, we find the average cost in that year was $2.830 and this was in a year of high building costs and the scarcity of labor. We believe that further reductions can still be made.

Senator MITCHELL. Are you saying there, Mr. Mahan, that private lending is meeting the need for housing in the lower income group? Mr. MAHAN. I say that it is gradually eliminating the problem. I would not say it has completely done so. But I am trying to point out to the committee at this point that over the years, in spite of higher building costs, the average cost per dwelling unit is being lowered constantly.

Senator MITCHELL. When would you estimate that the job will be done?

Mr. MAHAN. I wish you would let me finish, and then I will come back.

With increased wages and full employment, and a continued effort on the part of the building industry to decrease the cost of individual dwelling units by more efficient construction methods and larger scale housing, we believe that a large sector of our population known as the lower income group could be supplied with adequate and decent homes.

There is a sector of our population which would be classified as the handicapped, the indigent, the pauper, the laggard, and these require public aid. This, however, is a social problem and should be approached by the local communities and States.

Senator MITCHELL. Do you have any estimate of the total percentage of the population which would be in that group?

Mr. MAHAN. I have been trying to get figures from the reports which I have read, and the thing that confuses me is that all the figures showing the lower-income group which have been supplied to me, generally include this sector of our population.

Senator MITCHELL. But that sector would be a very, very small percentage of the total population?

Mr. MAHAN. As a matter of fact, it is pretty large.

Senator MITCHELL. What estimate would you make?
Mr. MAHAN. I would estimate about 20 to 25 percent.

Senator MITCHELL. One-fifth of the lower-income group would fall in this category?

Mr. MAHAN. That is purely a guess.

Senator MITCHELL. How can you guess?

Mr. MAHAN. Well, you can take various localities. In some localities, the percentage runs high, or low. You know the number of people in your institutions.

Senator MITCHELL. The testimony here has indicated that the housing situation makes the people you are talking about here.

Mr. MAHAN. Well, I do not entirely agree with that. I have lived in the country, and I have lived in the city. I know the habits of our city people, and I know the habits of the people in the rural areas. You will always have a large factor, a large sector of these people who are classified in this group.

Senator MITCHELL. Of course that is a varying sector?

Mr. MAHAN. I would say it is quite general. I see them in good times and bad. I saw them in the depression.

Senator MITCHELL. I mean across the country.

Mr. MAHAN. Yes. I have seen them in good times and bad. That type of people, I think, have been with us through the ages.

Senator MITCHELL. But your 20 percent is based only on your own observation? You do not have any specific figures to support that? Mr. MAHAN. I do not believe there are specific figures on that, but I think some of the social agencies have figures which would more or less support that estimate.

The CHAIRMAN. Did you read the testimony of Mr. Blandford here? Mr. MAHAN. Yes, I did. I did not read it completely. I saw it last night, and only went over it very hurriedly.

The CHAIRMAN. Well, he had estimates on the lower-income group, how much is needed for them, the shortage of housing there, and questions like that.

Mr. MAHAN. The best studies that I have seen on the subject have been made by independent agencies. I saw one from New Haven, Conn., made by the Association of Public Health, I believe is the agency that made it. And I am convinced in my own mind that the census figures and the deduction taken from the census figures does not make a proper differentiation between the people of this group and the people who are really unable to project their services into an income which is sufficient to support good housing, or a good home. Another thing, while we are on that subject, I would like to point out some observations which are not matters of housing at all. I have seen, and you have seen two families-here is a family that earns twelve or thirteen hundred dollars a year. Right next door to that family is a family who have the same identical earning power, twelve or thirteen hundred dollars a year. The one family is a thrifty family. They buy their groceries and they pay for them. They have a comfortable home and they maintain it. The other family is al

ways

The CHAIRMAN. Is this on $1,200 a year?

Mr. MAHAN. Yes, sir. I have seen very comfortable homes maintained on $1,200 a year.

The CHAIRMAN. With a family?

Mr. MAHAN. With a family.

The CHAIRMAN. Is that so?

