Mr. ROUSE. My name is James W. Rouse. I am president of James. W. Rouse & Co., of Baltimore, and I am here as a member of the board of governors of the Mortgage Bankers Association.

I have handed in a statement to the committee, and I would like to just talk for a couple of minutes.

The CHAIRMAN. Without objection, your statement will be placed in the record, as written, as well as everything you say as a witness. (The prepared statement of Mr. Rouse follows:)

STATEMENT OF JAMES W. ROUSE, BALTIMORE, MD., THE MORTGAGE BANKERS ASSOCIATION OF AMERICA

Mr. Chairman and members of the committee, I am grateful for the opportunity to appear before your committee and to testify to the enthusiastic support of the Mortgage Bankers Association of America for the slum clearance and urban renewal provisions of the Housing Act of 1954. Mr. W. A. Clarke, president of MBA has testified on the other sections of the bill. My comments are limited to title IV.

The MBA has supported the redevelopment program of the Housing Act of 1949 from its inception and is in full accord with the principles on which that program is based. We are encouraged by the operation of the program to date and are anxious to see our cities take advantage of the experience which has been developed in the past few years and move ahead on a broad front against slums and blight.

We can wipe out slums in American cities. We can build the vast sprawling squalid stretches of our cities into fine, clean neighborhoods where people will want to live and raise families. We can stop the spread of blight into our middleaged residential areas.

We can do these things if we will lift our sights from piecemeal thrusts at our worst slum pockets to a well-planned, carefully organized total campaign against slums along the whole front from the first signs of blight to the last states of urban rot.

Title IV of the Housing Act of 1954 is designed for such a campaign. If and when it is enacted into law it will unfold an enormous potential for effective action in towns and cities throughout the country.

The approach to slum elimination in the past has been largely surgical. We have selected a certain number of our worst slum blocks, acquired the properties, demolished the structures and redeveloped the cleared land. This process. has been important. We have not only cleared some of our worst slums, we have also learned a lot about the techniques of land assembly, relocation and redevelopment planning. We have built an important structure of enabling legislation in the States and cities and established redevelopment commissions with trained staffs and an accumulation of experience in urban redevelopment. In the 4 or 5 years this process has been in operation, we have also become aware of certain clear limitations on the "surgery project" approach to slum elimination. We have learned that it is slow and expensive. If we moved at 5 times the demolition rate of the past 3 years, it would take over 40 years to eliminate one-half the 10 million dwelling units said to be substandard in 1950and it would cost us $500 million per year to do it. This is far too slow and much too expensive. We have also learned that in many instances it creates new slums almost as fast as it clears the old ones. In the absence of effective preventive programs, it crowds the former slum dwellers into other deteriorating areas and spawns new slums. It simply fans the fire further into the forest. Thoughtful observers of the redevelopment program are not dismayed by these experiences. On the contrary, they are tremendously encouraged at the huge potential which the redevelopment program has revealed and they are eager to remove its limitations, accelerate its pace, reduce its cost and enlarge its effectiveness.

During the same period in which we have been cutting our teeth in redevelopment, there has been emerging in our cities an important new effort at slum elimination aimed at rehabilitating existing structures and conserving decent neighborhoods. This rehabilitation-conservation idea is new and growing. So great is the pressure in our cities for solution to the slum problem that the limited programs in rehabilitation which have been launched in some cities have 44750-54-pt. 1-22

been seized upon by others and lifted high as beacons of hope for effective action in slum prevention and slum elimination.

There is tremendous opportunity in this effort. Responsible organized, it can prevent slums before they start; rehabilitate structures worth saving; remove blighting forces and regenerate good neighborhoods out of deteriorating areas not yet beyond recall.

But this effort is new and highly developmental. We are still learning the requirements or effective municipal organizations, still wrestling with enabling legislation, still pushing back the frontiers of its potential. No city in the United States has yet put together a truly effective rehabilitation-conservation program. None is even abreast of the composite knowledge and experience that has been accumulated in the past few years.

It is clear to all who study the experiences to date in urban redevelopment. rehabilitation, and conservation that they must not be operated as separate programs but should be merged as essential components of an overall program for urban renewal. There is no sharp line in a city up to which all structures should be demolished and beyond which none shall be. Salvagable structures should not be destroyed simply because they are in a demolition area. We cannot afford that kind of waste. Nor does it make sense to attempt the rehabilitation of unfit structures simply because they are in an area marked for rehabilitation. The purpose of a slum-elimination program should be to eliminate slums and blighting influe ces from the entire city to make the city into a community of healthy neighborhoods. To achieve that purpose there must first be a comprehensive plan for the community and for each of its potential neighborhoods. Within those neighborhoods all unfit and nonsalvagable structures should be demolished; adverse nonconforming uses condemned; congestion relieved; parks and playgrounds provided; public utilities installed, street and traffic patterns planned to protect the neighborhood and, under a vigorous program of law enforcement, all structures should be rehabilitated to an acceptable minimum standard of health safety and sanitation.

