19, line 1, after the semicolon, following the word "involved,” and before the word "and," the following: * and also a provision requiring that no discrimination on account of race, color, creed, or national origin shall be made by any contractor engaged on the project involved, in the hiring, promotion, tenure, or employment conditions of any person employed or seeking employment, or in any connection with the project. In the housing field, it is generally known that private developers consistently fail and refuse to provide new and decent housing for racial minority groups. Mr. COLE. Will you repeat the last statement? Mr. PERRY. In the housing field it is generally known that private developers consistently fail and refuse to provide new and decent housing for racial minority groups. Since 1940 there has been an increase in the United States of the nonwhite colored population of 11.6 percent, as compared with 7.5 percent of the white population. In many areas, such cities as Los Angeles, St. Louis, and Detroit, the nonwhite population has increased by almost 100 percent. Yet, little housing has been constructed or made available to the nonwhite population in these areas. This is a grossly neglected market. A survey made by the United Press and released January 17, 1949, shows that, in spite of the recent decision by the United States Supreme Court holding restrictive covenants unenforceable, from coast to coast, realtors, banks, and other lending institutions uphold in actual practice the "white gentiles only" rule for sales and loans. In order to provide decent housing for the neglected minority groups, we suggest an amending title II, dealing with the low-rent public housing, by adding, at section 201 (b), page 26 of the bill, at line 4, following the word "thereof," the following phrase: Except that the 20-percent gap shall not be required where the authority finds that private enterprise has not met the housing need of any racial, religious, or nationality group in the local community. I think the purpose of that amendment, gentlemen of the committee, is obvious. We do not believe that private enterprise should be permitted to say, "We are not going to build any housing for minority groups," and continue to enjoy the benefit of this 20-percent gap in private versus public housing. We do not believe that the Federal Government should underwrite their restrictive practices; we do not feel that it is fair and just. Actually, it seems to me that we might give incentive to private builders to build the needed houses by eliminating the gap completely, if it is found that they are deliberately not meeting the housing need of any particular segment or group in the community. We would also add substantially the same provision in section 206, which makes special provision for large families of low income, by making the required net income provision inapplicable where private enterprise has neglected any such group in the local community. The specific amendment we propose at page 44, line 18, following the word "families," is: Except that such net annual income shall not be required where the authority finds that private enterprise has not met the housing need of any racial, religious, or nationality group in the community. It has been some time since I have looked at that section, but my recollection is that it contains an income-rent-ratio formula. In the case of large families there is a $100 deduction for each child or member of the family over a given number. Finally, with respect to H. R. 4009, we urge an amendment to section 201 of title II, dealing with low-rent public housing, to prohibit all discrimination and segregation in the selection of tenants otherwise eligible for public housing. On page 27 at line 16, following the subsection (1), we propose that the following language be inserted: There shall be no discrimination or segregation on account of race, color, creed, or national origin. Mr. Chairman, I would like to say just a few words in connection with a bill that you have also pending (H. R. 1938), a measure which would amend the National Housing Act so as to provide direct loans and incentives to private builders for the construction of homes for persons whose incomes are in excess of that required for eligibility to public housing. We have this observation to make regarding H. R. 1938: The Federal Housing Administration, which will insure a large part of the construction under that bill, has done more than any other single instrumentality to force nonwhite citizens into substandard houses and neighborhoods. Federal Housing Administration has done this by throwing its vast lending powers behind restrictive racial covenants, in spite of the recent decisions of the United States Supreme Court in Shelley v. Kraemer and Hurd v. Hodge, holding covenants to be unconstitutional and unenforceable at law. Moreover, the Federal Housing Administration has actively aided and encouraged restrictive housing practices by private institutions wherever nonwhites were