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Any research program to be of maximum effectiveness, therefore, must take into account the production problems of small as well as large builders.
Among the many factors which have retarded the rate of technological progress in the home-building industry, contlicting and restrictive building codes and lack of coordination in the dimensions of building materials are both of prime importance. The Housing Act of 1948 recognized that these two problems were so extensive in their effect and their solution so difficult as to require guidance and leadership at the Federal level. That leadership means combing the country for the best practices and telling other communities about them. But it means more than that-it means developing the engineering facts around which better code provisions can be developed. Furthermore, it means bringing these provisions to local officials in a form that is easy and inexpensive for them to use and easy of revision when further data become available.
It is my conviction that there are many other such obstacles where isolated efforts to correct them can meet with little or no success. I believe that the informed and central leadership that can be given by a broad Federal research program is essential to provide guidance and correlation to these individual efforts, to show how they should be focused if they are to help in lowering costs, and make it possible for such efforts to have the impact they obviously are unable to make alone.
The basic purpose of this whole research program should, I believe, be to see that the benefits of improved technology, simplified building codes, and the like are brought or made available to the American people in terms of better housing, more stable employment and a more stable economy as a whole.
I mentioned earlier that the Government itself has a very large stake in the housing business. Therefore, as a matter of public policy, the Government should be thoroughly informed as to every developing phase of that business. As a result of war housing programs, the Federal Government is now the largest single owner of residential real estate in the country. It has, morever, underwritten a large proportion of private home mortgage investments in recent years. It operates a system of insuring investment in savings and loan institutions. These interests are a compelling reason why the Government should equip itself wtih reliable information. For example, if through studies of investment experience with various forms of rental housing, we can develop formulas more attractive to private risk capital than are presently available, the Government may be able to withdraw or reduce the size of some of its commitments. Simplification of building codes, improved construction methods or any other technique that will reduce costs will benefit the Government directly both by reducing the dollar amounts involved in its insurance underwriting or other programs of financial aid and by reducing the cost of such building as the Government directly assists.
If we are given the authority which this bill provides, one of our first jobs will he to assemble and appraise as many current facts as we can about the whole process by which housing is now built, the costs of the various elements and the character and causes of present inefficiencies. It seems clear that if we are to do anything about costs we must find out what those costs actually are and how and why they vary so widely from place to place and from time to time. Today the facilities we have for bringing out even the most elemental facts about costs and their persistent tendency to rise and stay above the general price level of other durable goods are indeed rudimentary. The Joint Committee on the Economic Report, Eightieth Congress, wrote in its report on the statistical resources of the Government: "There is need for a reliable general construction cost index for
the predominant types of residential construction
*." We also need to know more about building as a business—what factors tend to produce stability and growth, and what factors inhibit them. We need to understand the working capital requirements of building enterprises of various sizes as well as the management and labor problems that various classes of builders experience. We need to devise better ways of applying good design and improved construction techniques and standards to the low-cost house. We need to find additional means of spreading those and other overhead costs over a larger number of units and thereby achieving a lower per-unit cost.
Such an initial effort would be in keeping with the conclusions of the Hoover Commission task force on the statistical agencies of the Federal Government that
“The collection and dissemination of information concerning the structure and processes of national life are among the basic functions of Government. Under
contemporary conditions, the provision of prompt, accurate, comprehensive intelligence concerning economic resources and major economic and social processes is an activity of high priority among governmental undertakings."
At the same time that we examined into the nature of the production process, we would undertake engineering studies to produce standard performance test ing procedures that can be applied in any laboratory to examine the adequacy and the adaptability of various building materials and components. We must see that the local building official is put in a position where he can approve the use of all products that have passed the laboratory tests indicated by nationally approved standards.
