underwrite and distribute securities to be issued under this housing act. We are not concerned about the question of them buying these bonds. Of course, they can buy them. They have had that authority, and it is natural they should have, but to underwrite and distribute is a different matter.

It has been mentioned, and the statement submitted by certain large banks states or implies that their participation in the underwriting would lower the cost and provide better distribution for these proposed housing authority bonds. That is a supposition which has not been proved, gentlemen. Personally, I do not believe that it can be substantiated by the facts. But at any rate, I call your attention to the fact that it is simply an opinion, which many of us dispute.

In the next place, one of the most important objections to this provision, permitting the banks to underwrite these securities, in my opinion, is that it would be a step backward in progressive Federal legislation. You are all familiar with the abuses that grew up in the decade of the twenties in the investment and banking field, due, to a considerable extent, to the fact that commercial banks more and more got into the security underwriting and distribution business. That was the cause of the serious abuses.

Fortunately, that was corrected in the legislation of the early and middle thirties, and banks are not now permitted to engage in the bond business for profit, referring to securities of corporations. Of course, they can participate in Government bonds and general obligations of municipals, and that is not a question at issue at this time.

However, I submit to you that to permit them to underwrite the bonds proposed under this legislation would be a step in the other direction. They would have another foot in the door for engaging in the security business, and open the door another degree, at any rate, to all those abuses which were so prevalent and which have been mentioned here by former speakers. It would be turning the clock back, and I do not believe that it should be done for that reason in particular. I feel that every good citizen is in favor of progressive, sound legislation, and that is one piece of legislation-divorcing the banks from the security business-that no one can criticize.

Let us keep it, let us strengthen it, instead of weakening it, as this proposed amendment would do.

Then, gentlemen, me question has been raised here about "good bonds." The statement submitted by the big banks implies, at least, that their backing of these proposed bonds would be a factor in causing them to be regarded as good bonds.

Now, gentlemen, that is just the trouble. There is too much feelingand it is not entirely the fault of the banks, and understand that I have no quarrel with banks, big or little, in general, they have their function and we are for them, in their place-but there is a public psychology, not discouraged at least, and I dare say in many cases it is encouraged and created by certain banks-but not by all-to the effect that if a bond or bond issue is backed by or is bought by banks, then it is a good bond. Gentlemen, I submit that that is a supposition contrary to fact. It does not follow. And in the very nature of the case, bank officers, with their manifold duties in other lines, cannot take the time, nor do they have the time, to analyze a bond and tell whether it is a good bond or not, any more than the members of your committee or the average citizen can do so.

We, in the business, who spend all our time at it, do not pretend to be able to say, in every case, what is a good bond and what is not. There is an enormous amount of statistical and research work necessary, and even being at it every day in the year, it is still sometimes impossible to tell.

So I appeal to you to oppose the provision with respect to underwriting by banks in section 502 of the proposed legislation, speaking for my own firm, speaking for certain other Pittsburgh dealers whom I have contacted, speaking for the National Association of Security Dealers, with its 2,700 members throughout the country, and speaking, I believe, for every person interested in maintaining and encouraging small business enterprises, without any reflection upon or criticism of, big ones, just because they are big, but speaking for fair dealing in all lines and proper restrictions to keep one line of activity from encroaching on another.

Gentlemen, I thank you.

The CHAIRMAN. We are glad to have your views.

Mr. MULTER. Mr. Chairman, at this time, may I ask unanimous consent to put into the record a letter from Charles Abrams, 225 Broadway, New York, dated February 21, 1949, addressed to Senator John Sparkman. Unfortunately it could not be made part of the Senate record because it was received by Senator Sparkman after its hearings were closed.

Mr. NICHOLSON. Who wrote the letter?

Mr. MULTER. Mr. Charles Abrams, who is looked upon by us in New York as an authority on public housing.

The CHAIRMAN. Without objection, it may be inserted in the record. (The letter referred to is as follows:)

Hon. JOHN SPARKMAN,

United States Senate, Washington, D. C.

NEW YORK, February 21, 1949.

DEAR SENATOR SPARKMAN: In a statement dated February 11, 1949, before the Senate Committee on Banking and Currency, Calvin K. Snyder, secretary of the Realtors' Washington Committee of the National Association of Real Estate Boards, appeared on behalf of the association and gave certain testimony quoting several sentences out of context from one of my articles in the New York Post Home News. This was then circulated throughout the country in support of the association's attack on the public housing bill. By separating the few sentences from the article as a whole, the implication is that I said that public housing has become immersed in politics. This is not the fact.

