ventionally financed housing so as to place an undue burden on home purchasers in the low and middle income ranges.

3. Regulation X has not reduced the volume of building or conserved critical materials required for defense needs.

4. The recent suspension of the voluntary credit restraint program was of itself an admission by the Federal Reserve Board that the real-estate credit restrictions were not needed for the anti-inflationary purpose which prompted their original adoption.

5. The suspension of regulation W further points up the gross inequity of continued restrictions on the purchase of homes. This recent action with respect to regulation W is convincing evidence that anti-inflationary objectives are not sought by the imposition of credit controls. If anything, the purchase of homes is less inflationary because it taps the built-up savings and increased incomes and channels them into long-term investments.

6. The increased availability of critical materials as indicated by industry reports and the relaxing of materials controls for nondefense building removes the conservation of critical materials as a reasonable objective of regulation X.

7. If the Congress wants sufficient defense and military housing, and we believe it does, surely it must be aware that regulation X does not further this objective. The Housing and Home Finance Agency winter issue of Housing Research candidly admits that regulation X penalized the little fellow who could not afford a larger down payment for a home. On page 7 of Housing Research we find that changes in the mortgage market and the number of housing starts "* occurred as a result of a complexity of factors, including the tight mortgage money situation. The latter factor may have been just as much or more responsible than credit restrictions for the developments in the housing and mortgage markets which are discussed."

The article continues: "* * * In the 1951 period the price distributions of new homes financed under each of these programs (FHA and VA) showed that s smaller proportion of homes purchased were priced at $10,000 or less and a larger proportion were priced at more than $10,000.

"Thus it was estimated that, based on the amount of first mortgage as a percent of purchase price, at least one-third of the new home purchases financed with FHA-insured loans and about two-thirds of the new home purchases financed with VA-guaranteed loans would have been ineligible. The comparable estimate of ineligible conventionally financed new home purchases (those requiring the highest down payments and without any form of government guaranteed or insured loans) would have been only 18 percent under the regulations" the article states.

Commenting on another phase of ineffectiveness of the credit regulations, the same article refers to the percent of homes purchased with all cash. We quote: 16* * * it is evident that the cash home purchases were relatively more frequent among buyers of homes costing less than $5,000 and of homes costing more than $15,000: * * Here is another indication that credit regulations would be partially ineffective in curtailing housing demand."

*

These comments in HHFA's Housing Research also support the fact that regulation X did not reduce the volume of construction or conserve critical materials, its stated purposes for existence.

* *

Increased cost of materials, the controlled-materials plan and the withdrawal of support of Government long-term bonds accounted for the decrease in housing starts, according to Housing Research. On page 11, we find: "** With lending institutions reluctant to sell their bonds at a loss (due to new Federal policy) there developed a shortage of mortgage money for new loan commitments. The resultant difficulty of obtaining advance commitments added to the credit regulations gave impetus to the decline in new home building." This statement readily admits that the credit regulations did not in themselves cut home building starts but that a change in the flow of money did result in that cut.

Production in this answer to any shortage. Again it has been proved with the most recent announcements by NPA and DPA that, surprisingly, we have more critical materials on hand than had first been believed. In growing proportions materials are being reported in greater supply and released for nonessential construction. All of these facts point to the need to repeal regulation X as a materials-conservation factor.

If regulation X had been responsible for conserving materials that are becoming increasingly plentiful, or had fairly and effectively controlled new home buying, it might be reasonable to take another look. But today it is neither needed nor wanted. It has resulted in hurting those who needed housing most but could afford it least.

The armed services and the Housing and Home Finance Agency admit that there is little relation between the number of units programed in a critical area and the actual number of units needed by the armed services involved in that area. For example, 100 rental units have been programed in the Fort Benning, Ga., area for suspended credit restrictions. The Army advises us, however, that the housing deficit on June 30, 1952, will be approximately 7,497 units. At Fort Hood, Killeen, Tex., there has been programed 1,000 units for suspended credit restrictions. Yet, their June 30, 1952, estimate of housing deficit is 9,893.

We are certain that the Congress is desirous of bringing about sufficient housing construction in the defense areas. It is obvious, however, this result will not be achieved by the present system of doling out a little relaxation of the credit restrictions here and there. As a matter of fact, a recent issue of the House and Home magazine reports:

"The biggest irony in the defense-housing program was that nonprogramed housing in almost every defense area was rising faster than programed housing.' Regulation X had two legs to stand on: anti-inflation and conservation of critical materials. Both have been removed after proving unnecessary. Surely, the Congress cannot continue a program which, without any benefit to the Nation, results only in the deprivation of opportunities for home ownership of many of our people.

We support wholeheartedly the repeal of the regulation X credit controls program.

Mr. BROWN (presiding). Does any member desire to interrogate the witness?