concerned. For example, section 213 of the bill authorizes direct loans to cooperative housing projects. On November 19, 1948, Assistant Federal Housing Administration Commissioner W. J. Lockwood wrote the National Cooperative Mutual Housing Association in New York as follows: The Federal Housing Administration has never insured a housing project of mixed racial occupancy. Under this FHA policy, housing cooperatives must build segregated housing or do without Government insurance altogether. We, therefore, urge that the Congress write into H. R. 1938 specific provisions prohibiting the Federal Housing Administration or any other Government agency engaged in underwriting, making direct loans, or furnishing other credits or aids for housing from making race, color, creed, or national origin a reason for granting or withholding such insurance, loans, or aids. Mr. Chairman, I would also like to put into the record a memorandum that was sent by this association to the President of the United States, concerning racial discrimination by the Federal Housing Administration, dated February 1, 1949, in which we set forth in some detail the practices of the Federal Housing Administration with regard to racial minority groups, encouraging restrictive racial practices, and generally helping and encouraging to confine Negroes to racial ghettos. The CHAIRMAN. It may be inserted in the record at this point. (The document referred to is as follows:) NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, The PRESIDENT, The White House, Washington, D. C.: DEAR MR. PRESIDENT: As you know, the National Association for the Advancement of Colored People has been seeking for years to break down the restrictions which confine Negroes to residences within black ghettoes throughout the United States. Thirty years of effort in this direction was climaxed by the signal victory of the association before the Supreme Court of the United States last May in Shelley v. Kraemer and Hurd v. Hodge. Those decisions established once and for all that private home owners and realtors who wished to exclude racial or religious minorities from a given neighborhood could not procure the aid of State or Federal courts to enforce agreements for this purpose. Despite these decisions and the report of your Committee on Civil Rights, the Federal Housing Administration has continued to lend its full support to the perpetuation of ghettos. In answer to protests against the granting of benefits to a veterans' housing project in which every tenant was required to sign an anti-Negro clause, FHA, in spite of the inclusion of race restrictive covenants in deeds or leases, stated that it would continue to give its support to such projects. On the other hand, requests for mortgage insurance for unrestricted housing were refused with the statement that unrestricted housing did not meet a favorable reaction on the part of prejudiced groups and consequently was a bad risk. Thurgood Marshall, special counsel of the NAACP, has prepared a memorandum which we are herein submitting for your consideration. This memorandum illustrates the discriminatory courses which FHA is pursuing and the moral consequences which this country will suffer should it be continued. We desire your assurance that the Federal Government will cease giving its support to racial restrictions in housing under its FHA program. We further seek to have FHA establish through certain procedures outlined in our recommendations a wholly unbiased policy of mortgage insurance in which the granting of benefits will be determined solely on the basis of the individual applicant without regard to race, religion, color, or national origin. May we ask that your action on this matter be as speedy as possible. The continued exclusion of America's minorities from decent housing imposes upon our cities, towns, and villages the ghetto pattern which undermines the entire fabric of our way of life and saps the vitality of the civil-rights program to which your administration is unequivocably committed. Respectfully, WALTER WHITE, Secretary. MEMORANDUM TO THE PRESIDENT OF THE UNITED STATES CONCERNING RACIAL DISCRIMINATION BY THE FEDERAL HOUSING ADMINISTRATION The shortage of housing is today a problem for every American. In addition to this barrier, however, minority groups as recognized by the President's Committee on Civil Rights are faced with a double handicap of prejudice and discrimination, which places them at a disadvantage in competing for the limited housing that is available. The report of this Committee found that these practices violated the basic principle that equality of opportunity to rent or buy a home should exist for every American. The denial of equality of opportunity to secure housing has confined minority groups to congested and deteriorating racial ghettos, and the solution of the housing problem of minorities is contingent upon procuring additional living space. In spite of the growing pressure of racial population in northern and western urban centers, as the result