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Mr. Mul/TER. When you talk here about Government getting into this business of public housing and slum clearance you are talking only about the Federal Government?

General SMITH. No; I make a big distinction between Government housing and slum clearance.

Mr. MULTER. You are willing to have the Government clear the slums but not put up the houses on the cleared area?

General Smith. I think we would get along a good deal better if the Government assisted local governments, who I believe are better fitted to do the job, to clear the slums. Then you do not always have to put up a housing unit in that slum-cleared area.

Mr. MULTER. You must house the people you take out of the slums.

General SMITH. There is no doubt about that, but we have been housing people that come out of slums right along for years and years and years.

Mr. MULTER. Where in this country has there been any extended slum clearance, removing of slums and not replacing them with other houses?

General Smith. I do not think there has been a great deal of it except in individual localities. For instance, a place that years ago was a residential area, turns into slums, and then quite often that particular area is better fitted for business or something of that kind than for residences.

Mr. MULTER. Do you know of any locality, municipal or State, which can clear the slums and put up housing to take care of the lowincome groups, without Federal help!

General SMITH. I think it could be done.

Mr. MULTER. Name a single locality, municipal or State, that can do it on its own without Federal help.

General Smith. I think perhaps if the State and municipality did not have to contribute so much to the Federal Government for taxes that they would be able to handle this problem.

Mr. ŇULTER. Assuming we cannot give them any relief along the tax line, name a single State or municipality that can handle this slum clearance and public-housing program on its own without Federal aid.

General SMITII. I cannot name a single State because I do not have that data before me, but I suspect there are plenty of States where the tax situation is such that they could do it if they wanted to.

Mr. MULTER. But there are many States and localities that cannot do it. The conferences of governors and of mayors both have so stated.

General SMITH. Of course, governors and mayors are human like anyone else, and if they can do something in their locality that benefits them and they do not have to pay for it, it is quite human for them to get it from some other source. Perhaps I would be the same way if I were in their position.

Mr. MULTER. Do you think if you had enough time you could come back and tell us that any State or municipality that could do it on its own without Federal aid ?

General SMITH. I think so.
Mr. MULTER. We will be glad to have you furnish that information.
General Smith. I will be very glad to, sir.

Mr. MULTER. Now, one other thing. You do say in your statement: If it appears necessary that Federal aid be granted to the localities in slum clearance, we feel very strongly that this is the best approach to the questionreferring to the Dirksen bill. Are we not attempting to do just that in this very bill, if we determine that the municipalities and States cannot do it on their own-does this bill not provide Federal aid to them?

General SMITH. It does under certain circumstances, but I think the error that is being made, as I said a little earlier in answering one of your questions, is mixing up the Government housing problem with slum clearance. From what I have observed in my own localiity, in the first place, the Government housing authorities quite often go out and build a public housing unit without tearing down the slums. They use vacant land.

Then again, while the theory here on slum clearance and on Government housing also is to take care of the lower-income group; from what observations I have made, they are not being taken care of. It is the people who are perfectly able to pay and should either pay their own rent or buy their own home if they had the incentive to do it that are largely, by far, the occupants of these Government housing units.

Mr. MULTER. Do I understand that you would be in favor of Government clearance of slums without any means being set up by the Government of eventually getting back some of the cost of the slum clearance?

General SMITH. No; I think that would be very desirable.
Mr. MULTER. To do it without any thought of getting back any

of the cost of the slum clearance?

General Smith. I think if they could get it back, it would be very well.

Mr. MULTER. How can you do it if you do not replace the slums with housing, which will then bring in an income?

General SMITH. If you replace the slums with buildingsMr. MULTER. What kind of buildings can you replace the slums with?

General SMITH. Factory buildings. It might be desirable, in some cases, to have a public park. In that case, you would not get any money back, but if the property is improved, the city or municipality is going to get some of its money back in tax receipts.

Mr. MULTER. In other words, your association would be in favor of the Government clearing slums for the factory sites for the benefit of industry, but would not be in favor of doing it for housing?