We would also undertake design studies to find out if less elaborate and costly elements can be devised. We have examples of what can be done in this direction in the studies of roof design and septic tank construction made under earlies limited programs. In the former case it was demonstrated that a simplified roof framing would result in a saving of about $80 in certain types of houses, and out research work convinced us that a better septic tank could be produced at a saving of about 150 per house. The cost of the research work of these two items was about $150,000. If the results of this work had been applied to only 10 percent of the new homes started in 1948 it could have resulted in cost reductions in the neighborhood of $20,000,000. Those savings would continue to be repeated year after year. We are convinced that there are numerous other such items where savings can be made.
In addition to building codes, the production of housing is conditioned by a variety of local codes and regulations—such as residential land use controls (including zoning, subdivision control regulations, and city planning), safety and sanitary codes, and the like-which affect not only the unit costs of housing but also its environment. Better community development generally is esseential if the housing that is produced is to have greater stability of value. Consequently, we are interested in improved urban land use patterns generally, for residential development and for the other land uses which serve and support it. Our research therefore should include studies of these various local regulations and should find out wh the best practices are for small ies as well as large, and what form of local administration is best suited to guide the small community which suddenly begins to mushroom. These studies should lead to the develop ment of model forms of local regulations for the guidance of State and local officials.
Progress in housing demands that we improve our knowledge of how the housing market operates. The housing industry needs to know more about how the size of local markets fluctuate from time to time, what the relationships are between family income and active market demand, when and why people prefer to rent rather than to buy and what eonsumer preferences are as between old and new units, or between units of different types. We need for instance to bring to light the favorable risk characteristics that Negro home purchasers have shown where credit terms have been related to their incomes. It is equally important to show how the market has been narrowed down when credit costs have been too high or credit supply withheld. We must get facts about the cost of upkeep and maintenance and the ultimate effect of shoddy initial construction or bad planning or location on total housing costs over the long run. We need to know what factors have produced favorable investment experience in rental housing and what factors are detrimental.
And there is an insistent demand for the disclosure of the hidden costs that result when poorly located dwellings have to be served by expensive utility extensions, school-bus services or other necessary facilities. These costs have to be borne by someone and we should know what their impact is, and upon whom they fall.
In connection with this general subject, I want to emphasize the importance of establishing the community itself as the informed source of information about its own housing problems. There is where the primary responsibility should rest for developing sound and well-organized data as to local needs and markets. This is equally true whether we are talking about the informational needs of the local building industry, about the data needed by local planning officials engaged in mapping out appropriate lines of city growth, or about the facts that the community would need to supply to the Federal Government in connection with requests for Federal aid.
The practical fact is, however, that to a large extent the technical experience with local housing market analysis has been concentrated in the Federal housing agencies that have had to develop suitable methods in connection either with underwriting or war programing activities. It seems clear that this experience should now be made available to the communities and we propose to accomplish this through such means as technical bulletins, demonstrations, studies, and advisory assistance.
There is a third major area in which our proposed research program can make a substantial contribution and that is the field of statistical information. There are a number of very significant gaps in our present body of housing data, and a number of places where the reports now compiled by various agencies are less useful than they might be because of lack of agreements in definition or concept. My attention has frequently been drawn to these deticiencies and to the way in which this lack of precise and complete information hampers the formulation of sound business and public policy.
We have made a small beginning in overcoming this problem through the publication of a statistical handbook which brings the principal types of data into a single volume and describes their structure and limitations. The very process of preparing this publication served the purpose of exposing some of the problems and stimulating an effort toward better coordination among the different compiling agencies. We have received many very favorable reactions to this activity, and I am convinced that it represents a field of coordinating effort in which the Housing and Home Finance Agency can exert real leadership. Our study of some of these problems has demonstrated that the statistical agencies in many cases need specific help in devising means of collecting certain types of data for which no reporting system now exists. In these cases we would propose to conduct with them experimental pilot studies to see if some adequate reporting method can be devised.
I am convinced that an adequate reporting service and one that works both ways should become an integral part of our Federal-State-local housing relationships.
