We further recommend that any Government research facilities that may be established for the benefit of the construction industry be so organized as to make use so far as possible of existing Government, institutional, and private research laboratories and facilities, and further that it embrace the entire realm of construction and not be restricted to one aspect thereof such as research in housing alone. It is obvious to us who are close to the industry that the materials, methods and common assemblies used in one type of building are frequently applicable to other types.

We, therefore, feel that the designation of separate agencies to conduct research in housing, other types of public buildings, and public works would be more costly and wasteful and less conducive to sound progress than the conduct of all such research under the direction of a single managerial group such as the proposed National Construction Research Committee.

Early in my statement I indicated that some individuals in the Government have a compelling reason for wishing to establish a permanent National Housing Agency at this time. Their reason is that a National Housing Agency is a basic step in an undeniable plan to socialize the entire construction industry, particularly housing, by keeping the industry under governmental controls more restrictive than those adopted during the war. Their plan calls for direct gov、 ernmental participation in the housing field on a scale never before attempted in this country.

In support of these statements, I wish, first, to quote from a letter written by Economic Stabilizer Chester Bowles to Housing Expediter Wilson Wyatt, under date of January 11, 1946. This letter was printed in the Congressional Record of March 21. In this letter, Mr. Bowles said, referring to the conduct of the war program:

All that meant central planning. * ** * I am confident that that's the way and the only way to get the housing we must have.

Earlier in his letter, Mr. Bowles said:

No one believes for a moment that we can get this housing by giving the construction industry its head. Anyone who argues for reliance on the industry * ** is arguing that we ignore the problem we face.

The alternative to relying on industry is to rely on Government. That clearly is Mr. Bowles' intention.

At the end of his letter, Mr. Bowles said:

Housing, in my opinion, is the most important single issue that faces the administration at this time. If we muff it, it will show us under. On the other hand, if we meet and meet it successfully, we shall not only make good on the basic responsibility of Government to the returned veteran, we shall give a lift to the administration's entire program which should prove invaluable.

In my opinion, Mr. Bowles' statement that his proposal would "give a lift to the administration's entire program," unquestionably refers to a program to gain and retain strict control over housing.

As further evidence of such an intention, I cite the OPA's prolonged and inexcusable refusal to adjust ceiling prices on low-cost building products needed to build low-cost homes for veterans. Mr. Bowles, Mr. Wyatt, and others have beat their chests over the housing shortage, but have carefully refrained from taking the steps needed to eliminate it. They have held prices down to the point where manufacturers cannot turn out the needed materials.

In place of adjusting ceiling prices to permit production, they brought forth their premium-payment subsidy plan. That plan gives them 18 months of control over building-product manufacture. They presented it to the Nation as the very "heart" of the veterans' housing program, although they do not to this day know how it will work or when it will start working.

In our opinion, this failure to adjust ceiling prices and the insistence on ineffective subsidies to be passed out at the whim of the Government is the groundwork for a campaign which is due to start before many weeks have passed, in which an attempt will be made. to blame private enterprise for not building more homes. As soon as it becomes obvious to everyone that Mr. Wyatt's housing goals cannot be met, because of the continued shortage of materials, these men in Government will cry out that private enterprise has failed, that veterans are not getting enough homes, that the Government must step in and take over.

The construction industry has anticipated this development. We have explained again and again that the subsidy plan will not serve its purpose, and we have told why. We repeat, here and now, that the failure to meet Mr. Wyatt's housing goals cannot be blamed on the construction industry. The blame belongs, and must be placed, squarely on the shoulders of the Government itself.

If anyone is inclined to take lightly the possibility that the Federal Government might try to take over the job of building homes for veterans, let me read again from Mr. Bowles' letter to the Housing Expediter. He said that, if it proves impossible to get the required number of houses produced, "the local authorities should be encouraged to undertake construction on their own." By the term "authorities" he clearly meant the public-housing authorities. Mr. Bowles then went on to say that "there should be no serious difficulty in the exercise of the right of eminent domain to secure the necessary sites." Mr. Bowles' letter reveals him to be the real author of the widely heralded Wyatt housing program. Bowles laid out the whole pattern just 1 week after Mr. Wyatt started work in Washington, nearly a whole month before the Housing Expediter made public his veterans' emergency housing program. I point out that fact simply to establish the fact that Mr. Bowles, who seems to be wholly committed to governmental domination over housing, is completely tied into the housing picture, and has played a dominant role in the plans laid to date.

