The CHAIRMAN. My point is you could have a new home for everybody in America built by the Government, because all socialism and communism is, is a form of government where the state owns everything and everybody works for the state.

Senator IVES. I think it is a little different, Mr. Chairman. I think communism is supposed to be controlled by Soviet Russia. There is not much difference in the fundamentals between communism and socialism in a great many ways. But I think the interpretation today is Russian and Soviet control and domination.

The CHAIRMAN. All communism is, is an attack upon the private ownership of property.

Senator IVES. You are talking about the basic terms.

The CHAIRMAN. Only when the Government gets control of all the property can you have communism. Therefore when we get the Government into too many things, we might automatically some day get communism and not realize we are getting it. That is why I have always been a great believer that the way to sell democracy or anything else is to sell it from its strength, not its weaknesses.

I am not criticizing you. It is just a philosophy I have had for many years, that the way to sell the American system of government is to sell its strength.

Senator IVES. But, Mr. Chairman, don't we have to recognize our weaknesses before we can correct them?

The CHAIRMAN. Sure we do.

Senator IVES. Otherwise, we can't become stronger.

The CHAIRMAN. But we shouldn't be spending all our time talking about our weaknesses and never talking about our strength.

For example, it all came about in this statement that the President's Committee made:

Our country, which has the highest standard of living in the world, cannot permit a substantial number of its citizens to live in filth and squalor and in hovels which health laws for the protection of our people would not allow for farm animals.

My point is, that makes good propaganda for the leaders of the Communists in Russia. They can take part of that out of context and convince the people——

Senator IVES. The fact that these conditions exist, to which reference is made, would also be good ammunition.

The CHAIRMAN. As long as you have human nature you are always going to have some of that sort of thing.

Senator IVES. I agree with you. I think we have to point it up in order to correct it.

The CHAIRMAN. I do too. I think you have to pay attention to it, but I don't think you have to make it the rule, rather than the exception. But you go ahead. I am certainly not criticizing you, because you didn't make the statement.

Mr. HOLLANDER. Senator, we do not even dream about advocating a situation in which the Government would own all of everything or all of the housing. There have been some very instructive experiences in a couple of the sturdiest democracies, such as Sweden, which, of course, have housing problems much less complicated than ours and on a much smaller scale. They have managed to work these things out through the private ownership of houses by people who live in them,

but through the instrumentality of the Government which makes this possible. This is the line along which we would like to see the housing program in the United States proceed.

The CHAIRMAN. You proceed.

Mr. HOLLANDER. Thank you.

It is encouraging to find in the President's message on housing and in the report of the Advisory Committee which the message mainly follows, explicit recognition of the Nation's housing needs and the urgency of meeting them. It is particularly encouraging to find a committee composed largely of businessmen, builders, and financiers. confirming what some of us have contended for many years: That there is a serious housing problem that demands solution so that every American family can have a decent place to live. We believe that the uniform recognition of this problem reflects the rebellion of the American people against slum conditions and their aroused demand for the kind of living that this country can provide. This recognition is a first and necessary step toward the achievement of good housing.

Unfortunately, the progress of our action has not kept pace with the progress in our thinking.

Since the war we have been building a little over 1 million dwellings a year-scarcely enough to provide what most experts agree is needed to house new families and replace losses through destruction. The National Association of Home Builders have estimated that we need to put on the market 2 million new or new-conditioned homes each year for the next 10 years.

The greatest demand is for medium- and low-cost housing, but most of the newly built homes are out of reach of medium- and low-income families.

By June 30 of this year, we will have built only 200,000 public housing units for low-income families, of the 810,000 units authorized by the Housing Act of 1949.

We have made only a token start toward eradicating our disgraceful slums, although there are 8 million families living in substandard conditions.

Little progress has been made against the scandalous conditions in the housing of minority groups. Yet it is estimated that 70 percent of our nonwhite families are living in dwellings that are dilapidated or seriously deficient.

