Senator SPARKMAN. I can't read that down at the bottom from here which shows who put forth this proposal. Read that..

Mr. REUTHER (reading):

Department of research and surveys, National Association of Real Estate Boards.

That fits in with the next point I wanted to make.

Senator SPARKMAN. I am sorry; I did not mean to anticipate you. Mr. REUTHER. It merely reinforces the point I want to make. I have here a copy of the statement of the representative of the National Association of Real Estate Boards in opposition to this bill that is pending.

Senator SPARKMAN. Mr. Thompson appeared. I am sorry that I did not know of this chart when he was here. I would have questioned him about it.

Mr. REUTHER. When I heard of this testimony I wondered what had happened to that attitude, because on February 2, 1949, which isn't far back in history, I received a letter signed by Herbert U. Nelson, executive vice president of the National Association of Real Estate Boards; Mr. Nelson said to me "Let's get together on this housing thing," and here is what he said in the first sentence of his letter to me; here is an official, executive vice president of the National Association of Real Estate Boards, writing to me as chairman of the National CIO housing committee

Senator SPARKMAN. Was that letter voluntary on his part?

Mr. REUTHER. I did not solicit the letter. As a matter of fact, I was surprised when I got it.

Senator SPARKMAN. Go ahead.

Mr. REUTHER. It is addressed to me [reading]:

DEAR MR. REUTHER: We are interested in giving whatever know-how our industry possesses to the advancement of the movement for cooperative housing in our country.

He is soliciting me to get together so they can help us with their know-how to promote the whole idea of cooperative housing. Upon receipt of that letter I turned it over to Mr. Leo Goodman, who does the work for our committee in Washington, and asked him to follow through with Mr. Nelson. Mr. Goodman met with Mr. Nelson and other representatives of the National Association of Real Estate Boards, along with other people from veterans groups, and so forth. Following that meeting on April 25, 1949, Mr. Nelson as the executive vice president of the real-estate organization sent Mr. Goodman and the other people who participated in the meeting a memorandum in which he outlined the things that they had talked about and had come to agreement on as the base for joint cooperation.

I want to read only the first point in Mr. Nelson's memo: Point No. 1: That the use of cooperative or mutual principle in housing can be expanded and that the matter is worthy of legislative attention by Congress. This is the same organization that now charges you with going down the road to socialism, that opposes this idea; they put this chart out, they solicit our cooperation in advancing the whole principle of cooperative housing, including trying to get legislative that would facilitate the implementation of that idea.

Now they come in and make a complete right-about-face. The only reason we can find out for that shift in position is that they

are in favor of that approach, they are not opposed to the idea of the cooperative housing, but they want it on the kind of basis wherein they could control it, and they can get tremendous benefits.

But when you apply that same principle where you have bona fidecooperative groups certified by the proper Federal agencies set up to help people help themselves-and not to help the speculators help themselves then they oppose this idea.

We are at complete loss to understand how these gentlemen can approach the CIO and say "Won't you sit down and help us develop this idea, even to the extent of going to Congress with it?"; but when we get over here, and begin to get that kind of legislative approach they suddenly stand up in the high places all over America and say this is bad, that it will undermine the foundation of free enterprise, and so forth.

Senator DOUGLAS. Mr. Reuther, there is another feature that I notice on this chart here, namely, that the RFC was to advance 47 percent of cost, but was to receive not a first mortgage, but a second mortgage. Therefore, wouldn't the risk of loss to the Government be greater under the proposal indicated on this chart than in the proposal in the Maybank bill, because in the Maybank bill the Government holds a first mortgage on the entire amount, but in this proposal the private lenders would take a first mortgage of 50 percent, and the RFC was to take a second mortgage of 47 percent. So any losses would fall primarily upon the Government, and the percentage of loss therefore would be greater for each dollar advanced by the Federal Government that under the Maybank bill.

Senator SPARKMAN. I think the way it would operate is that it would be in effect 100-percent guaranty by the Federal Government, very much like the VA loan operates now. The RFC, under this plan proposed by this chart, simply would take over the whole thing if it went into default, and reimburse the first mortgage for the full amount. So it would be 100-percent guaranty at 3 percent from the Government.

