Senator CAPEHART. You are going on the premise that the Government will be able to borrow money at the same rate at which it borrows it now, 5 or 10 or 15 or 20 years from now. It may not. Mr. COLE. It may not. Senator CAPEHART. If the Government tries to finance it later it may pay more than 4 percent for the money. Furthermore, if the Government puts out bonds, it will put out a bond, I presume, if it is a good businessman, for the full amount before it starts. Ordinarily that is the way it works. But my concern about this whole matter is to get adequate housing for the military.

Mr. COLE. It is a splendid and worthwhile objective, with which we are heartily in accord.

Senator CAPEHART. I think if we can all agree we do want to get adequate housing for the military and that that is a good purpose and that is our aim, then we will have no trouble working out the details of this bill.

Mr. COLE. We offer our services to help work out the details. Senator CAPEHART. As the author of the bill, along with 29 other Senators who have joined in it, I have no objection at all to FHA having more authority over what happens, providing it does not tie up the matter in red tape to the point where we do not get the job done. Neither do I have any particular objection to the military acting as their own insuring agents. I am not stiff-necked on either one of them. I do not care particularly, as long as we can get the job done, but I do know this: We must and will protect the existing Wherry housing. We must protect defense housing; we must protect the mortgages that the FHA has already insured. That will all be handled and all covered in this bill. Namely, that if these Wherry houses go into default of their own weight, the military would take them over and operate them and pay the unpaid balance under the framework of this bill. Those are things we ought to do. If only we can all become sold on the idea that we have to do something that will help, because it is a fact there has been no Wherry housing started since last August. Mr. COLE. That is right. I am under the belief that there is something needed and our agency will be in a position to assist you.

Senator CAPEHART. I would like to get some good testimony, which I believe you have given today, and then I think the committee will have to decide whether they want FHA to do the insuring job or the military to do their own insuring. Also if they want FHA to do it, how much authority or responsibility they want to give them. I do not care, as long as we get the job done. I think that the time has arrived when we ought to draft a program for military housing.

Mr. COLE. Senator, may I make it clear we are not asking for additional authority, but if we are given additional responsibility then we must have the authority. Frankly, we would be delighted not to have any more work to do, but we think it is an important problem and we are willing to do anything necessary to carry out the objectives. Senator CAPEHART. Let me say in all fairness to you that if builders were building Wherry housing at the moment you would have supervision.

Mr. COLE. Up to a point.

Senator CAPEHART. You did have supervision.

Mr. COLE. Up to a point. Yes, sir.

Senator CAPEHART. But you bring out there is no control over this in the present bill.

Mr. COLE. On the part of FHA.

Senator CAPEHART. We will control it exactly like we control FHA insurance at the moment. We will put a limit on the amount you can insure in any 1 year on military housing.

Mr. COLE. Senator, the thing I am pointing out is not that sort of proposition, but it is market analysis and control of the housingthe local situations in the communities and the impact of the military building on the economy of the local communities.

Senator CAPEHART. I think we can certainly tie that up, and it should be tied up. We will certainly want to put the military on notice, both in the bill as best we can, and in hearings and otherwise, and from year to year we will take a good look at it to see that they are handling it in a practical way. But I think the need is so great for good housing for the military that we all ought to use our best ingenuity to work out a bill that will get the job done.

Mr. COLE. I would not disagree with that approach-not at all. Senator CAPEHART. I think the Federal Government will save millions and millions of dollars on men who will stay in the service for 20 and 25 years who are now getting out because they do not have decent housing. For some reason the military transfers these boys very often. I never could understand why they do it, but they do it. They transfer them from one post to another. But we are all agreed we must protect the existing Wherry projects, and we must protect the other mortgages that the FHA has insured. We must see that the military does not overbuild and we must see that it is handled in a practical and sensible way.

We have no particular pride in authorship, but we threw this bill in the hopper here in order first that we might get people sold on the need for it; and then, secondly, that we might all sit down and work out the best possible bill.

That is our thought on it. So I think we have made a good start here this morning.

Mr. COLE. Thank you.

