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I submit that a tenant and a landlord relationship cannot be satisfactory unless each take their responsibility and live up to it, across the table.
Page 65, section 411, “Loan Funds," there is a little matter of $250,000,000 involved there in loans, which becomes a part of the public debt.
Page 66, section 412, entitled, “Contributions": As a kind of a green country boy I remembered the contributions to total about $10,000,000.
And in section 413, I read the outright gifts to be $12,500,000.
Gentlemen, that is $272,500,000 as I would count it, and while I submit to you that that is not big money as is now tossed about in our Federal Government, it is a substantial and respectable sum and could much better be applied to the reduction of our Government debt, and that the interest of agriculture could be much better directed toward the preservation of the soil and toward the edification of our people. I want to thank you for the opportunity of appearing before you, and of pointing out to you that, all the indications to the contrary notwithstanding, I believe that we in agriculture still like, insofar as possible, to stand on our own feet, and pay our own debts. Thank you.
Mr. Brown (presiding). Mr. Cole, do you have any questions?
Mr. COLE. Yes. Mr. Davis, I wish you would discuss the supervised credit feature of the bill. One witness the other day suggested that it was not particularly new in agricultural lending, but it seems to me that it is a little further advanced than heretofore permitted under present legislation. How far have we gone to supervise the operation of farms through lending? We have done it in the Farm Credit Administration. Will you explain that a little bit ?
Mr. Davis. We have supervised lending, gentlemen, to my knowl. edge, in two lending agencies of the Government, first the Farmers Home Administration, and we have that supervised lending in three divisions of that Administration,
The first division, where loans are made to tenants and operators, and the borrower is supervised in his operations.
The second division, where loans are made for the purchase of farms, the tenant-purchase feature, and the borrower is again supervised.
The third group is where the so-called large farm operations were originally set up. The last group has been a complete failure. The farm purchase group has done very well, and I think in some measure, Mr. Cole, due to the quality of supervision. The first group, in general, where their local committees were careful in the selection of applicants, and where they were insistent that the representative of the Farmers Home Administration assigned to their area really do his job, fine work was done. But in other areas where the committees just went along, and where the supervisor tended to be just another Government employee on a 9 to 4 basis, the results have been very sad.
Then the Production Credit Administration has also supervised lending, and again there the same picture carries. In general the picture has been fairly good, but the strangest thing about it
Mr. Cole. It has been fairly good with respect to the results so far as the operation of the farms is concerned?
Mr. Davis. And insofar as the results returned on the Production Credit Administration's lending record, but Congressman Cole, the
strangest thing about that it that practically 95 percent of the men they have loaned money to would be a fine addition to the portfolio of the local bank, and the bank would be glad to have them. We have the unusual experience of finding them advertising, bidding, seeking loans as actively as any commercial institution.
I would say that in those two instances, the picture has been good, and that in the third case, of the Farmers Home Administration, it has just been absolutely bad.
Mr. COLE. As I understand your statement, it would seem that this bill, with respect to the rural section, is rather confused between whether or not it is a bill for social benefits or for agriculture as such, is that it?
Mr. Davis. I would submit, Congressman Cole, that it is a pure and simple social aim, rather than a real attempt to help meet a problem which, in the first place, is indicated to be much worse than it is, and in the second place can be met, when desirable, adequately by local committees.
Mr. COLE. Is there anyone who seriously contends that if this rural section is passed, that farmers will be improved socially to any noticeable extent ?
Mr. Davis. I know of none who makes such a contention. Even the gentleman representing the Grange, the other day, I believe threw in a word of warning to not bring the debt above the earning ability of the property.
Mr. COLE. I thought he threw in quite a few words of warning,
Mr. Davis. In fact, he seemed to approve with reluctance, and I submit to you that I do not believe agriculture is crying for this help. I think if it is given, it's net result, outside of the social aim, will be just zero.
Mr. COLE. I do not see that it will do any good from a social standpoint.
Mr. Davis. Well, that is where it is aimed.
Mr. Davis. Thank you, gentlemen, for the privilege of again visiting with you.
Mr. Brown. Mr. Whitlock, identify yourself and proceed, please.