I will not take your time to rehearse the facts of the staggering costs-both human and financial-that arise from slum housing. These are already well known to you and generally admitted. The question is, How are we going to get rid of them? The beginnings we have made since the war are pathetically modest, and I am afraid that I cannot see in the bill before you very much reason to hope that we are going to do a great deal better.

In saying this, I do not mean to overlook some constructive features of the bill. Some people think it might help to make mortgage credit more readily available and to maintain fluid primary and secondary markets for mortgages. The emphasis in this bill on urban renewal, or rehabilitation of housing, and on preventive measures to check the spread of slum and blighted areas, will undoubtedly make our communities pleasanter places to live in. But let no one believe that this bill will go very far toward meeting our country's housing needs.

Mr. Chairman, Americans for Democratic Action believes in private enterprise and recognizes its great contribution to our standard of living. It seems to us, however, that this bill takes the "enterprise" out of "private enterprise" by shifting most of the risks from the builders and lenders to the Government. Under this bill, only as much housing will be built as will yield a quick and almost risk-free profit to the builders.

The basic defect of the administration's program is that it assumes that the incentives of the market will by themselves stimulate the building and rehabilitation of homes our country needs, for the people who need them. Experience of the past 30 years shows that these incentives, insofar as they stimulate the production of housing, operate mainly in the market for higher-priced homes.

They actually shy away from the middle- and low-income markets. They are concerned primarily with the protection of the price and value structure of the housing market. These incentives cannot provide housing for families who cannot meet present prices and financial terms.

Representatives of the lending institutions, testifying last week before the House Banking and Currency Committee, made it clear that they oppose making credit more liberally available because, in their view, this would undermine their present investment. They are afraid of a program that would even continue the present rate of building, because it is, as they say, "beyond that necessary to satisfy a real need for homes or of the available credit." They are opposed to more liberal mortgage credit because, as they say, "it will tend to overstimulate building, leading to overproduction of residential properties."

Mr. Chairman, we thought the purpose of the Government's housing programs was to stimulate the production of homes. These gentlemen do not mind if the Government underwrites their risks, but they want to be left free otherwise to exploit the consumers of housing. They not only want to eat their cake and have it too; they also want the Government to pay for the cake.

The real question before this committee and the Congress is: How can decent housing be made available to every American family! The Congress should make it unmistakably clear that the Government is going to see to it that housing is available, and that if conventional channels of the market are not capable, or not willing, to do the job, new means and methods will be undertaken. If they cannot be coaxed into building and financing housing, the Government should use more direct means to do it. And for those families whose small incomes place them outside the commercial market on any terms, the only answer as far as we can see is public housing.

Would this bill help the consumers of housing? For example, what would be the effect of the liberalization of mortgage terms?

The higher loan-value ratios and the longer periods for repayment are proposed to bring home ownership within the reach of more families.

Experience, however, has proven that sellers most often take advantage of more liberal credit terms to raise the prices of housing, thus diverting the benefit from the buyer to the seller and negating the purpose. What safeguards are there in the bill to prevent this?

In testifying before this committee on the Defense Housing Act of 1951, ADA proposed a provision to require builders to certify their actual costs and, where the approved mortgage loan exceeded these costs, to apply the excess to the reduction of the mortgage. Such an amendment was included in the act as adopted. In that case, it applied to housing for rent; we suggest that a similar provision be applied in this bill for sales as well as rental housing.

This would protect both the buyer and the Government.

We also suggest that you include a provision requiring builders to warrant that the dwelling has been built in substantial conformity with the plans and specifications as approved by FHA. This safeguard was included in the bill pasesd last year by the House but was eliminated in the conference committee. What objection is there to limiting the builder's guaranty to 100 percent of his cost, and requiring him to warrant that he has built the dwelling as he specified he would?

With adequate safeguards against price increases which are unwarranted and which you do not intend, we believe that this bill could make possible the building of some houses at somewhat lower prices than heretofore. While we do not think that by this bill housing can be brought within the reach of low-income families, we do think it might stimulate building of more homes that could be brought within the reach of families in the upper half of the income scale.

