$12,000 to $8,000 and under, this is the most heartening news that I have received.

You are in the title insurance business?

Mr. THOMPSON. I am in the real estate and the mortgage loaning and title insurance business.

Mr. O'HARA. Yes. I take it that your company is comparable to the Chicago Title & Trust Co. in Chicago?

Mr. THOMPSON. That is a very nice compliment, but I must deny its accuracy. I wish my company was comparable.

Mr. O'HARA. I can quite understand what you mean by that.

Mr. THOMPSON. We don't have that beautiful escalator that I was referring to before.

Mr. O'HARA. I was wondering, Mr. Thompson, when you leave here, if you would send a telegram to the president of the Chicago Title & Trust Co. and ask if you were quite accurate in putting Chicago in the list where they are now producing homes to sell for $8,000 and under. I assure you that you could place reliance on the information he would give you as to the actual condition of the real estate market in Chicago.

Mr. THOMPSON. Mr. O'Hara, I would be delighted to. I have met the gentleman and he is well informed, and if I could suggest to him that I personally made this survey and made these findings, I would be certainly covering a lot of territory. I am simply offering this as an exhibit for information on what has been recently, most recently found from a semiannual survey. I don't suggest that we have cured the housing problem by making a survey.

This is simply to indicate what is presently being done to contribute to the solution of the housing problem, which incidentally-and this is my statement-is no longer critical. It is still a problem, but that problem is being solved as rapidly as private industry, with the Government in cooperation with private industry, can solve it.

Mr. O'HARA. I merely wanted to know how accurate your information was in that statement on page 1 of your supplemental exhibit. Certainly, if you are accurate in that, if a miracle has suddenly come about and they are producing houses in Chicago to sell at $8,000 and less they were not when I left a few weeks ago-I would want to know if, on the other hand, that statement is as accurate as it seems to me, you could scarcely expect me to take too seriously your argument that all we are trying to do to make it possible for the American people to find homes within their means is socialism.

You see, if you are not accurate here, you cannot be accurate any place, can you? Let's be honest?

Mr. THOMPSON. In the first place, I haven't said "statism" as yet. I haven't said "socialism" as yet. And I again assert that this is an exhibit which I am offering. I am not certifying as to its complete accuracy anywhere. I did not make the survey.

Mr. O'HARA. Thank you for the explanation.

Mr. THOMPSON. It is actually physically impossible. Mr. Calvin Snyder, under whose direction this survey was made, is now here if you would like to have him make some statement.

Mr. O'HARA. Thank you very much for the explanation and time you have given to answering my question.

Mr. DOLLINGER. You have stated you are not opposed to the principles of cooperative housing, but you are opposed to the principles

as enunciated in the bill. You have also stated that your company hasn't made a cooperative loan in New Jersey, although the company you represent, or the bank you represent, has made it in other parts of the country.

Can you tell me why your company has not made any cooperative loans in New Jersey? Have applications or requests been made for it? Mr. THOMPSON. We haven't been fortunate enough, frankly, to have received an application from any builder or group who are entering into a cooperative enterprise to submit a mortgage loan application to the insurance company that my company represents. There have been cooperative developments in New Jersey, but the New Jersey Realty Co., I repeat, has not been fortunate enough to have been successful in getting an application in connection or in competition with other companies for such an application.

Mr. DOLLINGER. Do you know whether other companies have turned applications down?

Mr. THOMPSON. I can get that information.

The Housing and Home Finance Agency released in December 1949, a booklet entitled "Housing Statistics." On page 4 of section B, there is a break-down of units started in 1949 for the first 11 months compared to the same period for 1947 and 1948. Most significant is the fact that the average cost per dwelling unit for the first 10 months for all units started, according to the BLS report, is $7,475 as compared with $7,700 in 1948. So even with the greatest production in history, we have a lower dwelling unit cost.

On page 43 of the Fifteenth Annual Report of the Federal Housing Administration for 1948, we find:

About 60 percent of the buyers of new single family dwellings financed their purchases with section 203 insured mortgages and contracted to repay their loans at a rate of $45 to $69.99 a month, including the payment to principal, interest, FHA insurance premium, taxes, etc. * * * More than 72 percent of the payments (under 603) were in a somewhat lower range-$45 to $59.99 a month-even though the 603 median mortgage was more than $350 above that for section 203.

