budget session and he asked permission to submit his statement for the record. He is not here to make a formal presentation of it. Senator GOLDWATER. His statement will be received and made a part of the record.

(The statement of Mayor Clark follows:)

STATEMENT OF JOSEPH S. CLARK, JR., MAYOR OF PHILADELPHIA, PA.

My name is Joseph S. Clark, Jr., and I am representing the American Municipal Association. I have been the mayor of Philadelphia since January 1952; my term of office expires January 1956. The association officially represents 12,000 municipalities in the United States. AMA is the national federation of 44 State leagues of municipalities, taking in 80-90 percent of the urban population in this country.

The bill before this committee, the Housing Act of 1954, has been characterized as a comprehensive legislative approach to meet the housing needs of all seg ments of the population. Its contents contain provisions to aid the private building industry by liberalizing FHA mortgage insurance terms, provisions to aid the private home finance industry by reorganizing the Federal National Mortgage Association, provisions aimed at helping middle income groups obtain housing by rehabilitation and by special low cost private housing features, provisions to help cities and other local jurisdictions by redevelopment and even public works planning programs, and provisions to assist veterans, farmers, and other noncity dwellers. It omits entirely, however, a public housing program, which experience has proven to be the only effective answer for at least 30 percent of our nonfarm families, who, according to latest reports, are still earning less than $3,000 a year.

We recognize that some congressional leaders have assigned to the Appropriations Committee the responsibility for public housing. Although I am acutely aware of the fiscal implications, it is essential that the Appropriations Com mittee have some policy guide from your group, which is now mapping an overall housing program.

Members of Congress have seen fit to ignore the stated proposal of the Housing Act of 1949 calling for 135,000 public units for each of 6 fiscal years. The lack of support of the 1949 public housing policy is indicated by the fact that as of September 1953, only 112,696 public housing units had been completed with an additional 75,168 under construction. Even if one adds the 35,000 units already authorized, this total of 222,864 is less than one-third of the 675,000 which should have been built and authorized for the period ending June 30, 1954. Positive action by your committee could overcome this gap between promise and performance.

Furthermore, the proposed Housing Act of 1954 contains features (sections 220 and 221) which are alleged to be at least partial answers to the needs of our lowest income groups. Unless there is full understanding of each of these aspects of the total program to meet the needs of the different segments of our society, it would appear difficult to intelligently map out housing legislation. For these reasons we strongly urge adoption of the amendment by Senator Maybank, South Carolina, to reaffirm the 1949 public housing program as part of S. 2938. We further recommend that the number of authorized units be at the maximum permitted under that act, namely 200,000, in order to catch up with and carry out the full intent of the law.

It is important to bear in mind that even the original goals of the 1949 act were far less than the needs of the country. They represent, in effect, the floor below which we cannot permit our housing standards to go. According to census figures, 27.9 percent of our 26,918,000 urban families received a total money income of less than $3,000 in 1951. Seven and a half million urban families therefore meet the income eligibility for public housing, indicating that they are not in a position to purchase private housing accommodations with at least minimum standards.

Looking at the need for public housing in another way, we find that according to the 1950 census, there were 6,103,000 substandard occupied homes in urban districts which were considered either dilapidated or lacked plumbing or running water. That means that 22 percent of the 27,807,000 occupied dwelling units in urban districts did not meet minimum living standards, using the census definition. Nationwide experience with slum clearance indicates that a

tle better than 50 percent of the families which have to be relocated are igible for public housing. Experience in Philadelphia when total households, cluding both families and unrelated individuals, are taken into consideration dicates that the number eligible for public housing is about 40 percent. Thus realistic appraisal would point up the need for 2,400,000 public housing units.' ven at the rate of 200,000 units a year, it would take at least 12 years to fully eet the current problem of substandard housing as it affects low-income groups. Inadequate as the Government program has been, it still represents the only lution made available for our low-income families. Private industry has been able to meet this need, and there are no indications based on current building actices and prices that we can rely on the private building industry to do the b. The economic facts, bluntly stated, are that private enterprise cannot make profit in the construction of houses for families which earn $3,000 a year or ss. A Government program, therefore, is necessary to supply housing for ose families within the prescribed income limits which, by and large, cannot present profit to a builder or a landlord unless it is a slum property. The median net income of families living in public housing, according to a udy by the Public Housing Administration, was $2,087 per year for the calener year 1952. The median rent for public housing resident families was $35 er month. Twenty percent of the income of these families is therefore spent 1 housing costs. The 20 percent housing cost expenditure is in line with a iding contained in a special study cited in the Report of the President's Adsory Committee on Government Housing Policies and Programs. Given the › percent figure, families at the top end of the low-income scale (those earning 3,000 a year) can afford no more than $50 per month for shelter. With these figures as our economic guide, it is easy to see that the private ilding industry is not in a position to serve those family units whose income at the bottom end of the scale. Rarely do these families have any cash acmulated which would permit a downpayment towards purchase of a home. s credit risks, they undoubtedly would be charged a higher than average inrest rate on their mortgage. Unless the family can qualify for Veterans' Adinistration financing, home purchase is completely out of the question. Even r the GI family of this income group, there can only be an insignificant numr of existing homes which would have a maximum monthly housing cost of 50. Under the standard 42 percent 20-year mortgage, the housing would have cost $5,000 or less. In Philadelphia in 1953, admittedly a high housing cost ty, the average sales price for existing homes was $8,400.