of migration through the last 30 years, those swollen populations continued to be restricted to their already overcrowded areas by traditional real-estate and financing discrimination, aided and abetted in recent years by the Federal Housing Administration. The overcrowding resulting from such constriction becomes apparent when the statistics on the urbanization of Negroes from the South is studied. The number of Negroes living in urban areas rose to 48.6 percent in 1940, an increase of 21.3 percent over 1910. During the following 7 years alone there was a continued increase of over 2 million nonwhite persons and a decline of more than 1,000,000 nonwhites in rural areas. The significance of this migration in terms of housing is illustrated by the fact that during these 7 years the nonwhite population of Los Angeles increased almost 100 percent, with a similar increase in Detroit and a smaller increase in such widely separated cities as St. Louis, Seattle, Akron. During the same period, the money earnings of nonwhite workers doubled and the proportion of nonwhite, nonfarm home owners rose by 40 percent as compared to 27 percent among whites. In 1947, 1 in every 10 nonwhite households in nonfarm areas was paying $40 or more for monthly rents. In other words, the increased earning power of northern Negroes had produced a very real market for medium- as well as low-priced housing. In 1947, many Negro veterans, had shelter been available at the price and quality they demanded, would have been willing and able to build their own homes. In Cleveland, the medium price these veterans were able to pay was $5,000; in Detroit, this amount was $5,500. The upper quartile in Detroit reported ability to pay $6,000 or more, and in Newark and Cleveland this group felt it could afford $7,000 or more. It is ironic indeed that, although the earning power and the desire for new and decent housing by Negroes is now a reality, the FHA-supported discriminatory tactics of real-estate groups and interests constitute an impenetrable barrier toward better housing opportunities. In the 1930's, with the initiation of a national housing program, the country embarked upon the solution of some of its major housing programs. For Negroes and other minorities, some relief was afforded by access to low-rent housing. But, with the growth in Negro urban population and the increased purchasing power of Negroes, the continued denial of the benefits to Negroes above the low-income group eligible for public housing created greater hardships. A. THE NATIONAL HOUSING ACT AND ITS ADMINISTRATION The National Housing Act is entitled "An act to encourage improvement in housing standards and conditions, to provide a system of mutual mortgage insurance and for other purposes" (48 Stat. 1246). The encouragement of the improvement of housing standards and conditions was undertaken not directly by building houses, but indirectly by encouraging private investment in housing through insuring the lenders against loss of funds (secs. 1703 and 1709). Neither the security of the lending institutions nor the profit of the builders thus financed was the objective of the legislation. Rather, its aim is to improve the housing conditions of the Nation. The Federal Housing Administration has lost sight of this objective. Not only does the FHA deny its responsibility for a positive social policy but it now considers itself rather as a private business organization. Instead of contributing to the solution of the housing problems of minority groups, the FHA, as shown by the memorandum of the NAACP to the President of the United States in 1944, embarked upon a program in which it followed traditional private realestate practice, fostered and spread race restrictive covenants, restricted mortgage insurance for Negroes to occupancy only in areas already occupied by Negroes and thus further curtailed needed living space and confounded the housing problems of racial minorities. Following our protest, the FHA made certain revisions in their Underwriting Manual but continued in practice to deny insurance commitments for housing available to Negroes except in Negro neighborhoods, or in subdivisions generally contiguous to such neighborhoods, to insure properties encumbered by racial covenants and to require, in many cases, that such covenants be placed upon properties seeking to qualify for FHA-insured mortgages. While the revised manual contains no direct reference to race, there are many references in the new manual which are interpreted and applied to achieve the ends openly advocated by the old manual. In section 1104, the manual requires the underwriter to make an estimate of "the probability of any change in occupancy relating to income and other characteristics of occupancy which would tend to change desirability for residential purposes." In section 1215 (4) (d), the underwriter is told to evaluate the degree of compatibility of the inhabitants of the neighborhood as "the presence of incompatible groups in a neighborhood tends to lessen or