There is precedent for this scheme to put the Federal Government into the housing business. The precedent is found in England, where the Socialist government already has taken over the distribution of building products and is building houses. Private builders, operating under a license system, are not permitted to meet more than a small fraction of the demand. That license system goes further than the priority system being employed here, but we are headed in the same direction.

It may be asked what does England's plan have to do with us? For answer, I refer you again to Mr. Bowles' letter of January 11. There he says:

The supply of new types of materials for use in construction will expand very slowly if left to normal processes. What is called for is a Government program to take the risk out of immediate expansion of production in these

* *

*. The

new lines. Large orders should be placed at generous prices supplies thus acquired by the Government should be resold at prices in line with those of similar materials.

Later in the letter he proposes that the Government place large and continuing contracts for prefabricated houses. In short, Mr. Bowles is convinced that the Government must take over if we are to have houses and is not alone in this view.

I refer you to a newly published book entitled "Breaking the Building Blockade." The author is Robert Lasch, an editorial writer for a Chicago newspaper. Mr. Lasch is a devout disciple of the NHA. He gave valiant support to Mr. Wyatt's subsidy program in signed articles written prior to its partial adoption by Congress. His writings followed the NHA line to the letter, so that it is not unfair to assume that Mr. Lasch has been cooperating closely with the NHA and is intimately familiar with its future plans.

On page 150 of his book, Mr. Lasch says:

Why should not the Government undertake to purchase directly from the manufacturers an agreed amount of lumber, cement, bricks, concrete blocks, roofing, and insulation every year * **? Why should not the Government act as middleman between the manufacturer and the small consumer * * *? One can imagine Government depots, located In the major cities of the country, to which the manufacturers send regularly scheduled deliveries the year around *.

He is proposing that we copy a major step in the English system of socializing the housing industry.

Time will tell whether the American people will consent to this extension of governmental control over the building industry and whether the Government will be permitted to take over the distribution of materials and the construction of homes. But, if and when that day comes, the NHA clearly is the agency which would effectuate the program. It is the NHA, supported by millions of dollars from the Treasury, which would develop and lay the plans and promote the idea with the public. That is why the NHA is so badly wanted now, when there is no other need for such a superagency of government. They want time and funds to build their case and lay their plans for controlling construction more and more as time goes on. That is one reason why the private construction industry does not want a permanent National Housing Agency. We oppose socialization and central control of housing, and we shall continue to oppose it. We oppose those in government or elsewhere who advocate such ideas, and we shall continue to oppose them.

Private enterprise will be prevented from providing the new homes that the United States needs if it remains under stifling control, if denied the right to manufacture_low-cost materials, and if kept in a constant state of confusion and uncertainty by the threat of new controls and changing regulations.

The advocates of governmental control know that. By continuing their controls and nourishing the confusion, they hope to so hamstring industry that it must fail. That is when they step in. That is when they need to have a well-oiled National Housing Agency, staffed with planners and programers and dreamers.

This reorganization takes away from the FHA and the FHLBA all their autonomy and independence. These agencies have been the points of contact between the Government and the mortgage-lending

institutions, and it is largely through them that the present ample supplies of mortgage funds have been made available. The confidence and mutual understanding built up through the successful operation of these agencies is a priceless asset, which we cannot afford to lose. But it inevitably would be lost when they became subordinate to an agency committed to socialization of housing and the disastrous policy of governmental domination over housing and construction.

Moreover, the functions which the plan would consolidate are widely divergent. The activities of the FHA and the Federal Home Loan Bank Administration are different in themselves and are entirely different from the function of the FPHA, which is engaged exclusively in public housing. No one man can strike a proper balance between the requirements of these separate functions.

