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water and their walls caving in, and we feel one of the conditions of the Federal Housing Administration insurance should be what I consider a minimum warranty for the very short space of 1 year to at least give the veteran an opportunity to see that his building shakes down properly in the first year of its use.

Thank you.

Mr. BUCHANAN. Would you care to comment for the record on page 59 of your H. R. 1973, where you state

The families accepted for occupancy in such housing shall be limited to those whose net income at the time of acceptanceand so forth. Will you explain what you mean by family net income?

Mr. Javits. The family net income, as we understand it, is the income of the whole family group, after payment of their withholding and social security taxes. I think the net income would not be after food and rent and so on, it would be after the things which are deducted at the source.

Mr. BUCHANAN. One further comment on section 502 of H. R. 4009, the amendment to the Banking Act. How do you feel about that, so far as the opening up of the scope of bids to commercial houses and investment bankers?

Mr. Javits. I do not think we oppose that in our H. R. 1973. Mr. BUCHANAN. No, but how do you feel apart from that? Mr. Jayıts. If you are critically interested in the thing, I would like to check my colleagues on that question. We did not include it. We did consider it and did not include it. Hence, I would feel that its omission means that we are not particularly concerned with it now. Our bill does not contain that amendment to the National Banking Act.

What I would like to check, however, if I may, is whether or not we excluded it because we did not feel this was a proper place to put it or whether we have any fundamental difference with it in principle, and I would like to submit a statement, if I may, on that particular point.

The CHAIRMAN. Are there further questions?
Mr. MITCHELL. Mr. Chairman.
The CHAIRMAX. Mr. Mitchell.

Mr. MITCHELL. With respect to some of the testimony we have had here with regard to the feasibility of the clean-up and remodel approach, I am wondering whether the report of the cultural and scientific agencies in New York was formalized in the form of a reporttheir conclusion.

Mr. Javits. I have a report on the Manhattanville project which I will be glad to submit for the record, if I may.

Mr. MITCHELL. I think it will be very useful.

Mr. Javits. Yes, it is a very interesting thing. It was very scientifically attacked, which makes it particularly interesting.

Mr. MITCHELL. That is what we need here.
Mr. Javits. Yes.
The CHAIRMAN. If there are no further questions, you may

stand aside, Mr. Javits. We are glad to have your views.

Mr. Javits. Thank you very much, Mr. Chairman.

The CHAIRMAN. We will now hear from Mr. Oscar R. Kreutz, representing the National Savings and Loan League.



Mr. KREUTZ. Mr. Chairman and members of the committee. My name is Oscar R. Kreutz. As executive manager of the National Savings and Loan League, I wish to express appreciation of this opportunity to submit our views on H. R. 4009. Our nearly 600 member insti. tutions, with assets approximately two and a half billion dollars, have a very direct interest in this proposed legislation because of the possible impact of its provisions upon home ownership and upon thrift.

As this committee knows, savings and loan associations have taken a leading part in the financing of homes and in the encouragement of new home construction. In 1918 savings and loan associations loaned more than three and a half billion dollars to assist American families acquire or keep their homes. Almost four-fifths of this tremendous volume of lending went to finance the building or purchase of homes. Savings and loan associations have made 40 percent of veterans' home loans to date. Savings and loan associations have concentrated on the financing of homes in the medium and low-priced field. The average loan last year was well under $5,000. The average price paid by the nearly 600,000 home owners who obtained their financing from savings and loan associations was under $7,000.

These facts are significant because they show that savings and loan associations are close indeed to the hearts and needs of the average American family.

With respect to slum clearance, we commend the broad purposes of H. R. 4009. Anyone who has had the impleasant experience of viewing slums at first hand, especially in our great cities, must agree some workable plan should be formulated to bring about the elimination of these breeiling places of disease and crime. But it seems to us that the determination of need for slum-clearance programs should be maintained at the local community level. We also respectfully submit that the judgment of local groups as to the need for and extent of slum-clearance projects should be tempered by a substantial local participation in the cost of such projects. Slums are chietly the result of local codes and economics. Therefore, the major cost of their elimination should be borne by local taxes. We recommend that Federal capital grants be limited to one-half the aggregate of the net project cost. We recognize the need for Federal assistance also in the financing of self-liquidating slum-clearance projects.

