was anything I could do as a member of the Banking and Currency Committee, to see that the project was carried on, I would be perfectly willing and happy to accept any responsibility attached to my endorsement of the idea of carrying it on. I still feel that way about it. We are investing a lot of money today in a lot of places that don't promise anywhere near the return that this does. Senator FULBRIGHT. Is that all, then? Mr. LOBDELL. I was just going to, say, the public has gotten something out of this. They have gotten 2,300 houses right now; so it is not like putting the money into something that is not going to bring any return or has any use. We know the Government has put money into things that did not bring any return. Here there are 2,300 houses, plus the potential of thousands of houses, and a big savings to the Government. While the statement may have been made that they didn't intend to close it out, yet, according to the court action, it certainly appears that that is their intention, that they are going to close us out. Senator FULBRIGHT. Thank you very much, Mr. Lobdell. Senator Douglas suggested a Mr. Goodman wanted to have 5 minutes. Are you Mr. Goodman? Mr. GOODMAN. Yes, sir. Mr. LOBDELL. Thank you very much, gentlemen. May I ask you a question? Can we turn these telegrams over tomorrow, those we haven't tabulated, so we can find out the actual results? We can leave these others here. Senator FULBRIGHT. Certainly. I just thought they might be of interest to RFC and to the committee. If you like you can take them all and put them together; and then bring them back, if you prefer to do that. I think they would be interesting to have them as part of the exhibits. Mr. LOBDELL. Thank you very much. STATEMENT OF LEO GOODMAN, DIRECTOR OF THE CIO NATIONAL HOUSING COMMITTEE Mr. GOODMAN. Mr. Chairman, I am Leo Goodman, director of the CIO national housing committee. I have asked the clerk to pass to you two pamphlets which are the CIO's statement of interest in this issue. You will recall that Walter Reuther appeared before this committee on Monday, February 14, 1949, and, in our judgment, discussed in some detail the issues that are here before you today. That testimony appears beginning on page 445 of your hearings entitled General Housing Legislation. The interest of the CIO in this issue is not a selfish one. We are not seeking members in this industry. We are seeking to urge the Congress to take steps to help establish an industry which, in the present complex production systems, cannot get off the ground by itself. We believe that the statement of the case made in the two pamphlets before you proves the necessity and desirability of Government aiding the establishment of this new industry, not only for the homes which it will produce, but for the military advantage which will accru our defense system under the suggestions 'made in accordance w the plan presented to you by Mr. Reuther. We believe that we are increasingly approaching that condition our national defense needs which requires the establishment of industry which will be able to produce a large volume of homes eas assembled, in a period when the possibility of attack is a real one. We believe that this kind of an industry, and the issue that you: discussing here today, results from a complete lack of understandi of the prerequisites of the success of such an industry. It also sults from an organized campaign of attack by those who believe excl sively in the status quo, and those who fail to have sufficient imagin tion to recognize the possibility of success of such a tremendous ne undertaking. We had the same kind of people when the automobile began displace the buggy. We had the same kind of attack; and Hen Ford has written in great detail of his difficulty with the Wall Stre bankers, who failed to realize the tremendous financial potential i the automobile industry. Senator FULBRIGHT. Mr. Goodman, I think that we have demon strated our interest in the general problem. Do you have any knowl edge of the specific problem that now confronts us? I think you can gather from what has been said that the committe would like very much to see some way worked out by which Lustro could be carried on successfully, not only because we are concerned as we are, with the Government's investment, but also to do the same thing you are talking about. We are in agreement about those ob jectives. Do you have anything to help the committee on this specific problem? Mr. GOODMAN. I would like to go into the specific, if I may. Senator FULBRIGHT. I don't think we disagree about the value of the project, if we can find a way to make it a success. Mr. GOODMAN. I think we have made some suggestions, Senator, which I would like to follow up. Because of Mr. Reuther's presentation, he has been besieged, since his appearance before this committee, by the various representatives of the various segments of the industry, who have stated to him the problems which they face; and I believe, because we are not an interested party, we can