But I think there is general agreement on that; and if you think it might be helpful, I have a summary table, which was all the estimates which have been provided-information summarized. You will see that there is wide agreement on that, and it includes the latest estimate made by the Joint Committee on Housing.

Mr. GAMBLE (presiding). Without objection, that may be made part of the record, Mr. Shishkin.

(The information above referred to has not been supplied.)

Mr. SPENCE. What is your experience with reference to the shift in the interest rate? I understand there are about a million GI loans on which the interest rate is 4 percent. What effect do you think it would have if we increased that interest rate from 4 to 42 percent. What do you think present lenders would say with regard to others receiving one-half of 1 percent more than they. It seems to me that it is a fundamental principle that all people substantially equally situated should be treated substantially the same. What psychological effect do you think that would have?

Mr. SHISHKIN. The answer, it seems to me, Congressman, would be that the main force which has been operating in that market, which made it impossible for the GI's to get the loans which were promised them, was the feeling on the part of the investors that they were not good risks, that there was no confidence in their future stability, that there is bound to be a break-up within a short period of time-2 years, or 3 years, or 5 years from now-and it seems to me that this kind of legislation, this kind of approach, which does provide a basis for confidence-saying, "We have a long-range program in which we are going to be working together in every community"—is the kind of a thing that will back up the sense of confidence in the general income level. And once that is the case, you will have a much stronger force than any possible secondary market which is provided by one of the amendments to this-which I think is unfortunate-in order to make those loans available.

It seems to me that a return to the second-mortgage practice, as provided by one of the amendments in this bill, is not a desirable one. We have gotten away from it. We have had a great reform. Under the guise of GI loans along, all right. But going back to the secondary market is not a good thing.

Mr. COLE. Then you do not agree to the conclusion of title II in the bill, which is the secondary-market provision?

Mr. SHISHKIN. We are accepting it as a part of this bill, but we do not think that is a sound way of doing it.

Mr. COLE. Why would you accept it in the bill if you do not think it is a sound way of doing it?

Mr. SHISHKIN. Because there is a problem immediately before us. There is no other proposal offered. Time is of the essence, and when you really need to avert the kind of a crash you are going to have in a railroad wreck, you pull the switch.

Mr. COLE. Mr. Shishkin, I think you are doing a marvelous job and I have a great deal of admiration for you, but are you asking us to pass a bill which has a provision in it with which you do not agree? Mr. SHISHKIN. I said at the outset that there are several provisions, Mr. Cole, in this bill with which we are not in full agreement. There are many details which we would like to see in, and there are those which we would like to see out.

Mr. COLE. That is what we are up against. We think there are a number of provisions here some of us think, at any rate which were put in solely for the purpose of getting us to vote for one final provision.

Now, as I understood your original statement, you said that without this legislation the present situation could not possibly be met. This legislation may be amended in many ways, may it not, to meet the situation that you are talking about?"

Mr. SHISHKIN. Surely.

I think the provision to meet the present problem with regard to the GI loan is necessary, but the difficulty about it is-and I think that if an attempt is made by Congress-and there is a real parliamentary difficulty here that we are dealing with housing legislation, and this is perhaps the best we can do for the time being because it takes into account the provision which originated in the GI bill of rights, it takes into account what has already been done, and all this attempts to do is to assure that the GI who has had this promise will immediately have access to the loan. But as a fundamental proposition, it seems to me that the philosophy is wrong and that when pressed we restort to the secondary-mortgage idea.

Mr. COLE. Why not the simple provision that the secondary market for GI loans may be left with the Reconstruction Finance Corporation as it was, and not set up this tremendous corporation with tremendous powers?

Mr. SHISHKIN. The place is not important. Perhaps it is sounder to have it all in the same agency and have "Fannie May" liquidated and put in the Home Finance and Housing Agency.

Mr. COLE. Did you study title II?

Mr. SHISHKIN. I examined it.

Mr. COLE. For instance, the corporation, on page 25, is authorized to issue and have outstanding, at any one time, notes and other obligations to the maximum amount not to exceed $250,000,000, and then the President of the United States later may authorize an additional $250,000,000.

