but no funds have as yet been provided. The conference recommends contract authorizations of $50 million for loans to individuals, and of $50 million for nonprofit rental housing projects.

10. HOUSING FOR MIGRATORY WORKERS, INDIANS, AND ESKIMOS

An effective program is still lacking to provide housing for migratory workers, and for American Indians on reservations and Eskimos. It is essential that a realistic program be developed and adopted at an early date.

11. COMMUNITY FACILITY LOANS

The conference urges the continuation of the present program of community facility loans with an expansion of the program to include cities with a population of more than 50,000. At the same time the conference recommends that consideration be given to the extension of the emergency public works formula of grants to cover the continuing program of the Community Facilities Administration.

12. MASS TRANSIT AIDS

(a) The conference urges the extension of this program under the HHFA by an authorization reasonably related to the scope of the problem and including both grants and loans. This should include aids to both rail and bus systems, and aids which will help cities of all sizes with equivalent proportions of Federal assistance. It should recognize the continuing responsibility of the public roads program to provide from its funds for transit rights-of-way along or in major expressways, where needed. Transit aids for the construction of permanent facilities should have the same Federal-local matching ratios as comparable Federal highway aids. On the interstate system these are as high as 90 percent. (b) We further urge the essentiality of joint HHFA-Commerce Department support for metropolitan planning for transportation, land use, and urban development, to assure local responsibility for planning, and Federal action in accordance with such plans.

(c) The highway program should be amended to provide the same relocation aids and requirements as are now provided under the urban renewal program.

(d) The conference also urges that mass transit legislation authorize use of contract authority to permit the advance planning of long-range programs in conjunction with other development aids.

13. OPEN SPACE AIDS

The conference recommends that:

(a) The authorization for open space grants be increased by $50 million and that the unexpended authorization from the first year of operation of this program of approximately $32 million be recognized as a continued authorization so as to permit this program to move from an experimental to an operative stage.

(b) The matching formula be increased to grants of 50 percent where purely local open space is being purchased and to 70 percent where open space is purchased for metropolitan purposes, but both grants to be made only for open space uses conforming to a regional master plan.

(c) The land reserve provisions of title I of the Housing Act of 1949 which have never been utilized should be activated to permit experimental acquisition of lands required for urban development of community sites.

14. CONTRACT AUTHORITY FOR LOANS OR GRANTS

The conference notes the continuing attacks upon the concept of contract authority for loans or grants, which concept has been established for more than 25 years as the only feasible method of authorizing long-range programs of development which require the cooperation and participation of local governments, and advance planning in coordination with other State and local programs for orderly community development.

Attempts to eliminate contract authority and substitute an appropriation procedure are ill-concealed attacks upon these basic programs as adopted by the Congress. We urge the continued utilization and, where necessary, the reinstatement of contract authority provisions in all of the affected programs, including

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public housing, urban renewal, housing for the elderly, mass transit, open space, experimental housing, and other programs.

All such contract authorizations should provide for the payment of the administrative expenses of the Federal agency involved as a small percentage of

the authorization.

15. DESIGN STANDARDS

The conference urges that costs limits and the provisions in all programs be authorized and administered so as to permit federally aided housing to meet the best design standards in any locality and to achieve economy in cost and operation over the life of the project.

16. METROPOLITAN COORDINATION OF FEDERAL PROGRAMS

(a) The HHFA should establish a system of metropolitan field offices for the following purposes: to coordinate HHFA programs in the metropolitan area; to provide a means for coordinating information about other Federal programs, and convening their representatives for coordinating purposes; to convene coordinating conferences of local governments where no metropolitan agencies exist, so as to assist them in guiding programs toward common ends; and where official metropolitan planning agencies exist and have established plans and policies, to assure that Federal plans serve agreed upon local planning objectives and policies.

(b) The conference urges that section 701 grants for metropolitan planning be placed on a continuing basis as recommended by the Commission on Intergovernmental Relations and that after June 30, 1967, local government applications to the Federal Government for grants-in-aid serving regional needs be required to have comment of a legally constituted metropolitan planning agency as proposed by S. 3362 and S. 3363, bills authored by Senator Muskie in the 87th Congress.

17. FEDERAL GRANTS FOR PLANNING ASSISTANCE

The conference urges that the present 701 program of grants for local planning assistance be enlarged to provide continuing grants for planning assistance after the initial grant and on a declining Federal-share basis, as is now conducted in the State of New Jersey. To assure the continuation of the planning process in the local area, the Federal Government should contribute 50 percent of the cost in the second year, 40 percent in the third year, 30 percent in the fourth year, and 20 percent in the fifth year following the adoption of a master plan.

