MARCH 1, 1962

PAGE 3221

REORGANIZATION PLAN NO. 1 OF 1962, DEPARTMENT OF URBAN AFFAIRS AND HOUSING

Mr. MANSFIELD. Mr. President, on February 20, the Senate declined to take up the President's Reorganization Plan No. 1, of 1962, which would have provided for a Department of Urban Affairs and Housing. Subsequently, the House of Representatives rejected the plan, thus making any further consideration of the plan by this body moot.

On February 20, the distinguished junior Senator from Maine [Mr. MUSKIE] was prepared to deliver the basic argument for the proposed Department of Urban Affairs. As many Senators know, he left a hospital bed to attend that session.

At the time, following the Senate vote on the motion to discharge the Committee on Government Operations from further consideration of the reorganization plan, it did not seem necessary to place in the RECORD the substantive arguments on behalf of the plan, as contained in Senator MUSKIE'S speech.

However, it is now apparent that the proposed Department of Urban Affairs and Housing is a live issue on the political hustings, if not in this Chamber. The time has come to clarify the record on this proposal in some detail and to set forth the substantive, objective, and rational arguments for a Cabinet-level department which would coordinate Federal responsibilities in the fields of urban development and housing.

The junior Senator from Maine prepared such a speech for delivery in this Chamber. It has been unfortunate that his automobile accident and the course of events in this Chamber prevented him from delivering that speech. But because of their importance to a balanced and thoughtful discussion of this important issue, I ask unanimous consent that the remarks prepared by the junior Senator from Maine [Mr. MUSKIE] and the accompanying exhibits on the President's Reorganization Plan No. 1, of 1962, be printed in the RECORD at this point.

There being no objection, the speech and exhibits were ordered to be printed in the RECORD, as follows:

STATEMENT BY SENATOR MUSKIE

Today the Senate embarks on an historic debate. We have before us the recommendation of the President of the United States to establish an 11th Cabinet department in the executive branch -- the Department of Urban Affairs and Housing. I support that recommendation fully, and I urge the Senate to support it.

I have traveled a long road to reach the conviction from which I speak today. The State of Maine, which I have the honor and privilege of representing, in part, in the Senate, is by no stretch of the imagination a big-city State. We are a State in which great areas are sparsely populated. We have not a single city in the State which would be called big, measured by the standards of New York, Pennsylvania, Illinois, or California. We are a State of small towns and small cities, surrounded by modest suburban areas and farms of modest size. Among our 50 urban areas, all but 8 have populations of less than 15,000.

So it may seem strange to some that I rise today to place the voice and the vote of the junior Senator from Maine behind the establishment of a Department of Urban Affairs and Housing. But I do so because I believe it is right; because I believe it is needed; because I believe it is important. I believe it is important for the people of Maine, and for the people of every one of the 49 other States.

These beliefs are firmly rooted in personal experience. I have known intimately the life and problems of the people in the towns and cities of Maine. I have served in its legislature. I have had the honor of serving as its Governor. I have also served from the time of its establishment on the Commission on Intergovernmental Relations, set up by legislation which I helped to sponsor.

None of this is said by way of advertising myself as an authority. My purpose is only to emphasize that when we come to consider the problem before us today, it is, to me, no abstraction -- nothing about which I feel impelled to consult the textbooks on government or political science. To me, the problems of local, State, and Federal Government are very real and very vivid. Equally real and equally vivid are the relationships between these levels; their interdependence if the public interest is to be adequately served; and the crying need for a more coordinated center for the administration of urban programs at the national level.

My personal experience is far from unique in this body. The Senator from Pennsylvania [Mr. CLARK], who was strongly supporting this action long before many of us had made up our minds about it, served with distinction as mayor of the great city of Philadelphia. He knows at firsthand what urban problems are and how inadequate today are our governmental facilities to deal with them. The Senator from Minnesota [Mr. HUMPHREY] cannot possibly view this as an academic question; he wrestled with these problems as mayor of Minneapolis. The junior Senator from Massachusetts [Mr. SMITH] and the Senator from Indiana [Mr. HARTKE] have carried these responsibilities on their own shoulders at the municipal level. The Senator from Rhode Island [Mr. PASTORE] has served as Governor of his State, and sought to cope from the Governor's chair with the incredibly complicated problems resulting from the rapid urbanization of our country. I am sure there are others whom I have not named.

The issue before the Senate today, I say to my colleagues on both sides of the aisle, is purely and simply one of good organization and good administration -- in a word, of good government. We have today in the Housing and Home Finance Agency over a score of programs which this Congress has instituted -- some very large, some small; some as new as the Housing Act of 1961, and others which have been in operation for a quarter of a century or more.

All are related to each other, and each is important to the sound growth and the present and future prosperity of urban communities in every one of the 50 States. Administering them is an independent agency of Government which has served us well in the past, but which has been overwhelmed and outdated by the tide of change. Its administrative structure was established at a time when the principal problem confronting the Government in this area was to overcome the shortage of housing for returning veterans of World War II. Onto that structure have been grafted a dozen or more new programs, some directly concerned with housing and others with much broader though closely related urban matters -- urban renewal, urban planning, community facilities, mass transportation, and conservation of open space land near our cities.

The mission of the Agency has outgrown its form. The lines of authority within the Agency are the result of historical accident. Statutory authority had been conferred on the heads of organizations prior to the incorporation of these organizations into the Housing and Home Finance Agency when it was originally established. Other functions have since been transferred to the Agency from other parts of the Government. As a result, the statutory authority for some of the major functions of the Agency is not vested in the head of the Agency. This means that the mechanism for coordination among the many complex programs of the Agency, with their tremendous impact on our local communities, is inadequate and often ineffective. Of course, all powers of the new Department would be vested in the Secretary as head of the Department.

Perhaps most important of all, there is no continuing and appropriate voice in the highest councils of Government to represent the problems of the people living in our urban areas.

There is no agency -- no adequate instrument, as the President expressed it in his message on the plan -- to which the President, the Congress, and the States and local communities can turn for overall advice and assistance in connection with all the interrelated problems of housing and urban development. This is what the President seeks to remedy through this reorganization plan.

Before we finish this debate we shall, I surmise, be talking about everything under the sun from States rights to builders' profits. So be it. But as we enter this tangled maze of arguments and counter arguments, I would hope that we will not forget the real, central point; and that is, quite simply, that the plan reorganizes these already existing programs and administrative agencies into an executive department -- headed by a Secretary who sits in the President's Cabinet -- with crystal-clear lines of authority conforming to an elementary principle of good business management, in or out of government. The President in his message put it this way:

"I propose to act now to strengthen and improve the machinery through which, in large part, the Federal Government must act to carry out its proper role of encouragement and assistance to States and local governments, to voluntary efforts and to private enterprise, in the solution of these problems."

Let us see if we can put this whole matter into a little historical perspective.

Back in the 1920's there was not a program in Government which we would recognize today as a housing or primarily an urban program. There was nothing but the leftovers of a modest and not very successful World War I housing program conducted by the U.S. Housing Corporation -- long since out of business. This was how matters stood until the great depression struck.

That depression, as we all know, brought the home financing and building industries of the Nation to a virtual standstill. During an extended and dreadful period, far more homes were foreclosed than were built or sold, except at distress sales. Something had to be done, and, as ever, necessity proved the mother of invention. One experimental program followed another -- HOLC, the home loan bank system, the rudimentary beginnings of a secondary mortgage market device, mortgage and home improvement loan insurance, resettlement housing, public housing, and I am sure still others that I have forgotten. By the time the war came, Washington was full of big and little housing agencies. There was one under every bush, until a trade journal could write in 1942:

"The urgent need of coordinated Federal housing agencies was highlighted last week in hearings before the Senate Committee on Education and Labor. * * * Members of the committee gave up in despair after hearing representatives of 20 different housing agencies offer a description of how they thought the $50 million for emergency housing in Washington should be spent."

In February 1942 the President drew this scattered and chaotic group together into the Nation's first housing agency, under the title of the National Housing Agency. Since this was done under his war powers, it was a temporary reorganization to assist in the prosecution of the national war effort. Thus matters remained until the war ended.

After the war, a new problem arose. The war powers of the President were about to come to an end, but clearly the housing problem was not. There was a desperate shortage of homes for the men of our demobilizing forces. The homebuilding industry was plagued by shortages of land, of materials, and of labor.

Construction costs shot up alarmingly. The Congress and the executive branch were alike appalled at the prospect that the temporary National Housing Agency should dissolve into the scatteration and confusion which had existed before it was created.

After many false starts and extended national debate, the President sent to the Congress Reorganization Plan No. 3 of 1947, which became effective on July 27, 1947, and established the Housing and Home Finance Agency as a permanent agency of Government.

The Housing and Home Finance Agency as it was established at that time bore little resemblance to the Agency as we know it today.

There was no Urban Renewal Administration; no Community Facilities Administration; no Federal National Mortgage Association. It was, quite simply, a housing agency. It had no responsibilities for slum clearance and urban renewal, or for assistance to States and local communities in comprehensive planning, advances for planning of non-Federal public works, and so on and on.

The first great breakthrough toward a more comprehensive approach toward the problems of growing urban communities came in the Housing Act of 1949. That was the act which established the slum clearance and urban development program -- a major new program which was not housing as such, and yet was profoundly related to housing purpose, method, and result. Title I of this act proclaimed for the first time a national housing policy which stands unchanged today and to which the President referred to the text of his message on Reorganization Plan No. 1 of 1962, when he called for this action "to serve better all income groups in our population and to move ever closer to the goal of a decent home in a suitable living environment for every American family." Here was something new, indeed.

We are now getting into relatively recent history, and most of us will readily remember many of the new programs which Congress has authorized since 1949 and assigned to the Housing and Home Finance Agency. I could mention college housing, for example -- or public facility loans -- or the several special programs to aid in housing our older people -- or assistance for cooperative housing -- and so on. But since these are more familiar, I will not detain the Senate by going through each one of them. However, in order that the record may be clear, and so that Senators may refresh their recollection of these matters while reviewing the record, I ask unanimous consent that there may be printed at this point in my remarks a statement headed "Major Developments Affecting Urban Affairs and Housing." (See exhibit one.)

We have come a long way since 1949. Only the name remains the same -- and it woefully fails to convey a true impression of the present functions and programs of the Agency. In simple truth, the Housing and Home Finance Agency has long since become in fact, though not in name, an Urban Affairs and Housing Agency.

