sand dwelling units, or (2) after the date of approval of this Act, enter into any new agreements, contracts, or other arrangements, preliminary or otherwise, which will ultimately bind the Public Housing Administration during fiscal year 1954 or for any future years with respect to loans or annual contributions for any additional dwelling units or projects unless hereafter authorized by the Congress to do so, and during the fiscal year 1954 the Housing and Home FinanceAdministrator shall make a complete analysis and study of the low-rent public housing program and, on or before February 1, 1954, shall transmit to the Appropriations Committees of the House and Senate his recommendations with respect to such low-rent public housing program."

The Independent Offices Appropriation Act, 1953, contains the following proviso with respect to low-rent public housing projects:

"Provided further, That notwithstanding the provisions of the United States Housing Act of 1937, as amended, the Public Housing Administration shall not, with respect to projects initiated after March 1, 1949, (1) authorize during the fiscal year 1953 the commencement of construction of in excess of thirty-five thousand dwelling units, or (2) after the date of approval of this Act, enter into any agreement, contract, or other arrangement which will bind the Public Housing Administration with respect to loans, annual contributions, or authorizations for commencement of construction, for dwelling units aggregating in excess of thirty-five thousand to be authorized for commencement of construction during any one fiscal year subsequent to the fiscal year 1953, unless a greater number of units is hereafter authorized by the Congress."

So long as clause (2) of the above-quoted proviso from the First Independent Offices Appropriation Act, 1954, remains in effect, no new contracts for any lowrent public housing projects may be entered into unless the Congress authorizes the entering into of such contracts.

In the event that the Congress repealed clause (2) of the above-quoted proviso from the First Independent Offices Appropriation Act, 1954, there would still remain in effect clause (2) of the above-quoted proviso from the Independent Offices Appropriation Act, 1953, which prohibits the entering into contracts for low-rent public housing which would provide for the commencement of the construction of more than 35,000 units in any future fiscal year.

Senator MAYBANK. I told the chairman I was going to bring this up because I think the American people have been done a great wrong by having Appropriations Committees legislate on a law that took years and years to pass, and I don't think there were but 12 votes against the bill when it became a law in 1949.

If we are going to have legislation by Appropriations Committees, I might say to my friend, the distinguished chairman, for whom I have great affection, and the Administrator, there isn't any use for this bill. Suppose they don't want to appropriate any money for FHA employees? If you are a committee, you have to stand on your own. That is all I have, Mr. Chairman.

The CHAIRMAN. Thank you very much. We shall consider, of course, when we start writing up this legislation, the amendment you just introduced.

Senator MAYBANK. I not only think it is this committee's duty to determine the public housing program; it is this committee's duty to recommend these things; and I resent, as a member of this committee, the taking away of the authority by the Appropriation Com-mittee by bobtail legislation.

The CHAIRMAN. We will have as our first witness now Mr. Cole. We will go on this afternoon for a couple of hours, I presume. Then we will recess until 10 o'clock tomorrow morning, and our hearings. will be in our regular room, in the Senate Office Building.

We will possibly have to hold hearings tomorrow afternoon and again on Thursday morning and Thursday afternoon. Unfortunately, I cannot be here tomorrow or Thursday morning, because I am going to the funeral of Will Hayes in Sullivan, Ind.

44750-54-pt. 1—4

I have asked Mr. Bennett to act as chairman in my absence. I just want to make that statement at this time so you will understand why I am not here. I will have to go to the funeral of Will H. Hayes, who was a great American, Postmaster of the United States, as well as Republican national chairman back in 1920. He was head of the movie industry for many, many years, and there are many other attributes Will Hayes had which I shall not take the time to mention

here.

I presume, Mr. Cole, you have a statement you would like to read. Mr. COLE. Yes, Mr. Chairman. I have a suggested method of procedure which may or may not suit the convenience of the chairman and the committee.

The CHAIRMAN. Let me say this: Our agenda calls for finishing with the so-called Government witnesses this week.

Mr. COLE. Yes.

The CHAIRMAN. This legislation is too complicated and too farreaching to be hurried; and if we don't have the time to finish this week, we will take whatever time is necessary next week. This is a very complicated bill; it is, in many respects, hard to understand. There are many new features and new things that have been added to it. It changes the old basic law in many, many respects. We are not going to hurry anyone and we are going to listen to all persons who care to be heard. It is going to require the best thinking of all of us to come up with the right solution for this housing problem from this point on.

You may proceed, Mr. Cole.

Mr. COLE. I was going to suggest, Mr. Chairman, that I proceed with the portions of my statement with respect to FHA and then Mr. Hollyday, Commissioner of FHA, proceed with the detailed statement concerning the provisions relating to FHA. Then, if satisfactory to your committee, we submit ourselves to questions on the FHA provisions of the bill. Following that, then, we would proceed to the secondary mortgage credit facilities, slum clearance and urban renewal, and so on through each title to the bill. Because the bill is long, and because it is involved, it lends itself pretty well to that sort of procedure, if that meets with your approval and your procedure.