Title IV is designed to assist, promote and require that kind of slum-elimination program. It broadens the grant and loans provision of title I of the Housing Act of 1949, shifts the emphasis from demolition projects done to the regeneration of neighborhoods and the renewal of our cities. It permits the communities to obtain grants for public improvements which can so strengthen defined urban renewal areas as to make rehabilitation effective and in many instances avoid wholesale demolition.

Furthermore title IV faces the business of slum cure realistically and says that the Federal Government has no business spending money on slum clearance unless there is some reasonable assurance that the Federal grant will achieve the purpose intended. Federal assistance in the slum-clearance field is intended to help cities help themselves eliminate slums. A city that is unwilling to set up a comprehensive program for slum prevention and slum elimination is simply chasing its slums from one part of the city to another. The Federal Government cannot afford to encourage or participate in that kind of waste. Therefore a "workable program for effectively dealing with urban slums and blight” is made a precondition to Federal assistance including grants under title IV, grants for Public Housing and FHA insurance under section 220.

Title IV encourages a comprehensive approach to slum elimination by providing vastly broadened financial assistance for that purpose. Furthermore it requires that such a comprehensive program be developed as a precondition to eligibility. Then it goes an important step further and sets up an Urban Renewal Service to help the cities meet the conditions which the title IV program establishes. These programs of redevelopment and rehabilitation are new and growing. It is tremendously important to have a facility for communicating the various experiences in urban renewal from city to city and to thus assist in progressive improvement of the effectiveness of the program. The Urban Renewal Service will fill this need.

In this connection, the importance of the $5 million fund provided in section 414 merits special attention. This is a small fund as Federal finances go but it can be enormously useful. The timing in the urban renewal program is such that this fund, by accelerating the development and testing of new techniques in slum elimination, can ignite fires around the country that will light the way for hundreds of cities in the years ahead. It will tremendously speed up this entire program in its critical early years.

Title IV marks a great step forward in the battle against slums. It will find support in the cities throughout the country, among planners, builders, bankers,

civic, and labor leaders. There is wide agreement on the principles on which it is based. The Mortgage Bankers Association is pleased to have this opportunity to express its support.

Mr. ROUSE. The Mortgage Bankers Association has endorsed, and I am here to communicate to the committee, the support of the association on title IV of the Housing Act of 1954, which deals with slum clearance and urban renewal.

I have a very special personal interest in this legislation, as I had the opportunity to serve as a member of the President's Advisory Committee, and chairman of the Subcommittee on Urban Redevelopment, Rehabilitation, and Conservation.

That subcommittee, Senator, it seems to me, did a good job, as good perhaps as this Senate committee would like to have had done for it. The subcommittee itself was constituted of a labor leader, Dick Gray, the president of the AFL building trades department; Alexander Summer, a past president of the National Association of Real Estate Boards; Ralph Walker, a past president of the American Institute of Architects, a strong advocate of public housing and from that general point of view of housing, on the one side; and Ehney Camp, a young, bright conservative vice president of a southern life-insurance company, on the other.

We approached the task we had, with our conception of our mission being to determine what it is that cities ought to try to do to eliminate slums, and what the appropriate role of the Federal Government would be in such an effort.

We tried, as best we could, to bring before the committee the most objective study and discussion of what was happening in the country, what was wrong with what was happening in the country, what was right with programs that showed high potential, and how could we put together in the cities of the United States programs that were designed to really eliminate slums from American cities.

We brought in people on all sides of the program, not people who were representing particularly entrenched or biased positions but people who had been associated in redevelopment programs and rehabilitation efforts, people like Mr. Klutznick from Chicago, and Mr. McCord from Indianapolis, and people from the Housing Development Association in Norfolk.

We concluded our recommendations with enthusiastic agreement on the part of those people in the committee who perhaps had never before agreed on a housing program that had to do with slum elimnation.

That same atmosphere of agreement prevailed among all the people to whom we talked. We were amazed to find the tremendously wide. rea of agreement that there is in the United States as to what ought to be done to eliminate slums.

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Secondly, we were amazed to find the extent to which that area in which there was wide agreement was not being fulfilled in any city n the United States; that there is a broad understanding, on the one hand, of what ought to be done, but nowhere is it being done. I really believe that there is no informed person whom I have ever met n the housing field who would say that there is in existence in the United States today, in one single American city, a program which ives up to the composite knowledge that we have gained over the past ew years, of what ought to be done in a city to eliminate slums.

The CHAIRMAN. How do you account for that?

Mr. ROUSE. That is what I would like to account for. I think it is understandable. I don't think it is just a matter of perversity on the part of cities. I think it is a matter of timing.

Our whole approach to this business of urban development is newer than we sometimes realize. The first zoning law in the United States was passed in 1916. In Baltimore, which is my own city-and I can quote dates a little more freely there-we had no effective zoning until 1932. Our housing authority was instituted in 1937; our planning commission was given real power to act in 1943; our redevelopment commission, in 1946. The program known as the Balitmore plan, which is a rehabilitation effort, really got under way in 1949.

But, by and large, we have been approaching this business of controlling and influencing urban growth from two ends of a pipeline. We have been developing the techniques of better planning, to try to see to it that new housing goes into the housing inventory, protected against blighting forces, and with some opportunity for longerterm survival. On the other hand, we have been working at the very bottom of the pipeline, removing that stuff which is utterly nonsalvageable, and which must be demolished and removed.

But in between lies the great housing inventory of America, the great sprawling areas of most American cities. Until we had first developed a technique of planning and developed techniques of demolition and clearance, it really isn't likely or possible that we could begin to deal effectively with the inventory in between. As we have reached that point, these programs have come about all over the country this little effort in Baltimore, known as the Balitmore plan, the effort in Charlotte, the exploratory effort they have had in Illinois, including the remarkable legislation in the Butler bill, and the program in New Orleans. City after city has come to take a fresh look at its problem, with the new tools which we only developed very recently. The redevelopment program is only 3 or 4 or 5 years old, really.

So, first, I think it is timing. Secondly, I think it is a matter of gradual awareness in American cities. Slums first were recognized as a social problem, which took a severe toll in human values, and that aroused an initial interest in the slum problem. Recently cities have come to recognize that they are tremendously threatened economically and that their accessible bases are going steadily down. Even the addition of new construction in many cities is not keeping pace with the reduction of assessments in older cities, and in all cities the huge central area, which isn't a tiny part of the city but which is a vast part, is gradually losing value and base, and therefore threatening the financial solvency of the city.

So really I think we have just reached a point of timing where we can begin to develop an overall effective program in slum elimination, and that is why I think this wide agreement that I speak of has developed. But it has only very recently developed.

It seems to me that that wide agreement consists of three main points. First of all, a realization that a piecemeal surgical approach toward slum elimination won't work. It is going to take a lot more than simply going in with a few or a great many demolition projects to eliminate slums. There is serious question as to whether or not all

of the demolition programs today have kept pace with the growth of slums in the cities in which those projects have occurred.

There was a grand jury that met recently in Brooklyn, after a Brooklyn fire killed seven people, and it made a rather searching study of slums in New York, and surprised itself to find that if New York continued the extraordinary rate of demolition and new construction that has been underway in the past several years, it would be more than 100 years before New York even eliminated the old tenements, much less kept up with the increased spread of blight in New York City.

In Chicago, where extraordinary redevolopment has been underway, there are 56 square miles of blight, and I think very few of the people out there feel that the present programs have kept pace with the spread.

So that people have come to say, "We have got to do more than that." Obviously, some of these areas must be demolished, but also we have to throw a rope around this spread of blight. We have to prevent this threat. We have to start enforcing occupancy controls n cities, not just say we have no responsibility for overcrowding. We have to move into older areas that are worth saving, and find out what re the blighting forces that are pulling them down, eliminate adverse ises where they occur, create new street and new traffic patterns, inroduce park and recreation areas, demolish the unfit housing which is till maybe a small percentage of the housing in a given neighborhood, nd try to create out of that huge area of a city, which is cold and unplaced and spiritless and unneighborly as it exists now, a new neighorhood in which people are happy to live and want to live and where orces of deterioration are reversed by forces of care and concern and buildup of the property.

To do that, it seemed to us that the Federal program of assistance ight to be revised. Instead of doing what it does now, under title I the Housing Act of 1949, providing Federal grants on a two-thirds sis-essentially for demolition programs only-and that is the effect title I as it stands now-that same principle ought to be broaded and cities ought to be encouraged to go in and look at their over1 program of deterioration, and be encouraged, not to go in with a gle surgical project but to go into the city and create planned neighrhoods and take the steps necessary to create them, including public ilities that are required, and street lighting, in many cases. Bad eet lighting can be a force for slum creation, and inadequate paving, k of recreation areas, too much congestion, nonconforming usesThe CHAIRMAN. Don't forget the most important thing-smoke. Mr. ROUSE. It certainly is.

The CHAIRMAN. And smog and dirt.

Mr. ROUSE. In many cities, it is a starting point.

If the cities would plan and contemplate a program on that kind of roject, then Federal assistance would reach through that total proj-the city now adds up the total cost of acquisition and demolition, it deducts from that the reuse value of the land, and the Federal vernment contributes two-thirds. Instead of doing that, in this al program of urban renewal, the cost would be totaled up, with olic recreation areas, parks, demolition, and acquisition, and from t would be deducted reuse value of the land, in order that the cities Id enlarge their scope and enlarge their approach to this problem.