Mr. FOLEY. It was a combination of all the minima, that is what I meant. It is rather difficult for me to discuss that and I am sure it is for Mr. Richards, but we would both be happy if you would give us specific cases in which you feel our standards are too high for your area and certainly we would be glad to examine them because what we want is to get good, sound housing at the rental range as we see it and put some housing in proper family size. It may be that there are situations and we would be glad to know specific cases.

Mr. MCKINNON. There are many things I have in mind that I have gone over with the contractors. I cannot understand compelling specifications requiring a garage in San Diego when in Washington it is not required. Those things all add to a man's cost of a home and makes it difficult for him to pay for it.

Mr. FOLEY. Every time I tried to park my car where I once lived I wished the FHA had insisted on a garage-but it was not an FHA case, I am afraid.

Mr. MCKINNON. You can afford to pay for a garage.

Mr. FOLEY. We would be glad to have specifics of that kind because I am afraid I could not discuss them very helpfully with you.

Mr. TALLE. Mr. Foley, it is true, is it not, that under existing law you have authority to write certain rules and regulations pertaining to administration of law in the housing field?

Mr. FOLEY. Oh, you mean the authorities given in specific acts to write regulations for them; yes.

(Chairman Spence was called from the committee room and Mr. Buchanan took the chair.)

Mr. TALLE. My question is, Have any of the people in the field, let us say, like managers and other officials of local public-housing authorities, ever objected to any of the rules and regulations you have written?

Mr. FOLEY. You are speaking across the whole range of the agency. I would say that there probably have been times, sir, when local directors, district or State directors or otherwise have expressed opinions that our rules and regulations were mistaken in one direction or another. I would feel that we perhaps did not have as active and as interested an organization as we should have if that were not the case. However, rules and regulations having been established, I know of no cases in which the field organization has refused to carry them

out.

Mr. TALLE. As a second step, have any of these people in the field written to say that too much of their time is taken up by difficulties involved in the rules and regulations?

Mr. FOLEY. I do not at this point recall an instance, but I would not be surprised if that had been true on occasion in the past. I think I may have done so, myself, when I was a State director of the FHA. Mr. BUCHANAN (acting chairman). Any questions, Mr. Mitchell? Mr. MITCHELL. No.

Mr. BUCHANAN. Thank you very much. The committee will now adjourn to meet tomorrow at 10 a. m.

(Whereupon, at 12: 40 p. m., the committee was adjourned until 10 a. m., Wednesday, February 1, 1950.)

COOPERATIVE HOUSING

WEDNESDAY, FEBRUARY 1, 1950

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., Hon. Brent Spence (chairman) presiding.

Present: Messrs. Spence, Patman, Hays, Rains, Buchanan, Multer, Deane, O'Brien, McKinnon, Addonizio, Dollinger, Mitchell, O'Hara, Gamble, Kunkel, Talle, McMillen, Kilburn, Cole, Hull, and Nicholson, and Mrs. Woodhouse.

The CHAIRMAN. The committee will be in order.

We will hear from Mr. Kennedy, representing the American Legion.

Mr. KENNEDY. Mr. Chairman, Mrs. Woodhouse, gentlemen of the committee, I am director, national legislative commission, The American Legion.

I, myself, do not intend to offer any evidence, but I would like to present Mr. Dinger to testify before the committee.

The CHAIRMAN. Thank you very much. You may be seated, gentlemen.

Mr. Dinger.

STATEMENT OF ROBERT S. DINGER, ASSISTANT TO THE DIRECTOR, NATIONAL ECONOMIC COMMISSION, THE AMERICAN LEGION Mr. DINGER. Mr. Chairman and members of the committee, the American Legion appreciates this opportunity to express its views with respect to H. R. 6618, a bill to assist cooperatives and other nonprofit corporations in the production of housing for families of moderate income. This bill is a substitute for title III, H. R. 5631, which was favorably reported by this committee last year.

