to be in amounts of $500, $1,000, and $5,000 carrying interest rate of about 34 to 33% percent.

The difference between such an interest rate and the interest rate on the VA and FHA mortgages held in escrow would take care of servicing the mortgages and the paperwork involved. The testimony as to such costs was given by bankers and lenders at a special hearing of the Senate Banking and Currency Committee where representatives of lenders from all parts of the country had an opportunity to express their views on the mortgage interest rates and the net returns to the lenders.

In summary, I would say that there is an opportunity for a housing bill which will truly meet the needs of the people for housing as they were recognized by the late Senator Taft so recently as in the spring of 1953 at the National Housing Conference meeting at the Statler Hotel.

Furthermore, the housing program stimulated by such a bill could take up the slack in our current economic situation very effectively. The present bill does not go far enough.

Thank you for this opportunity to appear before you.

As you know, Mr. Chairman, I have appeared before you many times in the past few years.

The CHAIRMAN. Yes. Let me say this: You have always been very helpful to us, and we appreciate it.

Mr. WEITZER. At our last convention, we reaffirmed our support for the Housing Act of 1949, as amended. But I want to emphasize we are talking about amendments that were put through this committee, not amendments that were written by the Appropriations Committee, which has no understanding and hasn't taken steps for an understanding of housing problems.

Senator MAYBANK. I did everything I could there.

Mr. WEITZER. Yes. You are right, Senator Maybank. I just want to call attention now to 1 or 2 points that we covered in the resolution. We passed resolutions asking that the Congress fix the interest rate at 4 percent for veterans' loans, and 42 percent maximum for FHA loans.

I don't want to go into this at length, but I just want to point out that every one-half percent increase on $10,000 20-year mortgages, means $2.70 more expense to the veteran.

The CHAIRMAN. Per month.

Mr. WEITZER. Yes; per month. If you have a jump of 1% or 2 percent, that veteran has to find somewhere, and he has no place to find it, $10 extra per month. I just want to emphasize that in regard to the interest matter.

We also would like to see the current bill changed so that the VA would retain its power to limit fees in regard to VA residential mortgage loans.

Likewise, we would like to see changed the veteran preference provision in section 501, which takes away some of the preferences which the veteran had under the Housing Act of 1949, so that he will retain it.

The CHAIRMAN. Let me say this: The way we operate in this committee, the staff is working now to take every recommendation that has been made by every witness, and they will be listed. When we get

44750-54 -pt. 1-64

together to write up this legislation, every suggestion that was made by all witnesses will be placed in front of each Senator, and we will talk about them.

I just wanted you to know that is the way we operate.

Mr. WEITZER. Then I won't take up your time. But there are a couple of things here I want to mention. One of them was mentioned by the previous witness. That is that you revise the idea of changing the basis for granting mortgages on cooperative housing from the replacement cost to estimated value.

The CHAIRMAN. Yes; we have had a lot of testimony on that. Mr. WEITZER. Also, we don't like the idea of having this rider of the Appropriations Committee put into legislation by your committee, removing the Assistant Commissioner for Cooperative Housing.

The CHAIRMAN. I guess there is no way to avoid that.

Mr. WEITZER. I know, but at least you don't have to abdicate the function which they have attempted to usurp.

Senator MAYBANK. I wouldn't say that, because I am a member of the Appropriations Committee, and I fought against it. One year I think I had the bill sent back three times, but when you are outvoted

Mr. WEITZER. But there is no point in writing it into your own bill, in this committee.

Senator MAYBANK. I agree with you.

The CHAIRMAN. My point is that we of the committee have no jurisdiction over the Appropriations Committee. We can't make them do anything.

Mr. WEITZER. I understand that, but I think you ought not to write into the bill what they have put into rider form. They may do it again over your head.

The CHAIRMAN. I get your idea.

Senator MAYBANK. The last time the vote was awfully close, but we lost.

But I will tell you what you ought to do, you and the American Federation of Labor-I'm not giving you any advice; don't misunderstand me-but I would certainly tell the Appropriations Committee that. You don't have to tell me that. I am a member. But you have a right to tell them.

Mr. WEITZER. It is pretty hard to get before that committee.

