third. These are the families that constitute the backbone of America. This substitute title III is directed toward meeting the needs of this group; and we therefore urge its enactment.

Senator SPARKMAN. Senator Douglas, I am very much impressed with your statement on page 6, that the estimate which you make of savings through self-help are based on comparative figures with public housing projects where maintenance is required by the project, contrasted with where maintenance is provided, partially at least by the tenants. In those cases, the tenants do not directly profit themselves from the maintenance?

Mr. KROOTH. That is correct, sir.

Senator DOUGLAS. But in the cooperative they would profit directly from the maintenance?

Mr. KROOTH. That is correct.

Senator DOUGLAS. Therefore there would be an added incentive toward better maintenance under cooperative organization than in public housing, and therefore these figures are understatements rather than overstatements of the situation?

Mr. KROOTH. That is true, Senator.

Senator DOUGLAS. I impressed that on Mr. Foley last week.
Senator SPARKMAN. Senator Flanders?

Senator FLANDERS. No.

Senator SPARKMAN: Senator Bricker?

Senator BRICKER. No.

Senator SPARKMAN. Thank you very much, Mr. Krooth; we appreciate the information that you have given us.

The Right Reverend Monseigneur O'Grady. We are glad to have you with us. Will you identify yourself to the record?

STATEMENT OF RT. REV. MSGR. JOHN O'GRADY, SECRETARY, NATIONAL CONFERENCE OF CATHOLIC CHARITIES

Monseigneur O'GRADY. I am secretary of the National Conference of Catholic Charities.

The Housing Act of 1950 represents a new departure in the relationship of the Government to housing. In this new program it is proposed that the Government assume the leadership in a program of cooperative self-help. This is something that many of us have been looking for through the years. The program proposes that the Government go out and assist in setting up housing cooperatives. We know that this is not an easy task. It will require the finest type of leadership on the part of Government officials. Many of us have felt that this program calls for a new type of personnel in Government. This is the reason why we have come out boldly for a new constituent agency within the Housing and Home Finance Agency especially charged with the administration of the new program. Many of us are finally convinced that such an agency is essential to the success of the program.

During the past year I have had considerable opportunity of observing the attitude of the Federal Housing Administration toward cooperative housing. I would say that by and large the representatives of FHA with whom I have conferred throughout the country have not only been unsympathetic toward cooperative housing but they have done everything in their power to oppose it. I must say therefore that

with the mentality of FHA officials there is very little hope for cooperative housing. We need new personnel with a new vision; we need people who can join with us in a new crusade.

COOPERATIVE HOUSING AND THE DEMOCRATIC WAY OF LIFE

Cooperative housing should be regarded as a real effort on the part of the people to do things for themselves. It is a genuine expression of self-organization on the neighborhood basis. I have watched with great interest the development of self-organization in many of our city neighborhoods throughout the country. It has been a truly fascinating experience to see what people can do for themselves if there is somebody there to point the way. I do not mean somebody who comes to them with a pattern. I mean somebody who can inspire them to think and to plan for themselves. I have seen what they have been able to do in repair programs in housing on a neighborhood basis. I have seen what they have done in adult education in throwing up of effective leadership on a community basis.

In recent years in the United States we have had too much planning and too much thinking from the top. The ordinary citizen has tended more and more to be inarticulate in community affairs; he follows along with great mass movements. The tendency toward selforganization is the best antithesis to this tendency.

I would look on the cooperative housing movement as a great challenge for the extension of self-organization and self-help. Among all sorts of groups in the United States, little and big, we do not want to think about cooperative housing projects in the same terms as the multiple rental housing projects in many of our larger cities. They are too large; the population is still too dense.

In a cooperative housing program I would think largely of families with children. These are the families that are having most difficulty in securing proper housing accommodations in our cities at the present time.

THE FIELD OF COOPERATIVE HOUSING

Recently, I have had an opportunity of visiting a number of housing projects built under sections 203 and 608 of the National Housing Act. By and large, houses with three-bedroom units, which are the only type suited to families with children, sold at $10,000 or more. Most of the houses built under the FHA program were two-bedroom units and were selling from $8,500 to $9,500. These houses I feel are not suitable for family living. At least they are not suitable for families with children.

In a number of cities the home builders have tried to convince me that they were meeting the needs of middle-income families. In a few places they have shown me houses that cost $7,700 or $7,800. These houses were invariably two-bedroom units. The rooms were very small; in a number of places the public improvements have not yet been made which would impose an additional charge on the people who have purchased these homes, but I must say that in the cities that I visited I found very few homes of this kind. In no place have the home builders or the representatives of FHA given me sufficient evidence to show that they are making an effective contribution to the middle-income housing program. They are building

houses for people with incomes of over $4,800 or $5,000; they are not building homes for people in the $4,000-income bracket; they are not building homes for people in the $4,500-income bracket; they are not making an effective contribution to the building of homes for those in the $3,000-a-year bracket.

MIDDLE-INCOME HOUSING AND URBAN REDEVELOPMENTS

One of the most effective arguments for a cooperative housing program for middle-income families has been provided by the large number of families that have been displaced by the new, freeways that are being built in American cities. Besides the freeways we have many other public improvements under way, such as the development of new medical centers and new schools, which are displacing a considerable number of families. As the new program for urban redevelopment gets under way, more and more families will be left without any housing facilities.

In the past, many of us were inclined to believe that the families displaced by public improvements or by ordinary clearance in our cities could be taken care of by public housing, but we now find that a considerable portion of these families do not qualify for public housing because they are over income.