18. RESEARCH, TRAINING, AND EXTENSION SERVICES

The conference urges the establishment at once of a broad program of research, scholarships, training, and extension in housing, urban renewal and development, city planning, program administration, and related topics as outlined in the 1961 Report of Resources for the Future to the Housing Administrator. The program should be comparable in scope to similar programs of research, scholarships, training, and extension conducted in the Departments of Agriculture, and Health, Education, and Welfare.

NATHANIEL S. KEITH, President.

(The following letter was received to supplement Mr. Krooth's comments :)

Hon. JOHN SPARKMAN,

NATIONAL HOUSING CONFERENCE, INC.,
Washington, D.C., September 26, 1963.

Chairman, Housing Subcommittee, Senate Committee on Banking and Currency, U.S. Senate, Washington, D. C.

DEAR SENATOR SPARKMAN: On behalf of the National Housing Conference, I would like to supplement the comments by Mr. David L. Krooth with respect to the FHA below-market interest rate program for families of moderate income under section 221 (d) (3) of the National Housing Act.

As stated by Mr. Krooth in his testimony before your subcommittee on September 18, 1963, the National Housing Conference considers this pioneering program established by the Housing Act of 1961 as a most important first step

in broadening the operations of the private housing industry to reach families of moderate income who cannot afford new housing financed at market rates of interest. We favor greater administrative flexibility in the execution of this program and its extension to cover individuals of moderate income.

The National Housing Conference recognizes, at the same time, that even at maximum effectiveness the section 221(d) (3) program as presently constituted can serve only about the top one-third of the families and individuals with incomes ranging between the minimum at which new housing financed by marketrate mortgages can be afforded and the maximum income limits for admission to low-rent public housing. This results from the fact that the financing formula in section 221(d) (3) produces reductions of only 20 to 25 percent in rents or carrying charges as compared to market-rate financing of comparable dwellings whereas much greater reductions would be required to reach the full range of lower middle income families. Furthermore, the program is limited to rental or cooperative housing and thus is not available to moderate income families seeking homeownership.

In order to close this gap, the National Housing Conference recommends a greatly broadened program for this important segment of the housing market. We believe that interest rates should be tailored to the incomes of individual families, that a financing formula should be established which would permit a range of incomes in individual projects, and that the benefits of this financing should be extended to sales housing, with safeguards against speculative abuses. Our detailed legislative recommendations in this regard are set forth in section 5 of the NHC legislative proposals which Mr. Krooth presented for the record of your subcommittee hearings.

In our opinion, the establishment of programs along these lines not only would serve urgent unmet housing needs but also would provide an important stimulus to the volume of production by the private housing industry.

Sincerely yours,

NATHANIEL S. KEITH, President.

Senator SPARKMAN. Our next witness is Mr. Daniel S. Ring, general counsel, National Paint, Varnish & Lacquer Association.

Mr. Ring, we are very glad to have you. We have a copy of statement. You may proceed in your own way.

your

STATEMENT OF DANIEL S. RING, GENERAL COUNSEL, NATIONAL PAINT, VARNISH & LACQUER ASSOCIATION

Mr. RING. Thank you, Mr. Chairman, I appreciate the opportunity of outlining the position of the National Paint, Varnish & Lacquer Association on Senate bill 810, the mortgage market facilities bill. Our association represents the preponderant dollar volume of paints and kindred products produced in the United States.

With respect to my statement, I present the viewpoint of an industry that will be benefited by the facilities that are sought to be provided by the bill. We are not actually expert with respect to the methods to be adopted, and we feel that we are leaving those in very, very fine hands, as evidenced by the questions by the chairman and by Senator Douglas this morning.

Senator SPARKMAN. Mr. Ring, let me make this comment at that point. If this legislation is enacted into law, it will not produce the housing. What we are trying to do is to set up machinery that will make it easier to take care of the financing of it. It is this growth in population and the requirement of our people that is actually going to produce the housing.

In other words, we know the housing is coming.

Mr. RING. I fully appreciate that.

Senator SPARKMAN. What we wanted to do is to try to take care of it.

Mr. RING. We fully appreciate that, sir. I didn't want you to expect me to be able to answer technical questions concerning finance. Senator SPARKMAN. Very well.

Mr. RING. As producers of one of the principal building materials for homes and other structures, our members are deeply concerned with matters which will permit expansion of construction facilities for the residential homebuilding industry.

