ganda and political activities; that the evidence further indicates gross mismanagement on the part of such Federal employees, and that there is considerable evidence of fraud and conspiracy to defraud the Federal Government. This committee found evidence that political activity in the San Diego area was inspired by officials of the Public Housing Administration. New York City has public housing subsidized by Federal funds, State funds, and city funds. While the New York City Housing Authority has no such unsavory reputation of housing mismanagement as revealed in the San Diego case, the following statement in the January 19, 1949, issue of a daily newspaper, the New York Post, may be of interest. The statement reads as follows:

The N. Y. C. Housing Authority looms as the big plum in the political orchard, and the politician who dominates the housing authority controls the city's political future.

The article was signed by Charles W. Abrams, a writer known as an outspoken advocate of Federal public housing.

Provision of decent minimum housing for low-income families is a problem closely related to relief. History and experience, in this country and elsewhere, show that such matters are likely to be handled with minimum political abuse and economic dislocation by local authorities not subject to domination by any outside factors.

Thus far public housing in this country has been an experiment in financing and administration according to the socialistic formula. It has included annual contributions to local housing authorities, permitting them to charge below-cost rents to eligible tenants.

If Congress decides that the Federal Government is to offer new subsidies to local authorities it should grant them maximum possible local autonomy. It should not only permit but it should encourage them to utilize subsidy funds according to the rent allowance plan referred to earlier in this statement.

Under the rent-allowance plan or rent-rebate plan as it was called in Great Britain, local housing authorities would charge economic rents, keep subsidy money in a pooled fund out of which allowances toward rent would be advanced to eligible families in accordance with their current needs. Periodic check-up of family needs was provided and adjustments of rent allowances made accordingly. Such a check-up is essential in any sound system of public housing administration. This system properly administered by local authorities under local public scrutiny, would result in more economical administration of subsidy funds.

It would be far better to experiment with such program on a moderate scale than to commit the country to a continued socialistic experiment on the scale indicated in H. R. 4009. It might be better still to leave such experiment to the States, a number of which have public housing programs.

This bill would increase the existing loan authorization from $800,000,000 to $1.500,000,000 and place the whole on a revolving fund basis. It would commit future Congresses to annual appropriations of $400,000,000 for 40 years to cover annual contributions to local housing authorities. These financial provisions cover the building of 1,050,000 family dwelling units in a 7-year period.

Title III-Housing research: With respect to appropriate objeclives for a Federal program of housing research, I find myself in substantial agreement with the statements on this subject to this com

mittee by Administrator Foley of the Housing and Home Finance Agency on April 7. However, it seems to me that there are several quite objectionable features in the text of title III.

The research functions described by Mr. Foley are generally of an objective fact-finding character, the appropriate province of Government research programs. Yet, section 301 (a) of the bill defines the province of technical research as including development, demonstration, and promotion of the acceptance and application, among other things, of new materials. It states that the contemplated research program may be concerned with new and improved types of housing components, building materials and equipment and methods of production and distribution of such materials as well as with matters pertaining to design, methods of assembly, testing techniques and performance standards. Creative research, involving invention and new product development, and promotion of the acceptance of new products, have always been the province of private enterprise, which has made substantial and continuous progress in this respect. I strongly urge that the text of section 301 (a) be amended so as to define clearly the appropriate limits of technical research by Government. Furthermore, I strongly recommend that there be written into this section a directive requiring the Administrator, in formulating technical research programs, to consult with the National Academy of Sciences. That body, with the National Research Council, is the agency of Government established many years ago for coordination of programs of scientific research.

Section 301 (b) seeks to implement the over-all economic planning ideas contained in the declaration of housing policy and in other parts of the bill. It calls for the presentation annually to the President and the Congress of estimates of the Nation's housing needs for the coming year, with recommendations as to legislation required to accomplish the anticipated program. The making of such estimates is not, strictly speaking, a function of research; it is a function of planning and quota-setting.

There was intimated in committee reports preceding the drafting of this bill an intent for the setting of quotas not only for housing units, but also for all the materials required to build the estimated number of units. It was also intimated that the anticipated recommendations would be in the nature of controls, priorities, and allocations.

