HOUSING ACT OF 1949 TUESDAY, APRIL 26, 1949 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., the Honorable Brent Spence (chairman) presiding. Present: Messrs. Spence, Brown, Patman, Rains, Buchanan, Deane, Mrs. Woodhouse, Messrs. McKinnon, Addonizio, Dollinger, Mitchell, O'Hara, Talle, McMillen, Kilburn, Cole, Hull, Scott, and Nicholson. The CHAIRMAN. The committee will be in order. We will resume the hearings on H. R. 4009. Our first witness this morning is Congressman Jones of Alabama. Mr. JONES. Mr. Chairman, for the purpose of the record, I am Congressman Robert E. Jones, Jr., Eighth Congressional District of Alabama. STATEMENT OF HON. ROBERT E. JONES, JR., A REPRESENTATIVE IN CONGRESS FROM THE EIGHTH CONGRESSIONAL DISTRICT OF ALABAMA Mr. Chairman, I am gratified that you have given me this time before the committee this morning, as I am the author of title IV which is commonly referred to as the rural housing bill. This section represents an effort of some 3 years of intenseMr. BROWN. If the gentleman will pardon me, I wish to say that Mr. Jones is a recognized leader of the people out in the rural sections of our country. The CHAIRMAN. The chairman is also conversant with that fact, Mr. Brown. Mr. JONES. Thank you, indeed, Mr. Brown, and Mr. Chairman. For decades there has been a growing realization of the importance of adequate housing to the health and social and material well-being of people and a recognition that the public interest requires special ways and means of enabling large population groups to gain access to better living quarters. For the most part, however, inadequate housing has been associated in the public mind with cities. Little thought has been given to the rural situation. Yet the fact is that the rural farm dwellings, in general, are inferior to those of urban families, and the homes of the tenant farmers are even less adequate than those of the farm operators. Now, a good rural housing bill, one that is contemplated to be a long-range program, must have as its objective a good, sound, eco nomical approach which will bring into play several important factors, which I would like to enumerate. First, the objective of a good rural housing program must take into account farm credit as generally practiced. We are aware of the fact that the conventional credit practices that are now employed are not sufficient to give the farmer an opportunity to pay over a long period of time. And we must treat the investments, not only upon the value of the land, but must take into account the people who carry on the farm operation and hold the responsibility for the wise use of the land. Farmers cannot obligate themselves with debts for building and similar expenditures without a reasonable plan for liquidating the debt. Of course, that is particularly true in the case of farm tenancy, where there is not an adequate investment in the land itself that would warrant short-term loans. Another factor that must be taken into account under the provisions of this bill, which we set as an objective, is that it be an educational program, and would provide better houses and investments without employing Government assistance. The present-day earnings of farmers are probably higher than they have ever been in their history. Yet there has not been the incentive for the farmer to divert part of his profits in providing better houses for himself. There is not the technical assistance, nor the know-how. One of the prime objectives of the rural housing bill, considered from a long-range approach, is the cultivation of neighborhood standards in housing, certain minimum requirements toward which the family works as a necessary part of its mode of living. It must be one point of attack on the rural housing program. The decline in rural population and the urge for rural growth to move to the city may, in part, be met by raising the standards demanded for the farm home, thus alleviating one of the less satisfactory elements of rural living. Now, of course, of recent date we have seen a good deal of comment about slum clearance-particularly in the city of Washington-and some of our folks are amazed to find that slums actually exist very close to the Nation's Capitol itself. But, Mr. Chairman, I submit to you that there are slums outside of the city of Washington, from one end of America to the other-on the farms of the country-which this bill would attempt in some way to alleviate. I would now like to give you a short analysis of the bill itself. This provision will provide authority for Federal assistance toward the construction and improvement of farm homes and other buildings. It would make available to the farm residents a means adequately effective to those available to urban residents for securing adequate, safe, and sanitary homes. The bill contemplates the extension of financial assistance, through existing Federal agencies, to the owners of farms without decent, safe, and sanitary dwellings, and adequate other farm buildings, who are unable to finance such improvements through credits from other sources, upon terms and conditions suitable for such purposes. Some financial assistance in the form of limited grants would also be extended, to eliminate hazards to health and safety of occupants and to the community which cannot otherwise be improved. The bill also contemplates an extensive program of research and technical studies for the purpose of stimulating the construction of farm buildings, improving architectural designs and utility of buildings, utilizing native materials, effecting economies in materials and construction methods, and other phases of farm dwellings, with a view to reducing costs and adapting farm buildings to more efficient and economical farm use. Technical services, including furnishing of building plans and specifications, and supervision and inspection of constructon, is another type of servce authorized by the bill. It is proposed to inaugurate the program by authorizing loans not exceeding $25,000,000 on and after the beginning of the first fiscal year after the enactment of the bill, and additional amounts of loans on and after the beginning of the second, third, and fourth years after the enactment of the act of 50, 75, and 100 million dollars, respectively. The bill would authorize the Secretary of Agriculture, through the Farmers Home Administration, to extend financial assistance to the owners of farms to enable them to construct, improve, alter, repair, or replace dwellings or other farm buildings so as to provide the applicant, tenant, sharecropper, and laborers with decent, safe, and sanitary living conditions and adequate improvements. For the purposes of the act, a farm is defined as one or more parcels of land, operated as a single unit, which are used for the production of agricultural commodities and customarily produce, or are capable of producing, for sale and home use, agricultural commodities of a gross value equal to $400 in 1944. Many rural tracts classified as farms under the census definition would not be eligible for assistance under