Mr. BRYANT. That is right.

Senator DOUGLAS. And it hasn't been always clear; this corporation would not sell the individual notes or mortgages, to private holders, it would hold those, but merely sell debentures based upon a group of such mortgages? Is'nt that true?

Mr. BRYANT. I feel this is the best possible device for reducing risks in this field. Of course, the problem, the primary problem of reducing risk is sound administration in the first place to see that there is no water in the construction costs, and that is why I have strongly recommended open books on the part of the contractors, and I think that contractors will be found who will be glad to build under those conditions..

Senator DOUGLAS. When you say open books, what do you mean? Mr. BRYANT. That a certified audit be made of the contractor's actual expenses plus a previously agreed overhead and profit fee. Senator DOUGLAS. The cost plus percentage of fixed fee.

Mr. BRYANT. I would call it a cost-minus program. We will say that a unit costs $10,000, and there is an agreed fee of 10 percent, or $1,000; that the unit actually is therefore proposed to cost $9,000, we will say, with open books that anything the contractor saves under that $9,000 there be a prearranged basis for something like 50-50 split. Senator DOUGLAS. Giving him incentive to reduce costs.

Mr. BRYANT. Yes.

Senator DOUGLAS. Instead of possible incentive to increase costs. Mr. BRYANT. That is right.

Senator DOUGLAS. By giving him more than the 10 percent general contractor's fee.

Mr. BRYANT. Yes.

Senator DOUGLAS. Now, do you know of such contracts that have been let?

Mr. BRYANT. I know of several cooperatives that have drawn up such contracts in anticipation of FHA insurance.

Senator DOUGLAS. Did FHA object to the contract?

Mr. BRYANT. They objected

Senator DOUGLAS. To the idea of cooperatives?

Mr. BRYANT. Yes.

Senator DOUGLAS. This seems to be a very sensible type of contract. I wonder why it hasn't been used more.

Mr. BRYANT. Sensible from the consumer point of view, but not from the speculative point of view.

Senator DOUGLAS. Sensible from a business point of view.

Mr. BRYANT. The market has been so wide open that he hasn't needed to do this until very recently.

The major point that I made before you came in was that in one area there were 1,100 families and only about a third were possibly eligible for low-rental housing; large bulk were regularly employed wage earners, some with two unpaid wage earners in the family, who were just over the limits of public housing. Those people will put up a fight against redevelopment. That is why I feel that until you have some such tool for working with this group, that a large part of your redevelopment may be totally blocked.

Senator DOUGLAS. We are finding the same in Chicago. Families which will be displaced by slum clearance, but who cannot be rehoused in public housing because their income is above the limit.

We have that in Chicago. That is holding up a good deal of slum clearance with us.

Mr. BRYANT. I think that will generally be true in most of the cities studied.

Senator DOUGLAS. Did you see Mr. Foley's cost figures?

Mr. BRYANT. Yes. I feel there was one major error in those figures, in that they understated the savings which could be made, because they used the same Public Housing Administration maintenance and management costs throughout their entire table, whereas the profit margin would be far higher on the private-enterprise housing, and the management costs would be far lower on the cooperative housing, because cooperatives will not need a big central office, with a lot of officials and division heads, and Government accounting procedures, and that sort of thing.

Senator DOUGLAS. Would you be willing to submit a memo on what your experience has been on these items of cost?

Mr. BRYANT. I went into it in individual detail in my testimony. Senator DOUGLAS. Very well.

I regret it is impossible to attend all the committee meetings that one is expected to attend.

Senator SPARKMAN. There is one other item that might be taken into consideration: That is that the turn-over in public housing would normally be greater than in these cooperatives.

Mr. BRYANT. That is an excellent point. There would be far lower turn-over. That, itself, would reduce maintenance costs quite substantially.

Senator SPARKMAN. Of course, we want a greater turn-over in the public housing because we hope to make that a transitory occupancy, and to graduate them to higher incomes.