Members of this committee will recall that when hearings were being held last year on the middle-income housing bill the American Legion representatives testified that our organization was without specific mandate to speak either for or against the cooperative title. I would like to make it clear at this point that by action of our Thirtyfirst Annual National Convention, held in Philadelphia, Pa., August 29 through September 1, 1949, the national legislative commission has been directed to exert every possible effort to secure the speedy enactment of the middle-income housing bill as favorably reported by the Senate Banking and Currency Committee.

In view of this mandate we have made a very careful study of H. R. 6618 and it is our considered opinion that the benefits contained in the

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original title III are substantially implemented by providing a system whereby private capital can be utilized, thus eliminating the objections to direct Government loans. We believe that the encouragement of private capital to invest in this program along with the requirement that each borrowing cooperative subscribe to stock in the corporation will create a greater recognition of the cooperative principle designed to meet the housing needs of middle-income families which cannot be met by private capital alone.

The economic difficulties experienced by veterans upon their return to civilian status, following military service in World War II, and their resulting inability to acquire housing at prices they could afford to pay, has been a matter of serious concern to the American Legion for several years. Today, 41⁄2 years after the end of World War II, we find that the middle-income veteran is still priced out of the housing market. The failure of private industry to meet this need has encouraged the recognition of the cooperative principle, but this thinking is not new in the American Legion. Many of the more than 17,000 Legion posts throughout the country have formed housing cooperatives on a nonprofit basis with some success, demonstrating that considerable savings can be realized.

The Legion's experience in these instances gave such encouragement to the possibility of bringing monthly housing costs down, that during the Eightieth Congress we gave our major legislative effort to a veterans' cooperative housing bill, which was known as the Veterans' Homestead Act of 1948. This bill was favorably reported by the House Committee on Veterans' Affairs, but suffered the fate of other housing legislation in the House Rules Committee.

Congressman Wright Patman, who is a member of this committee, was very helpful to the American Legion and to the members of the Veterans' Affairs Committee in obtaining a favorable report on this cooperative housing bill and last year he introduced H. R. 2811, which was a slightly revised Homestead Act.

It was the feeling of our organization at that time, and is now, that considerable savings in monthly costs could be obtained in the construction of rental housing under the cooperative principle if financial assistance, not available through private sources, could be made available by the Federal Government.

The American Legion has consistently urged the formulation of a complete and well-balanced Government housing program, and has testified extensively before this committee on that subject. Many of the specific proposals which have been advanced by the American Legion have already been enacted into law. The unenacted portion of our program, designed to meet the needs of the middle-income third, is embodied in the legislation now being considered by this committee.

We believe that this bill, generally, is a considerable improvement over the former title III and take pleasure in joining with the other veteran organizations and public-interest groups in support thereof. We feel strongly, however, that the committee should give very careful consideration to the reasons presented for providing that the program be administered by a division director in the office of the Administrator, rather than by a constituent agency as proposed in the original title III. We do not believe that any substantial reasons have been

advanced that would justify the proposed change in that respect. A review of the testimony of the various veteran organizations and public interest groups who have devoted so much time and effort to this program will disclose the unified thinking that there should be a separate constituent agency created within the Housing and Home Finance Agency as a greater assurance that this program would receive the special consideration necessary for its success, rather than become submerged in the numerous other activities and responsibilities of the office of the Administrator.

The amendment contains a section providing preference to veterans in the rental of housing units constructed under this title, which has been spelled out in much the same manner as provided in the public housing bill enacted last year. We believe that if the provisions of this section are implemented with appropriate regulations and properly enforced, upward of 75 percent of the housing units constructed for rent under this title will go to veterans or their families and we, therefore, take particular pride in having had a part in its approval.

In conclusion, we would like to congratulate the chairman and members of the committee for their untiring efforts to develop a comprehensive and well balanced Government housing program by giving priority to this legislation. We urge the speedy approval by this committee of H. R. 6618, which will provide financial assistance to the middle-income third in acquiring housing accommodations at prices they can afford to pay.