Mr. COLE. Mr. Chairman.

Mr. BROWN (presiding). Mr. Cole.

Mr. COLE. I want to comment on the statement you make on page 12, and frankly congratulate you upon that approach. It is the first time I have seen as lucid and clear an explanation of the real issue involved in this bill today.

I asked Governor Arnall and Mr. Putnam how long they thought we should continue wage-price stabilization and rent control, and one of the gentlemen said-I think it was Mr. Putnam-"As long as war seems possible."

Then, when I queried him on that, he said, as I recall if offhand: "Well, as long as war seems probable."

Then we had a further colloquy about what that meant with respect to the future economic and diplomatic conditions in this country and the world. It seems to me that Congress should meet that issue very clearly and very squarely, whether or not we must control our economy when there exists in this world another potential enemy. If so, then we should realize and meet that issue, and say that we must from now on, for time immemorial, have these wage, price, and rent controls.

If it is a matter of mobilization, for defense, and purely a temporary emergency, that is one thing, and if that is true, then, I think we should make the determination based solely upon the facts. We should determine whether or not we are taking from our civilian economy materials needed for the construction of military goods. I want to congratulate upon that. I think we must meet that issue and I think the Congress will do it.

Now do you find, in your research and in connection with the cases which you have mentioned here, that there are other areas than those mentioned by you-Fort Benning, Ga., and so on that there are other areas which are making a definite effort to solve the problem locally? You have mentioned a few, but there are other areas, are there?

Mr. WILLIAMSON. Yes, sir; there are a considerable number of areas where the local people have been permitted to help solve that problem of rent gouging and a housing shortage by working closely with the military and naval authorities.

I think in some of the areas rent control was imposed prematurely, when the local people were actually at work on some program to keep rents down. I cite Norfolk, for example. They had a defense housing steering committee and they were working closely with the Navy, following the Fort Jackson plan, to keep rents down and to stimulate conversions and so forth. I think on almost the same day that the Fort Jackson plan was launched, rent control was imposed without the people in the community that were working on that project being apprized that it was even imminent.

Mr. COLE. I am frankly surprised that any military commander would say that he does not need rent control. So your statement here is most interesting. I was wondering if that will continue after this is announced publicly. Is this the first time it has been announced publicly?

Mr. WILLIAMSON. No, I would like, with the Chairman's permission. to insert in the record a newspaper clipping which appeared in the Chanute Field area on this subject.

It is significant that the Air Force went along with the Chanute Field command and did not recommend that rent control be imposed, and the situation has now improved, and very probably Chanute Field, in the very near future, will be completely in the black as far as housing is concerned.

Here is one clipping, and I quote. The newspaper quotes the general:

"Rent control won't solve anything," he asserted. "Price has nothing to do with it. Rent control infers that pigpens are fit for humans to live in. I don't want Air Force men living in them at any price. The only way to whip bad living conditions is to build more decent houses.

"I say, 'Let controls alone.' We'll always have controls if we perpetuate the problem instead of solving it. I think we're proving at Chanute that the problem can be solved. If the community will work with us, I know it can be solved."

What happened at Chanute Field was this: some enterprising man had taken some crates that were around Chanute Field-I think they originally contained the old World War I Jerry plane. He took these crates just outside Chanute Field and built a little project of about 40 units. They were practically nothing. They piled crate on top of crate and cut doors and windows in them.

Now there were approximately 40 servicemen that lived in those crates, right off the base, and the commanding general did not want to declare them out of bounds because he did not have any place to put his people.

But he said that as soon as a unit was completed, he would take an individual and move him in the unit, and then he would declare that unit out of bounds. He said that the only way he could do it was to keep rent control away from there, because all rent control did was roll the rent back to maybe $20 or $25 a month, and then he would have a hard time getting the man to go in a standard unit at $67.50. So rent control would just make it more difficult to get the people out of that substandard housing.

Mr. BETTS. What was the date of the general's statement, there?

Mr. WILLIAMSON. August 22, 1951. The newspaper was the News Gazette of Champaign-Urbana, Ill.

Mr. McDONOUGH. What is the situation at that camp?

Mr. WILLIAMSON. It is improved considerably.

Mr. MCDONOUGH. Are those crates entirely abandoned now? Mr. WILLIAMSON. I have not had a recent report, but as the other units are completed they are vacating those shacks. I do not know whether they are all vacated or not. The recent improvement of the area is dated May 6, the official notification of the area's improvement, so they must have made considerable progress since then.

Mr. BROWN (presiding). The clipping may be inserted in the record. (The clipping referred to is as follows:)

[From the Champaign-Urbana News-Gazette, August 22, 1951]

NEW CHANUTE HOUSING BEtter Slum DETERRENT THAN RENT CURBS: GATES

A renewal of rent control in Champaign-Urbana would perpetuate rather than solve Chanute Air Base's housing problems., Brig. Gen. B. E. Gates declared Wednesday.