this definition, but for the most part the units which would not be eligible are more accurately described as rural residences, the occupants of which are primarily engaged in pursuits other than agriculture and the agricultural production from which is purely incidental. Mr. RAINS. Does that say it must be a certain acreage or a certain gross income? Mr. JONES. Well, Congressman Rains, we have endeavored to find a formula that would set up the minimum requirements that would qualify for a loan. After going into the matter with the various departments, and making inquiries of farmers themselves, we found that probably the best formula would be established by defining a farm unit as of 1944, based upon an earning capacity of $400 at that time, or one which was capable of producing $400 as of 1944. Mr. RAINS. Well, under the bill who has the say-the Farmers Home Administration? Mr. JONES. The Farmers Home Administration would determine the eligibility. There have been some questions raised as to whether the Secretary would be arbitrary about what the applicant would be required to go through before he could establish his eligibility. I do not share those apprehensions because it would be merely on statement and upon inquiry of the neighbors who lived in the adjacent farms or community during the period of 1944. Mr. RAINS. Does it provide for appraisals? Mr. JONES. No, sir. Mr. RAINS. I was going to say that that would seem to be quite a burden. Mr. JONES. Yes, that would burden the Department with too much work. There is a wealth of information in the respective Production and Marketing Administration offices, in the counties where agricultural activity is carried on. Mr. BROWN. Will you yield, Mr. Rains? Mr. RAINS. Yes. Mr. BROWN. I would like to say that as long as we have Mr. Lasseter at the head of this agency I am sure he will carry out the will of Congress. Mr. JONES. Permit me to say, Mr. Brown, in support of what you have said, that we have faith in Mr. Lasseter's integrity, and his capacity to do the job, as certainly manifested by the job that he has done for the Farmers Home Administration. Mr. RAINS. How long are these loans going to be for? How many years? Mr. JONES. The loans on adequate farms will be for 33 years, at an interest rate of 4 percent. Mr. RAINS. With an interest rate established at 4 percent? Mr. JONES. Yes, sir. Mr. MITCHELL. It is not more than 4 percent? Mr. JONES. No; it. is 4 percent. Mr. MITCHELL. Is it definite? Mr. JONES. Yes, sir; you will find it on page 53, line 5. Mr. JONES. That is correct. I would like to go a little bit further, Mr. Brown, if you will permit me, and say that the Farmers Home Administration is the only agency of the Department of Agriculture that has had vast exeperience in building enterprises. Not only that, Mr. Lasseter informs me that within 90 days of the enactment of this bill, the program can be placed in operation. I believe you will recall that Mr. Foy testified that, under the provisions of the other sections of this bill, it would take a year and a half to get the program launched. Mr. PATMAN. This is a farm-purchase program? Mr. JONES. This is not a farm-purchase program, for the simple reason that the Bankhead-Jones Tenant Act takes care of that situation. Mr. PATMAN. You think it adequately takes care of it? Mr. JONES. Yes, sir. Mr. PATMAN. This is just to help tenants? Mr. JONES. No, sir; it is to help tenants, owners, and contains a general approach to it. Mr. RAINS. In other words, it provides a method for housing both for tenants and owners; is that it? Mr. JONES. That is right. Mr. RAINS. Does it require title? Mr. JONES. No, it requies whatever equity he might have. For instance, the bill provides that he shall exhaust every attempt to find local credit. But let me proceed, and I will go into the various provisions of the bill. Mr. BROWN. Are there any grants provided? Mr. JONES. Yes, there are grants provided in those so-called submarginal farms, Mr. Brown-for instance, the farms that are not potentially adequate. We do not want to encourage the farmer to remain on the premises; neither do we want to encourage him to become a problem to some city location. We had better keep him there until he can make more suitable arrangements to become a wage earner outside of the area where he is presently located. Mr. RAINS. I think, Congressman Jones, you had better put in the record, since it is rather a new subject, all the information you have as to need, because I doubt if the members of the committee living in cities are familiar with that. Mr. JONES. If you will permit me, I will go ahead with the general provisions of the bill and then describe the types of farm dwellings that we have in America today, and the question of need. The bill would also authorize loans for a period of 33 years at 4 percent interest on farms having income and earning capacity sufficient to repay the full sum loaned. In order that you may follow, I would suggest that if you will turn to page 51, sections 404, 402, and 403, you will see there set out the character of the types of loans that would be permissible under title IV. It will also authorize loans on farms having inadequate agricultural or other income adequate to support housing and other buildings, only in connection with the owner of the farm undertaking to enlarge or otherwise develop the agricultural income so that within a period of 10 years the full obligation with respect to such loans could be met. And those, Mr. Chairman, are those present inadequate farms which these loans will help to make adequate to the point where the loans can be repaid. Mr. PATMAN. Would there be a first lien on the property, including the farm home and the land? Mr. JONES. Yes, sir, Mr. Patman. Mr. PATMAN. It would be a first lien? Mr. JONES. No; it probably would be a second or third, whatever equity he would have in the farm, because if the land itself is sufficient to procure money from some private lending institution, then he would have no need for a bill of this kind. Mr. PATMAN. I notice it is just for the owners of farms. Of course, the owners can help their tenants by helping themselves get better improvements on their farms. Mr. JONES. Yes, sir. Mr. PATMAN. I just wonder if this bill would be used to any great extent. Most landowners now can get credit, and they do not seem to take too much interest in their homes. They do not seem to care whether they have good living accommodations or not. Mr. JONES. That is the very situation we had in mind, Mr. Patman, in drafting a bill of this nature. Mr. PATMAN. You want to encourage them. Now, you can pull a string, but you cannot push a string. How are you going to push these landlords into doing it? Mr. JONES. Well, we have to be realistic and try to approach the problem from the practical standpoint of farm economies, rather than trying to undertake it with a view to completely revolutionizing the farm economy. Mr. PATMAN. If we were to allocate our acreage or our production in a way such that tenants would be in demand, so that there would be |