Mr. COLE. Senator, may I further comment that when we discuss the slum-clearance redevelopment, urban renewal programs, I hope that we will have tied them in sufficiently to satisfy the Senator.

May I comment once more with respect to one more part in connection with section 220 that it will assist, we hope, in many cities in the rehabilitation and redevelopment of those areas which have been cleared. It can be used in those areas, too.

Senator DOUGLAS. Let me grant this to show you that I am not solely critical: In those cities, where the slums are scattered in blocks, which sometimes has been true of sections of Washington, there I grant you that you could take blocks out here and there and effect an improvement. But in cities like my own, in Chicago, where we have a blighted slum area of many square miles in extent, and in other cities like, I think, Birmingham, Ala., and Atlanta, Ga., it doesn't seem to me that this gets at the real cancer.

Mr. COLE. At this stage, may I point out that we are definitely not abandoning slum clearance as part of redevelopment.

The CHAIRMAN. May I say this, that if you don't have some such plant as this, then you will continually get slums. You must have a plan to rehabilitate what might be termed old houses, which are good, and in good neighborhoods.

Senator DOUGLAS. I am not opposing this proposal. I am merely saying don't place too much reliance upon it, and don't sell it to the American public on the ground that it is a substitute for slum clearance, and for handling people who are displaced from these areas and who, because of income or other factors, cannot get suitable housing. The CHAIRMAN. I think if it was properly carried out, it might keep slums from developing, not eliminate existing slums.

Senator DOUGLAS. May I file a dissent to the good Chairman on that point. But that is all right.

The CHAIRMAN. I want to say this at this point: I shall introduce at the proper time an amendment that I think will do as much as anything to eliminate slums in the future. That will be an amendment to this bill, whereby the Federal Government will give help to industry and cities, and States and counties, in eliminating smoke, because it is primarily smoke and dirt and filth, created by industry, that caused many of these slums.

Senator DOUGLAS. I join the chairman in an antismoke campaign. The CHAIRMAN. It will be an amendment whereby the Federal Government will assist cities in eliminating smoke that causes the slum conditions.

Senator DOUGLAS. Does that mean that you are going to stop the smoke in political propaganda, Mr. Chairman?

The CHAIRMAN. That would be impossible.

Mr. HOLLYDAY. Mr. Chairman, before I proceed with the new section, which is section 221, I don't want to impose upon the committee's time, but this question is so important, I think Senator Douglas would like to hear what I am about to say.

This is a very stiff prescription. We in FHA believe it will work. I believe there is no city right now in the United States that is fully prepared to take that prescription, but cities throughout America are asking and crying for guidance, and this will be something for them to shoot at.

Senator SPARKMAN. May I ask, is this in effect an application on a nationwide scale, of what you have experimented with for a good many years as the Baltimore plan?

Mr. HOLLYDAY. Yes, it is. It was written in our office.

Senator SPARKMAN. And it is intended as a supplementary program, you might say, an in-between program, rather than a substitute for slum clearance?

Mr. HOLLYDAY. Senator, this is absolutely no substitute for the clearance of slums.

Senator SPARKMAN. I say it is really an in-between program, between your regular housing program and slum clearance.

Mr. HOLLYDAY. I would say it is complementary, very definitely, and it has a possibility that is very great, indeed. Now that the businessmen at least have awakened to the price that they are paying for neglecting blighted areas, here is an opportunity for them.

Senator SPARKMAN. I want to say to you that I have been very much impressed with it. I do think that we ought to make certain that people do not think of it in their minds as a substitute for slumclearance programs, and furthermore, that they realize that it is something that must unfold more or less gradually. It is not going to take hold, I don't believe, like wildfire, all at once. I think it is. going to require a lot of hard work and a lot of patient endeavor to put it over.

Senator DOUGLAS. I want to compliment Mr. Hollyday for the integrity of that reply.

Senator SPARKMAN. You mean the reply I made?

Senator DOUGLAS. No. I want to compliment you, but for the moment I was complimenting the witness, not my colleague. That is a very honest and very sound position, and I want to compliment you, sincerely.

Mr. HOLLYDAY. Thank you, sir.

