Mr. LOCKWOOD. May I ask you a point on that question?

How can one expect a private lending institution which has to pay actual corporation and individual income taxes to the Federal Government to be able to lend at as low an interest rate as a Government organization which does not have to pay any corporate taxes. How can you expect that?

Mr. MULTER. That is the same argument we got from the lending institutions when they said that they could not afford to make amortized mortgages to run for 12 or 15 years.

Mr. LOCKWOOD. Do you realize that when a lending organization lends at 4 percent, on the average 12 percent of that 4 is to pay corporate income taxes

Mr. MULTER. I do not agree with that but that does not change the situation.

Mr. LOCKWOOD. And that if they did not have to pay those corporate income taxes they could therefore lend at 22 percent? Did you ever stop to think of that?

Mr. O'HARA. Mr. Multer is it not getting down to the simple question of which is better: To reduce the profits of the mortgage bankers or to give housing to the American people within their means to rent or buy? Is that not the issue which the witness is forcing to our attention?

Mr. MULTER. I think that is one good way of putting it.

Mr. LOCKWOOD. I think Mr. O'Hara raises another question: Whether it is within the means of the Federal Government to give that housing. That should be considered, too; not only within the means of the person to receive it, but is it within the means of the Federal Government to do it?

Mr. MULTER. Mr. Lockwood, are we to understand that because this may cause a loss of tax revenue to the Government we ought not to go into this problem or set up this kind of a project? You pointed out to us that these private lending institutions are paying 11⁄2 percent of their 4-percent interest in income taxes.

Mr. LOCKWOOD. I think you ought to take into account the loss to the Federal Government in deciding whether you should go into it or not.

Mr. MULTER. You are in favor of reduction of taxes, are you not? Mr. LOCKWOOD. I certainly am, but I am in favor of reduction of taxes equally to all persons and just not a special class or middleincome group that does not have any special claim to exemption from taxes that morally has no special claim to it, I submit.

Mr. NICHOLSON. Mr. Chairman, it seems to me that we ought to be allowed to ask one or two questions. Someone else wants to take all the time here every day.

I would like to ask the question why it is that the savings banks and other banks that have loaned money on property all through the years in my State have gone from 412 to 112 percent. That is what I would like to have answered. If this does not prove it, I do not know what does.

Mr. MULTER. Mr. Chairman, may I continue?

The CHAIRMAN. Were you finished, Mr. Nicholson?

Mr. NICHOLSON. That is the only question I wanted to have answered: Why it has gone from 411⁄2 down to 12 percent that we pay the depositors.

Mr. LOCKWOOD. Are you asking that of the witness?

Mr. NICHOLSON. Yes.

Mr. LOCKWOOD. I must confess that I have not made an exhaustive study of that, but my offhand observation is that the tax burden that the Federal Government has imposed on that operation is the reason. Mr. NICHOLSON. And lower rates in interest?

Mr. LOCKWOOD. The Federal Government, by establishing a policy which has depressed interest rates, plus the fact that they have extracted very exorbitant income and corporate taxes, have caused that situation to develop so that widows and orphans and others who have invested their life savings are not able to retire on the basis that they expected to be able to retire upon and obtain security in their old age. There is one other point that I would like to mention briefly and then I will close. And that is, if it is the intention of the committee, as we pointed out here, to let section 608 of the National Housing Act expire, that a saving clause should be written in to permit builders to complete the projects that are already in the works in their offices and on which architectural work has been done, land purchased and are ready to proceed, within the limits of the present existing dollar authorization under section 608.

I would recommend very strongly to you that if you do permit 608 to expire, that you write into this bill a saving clause which will permit FHA to complete the processing of applications already in their offices. Mr. GAMBLE. To the extent of the dollar authorization heretofore made?

Mr. LockwOOD. Yes.

When I appeared before the Senate Banking and Currency Committee-this is a matter that I think will be of interest to you-Senator Sparkman read an article which had appeared in the newspaperI believe written by someone in Sweden-which said that the United States was fourth among the nations of the world in the production of house per capita.