From the Housing and Home Finance Agency, I am advised that under section 203 the average mortgage for the first 11 months of 1949 was $6,956. The average mortgage under section 603 was $7,004, and under 608, $7,674 for the same period. Under the economy housing plan, which is section 203 (b) 2 (d), the average mortgage was $5,651 for the first 11 months.

If I have figured accurately, the average cost of more than one-third of the Nation's new homes in 1949, approximately 340,000, were less than $6,500 a unit. On that basis, the average monthly cost to the new-home owner would be less than $50, including taxes, interest, and amortization.

In September 1949, Mr. Franklin D. Richards, Administrator of the Federal Housing Administration, told the Mortgage Bankers Association convention that 172 percent of all FHA commitments issued during the September 1948-September 1949 year were in the oneto four-family unit classification under section 203 (d). The average commitment under this section was less than $5,500. At present, more than 30 percent of commitments issued are under this section.

The Housing and Home Finance Administrator, Mr. Raymond M. Foley, issued a statement in the form of a press release. In it he said

that private industry had constructed more than a million new housing units in 1949. He complimented the home-building industry on its 1949 record and said that "the 1949 production demonstrates that we can produce more than a million housing units a year as a normal average without undue strain on even our greater capacity." I most earnestly agree with Mr. Foley in that conviction.

I am most seriously concerned about the effect of this bill, if it is enacted into legislation, in its threat to the earning capacity of the moneys invested by millions of our citizens in insurance policies, savings accounts and in deposits in savings and loan associations.

If $2,000,000,000 of mortgage moneys are made available at interest rates of 3 percent or less, it will have the effect of further reducing the possibilities of these institutions investing in FHA-insured and VA-guaranteed loans, as well as conventional loans at current interest

rates.

Too, it will necessitate the investment by the officials of these institutions who are trustees for our people in substantially lower-rate securities which will result in a marked decrease in the dividends and interest returns on the investment of our thrifty citizens.

It will lower the dividend and the interest rates to the majority of the middle-income group for whom this bill is designed and for whom this bill is supposed to provide benefits.

I am also seriously concerned with the growing tendency to make mortgage credit a matter of welfare to which risk is not a prime consideration rather than one of business in which risks must be calculated and terms set accordingly. In following the welfare approach, especially favorable lending conditions are set up for special classes of borrowers not in respect to their relative resources, but in respect to their relative lack of resources.

Mr. BUCHANAN. What do you mean by "welfare approach"?

Mr. THOMPSON. We consider apparently first the welfare of a special group and, secondly, the ability of that group to repay obligations which it assumes. The welfare, in a broad interpretation, means the complete good, the social good, the living facilities, the educational facilities, and, secondly, the ability to warrant moneys, more particularly the ability to repay those moneys.

Mr. MULTER. You are not using the word "welfare" as synonomous with the word "Socialist," are you?

Mr. THOMPSON. I have explained it.

Mr. MULTER. Are you using it synonomously with the word "Socialist"?

Mr. THOMPSON. The answer is "No." I explained it before.

Mr. MULTER. I got your answer, but I wanted a precise explanation as to whether you were substituting the word "welfare" for "socialism."

Mr. COLE. The word "socialism" seems to worry a lot of people. Mr. THOMPSON. It worries me, too.

Mr. COLE. I think the word "socialism" has been used by that side 10 times to this side's 1.

Mr. MULTER. You mean during the current hearing?

Mr. COLE. Yes.

Mr. MULTER. That may well be. The answer is that while we are not worried about it, we don't want the merits of a bill buried under name calling.

Mr. COLE. I think you are definitely worried about it, and I think the record will show it.

The CHAIRMAN. You may proceed.

Mr. THOMPSON. Pressure for the bill comes in part from labor unions with tax-exempt incomes and surplus funds which they could invest in rental housing. It is rather ironic that so few of these unions which testify to a "critical" need for "middle-income housing" invest their funds in residential rental property.

Instead of building housing we find that some unions have invested in lucrative business property. They have purchased or built highrent office and store properties. Could it be that they wanted no part of rental-housing property because of rent control which would lessen their income. Commercial property, remember, is not and never has been under rent control, except in New York City.

It

I am not criticizing these unions for investing in real estate. has been a good investment. I cite this example because some of the very people who are clamoring for this bill have evidenced no desire to invest in the kind of housing they say is critically needed.

