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Senator Bush. That is why you provide for the court procedure?
Senator Bush. I think it is a good regulation.

Senator BENNETT. Mr. McAllister, I think it might be well for the record if you could point out to us the existence, or the type of question or the type of disagreement that might have existed between the Board and the industry, which led to the development of this program.

Mr. MCALLISTER. We have a well known case, that of the Long Beach Federal, Long Beach, Calif.; that has been in the courts for about 7 years, and they have had various kinds of congressional hearings.

It is my honest belief that if that statute had been in force at that time, that the difficulty could have been avoided.

Senator MAYBANK. Let me ask you this, if I may, Mr. Chairman: This statute, of course, couldn't apply to that case.

Mr. McALLISTER. No, sir. I am hopeful that that case will be disposed of.

Senator MAYBANK. I feel as you do, and I think you made a step forward. The reason I asked that was because I happen to have been around here when you had all this row in this committee 2 or 3 years ago, with two factions, so to speak. I presume that would be the right way to term it.

As you say, we had congressional hearings and they have had court hearings, and the thing has been doing on for 7 years. They haven't gotten anywhere. You do hope, now, that the court action is going to get somewhere?

Mr. MCALLISTER. I see termination in the horizon.
Senator MAYBANK. Thank you.

Senator BENNETT. I think Mr. Cole testified that there was no disagreement, either within the industry or between the industry and the Board with respect to this particular proposed solution. Is that so? Is there any other proposed solution that has been presented to you from the industry?

Mr. MCALLISTER. This, I think, is a meeting of the minds. I do not know of any industry opposition. As far as the Board is concerned, we believe it is fair and gives us adequate and proper power.

Senator BENNETT. Do you have any comment, Mr. Cole?
Mr. COLE. Yes, Mr. Chairman.

This is the result of conversations over a considerable period of time between the chairman and other members of the Home Loan Bank Board, counsel, people in the industry, and with others involved in these problems. We think it is an excellent solution to the problem. It protects not only the savings and loan, but it also, in my judgment, protects the public adequately and protects the Government in its interest. I think it is an excellent example of a settlement of a very difficult problem.

Senator BEN NETT. Senator Douglas, we have just finished discussing proposed changes in relationship between the Board—the Federal Home Loan Bank Board-and the individual members with respect to occasions requiring conservators and receivers.

Apparently there is no disagreement with respect to the proposal within the industry, and no questions of disagreement have been raised by the committee. Would you like for us to hold this matter up while you have a chance to study it?

Senator Douglas. No; thank you, Mr. Chairman.
Senator BENNETT. We will go on to the next section, then.

Senator SPARKMAN. Mr. Chairman, may I ask a question or two at that point? It may come up at a later time. Maybe while Mr. McAllister is here he can tell me.

Is the savings and loan business carrying along a vigorous program on the home mortgages?

Mr. MCALLISTER. Unquestionably. Last year, I should say, the savings and loan business provided the financing for 2 out of every 5 home loans that were made in the country.

Senator SPARKMAN. I think that has been largely true, year by year, and it is something I don't believe is generally understood by the people of this country—the extent to which the savings and loan industry is discharging its responsibility in home financing in communities all across this country of ours.

I have been particularly impressed in the past, and I am sure that it continues to be true, with the large amount of the GI loan program that they have carried. They continue to maintain a high level in that, do they not?

Mr. MCALLISTER. Yes, sir. As a matter of fact, the percentage of GI loans last year was increased.

Senator SPARKMAN. Over the past year?
Mr. MCALLISTER. Yes, sir.

Senator SPARKMAN. I think that is a very good thing to have on the record.

Senator BENNETT. Senator Goldwater, do you have any questions at this point ?

Senator GOLDWATER. No, sir.

Senator BENNETT. We have just finished a discussion of the proposed changes in the method of setting up receivers and conservators for the building and loan societies, and apparently there is no disagreement in the industry.

Senator GOLDWATER. I have no questions.
Senator BENNETT. Mr. Cole, will you proceed?

Senator MAYBANK. I would like to ask Mr. McAllister if he could put in the record the regions in which the veterans loans have been increased?