Today, under the temporary NHA, the balance is not being struck, but the sound principles on which FHA was established are being sacrificed in the name of an emergency. The result is likely to be the creation of a future credit emergency out of the present housing emergency, with the very great possibility of renewed demands for the direct use of Federal funds for mortgage credit. The strengthening of NHA as called for in the plan would augment these tendencies. The plan makes the FHA a mere cog in the NHA machine. The FHA, which on the whole has done a magnificent job of stimulating private building in the past, would become a tool of those who wish Government domination and control of housing. How easy it would be to discourage, rather than encourage, the insurance of loans on privately built dwellings. Just a few carefully worded regulations and the establishment of a few ill-advised standards would do the job. Private building quickly could be stifled.

When that happened, the NHA Administrator would have his public housing agency ready to step in and take over the job. The same thing well can happen to the Federal Home Loan Bank System. It, too, can be hamstrung by administrative device.

We do not oppose public housing to the extent that it genuinely is needed, and provided it is constructed and supervised under appropriate auspices. But we do contend that no good will come of bringing under one roof and one management the responsibilities for aiding private building and for promoting welfare housing. The two are not compatible. One is going to be promoted at the expense of the other, and it is not difficult to determine which will lose out under a National Housing Agency.

The producers' council at one time, several years ago, looked with favor on proposals to coordinate Federal housing activities. But that was before there was any clear indication that such an agency would become a tool of the advocates of controlled housing and socialization. We went so far as to issue, for tentative discussion, a printed pamphlet containing the suggestion that something similar to the NHÀ be set up in peacetime. We did so in order that the whole idea might be discussed within the construction industry. That discussion was fruitful. Piecing events together, it soon became obvious that such a proposal was both dangerous and impractical. We oppose the establishment of a National Housing Agency, as set forth in Reorganization Plan No. 1, and we respectfully urge that Congress disapprove the proposal in toto.

Mr. WHITLOCK. We feel in the Producers Council, representing the manufacturers of building materials, that this reorganization plan is being rushed through. It is of a very controversial nature, so far as the housing program is concerned. We see no need for rushing this through when Congress has just completed a Veterans' Emergency Housing Act which gives to a Housing Expediter all of the authority necessary until December 31, 1947, to issue orders, directives, or any other thing necessary to get the housing needed.

The CHAIRMAN. Mr. Whitlock, the Congress has been complaining because the President did not submit a plan earlier. We submitted this bill to him on the 20th of December, and we have been complaining because he did not send in a reorganization plan.

Mr. HOFFMAN. You say "we." Who do you mean?
The CHAIRMAN. I, for one, and several other people.
Mr. HOFFMAN. I do not care if he never does.

Mr. WHITLOCK. Well, we do not object to the President doing that as promptly as possible, but when we take a look at Plan No. 1, I think we must look at some of the objections to it, and try to determine what are some of the ideas behind it. I am very much in favor of reorganization, but I am for sound reorganization, and not reorganization Plan No. 1. I see no reason for Plan No. 1 being rushed through in the manner it is being done, when Congress has given power to the Housing Expediter to do the things the reorganization is proposing to do, by directive, in the name of the emergency. In other words, I am talking about the way this plan is being rushed. I do not know whether you agree with me, but the proposal has been thrown into us rather fast in the construction industry, and it has some grave implications..

The CHAIRMAN. Well, the functions to be performed under the plan, are already part of our law. There are no new functions created.

Mr. WHITLOCK. I am not sure the functions are a part of the law. Some of the authority is taken away from the lending agencies and placed under this Housing Administrator and it gives us cause to wonder what some of the implications are.

The CHAIRMAN. If they are not according to law, then that would be for the courts to decide, whether or not they violate the law.

Mr. WHITLOCK. We have been facing the question of the use of the courts to get some of these things settled to get housing under way. We have a job to do in these United States of getting housing back on the track. We are up against restrictive Government controls which have been hindering us. Having these restrictive controls made permanent is not going to aid construction or industry, and is not going to get housing built to take care of veterans and other families. We have a great pent-up demand.

We do not believe reorganization as proposed here under Plan No. 1 is the way to get more housing. In the first place, we are greatly alarmed over the implications in the National Housing Administration which they are proposing to make permanent. We have been living with it and watched it operate. We have documents that have come to light which give us great alarm.

The CHAIRMAN. What are those?

Mr. WHITLOCK. One of the most important documents is the letter Mr. Chester Bowles wrote to Mr. Wilson Wyatt. If you want the entire letter, we have it in printed form.