The corporation, as I understand it, is solely the director, or the Federal Housing Administrator. He has no control over him. He has an advisory board. There is no board of directors. He issues notes as he pleases and sells them as he likes, without any control or authorization whatsoever from Congress.

It seems to me that is a pretty broad feature of the bill. What I am driving at, Mr. Shishkin, is this: I noticed in your statement that you made some very fine statements in connection with generalities, in connection with the bill as a whole. I can well understand how people who hear you discuss it would pass resolutions approving the bill. But I notice, Mr. Shishkin, that not once did you take the bill, item by item, and attempt to help us to decide whether this was the best way in which we might approach a particular problem. That is the thing that concerns me.

Mr. SHISHKIN. Congressman, I would have been delighted to do it, and I will be delighted to do it if that is the committee's wish. I have appeared before this committee, examining these very provisions, section by section, and

Mr. COLE. Not this bill, sir.

Mr. SHISHKIN. Well, the essential provisions of this bill have been before this committee several times. There are some new provisions.

Mr. COLE. This is the first time this bill has ever been up for consideration by any committee in the House in public hearings other than before Government witnesses. I think this committee is interested in facts. I think we are interested in an analysis of the bill itself, and of what it does, item by item.

Mr. SHISHKIN. Mr. Chairman, in view of the fact that the Congressman would like to have an item-by-item statement from us, may I have permission to file a supplementary statement, an item-by-item analysis of the bill?

Mr. GAMBLE. Certainly. We will be glad to have it.

Mr. COLE. Here is the thing I have in mind, Mr. Shishkin.

For instance, you said the situation has been, in the past, where housing has been handed down from the rich to middle class and to poor. I do not understand what that means. Is that a bad situation or is that a good situation?

Mr. SHISHKIN. Well, sir, I have felt very humble and uncomfortable in even making that statement, before you and before this commitee, because, before you and before this committee, I testified on rent control and different aspects of housing itself five or six times, and I did not want to burden this committee with repetition. But I will be glad to elaborate on that in my supplementary statement. Mr. COLE. One other thing. You made a statement with respect to the loss of homes to families-that is, provided they had purchased a home and then lost it-and you said they suffered quite a blow, and I agree with you. And you say we must help them to reach a point where the tenant may be a sound home buyer. In that I agree with you. But I wonder exactly what you mean by that-that an individual may be a sound home buyer?

Mr. SHISHKIN. That he has sufficient savings, and that his income is sufficieint to be able to maintain the home purchase until the property actually becomes his, without any lien on it.

Mr. COLE. Then you do not agree that every person, irrespective of his financial condition, should be a home owner under our present economic structure in the country, or political structure?

Mr. SHISHKIN. Well, I think it is a desirable objective, but it is not possible now.

Mr. COLE. It is desirable, of course; I agree with you.

Mr. SHISHKIN. But it is not feasible now.

Mr. COLE. Nor legislatively feasible; is it?

Mr. SHISHKIN. No.

Mr. COLE. There is nothing we can do to make every person in the country a home owner.

Mr. SHISHKIN. Congressman, I want to make abundantly clear before this committee that I think it is a natural thing-and I have heard a number of people talking about legislation of this kind-to make it abundantly clear that we cannot legislate housing.

Mr. COLE. That is right.

Mr. SHISHKIN. We cannot legislate housing. All we can do is to facilitate the work of our communities, the work of the investors, the work of the builders, the work of those who are concerned with hous

ing, and the public itself, to give them the kind of guides, aids, and safeguards that will make certain things possible. That is all we can do.

Mr. COLE. That is right, Mr. Shishkin. But after listening to your replies to the chairman's question a while ago I came very definitely to the conclusion that your testimony did not help me in any way to show how this bill, S. 866, would do the things you have said generally should be done.

That is where it leaves me. I may be different from anybody else, but I do not find it in your testimony.

Mr. SHISHKIN. I will be glad to submit it to you in detail, and I am hopeful that the demonstration of what we have in mind will prove convincing.

Mr. COLE. May I say one more thing? I noticed you said nothing about the slum clearance and public housing, and that, of course, is one of the most controversial issues in the bill.