Mr. REUTHER. There is no question, Senator Douglas, that the cooperative principle is common to both proposals, but that the financial obligations in that proposal, as outlined in this elaborate chart, is a thousand percent more true with respect to the financial obligations of the Government than under the Maybank approach.

So that that is not their reason. Their real motive is that in this one they are making it possible for the speculators to help themselves. In your bill you are making it possible for people who need homes to help themselves. That is the thing that makes them change their attitude.

There is no question about it. They have gotten, certainly, a very selfish ulterior motive behind their position.

Senator DOUGLAS. I don't want to say they have selfish or ulterior motives, but it seems to me that the risk of Government loss would be greater under the proposal they have asked than under Senator Maybank's proposal.

Senator SPARKMAN. It would be 100 percent guaranty with no

reserve.

Senator DOUGLAS. And they did not object to the cooperative principle, itself. Is it not a fact, Mr. Reuther, that in many of our cities

the chief development in the field of cooperative housing has been among the very wealthy!

Mr. REUTHER. That is true, because they have the funds to get started.

Senator DOUGLAS. For instance, I know of a number of very elaborate apartments in Chicago that are cooperative apartments, but the rentals would be extremely high, only people with very large incomes could enter them. I think that is true of a number of other cities.

Mr. REUTHER. That is true in New York, and I think on the west coast. They have capital to launch cooperative housing projects of the nature that they need and want.

People of the type we are talking about, and the people that this bill would give relief to don't have that money, and this bill will facilitate them in getting under way as cooperative groups to build their houses.

I would like the record to indicate, in order that anyone who wanted to check on that may do so. On page 271 of the House hearings under H. R. 4409 appears a copy of this letter that Mr. Nelson sent to me. Senator SPARKMAN. What Congress; what date?

Mr. REUTHER. This hearing was held in April of 1949, and a copy of Mr. Nelson's memo which was the outcome of these joint conferences we had, where we raised the questions that were discussed, and there was a meeting of minds on that. That copy is on page 473 of the hearings on the housing amendments of 1949-H. R. 5631.

Senator SPARKMAN. You have read into the record the portions that you wanted quoted?

Mr. REUTHER. That is right.

Senator SPARKMAN. Now, Mr. Reuther, I know you want to get to something else, but I think it might be appropriate at this time to call your attention to this:

Mr. Thompson in testifying before our committee stated when I asked him some questions about how his organization and the Mortgage Bankers Association, of which he had formerly been president, how it stood on FHA back in the early days.

All of these organization endorse FHA now, with the exception of Mr. Russell, representing the savings and loan. I think he is the only witness I have heard before any committee who did not endorse the FHA program. They all endorse it now.

I asked him how they had stood originally. Later on he stated to the committee that the National Association of Real Estate Boards was the only trade association which originally had endorsed FHA. All of the others had opposed it.

In fact, we know it is a matter of history that practically all of these who are opposing this legislation now have opposed practically every step taken in housing legislation throughout the years, even though they later took full advantage of it, when they found out how well it worked.

It is historically true that the banks originally opposed Federal Deposit Insurance. I said they had opposed all housing legislation. I take that back. I don't suppose any of them opposed Home Owners' Loan Corporation, because then they were calling for help. What we are trying to do here is to build up the program so that when the next depression comes, if it comes, we won't have to have a Home Own

ers' Loan Corporation to bail out the very people who are fighting this legislation today, and who have fought practically every step of housing legislation that we have over the years.

Senator DOUGLAS. May I make a comment? This is not a reflection upon Mr. Russell at all:

I want to make that clear. It is a matter of interest that he was formerly general counsel for the Home Owners' Loan Corporation here in Washington for a period of 6 years.

Senator SPARKMAN. Yes; he was for HOLC.

