against that in the belief that the development of these special housing programs organizing people into special groups of that kind, is neither desirable administratively nor necessary. If the Public Housing Administration is free to take people over 65, then in the overall planning and operation of the projects they can adequately fit rooms for single people in a particular sector of the project, and fit them into a total housing community.

As a matter of fact, we wish that the total public housing program, by the way, will be a large single-type prospective housing program, rather than a breakdown into housing throughout the community. It seems to us to pick out a particular group of 65 and over and have a special program for them is unnecessary, and that it will hamper the administration's program.

Senator MONRONEY. You think it can be redesigned? As most public-housing units are designed now, they are usually for largefamily occupancy. There are very few quarters with several bedrooms other than public housing available in the big cities. It would require a redesign of the greater proportion of these into one and two bedroom types of apartments; would it not?

Mr. ROUSE. There might be some redesigning of existing units, but more likely I would say in new projects that would come in the future they would design them just as they now do. They will design a number of them for large families, and if it is an elevator project, for example, they will put all of those large family units down near the ground so that the children have as small a distance to go as possible. Also they will provide rooms for individuals over 65, and I assume they will tend to group those in one area, so that they are together. It seems to me it is a planning problem and can be accommodated in the plan of a new project. It is very possible also they would go back and in some instances be able to subdivide existing units into rooms that would accommodate older people.

Military housing

On S. 1501 of Senator Capehart, on military housing, we would hope there is an alternative way of accomplishing that objective rather than instituting a new section of the Federal Housing Administration operation. We are concerned about aspects of the Federal Housing Administration program which do not find their base on a sound measurement of risk. We feel a good many of the troubles that stem from title VIII and the Wherry Act program are related to the fact that FHA was getting out of the risk-rating business, on which it started, and once it got away from a risk-rating base there were not many things to which they could confine their program.

It would seem to us if there is a need for military housing on military bases, that the lease-purchase provisions-the new lease-purchase provisions might be thought through in terms of their adaptability to that program, just as any other Federal facility may be eligible for it; and lacking that, that the military housing should be by direct appropriation.

It is interesting that we have here two bills before your committee. One is a proposal that university housing and facilities be financed by direct loan from the Government. Here comes a Federal facility, with housing on military bases for military personnel which would be financed privately with FHA credit. We question both of

them really in terms of whether they are appropriate solutions to the problem.

On the military housing one it would seem to us it is essentially a Federal function and it should accommodate itself to the system for meeting those problems. Lease-purchase, it seems to us, is going to be an expanding one for meeting such a problem.

College housing

As to the two bills on educational institutions, S. 1744 and S. 1766, it is terribly hard for a fellow representing a trade association to take a position on something like that, because certainly the educational institutions are enormously in the public interest, and certainly there must be some greater story than we know from our position of the need for such financing facilities. So that sitting in your position and hearing both sides, your point of view might be different from mine. But not having that opportunity, it seems to us that the precedent of this direct lending to universities and colleges and junior colleges for dormitories and dining facilities, is a precedent which has no particular end.

Senator CAPEHART. Would you recommend that FHA guarantee the mortgage?

Mr. ROUSE. This has to be a very unofficial observation, not representing MBA.

Senator CAPEHART. Who is MBA?

Mr. ROUSE. The Mortgage Bankers Association.

Senator CAPEHART. Whom are representing?

Mr. ROUSE. The Mortgage Bankers Association, but I am stepping beyond my limits now when I talk about that. I can only answer personally.

Senator CAPEHART. What you have said so far-is that officially? Mr. ROUSE. Yes. The MBA takes a position in opposition to the

Senator CAPEHART. I do not quite understand your testimony. In one breath you say it is official, and in the second breath it is not official.

Mr. ROUSE. No, it is. I am representing the Mortgage Bankers Association in what I said. You asked me would I advocate FHA insurance of loans for educational institutions.

Senator CAPEHART. You said you favored lending money to colleges, and then my question was, would you advocate the FHA guaranteeing these mortgages for these college builders?