My purpose in asking that is because I have in the past gotten questions about it, and I understand it is more difficult for veterans in certain sections to borrow money than in other sections. If it isn't too much trouble, I would like to have it in the record.

For instance, people in Oklahoma have written me about veterans' loans and in the Boston area they seem more able to obtain them, If you could put that in the record, I would appreciate it.

Mr. MCALLISTER. I will do that.

Senator SPARKMAN. As a matter of fact, Mr. Chairman, it seems to me it might be appropriate, if it is available, to have a rather brief statement showing the extent to which the industry is making loans of all types in our home financing. I assume representatives of the associations will be here later and will give that evidence. I thought if you would put this in, it might be you could include a table showing the program generally.

Mr. MCALLISTER. Thank you. I will be very glad to include a very brief statement as to amount of savings invested in savings and loans, amount of withdrawals made and net gain in savings, amount of mortgages that were made last year, and then specifically, as the Senator asked for, information with regard to the amount of GI loans.

(The information requested follows:) As of December 31, 1953, all savings and loan associations in the United States had assets of $26.8 billion. They had $22.1 billion invested in home mortgages.

Home mortgage financing in the United States in 1953 amounted to $19,747,000,000. Over 37 percent of this amount was invested in such mortgages by savings and loan associations.

Savings and loan associations at the end of 1953 held GI loans totaling $3,972,000,000. In 1953 they made GI loans totaling $853 million or 28 percent of the total of all such loans during the year. Also such associations have made 28 percent of all GI loans since the inception of the GI program in 1914.

On the savings side, during 1953 new savings totaling $9.4 billion were placed in savings and loan associations. Withdrawals amounted to $5.8 billion, leaving a net inflow of savings of $3.6 billion into these institutions.

Senator MAYBANK. On Monday, we are going to start the appropriations hearing on the armed services bill of some $30 billion. I won't be able to be around here very much after this week, which I extremely regret. In the next few days, I intend to ask you gentlemen if you will cooperate as much as possible, because I have to be with Senator Ferguson on the subcommittee. That is a month's hearing, if it runs like it did last year.

Senator BENNETT. All right, Mr. Cole. I think there are no more questions.

Mr. COLE. Mr. Chairman, if agreeable, then, I would like to turn to page 36 of my statement, with respect to low-rent public housing.

Senator BENNETT. Senator Maybank was anxious to

Senator MAYBANK. If the chairman will permit, Mr. Cole, I notice your insistence to reserve public works. I wanted to ask a couple of questions. I assume priority on this would be given to defense areas, so to speak.

Mr. COLE. Yes. It would seem to me that it would be appropriate to consider giving a preference to impacted defense areas. You understand, however, Senator, that applications must be made by the locality to the Federal Government.

Senator MAYBANK. Of course. I mean, your housing situation would be worse in these areas than elsewhere, wouldn't it?

Mr. COLE. You are speaking of public works, now?
Senator MAYBANK. Your houses.
Mr. COLE. Of course.

Senator MAYBANK. Your houses are shorter and I presume these public works would be sewers, mains, water works, and things of that nature. They would also be worse in those sections?

Mr. COLE. No question about it, Senator.

Senator MAYBANK. That would cover it. Public works would cover purely housing and allied facilities, such as you handled in the past. It wouldn't have anything to do, for instance, with public roads?

Mr. COLE. It would not have anything to do with the public roads program as such. .

Senator MAYBANK. You could build a road, for instance, in an atomic energy plant in Idaho, New Mexico, or South Carolina, or wherever it might be, that you decide should be done?

Mr. COLE. This, Senator, is a local public works—State and local. Senator MAYBANK. It would be in cooperation with the highway department or the town or the water commissioners, or whatever it might be. I understand that. It could be extended.

Mr. COLE. The answer is yes.
Senator MAYBANK. What about fire service, and those ?
Mr. COLE. The same is true.
Senator MAYBANK. What about police service?

Mr. COLE. Yes; in the sense of making plans for the construction of police stations, barracks, and so forth.

Senator MAYBANK. Some years ago, and if I am not correct, I wish to be corrected, several years ago, in conference, we eliminated police service.