Mr. BRYANT. I feel I have taken up enough time without going into my feeling on public housing. I would disagree with your statement. Senator SPARKMAN. Going back to the statement about the need for some housing program in connection with redevelopment, you were here yesterday, you may have heard Mr. Lockwood testifying for the National Home Builders Association, make a statement similar to your statement except instead of arguing for cooperative housing, he thought we ought to set up a liberal program under the regular FHA for that type of housing.

You both recognize the need.

Mr. BRYANT. I feel that proposal, however, would really be dangerous in a lot of ways that are alleged this cooperative program would, because you wouldn't have the check of consumers interest in the cost figures for that kind of housing.

That would be another plan for the builders to get 100 to 120 percent financing on the construction without having money in it.

Senator DOUGLAS. As they have been frequently doing under section 608?

Mr. BRYANT. Yes.

Senator SPARKMAN. Are there any further questions?

Senator DOUGLAS. It just occurred to me that you mentioned the fact that you have written a book on cooperative housing which will be published shortly.

Mr. BRYANT. It is a book on redevelopment.

Senator DOUGLAS. I wonder if you have galley proofs which the members of the committee might look over individually?

Mr. BRYANT. I will submit one; yes.

I have an advance copy which is mimeographed.

Senator SPARKMAN. Submit one for the committee files, and it will be available for all members.

Mr. BRYANT. All right.

Senator SPARKMAN. Thank you very much,

Senator SPARKMAN. Mr. Walter Reuther.

Mr. Reuther, will you come around, please? We are glad to have you with us again, and we're glad to see the arm out of the sling this time.

Mr. REUTHER. Thank you. I am making progress.

Senator SPARKMAN. For the sake of the record, will you identify yourself and procede with your statement as you see fit?

STATEMENT OF WALTER P. REUTHER, CHAIRMAN, NATIONAL CIO HOUSING COMMITTEE

Mr. REUTHER. My name is Walter P. Reuther; appearing in the capacity of chairman of the CIO national housing committee and as vice chairman of the CIO and as president of UAW-CIO.

I appreciate the opportunity to appear before your committee. I am appearing to support the adoption of the Maybank amendment to S. 2246.

We believe that that bill represents a very practical and realistic approach to the basic problem of giving a great mass of American families an opportunity to acquire a home of their own. Last year we appeared before your committee in support of the legislation to build low-rental housing for the low-income groups. We believe that this bill begins to get at the problem that affects most of America.

We supported the bill last year, even though that bill did not affect the majority of the people that we represent in the CIO. Most of the people whom we represent do not qualify for the housing proposed under the bill last year. We fought the battle in support of that legislation because we felt that the people in the extreme low-income groups were in greatest need of housing, and we were happy to support that legislation, even though it did not directly affect the people that we represented.

We have been checking into the economic status of the various family groups in America, and we find that the great bulk of American families, based upon the figures that we have here in terms of savings, are disqualified from solving their housing problem. On the one hand, they don't have enough money to afford luxury housing on the market; on the other, they have income sufficiently high to disqualify them from being eligible for the low-income housing. According to these figures from the Federal Reserve Board, there are about 40 percent of American families that this housing bill will deal with who have only about 15 percent of the savings in America. That is the group in which the great mass of our membership falls.

In the city of Detroit, we have been digging into this problem of how this middle-income group can get decent housing. There was a survey made by the Detroit Housing Commission in November. They

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took a list of all the classified ads in the newspaper of housing that was available for rental. They found that out of 296 rental units available on the market, that would be available for the middleincome group, that 114 of those rental units did not permit children. We didn't check whether or not you could have a dog, but we know they would not permit children in 114 of those houses that were available. When we got into the question of rental costs, we found that that was prohibitive; that although this is the type of housing that normally ought to be available for the middle-income group, that the rentals were so high that workers could not afford them.

So, here is the group that is not eligible for the low-income housing, they can't afford to buy luxury housing, and can't afford to pay rent on this housing that is available for their economic group.

The rents in Detroit were just completely prohibitive. That is why we appear here.

We believe that the bill before us provides a realistic approach to this problem. I think the committee will agree that anything that will strengthen the American home strengthens America, because the American home and the American family is really the core of democratic strength in America.