Now, the research task I have described is a big one. But it is important to remember that our resources for tackling it are already considerable, providing we take the proper steps to mobilize and strengthen them, and to focus their work on a single objective rather than on isolated projects. To mention only the major ones in the Federal establishment, we have the National Bureau of Standards, the Bureau of Labor Statistics, the Bureau of the Census, the Public Health Service, the Commerce Department's Construction Division, and the Forest Product's Laboratory of the Agriculture Department. Right within the housing agencies, we have made-to-order "laboratories" particularly for certain 1ypes of financial analysis, such as on rental housing investment, the market and risk characteristics of particular types of housing or of special groups such as the minorities.
These and other facilities can be drawn upon within the Federal Government. But we must remember that in a program like the one we propose here the direct activities of the Federal Government also serve to stimulate and provide working data for specialized work in colleges, foundations, private laboratories and public and private offices of business economics and research.
And we must eventually encourage our communities and our local housing industries to turn to these groups for the answers to many specific local problems.
I have described these facilities because I want to emphasize the point that while, in finding solutions to the whole housing problem, leadership must be supplied by the Housing and Home Finance Agency, that agency cannot by any means undertake the entire task. The fact-finding problems are too broad and too many, and we must bear in mind that what we are seeking are the answers to our problems rather than exclusive credit for finding them. That is why in the research title itself the Administrator is called upon to utilize to the fullest extent feasible the research facilities of other Government departments, and to consult with and advise those departments concerning ways and means through which those facilities could contribute additional services. The Administrator is further authorized to undertake studies cooperatively with industry and labor, with the agencies of State and local governments, and with educational and other nonprofit organizations.
This idea is hy no means now or untried. A similar responsibility in the field of agriculture has been vested in the Department of Agriculture for many years. That Department not only conducts extensive studies of its own, but uses the resources of other Federal agencies. Furthermore, through the medium of frequent consultations with State universities and other public and private research groups it coordinates agricultural research throughout the country. The results of this program are well known. They have worked not only to the benefit of the farmers themselves, but to the entire American people as well as in the form of a more abundant food supply.
In like fashion, the role of the housing agency would be to throw light on the significant problems, to formulate and suggest methods of dealing with them, and to see that there is developed and promulgated an appropriate and consistent body of data from which intelligent judgment can be made. Informed advice on State and municipal housing matters should be given to all of the 48 States and the municipalities in them. Each question asked and answered would be a contribution to the growing store of knowledge from which we can decide how as a Nation we can best act to assure adequate housing for the American family.
This is a role of guidance and leadership, both in providing a factual basis for the extension of national housing policy, and in showing private industry and the States and communities, what types of action would be most helpful to them in their own attempts to provide better housing for our people.
This title does not contemplate the duplication of research activities now going forward publicly and privately. Rather, it is intended, in cooperation with industry, to map out the needs, to supplement the research going on elsewhere, to fill in the gaps, and to coordinate and seek to integrate these activities and disseminate the practical results of that research.
TITLE IV-FARM HOUSING
Federal assistance for the improvement of housing conditions on farms would be authorized in title IV. The provisions recognize that the consideration of farm housing is inseparable from that of farming as a source of livelihood and from the agricultural economy as a whole. For these reasons, it will be more appropriate for you to receive specific comments on the aids proposed in this title from the Secretary of Agriculture who will have the responsibility of administering this part of the program and who, I understand, has been asked to testify before this committee. My observations, therefore, shall be of a general character.
We know that despite nearly a decade of unparalleled farm prosperity a much higher proportion of farm than urban dwellings are in bad physical condition and that the majority of farm families lack in their homes the amenities now considered essential in urban dwellings. I am advised that nearly a third of the Nation's farm families derive insufficient income from their farming operations to finance the needed improvements to their homes.
The impact of these bad housing conditions on farm families, and on the health and character of their children, appear to me to fully justify inclusion in a broad housing program of the financial assistance which is otherwise unavail. able for provision of adequate farm housing.
Another paramount consideration is the necessity of utilizing our agricultural resources, on which we depend for food, clothing, and many other requirements of our society, so that our needs for both the present and future can be met. Through the provision of adequate housing we can help create a living environment that will attract and hold to the soil, as a source of livelihood, those best able to utilize these resources in a way that will protect our national security and well-being.
