But what is proposed to meet the unsatisfied housing needs of the great majority of families in the under $4,000-income range? The President proposes expanded slum clearance, and urban renewal. However, to translate objectives into probable performance, it is sobering to realize that the United States has been working on slum clearance since the passage of the National Housing Act of 1937 and slums continue to be conspicuously with us. The President is broadening the program, but there is nothing in S. 2938 to suggest an altogether new tempo.

The President is proposing measures to prevent the spread of blight into good neighborhoods and a rehabilitation program for salvable areas. This is good. He has our full support but we are not persuaded that this is in any sense going to take care of the housing needs of hundreds upon hundreds of thousands of American families.

Any slum clearance program must provide for the families displaced from their homes. In this bill, the President is proposing on an experimental basis advantageous mortgage insurance by which such families can buy $7,000 dwellings over a 40-year period or acquire them on lease-and-purchase options. Similar arrangements are made for displaced families in multifamily rental units.

The association has various comments to make on this proposal. (1) Inasmuch as it is restricted to families who are displaced through slum clearance and related projects, it is at once put forward on a small, narrow base.

(2) Inasmuch as families who will be displaced will be displaced in metropolitan areas, it is assumed that the proposal relates to housing in metropolitan areas. What kind of a house is it possible to build in our metropolitan areas for $7,000? According to the testimony of preceding witnesses some of whom have been outstanding low-cost housing builders, it is not possible to build a family dwelling in our major metropolitan areas for $7,000. It would be ironic indeed if within a few years of construction such housing became blighted or near-slum housing.

(3) Will the families who are displaced be in a position to make the necessary purchase or lease payments? According to the figures prepared by the President's Advisory Committee, estimated total monthly expenses on a $7,000 house would be $62.90. Put on an annual basis, this would be $775.04. If we use the customary family budget figure of 20 percent for rent, it is clear that $7,000 housing is above the capability of families with incomes under $3,000. The arithmetic is: 12 times $62.92 equals $775.04; 20 percent of $3,000 equals $600.

From the preceding figures on family-income distribution, it is apparent that roughly 40 percent of American families are below the income level which can afford such $7,000 housing.

The President proposes another avenue to meet the needs of those presently ill-housed. He proposes continuance of low-rent public housing. But strangely enough, the administration bill, S. 2938, contains no authorization for public housing. The President's proposals on this subject are to be found in his budget message wherein he urges, until the results of his low-income ownership housing have been determined, that continued reliance be placed on public housing. He recommends construction of 35,000 units annually for the next 4 years.

It is reported that the House Appropriations Committee

has not supported this recommendation, and has instead cut housing units to 20,000 for this year and 13,000 units for the next, at which time it is to come to a close.

The AASW strongly urges that the amendment proposed by Senator Maybank which calls for a return to the public-housing provisions of the 1949 act, other legislation notwithstanding, be adopted. In fact, it would appear that by this amendment Senator Maybank, a Democrat, is rescuing the President's own housing plan wherein he accorded public housing an integral place.

The AASW would point out that it has been amply demonstrated that private enterprise cannot provide, at a profit, good housing within the reach of all income groups. We call your attention to an article appearing in the New York Times, March 15, entitled "Billion Spent in Housing Since 1936 Yet 1 in 5 Here Is Slum Dweller."

* because of the housing shortage *** no nonveteran families qualified for public housing in almost 8 years, except those whose homes were torn down for slum clearance of other public projects.

Despite the notable improvement in the veteran's lot and the demolition of the worst hard-core slums, New York's overall housing problem is becoming more difficult instead of easier. One of every five New Yorkers today is a slum dweller or lives in substandard housing in a deteriorating neighborhood.

To clear the older slums and cut out the substandard housing that has infected larger areas, the city would need today 480,000 new dwelling units, according to Mr. Cruise (chairman of the city housing authority). But nowhere near that number will be built in the next 10 years, if the postwar rate of private and public housing is unchanged. The city's population, meanwhile, is being swelled by 50,000 to 60,000 migrants a year, most of them in the lowest income group.

Some real-estate men are enemies of all public housing, but the major realty groups and large builders agree on the need for public housing at the present range of $9 to $19 a room. The major realty spokesmen say there must be a large amount of housing in this rent range and that they cannot provide it.

