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GENERAL HOUSING

WEDNESDAY, JUNE 2, 1948

HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee reconvened, pursuant to adjournment, at 10 a. m., Hon. Jesse P. Wolcott, chairman, presiding.

Present: Messrs. Wolcott, Gamble, Kunkel, Sundstrom, McMillen, Kilburn, Buffett, Cole, Hull, Banta, Nicholson, Spence, Brown, Patman, Folger, Buchanan, Boggs, and Multer.

The CHAIRMAN. The committee will come to order.

We will continue with the consideration of the various housing bills before the committee, and with the testimony of Mr. Whitlock. Mr. WHITLOCK. Shall I proceed?

The CHAIRMAN. Yes.

STATEMENT OF DOUGLAS WHITLOCK, CHAIRMAN, THE BUILDING PRODUCTS INSTITUTE-Continued

Mr. WHITLOCK. Mr. Chairman, I was about to point out certain phases of title V when we recessed yesterday afternoon.

The first question we have to raise with this committee is a very fundamental question of the relationship of the Federal Government to States and localities. There has been a tendency, over the past few years, for the Federal Government to deal directly with localities, by-passing States. Here again, in title V, we have that same thing happening. We have the Federal Government dealing directly with local communities, with no relationship to State governments on this problem of slum clearance. We have a number of State laws, and we have some local communities that are now engaged in developing slumclearance programs. I think later in this hearing the committee will probably hear about some of those programs in detail.

In this bill we would have the Federal Government under a program to be established by the Administrator, dealing directly with the local community. With over a billion dollars that the Administrator would have, again with language loosely drawn as to the requirements for disbursement of this money to the local communities in the forms of grants-in-aid, we would have an opportunity for coercion of local governments by the Federal Administrator.

We think that this committee should seriously consider, if it is a Federal function to aid in slum clearance, whether the reestablishing of our traditional relationship between the Federal Government and the State government and the local community, is not much better than having the Federal Government dealing directly with local communities.

In section 501, on page 59 of the bill, S. 866, says that the Administrator, in determining what local communities are entitled to these funds, shall give consideration to the adoption, improvement, and modernization of building codes-and those codes are to be drafted so as to permit the use of appropriate new materials, techniques— methods in land and residential planning and design, increase of efficiency in residential construction, and the elimination of restrictive practices which unecessarily increase housing costs.

Under our interpretation of this bill, the Administrator, under title III of this bill, without the cooperation of industry or labor, is in a position to draft regulations stipulating the types of materials to be used, requiring the elimination of restrictive practices, as he defines them, and dictating the type of design, and then to coerce a local community to adopt them by withholding funds under this particular section of the bill. We believe that it raises a very serious question as to the relationship of the local community to the Federal Government, in direct dealing, where an Administrator has as much power as this bill gives, and has the opportunity of withholding funds in order to make the community subscribe to his wishes.

We also find, on page 60, that here again, in order to provide the more than $1,000,000,000 required, we would bypass the appropriations procedure of Congress entirely.

At the bottom of page 60, line 22 and following, the Administrator obtains the funds by issuing notes to the Secretary of the Treasury, in the amount of $10,000,000, which limit shall be increased by $200,000,000 in 1949 and by further amounts of $200,000,000 in the years 1950, 1951, 1952, and 1953, or a total of $1,010,000,000, which Congress has not the right to appropriate in advance. The Administrator merely issues notes which the Secretary is directed to purchase and, if he has not sufficient funds, he must use the Second Liberty Bond Act in order to provide those funds, and thus increase the national indebtedness by that amount without Congress having anything to say about the rate at which that indebtedness is increased, or without any appropriation procedures or any consideration of the fiscal position of the Government as this indebtedness is increased.

Then, on page 62 there is another method of bypassing appropriations which has been used in a few acts in the last few years, and which this committee should seriously consider. On page 62, section 503, there is provision for capital grants. These contracts would be entered into in the amount of $100,000,000 in 1948, and the bill says that limit shall be increased by further amounts of a hundred million dollars on each of the years 1949, 1950, 1951, and 1952, so here again we have that ambiguous language about which I spoke yesterday. It could mean that the total amount is $500,000,000, or it could mean that that total amount is $900,000,000, if the words "which limit" mean that in the year 1949 the Administrator can enter into $200,000,000 worth of contracts instead of $100,000,000 worth of contracts. Moreover, this act provides, quoting from line 6 on page 63:

The faith of the United States is solemnly pledged to the payment of all capital grants contracted for under this title.

The Administrator is permitted to enter into a contract with a local community, and in that contract the full faith of the United States is solemnly pledged. When those contracts come before an appro

priations committee, we see no way for the committee to do anything else than to appropriate that money because the faith of the United States has been pledged.