Traditionally, savings and loan associations have expressed great concern about public housing. Their concern is an unselfish one. They see in public housing a threat to the continued increase in home ownership. Home ownership has long been recognized as one of the keystones of our form of government.

Public housing is seen as a threat to home ownership because it is a form of socialized housing, and because it is difficult to establish and maintain a clear-cut line between "welfare" housing and a better home for every family in every income group." If better housing is built with public funds for people in the lowest-income groups than people in the self-supporting, but still low, income groups can afford in the way of private housing, this latter group can logically demand public housing, too.

The growth of public housing in England, where in recent years it has almost become a monopoly in new housing construction, is evidence of what can happen here. Public housing in England costs more to build than private housing. Public housing there has become a consistently heavier burden on the higher-income groups, including thos just barely above the income groups which are supposed to be eligible for public housing.

The big question in connection with the public-housing program such as is proposed by H. R. 1009 is: Where is the money coming from to carry such a program through to a logical conclusion? If the use of public housing were restricted solely to the indigent poor or for the temporary use of such other families for whom it may be proved private enterprise cannot immediately supply housing, our people would feel less concerned about the situation. But the history of publie housing here and abroad has been that it creates a wider and wider demand for additional public housing, and too often, unfortunately, without having the effect of eliminating slums.

There are some safeguards which might well be considered by this committee to keep public housing within safe limits, if any publie housing is authorized by this Congress.

1. Public housing should actually replace slums. 2. The use of public housing should be strictly limited to families which cannot obtain privatey built or operated housing at prices or rentals that they can afford to pay.

3. Public housing should not encroach upon established housing standards in the areas. For example, last fall while visting in Engand we saw multiple-family public housing developments right in the middle of private, single-family developments for the middle and upper income groups. This kind of encroachment cannot help but impair the values of neighboring private homes. The private home owner, therefore, losses in two ways: First, through the decline in the value and attractiveness of his home, and, second, in the additional tax burden which is placed upon him to help defray the cost of public housing.

4. Public housing built in outlying areas should be designed so as to be readily converted to private ownership.

If public housing in outlying areas takes the form of individual homes located in or adjacent to privately built homes of modest cost, there would be greater opportunity to sell such public housing to private owners.

We have noted Commissioner Egan's statement of February 7, 1949, before the Senate committee in regard to the sale of existing farm houses to tenants at prices they can now afford. We believe this is a sound principle which should be established and followed with respect to urban public housing in outlying areas. In other words, we believe multiple-family public housing should be limited to the congested areas and as a part of slum clearance programs.

We endorse the program of the Housing and Home Finance Agency in the encouragement of privately built, low-cost housing for lowincome groups. We believe the program understaken by Administrator Foley and his aides along this line is most commendable However, we are perplexed at the apparent inconsistency between this program, contemplating, as it does, a cost limitation of $7,000 on a

5-room house, or $1,400 per room plus $1,000 for each additional bedroom, under private construction, and a public housing program contemplating a maximum cost of $2,500 per room.

Again we must ask: Where is the money coming from to carry on a public housing program with a substantially higher cost per room than that which private builders are expected to provide ?

This situation points to the great importance of local determination of need for public housing and substantial local participation in its cost. There is a very real limit to what the Federal Government can or should be expected to do in providing direct assistance to a solution of local problems. The Federal debt is already high, Federal taxes already threaten to discourage private initiative. Local groups should take the lead in providing low-cost housing.

Yesterday I received a telegram from the chairman of the league's committee on public housing Mr. Hart, of Seattle, Wash. In this telegram Mr. Hart suggests that consideration be given to the use of an increasing number, as he described the situation in his telegram of title 608 dwelling uwits, which are becoming vacant. He suggests a form of rent subsidy, so as to make possible the use of this privately built housing under 608. He suggests also that such a program would eliminate need for the issuance of a large amount of the tax-exempt securities which are contemplated in this bill.