Mr. ROUSE. No, I would not. However, I do think that it is obvious that there is boiling to the top of the credit requirements in the country a succession of requests by charitable-type institutions for some form of Government assistance. It is direct lending in the case of loans to universities. Elsewhere in Congress there is the Wolverton bill, which would provide FHA insurance on loans to hospitals. So there is a whole group of indicated clear needs that perhaps require some greater overall study.

In general I feel that the granting of direct loans to an educational institution taps a pressure which, if it remained and exerted itself on the responsible boards and administrative heads of those institutions, would cause sound leasing campaigns for building programs.

Senator CAPEHART. Would you not say there was more logic in the Government helping schools, which has always been the function of the Government, in counties, States, townships, and federally? We have always considered that a governmental function. Is there not more sense in the Government helping to finance schools than there is in the Government helping to guarantee mortgages for private institutions such as yours? We are a private-industry Nation.

Mr. ROUSE. You mean guaranteeing mortgages on housing? Senator CAPEHART. You have no objection to the Government guaranteeing mortgages for private enterprisers in private business and guaranteeing the mortgages that your Association buys, which is 100 percent private industry. Yet on something here, schools and education, that for 165 years, the Government has always financedyou are against that.

Mr. ROUSE. The system of insuring mortgages of individual houses was not a system requested by the mortgage investors of the country. The system of insuring mortgages on individual houses was not intended for the benefit of the mortgage investors of the country. It arose out of the need to bridge the gap between the legal limit that the investing institution

Senator CAPEHART. But you are for it, are you not?

Mr. ROUSE. For the FHA system?

Senator CAPEHART. Yes.

Mr. ROUSE. Yes.

Senator CAPEHART. You are for FHA guaranteeing mortgages, that is, the mortgages you buy, on housing?

Mr. ROUSE. Yes.

Senator CAPEHART. You are for that. But on something which is 100 percent, and always has been for 165 years, financed by the Government of the United States, then you are opposed to it?

Mr. ROUSE. Could I explain what I see is the difference?
Senator CAPEHART. Yes.

Mr. ROUSE. The maximum legal limit that the savings institutions of the country can go in making a loan on an individual house as set by the States throughout the country is typically 66%, 70, and 75 percent. It seems to me we have learned conclusively that is not a sufficiently large loan to permit the people who want to buy houses to buy them; and, there existed a gap between what the lenders could lend and what the individual borrower had to have, and he had no other way of raising it. Therefore, it seems to me that that gap, if it was going to be closed, had to be closed by a system of Federal mortgage insurance.

Senator CAPEHART. It may be we ought to guarantee that gap between 6623 and whatever it is, rather than guaranteeing it 100 percent.

Mr. ROUSE. I think that possibility ought to be explored, and we have so recommended to the HHFA.

Senator CAPEHART. The point I was making was that we have for many, many years guaranteed FHA mortgages. In fact, the outstanding sum at the moment is $23 billion, and we are going to increase it by $4 billion, which would bring it up to $27 billion. The VA guaranteed up to $14 billion outstanding, which will make at the end of this year $40 billion outstanding. The Government guaranteed

strictly 100 percent for private industry. It guaranteed the credit, and it guaranteed your mortgages, so you just cannot lose.

Here is something which is private industry, too. I am a great believer in private industry because I think that is what made this country great. But on the other hand, for 165 years the Government has supported the schools outside of our endowed colleges, or some of them, and private schools. Generally speaking, schools have been a governmental function. You will agree with that, will you not? Mr. ROUSE. Yes.

Senator CAPEHART. Therefore I think there is some inconsistency here.

Mr. ROUSE. Nobody would benefit more by a program of Federal mortgage insurance on loans to universities and hospitals, and to all noncharitable activities, than the people in my position. Anything that happens that causes that kind of credit to flow more freely causes us to do a larger volume of business. So that selfishly our interests would be benefited by that, but I think, looking at the total economy, it would be unwise.