General SMITH. I do not say that, sir. I say it is not always a desirable thing after you have cleaned up a slum area, to necessarily limit it to housing, because that, in the growth of the community, that land perhaps is no longer a proper location for housing, and I believe that the situation should be broad enough so that the city or town, having spent some of the Federal money, if you want to put it that way, to clear that slum, should be able to get some of it back by putting it to the best productive use and to derive the business income from it either in taxes or something else.

Mr. MULTER. Up to the present time, your associations that make up this league have not participated in any venture to build low-cost housing, either for rent or for sale; is that correct!

General SMITH. I should say we have done a great deal. I believe Mr. Bodfish can give you more accurate statistics than I can, but I know that in my own locality—and I feel very strongly that it is that way all over the United States—a greater part of our lending in this last 2 or 3 years has been for low-cost housing.

Mr. MULTER. For sale?
General SMITH. For sale.
Mr. MULTER. None for rent?

General Smith. Well, some of us are not big enough to participate in the big developments for rent. Some of the larger ones have done so. I am speaking from my own experience. We are not large enough to go into a rental proposition and therefore we are limited to individual houses.

Mr. MULTER. Thank you, sir.
General SMITH. Thank you.
Mr. BROWN. Mr. Bodfish.

before youl.

STATEMENT OF MORTON BODFISH, CHAIRMAN OF EXECUTIVE

COMMITTEE, UNITED STATES SAVINGS AND LOAN LEAGUE Mr. BODFISH. My name is Morton Bodfish. I am from Chicago and chairman of the executive committee of the United States Savings & Loan League.

I would like this morning for a few minutes to bring out I think a somewhat different point of view to the consideration of the legislation

Many years ago when I was in academic work and later when I moved into business, it was my good fortune to visit the housing projects in Continental Europe. I have been in most of the pre-World War II housing projects in Great Britain, I have been in Great Britain since the war, and have seen some of the postwar housing there, and it seems to me that the experience of the other great English-speaking nation might be helpful in a consideration of some of the underlying principles and what some of us think may be the ultimate results of the type of legislation that is before us and I would like, if I could, to take 15 or 20 minutes to summarize the British story as accurately as I can. I would like to present it and then I will be very glad to respond to questions.

Mr. PATMAN. You visited Sweden, too, Mr. Bodfish.
Mr. BODFISH. Yes.
Mr. PATMAN. I wish you would cover that, too.

Mr. BODFISH. I will be glad to. I must say in all fairness that I know a great deal more about the British situation than the Swedish picture.

Mr. BUCHANAN. Of course the Swedish picture is very much better. Mr. Brown. You may proceed. Mr. BODFISH. It is the great middle group in Great Britain today which is finding it increasingly difficult to locate a place to live which they can afford. By the middle group I mean roughly the people living on incomes ranging from the equivalent of $2,000 to six or seven times that much. I have translated all the figures I use from pounds into dollars on the 4-to-1 basis.

They include, in Great Britain, the doctors and school teachers and the owners of small business as well as the white collar people who clerk in the stores and keep the books. They constitute a very sizable slice of the British population.

For a modest, semidetached dwelling, not a new one, mind you, the man with a $2,000 a year income has to pay at least $10,000, and it will cost him about $640 a year for the next 20 years, taking into account his taxes, his mortgage payments, repairs, water, insurance, and the like. The wage earner, on the other hand, can rent the same size house for $340 a year, and to enable him to do that the state stands the dead loss of $100 a year on every house, if you include the subsidies from the Exchequer, which corresponds to our Federal Treasury, as well as from local governments. The difference is the man who purchases at $640 has its ownership of the house at the end of the 20-year period.

The middle-income people are being penalized in a process of drying up of the private building industry under the planned economy, or Socialist state, if you please, which now prevails in Great Britain. They are victims of a policy which for the last 4 years has decreed that four out of five new homes built should be Government-owned, lowrent projects, wage-earners' dwellings, at the cost of a heavy burden on the Treasury, or Exchequer.

