March and April the number of new dwelling units started was less than in the comparable months of 1950. Unless there should be a more than seasonal increase in the coming months it is quite possible that total starts this year may be as low as 1.3 or even 1.2 million units. The New York Journal of Commerce, of April 11, 1955, commenting on prospects for housing activity, stated:

*** it is difficult to make a case, on the basis of the statistical evidence, for a tremendous housing construction boom throughout 1955. It may well be that, before the year is over, those who now are predicting new highs will be willing to settle for a total about the same as last year.

Not only are we not building enough houses, but as I shall indicate in greater detail in a moment, and as Mayor Clark stated in his very fine statement, most of the houses that are being built involve costs entirely out of line with the incomes of the families with the most urgent needs. Practically no houses are being built for the lowest income families and current prices for new housing are much too high for most middle-income families. Unless housing programs are developed which will assure a large volume of housing construction for low and middle-income families at costs they can afford, there is no prospect for a sustained high level of housing construction. On the contrary, as scattered signs already indicate, the likelihood is that we will have a construction rather than an expansion of housing activity.

The proposed Housing Amendments of 1955, as the very title of the bill makes clear, completely fails to lay the groundwork for a fundamental attack on the Nation's housing problem. As the Housing and Home Finance Administrator admitted in his testimony before your committee this week, the proposed legislation provides no new programs. The Administration apparently believes that the legislation enacted last year was so perfect that only minor changes are needed now.

The A. F. of L. takes sharp issue with the Administration's appraisal of its own housing program. This program does not measure up to the Nation's total housing needs; it does not encourage the building of housing geared to family income; and its so-called urban renewal scheme does not provide the basis for sound replanning and redevelopment of our cities. What is urgently needed now is not the few minor amendments the Administration has proposed but a bold comprehensive total housing program which will meet the Nation's fundamental housing requirements.

The Housing Act of 1954 limited publicly aided low-rent housing construction for this fiscal year to 35,000 units, but placed such crippling restrictions on even this pitifully inadequate authorization that virtually no units have actually been built. Now, the Administration proposes only minor changes in the provisions of the 1954 act. H. R. 5827 would limit construction to 35,000 units a year for a 2-year period. Although it is not quite as restrictive as the law now in effect, the maximum number of units authorized for construction in any community would still be restricted to the number of lowincome families to be displaced by urban renewal or other governmental activities.

This proposal does not begin to meet the needs of low-income families for decent housing. That need is as great today as ever before,

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but except for the insignificant trickle of public housing, no houses are being built that low-income families can afford. The so-called section 221, low-cost private housing program, provided for in the Housing Act of 1954, has thus far been a complete failure. There is no evidence whatsoever that this program will ever develop to any appreciable extent. Despite sporadic claims by private builders that they can provide housing at costs commensurable with rents in lowrent public housing projects, it is clear that there is no possibility that private speculative builders will make available any appreciable number of houses within the means of low-income families.

Thus even in the present housing boom, virtually nothing is being done to improve the living conditions of low-income families. Lowrent housing is needed not only for the low-income families who are displaced by slum clearance, urban renewal, and other Government projects, but also for hundreds of thousands of other families living in slum dwellings which are not slated for clearance.

We therefore urge speedy resumption of the full-scale low-rent public housing program contemplated in the Housing Act of 1949. We ask the Congress to authorize annual construction of at least 200,000 low-rent public housing units to provide decent housing for low-income families.

The proposed Housing Amendments of 1955 contain no provisions which would encourage construction of housing within the financial reach of middle-income families. Yet there can be no doubt that new housing now being made available involves rents and selling prices far too high for most middle-income families.

Earnings of factory workers currently average about $75 per week. Assuming that such a worker pays as much as 20 percent of his income for housing, the maximum that he can afford to pay is $65 a month. Yet according to the Bureau of Labor Statistics, during the first quarter of 1954, the average house built in metropolitan areas had a selling price of $12,300 which involved for its purchaser a monthly housing cost of about $125.

No recent information is available on the selling prices of houses built under the FHA program, but information at hand indicates that sales prices of VA houses have been sharply increasing. By the early part of this year, four-fifths of the new and proposed homes for which VA home loans had been closed involved sales prices of $10,000 or more as compared with only 63 percent at this level 2 years ago. What this means is that 80 percent of all VA-guaranteed homes involved costs at least 35 percent more than the average factory worker could afford. Yet there is every indication that prices will rise even higher in the months to come.