Senator MAYBANK. I wouldn't say that, because when I was chairman of the Independent Offices Subcommittee, anybody could come in. and being the ranking Democratic member, I will ask Senator Saltonstall.

Mr. WEITZER. I am sure Senator Saltonstall would be glad to cooperate.

The same thing applies here on the question of public housing authorization. We supported, as I say, the 1949 Housing Act, as amended. The Appropriations Committee made it impossible for that to continue in effect, by the rider they wrote into it.

I think this committee ought to include at least an authorization of what the President recommended. Our resolution said that you ought to restore the original bill, as written in 1949, to 135,000.

Senator MAYBANK. I agree with you, if it needs any change, this committee ought to change it.

Mr. WEITZER. That is right.

Senator MAYBANK. I have an amendment here to do that. I guess you knew that.

Mr. WEITZER. I know we can count on your cooperation, Senator. We are a little skeptical about sections 101 and 221. We don't disagree with the intent. We believe they are sections of good intention, but to whatever extent those things have been written, from the standpoint of providing additional housing, our organization doesn't believe it is going to provide it. And we spell the thing out here in my

statement.

We are not in opposition to these sections, but we think that they have been oversold as to what they might accomplish.

As to title II, the bankers and other lenders could set up their own association to insure a secondary market for mortgage loans—we are not opposed to that. But Senator Maybank knows. I suggested to him several years ago that you could avoid the necessity for going to Congress for additional appropriations for FNMA if, under FHA or FNMA auspices you set up a debenture corporation to issue and sell debentures secured by mortgages held by FNMA. I don't think any step ought to be taken to try to clear FNMA out of the picture at this stage of the situation

In summary, I would say there is an opportunity for a housing bill, which will truly meet the needs of the people for housing, as they were recognized by the late Senator Taft as recently as in the spring of 1953 at the National Housing Conference meeting at the Statler Hotel.

Furthermore, the housing program stimulated by such a bill could take up the slack in our current economic situation very effectively. This is no slambang program, because housing is set up to go ahead. If they ever try to correct this recession or rolling readjustment, or whatever you want to call it, by a public works program, you gentlemen know how long it takes to get that through Congress and how long it takes to set up the machinery to put it to work.

You have in this housing program something that you people on this committee have provided, that can be readily enlarged, and particularly from the standpoint of public housing, which has been put away behind the 8-ball over the past few years. You could get a program which would add a couple of billion dollars to the production of the country and provide housing for people who can't get it in any other way.

Thank you very much.

(The following was received for the record :)

SUPPLEMENTARY STATEMENT by BERNARD WEITZER, NATIONAL LEGISLATIVE DIRECTOR OF THE JEWISH WAR VETERANS OF THE UNITED STATES OF AMERICA The story of what has happened before the House Rules Committee and on the House floor in connection with the independent offices appropriation bill (H. R. 8583) emphasizes the point in my testimony before your committee on March 25 in which I urged on behalf of the Jewish War Veterans of the United States of America that certain changes be made in S. 2938-the Housing Act of 1954.

You will recall that according to the resolution passed at our organization's 58th annual convention, we wished to see reinstated the full terms of the Housing Act of 1949 as amended through your committee. The riders on the independent offices appropriation bills of 1953 and 1954 represented serious encroachments upon the legislative functions of your committee and greatly damaged the effective operation of the Housing Act of 1949. As this is written, there is no certainty as

to what may be done by the Public Housing Administration or the other bodies which which are under the general supervision of the Admiinstrator of the Housing and Home Finance Agency.

It seems to me that your committee, in considering S. 2938, should clearly establish the repeal of the riders on appropriations bills previously passed and should set forth definite authorization in your bill as indicated in my testimony. There is no reason why you should not reaffirm the authorization for 135,000 public housing units per annum and thus provide in the language of the bill as rewritten, that the pipeline be kept constantly full. That is the only way in which you can provide that there will be adequate means for relocating a large proportion of the tenants displaced by the improvements which the slum clearance and redevelopment sections of your bill call for.

The CHAIRMAN. Thank you very much. We appreciate your testimony.

The next witness will be Eleanor Hadley, of the American Association of Social Workers.

Miss HADLEY. I will read my statement, Mr. Chairman.
The CHAIRMAN. Proceed, Miss Hadley.