The CHAIRMAN. Does that conclude your statement?

Mr. DINGER. Yes, sir.

Mr. RAINS. I would like to ask a question, Mr. Chairman.

The CHAIRMAN. Mr. Rains.

Mr. RAINS. You are Mr. Dinger?

Mr. DINGER. Yes, sir.

Mr. RAINS. I note on your statement that you are the representative of the American Legion, is that correct?

Mr. DINGER. Yes, sir.

Mr. RAINS. There is only one question I want to ask? Do you think that we and the American Legion can justify the variance in interest rates proposed in this set-up by Government Mortgage Corporation, between that and the interest rates given on veterans' loans?

Mr. DINGER. I don't claim to be an expert on interest, but it has been the feeling of the American Legion that private industry has made no effort to get into a building program which would supply the need that this bill has in mind. We don't feel as though there would be any competition in interest rates because we don't feel as though private financing can accomplish the purposes which this bill proposes to accomplish. There has been quite a bit of discussion as to the competition between the 3-percent interest rate provided in this proposal

Mr. RAINS. If anything, I prefer seeing the interest rate come down on the GI bill as well, but the thing that troubles me is that a few years after the war and after we have made a good many loans to veterans under the program we held out to them at the best-should have been at any rate-we come along now to the middle-income group and in order to give them lower interest rates we set up a Government mortgage corporation. I am afraid my American Legion boys in Alabama and my colleagues in Congress generally are going to feel

that we gave the veterans the butt end of a stick when we did not give them the same consideration on interest rates that we now propose for the middle income groups, so I am wondering, if I can find it, a way to justify support of the measure.

Mr. DINGER. Yes. I would like to say that I believe this is a little bit different problem than-I don't think it is comparable with the GI loan 4 percent figure financing. As you probably know in the bill that was passed by the house last year there were a number of provisions that would implement the GI home-loan program and those provisions were put into the form of legislation upon the recommendation of veterans' organizations and other groups who had discovered the need of improvement in the GI home-loan program.

I don't believe that this particular title of the over-all middle-income bill will in an way affect what we have done in the past through the GI loan-guarantee efforts or what we hope to be able to do in the future, but that this will provide housing for the middle-income families of the country and it includes veterans

Mr. RAINS. That is right.

Mr. DINGER. At monthly prices that private industry has not been able to compete with.

Mr. RAINS. Do you think that the majority of the people who would like to use this legislation or this program for housing would be veterans?

Mr. DINGER. Yes, I do. I believe that American Legion posts, and other veterans' organization posts, who already in most instances are incorporated under their State corporation laws, would be a natural place for a cooperative such as proposed in this bill to begin to form. I feel certain, especially in your larger metropolitan areas that the American Legion posts and other veterans' organization posts will grab at this opportunity to get into this program of making housing units available at prices that the average income veteran can afford to pay.

Mr. DEANE. Will you yield, Mr. Rains, for an observation?

Mr. RAINS. For one question.

Mr. DEANE. Here are 40 FHA or GI houses, one to be serviced. Here is a cooperative of 40 units but all serviced by one mortgage.

Mr. RAINS. Of course, that would naturally cut the interest rate, but the point that troubles me is, and I believe it is going to trouble our colleagues on the floor, is the statement: "Here you are offering a better proposition to middle-income groups than to veterans." I am hearing it everywhere. If I could get into the record any better reasons I would like to have them. I realize it would be cheaper financing to make it in one large loan than to spread out the small units under FHA, but the simple fact remains that in order to get this low-interest rate, we are not offering it to private financing interests like we offer FHA. We are setting up a mortgage corporation. That is the only way we could get the 3 percent interest rate, no doubt.

You see my point. We did not do that any other place and I think that is going to be the bone of contention. It is the bone of contention with everyone with whom I talk. One other situation, which I would like to mention now: Certainly I am not going to take a provincial attitude. I would vote for it if it would help the metropolitan centers but we have a lot of people who are going to ask, "How is it