The CHAIRMAN. Yes. You proceed in any way you care. I would like to make this statement at the moment, because someone may wonder why Senator Ives is not going to act as chairman in my absence, because he is chairman of the Subcommittee on Housing. The reason is that Senator Ives is tied up in the Labor Committee with labor legislation and just doesn't have the time.

Senator IVES. We are trying to write the bill.

The CHAIRMAN. Normally, Senator Ives, as chairman of our Subcommittee on Housing, would preside.

Mr. COLE. Mr. Chairman and members of the committee, I appreciate very much the opportunity to appear before your committee. It is my purpose to extend to you such assistance as I can in your consideration of S. 2398, a bill "to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities."

S. 2938 is a very extensive housing bill. It covers 8 titles in its 107 pages. A rather detailed section-by-section summary of its provi

sions has been made available to your committee, so I shall try, in my statement, to cover generally the major features of the bill.

I should like to emphasize the fact that this legislation, which embodies a number of measures designed to promote the efforts of our people to acquire good homes and to assist our communities to develop wholesome neighborhoods in which American families can live and prosper, ranks high among the proposals included in the program which President Eisenhower has recommended to the Congress.

On January 25 of this year the President transmitted to the Congress a special message containing his recommendations for housing legislation. In that message the President pointed out that the development of conditions under which every American family can obtain good housing is a major objective of national policy, stating:

It is important for two reasons. First, good housing in good neighborhoods is necessary for good citizenship and good health among our people. Second, a high level of housing construction and vigorous community development are essential to the economic and social well-being of our country. It is, therefore, properly a concern of this Government to insure that opportunities are provided every American family to acquire a good home.

To help find the best ways of meeting this major objective of national policy the President last fall appointed an Advisory Committee on Government Housing Policies and Programs. Its membership consisted of leading citizens experienced in the problems of housing, mortgage finance, and community development. For the information of your committee, we have supplied a list of the names of its members.

This Advisory Committee, as you gentlemen know, made an exhaustive study of the existing Federal housing legislation and programs. Also, it analyzed numerous proposals looking toward the development of a housing program better adapted to current requirements. I can testify from personal experience that the members of the Advisory Committee worked long and hard on the task assigned to them, for I served as Chairman of the Committee, and I stayed with them day after day, night after night, and week after week, in their efforts to develop a well-rounded program to better the living conditions of American families. I think the members of this Advisory Committee did an excellent job and performed an important public service.

The conclusions and recommendations of the Advisory Committee were set forth in the report which it submitted to the President on December 14, 1953. I have sent copies of that report to each member of your committee. Most of the conclusions of the Advisory Committee, as well as the results of our own studies and experience in administering the existing housing legislation, were reflected in the recommendations contained in the President's special housing message, and are included in the pending bill.

I desire to advise your committee that I have been authorized by the Bureau of the Budget to state that the enactment of the bill would be in accord with the program of the President. Since the clearance letter contains specific comments with respect to 2 or 3 provisions of the bill, I am submitting a copy of that letter for the information of your committee.

Home mortgage loan insurance-I should like to comment briefly on 3 or 4 of the principal features of the bill relating to the operations of the FHA. Federal Housing Commissioner Guy Hollyday is here with me and has a more detailed statement covering the provisions of the bill relating to the FHA. If it is agreeable to your committee,

we would proceed with Mr. Hollyday, and answer questions after his presentation.

The CHAIRMAN. We will do so. At this point, unless there is some objection on the part of committee members, I think it would be wise to make a part of our record the first 20 pages of the Report of the President's Advisory Committee on Government Housing Policies and Programs, because in those pages, you will find their recommendations. I rather suspect it would be a good idea to place them in the record at this point, so without objection, the first 20 pages of the President's Advisory Committee on Government Housing Policies and Programs will be placed in the record.

(The report referred to follows:)

SUMMARY OF THE ADVISORY COMMITTEE'S SPECIFIC RECOMMENDATIONS

In order to carry out its detailed studies of the Government's housing policies and programs, the Advisory Committee set up five Subcommittees. The work of these Subcommittees was coordinated by the Executive Committee. The conclusions and recommendations of the several Subcommittees were reviewed, and in some cases modified, by the full Advisory Committee. The recommendations below are those finally adopted by the Advisory Committee. They are grouped by major purpose rather than by reference to the Subcommittees which originally proposed them. The reports of the various Subcommittees constitute the appendices of this report. Appendix 1 is the report of the Subcommittee on FHA and VA Housing Programs and Operations; Appendix 2 is the report of the Subcommittee on Urban Redevelopment, Rehabilitation and Conservation; Appendix 3 is the report of the Subcommittee on Housing for Low-Income Families; Appendix 4 is the report of the Subcommittee on Housing Credit Facilities; Appendix 5 is the report of the Subcommittee on Organization of Federal Housing Activities in the Federal Government. In connection with each of the Advisory Committee's recommendations below, a reference is provided to the portions of the appendices which deal with the same subject.