I realize there are ramifications of a proposal of that kind which goes to the question of rent as a subsidy as such. I am not prepared to go into those ramifications at this time. I do suggest, however, that it points up the need for further exploration of various means of assisting in private construction of housing for low-income groups.

In summary, we do not quarrel with the laudable aims of all the sincere people who would eliminate slums and raise the standard of living for the very poor, but we respectfully urge that the greatest possible care be exercised lest slum-clearance and public-housing programs result in a lowering of the standard of living for millions of workers and a loss of incentive for the great masses to be thrifty and indlustrious.

The CHAIRMAN. Mr. Kreutz, you represent an organization of institutions which I think have done a great deal for the American people. I know that in my own section, most people own their own homes. And I do not think the services which your organization has rendered to the American people can be too highly commended.

What effect do you think the elimination of slums will have upon the value of other property in a municipality? Do you not think it would have the tendency to increase the value of surrounding property, the elimination of slums?

Mr. KREUTZ. Oh, definitely. Yes, sir, we think the elimination of slums is a program of prime necessity in every community of the country where they exist to any extent. We feel that the elimination of those slums, however, should be handled chiefly at a community level.

The CHAIRMAN. But you are in accord with the general objective of eliminating slums?

Mr. KREUTZ. Yes, sir.

The CHAIRMAX. Irrespective of the methods, do you think the objective of low-cost, low-rent public housing is something to be desired in a democracy? Or do you not think that that ought to be an objective of the Government?

Mr. KREUTZ. I think all governments should give assistance within their capaicty, and along safe lines, to the development of low-cost rental housing on some basis. Our fear is that publicly built low-cost rental housing, if it gets the kind of start that it got in England, for example, may carry on to such a point that there will be little or no construction of private housing. We fear the effect of large-scale public housing on the potential builders of private housing who would see, in the threat of that kind of competition, something which they could not quite contend with, and which, therefore, would discourage them from constructing private housing for low rents.

The CHAIRMAN. The fundamental philosophy is the same. It is whether or not we want to give people with a low income, who cannot obtain proper housing, governmental help, and it seems to me if we are in favor of that governmental help to those people, you have answered the question as to whether that is socialistic or not. I man, it seems to me, cannot say, "I am in favor of giving this help, but I do not think it ought to be given if the Government gives it, but it ought to be given in another way:" It would still be the same principle. Certain people would be receiving the assistance of the Government and other people would not.

No one has come here against that principle, and that seems to me to be the same fundamental principle involved. Yet you hear some say, “This is socialistic.” Well, if it is socialistic for the Government to do it, it is socialistic for the State to do it. Is that not true? Mr. KREUTZ. Yes; the principle would be the same, yes, sir. The CHAIRMAN. It would be the same thing, substantially? Mr. KREUTZ. That is true. The CHAIRMAN. Are there further questions? Mr. Hays. Mr. Kreutz, your organization is one in which Mr. Ben Wooten is a 1 ational ollicer, is it not?

Mr. KREUTZ. Mr. Ben Wooten was very active in the organization of this league in 1943.

Mr. Hays. And it covers the entire Nation. You have members across the Nation?

Mr. KREUTZ. Yes, sir.

Mr. Hays. I wanted to comment on your point No. 4, on page 3 of your statement, regarding convertability of public housing to private ownership. I thoroughly agree with that point. The mayor of our city of Little Rock, insisted, when public housing was first adopted by Little Rock, that it be not in the large multiple-unit, but in duplex and single-unit projects. They were put in the outlying districts, and they have been adapted to the very idea which you have advanced. It constituted a very great public service.

Mr. BUCHANAN. One further question, Mr. Chairman.
The CHAIRMAN. Mr. Buchanan.

Mr. BUCHANAN. Is your organization affiliated with the Federal Home Loan Bank System!

Mr. KREUTZ. The members of our league are, to a great extent, members of the Federal Home Loan Bank System of the country.

Mr. BUCHANAN. And since1932 advances by the Federal Home Loan Bank System to these various institutions have totaled about 27 bil.

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