We believe America cannot be strong unless we take practical steps to try to strengthen the American home and the American family. I have returned from several weeks in Europe where I had occasion to participate in a number of international labor congresses with people from all over the world. We spent much time in talking about how we would carry a positive offensive against the propaganda of the Cominform. Everybody felt that those of us who want to fight the Communists effectively have to meet the Communists' offensive, not by pious slogans but by tangible achievement in terms of trying to win a greater amount of social justice.

Certainly in housing this question is a front on which we can strike some powerful blows for freedom and against totalitarianism.

I had a chance to visit a number of countries. I say that anyone going to Europe and making an honest evaluation of the housing in countries like Switzerland and the Scandanavian countries must come to the conclusion that with less resources they have done a better job on housing in many cases than we have with greater resources.

The thing that people in Europe keep asking the American trade unionists when they get to Europe, and when they come here, is “We understand why we have bad housing in Europe in some places. The war destroyed a very large percentage of our housing in Europe. We have limited resources, we have all the problems of trying to rebuild and rehabilitate our economies," but they say "we can't understand why America, with all of its resources, America that was untouched by war in terms of its housing, why you have slums, why you have inadequate housing?"

I say that nothing would help in strengthening the whole international force of freedom in its fight against totalitarianism more effectively than if we could really do a good job on the housing front.

We have insisted all along that we ought to give material aid to Europe in the form of machinery, food and clothing, and seeds. We believe that in addition to giving Europe material aid, we have to give them moral and spiritual aid by proving in a practical way that we can make democracy work; that democracy does then have the

moral strength and practical know-how to meet these practical problems, because you can't sell democracy by pious slogans.

These fellows won't buy slogans. They keep saying, “If you can deal with these problems in a tangible, down-to-earth, practical way, that is the way to sell democracy; that is the way to make people really believe that democracy can meet and solve these basic problems." Certainly, the housing problem is one of the most glaring examples of the serious lag between what democracy promises on the one hand and what it practices on the other.

Here is a chance to close that gap by making it possible for millions of Americans to begin to get decent housing at a cost that they can afford, on a cooperative basis.

Also, I think that here is a good chance to show that we know how to carry the fight for democracy on a positive basis. Too many times I think that we try to fight these things on a purely negative basis. Take the question of juvenile delinquency. I was appointed by the President to serve on this Midcentury Conference, White House Conference, on the whole question of youth in America. A great deal of time is being spent on talking about what we can do to try to minimize and eliminate juvenile delinquency. I say the greatest contribution that can be made is to try to give our children decent homes to grow up in. If they don't have decent homes to live in and wholesome recreational facilities, you can't expect them to grow up strongly physically and intellectually and spiritually into useful citizens.

Certainly, that is the prime need in trying to give the children the kind of environment in which they can grow into good citizens. Here again, you find we put the emphasis on the negative aspects of the problem instead of on the positive. If a child gets into trouble because he lacks decent housing, decent, wholesome recreational facilities and an opportunity for healthy expression, we are always willing to build new jails to put him in. I say if we could get the emphasis on the positive, on the up beat, by building fewer and fewer houses of correction and building more and more correct houses, we could get that shifting of emphasis. I believe that we can make real progress on these basic problems.

Now, there have been people who appeared here who have opposed these bills. I noticed in the New York Times on January 14 that A Mr. Horace Russell, general counsel for the United States Savings and Loan League, appeared before your committee in opposition to the bill, and the headline here in the New York Times says: "Housing Plan Seen as Pure Socialism; Realty and Private Lenders Hit Building Projects for Middle-Income Groups." Then it says that the witness was Horace Russell, who said that the bill was not only pure socialism to the extent of $200,000,000 but was designed and intended to mislead the American public.

Here is another headline from the Washington Post of January 14: "Witness Assails Housing Bill as Socialism." If there is any misrepresentation going on, it is Mr. Russell who is guilty of that misrepresentation, and not the bill before your committee.

We have dug into the record, and the record shows that Mr. Russell is inconsistent in his attitude about the question of Government's making funds available for this type of housing construction.

I would like to leave for the record a copy of the hearings before the Committee on Veterans Affairs, House of Representatives on