STATEMENT OF DOUGLAS WHITLOCK, CHAIRMAN, THE BUILDING
Mr. WHITLOCK. My name is Douglas Whitlock. My offices are in the Shoreham Building, Washington, D. C. I appear as chairman of the Building Products Institute, an organization of manufacturers of building materials and equipment.
I appear in opposition to H. R. 4009. I oppose the bill not because its objectives are unworthy or because the problems it seeks to solve are not serious, but because the bill will not measurably contribute to the achievement of the objective of providing better housing for those most in need. It offers a false hope which must soon lead to disillusionment. At the same time, it creates a costly governmental function, in many ways removed from the scrutiny and control of the Congress; it makes a tremendous grant of power to Federal administrative officials; and in its effort at benevolence, it threatens a serious intrusion upon the independent rights of the State, the municipality, and the citizen.
In this connection, I want to bring to your attention some remarks of a man as well versed in the ways of government as anyone we know-Mr. James A. Farley-as printed in the Congressional Record of May 3:
Governments are reaching further into every phase of individual life. Peoples of the world are being beguiled by benevolent governments. Much of this is good and some of it is bad. Benevolence can and has led to despotism. I am not here to discuss this trend, but merely to note it and emphasize that it calls for utmost vigilance on the part of all citizens.
This proposed act is one of those measures which must be viewed with the caution which Mr. Farley recommends because its objectives are worthy and its presumptive benefits are beguiling.
Last year I appeared before you on S. 866, a measure of similar import. I discussed with you the vagueness of its language, the indefiniteness of its grants of power, and the complexity of its provisions, which took it beyond the comprehension of anyone except those with limitless time for its study. The present bill suffers from the same faults, and what I said on this score last year applies equally now. Consequently, there is no need to repeat my last year's analysis. Instead, I want merely to give attention to a few of the main features of the bill which are at the heart of my opposition and of that of all citizens who would not let their impatience with present problems blind them to the dangerous connotations inherent in the bill.
The crux of the matter lies in the “Declaration of national housing policy.” This sets forth the doctrine of the all-wise benevolent government, which would grant to a small group of officials the right and duty to leap over the boundaries of State jurisdiction to deal directly with the affairs of municipalities and of citizens, to define their needs, to judge the performance of their enterprises and the adequacy of their laws, and to determine the scope of public activity.
The point of view is elaborated in section 101, where the granting of Federal benefits is to be governed by an administrator's judgment as to the propriety and effectiveness of local laws dealing with building construction, land use, building occupancy, trade restraints, and presumably the extent to which the locality brings its “positive programs" relative to these matters into conformity with a pattern set in Washington.
All this carries the Federal Government into new realms of power and influence. The excuse for this expansion is the greatness of the supposed need—at a time when the American people were never better housed at lower annual cost—the necessity for direct, Federal, emergency action, and the presumed effectiveness of the proposed act.
But this bill, while granting the power, cannot achieve the solution; and the power it grants is dangerous and may take us into areas of Government control and dictation not contemplated or approved by most of its supporters.
As an example, the determinations that the Administrator is required to make under title I could slow up its operation indefinitely, at the same time leaving him free to harass municipalities into bringing their plans and proposals into conformity with his evolving notions. Local initiative, under which State after State and city after city have been inaugurating slum-clearance programs through their own measures, suited to their own varying needs, would be blighted. The tendency would be to await the appearance of the national program, and to exchange local initiative for conformity.
This title has been proffered as a means of eliminating slums. But its provisions are not confined to this, nor can we even be certain that its most important objective is slum clearance. A “project,” as defined in section 110 (c), is not confined to a slum area, but may be set up on vacant, plotted land, and, indeed, upon vacant unsubdivided land beyond the limits of present private development. It thus encourages and provides the means for bringing land for future housing into public ownership; and since it permits this land to be leased for development purposes the city need never divest itself of control. Thus, through ownership of raw land on the outskirts of local communities and the gradual accumulation of land through the deterioration of built-up areas, private property in urban districts could be eliminated. I suggest that this goes far beyond the purposes approved by many advocates of the bill.