Under this policy it is not only true that houses are not being builteven for the workingman-in any notable quantity, but it is also true that the building tradesmen are out of jobs and building materials are piling up in yards and warehouses. A form-filling process which sounds like a page of dialog out of Gilbert and Sullivan is hamstringing the building industry there today, and yet the Government in its recent housing measure offers as its principal suggested improvement in the situation “the rescue from the clutches of extortionate money lenders those who want to borrow money to own their own homes,” and the making it possible for the “local authority provide any sort of house which is required by the community.”

This has happened to Great Britain, gentlemen, not just because a labor government is now in its fourth year of power, not just because some 300,000 British dwellings were demolished or damaged beyond use by the enemy during World War II, but because of steps taken in previous decades moving toward Government ownership of residential property.

These steps were taken, gentlemen, under the familiar argument that we hear now of "cooperation between the Government and private enterprise in housing.” The machinery through which the state controls housing production today is an inheritance from the tiniest grants of power over land and property to local governments in Great Britain as far back as 100 years ago. It was expanded and made more powerful by the reliance upon the Government for the building of wage earners' dwellings between World War I and World War II, when the British Government built about 700,000 units.

The machinery consists not only of statutes but of an equally powerful factor, an entrenched bureaucracy, if you please, the people whose jobs depend on the perpetuation and expansion of Government housing. Out of those beginnings, out of the creeping socialism of the past hundred years, and more spectacularly out of the past 30 years, this great Nation, the original home of private enterprise and small pro

prietorship as we know it, has come to a place where the present Minister of Health, Mr. Aneurin Bevan, can say in the Parliament in support of his present housing measure-he said this about 3 weeks ago, and incidentally I know the gentleman, and he is one of the most amazing and colorful characters I have ever met in public life:

A house is far too complex a product of modern society to be left to unplanned initiative. Therefore, it is essential that the state should take a hand in the provision of the modern necessity and do so by making housing a service. That can be accomplished by reposing it in the custody of a public authority. This is especially the case where there is competition for houses. Only à public authority can choose between the relative claims of different applicants for houses. That cannot be done by private persons acting upon private enterprise only.

Beginning on a notable scale after World War I, the British sacrificed traditional rights in small proprietorship to political expediency. The Conservative Party as well as the Liberal Party and the Labor Party consented and went along with the tide. To my mind, the entire story points the moral of how utterly impossible it is to stop socialism at a given point in time, regardless of the original limitations set forth in legislation. It also shows how impossible it is to stop the spread of socialism at a given level of individual income.

Briefly, I want to cite the situation as to the production of an adequate supply of housing today. The members of the committee well know that the labor government in Britain is to all intents and purposes a centralized socialist government attempting to carry out the orthodox and traditional socialist objectives within the framework of parliamentary institutions. In the field we are discussing the government has elaborate rules and red tape which bind the housing industry.

In fact that Britain is spending as large a proportion of its total national income on housing as it did before the war, but is producing barely half the number of houses it did then, is traceable in substantial part to the delays and arbitrary procedures of a bureaucracy. Since World War II only 367,761 permanent houses have been built.

It is now required that there be four public housing units for every new one to be privately owned. Before World War II Great Britain established a housing record for a nation of its size, creating 2,500,000 new permanent units in 8 years, of which 1,800,000 were built by private enterprise for private ownership.

There are now 50,000 houses for which contracts have been signed and on which building has not even started. The Town and Country Planning Act of 1947 which forces a landowner to pay a development charge on the increased value of his land as a result of improvements, has prevented thousands from even entertaining the thought of building.

Rent control freezes rents on 8,500,000 houses at such low levels that the owner's properties are almost confiscated. The 156,667 temporary houses were built at an average of $5,512, exclusive of land, roads, sewers, and services. This should be compared with a cost of not over $1,000 for permanent housing before World War I.

Although homes are desperately needed in Britain and there is material on the island sufficient for 140,000 houses, and although 100,000 building tradesmen are out of jobs, the houses are not being produced in any substantial quantity.

It is not difficult, on the practical side, to see why. I happen to have had a period of practical experience of building houses in Co

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