As for rental housing, new construction is out of the price range of families e are considering. There is only a limited amount of existing rental units and many cities, particularly the larger ones, they are in short supply. A survey mpleted only last week by the University of Pennsylvania for the city governent reveals that the vacancy ratio in Philadelphia is 2.2 percent, far below y normal level. These hard economic facts paint a clear picture of what has ready been recognized by this city and by Congress-that the private buildg industry cannot possibly meet the housing requirements for families with comes of less than $3,000 a year.

A number of statements have been made by witnesses before this committee d in the debate on the Housing Act of 1954 in the House of Representatives out provisions contained in S. 2938 which would alleviate and, in the words some claimants, eliminate the need for public housing. Let us consider these ternatives which require Federal assistance of another kind. Sections 104 and 05, which liberalize section 203 (FHA mortgages) and section 220, which plies these easier mortgage provisions to designated urban renewal areas for le and rental housing, can be considered together, as far as the construction I new and the sale of existing residential structures are concerned. In the first place a minimum downpayment of 5 percent is still required for les housing. Even on the lowest priced houses, the small downpayment would ake it impossible for most of the families in the lowest income group to qualify. econdly, carrying charges for houses above $5,000 would eliminate the bulk of

The Housing and Home Finance Agency reported that as of September 30. 1953, O of 112 projects approved under title I of the Housing Act of 1949, 28.501 families of e total of 55,030 were eligible as of September 30, 1953, for low-rent public housing. 2 Census data based on 1949 income for standard metropolitan areas (less inclusive than ban areas) indicates that 1.965,000 families earning $2,000 a year or less live in dwellunits which are either dilapidated or deficient in plumbing. There is no separate eakdown for families which earn between $2,000 and $3,000 per year, but at least a half lion families could be added to the total, thus making the above figure quite conservative. 3 P. 290.

the families we have under consideration, and even on the 30-year mortgages, houses which sell for more than $3,500 would be out of reach of the median income family within this group. Thirdly, it would be difficult to obtain private mortgage money for long-term periods, like 30 years, for existing homes, par ticularly those which sell at the lowest prices. The change in the mortgage provisions for rental housing will make little difference in terms of rent levels. Section 220 of the proposed act also provides for special FHA assistance for rehabilitation of dwellings in urban renewal areas. It is difficult to ascertain the effect of rehabilitation on monthly housing costs because a great deal de pends upon the amount of remodeling and renovation which each dwelling strue ture has to undergo. Construction costs being what they are, it is difficult to foresee how very much of the rehabilitation work will result in accommodations for the lowest income groups. The experience in Philadelphia with the Friends Neighborhood Guild project at Eighth and Fairmount Streets in the East Pop lar redevelopment area would point up the limitation of section 220 as far as low-cost housing is concerned. The average housing cost prior to rehabilitation work, I am informed by the manager of the project, was a little over $500 per year. Present housing cost, after rehabilitation, is $740 a year, a better than two-thirds increase. With this rental, $62 a month, the rehabilitation project is outside the scope of the public housing program. Again we have to take inte consideration the minimum 5 percent downpayment required under section 26 if the rehabilitated building is sold.

Ironically, the rehabilitation program at the same time adds to the size of the problem because a sound dwelling improvement project results in a reduction in the number of available dwelling units. In the Friends' project in Phila delphia just referred to, the reduction was 11.8 percent. Many of these families have, in numerous instances, nowhere else to go except to another slum dwelling. We find, therefore, that we are chasing ourselves around the block.