I know that the provisions of title IV are the product of extensive study and, for the reasons stated. I urge their enactment so that a start may be made on this critical phase of the housing problem.
TITLE V-MISCELLANEOUS PROVISIONS
I should like now to direct your attention to several of the miscellaneous provisions, in addition to those already mentioned, which are contained in title V.
Section 501 would permit the Housing Administrator to appoint such advisory committees as he deems necessary in carrying out his responsibilities under this and other acts. It is clear that the Housing Administrator could not fully discharge his responsibilities without frequent consultation with those who have a vital interest in housing, such as representatives of consumers, industry, finance, and labor, and I have had such consultations on an informal basis in the past. By permitting the establishment of advisory committees on a formalized basis, this section will facilitate this valuable phase of our operations.
Under section 502, national banks and (to the extent permitted by State law) State member banks of the Federal Reserve System would be authorized to purchase or underwrite (without regard to present legal restrictions which limit
such transactions to a fixed percentage of the bank's capital and surplus) certain notes having a maturity of not more than 18 months issued by local public agencies in connection with slum clearance or low-rent housing projects. This authority would apply only if the notes are secured by an unconditional agreement by the Federal Government to advance to the local public agency moneys sufficient to meet the principal and interest, at maturity, of such short-term notes and required to be used for this purpose. Similar authority is extended by this section with respect to long-term bonds of local public housing agencies to which special security features would attach in accordance with this bill under annual contributions contracts between the Federal Government and the local public agencies.
Section 503 would make the Secretary of Labor or his designee and the Federal Security Administrator or his designee members of the National Housing Council in the Housing and Home Finance Agency in recognition of the interest of those agencies in problems related to the Federal Government's housing programs.
Section 507 would authorize the Bureau of the Census to conduct a census of housing in 1950, and every 10 years thereafter. I have already referred to the necessity of adequate economic and market data on housing as the basis for intelligent judgment on housing needs and programs. A complete and up-to-date inventory of housing is an indispensable part of that data. Such a census will be of great benefit also in the administration of the other provisions of this bill. Census data on the size, quality, and general characteristics of the housing supply in individual towns and cities will play an important part in the local determination of the extent of the need, for Federal aid for slum clearance and low-rent public housing, provided under titles I and II of this bill.
While subsequent sample surveys have brought up to date the most important aspects of the 1940 housing census data, they do not fill in all the gaps and they do not make available complete current data for every city, village, and township that are required periodically. I therefore urge prompt authorization for a 1950 census in order that the Bureau of the Census may complete in time the monumental job of pla ng, organization, and coordination with the population and agricultural censuses which will be conducted at the same time.
In conclusion, I should like to make a few personal remarks based on my 15 years of experience in the housing field. During most of this period I have been concerned with the administration of the Federal Housing Administration mortgage-insurance program, first as director in my home State of Michigan, and later as Commissioner. I am proud of the achievements of FHA in improving our system on housing finance, in encouraging the production of both rental and sales housing, and in establishing a more secure basis of home ownership.
That experience has also intensified my conviction that we must expand our efforts and bring the advantages of better housing to the thousands of families who have not yet been reached. I do not think our Nation can afford to deny the aspirations of these families for decent homes or to commit their children indefinitely to the sordid environment of the slums. Our national well-being and security do not permit the continued assumption of such risks.
So I feel that it is important that the tools proposed in this bill, which have been fashioned over so long a time, be put to work. With them I believe we shall be firmly on the road toward the objective to which all of us, I am sure, subscribe the goal of a decedent home and a suitable living environment for every American family.
TABLE 1.-Effective nonfarm housing inventory as of beginning of 1949
(in thousands) Total number of nonfarin dwelling units, April 1947, according to Bureau of the Census.-
* 31, 248
or rented but not yet occupied)-
Effective supply of housing to meet nonfarm needs as of April 1947- 32, 729