destroy owneroccupancy appeal." In section 1320, subdivisions (1) and (2), the underwriter is instructed to give weight to the "tendency of user groups to seek compatible conditions" and is admonished that "neighborhoods constituted of families that are congenial, physical conditions being acceptable, generally exhibit strong appeal and stability" and further he is instructed that his rating must reflect the degree of risk attendant upon change of occupancy of the neighborhood from one "user group" to another. While no definition of the term "user group" and no analysis of compatibility of user groups is to be found in the Underwriting Manual, the FHA has elaborated its "underwriting philosophy" in letters to inquirers. Thus in answer to a request for a statement of policy in regard to insuring mortgages on a proposed housing cooperative to be open to families of all racial groups, Mr. Foley, then Commissioner of FHA, wrote the Community Homes, Inc., on July 3, 1947, as follows: "This Administration does not use the mortgage insurance system either to promote or to discourage any proposal on the ground that it involves interracial characteristics. Such aspects of a proposed transaction are given the same consideration as all other characteristics, such as transportation, taxes, community facilities, livability, and design of structure. If the study on any of these points indicates probable adverse effect upon continued market acceptance to a degree significantly increasing the risk, we are not warranted in accepting the risk, regardless of the nature of the cause producing that effect." The development of this philosophy is shown in a further letter dated November 19, 1948, sent by Mr. W. J. Lockwood, the Assistant Commissioner, to Mr. Herman Will, Jr., in connection with the York Center Community Cooperative, another proposed interracial housing project in Illinois as follows: "If it is therefore apparent, with respect to the particular neighborhood or property under analysis, that infiltration will be unacceptable to the local realestate market and desirability of properties will be reduced in the market's mind, then this Administration has no alternative but to so recognize the conditions in its valuation of specific properties within that sphere of influence." The letter to Mr. Will is amplified by the annexed affidavit of Mr. Will setting forth the substance of a conference in which the FHA's representative in the area office located in Chicago, stated that "mixed" neighborhoods were a bad risk. As a result of this policy FHA approval was denied of the York Center Community Cooperative, because of its interracial membership. It is an easy step from governmental disclaimer of any responsibility for the promotion of unrestricted housing to governmental participation in the perpetuation of restricted housing. That step the FHA has now taken, for Commissioner Franklin Richards has declared in a letter to Thurgood Marshall dated November 1, 1948, that FHA would and could, with complete freedom, insure mortgages for a veterans' housing project known as Leavittown in New York where thousands of tenants are forced to sign leases containing a clause agreeing not to permit use of the premises by any person other than members of the Caucasian race. Contrasted with the vague language in which FHA's policy concerning unrestricted housing projects is couched, the commissioner's statement of policy concerning housing projects restricted against Negroes is strong and clear: "I find nothing in the (restrictive covenant) decisions to indicate that in the absence of statutory authority the Government, or any agency thereof, is authorized to withdraw its normal protection and benefits from persons who have executed but do not seek judicial enforcement of such covenants." In sum, the FHA withdraws its "normal protection and benefits" from Negroes who wish to live outside the ghetto, yet contends it is not authorized to withdraw such benefits from persons who contract with their neighbors to discriminate against Negroes. It is the thesis of this memorandum that support by the FHA of residential segregation in any shape or form is contrary and odious to the public policy of the United States as evidenced by the decisions of the United States Supreme Court last May prohibiting judicial enforcement of racial convenants and by the report of the President's Committee on Civil Rights. B. THE FHA POLICY OF CONDITIONING MORTGAGE INSURANCE FOR UNRESTRICTED HOUSING UPON APPROVAL BY THE LOCAL REAL ESTATE MARKET IS IN VIOLATION OF THE FIFTH AMENDMENT In their attempts to maintain residential segregation, property owners have secured Government sanction for a series of devices which have been held unconstitutional. First, the Supreme Court struck down an ordinance of the city of Louisiville which prohibited occupancy of homes by members of one race in any block where the majority of residences were occupied by persons of the opposite race (Buchanan v. Warley, 245 U. S. 60). Thereafter two ordinances |