Once this bill is passed, the control of the slum-clearance program passes from the scrutiny of the Congress until the present generous authorization is exhausted. Loan funds are obtainable through the use of the public-debt procedure without need for requesting appropriations, while contracts for grants may be made which pledge the full faith and credit of the United States, leaving appropriations committees with no recourse except to honor the pledge when presented.
This device for circumventing the scrutiny of the Congress, for preventing the modification of Federal programs to meet conditions as they change from year to year, is used in an even more ominous manner in title II, "Low Rent Public Housing." Here loan funds are also obtained through the public-debt procedure, and commitments or contracts may be made, not over a period of 5 years or for merely a year at a time. Rather, Congresses for 10 years in the future are committed to honor the contracts for contributions of hundreds of millions of dollars which are in the power of a present administration to grant.
This constitutes an abrogation of one of the most jealously guarded prerogatives of the Congress. I think the wisdom of such a long-term commitment should be questioned, even if so drastic a departure from historical practice could accomplish the objective intended. But the provisions of the bill offer little hope that it will be.
The proposed benefits are not only generous but extravagant. The maximum cost of a public dwelling unit may run up to $2,500 a room or to $12,500 (excluding land) for a 5-room unit. "Contrast that figure,
if you will, with the $9,000 limit (including land) for privately financed rental property receiving 90 percent mortgage insured through FHA. The maximum annual subsidy can be 4.5 percent of the development cost. Including land, the development cost could be higher than the above figure; but, even at that, the subsidy in dollars—not counting the local contribution-could be as high as $46 a dwelling unit a month. Admittedly these estimates are maximum, or close to it, but there is nothing in the bill to require or even encourage economy.
Yet, there is no promise that even this high price will provide housing for those most in need. The average rental in public housing already built under the United States Housing Act which exceeds $27 per month is close to the median of rents paid in unsubsidized private urban rental property, which comes to around $31 per month. The average citizen may thus be said to be contributing taxes in order to house other average citizens in accommodations which often are better than his own. The most desperate situations remain untouched, and the neediest families continue to be neglected.
But a potent instrument for Government control and political power will have been created. One advocate of the bill has stated that, once enacted, it would not again be necessary to appear in order to urge the future expansion of these benefits because political pressures would make such expansion automatic. We must all agree that this is a likely prophecy. There is no reason why the 810,000 units in the Senate bill or the 1,050,000 units in this bill should be the limit any more than the 500,000 units proposed a year ago should be the limit. This part of the bill will release forces and pressures, the strength and direction of which we can only vaguely surmise at this time. We risk opening a Pandora's box without even the gamble that a treasure rests inside.
A few questions must also be raised about title III, "Housing Research.” Again the objectives of encouraging the development of techniques for housing of lower price and higher quality are laudable. But if such a program is to be effective, and not a multimillion-dollar boondoggle, provisions should be made requiring Government to work with industry and labor through procedures in which all can cooperate and contribute.
The mandate to engage in statistical and economic research and to publish estimates of needs may, I fear, be sufficiently broad to permit control of the sources of information. Under a previous administration we had an unfortunate experience where controlled information was withheld in order to suit a political contingency.
To prevent such an occurrence in the future, provision should be made to assure the collection and publication of basic data by agencies which are not responsible for promotion and performance. Moreover, there is no valid reason for removing the restrictions wisely placed by Congress on press agentry by Federal agencies and to not only permit but to require that indiscriminate publicity be indulged in.
The farm section, title IV, is beyond comprehension. It seems designed to preserve the uneconomic methods of farming and to reverse all recognized standards of offering credit. In any case, these provisions do not belong in a bill mainly concerned with urban problems; rather, they should be brought before those committees of the Congresses which have jurisdiction over matters relating to agriculture and which are familiar with the many programs of aid to farmers that have already been instituted.
In summary, the bill will not meet its objectives. It will add immensely to the cost of the Federal Government. It will expand the control of the Federal Government over local and personal affairs. It will evoke limitless demands for the extension of its provisions. It should not be passed.
Now, I would like to take a few minutes to emphasize certain points and to give you additional documentation of some of the points in my statement.