The New York situation is not unique, though perhaps it is one of the more glaring cases of need in the United States. However, Philadelphia, Boston, Detroit, Baltimore, San Francisco, and Seattle are among the cities with acute housing needs. The inadequacy of housing for the country's low-income groups is so much a matter of everyday knowledge in the social workers' world that it is difficult for us to understand how responsible officials would advise the President that a program of $7,000 dwellings for persons whose homes are demolished in slum clearance projects and public housing at the rate of 35,000 units a year would approach the President's laudatory objective of decent housing for all American families.

In addition to families with low incomes, there is another group of American families who are poorly housed. This is the minority group. Fifteen million of our citizens have dark skin. Americans of Japanese ancestry number over 100,000 as do Americans of Chinese ancestry. The AASW commends the President for his frank recognition of the housing situation of minority groups. Given the situation from which we are starting, however, the President's ambition "to assure equal opportunity for all of our citizens to acquire, within their means, good and well-located homes" is an ambitious one indeed. Progress does not seem to come very rapidly in this area.

It is noted that the President proposes no legislative guaranties of any kind here. Rather, he pledges administrative action. The AASW will be interested to see how the President implements his

objectives. Our chapters plan to keep careful tab on administrative actions designed to bring decent housing within the reach of minority groups. Next year, we will be in a position to report what has been done here.

Study of the administration's housing proposals does not suggest to the AASW that there is likely to be much change in the amount of housing constructed in 1954 over what was done in 1953. In fact, it is conceivable that there may be less. From the high of close to 1,400,000 starts in 1950, construction has run between 1,000,000 and 1,100,000 these last 3 years. It is unnecessary to observe that this is not a sufficient rate. Needs are not being met.

With all the abundance of this economy, it is a shock for an American traveling abroad to find European countries outstripping us in housing. Holland has done an extraordinary job in housing. So has Sweden. It is not that we lack the means to house our citizens. In 1948 this Nation, with 6 percent of the world's population, had 40 percent of its income. It is that we have not met the challenge of this problem. The AASW does not believe that S. 2938 makes a dent on the problem at hand. The administration has proposed noble goals but has not done much to provide for their realization.

Now, briefly, the point of our comments is that we wholeheartedly share the objectives and goals of the President's housing program for 1954. But we are not persuaded that S. 2938 will bring about what he hopes to achieve.

In particular, we call attention to the number of families in the bottom income brackets; inasmuch as the President says his housing program is for all families, we would call attention to the fact that over half of the American families are under the $4,000 income level, which creates special problems in housing.

With his program of the $7,000 mortgage purchase arrangement, we have three comments to make:

First, that it is a very narrow program which the President puts forward, inasmuch as it is restricted to families who are displaced from slum clearance.

Senator MAYBANK. What would you suggest about that?

Miss HADLEY. What do we suggest? We think it is an interesting

Senator MAYBANK. I mean just about that one subject you mentioned.

Miss HADLEY. The narrowness?

Senator MAYBANK. Yes, the narrowness, as I understand it, of the President's program in slum area replacement.

Miss HADLEY. The point I mean to make is that the President puts forward his program of the $7,000 advantageous mortgage, restricting it to those who are displaced by slum clearance.

You asked what our recommendation would be there. We would like to see it done on a broader basis.

Senator MAYBANK. For anybody?

Miss HADLEY. For any low-income person.

Then, furthermore, as I will come to it, Senator Maybank, we feel that there should be more in the public housing field.

I comment, in the third point here, on the fact that with the income distribution which takes place in American families, that families

with incomes under $3,000 are now in a position to take advantage of the President's mortgage plan here.

We feel it is unfortunate that the administration's bill, S. 2938, contains no authorization for public housing, and we strongly urge that Senator Maybank's amendment be incorporated by the committee. We further draw the attention to the committee to this item, which we quote here, from the New York Times, which we feel is a very interesting objective report of what housing conditions are in one of our major cities, and how far we have gotten with the various housing programs we have had in these last several years.

We highly commend the President for directing attention to the housing of minority groups, and distinctly feel that this is an area which will take a very special effort.