"Decent places in which families can live like humans" can be provided only by the base and the civilian community working "hand-in-hand" for improvement, he asserted.

“Chanute is doing its part by providing good homes for another 800 families on the base," he said. "I hope the community will do as well."

General Gates expressed belief that Chanute's new housing facilities and policies will spur similar civilian improvements by "killing the market for substandard housing."

With 800 families moving onto the base soon there will be no need for Chanute men to live in "pigstys and hovels," he declared. He added, "Before we permit them to live there again, we'll put trailers on the base."

Chanute's military strength now is about 17,500. About 2,400 of the men are married. When all of the 800 new units are occupied, about half of the married men will be housed on the base.

Most of those housed on the base will be members of the permanent party. Most of the married students in the Chanute technical schools will still require housing in the community. General Gates predicted local landlords will be "good enough businessmen" to provide the improved quarters that will be demanded when the 800 removals are reflected in the housing market.

General Gates was putting the finishing touches to the base's new housing policy when his attention was called to a Chicago newspaper's illustrated report that Chanute men were living in "pigstys, hovels, and dungeons." The newspaper referred to Chanute as a "black hole" and suggested that action could be taken only by designating Champaign-Urbana-Rantoul as a "critical defense area." This presumably would mean that rent control would be imposed again in Champaign-Urbana and continued indefinitely in Rantoul. The Chicago paper made only a passing reference to the 800 new units that are nearing completion.

"Rent control won't solve anything," he asserted. "Price has nothing to do with it. Rent control infers that pigpens are fit for humans to live in. I don't want air force men living in them at any price. The only way to whip bad living conditions is to build more decent houses.

"I say, 'Let controls alone.' We'll always have controls if we perpetuate the problem instead of solving it, I think we're proving at Chanute that the problem can be solved. If the community will work with us, I know it can be solved."

Mr. COLE. I have one other comment. I have been impressed with the possibility of permanent rent control, and the manner in which rent-control legislation is handled by the Congress now indicates to me that that possibility is more and more to the point.

If you will recall, we used to consider rent control as a separate piece of legislation, and people would come in to testify and we had considerable discussion about it. Now it is a part of this great Defense Production Act, tacked on to the tail end of it, so to speak,

figuratively. My colleague, Mr. McDonough, will remember very well what happened in the House last time when we wanted to debate rent control a little bit. We were cut off. I believe we had no debate on it, did we? Maybe 2 or 3 minutes apiece, perhaps, and then amendments were submitted without any debate.

The thing that disturbs me is that we now have a small minority of the units, let us say, under control. We have certain critical areas, so-called, under control, and we have other small areas, speaking geographically, with not too much in the way of population control. So we have a minority group here, really interested in the problem. I am greatly concerned about whether or not the real issue can be properly presented to Congress.

Mr. WILLIAMSON. I think it is safe to conclude that rent control bears little relation to its original statutory purpose.

Mr. COLE. I am sure of that.

Mr. WILLIAMSON. Take a community like Minneapolis, that has not sustained any great impact under the defense program. Its population has increased 18 percent since 1940, and its housing accommodations and these are not dilapidated, these are housing accommodations available--have increased by 30 percent.

Pittsburgh, the other city that we cited, the population has increased 6 percent, and housing has increased 15 percent.

And here is what has happened in Pittsburgh. The little suburb of Wilkinsburg, right outside of Pittsburgh, decontrolled by local action.

Well, the CIO in Pittsburgh-and the papers have been full of it-were so incensed at the fact that Wilkinsburg had seen fit to decontrol itself, that they are now trying to get back at Wilkinsburg and the only way they can do it is by having the whole area of Pittsburgh, including Wilkinsburg, certified as a critical defense housing area. They cannot meet the criterion of a substantial in-migration, which is one criterion that I am sure they would like to see removed. But the monthly labor survey reports of the Pittsburgh area, based on February information, showed that there is a moderate unemployment in Pittsburgh, which therefore rebuts any finding that they might make that there is a substantial in-migration.

Well, there was so much agitation on Pittsburgh, that the Department of Labor has ordered a special survey to see if they might come up with that substantial in-migration. They already have a regular monthly survey, but they had to conduct a special one to try to come up with this answer, but I do not see how they can, if they have moderate unemployment.

However, this gives you an example of how the whole purpose of rent control has been distorted.

Mr. COLE. That is all, Mr. Chairman.

Mr. BROWN (presiding). Do any other members desire to interrogate the witness?

If not, you may stand aside. We are very glad to have your testimony.

Mr. FITZGERALD. Thank you, Mr. Chairman.

Mr. BROWN (presiding). The clerk will call the next witness. The CLERK. Mr. Henry DuLaurance, National Apartment Owners' Association.