This legislation contains another proposal under section 221 calling for the private construction of low-cost housing for families displaced as a result of a rehabilitation and redevelopment program. The limitation means that the pro posal cannot help meet the existing need. Even for families needing relocation, it may well prove to be an empty promise.

There is no evidence that the private building industry can construct residences in Philadelphia or other metropolitan areas to sell for $7,000 or less or, for that matter, even the $8,600 maximum, as contained in the amended House bil Where they can be built, there is great danger that they will be inferior in construction and design and may well represent the slums of tomorrow. It is difficult to see how such cheap homes can be expected to last 40 years, the periou of time covered by the mortgage proposed under section 221. It is perhaps for that reason that the private home finance industry has expressed serious doubt as to whether funds will be available for this type of financing.

Even if these obstacles are overcome, what families eligible for public hous ing could get the $200 in cash required for settlement? If, by some chance, they could raise this amount, the monthly housing cost for 100-percent mortgages for a term of 40 years is above the level of the low-income family's ability to pay The report of the President's Advisory Committee on Housing contains an exhibit (p. 94) of the Federal Housing Administration which lists the monthly housing expenses for a $6,000 mortgage of this type as $55.35.

These three approaches contained in the bill before this committee cannot substitute in any way for low-rent public housing.

As the chief executive of a large city which is continually harassed because of its limited financial resources, I am not unmindful of the dollars and-cents cost of public housing. I honestly believe, however, that extension of the Hous ing Act of 1949, even at the maximum limits, will not bring a serious strain on our Federal budget. The 1949 law already authorizes the necessary appropriation to finance 810,000 low-rent public housing units.

During the last 13 years (ending with fiscal 1953) the Federal Government has laid out only $116,243,037 in contributions to local housing authorities. This represents 44 percent of the maximum contributions pledged by the Federa Government for payment during this period. On top of this might be added $30.240,900 appropriated by the Congress for administering the program. It is the cheapest kind of Federal assistance and it has helped or is helping to build almost 400,000 new dwelling units.

Use of this illustration tends to make the findings conservative. The project is finans as a sec. 213 cooperative. On its board of directors sit experienced leaders in the home building and home-finance industry.

The price is indeed small when one considers what the investment is in terms of human cost. It has been reported that, although slum and blighted districts comprise about 20 percent of our metropolitan areas, they account for 33 percent of the population, 45 percent of the major crimes, 55 percent of juvenile delinquency, 60 percent of the tuberculosis victims, 50 percent of the arrests, 35 perent of the fires, 45 percent of city service costs-and 6 percent of real estate ax revenues. The Commissioner of the Public Housing Administration, Charles E. Slusser, has estimated that we are spending about $40 to $50 a year on the approximately million population living in public housing. I agree with him 100 percent when he says he believes they are worth a lot more than that.

In addition to better health, fewer fire and police costs, and a strengthening of 'amily relations, there is little need to recite the other advantages of public housing such as the increase in property values in adjacent areas. I recognize hat it is possible to point out a project here and there where standards have een let slide, but taken in all, the public housing program is a credit to the oresight of the Congress, which acted in 1937 and again in 1949. The costs of ublic housing are negligible and are far outweighed in size by many other types of Government subsidies, such as highways with a subsidy of $120 million, comnercial aviation with a subsidy of $115 million, reclamation and irrigation with subsidy of $169 million, and mail service with a subsidy of $300 million. Because of our tax structure, the public housing job must continue to be the esponsibility of the Federal Government.

For urban communities, inadequate and substandard housing is doubly dangerous. Slums require the greatest amount of local Government services and attention. They are the breeding pots of illness and delinquency. While the lant is being sapped in this way, the spread of blight is attacking the roots. If unchecked, the cities of this country will lose the economic base which made ossible their growth, and upon which their survival depends.

Slums and blight fester primarily in large cities. As deterioration spreads, he city, ironically, is less able to check its advances because the disease depletes ts resources. Since the city is so dependent on its real-estate tax, every lowerng of assessment brought about by blight hits the pocketbook quite hard.

Furthermore, the tax structure of the Federal and State Government picks the best fruit and leaves hardly enough to local government to meet its basic health and safety functions. The President's Advisory Committee on Housing in its tudy of 14 representative cities found it would take $4.2 billion to remove all the substandard dwelling units which existed as of 1940. This sum was 30 times the net cost spent on projects up to September 30, 1953, under title I of the Housing Act of 1949. It is further compared to $3.2 billion, which is the combined net lebts, and to $1.6 billion, which is the combined revenues of the 14 cities. These staggering costs underline the impossible financial burden involved in cities emoving slums on their own. Many of our cities are pressing hard on debt eilings. Many more must function under limited taxing power particularly when, as is so frequently the case, the limit is on taxes for operation. In addiion, the cost of nearly everything a city buys has risen much faster than municial tax revenue sources could respond. And there is the further limitation imosed by the States upon available sources of taxation.