The issue I discussed involved an effort by the New York State Housing Commissioner to approve all sites selected by the New York City Housing Authority whether these sites involved city projects, State projects or Federal projects. Administratively this would have submitted the agency to supervision by five Government agencies and cripple its efficiency. The effort by the State Housing Commissioner was in my opinion entirely political. My article pointed out that there was long an effort by local Queens politicians to keep public housing projects out of Queens County where representatives of the National Association of Real Estate Boards have concentrated their efforts against public housing. My article said:

"The bill introduced by two Queens legislators is partly the offshoot of the ugly fight to keep public housing out of Queens where a few key members of the Washington anti-public-housing lobby have joined a clique of troublemakers in fanning up race hatred among Queens home owners.”

The balance of the article, which includes the sentences quoted out of context, reads as follows (the quoted sentences are bracketed) :

"Stichman's aim seems to be entirely political. GOP control of the Housing Authority's operations would be a great political coup. [The NYC Housing Authority looms as the big plum in the political orchard and the politician who dominates the housing authority controls the city's political destiny.

"Within a few years the families in public-housing projects will be nearly 10 percent of the city's total, and the investment of the authority exceeds $2,000,000,000, with all this means in construction contracts, patronage, and other rewards for the worthy.

"Selection of sites enables carving out blocks where hostile voters are numerous and retenanting the projects with those who vote 'right,' while tenant relocation on vacant areas could change a whole neighborhood's political complexion.] "Under proper procedures the city's independent planning commission is supposed to lay down a general plan indicating sites for housing.

"But this is not what has been happening. Opposition by Queens Borough President Burke has forced the authority to avoid Queens and select occupied sites in slums with all that it means in hardship to the occupants that are displaced.

Recently a small committee headed by Robert Moses was appointed to pick sites suitable to all the powers that be. Planning Chairman Robert F. Wagner,

Jr., was belatedly made a member.

"Amid the scramble for control of site selection now comes the Republican housing commissioner demanding that he, and he alone, be made site arbiter. This would put control of the forthcoming billion-dollar federally aided as well as the $300,000,000 city-aided projects in Stichman's hands and make him czar of every housing authority in the State.

"Under his fantastic proposal, five agencies representing all three levels of government would have to approve every plan and every change in the plan with all that it means in slowing up progress, and red tape. Stichman's delays in the past have caused projects to be held up for months, and administrative costs on his State-aided undertakings have been said to be more than three times that of city-aided and twice that of federally aided undertakings.

"Both the planning commission and the housing authorities of the State were set up with safeguards against political meddling. But efforts by politicians to move into housing have begun.

"The Stichman bill would now collapse its independence with a simple blow. It should not only be defeated, it should high light the fact that the people of the city will be overvigilant in opposing any offort by any political clique, whatever its earmarkings, to make the underprivileged the plaything of politicians."

As the article indicates, it was the effort to put politics into housing that I was attacking. I was not saying that housing had already collapsed into politics as the excerpt implies.

The Housing Authority was and is an inedependent agency set up with safeguards against political interference and so far it has done a remarkable job administratively and the people of this city have been given a relatively nonpolitical administration of housing.

*

I have not overlooked the danger of subjecting public housing to political interference, and I have written upon this often, particularly in The Future of Housing (Harper & Bros., 1946, p. 285 ff.). But there I distinctly said: "Political pressure in the selection of personnel and tenants has been applied in large or small degree to most of the local housing authorities. Because of their independent structure, the authorities have generally succeeded in resisting these influences. The independence of the authority is most often a blessing to mayors importuned by tenants and district leaders for apartments. the accomplishments of local housing authorities have been little short of phenomenal. The excellence of the record may be partly attributed to sound division of functions. All of the technical and administrative work is performed by the paid staff. All of the policy making is done by the authority, often on the recommendation of the paid executive and his assistants. Can Government's administrative mechanisms attain the efficiency of private enterprise at its best, while the people still retain enough control of their agencies to assure democratic fulfillment of the functions? The housing record is short mistakes have been made; policy may have to be modified, but the local authority experience has pointed the way."