Mr. MAHAN. They do it through thrift. They all work. The daughters and children work. They are thrifty. Right next to them is the same identical kind of a family, who do not have any of the elements of thrift. •

Senator MITCHELL. To have that illustration stand up, you would have to tell us the whole background of the two families, in order to have it mean anything to the committee. You would have to trace it all the way down, to show whether housing had anything to do with the thriftiness of one family and the waste of the other. The illustration by itself does not mean a thing.

Mr. MAHAN. The isolated instance, no. But you can pattern that. I have spent all my life in credits. For 30 years I have done nothing but handle credits for financial institutions, for myself or organizations which I represented. And that is an element which you must recognize. Now I will refer to Missouri, for instance.

The CHAIRMAN. Where?

Mr. MAHAN. The State of Missouri. While we are on the subject, we will take St. Francis County, which is not an industrial county. It is a farm area. Some years ago they brought to St. Francis County a great many miners to work in the lead mines of St. Francis County. St. Francis County ceased to be a mining area, and those families remained there.

They were not adapted to agriculture. They were not adapted to working in the fields, growing crops. They were purely miners. As the result, that county in Missouri has always been a social problem. Now the point I am making here is that the problem is not housing in that county, it is a social problem. And that projects itself into so many studies that you make of those particular problems. It is a social problem, which means rehabilitating those people and converting them to areas where they can be productive citizens, in the pur

suits which they are trained in, whereas, letting them remain there as farmers, they become the very class I have tried to illustrate here. Senator MITCHELL. That is a relatively isolated illustration, is it not?

Mr. MAHAN. I would not say so. I think you will find that element pretty well throughout the whole structure of our national life. Senator MITCHELL. But the places where housing is needed are for the most part in localities where you have a static population.

The CHAIRMAN. The slum areas. I know something about that in New York. That you are indifferent to this thing surprises me. There is something we have got to do for these people living in slums, not making enough wages to have a decent home. And yet, sanitation on these matters is a protection to the city and to the country.

Mr. MAHAN. Is the providing of housing the solution to the problem?

The CHAIRMAN. I think it is.

Mr. MAHAN. I do not believe that is the whole problem.

The CHAIRMAN. I know you do not.

Senator MITCHELL. What percentage of the problem is it, then, in your mind?

Mr. MAHAN. Let me go on. We will go back to that. I will be glad to discuss it-the subject of housing.

VETERANS

The subject of housing the veteran is uppermost in the minds of government and private enterprise alike, and I would like to read to you at this point, a recommendation made by the executive committee of our association, with reference to sections 501 and 505 of the Servicemen's Readjustment Act.

This association desires to call to the committee's attention that the veterans home loan program as established under sections 501 and 505 of the Servicemen's Readjustment Act and as proposed in legislation now before you, fails to make available to veterans the principal source of credit for residential financing in the United States, and denies the veteran, except at increased cost, the protections afforded by Federal Housing Administration financing; protections which urban home buyers, in particular, have learned to value.

These conditions can both be corrected without curtailing any of the veteran's present opportunities for borrowing and with a probable ultimate saving to the Government by making available to veterans FHA insurance on mortgages for 100 percent of value at 4 percent interest with no additional charge for mortgage insurance-losses and administrative expenses to be provided for by a separate fund appropriated for that purpose. A probable ultimate saving to the Government is assumed, on the basis of the loss experience of the FHA in insuring high ratio loans over the past 11 years 100 percent insurance with the opportunity to recover losses, at least partially, through subsequent resale is regarded as less hazardous than guaranteeing the first $2,000 of loss.

Section 501 of the present law makes available to veterans a 100 percent loan at 4 percent interest; however, the legal limits on ratios of loans to valuations imposed on life insurance companies and many banks prohibit their large scale participation in this program.

Section 505 theoretically makes FHA financing available to the veteran and also, therefore, theoretically makes available to him the credit resources of the banks and life insurance companies who otherwise are unable to participate. Under this section, however, cumbersome two-mortgage financing is required and the cost to the borrower is increased at least to extent of the one-half of 1 percent FHA insurance premium. The unworkability of this plan is recog