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earmarked for certain rents and hence for families of certain incomes (figured on the factor of five times the rent).

Without the earmarking system the Asheville Housing Authority has been operating Pisgah View Apartments and another project, Lee Walker Heights (96 units) so that it used in fiscal year 1953, $89,340 of the permissible contract subsidy of $137,020. This left unused of the authorized ceiling subsidy $47,680.

In fiscal year 1954 the Authority used $117,226 subsidy, leaving unused $19,794. For fiscal year 1955 PHA estimates the Authority will use almost the same as last year—$117,227. That would still leave unused of the authorized subsidy nearly $20,000, or, to be exact, $19,793.

It seems that somebody has complained that Asheville has been using too much subsidy. Now, the only way the Housing Authority can do its maximum to reach down and house the lowest-income families is to use the full subsidy authorized by the Congress to do just that.

So the Housing Authority of Asheville is to be asked to take apartments from lower-income families and earmark them for higher-income families and higher rents. This is purportedly to reduce the amount of Federal subsidy required.

The current allocations without mandatory earmarkings are shown below alongside the proposed quotas to be fixed.

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This means, for example, that 32 apartments now rented to families who can afford to pay no more than $21 per month will not be rented to families in that income bracket when the present occupants vacate. They will be rented to higher income families. Under the proposal, and it is expected to be adopted shortly, families who can afford to pay no more than $31 per month will lose 36 apartments and families who can afford to pay $32 and more per month will have 52 more apartments than they have now ; 13—the number of apartments now used by families who can afford to pay $42 and more per month—would be increased to 30.

We certainly do not intend to pick on the Asheville Housing Authority. They are now using a higher proportion of the Federal subsidy authorized to house lowest income families than most authorities we have looked into. At least they are coming nearer to housing the families Congress and the public intended were to fulfill a social-welfare purpose unless public housing is going to serve those housing can be disposed of, Congress should insist that its statutory purpose should be carried out." That will mean using the subsidies authorized by the 1937 and the 1949 acts to full extent. Why should Congress authorize subsidies to fulfill a social welfare purpose unless public housing is going to serve those families Congress and the public were led to believe would be housed ?

We are convinced that the Asheville case is a mild symptom of a wave of such actions by housing authorities all over this country to house higher and higher income families in Federal public housing. This pattern, of course, has the effect of excluding the lowest income families Congress intended to take care of.

HENRY G. WALTEMADE. Senator SPARKMAN. Senator Kuchel is here now. He is busy with other commiteee functions, and he tells me he will take only a very few minutes. Senator Kuchel, we are glad to have you. You can make your statement at this time.

Air pollution



Senator KUCHEL. Mr. Chairman, I greatly appreciate your permitting me to testify briefly here as a coauthor with Senator Capehart of S. 1565. I might say that legislation of similar purport was introduced, Mr. Chairman, in the 83d Congress by Senator Capehart and me. It passed the Senate only to become lost in the House of Representatives. It deals with the subject of air pollution, one of growing importance to the people of the United States. Meanwhile, however, Mr. Chairman, at the conclusion of the 83d session of the Congress, Senator Capehart and I joined in requesting the President to appoint a committee, consisting of various members of the departments of the Federal Government, to inquire into the broad subject of air contamination and to determine what might be done by the Federal Government to assist the cities and counties and States of America in coping with that problem.

I was glad to note that when the President addressed the Congress in January in his state of the Union message, he recognized the problem or air pollution or air contamination and suggested that the Federal Government could occupy a portion of the field designed to eliminate that pollution ultimately.

I think, Mr. Chairman, I can say that there are two fields where the Federal Government might well operate in the fight against air contamination. It is true that the control of the problem through legislation should remain with local government, but it is also true that in the field of research the Federal Government might well perform a constructive service. It might, secondly, provide an incentive to industry in America through appropriate tax amortization legislation. Thirdly, and I address myself now to a portion of the bill before us, it might provide for loans to people in America who desire to install various types of air pollution control devices. That, Mr. Chairman, is the reason why I am particularly interested in those portions of the present legislation providing for loans by the Housing and Home Finance Agency. I think it is vital for the Federal Government, acting through that Agency, to provide such assistance in the installation of devices and apparatus which would cut the amount of air pollutants discharged into the atmosphere.