Mr. Chairman, I should like to discuss briefly three principal points raised in the President's housing message, relating to this bill. They are separate subjects, though they are related to each other. First, the question of slum clearance; second, the question of housing low-income families; third, the housing of minority groups.

We believe that slum clearance and urban renewal are goals in themselves. The case against the slums has been made; it remains to get rid of them. The Subcommittee on Urban Redevelopment estimated that if we were to spend on slum clearance 5 times what we are now spending it would take 50 years to clear the present substandard dwellings from our cities. At the present rate it would take 200 years. The subcommittee estimated that $1.5 billion a year would be required to do the job in 10 years-if at the same time we take steps to prevent the spread of new slums.

Can we honestly say that we cannot afford $1.5 billion a year to rid ourselves of the costs and the misery of slums, in a country with a national product of nearly $400 billion a year? Less than one-half of 1 percent.

What is impossible about that? It is less than the price of keeping the slums to breed delinquency, crime, and disease. It is estimated that although slum and blighted areas comprise about 20 percent of metropolitan residential area, they account for 45 percent of major crimes, 55 percent of juvenile delinquency, 60 percent of tuberculosis, 50 percent of arrests, 35 percent of fires, 45 percent of city service costsand only 6 percent of real estate tax revenue. If we want to do away with them, it will take a bold program. The cautious, cumbersome approaches we have adopted will never do it.

But slum clearance and urban renewal, though they are necessary to save our cities and protect our people, do not solve the housing problem. On the contrary, in the short run they aggravate it, by displacing families from substandard homes.

Even rehabilitation of dwellings, though it improves the quality of housing, invariably results in increased rents often beyond the means of the original occupants. The plain fact is that people live in slums because they cannot find good housing at prices they can pay.

There cannot be large-scale slum clearance, nor effective enforcement of housing codes, until there is enough housing of suitable standards for the families who would be displaced.

This week's newspapers offer dramatic and living examples under our eyes here in Washington. On the one hand, we have an example of the horrifying condition and consequences of the slums which we have permitted to develop in the heart of Washington, as revealed in the Washington Post. Next to this, we have the story of the painfully slow efforts to depopulate one of the worst of Washington's slum blocks, as replacement housing can be found, one by one, for the families who unwillingly and unhappily lived there. Place these two i stories side by side, and try to imagine how long it would take to clean out the Washington slums if we have to go househunting family by family as we do now.

Then look at the story on the redevelopment in southwest Washington. The slums are going to be cleared, we are told, and replaced by a $5 million combined "residential-tourist-commercial center" with a convention hall, symphony hall, office buildings, garden apartments, a concession area, redeveloped waterfront, outdoor restaurants, playgrounds, and a plaza. Everything in fact, but a place to house the people who now live there, at prices they can afford.

The problem of housing in the United States is very largely the problem of finding suitable housing for low-income families and minorities. When we consider that about half of our 27 million city families have annual incomes of less than $4,000, one-fifth of themabout 52 million-less than $2,500, you can recognize the size of the low-cost, low-income housing needs.

Incomes under $2,500 a year mean that families cannot afford more than $40 a month for housing-and what kind of housing can be had for $40 or less on the market in our cities today? Even on the most liberal credit terms this will buy less than $5,000 of house-hardly half the cost of the lower priced housing now being built.

I am sure this story is familiar to you by now: The rehousing of the families in the bottom quarter of the income scale waits on the depreciation of existing housing to a price they can afford. This is a slow process; by the time it happens, much of the housing is hardly worth having. We see nothing in this bill that would lead us to believe that it will bring good housing-new or used-within the means of low-income families.

I would like to make a few brief comments on the so-called $7,000 house-section 221 of title I: (1) Housing at this price cannot be built in the larger metropolitan areas where the housing need is the greatest; (2) it cannot be built to provide homes for larger families with children; (3) if built, the payments will be $63 a month or more, which would bring them within the range of families with incomes of $3,600 or more.

Presumably, if the house were to have more than 1 or 2 bedrooms, its cost and the monthy payments would be even greater-perhaps $70 or $80, far beyond the capacity of families now living in slums.