Mr. BODFISH. You know who it is. It is Buddy Young, the football player.

The CHAIRMAN. There is a roll call on the floor and we will have to suspend.

Mr. BODFISH. Thank you for your courtesy, Mr. Chairman. The CHAIRMAN. Thank you for your very enlightening statement. We are always very glad to hear from you. You have been very helpful.

The committee will now recess to reconvene at 2:30, depending on the business of the House.

(Whereupon, at 12:12 p. m., the committee was adjourned, to reconvene at 10 a. m. the following day, Thursday, May 5, 1949.)

HOUSING ACT OF 1949

THURSDAY, MAY 5, 1949

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., Hon. Brent Spence, chairman, presiding.

Present: Messrs. Spence, Brown, Patman, Monroney, Buchanan, Multer, Deane, McKinnon, Addonizio, Dollinger, Mitchell, O'Hara, Wolcott, Kunkel, Talle, McMillen, Kilburn, Cole, Hull, and Nicholson. The CHAIRMAN. The committee will be in order, and we will resume the hearings on H. R. 4009.

Mr. Thomas Holden will be our first witness. Will you identify yourself and proceed, please?

STATEMENT OF THOMAS S. HOLDEN, PRESIDENT, F. W. DODGE CORP.

Mr. HOLDEN. I am Thomas S. Holden, President of the F. W. Dodge Corp., of New York and other cities throughout the country. We are publishers of news, information, and catalog services for the construction industry.

I appear before you today as a representative of the Commerce and Industry Association of New York, Inc., of which organization I am a director and chairman of the committee on urban rehabilitation.

The Commerce and Industry Association is an association of some 4,000 members, representing all sectors of industry and business in Greater New York. Founded as the Merchants Association of New York in 1897, our organization has always taken an active interest in matters pertaining to civic improvement, locally and nationally. During the past 13 years, the association has conducted studies of the problems of slum clearance and adequate housing for low-income families.

The Commerce and Industry Association believes, with deep conviction, that these problems can be most satisfactorily solved within the framework of the American free society. We oppose socialistic solutions, not merely on ideological grounds, but on practical grounds: wherever tried they have failed to accomplish their stated purposes, and have brought in their wake a variety of abuses that well-meaning supporters failed to anticipate.

This association secured enactment of the first slum-redevelopment law in this country, the New York urban redevelopment corporation law in 1941. This statute encourages partnership between private capital and municipalities in clearing slums. Similar laws have since

been enacted in other States.

Repeatedly, the association has advocated for public housing projects a system of subsidy payments, from whatever source, that obviates the abuses that have practically everywhere arisen in connection with public housing as it has been administered in this country up to now. It is known in Great Britain as the rent-rebate system, and it was used successfully there on an ever-widening scale before World War II, and before the advent of all-out socialism.

The principles this association stands for, with reference to public housing and slum clearance, have been presented many times before committees of the Congress, the Legislature of New York State, and the New York State Constitutional Convention in 1938.

TOWARD HOUSING DICTATORSHIP

According to our view, the provisions of H. R. 4009 tend strongly in the direction of socialism. The bill not only proposes socialistic solutions of specific problems that can be better solved in other ways, but it cunningly devised as an instrument for transposing the American free society into a blurred carbon copy of the socialist and semisocialist states of Europe. It tends to transform the Housing and Home Finance Agency, a very useful service agency, into an instrumentality for control of the construction industry and through such control to introduce theoretical economic planning into a very large section of American industry.

THE PROPAGANDA BUILD-UP

Public and congressional support for a vast program of Federal subsidized housing and slum clearance has been secured by a propaganda of exaggeration, distortion, misrepresentation, and suppression of facts. It is a propaganda which seeks to exploit the generous, though sometimes uncritical, humanitarian impluses of the American people for the purpose of building up the power of centralized bureaucracy. The propaganda for this and related legislation has followed five principal lines:

1. Exaggeration of the postwar housing shortage and the longrange housing needs of the country.

2. Belittlement of the construction industry as a whole and of the accomplishments of private home builders.

3. Creation of an illusion that Government can provide costly benefits for all the people.

4. Concealment of the actual cost of vast social programs to every income group in our society, including the lowest.

5. Leading the public to believe that Government can reduce the cost of producing dwelling units.

The fallacies of these five lines of propaganda should be examined.

EXAGGERATING THE COUNTRY'S HOUSING NEEDS

The country's postwar housing needs have been repeatedly stated to be in the range of 1,260,000 to 1,500,000 new nonfarm dwelling units a year for 10 years. How was the 1,260,000 figure arrived at originally by the National Housing Agency in 1944?

First, there was an estimated average primary market need of 630,000 units a year. This was supposed to accommodate all the new

families, increased migration from the farms, servicemen's houses to be established or reestablished, undoubling of families living together, and a 5 percent vacancy allowance.

Second, the postwar demand for new units to replace units to be destroyed, demolished, or abandoned for any reason was estimated at an additional 630,000 units a year. Since total replacements averaged only 40,000 units a year from 1920 through 1939, this estimate called for a tremendous upping of replacement activity. This estimated replacement demand of 630,000 units a year was completely unrealistic, though very serviceable for propaganda purposes.

Stepped-up replacement activity was supposed to balance elimination of all substandard dwelling units in 20 years, half of them in the 10-year period, 1946-55. Substandard units were defined as all those reported in the 1940 housing census as needing major repairs plus all units in metropolitan areas which lacked private baths. No evidence has ever been brought forward to show that the 1940 census enumerators ascertained, or were sufficiently qualified as experts to judge, whether any or all such units should be classified for demolition or were susceptible of improvement.

Repeated Census Bureau surveys have shown that there has been steady progress in repairing, modernizing, or otherwise improving existing dwelling units. On the basis of the most recent census survey, it has been estimated that about 2,240,000 housing units were taken out of the substandard class and put into the habitable class between April 1940 and April 1947. It was also estimated that there was in the same period a net gain of 1,117,000 to 1,367,000 units resulting from conversions of buildings of other types to residential use and division of large houses into apartment suites.

These estimated enlargements of the housing supply, based as they are on sample surveys, are subject to some margin of error, but they appear to be reasonable. Otherwise, how can we explain the fact that the acute phase of the postwar housing shortage is over, and that housing has definitely entered a buyer's market?

It is seen that the NHA estimates consisted of the same kind of statistical fantasy that led Government economists to predict there would be 8,000,000 unemployed shortly after VJ-day. In the NHA estimates anticipated demolitions of existing houses to suit the statistical propaganda of Federal public housing advocates exceeded greatly the actual destruction of European housing that took place in the war. In a period of 534 years, there were totally destroyed in 16 countries of western Europe, an aggregate of 2,498,000 dwelling units. If the American people had met the imaginary demolition requirements of the Federal housing experts, they would have willfully destroyed, without benefit of artillery or bombing raids, over 3,600,000 units in the same period of time.

It is true that, in the postwar period, production of new rental housing has not kept pace with production of single-family houses for sale. Most important reason for this has been the artificial shortage of rental accommodations created by Federal rent control. Private investment in rental housing will lag so long as rent control is in effect. Furthermore, there will be no real way of soundly estimating actual rental housing needs of the country until occupancy returns to normal in a free rental market.