STATEMENT OF ELEANOR M. HADLEY, AMERICAN ASSOCIATION OF SOCIAL WORKERS

Miss HADLEY. I should like to take this opportunity to discuss with you the concern felt by the American Association of Social Workers over the housing program of 1954. Social workers have an intimate and keen appreciation of what decent housing means to human beings.

The association commends the President for the insight, leadership, and courage displayed in his housing message of January 25, wherein he states that "It is properly a concern of this Government to insure that opportunities are provided every American family to acquire a good home." The President forthrightly calls good housing "a major objective of national policy." So does the AASW. I quote from the AASW platform statement on a national housing program adopted at the delegate assembly. It reads:

Good housing is a basic essential for wholesome living. The stability of the family in the community cannot be obtained without it. A national objective, therefore, should be the provision of good housing for all segments of the population at costs within their capacity to pay.

The reservations which the association feels toward the administration's housing program of 1954 are not with the President's goals, but with the measures outlined to achieve them. The rub is with the program. The association questions whether S. 2938 will produce the President's objectives.

The President says we are to move toward decent housing for all families, not just families with incomes above $5,000. That is, the President favors housing for families with incomes under $2,000: 22% of American families are in this group; 16.5 percent of families have incomes between $2,000 and $3,000; 17.4 percent between $3,000 and $4,000. Thus, over half the families of our Nation have incomes under $4,000. As the President knows, these are the families most poorly housed. These are the families who live in the slum sections of our metropolitan areas, in the blighted sections of our cities, in declining neighborhoods. The President states he is for decent housing for this half of our Nation.

But what is proposed to meet the unsatisfied housing needs of the great majority of families in the under $4,000-income range? The President proposes expanded slum clearance, and urban renewal. However, to translate objectives into probable performance, it is sobering to realize that the United States has been working on slum clearance since the passage of the National Housing Act of 1937 and slums continue to be conspicuously with us. The President is broadening the program, but there is nothing in S. 2938 to suggest an altogether new tempo.

The President is proposing measures to prevent the spread of blight into good neighborhoods and a rehabilitation program for salvable areas. This is good. He has our full support but we are not persuaded that this is in any sense going to take care of the housing needs of hundreds upon hundreds of thousands of American families.

Any slum clearance program must provide for the families displaced from their homes. In this bill, the President is proposing on an experimental basis advantageous mortgage insurance by which such families can buy $7,000 dwellings over a 40-year period or acquire them on lease-and-purchase options. Similar arrangements are made for displaced families in multifamily rental units.

The association has various comments to make on this proposal. (1) Inasmuch as it is restricted to families who are displaced through slum clearance and related projects, it is at once put forward on a small, narrow base.

(2) Inasmuch as families who will be displaced will be displaced in metropolitan areas, it is assumed that the proposal relates to housing in metropolitan areas. What kind of a house is it possible to build in our metropolitan areas for $7,000? According to the testimony of preceding witnesses some of whom have been outstanding low-cost housing builders, it is not possible to build a family dwelling in our major metropolitan areas for $7,000. It would be ironic indeed if within a few years of construction such housing became blighted or near-slum housing.

(3) Will the families who are displaced be in a position to make the necessary purchase or lease payments? According to the figures prepared by the President's Advisory Committee, estimated total monthly expenses on a $7,000 house would be $62.90. Put on an annual basis, this would be $775.04. If we use the customary family budget figure of 20 percent for rent, it is clear that $7,000 housing is above the capability of families with incomes under $3,000. The arithmetic is: 12 times $62.92 equals $775.04; 20 percent of $3,000 equals $600.

From the preceding figures on family-income distribution, it is apparent that roughly 40 percent of American families are below the income level which can afford such $7,000 housing.

The President proposes another avenue to meet the needs of those presently ill-housed. He proposes continuance of low-rent public housing. But strangely enough, the administration bill, S. 2938, contains no authorization for public housing. The President's proposals on this subject are to be found in his budget message wherein he urges, until the results of his low-income ownership housing have been determined, that continued reliance be placed on public housing. He recommends construction of 35,000 units annually for the next 4 years. It is reported that the House Appropriations Committee