As a matter of fact, the January 8, 1950, issue of the CIO News boldly makes the claim that this bill-the one I am now talking aboutwas the direct result of a conference held here in Washington in December last year.

Proponents say that this is a bill to aid private enterprise. We and others representing private enterprises are here to say we do not need the bill nor do we want it.

Perhaps the time has come to remove the silk wrappings and expose this legislation for exactly what it is a vote-getting political vehicle which cannot or will not deliver on the promises which are being held out to the public.

Mr. Foley testified that there are 8,000,000 families in the middleincome class. By no stretch of the imagination can this bill, even under the most favorable circumstances, provide more than 200,000 units to 250,000 units. That is just about 3 percent of the total number referred to by Mr. Foley, 3 percent of the estimated 8,000,000 in the middle-income group.

Yes, claims are being made that this is a middle-income housing bill. We must explain that it could cover at best only about onethirtieth of the families said to be in this group. Otherwise, we may be charged with deliberately misleading 29 out of 30 families in the middle-income group.

If you were to carry out these promises being made to the public, you would establish the obligation of the Government to go ahead, through successive expansions that would increase like a rolling snowball, and provide the same things for all of the 8,000,000 families Mr. Foley says are in the middle-income group.

Mr. MITCHELL. May I ask a question there, Mr. Thompson?
Mr. THOMPSON. Yes.

Mr. MITCHELL. If the 3 percent of the housing needed that you outline here as being insufficient were built and built successfully, don't you think that then the private finance industry would get into this field and help build houses on a cooperative basis or some other basis for this group of people?

Mr. THOMPSON. Mr. Mitchell, of course, as I indicated before, private money is being invested in cooperative housing.

Mr. MITCHELL. But your own company has made no loans and it is difficult for cooperatives to get money.

Mr. THOMPSON. Oh, that is not so. I have said repeatedly in here that private capital, private money-and when I say "private capital" and "private money," I am referring to the moneys of our own people, insurance companies and banks and savings and loan associations is available today for investment in mortgages secured by cooperative projects on a sound, economic basis, and the record proves that those loans are now being made.

Mr. MITCHELL. The record here proves that the cooperatives have had difficulty in getting money, but that is beside the point. The whole point here in regard to your 3 percent figure is that cooperatives have said here that under this program they can prove the soundness of the program.

If it is proven out, then private initiative, private capital, will be able to go into the field and meet the housing need, which certainly is not being met, despite your statement here this morning, by the private building industry.

Mr. THOMPSON. I can only repeat, Mr. Mitchell, what I said, that there are almost limitless funds in the hands of insurance companies, banks, savings and loan associations, to invest in all economically sound mortgages at the interest rates which are acceptable to the mortgagor as well as the mortgagee.

Those moneys are available for investment in mortgages secured by cooperative housing of either the free-standing type or the multiple family. What I have said this morning so far clearly indicates that. I am going to supply this committee with the requested statement that nationally cooperative mortgage loans are being made by private industry.

The 3 percent to which I have just referred was calculated in this way: It has been estimated that from eight to ten thousand dollars is likely to be the cost-these are Mr. Foley's figures of the units in the proposed cooperative type of developments. If it costs, say, $8,000 a unit, and $2,000,000,000 of mortgage moneys are made available, only 250,000 units will be completed and 250,000 units will only house 3 percent of the 8,000,000 families in the so-called middle-income group.

Mr. MITCHELL. Of course, that is all recognized. You are just repeating a truism there. The whole program is designed, not to meet the complete need, but to inaugurate a program in this field and help meet a need. We would only build 37,500 homes during the first year. Yet your whole statement would indicate that these 37,500 units would upset the whole housing finance picture.

Mr. THOMPSON. This, Mr. Mitchell, is, in my opinion, just the beginning. If this ever gets under way, it will continue and that 3 percent will compare with what will ultimately be done, like a ripple compares to a tidal wave. This is only the beginning.

Mr. MITCHELL. At what rate could your industry lend to sound, cooperative or nonprofit developments?

Mr. THOMPSON. From 32 percent, we will say, to 4 percent, but not with 100 percent mortgage loans and not for up to 60 and possibly 63 years. That isn't good for either the cooperator or, I guess you would call him the cooperatee.