We had an instance in Baltimore recently where a university wanted to build a dormitory. It happened to be in a redevelopment project. That dormitory could have been built unfinanced on a sale lease-back arrangement, or through mortgage facilities, but the university quite naturally decided to wait and see if it could get the money of the HHFA. Naturally, when it did everybody in the community felt that was fine. But the availability of that program taps the pressure on the institutions finding their own solutions through the channels available to them, in the raising of private funds and the use of private lending facilities, whatever those channels may be-and I think they are good channels. Our system of private initiative as well as private enterprise in going out and getting money is diluted somewhat by an expansion of the system of direct Government lending.

Public housing

I guess that covers all of the smaller bills. I would like to talk about S. 1800, and mainly about two points. The bill does two things primarily, it seems to me. First, it seeks to remove the measurement of public housing in terms of relocation need. It seeks to release the public housing program from that test of need.

The second thing it seeks to do is to release it from the test of the workable program; not fully to release it, but relax the test of the workable program. It seeks to fully release it if there is a redevelopment program in a community and postpone application of it in other instances.

I would like to spend a minute on why I think those two tests are good. By the way of background, I would like to explain I was a member of the Advisory Committee on Housing and was Chairman of the Subcommittee on Redevelopment and Rehabilitation and Conservation, out of which some of these ideas developed. I have also had the opportunity to apply them in making a study of the District of Columbia for the Commissioners of the District of Columbia, and recommended a program for the elimination of slums in the District. It seems to me in an approach to the problem of public housing-and it is in no sense a statement against public housing, and I am assuming as a premise there is a need for it-the problem is how much it seems

to me you must apply a test in any community, as we did in Washington. I think this program and recommendation has not been criticized by the people in the public housing field. It was done by Nat Keith and me, and Nat is a strong believer in public housing. We did it jointly.

The test we made and the test the law requires in essence is that a community must first face up to its total slum problem. It must say, "All right, what is going to be required in city X in order to eliminate slums?" First, what do the slums consist of and, secondly, how much of that stuff is nonsalvageable and must be destroyed. Third, over what periods of years are we going to do it? You lay out a schedule and that involves a demolition program, and also involves an extensive rehabilitation under vigorous code enforcement. You are able to schedule this, and we did over 10 years in the District of Columbia. It might be 15 somewhere else, and it might be 5. Three years in advance on that schedule, you project it 3 years as to what is going to be required and what number of families is going to be displaced by the combined-demolition program, and rehabilitation program, and code-enforcement program. Then you determine how many of those families are of low income and will require some special assistance through a relocation agency. With that being the demand, you add up the components of supply, which are the existing vacancies in the market, and new public housing programs that may be underway, and new private housing that may be built for that

purpose.

A big item is the turnover in the public-assistance housing. You match that supply of available housing for those low-income families against that demand and the deficiency is your projected public housing need.

If that test is being applied, it seems to me there can be very little argument over that need. But if the supply of housing exceeds that demand, there is no purpose in additional public housing. It means you have an overall slum elimination program that you are working toward. Your schedule is to accomplish it over a set period of years, and the only purpose for which you need this public housing is to achieve it.

It seems to me it would be a very unfortunate thing if we lost that test.

Secondly, as to the workable program test, when we conducted this we followed a certain procedure. This subcommittee of the President's Advisory Committee included Dick Gray of the Building Trades Council of the American Federation of Labor, Ralph Walker of the American Institute of Architects, a fellow from a life-insurance company in Birmingham, an architect from New Jersey, and myself. We called for people from all over the country to study with us all day, if necessary-planners and administrators of housing programs, of redevolpment commissions, and private builders, to try to find out what was needed to eliminate slums from American cities. The greatest unanimity among everybody who came before us-and our report said that the greatest point of unanimity was that there was absolute agreement that these various programs that aimed at slum elimination needed to be tied together in a single program._There was no justification in the Federal Government's making a Federal grant for urban renewal, for demolition and reuse of land by private