The financing of homebuilding projects will, as you have just said, Mr. Chairman, become more important year by year as this decade moves on. Residential-building financing must be made available in greater and greater volume to meet the increasing demand.

This bill, we believe, promotes the opportunities of more local and smaller type banks to engage in functions related to the type of residential financing which will be required in great volume over the next 10 years. It is logical and proper to bring local banks into this picture because it is in these banks that the savings of the members of the community are placed, and it is these banks that are primarily interested in maintaining a sound and stable economy in the areas they

serve.

What will benefit the prospective homeowner in making it easier for him to buy a new residence—and I might say in making it easier for the builder to construct more new residences-what will benefit the prospective homeowner will benefit our industry.

We believe that facilitating the investment of mortgage funds in local areas and easing the opportunity for smaller banks to make outlays of capital for more housing construction, as the demand arises, will benefit not only homeowners and home buyers, the housing industry, and our industry, but also the national welfare.

By authorizing the Federal chartering of some organizations to insure conventional mortgages and others to provide a secondary market for conventional and other mortgages, the proposed legislation will put the focus of decision where it should be in the locality where the facilities are to be constructed rather than in a national organization which has headquarters located hundreds, possibly thousands, of miles from the scene of the housing activity.

The proposed legislation will also authorize issuance of debentures by the marketing organizations provided for in the bill upon the security of insured or guaranteed mortgages. The joint supervisory board which will be set up to examine charter organizations created under the proposed law will assure the same regularity and safety of operation that is now provided for banks all over the country.

We feel that by opening up the opportunities for smaller banks to invest in conventional mortgages, the Mortgage Market Facilities Act will expand materially lending opportunities hitherto unavailable to the smaller banks because of the limited market for conventional mortgages. We further believe that a more active secondary market will encourage all lenders to compete effectively in the overall mortgage market and will minimize the need for direct intervention by the Federal Government in housing activities. This is as it should be. It is impossible for a national authority to make decisions, plan policy, and operate with as great assurance of safety as responsible local experts provide for housing financing.

Thus, it seems apparent that the facilities provided for by this bill will redound to the benefit (1) of the local community; (2) of all business involved in the housing and building industry, including our own; (3) in the welfare of those of our people who will be seeking more and more millions of homes during the next 10 years; and (4) in the greater stabilization and security of our national economy.

Thank you very much for the opportunity of appearing before you. Senator SPARKMAN. Thank you, Mr. Ring. I think you have given us a very fine statement, and I appreciate it very much.

Mr. RING. Thank you.

Senator SPARKMAN. The next witness is Mr. Robert R. Nathan, president of Robert Nathan Associates.

Mr. Nathan, I saw you come in the door. You had excellent timing. I don't know how you worked it out.

STATEMENT OF ROBERT NATHAN, PRESIDENT, ROBERT NATHAN ASSOCIATES

Mr. NATHAN. Thank you, Senator Sparkman. I was fortunate to get here just in time.

Senator SPARKMAN. We are glad to have you. We have your paper. Proceed as you see fit.

Mr. NATHAN. Thank you.

I have a brief statement, Mr. Chairman. It will take just a short time to read it.

Mr. Chairman and members of the committee, I am grateful to you for affording me the opportunity to testify before you today briefly on the proposed Mortgage Market Facilities Act of 1963. I am not speaking on behalf of any group or organization, but only as a private citizen and as an economist very much interested in the subject matter under consideration.

May I emphasize my personal concern over the lag in our economic growth and over the waste of manpower and other productive resources associated with this lag. The pending tax bill will help in some degree in attacking this problem, but even President Kennedy does not promise nor foresee relatively low unemployment for a couple of years. We cannot and must not resign ourselves to continued waste and less than satisfactory economic performance.

Of special dismay is the fact that we are wasting resources simultaneous with huge unmet needs here and abroad. Too many requirements for peace and progress abroad and for decent minimum living standards at home are unfulfilled for us to ignore this loss of productive potential. Particularly distressing is the huge deficiency that exists between our slums and terribly inadequate housing for so many families on the one hand and our unused material and financial resources on the other hand. Much more must be done to use the latter to erase the former.

The failure to build more houses in the face of great housing needs is both a cause and a reflection of our economic performance. It is a cause since there is an inadequate level of effective investment demand. There certainly is a sufficient amount of savings for more investment, and if we could now enjoy a higher level of investment there would be more savings for even greater investment, as a consequence of higher levels of national income.