We note, however, that the President is proposing to do this entirely by administrative action; that there are no legislative guaranties written in.

Basically, I think it is the feeling of the association that with the abundance of the American economy-and we comment that this economy has 40 percent of the world's income-that it is a shock that we have not gotten further forward on housing. And unfortunately we don't feel that S. 2938 will accomplish the admirable goals which the President sets forth for us.

The CHAIRMAN. Thank you very much. We appreciate your testimony.

I want to say at this time that we have three more witnesses, and then we will temporarily close the hearings on housing. However, the record will be kept open for 10 days or 2 weeks, should anyone care to file any supplemental statements or make any statements.

We will hold 2 or 3 days of hearings a little later, on smoke abatement, at which we hope many of the mayors of cities will appear. I don't see how we can get around to starting to write up this bill before the 10th or 15th of April. We certainly are going to try to have this bill ready for action on the floor by the first of May, or sooner if we can, but not later than the first of May. But the record will be held open for anybody to file any statements that they might care to. We will possibly have 2 or 3 days of hearings in the next week on smoke abatement.

I just wanted the record to show that. I want the public to know just what our plans are.

Would you gentlemen prefer to finish in the next 10 minutes, or would you rather have a hearing starting at 2 o'clock. Whatever your pleasure is will be ours.

Mr. RAIDER. We can conclude in a very few minutes.

The CHAIRMAN. All right. Our next witness is Mr. Whiteman of the Associated Builders of Greater New York.

Mr. RAIDER. Mr. Chairman, I am David L. Raider, attorney for the Associated Builders of Greater New York, and I am appearing for Mr. Whiteman, the executive director.

The CHAIRMAN. Yes, Mr. Raider, go ahead.

STATEMENT OF DAVID L. RAIDER, ATTORNEY, ASSOCIATED BUILDERS OF GREATER NEW YORK, INC.

Mr. RAIDER. The Housing Act of 1954, as proposed in identical bills introduced in the 83d Congress, 2d session-S. 2938 and H. R. 7839-contains provisions that are of vital interest to members of this association who are active multifamily builders under FHA programs in the New York metropolitan area and in other States along the eastern seaboard.

Section 119, referring to section 213: The general provisions of the Housing Act with regard to section 213, as recited in section 119 of the proposed act, are endorsed by the members of this association. It is their experience that a majority of the interested purchasers have been unable to avail themselves of current 213's being offered for sale, due to their inability to meet the high downpayments required. Generally, these potential purchasers are families who do not have substantial cash reserves, but who are nevertheless excellent credit risks. The intended purpose of the new Housing Act, in making cooperative apartments available at low downpayments, should provide good housing at moderate carrying charges for these people who heretofore have been unable to avail themselves of the benefits of cooperative housing. It is the intention of the builder-members of this association to proceed with large scale projects upon the enactment of this new legislation.

An analysis of the proposed bill indicates, however, that the provision which would substitute a ratio of mortgage to value for the current ratio of mortgage to replacement cost might present a very serious obstacle to the implementing of the basic provisions of the bill which are intended to provide more liberal mortgage credit to cooperative purchasers and therefore might tend to defeat the fundamental purpose of this legislation.

Assuming, for example, that the same formula for determining valuation will be used in section 213 as is currently used in determining value under section 207, we start with the basic assumption that the value can be no higher than replacement cost, but it can be substantially lower than replacement cost. The FHA arrives at a determination of value on section 207 projects by using either a value by summation, capitalization of net income or profit, or by comparison, whichever is lower. The value by summation is the same as replacement cost. The value by comparison is very rarely, if ever, used because of the inability to secure precisely parallel projects. The use of value by capitalization on a cooperative project, where there is no income or profits, does not appear to be a sound method for arriving at the value of such project.

Therefore, the only reasonable method of arriving at a value of a cooperative project is the use of value by summation. Since the value by summation is the same as replacement cost, the Housing Act should be explicit in stating that the limiting criteria should be a mortgage as a percentage of the replacement cost rather than as a percentage of value.

The Federal Housing Administration, by its processing procedure, adequately covers the question of the economic desirability of the project at the time of the site submission and submission of the archi