Government estimates dignified in advance by a legislative directive are apt to gain acceptance from an uncritical public, regardless of whatever intrinsic merit they possess. It is apparently quite easy to inflate needs estimates in order to produce sales arguments in support of almost any governmental policy or any desired legislation. Government economists have recently tried to prove a need for a Government forced expansion of the steel industry. Inflated estimates of the shortage and of housing needs caused the Congress to enact the Veterans' Emergency Housing Act of 1946, remembered as the Wyatt program. This program involved price controls, priorities, allocations, and other factors disruptive of large sectors of the economy. It was only after its repeal that the private home building industry got into its postwar stride. Earlier in this statement it was shown how inflated needs estimates have been made the basis of propaganda in support of a series of socialistic housing bills like H. R. 4009.

We would prefer to see this provision for estimates omitted from title III. If Congress decides to retain it, we would like to see an addition to the text requiring that any such estimates be accompanied by clear and adequate descriptions of their factual content and of the assumptions and procedures used in developing the estimated figures. Section 301 (c), providing for technical assistance to localities for making studies of their own housing needs and markets, is sound and constructive.

The Congress can and should sanction continuation of the decennial housing census, referred to in section 507 of this bill, and interim factual surveys by the Census Bureau or other fact-finding agencies of the Government which are independent of operating agencies responsible for carrying out specific Government programs.

Title IV-Farm housing: The existing public housing pattern of loans and grants to local public housing authorities brings about the construction by such authorities of rental housing projects of a semiinstitutional character. The pattern fits urban communities, not farm communities. The farm dwelling is an integral part of the farm

economy.

Subsidies for farm housing are presumably proposed to compensate for the fact that the other titles of H. R. 4009 provide benefits to city dwellers. Provision is made for direct loans and grants to individuals by the Secretary of Agriculture. The proposed program is modest, a loan fund of $250,000,000, increasing Federal debt by that amount, and contributions amounting to $17,500,000 a year for 10 years. If started, it may be expected to grow.

Section 406 (b) of this tile provides for annual estimates of farm housing needs in much the same terms as the needs estimates for urban and rural nonfarm housing are provided for in section 301 (b); I think the same criticism applies. In view of the variety and extent of benefits to farmers and the agricultural economy currently being charged to the Nation's taxpayers, the proposals contained in title III seem unnecessary and undesirable.

Title V-Miscellaneous provisions: This title covers a variety of technical, legalistic, and administrative provisions, mostly of minor significance for the purposes of this statement.

CAN THE WORLD AFFORD A SOCIALIST AMERICA?

The housing, slum clearance, and research problems this bill seeks to solve can be adequately met without turning this whole Nation into a guinea pig for soft Socialist experimentation. The country cannot afford to junk the system which has housed the average American better than any other people are housed in the world today for another system supposedly better in theory and everywhere a failure in practice.

The United States has a responsibility for world leadership. Its position will be weakened if it drives further in the direction of socialism, if it resorts to heavy deficit spending, and if there develops through the process of socialization a deterioration of the independence and moral fiber of its people.

Speaking at the Columbia Forum of Democracy, General Eisenhower recently described the current trend toward soft socialism

as

a creeping paralysis--a readiness to accept paternalistic measures by the Government and along with these paternalistic measures coming a surrender of our own responsibilities and, therefore, a surrender of our own thought over our own lives.

General Eisenhower warned:

If we allow this constant drift toward centralized bureaucracy to continuethere will be a swarming of bureaucrats all over the land. Ownership of property will gradually drift into that Central Government and finally you have to have dictatorship as the only means of operating such a huge organization. It is things such as that that we must watch today.

I first make the point that our association has always held the conviction that the problems this bill, H. R. 4009 tends to solve can be solved within the framework of a free enterprise society, the problem of adequate housing for low-income groups, the problem of slum clearance, and the new problem of housing research that is taken care of in this bill.

Actually, our association drafted and secured enactement, by the Legislature of the State of New York, of the first urban redevelopment bill that was enacted anywhere in this country. It was the urban redevelopment corporation law, enacted in New York State in 1941. I was chairman of the committee that drafted that legislation.

I state these things to show that we are not opposing the objectives of this bill, although we feel that this bill is a bad way to achieve these purposes, and we believe there are better ways.

It has been made to appear to the public that this is the only way to do it, by a build-up of propaganda, propaganda of exaggerating the housing shortage and the long range housing needs of the country, a propaganda which has belittled the performance of the construction industry and its competence, and the accomplishments of the private home builders.

There has been an illusion created that the Government can provide costly benefits for all the people, and by reason of deficit spending over a long period of years, people have gotten the notion that Federal money is inexhaustible and can be handed out free without costing anybody anything.

At the present time there is a theory that these things can be done by soaking the rich, whereas the realities of our present budgets and spending, and our present taxation, are that everybody in the country that earns anything is today being taxed directly or indirectly.

So these benefits are not free, they are costly, and they affect everybody-if not through taxation, at least through an enhancement of the prices of all the goods and services people buy.

There has been created a general idea that the Government can reduce the production cost of housing. Now the Government has done a very competent job in reducing financing costs by providing banking services in the home-loan bank system and the mortgage insurance of the Federal Housing Administration, which is essentially banking legislation, offering facilities to those citizens who wish to use the facilities, and I think the institution of those activities by the Government was a great step forward. But beyond that, I do not think Government can do anything to directly reduce the cost of housing. It can emphasize the need for cost reduction, but it is competitive free enterprise that can actually reduce housing costs.

For instance, according to the United States Bureau of Labor Statistics, the average construction cost of privately financed nonfarm dwelling units stated in the United States in the first 9 months of 1948 was $7,640, whereas the average publicly financed unit cost $9,350. That does not mean that they were comparable units, but if we have to build to a higher standard for public housing than the average private owner can afford to pay, we are certainly doing a rather extravagant job for some people, at the expense of others.

I have just summarized the introductory part of the statement. I believe that this tendency toward spending, lavish distribution of benefits, and toward concentration of power in governmental agencies, bureaus, and so on, is definitely a trend towards some kind of socialism, and it is not a question of disliking the word or the idea. My observation is that where this socialistic trend has gone very far, as it has in many other countries in the world, that there has been a reduction in the standard of living and a failure to meet the housing needs of the people as adequately as they have been met and are being met today in this country.

Mr. PATMAN. How can you make that statement in view of the fact that the Government is doing so much to encourage home ownership, both in the city and in the country, and this would be such a very small, insignificant part of the over-all picture?

Mr. HOLDEN. Sir, I think the encouragement of home ownership is a very different thing from the

Mr. PATMAN. I know it is. You see, this is just a small part of the shelter problem of the Nation.

Mr. HOLDEN. I think it is a larger

Mr. PATMAN. And the Government is encouraging the people, through using the Government's credit and otherwise, to buy their own homes and to pay for them, both in the country and in the city. I cannot see how you are justified in saying that this would be a trend toward socialism. I think that is going too far.

Mr. HOLDEN. Well, sir, the people who will occupy the subsidized houses will be occupying more expensive quarters than the average family which will build its own home, with its own financing, using the facilities of Government for that.

Mr. PATMAN. That part probably should receive consideration, as the amount of money that should be spent.

Mr. HOLDEN. The very subsidy provided for public housing in this bill would be an average of $360 per year per family unit for 40 years. Mr. PATMAN. That seems too high to me, very much too high. Yet, I wonder how you can get away from it without putting the people out in the country in a difficult situation. I would rather see them have a plot of ground and a house of their own, and if possible have it cost the Government less. But certainly in the industrial areas where these houses will be constructed they will of necessity have to be close to their plants and close to their work, and it would be wrong to put them out in the suburbs for that reason.

Mr. HOLDEN. I think that is probably true, sir.

Then I mention in here, in connection with title II, in my analysis of the bill, the policy that our association has always stood for, which was a policy that was followed to a considerable extent in Great Britain before the war and before Great Britain adopted socialism. That permitted-it did not make mandatory but it permitted-the local