Mr. REUTHER. He is very versatile. One of the other things we think will be the natural outgrowth of this sort of cooperative approach is that you encourage ownership and encourage responsibility in ownership, we believe that we can get the cost of housing down some. That is certainly a very important factor, because the high cost of housing is one of the important factors that makes housing prohibitive and hard to achieve. We believe that you will not only get the costs down, but you will get a better quality house. There was a conference held in Washington, National Conference on Family Life, where for several days, leading authorities in the whole field of problems that affect families and family life came together and discussed this whole question of housing, and one of the things they pointed out, on page 13 of their bulletin, is that the quality of housing has deteriorated very fast, that people are buying houses that are not really decent houses, that because you get a new house doesn't mean you get a good house. We believe the co-op approach will give us better housing at lower cost. Here is a booklet put out by the National Association of Home Builders, obviously when they put a catalog out trying to promote their houses they don't pick the bad ones but pick the good one to reproduce. When you thumb through this you find here is a house, two bedrooms, only 700 square feet. That is 50 square feet less than what our minimum standards were under war housing, at a time when we were putting tremendous economic effort into the job of fighting a war, when we had to skimp and cut down normal standards in every phase of our life, and we said then that even on minimum housing, even housing that was being built under the pressure of war, we said we had to have 750 square feet, for two-bedroom units.

Here is housing being built now, model homes, 700 square feet. That is the stuff. They are just glorified chicken coops that people are paying tremendous prices for. This cooperative approach will get quality up, give people decent homes. Here is another, 700 square feet, here is another 672 square feet. I say it is a crime for people under the situation where they are so desperate for housing that they have to pay hard-earned dollars to buy those kinds of cracker boxes, because there are no other homes available. When you are without a roof over your head and the kids have to be housed and you are desperate enough I suppose you will buy a thing like this. But this approach will give people a chance to get together, and get started on the kind of cooperative basis where they can get decent, adequate housing, at a lower cost; and nobody that knows anything about this problem of trying to develop stability can argue that the family units in present-day society is not the hard core of stability. Where you have a family that is insecure because the home is bad; where the general living environment is not healthy, you will find great instability. We say a good house means a better worker, a better citizen, it means

that that family is an asset to democracy and not a liability. Yet people are buying these kinds of cheese boxes over America today because they can't get decent housing.

This cooperative approach will give us better housing at lower cost. I think also there is this aspect of this bill that is very important in the long-range point of view. Some day in America we will have to get into the mass production of housing. We cannot hope to meet the need for housing in America by the utilization of the tools of yesterday. We are going to have to apply the most advanced methods of production. The technical aspect of mass production of housing has been solved. The people that can make the B-29, B–36, the jet-propelled ships, can also build a house. The technicians are there. The big problem has been that you cannot get a mass production industry under way until you are assured of a mass market for it. I can't build 50,000 house and park them in the back yard while waiting for a customer. There has to be a flow from the assembly line to the foundation, to the user. This bill will begin to create the kind of groups that can organize and plan and purchase housing to create that mass market in the middle-income groups which alone can be the basis upon which you can build mass production. We couldn't make automobiles if we made 50,000 cars in one plant; those cars would cost us $25,000 each. It is the volume that is important. You can't get volume until you know you have got a market to justify the tooling, which is the initial cost; unless the volume, the market is there to justify the volume, you don't put your money in the tooling.

We believe this in the long run will create the mass market in which we can get mass production of housing to supplement current construction, because it is only if we use every tool at our disposal, both the present-day methods of construction and mass production, can we hope to get adequate housing. We think that this bill will facilitate that.

I think another very important consideration is the question of employment. There is not a single thing that we can do in America that will create the job opportunities, as to a high potential, as will a housing program. And the need is all over America. It is in large cities, small cities, on the farm. The need is where the unemployment is. Housing in America will create more new job opportunities in the housing industry than in any other possible economic activity that we might conceive of. It certainly is the greatest opportunity for new jobs, new industry, and it certainly gears in with the most pressing needs that the people have in America.

We believe that you ought to have a separate agency to handle this program; we think it is a specialized operation; it ought to have the kind of careful attention and follow-through that there would normally be given by a separate agency.

We believe that your committee should be commended because this bill represents the most effective, the most realistic, the most practical, and certainly the American approach to the basic housing problem.

We hope that the committee will report it out unanimously; we hope that the Senate and the House will both act very shortly on it so we can get on with this very pressing job of proving that democracy does have the moral strength and the practical know-how