add some elements to the discussion which you have had here that have not as yet been brought out. There are two basic elements that I feel it would be desirable for the committee to be aware of. One is that this established industry cannot be easily put into effect. We stated that in great detail in this plan you have before you entitled, "Homes For People, Jobs For Prosperity, and Planes For Peace." I hope it will be possible to embody that plan into the record, so you will have available, for anyone who cares to read it, the full discussion of the complex factors that lead up to the suggestions we make, beginning on page 29 of the program, to put this plan into gear. Now, that envisaged the possibility of the coordination at top level in this city of all the housing agencies that are involved, to take into consideration the factors that are necessary for the success of this kind of an industry. For example, we have met at great length with the Secretaries of Defense at the various levels. Our representatives, along with representatives of other public interested groups, have met with representatives of the RFC, the FHA, the Army, the Navy, the Air Corps, the White House. We are expecting an early meeting with the National Security Resources Board. Senator FULBRIGHT. Mr. Goodman, I think that is very fine work; but can you give us some ideas about the Lustron problem now immediately before us? Mr. GOODMAN. Yes, sir. Senator FULBRIGHT. Mr. Sparkman here has a subcommittee on housing; and I know he is interested in coordinating it; but that is a very different problem. What about this immediate problem? Mr. GOODMAN. We believe, sir, that the immediate problem could be solved by coordinating the activities of the military services and their housing needs with the activities of the Home Housing and Finance Agency, under Mr. Foley, and the activities of the FHA and the RFC. Some efforts have been made to that, Senator. Senator FULBRIGHT. Do you mean by that, that the military ought to be interested in purchasing some Lustron houses; is that what it comes down to? Mr. GOODMAN. That is one aspect of it, yes. There was a second aspect, sir, of the advantages that would accrue to the military, in their mobilization needs, of having these plants on a stand-by basis. We have discussed that with the Munitions Board; and consideration has been given to it. I would like to tell you, without going into too great detail, an exact example of how the military could have prevented and avoidedif the RFC had not been adamant in its desire to kill this industry, in our judgment-the situation we are now in. Senator FULBRIGHT. What do you mean? I am interested in that, that they are adamant in their desire to kill this industry. What facts do you have to lead you to that conclusion? You think they do want to kill this industry? Mr. GOODMAN. I am convinced that they do. Senator FULBRIGHT. Why? Mr. GOODMAN. They represent the thinking of those that believe in the status quo in the housing industry. Senator FULBRIGHT. You think the RFC does? Mr. GOODMAN. Yes, sir. Senator FULBRIGHT. Then would you recommend this whole thing be turned over to Housing and Home Finance? Mr. GOODMAN. Yes, sir. Senator FULBRIGHT. I have also suggested that to the committee, I may say; and I don't think it is a bad idea. Mr. GOODMAN. We have so recommended, Senator. Senator FULBRIGHT. Can you pursue that thought just a little? Mr. GOODMAN. Could I give you one case as an illustration of the kind of problems that have come up in the present circumstances, and to show how that kind of transfer would eliminate the problem? Senator FULBRIGHT. Yes. 63072-50-5 Mr. GOODMAN. One of the most urgent housing needs of the military was illustrated in Life magazine about a year ago, in a spread regarding Fort Dix, showing families actually living in chicken coops. The military have been very concerned about that housing problem. I had hoped, in the general presentation, to discuss the urgency of the military housing need as a generality. Senator FULBRIGHT. We just passed a bill providing a great deal of money. That isn't the problem. I don't want to be impolite; but this particular problem of Lustron is the one before us. This is not the full committee nor the Housing Committee. All I want, as far as I am concerned, are your ideas about this particular project. I understood you to say it ought to be transferred to the Housing and Home Finance because, I think you said, the RFC is not sympathetic, at least, with this project; is that correct? Mr. GOODMAN. I think they have purposely blocked this, sir, and prevented its success; and I think I could document it to the committee. Senator FULBRIGHT. What do you mean by that? That is what I am interested in. What is your documentation of that? Mr. GOODMAN. Well, in Fort Dix, the military released this story of the urgency of the housing need there, because of the serious problem which resulted from the failure to meet the family housing needs of the military personnel at that camp. Now I