What the President asks us to join him in doing is not to change the character of the Agency, but to give long-overdue recognition to what it actually is today. I ask unanimous consent that there may be printed in the Record a statement I have here entitled "Organization and Functions of HHFA." It very briefly summarizes some 30 active programs in the field of urban affairs and housing which are now being administered by the Housing and Home Finance Agency. (See exhibit two.)

Before turning to the next phase of this discussion, it is convenient here to point out that these programs are not only numerous -- not only complex -- not only closely related among themselves -- not only large and significant: they are also, with minor exceptions, permanent activities of the Federal Government.

Senators who were present and heard the testimony will recall that the Budget Director, when he was discussing the appropriate criteria for judging when an agency had reached the point where it should be considered for Cabinet status, stressed not only the size, scope, the complexity, and the national importance of its programs, but also their permanence.

Of course, there are a few purely experimental programs authorized on a limited temporary basis, such as the programs of grants for developing and demonstrating new methods of providing housing for low income persons and new methods of improving mass transportation. Congress may elect to extend these programs or let them expire.

Now, I am well aware that as a legal technicality all the programs of the Federal Housing Administration will expire on a date certain under existing law -- some in 1963 and the remainder in 1965. But that is only a legal technicality. Surely there is not a Senator on this floor -- or off it, for that matter -- who seriously believes that the Congress of the United States is going to let the Federal Housing Administration go out of business in the summer of 1965. It has been extended periodically since it was set up 27 years ago, and we all know it will continue to be extended.

Most of the major programs have no expiration date at all. Some of them, to be sure, have dollar limits on their authorizations. But here again, the record shows that the Congress has increased these limits as they were reached or about to be reached. The college housing program, as best I recall -- though it was enacted before I came here -- started with an authorization of $300 million. Under the Housing Act of 1961, the program, in successive stages, will reach a total of $2,875 million. The urban renewal program enacted in 1949 and the public facilities loan program enacted in its present form in 1955 similarly started with dollar authorizations adequate only for limited periods of time and have been similarly extended by the Congress.

I could cite other examples, but I believe I have said enough to establish the point that these programs, in addition to being large, complex, interrelated, and important, also meet the test of permanence. To complete the record, however, I ask unanimous consent, Mr. President, that there may be printed at this point a table, entitled "Program Authorizations and Expiration Dates," showing the various programs of the Housing and Home Finance Agency with their expiration dates, where there are expiration dates, and with any applicable monetary limitations in other cases.

The programs are also national in scope, extending to large and small communities throughout the country. There is not a single State which is not significantly affected by one or more of these programs. I ask unanimous consent that there be printed in the Record three tables showing the extent to which selected Housing Agency programs, namely "College Housing Loans" (see exhibit 4), "Public Works Planning Advances" (see exhibit 5), and "Urban Renewal Grants" (see exhibit 6), are truly national in scope, serving as they do virtually all parts of the Nation.

The mounting need and demand for a Department of Urban Affairs and Housing has been reflected in legislative recommendations and the introduction of many bills in the Congress. Bills to establish an executive department concerned with urban affairs and housing were introduced in the 84th, 85th, and 86th Congresses. These differed in content, but they all had as their major purpose the creation of a Cabinet-level department to administer and coordinate Federal programs relating to urban affairs and housing. One of these bills in the 86th Congress was S. 3292, introduced by Senator CLARK, for himself and Senators MURRAY, JAVITS, and WILLIAMS of New Jersey. It was favorably reported by the Senate Committee on Banking and Currency after extensive hearings.

In the President's state of the Union message in January 1961 and in his special message to the Congress on our nation's housing in March of that year, the President reaffirmed the need for the Department. On April 18 he transmitted to the Congress draft legislation to carry out his recommendation.

Last year 20 bills relating to the establishment of such a department were introduced. These included S. 609, introduced by Senator BUSH, and S. 1633, introduced by Senator CLARK, for himself and 16 other Senators. Following extensive hearings before the House and Senate Committees on Government Operations, identical bills for this purpose were reported favorably in the two Houses: S. 1633 on September 6 and H.R. 8429 on August 28.

In his state of the Union message in January of this year the President again strongly urged a new Department of Urban Affairs and Housing. On January 24 the Rules Committee of the House of Representatives voted against giving the Members of that body the opportunity to vote on a bill to create a new department which had been reported by its Committee on Government Operations.

Accordingly, the President had no really practical alternative but to submit his proposal in the form of a reorganization plan as authorized by the Reorganization Act of 1949.

PROVISIONS OF REORGANIZATION PLAN

At this point, I believe it would be helpful to review each of the plan's provisions. Because there has been so much confusion and misinformation about the effect of the plan, it is very important for all of us to keep firmly in mind during the debate just exactly what these provisions of the plan are. Actually, there is no reason for uncertainty or confusion about these provisions, as they are quite clear and simple.

As a general statement, the plan can be said to do but one thing -- it would create a new department in the executive branch and transfer to it the existing functions of the Housing and Home Finance Agency, providing for their administration in accordance with sound principles already approved by the Congress for other executive departments. The plan is brief -- taking less than two pages in the President's transmittal message. Let me run through the seven sections of the plan:

Section 1 would establish the new Department. It would provide that there shall be at the head of the Department a Secretary appointed by the President with the advice and consent of the Senate. The Department would be administered under the supervision and direction of the Secretary -- thus obviating the impediments to good administration which result from scattered authority such as now exists with respect to major programs in the existing Housing and Home Finance Agency.

Section 2 of the plan would provide for the other top officials of the Department. These would consist of an Under Secretary, three Assistant Secretaries and a General Counsel, each of whom would be appointed by the President with the advice and consent of the Senate. There would also be in the Department an Administrative Assistant Secretary who would be appointed, with the approval of the President, by the Secretary under the classified civil service. The Secretary and these other officials would receive compensation at the rate provided by law for corresponding officials in other executive departments.

Section 3 of the plan provides for the transfer of Housing Agency functions to the new Department. I know that you are familiar with most of the programs of this Agency, including its five constituent organizations. Therefore, I will not attempt to enumerate all of its various programs here. Also, there has already been ordered placed in the RECORD a statement entitled "Organization and Functions of HHFA" which describes the Agency's great range of diverse but closely interrelated activities.

Section 3 of the plan would transfer to the Secretary all functions of the Housing and Home Finance Administrator (including the administration of the programs of the Urban Renewal Administration and the Community Facilities Administration) and the authorities now vested in the Public Housing Administration and the Federal Housing Administration and their officers. Recognizing that private housing will continue to be the core of all the interrelated programs of the Department, the Federal Housing Administration would be transferred as an entity to the new Department. Provision is also made for the continuance of the existing office of Federal Housing Commissioner appointed by the President with the advice and consent of the Senate. The Commissioner would continue to head the Federal Housing Administration under the supervision and direction of the Secretary as head of the Department.

The Federal National Mortgage Association and its functions would be transferred to the new Department without change, in view of the special legal status of the Association as a mixed-ownership corporation. The Secretary would serve as Chairman of the Board of the Association, as the Housing and Home Finance Administrator now does. No change in the organization or functions of the Association within the Department affecting its secondary market operations could be made unless the Secretary finds that such change would not adversely affect the rights and interests of owners of outstanding common stock of the Association.

Along with the functions transferred by the plan, there would be transferred the related personnel, property, records, funds, assets, and liabilities.

Sections 4 through 7 of the plan consist of standard provisions relating to delegations of functions and other technical matters.

There is nothing in the reorganization plan except the strictly organizational changes I have described. No new function or program is authorized and no additional funds are provided.

As I would like to explain later in my remarks, the reorganization plan is essentially the same as the legislation reported favorably last year by the House and Senate Committees on Government Operations, except as to a few minor substantive provisions which legally cannot be included in a reorganization plan.

THE ARGUMENTS FOR THE PLAN EXAMINED

I turn now to a review of the reasons why, in my judgment, the reorganization proposed by the President is not only desirable but urgently needed. I should like to stress three principal points:

First, the plan is needed to improve organization at the top level in the executive branch.

Second, the reorganization is needed in the interest of economy and efficiency.

Third, the reorganization is needed to assure the highly necessary coordination of a group of programs which are closely related in their objectives, and which should be equally closely related in their planning and execution.

I submit that the issue before the Senate is first and foremost one of good organization, of simple good Government.

I submit that it makes plain, good commonsense for the major programs of the Federal Government which deal directly with the problems of planning and shaping urban growth to be established as a Cabinet department, headed by a Secretary with the authority appropriate to his position and necessary to discharge his responsibilities. To use the words of Nelson Rockefeller in his memorandum to President Eisenhower of July 2, 1957, these programs go far beyond housing and involve "the general physical planning and development of communities." There is nothing novel about this proposal. We are merely applying here time-tested concepts of good business and good government -- applying them to a new situation, which has grown up because of the pace of urbanization in the last few decades.

I am not in the least impressed with the arguments of those who try to confuse this issue by suggesting that this Department would be, or should be, or might become, a department of everything-that-happens in cities. That would be absurd, of course, about as absurd as trying to put into the Department of the Interior everything that happens within our continental limits, or into the Treasury everything that costs money. We have a very clear unifying theme for this proposed department, and that is to encourage and to help provide good homes in good neighborhoods for our growing urban population. That is what this plan is all about.

To accomplish that objective, we need an executive department which has the primary responsibility for working with other departments and with States and local governmental agencies to encourage the analysis and identification of their problems of growth and development -- not simply their problems today, but their problems 2, 5, and 10 years hence. This Department should also have the necessary tools to aid local governments in comprehensive planning for the solution of these problems, and in the actual execution of their programs of housing, urban renewal, and the provision of necessary community facilities. Once these plans are made, with proper consideration for the total land use pattern in the community, then of course it simply makes good sense for an agency like the Bureau of Public Roads, for example, to continue to carry out its operation program within the context of the needs of our Interstate Highway System, or for problems of air and water pollution and hospitals to continue to be treated as public health problems, which obviously they are.

The President has said, and I agree with him, that the people who live in and near our cities deserve a spokesman in the highest council of Government -- the President's Cabinet. But I submit that the reverse proposition is equally valid: the President and the Cabinet itself need a Secretary of Urban Affairs and Housing.

What is the significance of the President's Cabinet in our form of government? Opinions differ widely on this question, and it is not easy to give it a simple answer. As we all know, the Cabinet is not established by the Constitution; it is an invention of the Executive, which has grown up over the years. The use made of the Cabinet has varied considerably with different Presidents. Some have made extensive use of it as a method for coordinating the Government's varied programs; other Presidents have used it largely as a political sounding board.