Mr. SHISHKIN. There are two things that I would like to say. I did not quite conclude my statement when the questioning started. Mr. COLE. I am sorry.

Mr. SHISHKIN. On slum clearance, this provision is different from what was attempted before the war in that the urban development and slum clearance title makes it possible, by divorcing the construction of low-rent housing, to have private enterprise assume the initiative and a large measure of the responsibility for slum clearance.

In other words, if you clear a particular area which is rotting, and the economic value of which is far in excess of what you need there, you have in that kind of a situation, after you have met that problem, a possibility for a development into a park or into a set of shops or stores or an apartment house built by private enterprise, or into local low-rent housing redevelopment, if necessary. It is not binding, the slum clearance, which will distort planning, sound planning, in such a way as to distort the sound planning of a community.

As for the public aid to local housing authorities, under title VI of S. 866, we believe that that provision is indispensable. We believe that the construction of this minimum of homes, for which prior claim will go to veterans only during inspection periods, is the essential thing which will give the balance to the supply of housing not only at the top level of income, but also at the bottom, so that you will have it throughout the whole range.

It is a small program. It is one which has been tested by experience, and it is the one force in this country which has given hope, to the families in the slums and their children, of attaining at least some kind of decent living and being given an opportunity of growing out of it, just as citizens have been given assistance at other times when their income prevented them from participating on an equal basis with other citizens in the community.

Mr. SPENCE. Do you think there would be some difficulty in relocating some of the inhabitants of slum areas?

Mr. SHISHKIN. In some areas; but there is a specific provision to defer relocation while the emergency is still with us. This is a longrange program. This is a program which is needed to make cities

like Louisville, St. Louis, and so forth, livable not only today but 10 years from now.

It is the kind of provision in which we have large metropolitan areas which are rotting at the core, because there is an enormous exodus out of those communities into the suburban areas, which will mean a loss of invested capital now in buildings and real devastation right in the heart of our large metropolitan cities.

This is one thing that will help prevent that, in addition to helping the slum families.

Mr. MONRONEY. Is it not also true, Mr. Shishkin, that if you have this redevelopment of this rotten area you could accommodate a great many more people through modern construction and multipledwelling units and still have a great deal left over for parks, playgrounds, and so on-land which is now covered by one-, two-, and three-story buildings?

Mr. SHISHKIN. You will also provide an opportunity for balancing the places where people live with the economic life of the community, where the trade and industrial areas are. Because if you do it under a plan of that kind you will be able to bring people not only within reach of housing which is decent, but also of places to live which bear some relation to places of work, something which we have greatly overlooked.

Mr. BUCHANAN. Mr. Chairman.

Mr. GAMBLE. Mr. Buchanan.

Mr. BUCHANAN. A while ago, when the chairman was interrogating you, he kept referring to our present housing plight as an emergency. Mr. SHISHKIN. Yes.

Mr. BUCHANAN. I wish you would clarify for the committee your reaction to whether or not the present plight is an emergency and whether or not the mere enactment of title VI of this bill is a cure-all for our present plight.

Mr. SHISHKIN. No. As I pointed out before, I think that the extension of title VI should be a temporary thing. It should constitute a transition to reversion to title II. I think the remainder of the bill will help as much as possible.

As far as the emergency is concerned, I think it is better to say that the situation is extremely acute; that it is extremely critical. It has been critical and acute for a long time, but it is the result of a chronic situation—a situation in which we have had a really desperate need over a long period of time and a situation which cannot be cured overnight by title VI.

My great worry is, frankly, that by applying that solution you will have, all over the country, a lot of enterprisers who are not the normal suppliers of homes in the market, who are shoe-string operators. Right near where I live there is one who started out with $3,000 by buying an option and is now building a $3,000,000 project. I do not think he is competent to do that, and I do not think he should be given approval under title VI. I think that sort of thing is extremely dangerous. The man is not a sound provider to the community, and it is because of that that I feel very strongly that it should be crystal-clear that by providing easy terms, in a time of boom, to a needy family in desperate need of a home we are unfair to them