Senator DOUGLAS. I don't think you ever appeared before our committee, urging this as a substitute for slum clearance, but a great many people did appear and urge the Baltimore plan as a substitute for slum clearance and for public housing. I do not question their good faith in the slightest, but I am delighted that the man who was bearing the burden of the battle, down in Baltimore, and who originated this plan, carried the heat of the day, does not make the claims for his plan which other advocates have made.

Mr. HOLLYDAY. I wish I could be as charitable as you are about the people who use the Baltimore plan under the theory that they were trying to help people who lived in the slums, because the people who misused this plan have caused those of us who are working for it more trouble than anything we could possibly think about.

The CHAIRMAN. It is not intended to take the place of slum clearance; it is to prevent slums. No one writing the bill, or offering the bill, or in any of the discussions we have ever had was it ever intended to take the place of slum clearance. It is to prevent slums, and I think it a very, very excellent idea, and I think it will work quite satisfactorily.

I again want to say I will introduce at the proper time an amendment to give some help in this bill to industry and cities that want to try to eliminate their smoke, because it is really smoke and dirt that causes slums. It isn't going to do us any good to go out here

and build new additions, shiny new houses with shiny roofs, and then have a factory on the next bill, or down in the valley, pouring smoke on top of it so that in a year's time it looks like it had been built 10 years and all the paint has gone.

I think we have to give some thought to eliminating smoke, if we are going to do the proper job of eliminating slums. I think it can be done, and we will offer an amendment to this bill to do it.

Senator SPARKMAN. Let me ask Mr. Hollyday a rather short technical question: Let's assume that you are engaging in an urban renewal program-that is what you call it, isn't it?

Mr. HOLLYDAY. Yes, sir.

Senator SPARKMAN. And that involves one block, for example. Now, you have to have the cooperation of the individual property owners in there, don't you?

Mr. HOLLYDAY. Yes, sir.

Senator SPARKMAN. How are you going to get that, unless they are violating some sanitary code or ordinance, or something of that kind?

Mr. HOLLYDAY. Senator Sparkman, this is called a neighborhood program. Now, a block is not a neighborhood. Senator SPARKMAN. Of course.

I realize that.

Mr. HOLLYDAY. I didn't mean to be technical. Senator SPARKMAN. Suppose in that area you had a block in which some of the neighborhood would not cooperate.

Mr. HOLLYDAY. Section 220 cannot be applied in a city until some very important things happen first: The city must have a workable plan for the whole city, for the whole community, in the opinion of the Administrator of the Housing and Home Finance Agency. Then, when the Administrator says to FHA, "I have looked at this program, and it is workable," then, and only then, can we go to the city and say, "Now, Mr. Mayor, we don't want to tell you what to do, but if, in this particular delineated area, which we will work out with your planning organization, you will do these things"--and they are very difficult, indeed, to do

Senator SPARK MAN. Yes, I have looked them over.

Mr. HOLLYDAY. Then we say, "If you will do that, and if you will enforce the laws that will restore to that particular area the health that should be there, and will remove the causes the livery stable, the flashing electric light, the traffic, the congestion"-numerous articles that I have spelled out somewhat. in a condensed form in here—“Mr. Mayor, if you will do those things, then we will come in, because it will be economically sound for the First National Bank of Birmingham to lend their money, and we will guarantee they won't lose."

Senator SPARKMAN. In other words, the initiative has to be on the part of the city itself in working up the plan?

Mr. HOLLYDAY. If the citizens and the city hall are not really anxious for it, we are wasting our time.

Senator DOUGLAS. Having been a city alderman, may I say that if you eliminate this flashing electric light, you have to effect a greater change in the procedures of our city council, as great as it would be if we changed the whole procedure of the Senate and the House of Representatives and turned over a great deal of administrative power to the folks downtown. And that is true of variations in zoning ordinances, too.

Mr. HOLLYDAY. Zoning, of course, wasn't spelled out specifically, but zoning against such things in a residential neighborhood is, of course, fundamental.

Senator DOUGLAS. Permitting variations and permitting business to creep in, in one case, to a residential neighborhood, like a hotdog stand or a little basement grocery store, and letting an electric sign creep off a main street into a side street, and so on-that is done by special ordinances passed through the city council, with the understanding that all the aldermen scratch each others' backs, as is sometimes done on the rivers and harbors bill up here.