In general, however, I think it is fair to say that the Cabinet, together with the President, constitute the hard core of an administration. These are the men who have most continuous access to the President, and the most intimate understanding of his views. These are the men who have the most continuous responsibility for coordinating the almost unbelievably complex activities of modern government. Of course, final decisions must be made by the President himself. He cannot delegate them to a committee. But these are the men who hammer out the policy, subject to his final approval.

Now let us suppose that the Cabinet undertakes a review of the state of the general economy. Should not such a discussion include the views of the Government's principal housing official, considering that housing is perhaps the third largest factor in the entire economy? It is difficult to think of anything more vital to economic stability, prosperity, and growth, yet there is no Cabinet officer to bring special knowledge and experience to bear on this subject.

Or let us imagine that the Cabinet is concerned with the many problems resulting from the movement of population from the farms to the cities. How absurd it is that we have a Cabinet officer present to discuss the problems of the areas from which the people are moving, but none to represent the areas to which they are moving.

Or again, let us imagine that the Cabinet is to take up the general question of monetary and credit policy. Total nonfarm residential mortgage debt in the United States is about $175 billion. Something in the neighborhood of $15 billion is expected to be the net investment in housing mortgages during this calendar year alone. Are not these matters of enough consequence to be represented in such a discussion?

I could give a dozen other examples. For instance, the Cabinet often reviews the general budget picture. Surely, such a review must be incomplete without a spokesman for the programs of the Housing and Home Finance Agency, which constitutes one of the largest and most complex parts of the entire budget, outside the national security area. I think it is self-evident that the programs of the Department of Agriculture, or of Labor, or of Health, Education, and Welfare, or of Commerce would benefit by having at the Cabinet table a spokesman for urban affairs and housing.

Now, it has been argued since this proposal was made that the Housing Administrator can and sometimes does attend Cabinet meetings at the invitation of the President. In all charity, this argument is just a little silly. Of course the Administrator can go to a Cabinet meeting if the President asks him. So could I. A man may eat by invitation in the Senate dining room, but that doesn't make him a Senator. An official doesn't get to be a member of the President's Cabinet by attending meetings - he gets there by heading an executive department of government. People may talk as much as they like about this being a mere matter of prestige, and so on, but there is not one person on this floor who doesn't know that a Cabinet officer has more influence, more weight, and more effect than the head of an independent agency. That is a fact of life, and will continue to be.

I conclude that the facts clearly show that the President and the Cabinet itself need the inclusion in its structure of a Secretary of Urban Affairs and Housing, if the Cabinet is to function as it should to assist this and future Presidents in their duties as Chief Executive.

Now, what about this matter of economy and efficiency? Some people have tried to make much out of the fact that higher salaries and a couple of additional positions established under the plan will cost about $50,000 a year. But that is peanuts compared to what is really involved here. The Budget Director said that he believed these costs would actually be offset by other savings -- but even if they were not, surely we are not going to decide a matter of this importance on the basis of the cost of modest salary increases to a few officials who are overworked and underpaid anyhow.

Let's look at the big money. The Federal Housing Administration alone has insured mortgages and home improvement loans totaling something in the neighborhood of $70 billion, and about half of that is still outstanding as a contingent liability of the Government. The Federal National Mortgage Association owns about 600,000 mortgages, representing a Government investment of some $6 billion. The college housing program involves nearly $3 billion, and the public facilities loan program another $600 million.

Let us consider urban renewal for a moment. The grant authorization under title I now stands at $4 billion. Think of it. Now a 1-percent increase in efficiency and productivity in that one program alone would be worth $40 million -- or enough to pay the increased salary costs under this plan for a little better than 80 years. Surely a 1-percent increase in efficiency in just one program is a modest target.

But in government, as in business, improved organization should yield greater efficiency and productivity in all programs not just one. After all, the principles of organization in big government are not greatly different from those in big business.

If this Agency were a big private corporation, we would not have any doubt about what to do, and we would confidently expect that clarifying the basic organization structure and establishing clear lines of authority and responsibility would pay off in increased efficiency. Mr. President, I am convinced that this reorganization means savings to the taxpayer over the next few years not of thousands but of millions and tens of millions of tax dollars.

I turn next to the importance -- in my judgment, the critical importance -- of the highest degree of coordination among all the related programs and activities of the Housing and Home Finance Agency. For it is precisely here that our cities and urban areas will benefit most from the reorganization proposed by the President.

I quoted earlier the language of the President's message concerning the need for action now to strengthen and improve the administrative facilities at the Federal level. The message then refers to the complexity of urban problems, and the need for certain basic unifying concepts which will define objectives and suggest the boundaries of policy. The President then speaks of the programs of the Agency, describing them as including "an extraordinary range of diverse yet closely interrelated activities." And then occurs this striking paragraph:

"Widely different as these Federal programs are in subject matter and in techniques, they all affect the lives and welfare of families in our cities and their surrounding areas, and they all impinge in one degree or another on each other. None can or should stand by itself. The basic purpose of this plan is to establish a department which will bring a maximum degree of coordination and effectiveness to the planning and execution of all of them."

Now, what exactly is the President talking about? Let us see if we can make this general language a little bit concrete.

Let us take a neighborhood in some city almost any city. It could be in a great metropolitan center, or in a town of 25,000 or 10,000. This neighborhood we are supposing is getting old; it has started down the incline that ends in a slum. Part of it is a slum now, much of it is not -- not yet. Every Senator has seen a hundred such neighborhoods in his own State.

Now, a local public agency begins to survey this area and make plans for rescuing it, for stopping the process of decay and starting the neighborhood back on the upgrade. It is enabled to do this job by a planning advance under title I of the Housing Act of 1949, administered by the Housing and Home Finance Agency. When the planning job is done, the local agency receives a contract for an urban renewal project, which will involve clearance of those parts of the neighborhood that are too far gone, and conservation and improvement of the rest.

Under title I, the urban renewal plan for the area must conform to a general plan for the community as a whole. If that plan is inadequate or obsolete -- or if, as is too often true, it doesn't exist at all -- then another branch of the local government may seek assistance from the Housing and Home Finance Agency under section 701 of the Housing Act of 1954. If our neighborhood is in a small city or town, that grant will come to it through the State planning agency.

When the local agency begins to carry out its project, people and small businesses will have to be relocated. The Urban Renewal Administration in the Housing and Home Finance Agency makes grants to pay relocation expenses, up to the limits specified in the law. But moving expenses are only part of the problem. Where are the people to live? Perhaps, if they are low income families, in public housing assisted by the Public Housing Administration with annual contributions. Or if they are in the middle-income range, in new or rehabilitated housing financed with FHA mortgage insurance under section 221. Or, if their incomes are high enough, in new or existing standard housing financed under FHA's section 203, or perhaps in rental housing under section 207. Perhaps a labor union or some similar group decides to form a cooperative to provide the needed housing. In that case, probably they will find their financing through FHA's section 213.

Experience has shown that a great many of the people who have to be relocated from project areas in the central cities are advanced in age. It is a tragic fact that rundown neighborhoods tend to be heavily populated by older people. All five constituents of the Housing and Home Finance Agency have special programs designed to assist the local community in the solution of this very human relocation problem. Each program, of course, is pointed toward a different kind of need. For example, the Federal Housing Administration provides a special form of mortgage insurance for housing for elderly people where the capital put in and the revenues of the project make up an economically sound, long-term loan. The Community Facilities Administration makes direct loans at the college housing interest rate, to provide decent housing at lower rentals. And at the lowest income levels, the Public Housing Administration has a special program for older people.

But we still have not considered what is to be built on the cleared land. Is it to be residential? In that case, because of the special elements of risk involved in what formerly was a slum or near-slum area, in all probability the financing of the housing to be built will have to be supported by FHA insurance under section 220. Or perhaps public facilities are necessary to improve the area. If so, planning advances are available from the Community Facilities Administration of the Housing and Home Finance Agency to be repaid when construction is actually undertaken, sometimes with the aid of a CFA loan. But let me note that the Housing Act of 1954, which authorized the public works advance planning program, requires that any project so assisted conform to any applicable general plans for the development of the area as a whole and so we come full circle.

I feel safe in asserting that there is no other department or agency in government where it is so clearly true that one major project in one city or town may involve, not only every major constituent agency or bureau, but even every program administered by these different but associated agencies. Perhaps I have not said enough about the Federal National Mortgage Association. Note well that the FNMA is as much in the heart of these operations as any of its sister agencies. It is the special assistance support of the FNMA which is the catalyst, if you will, for such diverse activities as housing in urban renewal areas, housing for relocated families or the elderly and other special-purpose forms of financing which have not yet established their place in the private market.

I could expand this discussion further. For example, we will recognize the tremendous economic importance of maintaining and improving our existing stock of housing, in which the Nation has an investment on the order of $500 billion. That is a key piece of our hypothetical urban renewal project to preserve and upgrade the major portion of the area, without having to resort to the drastic surgery of clearance and demolition. And to accomplish this, probably the key tool is the new authority granted to FHA in the Housing Act of 1961 to insure loans up to $10,000 and up to 20 years for major home improvements.

There are probably a half-dozen or more important programs I have not yet cited in this connection, but it seems to me that this is enough. I think this recital, which was hypothetical but completely realistic, is quite enough to establish how rightly the President chose his words when he referred to "an extraordinary range of diverse yet closely interrelated activities." It would require, it seems to me, an astonishingly effective set of cross-eyed spectacles for anyone to fail to see the importance -- the basic national significance -- of establishing at the national level that form of organization which will produce the highest degree of coordination and unity of purpose in the planning and execution of these necessarily complex programs.

On February 7 the senior Senator from Pennsylvania addressed this body on the proposed new Department. No one in this body has had deeper concern for the problems of our cities or done more to help solve them than the senior Senator from Pennsylvania. To any who have not heard or read his statement (appearing at p. 1993 of the CONGRESSIONAL RECORD) I recommend it for its accuracy and clarity. After laying to rest the most terrifying of the "bogeymen" raised by opponents of the Department, he explains these four important things which the creation of the new Department would do:

"First, it would raise the status of a cluster of governmental programs which, taken together, have a tremendous impact on the development of communities of all sizes.

"Second, the plan would bring greater attention to the problems of urban America.

"Third, the reorganization would improve the coordination of Federal functions affecting communities.

"Fourth, the new Department would be in a better position to provide information and technical assistance to State and local governments on problems arising from urban growth."

