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This bill includes another feature which I consider to be of utmost importance. It provides for the maximum local determination and responsibility in the undertaking of any project. The projects will be locally planned and locally executed. For example, this title requires that plans for any projects conform with comprehensive city plans. But the plans themselves, both general and project, would be made locally.

Under this program large amounts of urban land will be bought by public agencies with public funds. The bill establishes safeguards against excessive payments for land in slum clearance areas. It prohibits any interpretation of the title which would permit speculation in land holding and it authorizes the Administrator to take further protective steps against excessive payments through specific provisions in loan and grant contracts made with local public agencies.

The title also requires the Administrator, in extending financial assistance, to give consideration to the extent to which localities have encouraged housing cost reduction and the prevention of the recurrence of slum and blight through the adoption, improvement, and modernization of building and other local codes. As you know, the Housing and Home Finance Agency is now engaged in a program to encourage the improvement of local building codes and dimensional standardization. Housing codes and regulations establishing standards of health, safety, and sanitation are also of significance in this title. Such codes may require the removal or repair of slum dwellings which do not meet minimum standards of health, sanitation, or safety. To the extent that they exist and can be enforced, they may be effective in reducing the public cost of the slum clearance and redevelopment which is required and in decreasing the size of the job to be done. These provisions are of especial importance in connection with title III of the bill, under which Federal assistance through research and technical advice on building and housing codes can be made available to localities.

Recognition is given in the bill to the fact that the slum clearance problem and its solution frequently involves matters extending beyond the corporate limits of our cities. It is a problem that stretches across metropolitan areas which frequently embrace many incorporated municipalities. The bill, therefore, directs the Administrator to encourage those local public agencies which are established on a State or a unified metropolitan basis to deal with the slum problem.

Loan funds acquired by the Administrator under the title would be advanced by the Treasury. An initial loan authorization of $25,000,000, for the fiscal year 1950 is provided, which limit would be increased by stages to the full $1,000,000,000 revolving fund provided in the title by July 1, 1953. The Administrator is authorized to make contracts for capital grants up to $100,000,000 in fiscal year 1950. This authorization is increased by $100,000,000 each year until the maximum authorization of $500,000,000 is reached by July 1, 1953. Subject to the maximum authorization of $500,000,000, the President may increase the amount available in any year by $100,000,000 after receiving advice from the Council of Economic Advisers as to the effect on building and general business conditions.

There is such a wide variation in the size, gross cost, and write-down in the projects which cities are now planning that it is difficult to make an accurate estimate of the total amount of clum clearance which can be assisted with this authorization. While the loan authority of $1,000,000,000 and the capital grant authority of $500,000,000 provided in this title are small in relation to the Nation's total slum clearance job, they would permit us to make a good start now.

I should like to emphasize the fact that eliminating slum and blighted areas and making the land therein available for redevelopment cannot be separated from the necessity of providing the housing necessary for the families now living in the slums. Any slum-clearance program which fails to assure adequate rehousing for these families will be merely aggravating their problems and forcing them into even worse conditions. Such a short-sighted policy would impose unusual hardship on families of minority races who comprise a considerable portion of our slum population and for whom the problems of relocation are particularly difficult.

This bill clearly recognizes this necessity. The slum clearance program is set in the context of a bill which has as one of its major objectives the provision of adequate housing for the inhabitants of slums and blighted areas. Title I, furthermore, contains specific requirements for the rehousing of families displaced in slum-clearance projects. Financial aid may not be extended to local public agencies unless a feasible method is provided for the temporary relocation of families displaced from the project area and unless permanent housing has been or is being provided for them either in the project area or elsewhere. The permanent housing must consist of decent, safe, and sanitary dwellings which are located in areas not generally less desirable in regard to public utilities and public and commercial facilities and which are available at rents and prices within the financial means of displaced families. Title I further prohibits the demolition of residential structures in slum-clearance projects prior to July 1, 1951, if the local governing body determines that undue hardship would result.

This principle is carried forward in title II, which requires that first preference for occupancy of public housing projects assisted under this bill shall be extended to families displaced from slum-clearance projects if are otherwise eligible for admission.

These requirements are essential to the purposes of this legislation and to the success of the slum-clearance program itself.