Mr. HOLLYDAY. Section 221-this is the new section-is designed to provide privately financed housing under insured mortgages for families displaced by governmental action in a community with a workable urban renewal plan. These will be low-income families generally families who have been living in substandard housing in substandard neighborhoods. They are being forced to move. These families must find decent homes. Unless they are adequately housed, the problem of overcrowding and blight is not solved; it is just moved from one part of the city to another.

Some of these displaced families will be able to find decent homes in the existing housing inventory of the community. Many of them will not. Having come from substandard housing, they might be forced again into substandard housing unless public housing were made available or unless some way can be found to bring privately financed housing within their means. That is what section 221 is for.

Section 221 is designed to bring privately financed housing within the reach of at least some portion of these families by applying the insured-mortgage system on the most liberal terms deemed feasible and on a frankly new and untried basis.

That is applicable only to the people who have been physically displaced by Government action.

I might add in this connection that, while section 221 is a new approach to the problem of rehousing families displaced from blighted areas, FHA has had some very limited experience with 100-percentinsured mortgages in disaster areas. That experience, though limited, has been good.

I believe section 221 is an intelligent approach to a very serious problem. Let me briefly summarize its specific terms.

Section 221 is to be available only in communities which have been certified by the Administrator of the Housing and Home Finance Agency as having workable programs for the elimination and prevention of urban blight. It would be available only for housing to be built or rehabilitated for families being displaced from their homes by governmental action in such communities. It is intended for use in those situations where there is an insufficient supply of suitable housing available from other sources to take care of such displaced families.

The maximum mortgage under section 221 would be $7,000 per unit, This limit is designed to insure provision of housing within the financial means of a substantial portion of the modest-income families being displaced from urban renewal areas. The maximum term would be 40 years and the mortgage insured by FHA could be as high as 100 percent of value. The properties covered by the insured mortgages under section 221 could be single-family homes for sale to eligibile

displaced families or may be projects of 10 or more units to be rehabilitated by nonprofit organizations for rent to such families. Mortgage financing is also available for single-family homes built for sale in amounts not to exceed 85 percent of value, to assist in the construction and provide financing pending subsequent sale to a qualified-owner occupant.

The ceiling of $7,000 for home mortgages to be insured under section 221 has been proposed on the basis of several considerations. In the light of past experience under both section 203 and section 8, it appears that new houses with at least two bedrooms can be built to minimum section 203 standards in the cheapest land areas of most of the metropolitan communities in the country within the $7,000 mortgage amount proposed in section 221. In all communities, urban as well as suburban, the $7,000 ceiling should be effective in assisting rehabilitation or purchase of existing homes adapted to the needs of displaced families.

Senator DOUGLAS. You speak with great confidence on that point. De you really feel that confidence, that you can build new houses with at least two bedrooms on cheap land areas within the $7,000 mortgage amount?

Mr. HOLLYDAY. No, sir. They could hardly ever be built within a blighted area, because of high land values. You would have to go outside of the blighted areas to take care of these people with a new home.

The confidence comes, Senator, where I refer to the fact that on the rehabilitation of existing homes, I think that $7,000 can be used.

Senator DOUGLAS. But the preceding sentence speaks with confidence, where you say that new houses with at least two bedrooms can be built.

Mr. HOLLYDAY. I think you will find, sir, I use the term "cheapest land areas." And I said in most communities.

Now, in Chicago, I take it you would have to get pretty far out in order to get land that would make it possible, but I would like to call your attention—

Senator DOUGLAS. You would get so far out, you would never get to your job.

Senator LEHMAN. Mr. Chairman, may I ask a question?
The CHAIRMAN. Yes, Senator Lehman.

Senator LEHMAN. You may have already explained this during the time I was out of the room, and if you have, I will withdraw my question. But one thing is not very clear to me. I think your proposal here is certainly a very interesting one, but I was wondering why you limited these $7,000 houses merely to people who have been displaced from urban blighted districts, and did not make them available to other people, when it is established that the supply of suitable housing is not available from other sources.

Mr. HOLLYDAY. Senator, I did not explain that while you were out. Section 203, here, will be available to everyone, up to a 95-percent loan, with an $8,000 ceiling, just as it will be for these people. But where we went to a 100-percent loan, we felt the $7,000 ceiling was desirable.

Mr. COLE. May I add, too, Senator, as Mr. Hollyday has explained in his statement, the section 221 program is, frankly, an experimental program. There are some questions about it in our minds, and in the