The proposed Housing Act of 1950, which was introduced by the chairman of this committee, and was reported favorably in that year by this committee to the Congress, contained the basic principle for making good housing available to middle-income families at costs they could afford. The core of that principle was the provision of lowcost, long-term loans for housing for middle-income families.

The present interest rates of 412 to 5 percent under the FHA and VA programs are entirely too high in the light of the virtually complete lack of risk to the lender. Private lenders should make loans under these programs at considerably lower interest rates. But if

private lenders do not reduce interest rates for middle-income housing loans, the Federal Government should make such loans available at lower rates.

In order to make possible an effective program of middle-income housing, we recommend establishment of a mortgage bank for cooperative and middle-income housing similar to the agency proposed in the Housing Act of 1950. This quasi-public bank should make available loans at the cost of money to the Government plus one-half percent, approximately 3 percent, for 40 years, such loans to be made available for cooperative, non-profit rental, and sales housing for middle-income families. Such loans should be made up to 95 percent of the construction cost.

We would stress the fact that a long amortization period for repayment of a housing loan is appropriate only if it is combined with a low interest rate. Interest rates today are so high that the home purchaser is saddled with total costs over the life of the mortgage double or triple the selling price. With a 3 percent interest rate it would be possible to take advantage of amortization periods up to 40 years without unduly burdening the buyer, and yet permitting a considerable reduction of monthly housing costs.

The so-called urban renewal program which was launched with considerable fanfare last year has hardly begun to function. In our testimony before this committee last year we directed the attention of the committee to some basic misconceptions in the urban renewal program. We indicated at that time that the excessive emphasis on rehabilitation was misplaced and that the effect would be to encourage the overuse of existing housing.

Although the urban renewal program is still not off the ground, it is clear that its undue stress on so-called rehabilitation and conservation of slum areas will not encourage a healthy growth of our urban communities. The A. F. of L. does not oppose rehabilitation of existing dwellings where such rehabilitation will produce livable homes in decent neighborhoods. But there simply is not a large number of dwellings now occupied which can be modernized or patched up for long-continued occupancy. At most, there are perhaps 200,000 units a year which can be properly and effectively rehabilitated. Therefore, it is clear that what is needed primarily is not patching up of rundown dwellings, but clearance of blighted slum areas and fundamental and lasting urban redevelopment.

H. R. 5827 provides an additional $500 million authorization for urban renewal, slum clearance, and urban redevelopment. We recommend this increase in the authorization, but we urge that the program be redirected to its original objective of clearance of unlivable slums and genuine city rebuilding. At the very least, we urge that the Congress make it unmistakably clear that financial aid must not be denied to communities undertaking effective slum clearance and urban redevelopment programs. Furthermore, financial assistance for rehabilitation and conservation should be authorized only when, from the long-term viewpoint, such activities are feasible and economical and will produce livable homes in sound neighborhoods.

We have already recommended a program of low-cost long-term loans for middle-income housing, including as a major part of the program, cooperative housing. We urge that the committee accept. this recommendation and recommend its adoption by the Congress.

Until this program is enacted, however, we recommend strengthening of the existing FHA 213 cooperative housing program by enactment of H. R. 5663 introduced by Congressman Patman. The major provisions of this bill would:

(a) Restore the previous provisions which allowed mortgages for cooperative housing on a replacement cost rather than value basis. This change has necessitated such large downpayments that it has crippled the cooperative housing program. We urge return to the previous provision.

(b) Establish a $50 million revolving fund in the Federal National Mortgage Association to make available financing for cooperative housing projects unable to procure financing in the open market.

(c) Restore the post of assistant commissioner of FHA for cooperative housing.

(d) Increase the maximum mortgage on cooperative housing projects from $5 million to $30 million in order to permit construction of large projects.

As a representative of the cooperative league is here this morning, and will amplify this considerably. I will merely say at this time that we endorse the enactment of this bill.

We understand that a number of bills have been introduced to encourage construction of housing suitable for elderly single individuals and couples. We have not given detailed consideration to these proposals, but we recognize that the problem of making available suitable housing for the aging is becoming ever more serious. Two promising approaches to this problem are: (1) The provision of units for the aging in low-rent public housing, over and above the units we have recommended for the existing program, along the lines of Congressman O'Hara's proposal; and (2) assistance for cooperative housing for the aging. We urge that the committee direct serious attention to this issue.