I am quite conscious of the fact that because of the housing shortage most communities will be unable to proceed immediately with full-scale slum-clearance programs until adequate housing can be assured for families now residing in project areas. I do not think, however, that this offers any valid reason for delaying the authorization of these aids. The enactment of this title will necessarily be followed by a preparatory period of several months required for the establishment of administrative organization and machinery in the Federal Government and in many of the localities which desire to participate in its benefits,

While a few cities are prepared to move ahead rapidly, most communities will have to go through the time-consuming process of preparing programs and plans and of site selection and acquisition. On the other hand, some communities may be able to proceed first with project areas and parts of project areas which will not require substantial displacement of families. Initial projects of this nature will permit these communities subsequently to move more readily into projects involving the residential slums which will comprise the heart of their slum clearance programs. These various factors, I believe, furnish impelling reasons for prompt enactment of the slum clearance title now.

TITLE II-LOW-RENT PUBLIC HOUSING

Title II of the bill would extend the low-rent public housing program, originally authorized under the United States Housing Act of 1937, for the provision of 1,050,000 additional dwelling units for urban and rural nonfarm families whose incomes are so low that they are unable to obtain adequate shelter in either new or existing private housing.

Mr. Egan, the Public Housing Commissioner, is here and will present a detailed statement on this title. However, I do wish to explain why I believe adequate provision for low-rent public housing is essential to a sound over-all housing program.

I mentioned earlier the 6,100,000 inadequate dwellings in nonfarm areas, Virtually all substandard units are occupied by low-income families who cannot afford adequate housing. I also stated earlier that a large proportion of our low-income families are forced to live in structures which are actually unsafe or unhealthful, or in slum neighborhoods, or in extremely crowded quarters-and I discussed the numerous evils which result from these conditions.

We cannot ignore the fact that there remains today, and will undoubtedly re. main for years to come, a considerable percentage of our families whose incomes are so low that they must continue to live in slums or other inadequate housing unless we take action to prevent it. The breadwinners of most of these families are usually gainfully employed and, with proper budgeting, their incomes are usaully sufficient to supply all the basic needs of their families except adequate shelter. Adequate shelter is not available to these families because rents or prices charged for such shelter would represent an unduly and prohibitively high proportion of their limited income. The problem, both in its extent and nature, is not the sort which can be solved in the forseeable future by private enterprise even with further possible financial aids.

I have explained at considerable length my support of the slum clearance title of this bill. I want to emphasize again that the mere tearing down of bad houses will not solve the problem of the families who live in them, any more than warcaused destruction of the slums in London solved the housing problem of the bombed-out families. Slum clearance and the rehousing of families living in the slums are indeed separate operations, but they should not be treated as unrelated problems. If we are to make real progress in clearing slums, there must be ade. quate provision for the low-income families who live in them.

I have yet to hear of a solution to this problem that would be an adequate substitute for the basic formula contained in the United States Housing Act. Briefly, this act authorizes Federal loans to local public agencies to help them finance the development of low-rent public housing projects and authorizes annual Federal contributions which, together with local tax exemption, make it possible for the housing to be made available at rents which low-income families can afford to pay.

There are some basic features of the proposed extension of this public-housing program on which I should like to comment.

To begin, this title contemplates the construction of 1,050,000 additional lowrent dwellings over a 7-year period. There has been so much comment about the size of the program that I want to take this opportunity to speak plainly and directly to the subject.

It is my firm and unqualified conviction that this program, measured against the needs of the millions of families now living in slums or other substandard housing, is fully justified and that our responsibility to provide decent housing for those who are forced, through no fault of their own, to live in disgraceful slums can no longer be postponed. I believe that we have talked too long and that it is time for action. In this connection, it should be noted for 4 years ago, and again 2 years ago, the legislation then under consideration would have provided 500,000 public housing units over a 4- or 5-year period. That legislation clearly contemplated that before the period expired, Congress would reexamine the whole question of the need for public housing, measure the results accomplished, and make provision for whatever additional action was shown to be justified.

Those bills did not pass. We have been able to do nothing further in provid. ing and decent housing for our ill-housed low-income families. The Congress and the Housing Agency have, however, made the type of continuing studies and reexaminations of the need for public housing which was contemplated. Evidence of the prevalence of bad housing for low-income families fully supports the advisability of initiating a larger program than was planned 4 years ago.

The plain fact of the matter is that the current proposal for provision of 1,050,000 units over the next 7 years represents an attempt to recapture some of the ground already lost.

It is totally unrealistic to claim that living conditions among slum dwellers have improved materially during this period of inaction. The figures I have cited earlier, the finding of repeated congressional investigations all lead to the same conclusion. Either we tackle this problem now or we continue to refuse any hope to the thousands of low-income slum dwellers that their lot can be improved. No effective alternative is offered.

The clear intent that this program should be extended to rural nonfarm families of low income, as well as urban families, should also be noted. To assure rural communities ample opportunity to qualify for financial aid before the authorizations for annual contributions are fully committed, the bill requires that for 3 years after such authorizations become available 10 percent shall be reserved for rural nonfarm projects. Ample evidence has been made available as to the needs of rural nonfarm families, including farm laborers who do not live on the farms, to justify their being brought within the scope of the total public housing program.

The bill contemplates that the public housing program should be undertaken at the rate of 150,000 units per year, which is about 10 percent of the annual total additions needed to the supply of adequate housing. The President is authorized to accelerate the program to 250,000 units or decrease it to 50,000 units in any year, if he finds such action to be in the public interest after receiving advice from the Council of Economic Advisers as to the impact on the building industry and the national economy as a whole.

Another matter on which I should like to comment is the claim that the program will not really serve low-income families. This claim is completely unjustified.

Under the pending bill, a number of policies with respect to tenant eligibility would be enacted into law. Thus, the local authorities would be required to set' maximum income limits for admission to the project and also to set limits for continued occupancy. If conditions change, new limits would be required to be set. All such limits would be subject to approval by the Public Housing Administration.

In the selection of tenants, local authorities would be required under the law (as under present policy) not to discriminate against families whose incomes are derived in whole or in part from relief payments. Moreover, in the initial selection of tenants a preference would be required for families with the most urgent housing needs. Provision is also made for an investigation of the net income of each family at the time of its admission and periodically thereafter, and for the removal of families who become ineligible because of income.

As a further safeguard against serving families other than those of very low income, the bill would require that there be a gap of at least 20 percent between the upper rental limits at admission in a proposed low-rent project and the lowest rents at which private enterprise is providing a substantial supply of safe and sanitary housing, either through new construction or existing structures.

Quite apart from these legal safeguards, actual experience in the present federally assisted low-rent public housing projects makes it clear that such housing truly serves families of low income. In 1918, the average income of the families admitted to those projects was $1,481 or 17 percent below the median income of urban families in the lowest income third. Even with a considerable portion of families whose incomes have increased beyond permitted limits for continued occupancy but which have not as yet been removed from the projects, the average family income of all tenants in those projects was $1,884 in 1918, or well within the range of the lowest income third.

Low-income families being displaced in connection with the development of slum clearance and public housing projects will have first preference in occupancy in low-rent projects and among these families disabled veterans and other veterans will have preference in the order named for a period of 5 years. Among other eligible families local housing authorities are required for a period of 5 years to give preference first to disabled veterans and then to other veterans, and in their case the requirement for previous residence is substandard dwellings will be waived.

The annual cost of this program to the Federal Government, based on the maximum authorization provided in this title, would amount only to approximately 1 percent of our annual Federal budget and represent little more than 1 day's cost of the last war. Surely we can well afford to set aside this proportion of our total Federal expenditures for this most important contribution to the welfare of our people and our Nation.

I would like at this point to call the attention of your committee to section 504 in the miscellaneous provisions title. This section would remove two limitations which have been imposed on the operations of the Public Housing Administration by the Government Corporations Appropriations Acts of 1948 and 1919.

One of these limitations concerns payments in lieu of taxes in connection with low-rent housing. It has resulted in considerable injustice to a number of local communities; and, since Mr. Egan will discuss the details, I merely want to emphasize my belief that this limitation should be repealed.

The other limitation restricts the number of administrative employees of the Public Housing Administration above grades CAF-10 and P-3 to not more than 20 percent of the total number of such employees. This unprecedented limitation has greatly diminished efficiency; and I believe that unless it is repealed, it will have a crippling effect on our constituent agency's administration of the expanded low-rent public housing program. The Public Housing Administration will be required to furnish financial and technical aid to hundreds of local public agencies, and will have important supervisory duties with respect to those agencies. Obviously these functions will require a much greater proportion of trained technical employees than this present inflexible limitation permits.