Mr. COLE. Yes; under defense community facilities.
Senator MAYBANK. We didn't have police service.

Mr. COLE. This is not, as you know, Senator, the proposal for the extension of the defense communities facilities service. This is a program to aid the planning of local public works.

Senator MAYBANK. Public works program with the cooperation of the local identities of government, whatever they might be.

Mr. COLE. That is right.

Senator MAYBANK. It wouldn't entail the police department of the community?

Mr. COLE. Senator, it does not provide for the employment of policemen. It would, as a local public work

Senator MAYBANK. You could make the study.

Mr. COLE. It would permit Federal grants to prepare to provide facilities for the housing of the police department, for example.

Senator MAYBANK. The police department would be hired locally? Mr. COLE. Yes.

Senator MAYBANK. The reason I ask that is, you well remember in the House in those days we had an argument and conference that went on until 2 or 3 o'clock in the morning some 2 or 3 years ago.

I thank you. As I understand, it doesn't have anything to do with employment of anybody, but merely a cooperative action in public works of necessities between the local communities and the housing agency. Mr. COLE. That is correct.

Mr. Chairman, I have with me, now, Mr. Slusser, Public Housing Commissioner, on my left. On his left, Mr. Bloomberg, with the Public Housing Administration.

I am now turning to page 36 of my statement.

In order to permit public housing to serve better its overall objectives, the President's Advisory Committee recommended certain changes in the basic legislation, and the bill includes the provisions necessary to carry out those recommendations.

The program of slum clearance and urban renewal contemplated by it will, of necessity, result in the displacement of many thousands of families through the demolition of slum areas, the rehabilitation of blighted areas, and the enforcement of building, health, sanitary, or other codes prohibiting or reducing the occupancy of particular dwellings.

In addition, thousands of families are being displaced each year in our cities by public improvement programs such as new thoroughfares and street widenings, and the construction of public buildings and improvements. Many of the families displaced from their homes

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by these public undertakings are in the lowest income groups. An adequate supply of housing must be available for all the families displaced by these various programs.

The Advisory Committee pointed out that about half of the families displaced by the present slum clearance and redevelopment programs have incomes so low as to fall within the limits set for admission in public housing. The difficulties of relocation are particularly acute

. for low-income families in minority racial groups.

In order that public housing may better facilitate urban renewal programs through the provision of housing for displaced families of low income, preference in admission should be granted to all such families.

At present, first preference in admission is limited to families displaced only by low-rent housing projects or by public slum clearance and redevelopment projects. The bill would extend the preference to families who are to be displaced through other public actions, thus permitting public housing to facilitate all types of public undertakings involved in the total process of urban renewal.

Also, in order to permit proper coordination of relocation activities, the bill would permit local housing authorities to grant special preference as to any of the projects or actions entitled to the general preferences. Veterans would continue to have a first preference within all preference groups.

The bill also contains provisions to assure that the payments in lieu of taxes, which local governments expect from their low-rent projects, will be made on a contractual rather than on a voluntary basis. These payments in lieu of taxes will, with certain exceptions, be equal to 10 percent of the shelter rents charged in the various low-rent projects.

A further change recommended by the Advisory Committee is designed to make public housing projects self-liquidating to the maximum possible extent. The bill provides that, as soon as the capital cost of a project has been repaid, future net revenues of the project would be used to repay to the Federal Government and to local governments the contributions made by them to the project during its earlier life.

Senator MAYBANK. Mr. Chairman, if the chairman will permit me, these communities up to date have pretty well amortized whatever loans they have gotten from the Federal Government, have they not?

Mr. COLE. Yes.

Senator MAYBANK. In other words, there have been no delinquencies to speak of?

Mr. COLE. No; there have been no delinquencies.
Senator MAYBANK. None whatsoever?
Mr. COLE. On the bonds; no.

Senator MAYBANK. That is what I meant. And the communities, too, have all paid up their 10 percent.

Mr. COLE. I think that is true.

Senator MAYBANK. I mean, 10 percent in lieu of taxes. The communities are paid up by schools and different facilities that they have made available?

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