am not here to defend any particular dealer or any particular company; but as an illustration and as an example of the charge I make, I contend, sir, that the RFC, in dealing with the commanding general, and a dealer of this company, did everything to prevent the possibility of using Lustron houses to solve the housing shortage in the Fort Dix area. Senator FULBRIGHT. What evidence do you have of that? Mr. GOODMAN. I would like to introduce into the record, first, if I may, a communication entitled, "Fort Dix, N. J.” Proposal submitted, June 1, 1949. Order issued by Commanding General, First Army, August 11, 1949. This is in the nature of a commitment, sir; for $3,445,500, for 300 Lustron homes. I would like to ask that that be inserted in the record. Senator FULBRIGHT. All right, it will be inserted. (The document referred to is as follows:) FORT DIX, N. J. (R. W. Elliott) Proposal submitted, June 1, 1949. Order issued by Commanding General, First Army, August 11, 1949. Sponsor-dealer: Arthur Padula. Number of units: 300. Number of Lustron units: 300. Distribution and rentals: Two-bedroom, model 02-$85 per month shelter rent. Three-bedroom, model 03-$95 per month, shelter rent. Financing: Conventional mortgage loan. Required mortgage loan: $3,080,000. Sponsor's equity: $365,500. Project cost: $3,445,500. This is a negotiated project on which agreement has been reached with the military authorities for the above-stipulated 300 single-family Lustron units at the shelter rents specified above. Wherry financing is not involved. In other words, it is not a competitive proposition, but rather a negotiated deal for a project to be erected on the military reservation under a long-term leasehold agreement at a low annual rental estimated at $2,750 per annum. The housing is urgently needed and the post has agreed to hold the same open and in abeyance pending acquisition of requested mortgage financing by the sponsor, Arthur Padula. Mortgage financing from private source is not available because of the uncertainties naturally attendant upon any project built for the military services based, essentially, on lack of market stability. The mortgage loan exceeds the maximum $9,000 mortgage amount per dwelling unit permitted under the Wherry bill (title 8) and is, therefore, not eligible for FHA mortgage insurance. Mortgage ûnancing must be obtained from another source, such as RFC. Extensive discussions have been held with RFC with approval withheld by them pending determination of Lustron's future financing. If this latter point is determined satisfactorily, the procedure proposed to be followed contemplates application with a proposed Lustron Mortgage Co. for financing. (On October 19, 1949, an RFC spokesman advised no money would be loaned on this project. In December the Commanding General, First Army, rescinded the order of August 11, 1949.) Mr. GOODMAN. That was a fixed commitment; and the RFC advised the military services that they were going to take the question of the financing of those homes under consideration. The commitment, as you notice there, is in the nature of a contract. The military needed the homes; the company was anxious to sell the homes; they sought to fill that need. On August 16, 1949, Harry O. Fischer, Lieutenant Colonel, Corps of Engineers of the United States Army, wrote the Lustron Corp., effecting that contract. I ask that this be inserted in the record. Senator FULBRIGHT. It will be inserted. (The document referred to is as follows:) CORPS OF ENGINEERS, UNITED STATES ARMY, Attention: Mr. Frank L. Sundstrom 4200 East 5th Avenue, Columbus, Ohio GENTLEMEN: For your information you are advised that the Commanding General, First Army, has selected the Northern New Jersey Better Living Homes Co. for the construction of a 300-unit privately owned housing de elopment for Army use at the Fort Dix Military Reservation and has requested this office to negotiate a lease with said company of Department of the Army owned lands to effectuate that purpose. A conference held in this office with Messrs. A. H. Padula and A. L. Padula, of the above mentioned company, was attended by Mr. Frank Specht of your company, who advised this office at that time that construction of the contemplated housing project was to be financed by your company and that you were therefore interested in the terms of lease to be negotiated. At Mr. Padula's request there is therefore transmitted herewith for your consideration a draft of proposed lease embodying terms and conditions agreed upon at the abovementioned conference. In the event that there are any particular clauses that you desire to be included in the lease for your protection as the prospective mortgages, it is suggested that you advise this office thereof so that consideration can be given to the propriety of including such matter. For the district engineer: Very truly yours, HARRY O. FISCHER, Lieutenant Colonel, Corps of Engineers, Mr. GOODMAN. I met today with the commanding officer at the Pentagon in charge of these commitments. |