These are four major benefits which would flow to all of our communities and ultimately to all of the Nation.

I am well aware that I have already spoken at great length about the contents and the merits of this reorganization plan. I do not wish further to try the patience of my colleagues by describing as well a great amount of background information. However, many Senators would undoubtedly find it useful if relevant background information were spread upon the RECORD.

With this in mind, I ask unanimous consent to have printed in the RECORD at the end of my remarks a series of documents which I will briefly identify.

The first of these is a short statement on the "Growth of Demand for a Cabinet Department" (see exhibit 7.) This demand is rooted in the sharp growth of our urban centers during the present century. The brief statement shows how the demand was expressed in recommendations made since 1938 for changing the structure of the Federal agencies engaged in housing and urban development activities. A second historical statement lists "Studies of the Federal Role in Housing and Urban Affairs" (see exhibit 8), starting in the late 1930's and culminating in the hearings on Reorganization Plan No. 1 of 1962. A third is a "Chronology" (see exhibit 9) listing actions taken between January 1961, when President Kennedy recommended the establishment of a new department in his first state of the Union message, through January 1962, when he transmitted Reorganization Plan No. I of 1962 to the Congress.

This brings us to the Housing and Home Finance Agency as it now exists. Material on the organization and functions of the Agency have already been ordered to be inserted in the RECORD. Additional material for inclusion at the close of my remarks includes a chart entitled "HHFA Employment Summary" (see exhibit 10) and an explanation of "HHFA Programs for Small Communities." (See exhibit 11.)

It would also be helpful if the RECORD contained a brief statement showing "Additional Costs of Top Level Positions" (see exhibit 12) and a brief discussion of "Housing Programs Not Transferred." (See exhibit 13.) These programs include farm housing functions of the Department of Agriculture, the credit functions administered by the Federal Home Loan Bank Board, and the home loan guaranty program of the Veterans' Administration.

Certain questions have been asked concerning the provision of the plan which would vest basic functions of the Housing and Home Finance Agency in the Secretary of the new Department. The answers to these questions may be found in a statement entitled "Powers of the Secretary Compared With Those of the Housing and Rome Finance Administrator." (See exhibit 14.) Background information concerning this feature of the plan is contained in a statement listing "Hoover Commission Recommendations" (see exhibit 15) and in another statement dealing with "General Transfers of Authority to Department Heads." (See exhibit 16.) The latter document lists various reorganization plans and statutes which have transferred authority to the heads of each of the 10 present executive departments. A list entitled "Establishment of Executive Departments" (see exhibit 17) is also submitted for the RECORD. This shows the year when each of the present executive departments was established, the authority under which it was established, and information relating to its predecessor agency.

Finally, I wish to submit for the RECORD a "Summary of Differences Between the 1961 Bills and Reorganization Plan No. 1 of 1962." (See exhibit 18.) A study of this document indicates that there are no really significant differences between the departmental status legislation which was approved by the House and Senate Committees on Government Operations last fall and the President's reorganization plan.

For example, the legislation contains a declaration of congressional purpose which could not appropriately or legally be included in the plan. However, a similar explanation of the purposes to be accomplished is to be found in the President's message transmitting the plan to the Congress,

Secondly, the plan could not include certain provisions of the legislation which would vest in the Secretary functions relating to studies of housing and urban development, the Secretary's advisory relationship to the President, and his role in helping to coordinate Federal activities affecting urban areas. Such legislative provisions cannot legally be included in a reorganization plan. However, their omission from the plan in no way detracts from its practical effect. Thus, functions with respect to housing and urban development studies are in fact controlled through the annual appropriations process and will continue to be so controlled regardless of general language of the type included in the predecessor bills. The Secretary's advisory relationship to the President and his role in furthering the coordination of Federal activities affecting urban areas will, as a practical matter, flow from his Cabinet status. The references to these two functions in the departmental status legislation were merely descriptive of the effects which tend to follow from departmental status.

A third change is the omission from the plan of authority to provide a general clearinghouse service to State and local governments in developing solutions to urban problems. This is legislation which could not legally be included in a reorganization plan. It should be noted, however, that the Secretary of the new Department would be authorized under the plan to provide States and localities with technical assistance of various types in accordance with a number of specific provisions of present law now administered within the Housing and Home Finance Agency.

The reorganization plan could not include provisions which were contained in the predecessor legislation directing the Secretary to give consideration to the special problems of small towns and communities and defining urban areas and urban communities. These provisions would not in fact change the existing situation with respect to smaller communities. Smaller communities now participate very extensively in Housing Agency programs, The provisions were added to the original legislation at the request of a distinguished minority member of the Committee on Government Operations who desired reassurance in this matter. Actually, the best assurance that the needs of our smaller communities are not now being neglected by the Housing and Home Finance Agency and that they will not be neglected under the reorganization plan is to be found in present practices which are described in the statement entitled "HHFA Programs for Small Communities."

THE ARGUMENTS AGAINST THE PLAN EXAMINED

The arguments which have been made against the proposal to establish a Department of Urban Affairs and Housing are to me clearly without foundation. This is not because they are lacking in surface plausibility, but rather because each of them is based on a misconception of what a reorganization plan can actually do or not do.

Some have criticized the plan because they fear that the Government reorganization by itself will mesmerize future Congresses into enacting substantive proposals which will somehow destroy the States. In effect, they believe that the plan will do dangerous things which no reorganization plan can possibly do. On the other hand, those who mistakenly expect a governmental reorganization plan to solve major substantive as well as organizational problems naturally feel that the plan does not do enough. They say it would merely create some high ranking offices, and that this is hardly worth all the bother. Interestingly, neither of these two inconsistent views of the matter is without precedent.

In the House debate on January 15, 1903, Mr. Gaines had the following objection to the creation of the Department of Commerce and Labor, the predecessor to our two present Departments:

"In such action, Mr. Chairman, are we undertaking to absorb, by right of might, if you please, the powers and rights of the State? Is not such legislation an invitation for the Government of the United States to rush down and undertake to attend to all the varied business of the States and crush the latter? If we continue to do this -- and we see the great tendency toward it-how soon will it be before the States are destroyed -- the States that created the Union?"

In the House debate on May 21, 1888, Mr. Blount spoke as follows in opposition to setting up a Department of Agriculture:

"Mr. Speaker, if I could see any benefit to result to the farmers of the country from this bill, I would give it my cordial support. * * * What is proposed in this bill for the purpose of advancing agriculture? You have today the Agricultural Bureau in existence, with all its functions; and what are you proposing now? Simply to create some new offices. You propose to make the head of that Department a Cabinet officer, with increased salary; and you propose to create an assistant who is to receive a liberal salary. Beyond this, except transferring to the Agricultural Department the Signal Service -- a service which, so far as I know, is well conducted today -- there is nothing in this bill. I cannot see anything in it for the purpose of promoting agriculture."

Returning to the plan now before us, I want to try to summarize the objections which have been made and explain why they do not persuade me.

1. It has been said that the establishment of a new department will lead to large increases in programs and spending for urban development and housing. This argument fails to give full and proper weight to the fact that only the Congress can establish new programs of assistance for housing and urban development and only the Congress can authorize or appropriate funds for new or expanded programs. The Congress will do neither when it approves Reorganization Plan No. 1 of 1962.

Certainly, the need for a Cabinet department to handle Federal programs of urban development and housing will make it easier for the executive branch to administer and coordinate any future expansion of Federal interest approved by the Congress in this area. The lack of a Cabinet department has not prevented the Congress from enacting new programs and expanding existing ones to help alleviate some of these problems of urbanization. Nor will the existence of a Cabinet department create -- in and of itself -- new programs and expenditures.

The immediate increase in expenditures which can be expected to result from approval of the plan is about $50,000 annually for the salaries of several important new officers, the Secretary, the Under Secretary, three Assistant Secretaries, and an Administrative Assistant Secretary. The better coordination of any two of the dozens of programs now administered within the Housing Agency or the better coordination of these programs with those of other departments could save many times this sum as a result of a single decision within the executive branch.

2. Some fear that the reorganization plan will weaken State and local governments and centralize more power in Washington. Let me say first, on this point, that as a former Governor and as a present member of the Intergovernmental Relations Commission, I would find it impossible to support any measure which would result in the reduction of State and local authority and initiative. In fact, this plan would not extend in any way the power or control of the Federal Government over other governmental jurisdictions, nor would it in any way affect the authority of any State, city, or other local body.

The Department of Urban Affairs and Housing would administer programs enacted by the Congress. The legislation authorizing these programs sets the framework for the relationship between the Federal Government and the State or local governments receiving assistance.

All of the intergovernmental programs which would be assigned to the Department by this plan provide financial assistance only to State or local public bodies which request it. Participation by cities or other local bodies must be authorized by the State legislature or some specific constitutional provision, or both.

President Kennedy said in his message transmitting the plan:

"Just as the programs of the Department of Agriculture have strengthened the role of the States in measuring and helping solve the problems of their farmers, so the Department of Urban Affairs and Housing will provide additional opportunities for the States to play a strong role in the development of their urban communities."

I firmly believe this to be so. Establishment of a Federal department with Cabinet rank to deal with particular types of problems has in the past stimulated the States to create their own departments designed to deal with the same types of problems at the State level. For example, the establishment of a Federal Department of Labor with Cabinet rank in 1913 served not only to give labor a voice in the Cabinet, but also lead the way for every State in the Union to form an executive department or agency to deal with problems affecting labor.

As a result of the urban planning assistance program of the Housing and Home Finance Agency, authorized in 1954, about three-fourths of the States have established new State agencies or authorized existing State agencies to participate in that program. It provides matching grants for urban planning to States to help State, local, metropolitan and regional planning agencies. The number of States participating has risen from 4 in 1955 to 47 at present.

It is true, of course, that the States should further strengthen their own capacity to deal with housing and urban matters. For example, only six States now make contributions to urban renewal programs. The need for greater State initiative in this area is well recognized. But far from weakening State participation in these programs, the Department of Urban Affairs and Housing would have as a practical responsibility the encouragement of States to exercise positive leadership in solving urban problems.

3. The argument has also been made that departments should be organized by major purpose rather than by geographic areas and that a Department of Urban Affairs and Housing will create a cleavage between our urban and rural populations. The new Department would not be established on any geographical basis or on the basis of where people live. Rather, it would be established to deal with problems, programs, and activities which are primarily and peculiarly urban. This would not create any cleavage between urban and rural people, because it does not alter any Federal functions applicable to them. The Department is needed, not strictly because 70 percent of our people live in urban areas, but because of the magnitude and intensity of urban problems which have developed.

The plan would have a unified major purpose. The urban development and urban housing functions which would be assigned to the Department all have a unified objective -- to provide homes in good neighborhoods in well-planned communities adequately served by related public facilities. In fact, the functions of the Department are more closely interrelated in objective than are the programs of most existing Departments. It is this complex interrelationship of program purpose which has contributed to the demand for Cabinet status for the present Agency.

It must be remembered, too, that the Department would not administer all of the Federal programs having an impact on urban areas. The Department would help provide leadership and coordination within the executive branch in regard to the major problems of urban growth, but other important Federal activities for assistance to cities in such areas as education, health, and interstate highways would continue to be handled by the agencies to which they are now assigned on the basis that their primary purposes relate to education, health, and commerce.

There is no more reason to suppose that the establishment of a Department of Urban Affairs and Housing will create friction between urban and rural dwellers than did the establishment of the Department of Agriculture. If anything, I think it is fair to assume that the new Department would help achieve a happy balance which has been long lacking.

4. Objections have been made because some important urban functions would not be placed in the new Department. Some witnesses opposed the plan because of its failure to include in the functions of the new Department such functions as assistance for highways, air and water pollution, hospital construction, and others.

The establishment of the Department will provide a Cabinet officer who can deal more effectively with other Cabinet officers on problems of mutual interest. It is neither necessary nor desirable, however, for one department to administer by itself all of the programs affecting urban areas.

The body of programs now being administered by the Housing and Home Finance Agency and which would be transferred to the new Department provide a sound basis for the kind of leadership at the Federal level which is needed. Programs of the Department for assistance to urban areas in comprehensive planning for urban land use and future development permit the localities themselves and the other Federal agencies involved to appraise the need for and the best location of such things as highways, schools, health and sanitation facilities. These same comprehensive plans would provide a basis for approval by the new Department of various aids which it would administer directly-programs for urban redevelopment and renewal, community facilities planning and construction, mass transportation, and housing.

The additional programs which have been suggested for inclusion in the new Department are being satisfactorily administered by the agencies in which they now reside and in which they have been placed on the basis that their purposes related primarily to commerce or health rather than to desirable urban development as such. A Cabinet Department of Urban Affairs and Housing will provide a strengthened mechanism within the executive branch for assuring a proper relationship among all of these programs.

5. Objections have also been made because the housing functions of the Veterans' Administration and the Federal Home Loan Bank Board would not be transferred. The problems of coordinating the VA guarantee program with the FHA mortgage insurance program have long since been worked out, and the programs are operating smoothly. Transferring this program which is being phased out under legislation enacted in 1961 would be time consuming and expensive, and would offer no real advantage.

As to the Federal Home Loan Bank Board, the Congress acted on its organizational placement in 1955, when it separated the Board from the Housing and Home Finance Agency. This was done by the Congress on its own initiative and not on the recommendation of the executive branch. This action is, of course, open to review by the Congress at any time. In the meantime, the President's plan is fully in accord with congressional preferences in this matter.

6. Groups whose interests have been focused on homebuilding have expressed fear that the new Department would emphasize urban affairs functions to the detriment of the housing functions assigned it. There is no basis at all in the plan for any such nervous concern. The fact is that the plan would make the Government's principal housing official a member of the Cabinet and thus strengthen the organizational position of the housing programs within the Federal Establishment.

In transmitting the plan, the President said:

"Because of its magnitude in our economy and the immediacy of its impact on our people, housing has been and will continue to be the heart of this complex of related programs. In recognition of this fact, the plan provides for the transfer of the Federal Housing Administration as an entity to the new Department."

There is no reason to expect that this would not be so. Historically, housing has formed the nucleus for the other programs assigned the present Housing and Home Finance Agency, and must continue to do so. About three-fourths of all of the privately owned structures of our urban areas are residential. In addition to assisting in the provision of this housing, the programs of the Department would assist in planning, financing and providing the community facilities and other amenities which are necessary to serve and support housing, including well-planned neighborhoods and communities.

As we said in our committee report on S. 1633:

"The end objective remains, as the Congress declared in 1949, 'a decent home and a suitable environment for every American family."

All the housing, planning, urban renewal, and community facility programs which would be administered by the new Department have this end objective.

7. Yet another baseless fear is expressed by those who predict that the new Department will emphasize aid to big cities, to the detriment of smaller communities. There is nothing at all in the plan which supports this fear and there is ample evidence in the entire history of substantive housing and community development legislation which negates it. As has been emphasized already, the plan does not change in any way the programs now being administered by the Housing Agency, nor the relationships of the Federal Government with other levels of government in the administration of those programs. The Department would continue to emphasize aid to smaller communities, as the Housing Agency has done in the past, because they frequently have the greater need and because Congress has enacted programs which authorize such assistance to smaller communities, often on' a priority basis. In this connection I again refer the Members to the statement already submitted for the RECORD on "HHFA Programs for small Communities."

The objective of the executive branch in this regard was made clear in the message of the President transmitting the plan.

President Kennedy said:

"It should not be assumed that these are matters of concern only to our larger cities. Hundreds of smaller cities and towns are located on or near the fringes of rapidly growing urban areas. The problems of the cities affect them today, and will be theirs tomorrow. Hundreds of other smaller towns and cities not now affected will be so situated a few short years hence. Thus, the smaller towns and cities have a stake in this proposal as vital as, and only a little less immediate than, that of our large urban centers. This plan is addressed to their needs as well as to those of the major cities."

8. Perhaps the gentlest argument against the plan is the one which assumes that the existing Housing Agency can do just as well everything that the new Department would do. The reorganization plan would in fact do two very important things which need doing and cannot be done without the plan:

It would elevate to Cabinet rank the agency having primary responsibility for housing and urban development programs; and

It would give the Secretary of that Department the clear authority to administer effectively the programs of the Department and to assure that they are properly coordinated with each other and with the programs of other departments.

The importance of these objectives should not be minimized. Witness after witness before our committee has stressed the need for stronger leadership in urban development and housing at the Federal level.

The kind of leadership we should seek cannot be provided by an independent agency head who is not a Cabinet member and who has only the power of general supervision and coordination over two major constituent agencies whose powers are not vested in the head of the entire Agency. A provision in the Independent Offices Appropriation Act, 1955, cited by some as constituting a full grant of authority to the Housing and Home Finance Administrator, is simply inadequate. It must be taken in the context of the statutory limitations on the present powers of the Administrator which indicate congressional intention that basic program functions, as distinct from administrative services, shall not be subject to the Administrator's direction, but only to his general supervision and coordination.

This very limiting phrase is repeated in the 1955 Appropriation Act provision. The phrase in turn was clearly intended to be far more limited than the phrase "superintendence, direction, coordination, and control." Indeed, the latter phrase was included in plan No. 1 of 1946 which would have created an overall Housing Agency one year earlier, and this inclusion led to the defeat of the 1946 plan. Thus, the provision most certainly does not provide an adequate, or even a very clear, vesting of responsibility. Also, it fails to vest in the Housing Administrator the statutory functions previously vested in constituent agency commissioners.

Budget Director Bell, testifying for the President, said on this general point:

"He [the President] is convinced that a Secretary with Cabinet rank can play a far more effective role in coordinating these programs with other Government activities, and conducting them with economy and efficiency, than could the present agency."

CONCLUSION

In conclusion, I want to re-emphasize the fact that the President's reorganization plan is an urgently needed step in good government organization. Partisan political arguments and incidental disputes should not divert us from that fact. In the words of our President, a Department of Urban Affairs and Housing is urgently needed to enable him to discharge most effectively the responsibilities in this area placed upon him by the Constitution and by the statutes enacted by the Congress. This represents his judgment as to the governmental organization needed by him for this purpose. It represents also the judgment of key officials in the previous administration.

The new Department would give a voice in the Cabinet on urban and housing matters so that proper consideration and weight would be given to them in the overall administration of the executive branch. It would enable a better coordination of the interrelated functions of the various departments.

The new Department would give our States and communities an urgently needed agency at the departmental level to assist them in formulating and carrying out local programs relating to their general physical planning and development. This is the basis on which the Department would be established. It would not be established on a geographical basis or provide a cleavage between rural and urban populations. It would administer an especially logical category of functions in the executive branch.

In no way whatsoever would the reorganization plan extend Federal authority or reduce the stature and position of the States and localities. Instead, history teaches us that the functions of States and localities in this field would be stimulated and strengthened by the creation of the Department.

The reorganization plan would have no significant bearing on either the size of any programs or the size of the organizations administering them, as these would continue to be fixed in legislation enacted by the Congress. In fact, the internal organization of the Department would be put on a sound basis to permit greater efficiency and economy, which should result in substantial savings in the cost of services and in the cost of financing the local projects which are being assisted.

In the interest of the better management of the executive branch and to better serve our States, our cities and towns, and the people for whom they exist, I urge rejection of the resolution of disapproval, Senate Resolution 288.

EXHIBIT 1

MAJOR DEVELOPMENTS AFFECTING URBAN AFFAIRS AND HOUSING

This Summary outlines the major events which, over the last three decades, have led to the establishment of a single point of responsibility for the supervision and coordination of the Government's principal housing and community development programs.

THE DEPRESSION YEARS

Although there are isolated instances of Federal concern over housing and related problems which go back 50 years and more, the substantial development of the Government's interest in this field did not occur until the 1930's.

The President's Conference on Home Ownership in 1931 undertook an extensive study of housing and its financing. There were enacted during the ensuing prewar years

In 1932: The Home Loan Bank Act which established the Federal Home Loan Bank System under a Federal Home Loan Bank Board.

In 1933: The Home Owners Loan Act, which established the Home Owners Loan Corporation for the relief of distressed homeowners and lending institutions.

In 1934: The National Housing Act, which

Established the Federal Savings and Loan Insurance Corporation under the Federal Home Loan Bank Board.

Established the Federal Housing Administration to administer the title 11 program of insurance for home improvement and the title II program of mortgage insurance for small homes and rental housing projects.

Authorized the chartering of national mortgage associations to provide a secondary mortgage market. The Federal National Mortgage Association was originally chartered under this authority.

In 1937: The U.S. Housing Act of 1937, which created the U.S. Housing Authority in the Department of the Interior to administer a program of federally aided low-rent public housing.

In 1939: Reorganization Plan No. 1 of 1939, which transferred the U.S. Housing Authority to the Federal Works Agency; and transferred the Federal Home Loan Bank Board and the Federal Housing Administration to the Federal Loan Agency.

In the depression years various emergency relief acts were also enacted, under which experimental public housing programs were undertaken by the Public Works Administration, the Subsistence Homesteads Division of the Department of Agriculture, and the Resettlement Administration.

THE DEFENSE AND WAR PERIOD

During the defense and war periods of World War II, housing was viewed as an essential component of the war production effort. This period saw the following developments in housing legislation and organization :

In 1940: Authorization for the U.S. Housing Authority to construct projects for defense workers and for the Army and Navy to build emergency housing for defense and military personnel.

Appointment in July 1940, of a Defense Housing Coordinator, attached to the National Defense Advisory Committee and having only advisory powers.

The Langham Act which authorized the construction of publicly financed war housing by the Federal Works Agency.

In 1941: Establishment in January 1941, of a Division of Defense Housing Coordination in the Office for Emergency Management, with vague and indefinite powers of coordination.

Title VI of the National Housing Act, which laid the basis for FHA-Insured privately financed war housing.

In 1942: Establishment of the National Housing Agency by Executive Order 9070 in February 1942. This consolidated most of the Federal housing programs into three constituents: the Federal Home Loan Bank Administration, Federal Public Housing Authority, and Federal Housing Administration. The National Housing Administrator reported directly to the President.

In 1946: Establishment of the Office of the Housing Expediter in 1946 to administer the veterans' emergency housing program. The positions of Housing Expeditor and National Housing Administrator were combined from February 1946 to

January 1947, when they were again separated.

THE P0STWAR PERIOD

The Executive order which set up the National Housing Agency was issued under war powers and would have ceased to be effective 6 months after the legal termination of the war. The need for a coordinated Federal approach to housing assistance was, however, emphasized by the severe national housing shortage which existed after the war.

As this need began to be met, the emerging problems of the central cities came into focus as one of major consequence to urban and metropolitan area development and to the entire nation.

Important steps in the postwar period which affected the position of HHFA as the focal center for national planning and action on housing and community development problems generally were:

In 1947: Establishment of the Housing and Home Finance Agency by Reorganization Plan No. 3 of 1947 as a permanent independent agency reporting to the President. The plan established as constituent agencies of HHFA the Federal Housing Administration, the Public Housing Administration and the Home Loan Bank Board.

In 1948: Authorization for a housing research program in the Housing Act of 1948.

In 1949: Enactment of the slum clearance and redevelopment program and of an extended low-rent public housing program in the Housing Act of 1949. This act also contained a declaration of national housing policy and broadened the scope of the housing research program.

In 1950: Transfer to HHFA by Reorganization Plans 17, 22, and 23 of 195D of the program of advances for public works planning and the Lanham Act war public works program from the General Services Administration; of the Federal National Mortgage Association from RFC; and of the prefabricated housing loan program from RFC.

Enactment of the college housing loan program.

In 1951: Assignment to HHFA of the defense housing and community facilities and services program, designed to provide housing and community facilities for defense activities stimulated by the Korean conflict.

In 1953: Recommendations of the President's Advisory Committee on Government Housing Policies and Programs, from which most of the provisions of the Housing Act of 1954 evolved.

In 1954: The Housing Act of 1954, which broadened the approach to slum clearance to include rehabilitation and conservation, authorized the special urban renewal sections 220 and 221 FHA insurance programs, instituted the workable program for community improvement as a prerequisite to participation in certain Federal pro-rams, and established the urban planning assistance program.

In 1954: Establishment, by an order of the Administrator, of the Community Facilities Administration and the Urban Renewal Administration. These new constituents had previously been divisions in the Office of the Administrator.

Enactment of the Federal National Mortgage Association Charter Act, which rechartered FNMA and provided the basis for the eventual transfer of the Association's secondary market operations to a privately owned and financed corporation.

In 1955: Enactment of a new program for public facility loans, to be administered by HHFA.

Separation of the Federal Home Loan Bank Board from HHFA, and its establishment as an independent executive agency.

In 1956: Authorization of a program of studies on problems of housing need, demand, and supply.

Enactment of special programs designed to assist in providing housing for elderly persons, including special authorities and priorities under the PHA low-rent public housing program.

In 1957: Transfer by Reorganization Plan No. I of 1957 of the RFC public agency loan portfolio to HHFA for liquidation. The mortgages held by RFC as a result of loans made under the programs of the RFC Mortgage Company, and the Defense Homes Corporation had been transferred to HHFA for liquidation in 1954.

In 1959: Enactment of FHA mortgage insurance programs for rental units and nursing homes for the elderly and a program of direct loans for housing for the elderly.

In 1961: The Housing Act of 1961, which

Assigned to HHFA new programs to assist urban mass transportation through loans for facilities and equipment and grants for comprehensive planning and for demonstration projects.

Enacted a new program of grants to help localities acquire permanent open-space land.

Provided for new FHA programs for home improvement and rehabilitation and for experimental housing, and a new mortgage insurance program for displaced families and other low and moderate income families,

Reduced the interest rate for public facility loans to small communities and authorized a technical advisory service to such communities.

Authorized liberalized aids to depressed areas participating in the urban renewal and public facility loan programs, in addition to provision for special programs authorized in the Area Redevelopment Act.

Authorized a program of demonstration projects for housing for low-income persons and families.

EXHIBIT 2

ORGANIZATION AND FUNCTIONS or HHFA

The Housing and Home Finance Agency consists of the Office of the Administrator, three constituent agencies, and two constituent units.

The constituent agencies are the Federal Housing Administration, Public Housing Administration, and the Federal National Mortgage Association. These constituents are established by law and have statutory powers independent of the Administrator. The Federal Housing Commissioner and the Public Housing Commissioner are appointed by the President, with the advice and consent of the Senate. Under the FNMA Charter Act, the Housing Administrator is Chairman of the FNMA Board of Directors and appoints the other members of the Board and the Association's principal officers.

These three constituents are self-contained entities and each has its own field structure, although regional boundaries conform with minor variations to a standard HHFA pattern.

The constituent units are the Community Facilities Administration and the Urban Renewal Administration. These constituents were established in 1954 by order of the Administrator to administer programs vested directly in him by law. The Community Facilities Commissioner and Urban Renewal Commissioner are appointed by the Administrator.

These two constituents obtain common administrative services from the Office of the Administrator and in the field their programs are carried out through HHFA regional offices.

The regional administrators in charge of HHFA regional offices, in addition to supervising field execution of the community facilities and urban renewal programs, represent the Administrator in their regional areas and in the general coordination of Housing Agency programs at the local level.

The Administrator is Chairman of the National Voluntary Mortgage Credit Extension Committee (voluntary home mortgage credit program). The Agency provides staff help for both the national and regional committees set up under this program.

The Administrator is also Chairman of the National Housing Council, established under Reorganization Plan No. 3 of 1947, to promote the most effective use of the Government's housing resources and assure coordination of National Housing policies with overall Government and fiscal policies. The National Housing Council is made up of ex-officio members from various Government departments and agencies. It has been largely inactive since 1954.

FUNCTIONS

Office of the Administrator: The Office of the Administrator assists the Administrator in carrying out his responsibilities as head of the Agency, including the supervision and coordination of the constituent agencies and units, and in carrying out those program functions not delegated to or performed by the constituents. The Office, also provides certain common services to the Community Facilities Administration and the Urban Renewal Administration. Other functions administered within the Office of the Administrator include:

Urban mass transportation grants and loans: The Housing Act of 1961 provides for (1) grants for up to two-thirds of the cost of comprehensive planning for maw transportation, (2) grants for up to two-thirds of the cost of demonstration projects designed to improve, or reduce the need for, mass transportation, and (3) loans to finance the acquisition, construction, and improvement of transportation facilities. Certain aspects of the comprehensive planning grant program will be administered by URA, and certain technical services in the facilities loan program will be provided by CPA.

Urban studies and housing research: A program of research and studies in housing and urban problems is carried out under the authority of the Housing Act of 1948, as amended, and the Housing Act of 1956.

Low-income housing demonstration grants: Grants may be made to demonstrate new or improved means of providing housing for low-income families.

Federal Housing Administration: The Federal Housing Administration insures lenders against loss on mortgage loans covering new or existing residential properties and on loans for home modernization and improvement. The principal FHA programs are:

Home mortgage insurance: More than 70 percent of FHA insurance is on one- to four family houses in the regular mortgage market. The majority of these mortgages are insured under section 203 of the National Housing Act and included in the Mutual Mortgage Insurance Fund.

Multifamily rental housing mortgage insurance: Mortgages on Multifamily rental housing in the regular market are issued under section 207.

Cooperative housing mortgage insurance: Section 213 provides for the insurance of mortgages on cooperative housing built by cooperative associations or by builders for sale to cooperatives.

Urban renewal mortgage insurance: Section 220 provides special mortgage insurance aids for the construction or rehabilitation of residential properties in urban renewal project areas.

Mortgage insurance for moderate income and displaced families: Section 221, as amended by the Housing Act of 1961, provides assistance for moderate income families through special mortgage insurance aids for low down payment, long maturity loans to purchasers of one- to four-family homes, and for low-interest loans to private nonprofit bodies, limited dividend corporations, cooperatives, and public agencies for construction or rehabilitation of multiunit rental housing. Mortgage insurance for housing for the elderly: A special program, under section 231, assists in providing housing for the elderly.

Home improvement loans: A new program enacted in the Housing Act of 1961 authorizes insurance of home improvement and rehabilitation loans up to $10,000 per dwelling unit at not more than 6 percent interest and a maturity up to 20 years.

Experimental housing mortgage insurance: Mortgages may be insured on properties involving uses of advanced technology in housing design, materials or construction or experimental neighborhood design under the Housing Act of 1961.

Mortgage insurance for individually owned units in multifamily structures (condominium mortgages) : Mortgage insurance may be provided under a new provision in the Housing Act of 1961 for individual fee simple or long-term lease ownership of a unit in a multifamily structure.

Armed services housing mortgage insurance: FHA has three programs, under sections 803, 809, and 222, which are particularly designed to provide housing for military and civilian personnel living at or near military installations. A large part of the family housing for military personnel in the past decade has been financed under these programs.

Property improvement loan insurance: In addition to its mortgage insurance programs, FHA coinsures qualified lending institutions against loss on loans made to finance alterations, repairs, and improvements to homes and other properties and the building of small nonresidential structures.

Public Housing Administration: PHA assists in the provision of public low-rent housing for low-income families (under the Housing Act of 1937) through (1) direct loans and the guarantee of private loans to local housing authorities for construction financing and (2) annual contributions to meet the local housing authority's 's annual payments on its long-term bonds issued for permanent financing. The annual contribution is reduced to the extent that project income exceeds operating expense and reserve requirements. The housing is planned, owned, and managed by local housing authorities, created under State law.

Special housing can be provided under this program for elderly persons and families of low income.

Federal National Mortgage Association: FNMA carries out three primary functions, for which separate accountability is required under the FNMA Charter Act. These are:

Secondary mortgage market function: FNMA supplements the private secondary mortgage market through the purchase and sale of FHA-insured and VA-guaranteed mortgages, thus providing a degree of liquidity for mortgage investments and improving the distribution of investment capital available for home mortgages.

Sellers to FNMA under this function must subscribe to the common stock of the Association. The charter act contemplates eventual private ownership of the secondary market function through the transfer of the Association's liabilities and assets to the owners of the common stock.

The Housing Act of 1961 authorizes FNMA to make loans, with maturities up to 1 year, on the security of FHA or VA mortgages.

Special assistance function: At the direction of the President or Congress, FNMA makes commitments to purchase and purchases selected types of mortgages originated under special housing programs. This authority may also be used by the President to retard or stop a decline in mortgage lending and home building activities which threatens materially the stability of a high-level national economy.

Management and liquidation function: FNMA is responsible for managing and liquidating the portfolio of mortgages acquired by it prior to the charter act of 1954. It may also purchase and dispose of mortgages held by other HHFA constituents when the administrator finds that this will be in the interest of efficient management.

Community Facilities Administration: The Community Facilities Administration administers five active programs and is responsible for the liquidation of certain programs for which program authorization has expired. The active programs are:

Advances for public works planning: Interest-free advances are made for the planning of essential public works. The advances are repayable when and if construction is undertaken.

College housing loans: Loans are available for student and faculty housing and related facilities and for housing for student nurses, interns, and residents, to public and private nonprofit colleges and hospitals which cannot secure funds from other sources on equally favorable terms. Loans are limited to 40 years. Interest rates cannot exceed the higher of 2% percent or one-fourth percent above the cost of borrowing from the Treasury. The current rate is 3% percent.

Public facility loans: Loans for essential public facilities are made to non-Federal public bodies unable to obtain funds from other sources at reasonable interest rates. Eligibility is limited to communities with a population of less than 50,000 or, if located in an economically depressed area, less than 150,000. Maturities of loans cannot exceed 40 years. The interest rate under the statutory interest rate formula established by the Housing Act of 1961 is 3% percent for the fiscal year 1962.

Public facility loans under the Area Redevelopment Act, administered by delegation of the Secretary of Commerce, may be made in designated areas of persistent unemployment at interest rates of 3% percent during fiscal year 1962. The Area Redevelopment Act also authorizes grants for public facilities in such areas.

Senior citizens housing loans: Low-interest long-term loans are made to private nonprofit corporations, consumer cooperatives, and public agencies for up to 100 percent of the cost of constructing or converting housing facilities for elderly persons and families. The maximum repayment period is 50 years. The interest rate cannot exceed the higher of 2% percent or one-fourth percent added to the average annual interest rate on all interest-bearing U.S. obligations forming a part of the national debt. The current rate is 3% percent.

School construction: CPA provides technical, legal, financial, and engineering services in the administration of the

Federal and non-Federal school construction programs of the Office of Education.

Urban Renewal Administration: This constituent administers the following programs relating to urban renewal and community planning:

Slum clearance and urban renewal program (title 1, Housing Act of 1949): Urban renewal projects are planned and carried out by local public agencies.

URA provides advances for survey and planning activities, feasibility surveys, and general neighborhood renewal plans,

Loans and grants are provided to assist in carrying out such project execution activities as land acquisition, temporary operation of acquired properties, relocation of site occupants, demolition work, installation of public improvements to prepare the land for redevelopment, and land disposition. The Federal grant at project settlement covers two-thirds of the net cost of the project, except under the Housing Act of 1961, the Federal share is increased to three-fourths for any municipality having a population of 50,000 or less (or 150,000 for a municipality in an economically depressed area).

Grants are also made to share the cost of citywide plans for a long-range urban renewal program.

Demonstration grant program: Grants are made to non-Federal public bodies to cover two-thirds of the costs of projects which develop, test, and demonstrate improved methods and techniques for slum prevention and elimination.

Urban planning assistance grants: Two-thirds grants are made to State planning agencies to provide planning assistance to municipalities, counties, or groups of adjacent communities which have a population of less than 60,000. Similar grants are made to State, metropolitan, and regional planning agencies for comprehensive planning in State, interstate, and metropolitan areas and urban regions; and to local governments in disaster areas and in areas facing rapid urbanization as a result of the expansion of Federal installations. Under the Area Redevelopment Act, grants of up to 75 percent can be made for comprehensive planning in designated redevelopment areas, either directly or through State planning agencies.

Open-space land grants: The Housing Act of 1961 authorizes a new program of Federal grants to assist local public bodies in the acquisition of land required in connection with comprehensive urban plans to be used as permanent open space for recreational, conservation, and scenic purposes. Grants may normally not exceed 20 percent of the cost of the land; but, to encourage comprehensive area wide planning, the grant may be increased to 30 percent to a public body which exercises responsibilities for an urban area as a whole or as participant in an interstate or similar compact or agreement for an area.

EXHIBIT 7

GROWTH OF DEMAND FOR A CABINET DEPARTMENT

The demand for a department to represent the Nation's housing and urban development needs at the Cabinet table is rooted in the explosive growth of our urban centers and the transformation from the essentially rural economy of a scant half-century ago to the predominantly urban economy of the 1960's.

The growth of this demand is traceable in the development of the programs and organization established to meet the emerging problems of urbanization-from a group of widely scattered defense and war housing programs and agencies; through a temporary consolidation of these under the pressure of war into the National Housing Agency in 1942; to the recognition of the permanent nature of the problem with the establishment of the Housing and Rome Finance Agency in 1947.

The formation of HHFA was followed by a series of actions by the President and Congress to round out the skeletal mission of the Agency and to strengthen its supervisory and coordinating functions. These actions included increasing the responsibilities of the Administrator for research, economic analysis, and policy and program advice; transferring to HHFA the community facilities program of the General Services Administration and the secondary mortgage market operations of the Federal National Mortgage Association; and enacting a variety of new program in response to special needs and the generally increasing desire of localities for assistance in planning and development; the slum clearance and urban renewal program of 1949, the expanded urban renewal program of 1954 with its special FHA supporting programs, the urban planning assistance program, expanded low-rent public housing, college housing, public facilities loans, special programs for housing the elderly, and the programs enacted in 1961 to meet the need for moderate-income private housing, and to cope with the pressing problems of urban transportation and the proper development of open-space land.

The demand that the capacity of HHFA to provide leadership in urban development and housing matters be strengthened has grown steadily along with the increased Federal interest and participation in urban problems.

In 1938, 23 years ago, the President's Committee on Administrative Management called attention to the needs of urban communities and urged the Bureau of the Budget to assume future responsibilities in this area.

In 1942 Charles E. Merriam called for a department of urbanism within the Federal Government during a conference on this subject at Harvard University.

Ten years later, the National Housing Conference recommended to Congress the establishment of a Department of Housing and Urban Development. In subsequent years, this recommendation has been supported by the American Municipal Association, representing more than 12,000 cities; the U.S. Conference of Mayors representing more than 315 cities; the AFL-CIO; the National Association of Housing and Redevelopment Officials; the American Society of Planning Officials; and other organizations concerned with housing and urban development problems.

The first Hoover Commission recommended that all housing activities be placed in one agency under a single administrator who should be given the type of authority recommended for the heads of all agencies.

A broadly representative President's Advisory Committee on Government Housing Policies and Programs reported in 1953, after a thorough study of the then existing activities of HHFA, that:

"There should continue to be a single housing agency headed by an Administrator. * * * The Administrator should be given clear authority to supervise and direct, if necessary, the activities of constituent agencies where any matter of basic policy is involved. The Committee is convinced that although the heads of constituent agencies should be fully responsible for the day-to-day operations of the programs of their agencies, the Administrator must have clear and unmistakable authority to supervise constituent operations for and on behalf of the President."

The Democratic Party platform of 1960 recognized the growing needs of the urban population and stated that the party would bring together within a single Cabinet department the programs concerned with urban problems. This was followed by an address by Senator Kennedy in October of 1960 favoring a Cabinet department for urban development and metropolitan planning activities. In his state of the Union message in January and his special message to the Congress on housing and community development in March 1961, the President reaffirmed the need for the department; and on April 18, 1961, he transmitted to the Congress draft legislation to carry out his recommendation.

This need was again stressed in the state of the Union message for 1962, and in the transmittal of Reorganization Plan No. I of 1962 to the Congress.

The plan under consideration is not the first legislation to have been introduced for the purpose of establishing a Cabinet Department for Urban and Housing Affairs.

Bills to establish an executive department concerned with housing and urban affairs have been introduced in the 84th, 85th, and 86th Congresses including four bills in the 84th Congress, one in the 85th, and eight in the 86th. Although the specific provisions of these bills varied, they all had as their major purpose the creation of a Cabinet-level department to administer and coordinate Federal programs and activities having a major impact on urban areas.

S. 3292, a bill to establish a Department of Housing and Metropolitan Affairs, introduced during the 86th Congress by Senator Clark for himself and Senators Murray, Democrat, Montana, Javits, Republican, New York, and Williams, Democrat, New Jersey, was favorably reported by the Senate Committee on Banking and Currency (Rept. No. 1607 to accompany S. 3292, 86th Cong., 2d sess.) following hearings held over a 3-week period starting on May 9, 1960. No further action was taken on this bill.

During the 1st session of the 87th Congress, 20 bills relating to the establishment of such a department were introduced.

Following hearings before the House and Senate Committees on Government Operations, identical bills for the purpose were reported favorably in the two Houses: S. 1633 in the Senate (Rept. No. 1053). These two bills are the immediate predecessors to Reorganization Plan No. 1 of 1962.

EXHIBIT 8

STUDIES OF FEDERAL ROLE IN HOUSING AND URBAN AFFAIRS

The responsibilities of the Federal Government with respect to problems of urban affairs and housing have been the subject of a large number of official studies and investigations. These have included the questions of intergovernmental relations between the Federal Government, the States, and the cities, and of the organization of the Federal Government to best meet its responsibilities in this area.