So whether this is $500,000,000 or $900,000,000, it is practically putting a gun to the head of the Appropriations Committee, because the faith of the United States has been pledged in those contracts with the local community, and, therefore, they must be honored. Here again the appropriating committees of Congress have very little to

say.

The CHAIRMAN. That becomes a contractual obligation?

Mr. WHITLOCK. It is a contractual obligation in which the United States, by this act, has permitted its faith to be pledged.

Mr. BUCHANAN. They are limited to two-thirds of the cost.

Mr. WHITLOCK. They are limited to two-thirds of the cost, but the total amount is either $500,000,000 or $900,000,000.

Mr. BUCHANAN. It is limited to $100,000,000 for the years 1948 through 1952?

Mr. WHITLOCK. If the words "which limit may be increased" means $200,000,000

Mr. BUCHANAN. That goes back to the same dissertation you presented yesterday.

Mr. WHITLOCK. It goes back to the same question and, as I say, in your statements before the House the other day, you adopted the interpretation that it did not increase.

Mr. BUCHANAN. That is right.

Mr. WHITLOCK. But it is ambiguous. It could be interpreted either way.

Mr. BUCHANAN. What language would you suggest, instead of "which limit"?

Mr. WHITLOCK. I would say "may be increased in further amounts of."

Mr. KUNKEL. Is this same phraseology as to the faith of the United States used in the old United States Housing Act?

Mr. WHITLOCK. Yes, sir.

Mr. BUCHANAN. That was not misconstrued in any way, was it, under the act of 1937?

Mr. WHITLOCK. Perhaps I am confused. I do not believe the "which limit” was used in the old United States Housing Act. I am talking about the faith of the United States being pledged.

Mr. KUNKEL. That is what I was talking about.

Mr. WHITLOCK. The faith of the United States was pledged on the contracts under the present United States Housing Act. I do not believe the words "which limit" are in the United States Housing Act.

Mr. MULTER. You referred to this legislation as bypassing the appropriations committee, and as a gun held to the head of the appropriations committee. It is of no higher caliber held to the head of the appropriations committee than when it is directed to the Reconstruction Finance Corporation, or any other Government corporation, when called upon to make good its obligations, is it?

Mr. WHITLOCK. That may be very true, but my statement still stands: That they will have to honor these contracts when they are brought in.

Mr. MULTER. I am sure the Government will honor all the contracts of all of its corporations and administrators, whether they are acting through Governmental corporations or otherwise.

Mr. WHITLOCK. In that case, the Appropriations Committee has very little to say about these contracts until they are presented to it, in the total amount of $500,000,000 or $900,000,000.

Mr. MULTER. The Appropriations Committee is merely a creature of the Congress. When a Congress enacts a law through both Houses, and it is signed by the President, the Appropriations Committee is going to follow that.

Mr. WHITLOCK. I agree with that, but I think this Committee should realize that they are obligating the Government to a total amount, in this instance, of either $500,000,000 or $900,000,000, which will have to be honored at some later date without any action by the Congress. On page 65 of the bill, we have another highly important point in this title which raises serious questions in our minds. I am referring to subsection (3) of section 505. It begins at line 4 on that page.

In the contracts with the local community, before giving this finan cial aid the requirements of those contracts are set out, and you will note there that this contract provides

that there be a feasible method for the temporary relocation of families displaced from the project area,

and in what kind of housing?

In other areas not less desirable in regard to public utilities and public and commercial facilities and at rents or prices within the financial means of the families displaced from the project area; in decent, safe, and sanitary dwellings equal in number to the number of such displaced families.

In other words, if we are taking people out of a slum area, in order to clear that slum area, there must be, in that community, in another area, not less desirable, and at rents and prices within the financial means of those displaced people, accommodation to take them in.

Now, if there were those accommodations-not less desirable, or decent, safe, and sanitary dwellings, available at prices which those people who are to be displaced could pay-it would be presumed that they would have moved into those better accommodations at the same price and thus have gotten out of the slums which are to be cleared. We think that this means there can be only one answer: It means more public housing in that community in order that slums may be cleared. In other words, the community must put in a public housing project in order to move these people over and to force public housing upon the local communities, under these contracts, whether they want it or not, if they are going to use Federal funds to help clear their slums.

Mr. MULTER. How would you suggest that slums be cleared?
Mr. WHITLOCK. How do I suggest that slums be cleared?
Mr. MULTER. Yes, sir.

Mr. WHITLOCK. As I said earlier in my statement, there are State plans and there are local plans which are working effectively. I think that if this Congress should determine that there is not to be Federal aid, localities then will have a greater incentive to go at this job with State and local funds.

As long as this question hangs over us, as to whether or not there are going to be Federal funds, I think you will have such instances as

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