The Federal Government has a continuing responsibility to promote economically sound urban communities. Just as agriculture and the farmer are aided In their development and in maintaining living standards, so the State governnent, and particularly the Federal Government, must give attention to the future conomic and social well-being of the cities in which the greater portion of our people live, and in which are concentrated the commerce and industry which urn the wheels of this country. Certainly the time has long since come when he Central Government must take up its large share of the responsibility for he conservation of our urban resources.

No democracy can long survive against the menace of totalitarianism at home and abroad unless it sees to it that its citizens have decent shelter. Just as we must protect our soil against erosion which destroys our ability to feed our peole, so must we protect our citizens against human erosion which comes from =ubstandard habitation. No peoples' government worthy of the name can neg. ect this fundamental human need.

The American Municipal Association is committed to the principles of public housing. The AMA believes the aim of government at all levels should be to ssure, in cooperation with private enterprise, a decent home and a healthy en-ironment to every American family. Public housing is a necessary part of the Federal program. If this is socialism, so is garbage collection.

44750--54 pt. 1- 67

Senator GOLDWATER. That concludes the list of witnesses for the hearing on the Housing Act of 1954. We will now proceed to other matters.

(Whereupon, at 3 p. m., the committee proceeded to other business.) (The following letters, telegrams, statements, etc., were submitted for the record:)

Hon. HOMER E. CAPEHART,

AMERICAN FARM BUREAU FEDERATION,
Washington 1, D. C., April 7, 1954.

Chairman, Senate Committee on Banking and Currency,

Senate Office Building,

Washington, D. C.

DEAR SENATOR CAPEHART: The American Farm Bureau urges you to include a 1-year extension of title V of the Housing Act of 1949 (title IX, sec. 904 of H. R. 7839, passed by the House) in the housing bill now receiving consideration by your committee. In doing so we urge an amendment to title V to define, for the purposes of this act, a farmer and an "eligible applicant" as "an individual who derives not less than 50 percent of his income from agriculture."

The purpose of the amendment would be to make the funds provided for the purposes of this title available to bona fide farmers. We understand that the Administrator of the program has experienced difficulty in avoiding loans on suburban type property because of the broadness of the definition of a farmer and of "eligible applicant" provisions contained in title V of the Housing Act of 1949.

Many rural areas do not have credit facilities available on a basis comparable to that in urban areas for building, improving or repairing dwellings. Country banks and banks in rural towns largely do not have adequate elasticity for making loans for these purposes on a long-term basis. Other lending institu tions are not interested in many areas because of the small volume, relative high per unit cost and other similar reasons. The absence of these credit facil ities emphasizes the need for direct loans until the time when other credit may become available.

Bills have already been introduced in the Congress which would authorize insured loans for these purposes under the Bankhead-Jones Farm Tenancy Act. We support the enactment of such legislation. Such legislation could be expected to encourage more interest of various lending institutions in this field. However, we are convinced that currently there would not be enough credit from this source to meet the demands in all areas. We believe the Congress in its intent should state that direct loans should not be made available in the areas where insured loans would adequately serve the needs.

It is our understanding that banking institutions are giving serious consideration to a proposal whereby larger banks would join with smaller banks in making long term loans for title V and other purposes. Under this proposal, for example, a large bank would provide 80 percent of the loan and a small bank 20 percent. The small bank would service the loan and collect a portion of the interest rate on the 80 percent for the service rendered.

It is our hope that interest will develop, as a result of these programs, to an extent that direct loans would not be necessary in a relatively short time. We believe the Congress, in its intent, should state that direct loans for these purposes should cease when credit for these purposes becomes generally available. We observe that the values of dwellings located in rural areas and on farms have taken on new proportions in recent years where they are located on allweather roads and served by central station electricity. Population trends of recent years have been from the cities to suburban and rural areas. This has created a demand for dwellings in such areas. whether or not they are located on acreage or farms. However, to date lending institutions have not given much attention to this trend.

We are not in a position to recommend specific funds for the various purposes of title V. We observe that the funds made available in the most recent years appear to be adequate. This would particularly be true in light of the amend ment we propose and the possibility that insured loans will become available in some areas.