Purchasers of homes under the FHA and VA programs should be given protection through a lapsed payments plan. This would establish a revolving fund out of which monthly payments could be maintained in the event a home buyer is forced to miss monthly payments by unemployment, illness, death in the family, or other emergency. The mortgagor would be expected to make slightly higher monthly payments to make up for the lapsed time and reimburse the revolving fund.

The Federal Government should not provide financial assistance for projects which involve substandard wages for any employee. We, therefore, ask that housing built under the FHA and VA programs, as well as all other programs involving Federal financial assistance, be made subject to the requirements for the payment to all employees of wage rates prevailing in the locality, as determined by the Secretary of Labor.

In conclusion, adoption of the recommendations we have made would provide the impetus for a bold fundamental attack on the Nation's housing problem. We are convinced that enactment of these proposals would assure a rate of housing construction sufficient to meet otal housing requirements; it would bring good housing within the inancial reach of all families; and it would provide the basis for farencing replanning and redevelopment of our urban communities.

Finally, it would assure that housing would play a full role in helping to achieve and maintain economic prosperity.

We urge your committee to give these proposals your sympathetic consideration and to recommend their enactment to the Congress. Mr. Chairman, I have attached to my statement the resolution on housing unanimously adopted by the 73d convention of the American Federation of Labor held last September, and I respectfully request that this resolution be included in the record of the hearings. Mr. BROWN. It may be made a part of the record.

(The resolution is as follows:)

RESOLUTION ON HOUSING UNANIMOUSLY ADOPTED BY THE 73D CONVENTION OF THE AMERICAN FEDERATION OF LABOR, HELD IN LOS ANGELES BEGINNING SEPTEMBER 20, 1954

Whereas the current housing construction rate of about 1 million units a year must be doubled to make available livable homes to the nearly one-third of American families forced to live in dwellings below even minimum standards for family living and to meet the additional needs of our rapidly expanding population, and

Whereas a doubled rate of housing construction is essential to help maintain economic prosperity and full employment, and

Whereas the overwhelming proportion of the additions to our housing supply must come from new construction and cannot be made available by haphazard paint-up and patch-up schemes such as the socalled "urban renewal" program sponsored by the administration, and

Whereas the requirements of low and middle-income families who have the most desperate need for decent housing at rents and selling prices they can afford have been virtually ignored in Government programs of financial assistance to private speculative builders, and

Whereas Congress, in the Housing Act of 1954, has tragically weakened the Nation's housing program by :

(1) Limiting low-rent public housing construction to a token 35,000 units for 1 year despite overwhelming evidence that only low-rent public housing can make available decent homes to low-income families at rents within their means. (2) Providing additional incentives to speculative builders to continue to concentrate on construction of high-priced houses while doing nothing to assist construction of moderate-priced homes that workers and other middle-income families can afford.

(3) Taking only incomplete and largely ineffective measures to inject urgently needed safeguards in the programs of Federal assistance to speculative builders and mortgage lending institutions despite the shocking evidence of widespread frauds in the mortgage insurance program administered by the Federal Housing Administration which have permitted unscrupulous builders and contracts with the connivance of FHA officials to despoil building trades workers, consumers, and the Government of hundreds of millions of dollars: Therefore be it

Resolved, That the delegates to the American Federation of Labor Convention assembled in the City of Los Angeles, Calif., go on record as urging the Congress to enact a housing program which will make possible a doubled rate of residential construction and will assure especially that the urgent needs of low and middle-income families for decent housing accommodations within their means are met. This program should include:

(1) Resumption of the low-rent public housing program at an annual rate of at least 200,000 units a year.

(2) An expanded urban redevelopment program providing necessary financial assistance to cities for slum clearance, replanning, and rebuilding of metropolitan

areas.

(3) Increased Federal assistance for housing for middle-income families through reduced interest rates and lengthened amortization periods. These homes should meet adequate standards of space, construction, and availability of community facilities. Priority for assistance under this program should be assigned to genuine cooperative and nonprofit housing.

(4) Full protection of consumers in all housing programs involving Federal financial assistance in any form including: