Housing Administrqtor Specrks Out Ploinly on Conditions

Address by ALBERT M. COLE, U. S.Housing Administrator, to National Assn. of Home Builders Statler l,Iotel,'Washington, D.C., May 27, L957

This is a time for plain speaking. I shall speak plainly about your views and mine.

Your views-the homebuilders-have been brilliantly put forward by your president, George Goodyear. They have had wide circulation. Judging by the press clippings that come to my desk several million people must have read George's statement that in a few years we are going to be living in tents because there won't be enough houses.

I envy that idea of tents because it has a Biblical simplicity. The picture conjured up is one.we can all understand and appreciate. It brings a problem home to us. Something we cannot ignore.

runaway inflation will rank as one of its greatest achievements.

Don't mistake me on this point. I am not claiming that prices are not rising as a result of enormous inflationary pressures. They are. We know they are. I have a clipping here dated May 25th, and the headline reads: "U.S. Living Costs Increase Again." Mainly the increase is small percentage-wise, and on examination is due to a rise in some food prices.

Of course, in an expanding economy, with productivity increasing, some degree of rising prices is inevitable. But that is only a fraction of the story. The truth is that at the moment we are waging a full-scale defensive war without actually being in a war-and we are doing this and still maintaining our free enterprise system.

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If housing starts continue to go down, down, down, and i disappear almost to nothing. I can see where George's gloomy predictiori could be right.

On the other hand, I have a prediction to make which is equally as gloomy as his, but which presents a different aspect of the picture.

Putting it in one sentence: If present trends should get out of hand and lead us to runaway inflation, we ford houses.

So far they haven't got out of hand. It is my personal opinion that when the merits of this Administration come to be weighed in the scales of history, this containment of

Where else has this been done on such a scale? Or could be done ? Open your newspapers and turn to the advertising sections. What you will see are advertisements of a quarter, a half, or sometimes a full page appealing for engineers and technicians for missiles, rockets, atom plants, bombir plants-and there you have the situation, vividly illustrated.

A vast segment of our economy is readying against the threat of war, and almost each day scientific breakthroughs make such preparations more and more costly. A job that cost a half-billion dollars may be out of date next year. And still-despite all this-we retain our freedom.

We retain the right to choose, to run our own businesses.

We retain the right to speak out loud, just as you homebuilders have been doing.

Although this is a critical period in history, none of our rights have been impaired. You can underline that-none.

This is the situation in black and white. Keep in mind there are no constitutional safeguards against the loss of our economic freedom.

It can disappear overnight simply by a process of attrition, almost without our knowing it. The Government-or the Congress, or both, can decide to use the taxpayers' money to compete with you directly or indirectly. Or to create subsidies or increase them. Nothing in our basic law says that the Government can't get into business. Once you invite or accelerate that trend we are driving a nail into our own coffins.

Specifically, in my opinion if we have the Government making direct loans for homebuilding under any gqise, we are striking a blow at our economic structure.

On the same grounds, I am opposed to the provision in the housing bill reported out by the Senate Committee on Banking and Currency-along with about a dozen other provisions.

This provision would increase the amount of the Federal grant money contributed toward the ultimate cost of Urban Renewal projects from two-thirds to three quarters.

We have done some figuring on this, and this is what we have come up with. The proposed increase from twothirds to three quarters will apply to presently active projects and in dollars and cents it means that cities that are already asdured of their two-thirds will get $108,000.000 extra,

But where is this extra coming from? It is coming out of total fund, and so far as we can see now the Congress is going to vote us $250,000,000. From that subtract $108,000,000 and that is what is going to be available to cities that haven't reached the active project stage. And not only that, but consider what is going to happen in the future. The increase to three quarters will reduce the number of cities benefited. Fewer cities will get more to the disadvantage of the many.

I see no reason to raise the Federal capital grant proportion from two-thirds to three quarters. It is a step in the wrong direction-in the direction of that attrition all of us must fear.

The urban renewal program is growing by leaps and bounds as it is. We are swamped by applications from all parts of the country, and there is not the slightest indication that the two-thirds contributions has had a retarding effect.

That is one side of the coin. There is another:

On March 26 I urgently appealed to the Congress to raise the VA interest to 5%. I{ere was a clear case where an economic imbalance was severely hurting the homebuilding industry. I said, and I quote:

"The effect of failure to act promptly on this question will be to knock out a prop from under the housing market at a critical time in the homebuilding season. The effect on home builders will be serious. They will be unable to make firm plans for the rest of the year, and as each day passes the situation will become more difficult."

I want to repeat the record on that particular appeal be- cause sometimes I run into people who don't recall it. It was made ; it was repeated; it was ignored in the Congress. Nothing happeped. :F :F r

Now let me conclude by saying that I am aware of the pressures that are on you. And I think you understand the pressures that are on me. It is not easy to take the long view. Yet rvhen we do take it, this is what we see:

We see a temporary interruption in the most successful, sustained span of years the homebuilding industry has ever experienced.

We see the industry attaining a stature it has never previously held in history.

We see a latent demand of unexampled proportions.

As a result of a multi-billion dollar Federal road project, which soon will be underway, we see imminent an expansion of homebuilding that will break all records.

None of us can tell exactly when the swing will begin from low into high gear. It could come about next month, this summer, this fall. The potentials are there.

The only thing we can say for certain is that it will come just as surely as you and I are meeting at this moment.

It is my intention to battle for housing in the future as I have done in the past. The concept of better housing for the people of our country is not only my first love. With me it is an obsession. Let me say that as long as I am Housing Administrator you are free at any time to say and speak frankly: my office is open house to you at any time. We all have the same ideal in mind-the welfare of the American people.