COOPERATIVE HOUSING AS EFFECTIVE MEANS OF MEETING NEEDS OF MIDDLE-INCOME GROUPS

We have had a great deal of discussion in the past 2 or 3 years about ways and means of meeting the housing needs of middleincome families. When the Wagner-Ellender-Taft bill was first introduced in the Congress it was the hope of its promoters that a further extension of FHA financing would provide the answer for middle-income housing, but we have found that in spite of all the extensions of FHA, the middle-income groups still remain uncovered. From time to time there have been suggestions that the Government should provide subsidized housing for middle-income groups. I have always strongly opposed the entrance of Government into this field. I do not believe that we can afford to provide subsidies for such a large sector of the population.

When the Sparkman bill was introduced into Congress last year it was the thought of its promoters that straight Government lending might provide the solution for middle-income housing. This bill, including provisions for direct Government lending, was approved by this committee. However on the basis of more careful consideration, agreement was reached among the promoters of the legislation that ways and means should be devised of bringing private capital into the field. It was therefore proposed to set up a National Mortgage Corporation for housing cooperatives. This Corporation would be authorized to borrow $100,000,000 from the Government. would be used to make advances to housing cooperatives to aid them in their preliminary planning. It would also loan them the necessary funds for the construction of the housing units. It was recognized that each member of a cooperative should make a contribution of 21⁄2 percent of the cost of the housing unit that he was to occupy, and 5 percent within 20 years. This, plus the rental payments or

This

service charges, would help to build up the capital of the National Mortgage Corporation; the Government investments in the Corporation would thus be replaced by the payments made by the various members of the cooperative. This would represent private savings in the true sense. It would mean savings on the part of our middleincome groups on whom to such a large extent depend the savings that are the very basis of our free economy.

COOPERATIVES AND HOME OWNERSHIP

In another important respect S. 2246 represents a very great improvement over the provisions of the bill approved by the Senate Committee on Banking and Currency last year. Last year's bill provided merely for mutual home ownership under the cooperative program. Under the bill as it now stands, families of moderate incomes may own their own homes where such homes are free standing. However, if an individual wants to sell his home he must give the cooperative the first opportunity of buying it. This is in line with the thinking of the people with long-established traditions of home ownership. In discussing last year's bill, the question was asked over and over again if it was possible for people of moderate means to own their own home. We found a great lack of enthusiasm when we announced that the program was confined to rental housing.

We are sorry to point out, however, that the bill in its present form fails in one essential for which the various public-interest groups have been struggling. It provides for the setting up of a division within the office of the Housing and Home Finance Agency to be charged with the administration of the program. The various public-interest groups that have worked so hard in promoting this program believe that there ought to be a separate constituent agency to administer it. We believe that this agency should be on the same level as the Public Housing Administration, Federal Housing Administration, and the Home Loan Bank System. We are not impressed by the arguments advanced against a separate constituent agency. We know that conditions do arise in the Government in which the new agency is essential; this is the type of program with which we have had really no governmental experience. It is a new field of endeavor for the Government. It is a new type of service that cannot be easily administered by the established agencies of the Government. They are set in different patterns. In this new venture we need new leadership, new inspiration, and a new outlook. We need crusaders in contradistinction to the ordinary Government official.

Senator SPARKMAN. Thank you very much, Father O'Grady.
Are there any questions?

You must have been very satisfactory; there are no questions.

The next witness is Lawrence A. Epter, representing the Mortgage Bankers Association of New York. Is Mr. Epter present?

(No response.)

Senator SPARKMAN. Those are all of the witnesses scheduled for today, and therefore the committee will stand in recess until 10 o'clock tomorrow morning.

(Thereupon, at 11:40 a. m., the committee recessed until 10 a. m., Tuesday, January 17, 1950.)

MIDDLE-INCOME HOUSING

TUESDAY, JANUARY 17, 1950

UNITED STATES SENATE,

SUBCOMMITTEE ON HOUSING AND RENTS

OF THE COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The subcommittee met, pursuant to recess, at 10 a. m., in Room 301, Senate Office Building, Senator John J. Sparkman presiding.

Present: Senator Sparkman.

Senator SPARKMAN. The committee will come to order, please.

Congressman Javits, we are glad to have you with us. I am sorry that the committee attendance is so small. There is a Democratic caucus going on which takes the Democratic members away. We have had assurance that some of our Republican members would be here a little later.

Senator Bricker's administrative assistant is present. Senator Ives will be here soon, and his administrative assistant is on his way now. We hope that Senator Flanders will be here also.

Congressman Jacob K. Javits, Congressman from the Twenty-first District of the State of New York. Congressman Javits, just proceed in your own way.

STATEMENT OF JACOB K. JAVITS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW YORK

Mr. JAVITS. Mr. Chairman, I might say that although the attendance of the subcommittee is small, it is distinguished. I have a great respect for the chairman and his leadership in the whole housing fight, which has been so difficult and so far partially successful.

I might say that I deeply appreciate the opportunity to come and testify before this subcommittee, which pleasure I have been accorded before, and I believe we have had fair success before in this somewhat close cooperation between the Senate and the House. The experience with the public housing bill demonstrated that bipartisan support is absolutely essential if we are to carry a housing measure of this character.

Apparently, anything but a straight extension of FHA calls for bipartisan backing. The only thing which enabled the public housing bill to pass in the House, as the Senator knows, was 23 Republican votes added to the Democratic votes, to give us a majority of five on the critical move to strike out the public housing article in the housing bill last year.

We are now considering in this committee and I intended to confine my views to this-the amendments to title III of S. 2246, introduced by the chairman of this subcommittee, which amendments now deal with a fundamental proposition of making available to the

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