That seemed unbelievable to me, so in the interim since then, since my appearance before the committee, we have made an exhaustive study of the facts available from the best possible official sources, and I would like briefly to give you a report on what we actually found to be the fact as compared with the article that was read into the record of the hearings of the Senate Banking and Currency Committee. The article read as follows:

The United States home building industry is booming, but nevertheless it ranks fourth in the world of number of units built for each 1,000 inhabitants. Dagens Nyheter of Stockholm reports, according to figures obtained throughout the world, that Sweden's house building program is the most intensive in the world, with 33 units in 1948 and 311⁄2 units in 1949 built for every 1,000 of population; New Zealand second with 24 units per 1,000 in 1948, and Canada third with 24.

Here are the facts: United States of America, 6.4 units per 1,000 population; New Zealand, 5.7 in Sweden, instead of 32 units per 1,000 that was alleged in the newspaper article, the actual fact is that in Sweden they built 5.6 units per 1,000 population.

I am talking now about urban housing projects.

Mr. BUCHANAN. What year?

Mr. LOCKWOOD. 1948. The urban housing comparison is 6.4, United States; 5.7, New Zealand; 5.6 in Sweden. So Sweden is third, and

Canada is 3.7. Of course, those countries therefore rank: United States first, New Zealand, Sweden, and Canada.

The CHAIRMAN. What is the extent of the housing shortage?
Mr. LockwOOD. What is the extent of it?

The CHAIRMAN. Yes.

Mr. LOCKWOOD. That is a fact that I think no one has real statistical and factual information on. We do know this: That we have something in excess of 8 percent more housing per capita in the United States today than we did in 1940, at the time of the 1940 census.

The CHAIRMAN. It is not controverted that there is a great shortage of housing in various sections, is it?

Mr. LOCKWOOD. I would like to say this: I visited 59 cities this year, and in no place have I found any critical shortage any more. The critical era has passed. There is still a shortage, and it is a healthy condition, I think, in that it reflects the wellbeing of the American family. That is, the relatively high earnings, as compared with the cost of living, enables them to spread out and enjoy more housing and better housing than they ever did before.

Mr. BUCHANAN. There is certainly not a shortage of homes of $10,000 or over, is there?

Mr. LOCKWOOD. There is just as much a shortage of homes of $10,000 and over as there is under $10,000.

I will make this statement right now: I am very intimately familiar with the housing market in the Detroit area, where I come from, and today all of the builders are turning to the problem of giving more consideration to the over-$10,000 home. That is where the greatest shortage is in that area right now because we have been concentrating so heavily on low-cost housing that there is really a shortage of highercost units. There is absolutely no supply whatsoever of the over$10,000 housing available in our territory at this moment, whereas there is ample supply of the under-$10,000 housing.

Mr. BUCHANAN. I am amazed to hear you make that statement. Mr. LOCKWOOD. The Federal Housing Commission in Michigan is preparing a statement on that and, when made, it will bear out what I am saying.

do

The CHAIRMAN. The average housing is nineteenth-century housing, you not think so? It seems to me that an emergency exists if there is an acute shortage, and to remedy that situation is not a socialistic enterprise but is a very American enterprise. And if you adequately house the people—I am not saying by what method-but if the people of America are adequately housed it adds to the stability of our institutions and the strength of our Government; do you not think so? Mr. LOCKWOOD. I agree with you wholeheartedly.

The CHAIRMAN. Every time we do something for the plain people, you know, the cry goes up that it is socialistic. As far as that is concerned, I treat that with the contempt that it deserves. I hate socialism, but I don't like to see it complimented in that manner.

Mr. LOCKWOOD. I think, in view of the fact that you detest socialism, that you would be interested in this further proposition: That we serve our country best, and its welfare is safeguarded against the development of a possible Socialist state, if we adopt measures which will encourage the lower-income families, the middle-income families, all kinds of families, to own their own homes and own a piece of

America, if you please. It will increase their patriotism. They will become better citizens. But when we project ourselves into measures which are mimicking the types of organizations that they have in Socialist countries, then we do not lend our efforts in the direction which you commend.