*

The implications made by the National Association of Real Estate Boards is that, since politics is present in Government-aided enterprises, Government should therefore keep out of slum clearance, public housing, and all other activities. It should be plain that politics intervenes in every activity of Government, including social security, flood relief, poor relief, taxation, education, and the post office. But it would be as futile to recommend elimination of any of these vital functions as it would be to say that we should let ourselves be 89451-49-26

invaded by an enemy because defense might mean some war contracts for worthy politicians.

When politics threatens in any field in which Government intercedes, it is the place of the citizen and the press to fight the political intrusion, not eliminate the reform. Unless we are able to do this, the only alternate system would be anarchy.

The effort to take over the authority's functions was scotched in a few days by the exposure in the press. The bill was withdrawn the day my article appeared. Far from being a demonstration of the evils of politics in housing, the speed with which the bill was withdrawn was a remarkable example of public alertness and a tribute to the press.

Of course, public housing looms as a political plum. So does relief. So does every public-works program and every city, State, and Federal expenditure that has ever been made. The authority mechanism, however, is more poised to avoid the customary political interference than other public operations, and I have repeatedly said this.

The authority members in the city, with the exception of the chairman, come from the ranks of labor, banking, business, and the professions. They are unpaid. Terms of office are staggered so that no one political official will have the sole appointive power. No more than one city official may be a member. Of the 500 active authorities throughout the country, not one major scandal has been revealed through billions of dollars have been spent. Construction cost has been low and building efficient. The local housing authority as a mechanism for fulfilling public functions has turned in one of the most remarkable performances in the history of public administration.

I do not claim that every housing authority, is or will continue to be free from political meddling. Nor can any public agency. But when that happens, and when, as in this instance, the public responds as it did, the response is an example of democracy functioning at its best. The experience, far from being an attack on housing authorities, was a signal tribute to them.

Yours very truly.

The CHAIRMAN. Our next witness is Mr. West.

CHARLES ABRAMS.

STATEMENT OF GEORGE W. WEST, ATLANTA, GA., ON BEHALF OF CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. WEST. Mr. Chairman and members of the committee, my name is George W. West. My home town is Atlanta. I am a member of the board of directors of the Chamber of Commerce of the United States and represent their construction and civic-development department. Your committee is holding hearings on H. R. 4009, which is similar to the bill recently passed by the Senate (S. 1070). The national chamber is opposed to both these bills.

First, some comments on H. R. 4009.

The extent of Federal financial commitments under H. R. 4009 is indicated below:

No allowance is included in operations under title II or for general operating expenses.

Once this bill is enacted, these billions become available without further authorization by the Eighty-first or any succeeding Congress. Total committments of over $19,000,000, payable until the year 1990, can be entered into at the discretion of various administrators, and the full faith and credit of the United States is pledged to their payment. With respect to slum clearance and public housing, the Eightyfirst Congress would abandon, both for itself and its successors, the traditional control of the Congress over expenditures from the Federal Treasury.

In this connection, I call your attention to the fact that under the language of this bill determinations and judgments as to the performance of private enterprise and as to the need and character of governmental intervention are left solely to the executive agencies. Dependence on administrators is repeated in the various titles. The bill seems based on a philosophy of government by extensive direction rather than by fixed rules.

This bill (H. R. 4009) would have the Congress declare that the general welfare and security of the Nation require the provision of a decent home and suitable living environment for every American family as a definite responsibility of the Federal Government. Private enterprise would be encouraged to serve as large a part of the total need as it can, but the Federal Government, in effect, would provide whatever forms of assistance may be necessary and available to achieve the objective.

Is this a sound declaration of policy?

The free men and women of this country are responsible for providing themselves with food, clothing, and shelter. This has always been their responsibility under our form of government, and it will always be their responsibility as long as we remain a democratic and free society. The proposed declaration in this bill of a national housing objective in which the Government assumes responsibility for providing the housing for its citizens is not appropriate for a government of limited powers such as ours. This declaration of policy is inconsistent with our present form of representative democratic government.

Title I of this bill would provide Federal loans and capital grants to local communities for the clearance of their slums and blighted areas. Such assistance would be confined to purposes of land assembly and preparation for redevelopment and not to the construction of any of the buildings contemplated by a redevelopment plan. Administration of the program would be under the Housing and Home Finance Administrator. The program requires local financing participation equaling at least one-third of the difference between the project cost and the new reuse value of the land comprising the project

area.

The national chamber believes that we need some Government action to clear away the slums that exist in our cities and thus clear the way for rebuilding and redeveloping blighted areas so as to make them better places in which to live and to work. We have long advocated