Senator CAPEHART. Before we get away from that, let me see if I can summarize your position, as I understand it. While you point out what is essentially the Comptroller General's attitude, and I assume the Bureau of the Budget's attitude with reference to the cost of financing this, the heart of your objection, representing your agency, is that you are called upon, or the insurance fund you administer is called upon, to carry a load which you have no part in setting up. It that not true?

Mr. COLE. Yes, that is true.

Senator CAPEHART. In other words, you feel in order for this to be a safe program for you to administer, you ought to know something about the design of the houses, the economic need for the housing, and all of those things which would go into your determination of a regular FHA project?

Mr. COLE. We would like to have the Congress take one side of the situation or the other.

Senator SPARKMAN. Either let you out completely or else let you have some responsibility.

Mr. COLE. Yes, and authority.

Senator SPARKMAN. In setting up the obligation that you are going to have to stand behind.

Mr. COLE. If you give us responsibility, we need authority. That is the point. We are not asking for the responsibility. I want you to know that.

Senator SPARKMAN. Yes. I want to say this: I agree with Senator Capehart, and I think all of us are in agreement as to the need for a better military housing program than we have yet been able to devise. I am of the opinion that we can work out something on it. I hope the members of your staff may be able to cooperate with the members of our committee's staff and probably with the military in shaping up something that will give us what we all want. Do you think that could be done?

Mr. COLE. Yes, very definite, sir. We are delighted to work with you, naturally.

Senator SPARKMAN. Senator Lehman.

Senator LEHMAN. I would like to ask a few questions. I think there is considerable merit in some of the criticism you voiced here today. I think it is axiomatic that if FHA is given additional responsibilities it must be given corresponding authority to discharge them. But the question I want to address to you is this: On page 4

you say:

While construction under the bill would be financed initially by borrowings from private mortgage lenders, the payment of the mortgage would apparently be assumed by the military as soon as the construction is completed.

As I understand it, and as I understand the bill, when you say the payment of the mortgage will apparently be assumed by the military as soon as the construction is completed, you mean the obligation to pay. There will be no immediate assumption of the mortgage, if I understand you correctly. All that the Government, whether it be done directly or by the services, obligates itself to do, would be the amortization of the debts annually. I may be wrong on that, but I do not understand that the Government immediately takes these mortgages over as soon as construction is completed. Am I correct on that?

Mr. MASON. The legislation provides that the Government; that is, the division of the Armed Forces, shall assume payment of notes, mortgages, or other legal instruments.

Senator LEHMAN. I cannot conceive that that would be immediate. Mr. MASON. You see, the mortgage would be arranged by the sponsor of the building-the firm who was taking the contract to put it up. The mortgage would then be assumed by the branch of the military service.

Senator LEHMAN. As I understand the bill, the mortgage would be entered into with some banks or other private agencies-nongovernmental agencies guaranteed, of course, by the FHA. But it would not become due except for the annual amortization of the debt service unless and until there was a default.

Mr. MASON. That is correct.

Senator LEHMAN. We are not requiring the Government to pay out this large amount immediately.

Mr. MASON. That is correct.

Senator LEHMAN. The statement is not very clear.

Mr. COLE. May I add that I cannot see how it would be defaulted. We do not see any possibility of default on the mortgages.

Senator SPARKMAN. The Government would be the mortgagor. Senator LEHMAN. That is correct. You say that the utilization of quarters' allowances will be withheld from the military personnel assigned to the housing. The way I understand it, according to the statements, the military services will use the quarters' allowance to pay the mortgage. I do not see how you can count on that. These mortgages, as I understand it, have a life of 25 years, and you are amortizing them annually. We have certain schedules of quarters' allowances today. We have no idea what they will be over the period of 25 years. They may be much higher or they may be much lower, but I do not see how you can depend exclusively on that.

Senator CAPEHART. Let me say, if the Senator will yield, that you always have the men at these camps who have to have some place to live. They will either get quarters' allowances from the Government or have to pay the rent out of their own salaries, because they have to have some place to live. Their monthly allowances that are given to these fellows are far more than sufficient today to meet the mortgage payments. It is far superior to that. You need have no fear of that at all, in my opinion, because the rental allowances are more than sufficient to amortize the mortgages over 25 years.