I. STATEMENT OF BASIC POLICY

It is the conviction of this Committee that the constant improvement of the living conditions of all the people is best accomplished under a strong, free, competitive economy, that every action taken by Government in respect to housing should be for the purpose of facilitating the operation of that economy to provide adequate housing for all the people, to meet demands for new building. to assure the maintenance, restoration, and utilization of the existing stock of housing, and the elimination of conditions that create hazards to public safety and welfare and to the economic health of our communities, and that only those measures that prove to be successful in meeting these objectives should be continued.

II. RECOMMENDATIONS DESIGNED TO PROVIDE SPECIAL AIDS TO LOCAL COMMUNITIES AND TO PROPERTY OWNERS TO ENCOURAGE THE CONSERVATION AND RENEWAL OF DECAYING NEIGHBORHOODS

1. The program of Federal loans and grants established by title I of the Housing Act of 1949 should be broadened. It should provide assistance to communities for rehabilitation and conservation of areas worth saving as well as for the clearance and redevelopmentof wornout areas. It should make Federal loans and grants available for well-planned neighborhood projects at any stage of the urban renewal process provided they will clear blight and establish sound healthy neighborhoods. (Appendix 2, Recommendations 1 and 3.)

2. An urban renewal fund should be established to provide both loans and grants to local communities for urban renewal. The size of the fund should be sufficient to permit necessary advance planning and it should be augmented yearly in such amounts as the Administration and the Congress may determine. The grant funds presently authorized and unused under Title I of the Housing Act of 1949 should be transferred to the urban renewal fund. The studies of the Committee indicate that they are adequate to cover requirements for at least

the next fiscal year. Additions to the fund should be made yearly in such amounts as the Administration and the Congress may determine, taking into consideration the capacity of the program and the financial ability of the Federal Government to provide the necessary funds. (Appendix 2, Recommendation 5.)

3. To provide technical and professional assistance to communities, at their request, for the planning and development of programs for urban renewal, an urban renewal service should be established in the Urban Renewal Administration (a proposed new constituent of the Housing and Home Finance Agency, which will be described later in this report). (Appendix 2, Recommendation 6.) 4. To encourage more effective action among the cities in facing up to their problems of blight the present basis for geographical allocation of funds should be modified to make one-third of the capital grant funds available to those cities showing the highest level of performance in a positive overall attack on urban, decay. (Appendix 2, Recommendation 10.)

5. A special fund of $5 million should be set aside from the presently authorized funds for grants under Title I of the Housing Act of 1949 to be used in testing, developing, and reporting slum prevention and slum elimination techniques in American communities. Expenditures from this fund should be on a twothirds grant basis but should be made available to communities without regard to the restrictions imposed on other loan and grant funds. Lessons learned through this activity will be of great value to other cities and to the Federal Government in the refinement and improvement of the urban renewal program. (Appendix 2, Recommendation 11.)

6. To help the smaller communities and to stimulate planning and action on a metropolitan area basis, grants are recommended on a matching basis to State or metropolitan area governmental planning agencies to cover the cost of technical assistance. (Appendix 2, Recommendation 16.)

7. The Federal Housing Administration should be authorized to insure the private financing of dwellings in urban renewal areas. To carry out this recommendation the Committee urges that Title II of the National Housing Act be amended by the addition of a new Section 220 which would empower the Federal Housing Commissioner to insure loans on liberal terms for the rehabilitation of existing properties and for the construction of new dwellings in designated renewal areas, provided the local community has taken appropriate action and presented evidence that it has developed a workable program to attack the problem of urban decay. The Committee agrees that unreasonable rent increases ought not to follow rehabilitation. The Section 220 proposal contemplates the establishment of maximum rents for structures of 12 or more units. This control would follow the same procedures now used by the Federal Housing Administration in its large-scale rental housing program. A substantial minority felt that similar provision should be made to cover all rehabilitated structures including single-family homes. (Appendix 1, Recommendation 16; Appendix 2, Recommendation 7; Appendix 3, Recommendation 1.)

8. To see to it that Federal assistance as related to local programs which actually face up to the local problems, the Committee recommends that extension of Federal financial assistance and the insurance of mortgages in urban renewal areas be conditioned upon the submission by the local communities of a workable program to attack the problem of urban decay.

The same type of evidence should be presented by the community before Federal assistance is granted for low-rent subsidized housing. Determinations regarding compliance with the requirements should be made by the Housing and Home Finance Administrator on the advice and recommendation of the Urban Renewal Administration, in order that all Federal action, be it in the form of loans, grants or mortgage insurance in urban renewal areas can be closely coordinated in the interest of both the local community and the Federal Government. (Appendix 2, Recommendations 2, 3, 8 and 9; Appendix 3, Recommendation 5; Attachment to Appendix 3.)

9. A broadly representative private organization should be formed outside the Federal Government with congressional and/or Presidential sponsorship to mobilize public opinion in support of vigorous action by the communities in slum prevention, neighborhood conservation and other urban renewal activities. There is a need for vigorous and responsible leadership on a national scale to promote the type of integrated urban renewal program which is recommended. Such an undertaking should not be a direct activity of the Federal Government but rather should be carried out by a private organization which will bring to