To illustrate the need for such assistance on the part of the Federal Government, I wish to advise the committee that only recently the air pollution-control authorities in the city of Los Angeles have adopted an order outlawing the use of home incinerators. These rubbish burners are extremely numerous in that metropolitan area. Similar situations unquestionably exist in the large metropolitan areas across the Nation. The regulation prohibiting such gadgets was taken after long debate but is indicative of the lengths to which responsible local governmental agencies are going and will go in order to reduce smog and other pollutants.

Therefore, with the suggestion that an important source of air contamination is the home and small industry or business heating plants, it is not inconceivable that control efforts will reach the point

where major modifications of such installations are required. In addition, it has been suggested that the building codes should be strengthened so that future construction will be designed to hold air pollution to a minimum. Such steps would make necessary credit facilities for property owners, and I therefore urge the committee to approve particularly the loan provisions embodied in Senator Capehart's and my legislation. I particularly hope the legislation will contain authority for loans to individuals as well as to business enterprises.

I was happy to join in sponsoring this legislation because I feel that production and the ultimate elimination of pollution in the air are imperative in connection with the efforts to solve the Nation's housing problem and wipe out slums. There is no doubt that contamination of the air is a strong factor in the deterioration of neighborhoods. Obnoxious fumes are known to damage physical properties.

For these reasons, Mr. Chairman, I feel it is entirely logical for this committee to approve legislation amending the Housing Act so that resources of the Housing and Home Finance Agency may then be employed in a broad campaign against smog and all other types of air pollution.

Thank you very much, Mr. Chairman.

Senator SPARKMAN. Any questions? Thank you very much, Senator Kuchel. We are glad to have your statement.

Senator SPARKMAN. The United States Savings and Loan League, Mr. Henry A. Bubb, chairman of the legislative committee.

Mr. Bubb, you have heard what I have said about the necessities of time, and I wonder if you will cooperate with us in trying to condense or summarize your statement, if you will, in order that we may give a chance for all of them to be heard. Ilome loan bank



Mr. BUBB. Mr. Chairman, in order to expedite matters, I had already contemplated that, and I have cut out quite a little bit of my statement, which will be presented for the record.

Mr. Chairman and Senators, I am Henry A. Bubb, of Topeka, Kans., president of the Capitol Federal Savings & Loan Association of Topeka, and chairman of the board of directors of the Federal Home Loan Bank of Topeka. I appear, however, as chairman of the legislative committee of the United States Savings and Loan League. I have Mr. Slipher with me, who is our Washington representative.

On behalf of the officers and members of the league, I wish to express my appreciation to the committee for the opportunity to state our views on legislation dealing with housing, and with the Federal statutes which affect our savings and loan institutions. Our membership consists of some 4,100 local savings and loan associations, cooperative banks, homestead associations, and building and loan associations.

I am going to skip some of this paragraph.

I am glad to report that we feel the Department of Justice and the Federal Housing Administration have been diligent in enforcing the provisions of section 513 which were enacted last year. However, this objectionable practice of transient rentals has not yet been completely stopped. But when three cases, now before the Federal courts, are decided, we hope that the pattern of procedure will have clearly emerged, and that the controls which the Congress established will begin to be effective.

Even though this is a very serious business to the hotel industry, the preliminary litigation is not without its paradoxical angles. For example, the Commissioner of FHA ordered one apartment building to cease and desist from its practice of transient rentals, whereupon the FHA borrower brought action in Federal court to compel the Commissioner to desist from further harassment and annoyance in the operation of his property. But with the Department of Justice depending the case, I hope the Commissioner has not missed any sleep

I over that action.

I would like very much to recite a few observations to your committee today, during the brief time that I will require for this statement.

First, one of the points we stressed in our testimony last year was the fact that there are roughly 1 million hotel rooms throughout the country. Compared with this number, we understand that there are approximately 500,000 units in FHA projects which were financed under section 608 and section 207. These federally financed facilities could conceivably take over our entire business, if permitted generally to rent on a transient basis. However, Congress took care of that situation last year by forbidding such transient rentals, except under certain circumstances.

But today there are already several bills before the 84th Congress today which would exempt certain FHA projects from section 513, and permit transient rentals by those certain properties. And even though it be said, in some cases, that the borrowers are in difficult financial straits, may I observe that the hotel industry, too, finds itself in difficulty. Nationally, our occupancy has been steadily downward ever since 1947. And we will not soon forget that in the decade of the 1930's, 82 percent of all hotels either went bankrupt or were obliged to refinance. And this happened, if you please, without competition from Government-financed properties which now represent a potential competitor with 50 percent of our total available space.

Second, we note that Administrator Albert Cole recommended to your committee that the mortgage limitation on multifamily housing projects be raised from $5 million to $12,500,000. There probably are valid reasons why Mr. Cole lodged this recommendation with the Congress. But I should like to point out that there are probably no more than 25 hotels in all America, whose assessed valuation today would equal $12,500,000. You are, therefore, thinking in terms of building properties which generally surpass anything known in the hotel field. When you are dealing in sums of that size, gentlemen, I believe that a builder would find himself able, for the first time, to finance the construction of one of these properties in the Chicago Loop, or the very heart of the downtown business area in almost any American city. Thus could be created an establishment which could very simply be converted to hotel operation later and largely supplant a number of following the broad pattern previously established with the Federal Reserve system as the central banking system for commercial banking and the Federal land bank system as the central banking system for farm mortgage credit.

The legislation followed the generally accepted principle that where Government agencies are created to supervise in the public interest the operation of privately owned business corporations, such supervision should be exercised by nonpartisan boards or commissions, the members of which are appointed for specific and overlapping terms. Only in this fashion is there provided a continuity of policy so essential to the operation of the institutions under supervision. This principle is well demonstrated in the case of such bodies as the Federal Reserve Board, the Interstate Commerce Commission, the Federal Communications Commission, the Federal Trade Commission, and others.

Insofar as the grouping of related governmental operations is concerned, it may be pointed out that the Home Loan Bank Board, in addition to its original function, has since been charged with the further responsibility of supervising the Federal Savings and Loan System and of operating the Federal Savings and Loan Insurance Corporation. In the administration of its duties in these three areas, the operations of the Home Loan Bank Board are conducted without expense to the Government, all of its cost being apportioned to and paid by the institutions it supervises.

The institutions that are supervised and that pay the costs of operation of the Federal Home Loan Bank System, of the Federal Savings and Loan System and of the Federal Savings and Loan Insurance Corporation, raised no objection when, as a wartime emergency measure, in 1942, a Presidential directive placed the Home Loan Bank Board under the supervision of a single Administrator, along with certain other unrelated activities of Government, reliance being had on the statute which provided that such directive would expire with with the termination of the war emergency. Nevertheless, under another statute, this consolidation was made permanent in 1947.

The Federal Home Loan Bank System is now owned entirely by its member institutions. There are no Federal funds in its capital structure and no appropriation of Federal funds is made for its operation. The Board exercises administrative, legislative, and judicial powers

and supervises a three-phase financial operation. There is no community of interest or advantage served by placing it under the supervision of an Administrator, and, indeed, the continuance of such a program does injustice to a basic philosophy of governmental supervision of private business operations.

The independence of the Home Loan Bank Board was recommended both by the Hoover task force and by the Hoover Commission report itself. It is endorsed by every organization of savings and loan associations that I know of and according to the American Banker is endorsed by the American Bankers Association. The language of this measure which was worked out by many elements of the savings and loan business is very simple. The Board is simply restored to its original independent status and the $66 million of Treasury funds are retired and replaced by an investment by the 11 Federal home loan banks. The investment by the banks requires only 6 percent of the Federal home loan banks' assets, but even so the committee might want to consider laying aside for the time being the proposal to reduce the

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