The CHAIRMAN. We are not the Government of America. We are the servants of the people of America and, after all, the people are the reservoir of all the powers and the people are entitled to have the Government serve their best interests as long as it can do so in conformity with our principles of government. That is the way I feel about it.

Mr. LOCKWOOD. I think there is room for debate as to whether or not a given measure serves their best interest.

The CHAIRMAN. We will concede that. The home loaners have pushed it off by saying this measure is socialistic.

Mr. LOCKWOOD. I think we have to look at their long-term interest as well as their short-term interest. I would much rather be without a home than without my freedom and liberty which I have always enjoyed here.

The CHAIRMAN. Without your home you are without your freedom and liberty, too.

Mr. MULTER. On that question of socialism, did I understand Mr. Lockwood to say that he looks upon this bill as socialistic?

Mr. LOCKWOOD. It provides for collectivism in housing.

Mr. MULTER. You take quite an opposite view from the distinguished gentleman who appeared before us yesterday-Mr. Oscar Kreutz, executive manager of the National Savings and Loan League, an organization that has done so much for American home owners. He said yesterday:

I would like to make two or three points clear here. One is that we are not opposed to cooperative housing as such. We do not believe it is socialisticAnd so forth.

Mr. LOCKWOOD. You can quote from my statement that same statement. I just made it a few minutes ago. We are not opposed to cooperative housing as such, so long as it is not Government-controlled and Government-subsidized in one form or way, directly or indirectly. Socialism never emanates from the people. It always comes from the Government. The essence of it is autocracy. Mr. MULTER. When does it become collectivistic-when subsidized or not subsidized?

Mr. LOCKWOOD. When Government-controlled, and if the Government subsidized it, it is certainly controlled. You will grant we never subdisize anything without controlling it.

Mr. MULTER. We subsidize the railroads. Are they socialistic? Mr. LOCKWOOD. It seems to me you tax them.

Mr. MULTER. We tax them, but we subsidize them, too.

Mr. BUCHANAN. Are these cooperatives not subject to local real estate taxes?

Mr. LOCKWOOD. No; they do not pay any Federal taxes.
The CHAIRMAN. They have no income.

Mr. LOCKWOOD. That is the point. That is just an indirect way of exempting them from Federal taxes. That is all the cooperative amounts to. That is the point I have been trying to put over.

That

is the whole purpose of a cooperative-to escape taxes. That is the only saving they can achieve.

Mr. MULTER. Let's take a minute with the collectivists.

We subsidize the steamship companies and control and regulate them. We do the same with the aviation industry. Are they collectivistic or socialistic?

Mr. LOCKWOOD. As I understand it, your subsidization of the aviation industry is a part of the national defense.

The CHAIRMAN. We are getting into a broad field that we cannot settle today.

Mr. COLE. Mr. Chairman, I would like to ask a question, if the other side will permit it.

Mr. MULTER. I would like to continue at the point where I was interrupted by Mr. Nicholson before.

The CHAIRMAN. We have one more witness.

Mr. GAMBLE. Mr. Lockwood said if 608 is discontinued he would like to recommend that 207 be modified. I would like to suggest that Mr Lockwood submit some amendments.

Mr. LOCKWOOD. On modernizing the text in 207?

Mr. GAMBLE. Yes, if we discontinue 608.

Mr. LOCKWOOD. We will do that.

Mr. GAMBLE. It would be helpful to us.

Mr. LOCKWOOD. We have some amendments that we would like to submit to you, also, which would amend 207 or submit a new section that would extend the benefits of section 207 to the private enterprise slum clearance program.

The CHAIRMAN. We will adjourn at this time and meet at 9:30 tomorrow morning.

(Whereupon, at 11:45 a. m., the committee adjourned to 9: 30 a. m., Wednesday, February 8, 1950.)