Senator LEHMAN. Is it intended to pay into this fund the entire quarters' allowances, or only that part of the quarters' allowance which will permit the amortization?

Senator CAPEHART. The entire quarters' allowances.

Senator LEHMAN. Then there may be a considerable surplus.
Senator CAPEHART. Yes.

Senator SPARKMAN. If you have an orderly amortization I should think that would not be correct. The Government automatically retains quarters' allowances when quarters are furnished. I should think that the orderly way to do it if this is based on a 25-year amortization would be simply to apply to the amortization the amount required each month, rather than making a caluclation.

Senator CAPEHART. I just wanted the Senator to understand it is available and the allowances are greater than are necessary. For example, if you have 1,000 units in a given place, the allowance for that 1,000 units for the 1,000 men is greater than the yearly amortization of the mortgage.

Senator SPARKMAN. Senator Payne has some questions.

Senator PAYNE. I noticed yesterday, Mr. Cole, during the reading of the statement from the Comptroller General, the fact that he believed housing built by direct appropriation was more desirable and less costly than housing under this plan, or the so-called Wherry plan. Do you want to comment on that?

Mr. COLE. I would not comment on what is more desirable. I think that is a matter for the military to determine. If this is to be housing on a military base for the military, then this is their problem and their responsibility, and the responsibilities of other agencies of the Gov

ernment.

On the cost situation, part of that would be involved in the type of housing which the military would select. I do not believe I would comment on that.

Senator SPARKMAN. Do you mean the cost of housing, or the cost of financing the program?

Mr. COLE. The cost of financing I am talking about.

Senator SPARKMAN. Mr. Cole treated the question of cost of financing.

Senator PAYNE. I read it rather hastily, but I thought he felt the appropriated housing was more costly to enter into.

Senator SPARKMAN. I think it was based on the cost of financing rather than the cost of the physical properties.

Mr. COLE. It would be difficult for us to say whether it would be more costly to construct the houses that way. I think the military does a good job of construction.

Senator PAYNE. I think if you will observe the construction that has been done under appropriated housing as such, it is far less desirable than the so-called Wherry housing, at least in the cases where I have had a chance to investigate. Furthermore, if they take all of the factors of cost into consideration they find that the Wherry housing is less costly than appropriated housing, because in the Wherry housing we take into consideration not only the construction of the building itself, which is different in design so that everyone is not simply a prototype and is exactly the same as the others; but they also include in those costs the landscaping and many other factors which enter into it.

When the military does it, they construct the building under the appropriation, yes; but then they step in and do the landscaping and the road construction work, and sidewalks, and so forth, on each separate proposition. I think you will find in the large run of activities of that type, appropriated for housing, if you take all of the factors into consideration by analysis, runs far more than Wherry housing, and is not anywhere near as satisfactory.

Senator SPARKMAN. Have you any questions, Senator Bush?
Senator BUSH. No, sir.

Senator SPARKMAN. Suppose we move on? Let me say this to the committee: Mr. Cole wants to leave at 11 o'clock.

Mr. COLE. I can stay about 10 or 15 minutes after eleven. Senator SPARKMAN. I was wondering if there was any particular bill you would want to discuss, and then you could leave your paper with Mr. Mason and others, and we could take up the rest of it after you have gone; or if you would like to continue, why, that is all right. Mr. COLE. I think the chairman would like to have me comment on the next one, which is housing for elderly persons of low income. Senator SPARKMAN. All right. Go ahead.

Housing for elderly and single persons

Mr. COLE. Two of the bills being considered by your committee (S. 1412 and S. 1642) relate to low-rent housing for elderly persons. S. 1412 would amend the United States Housing Act of 1937 to require the Public Housing Commissioner to include in contracts with public housing agencies a provision authorizing single elderly persons of low income, 60 years of age or over, to be admitted to occupancy in lowrent housing. The admission of these elderly persons would be subject to a determination by the local housing authority that such admission will not "prevent or delay" the admission of any eligible family to the project. It may be pointed out here that this requirement