TITLE III-HOUSING RESEARCH

Title III would authorize the Housing and Home Finance Agency to carry out a comprehensive program of housing research.

It is a well established fact that the home-building industry has never been able to achieve a stabilized high volume of production at prices within the reach of the vast majority of American families. Traditionally housing has cost too much. That is the nub of the housing problem especially as it relates to low and middle income families.

I should make it clear here that in speaking of the home-building industry I have in mind not only the builders and the workers who actually construct our housing, but the whole range of groups which play a part in the process. This includes the institutions that finance the builder and later the consumer, the material supplier and the land developer. And I must also include those local governmental agencies which write and administer the local regulations controlling the type and location of construction and which must provide the streets and sewers and other necessary facilities. These local agencies clearly exert a profound influence on the whole industry.

No housing action now before the Congress for consideration is more important than the authority this title would give to draw on the professional skills and research facilities available inside and outside the Federal establishment and to direct and focus those skills and facilities on the problem of modernizing the housing industry. Furthermore, I can think of no area of public expenditures that holds such great promise of paying its own freight, many times over.

The central fact is that every group which is concerned with finding a solution to the housing problem needs the kind of help a research program can provide. That applies to the home builder who is seeking to redirect his output to a larger volume at lower prices to avoid the withering up of his market, and to the people he employs, who want stable employment at good wages. It applies to the mortgage investor who seeks a safe outlet for the funds in his charge, and to the producer or distributors of building materials who must now answer the question of plant modernization or expansion with hesitation in view of the violent fluctuations in building of the past. The leaders of our communities particularly need this help for it is they who must deal at first hand with the effects of bad housing in their communities. And lastly, the Federal Government itself needs the facts which only a competent research program can establish in order to determine the wisest action possible in its attack on this complex problem.

The Congress last year gave partial recognition to the importance of a research program in the Housing Act of 1918. That act authorized the Housing and Home Finance Agency to undertake research work directed at the improvement and standardization of local building codes and at the standardization of the dimensions of home-building materials and equipment.

This has enabled us to make a start in tackling these two vexing problems of the building industry. However, we cannot, with our present authority, make the broad gage attack that is so desperately needed. While engineering progress is of vital importance in this field, we must not lose sight of the fact that some of the major obstacles to genuine and lasting progress in housing technology are social or economic, Means must be found to remove them, therefore, before we can hope to derive the maximum benefits from our engineering research.

The housing problem has so many facets that it would be unrealistic to place all our hopes on any one field of action. Housing research must be broad enough to disclose the possibility of constructive action in every aspect of housing whether it be engineering, financing, management, labor, local administration or Federal.

It is my belief that the Federal Government should therefore broaden its research and assume the leadership in analyzing all of the factors that in any way impede housing production, add to costs, prevent the improvement of our housing standards, or cast doubt on the value of housing as an investment. The formula of a progressively higher volume and lower unit costs is too successful in too many other American industries not work in home building.

Indeed, I feel it is one of the major functions of the Federal Government to investigate and point the way toward removal of whatever unjustified factors are preventing industry from bringing of that formula to the American people in their search for adequate housing.

I want to make clear that our problem is not lack of interest, energy, or inventiveness outside the Federal Government. No one can fail to be impressed by the number of people who are willing to devote sober study and interest to one phase or another of the housing problem.

But the inescapable fact is that despite all this effort, the rate of technological progress in home building has been slower than is true in most of our mass industries. This does not mean that we have made no improvement in the building industry, but it does mean that we are making those improvements too slowly and too spottily, and that too much of it results in luxury housing. This results in part at least from the fact that most of our home building is done by relatively small-scale operators. It has been variously estimated that there are between 75,000 and 100,000 builders of small homes in the United States. Of these, only a small proportion build more than five houses a year.

Small builders obviously do nat have the resources to embark upon a broad program of research into new techniques or designs. Nor can they afford to experiment very much with new ideas or to attempt single-handed to surmount the obstacles imposed by obsolete and unnecessarily restrictive building codes.

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