Among these studies have been

In 1937: National Resources Committee. The National Resources Committee, in its report to the President entitled "Our Cities," ,reviewed in depth the problems of the cities. It studied the role of the Federal Government, and concluded that "all in all there has been more widespread national neglect of our cities than of any other major segment of our national existence." The Committee recommended creation of a Federal unit for urban research, and called for action on "the urgent necessity of coordinating both at Washington and in the field the related services and activities performed by the various Federal agencies operating in urban areas."

In 1949: The Commission on Organization of the Executive Branch of the Government (First Hoover Commission). The Commission studied the housing programs of the Government as a part of its review of the executive branch. In its report on "Federal Business Enterprises," which included a section on "Business Enterprises in Housing," the Commission recommended that "all housing activities be placed in one agency under a single Administrator, who should be given the same type of authority which we have recommended for the heads of all agencies."

In 1953: The President's Advisory Committee on Government Housing Policies and Programs. The Committee made a detailed study of Government housing program , including low-income housing, and urban development, rehabilitation, and conservation. It emphasized the need for a complete and coordinated program of urban renewal, noting that "a piecemeal attack on slums simply will not work," recommended "Federal assistance to help communities help themselves attack the problem of the spread of slums at every stage of urban decay," and recommended that the housing activities of the Government be grouped within a single agency

In 1955: Commission on Intergovernmental Relations (Kestnbaum Commission). The Commission studied in depth the problems of Federal, State and local government relations, including their impact on the areas of housing and urban affairs. The Commission's report pointed to the need for greater coordination of Federal programs in these areas, noting that "Public and private housing, g, Federal Housing Administration Insurance, private insured and uninsured mortgage lending, Veterans' Administration loan guarantees, slum clearance, urban renewal, rehabilitation, and enforcement, and local public works are all related in local communities. Diverse lines of responsibility to the Washington Offices of these programs tend to create confusion."

In 1961: Advisory Commission on Intergovernmental Relations. This Commission made a special study of governmental structure, organization and planning in metropolitan areas, which included suggested action by local, State, and Federal Governments. The Commission's report recommended expanded and improved Federal financial and technical assistance to metropolitan areas; it also recommended that "steps be taken within both the executive and legislative branches of the National Government to bring together in better coordination and interrelationship the various Federal programs which impact upon orderly planning and development within the large urban areas."

In addition to the studies of the committees and commissions noted above, the Congress itself has studied the problem in considerable detail over a period of years. Committees of both Houses have held hearings and considered detailed testimony on the problems of Federal programs and Federal-State-local relations in the field of housing and urban affairs.

Among these hearings have been

In 1945, Senate: The Subcommittee on Housing and Urban Development of the Senate Special Committee on Postwar Economic Policy and Planning, headed by Senator Taft, held hearings from June 1944 to February 1945, and studied the question in detail. Senator Taft later noted that "our subcommittee spent nearly a year in dealing with that problem."

In 1946, Senate the Banking and Currency Committee held extensive hearings in December 1945 and January 1946 on S. 1592, to establish a national housing policy (the Wagner-Ellender-Taft bill).

In 1948, joint: The Joint Committee on Housing was created by the 80th Congress and held extensive hearings in 1947 and early 1948, including hearings in 32 cities throughout the country. The results of its studies and hearings were published as a report entitled "Housing in America."

In 1955, House: Subcommittee of the Committee on Government Operations held hearings in July 1955, on H.R. 1864 to create a department of urbiculture.

In 1959, Senate: The Subcommittee on Reorganization and International Organizations of the Committee on Government Operations held hearings in July 1959 on S. 1431 to provide for the establishment of a commission on metropolitan problems and S. 2397 to establish a department of urbiculture.

In 1959, House: Subcommittee of the Committee tee on Government Operations held hearings in June and July 1959, on eight bills to establish a commission on metropolitan problems and urban development and to create a department of urban affairs.

In 1960, Senate: Subcommittee of the Committee on Banking and Currency held hearings in May 1960 on a number of bills to amend the Federal housing laws, including S. 3292 to provide for the establishment of a department of housing and urban affairs. S. 3292 was subsequently reported favorably to the Senate by the Committee on Banking and Currency.

In 1961, Senate: The Subcommittee on Reorganization and International Organizations of the Committee on Government Operations held hearings in June 1961 on four bills to provide for establishment of a department of urban affairs and housing. S. 1633 was subsequently reported favorably to the Senate by the Committee on Government Operations.

In 1961, House: Subcommittee of the Committee on Government Operations held hearings in May and June of 1961 on H.R. 6433 to establish a department of urban affairs and housing. H.R. 8429, a clean bill, was subsequently reported favorably to the House of Representatives by the Committee on Government Operations.

In 1962: Hearings before House and Senate Committees on Government Operations during February 1962, on Reorganization Plan No. I of 1962.

In addition to the studies and hearings by both the executive and legislative branches of the Government, there have, of course, been a large number of reports, articles, and studies by private individuals, research organizations, and universities and foundations on the various aspects of metropolitan problems, and on the relationship of the Federal Government and its programs and activities, to those problems.

EXHIBIT 9

CHRONOLOGY

January 30, 1961: President Kennedy, in his state of the Union message, said that a new housing program under a new department will be needed this year.

March 9, 1961: President Kennedy, in his message to Congress on "Our Nation's Housing," recommended the establishment in the executive branch of a new, Cabinet-rank department for housing and urban affairs.

April 17. 1961: Budget Director David E. Bell submitted to President Kennedy a draft of proposed departmental legislation.

April 18, 1961: President Kennedy transmitted the draft legislation to the President of the Senate and the Speaker of the House of Representatives.

April 18, 1961: Bills introduced in the House by Representative FASCELL, of Florida, and in the Senate by Senator CLARK, of Pennsylvania for himself and 14 other Senators.

May 24, June 6, 7. and 13, 1961: Public hearings held on the legislation by a subcommittee of the House Committee on Government operations.

June 21 and 22, 196 1: Public hearings held on the legislation by a subcommittee of the Senate Committee on Government Operations.

August 28,1961: House Committee on Government Operations reported favorably on the bill (H.R. 8429).

September 6, 1961: Senate Committee on Government Operations reported favorably on the bill (S. 1633).

January 11, 1962: President Kennedy said in his state of the Union message: "Both equity and commonsense require that our Nation's urban areas-containing three-fourths of our population -- sit as equals at the Cabinet table. I urge a new Department of Urban Affairs and Housing."

January 24, 1962: House Committee on Rules denied a rule to clear the House bill for floor action. President Kennedy said in a press conference: "I am going to send it to Congress as a reorganization plan and give every Member of the House and Senate an opportunity to give their views and work their will on this."

January 30, 1962: President Kennedy transmitted Reorganization Plan No. I of 1962 to the Congress to establish a Department of Urban Affairs and Housing.

HHFA PROGRAMS FOR SMALL COMMUNITIES

The proposal for a Department of Urban Affairs and Housing has been referred to as a measure for the big cities. There have been congressional demands for a similar department for small towns and at least one bill, introduced in the House by Congressman CUNNINGHAM, of Nebraska, would establish such a department.

While the big cities are, of course, vitally interested in the proposal for a Department of Urban Affairs and Housing, the smaller communities are equally interested.

in his message transmitting Reorganization Plan No. 1 of 1962 President Kennedy said:

"It should not be assumed that these are matters of concern only to our larger cities. Hundreds of smaller cities and towns are located on or near the fringes of rapidly growing urban areas. The problems of the cities affect them today, and will be theirs tomorrow. Hundreds of other smaller towns and cities not now affected will be so situated a few short years hence. Thus, the smaller towns and cities have a stake in this proposal as vital as, and only a little less immediate than, that of our large urban centers. This plan is addressed to their needs as well as to those of the major cities."

Mayor Daley, of Chicago, and Mayor West, of Nashville, both emphasized this point in their testimony on the bills last year.

Mayor Daley said: "I would like to give particular emphasis to the far-reaching benefits that this bill would give to our urban and suburban communities. This is not a bill for the big cities."

And Mayor West, speaking on behalf of the U.S. Conference of Mayors and the American Municipal Association before both the House and Senate subcommittees, said: "When we speak of a Department of Urban Affairs we do not mean a department of "big city affairs" or "small town affairs." This Department would be charged with looking after the programs of vital interest to the big city and the small town."

Ed E. Reid, executive director of the Alabama League of Municipalities, also speaking for the American Municipal Association, made the same point in the statement filed with the House and Senate subcommittees. He said:

"There is one point which I cannot emphasize too strongly. Some people unfortunately seem to identify a Department of Urban Affairs only with large cities. This impression is completely mistaken.

"To be sure our large cities have some special problems, as do small communities. However, cities of every size have many problems and aspirations in common. I feel confident that a Department of Urban Affairs and Housing would not be administered simply to benefit the larger metropolitan areas.

"The Alabama League represents all Alabama communities, regardless of size. These communities range from very small towns up to the metropolitan area of Birmingham with a total population of over 600,000, but most of them are small, by big city standards. I would not be testifying in support of this measure, if I did not believe that all of these communities would benefit.

Some of the programs which would be transferred to the new Department are particularly designed to help small cities. These include the program of advances for public works planning and the public facility loan Program, both administered by the Community Facilities Administration, and the urban planning assistance program administered by the Urban Renewal Administration. In each of these programs, the major portion of the assistance is given to communities of under 50,000 population.

Other HHFA programs also contribute to the welfare of the Nation's smaller cities. For example, over 585,000 FHA mortgages were insured in counties outside of standard metropolitan areas during the period of 1935-52. About $300 million in capital grants have been made available to communities under 50,000 Persons through URA's slum clearance and urban renewal program. And over 40 percent of the communities with low rent public housing projects in preconstruction, construction, or management were Cities of less than 5,000.

A program outline of significant HHFA assistance to the small cities follows:

COMMUNITY FACILITIES ADMINISTRATION

Advances for public works planning: Interest-free advances are made for the planning of essential public works. The advances are repayable when and if construction is undertaken.

Communities under 5,000 population have provided 1,356 of the 3,518 applications received as of December 31, 1961, and 2,778 applications have come from cities under 50,000 persons. Communities of 50,000 of less have submitted 78.5 percent of the applications under this program.

Public facility loans: The program of public facility loans is especially beneficial to the smaller communities. Loans for essential public facilities are made to non-Federal public bodies unable to obtain funds from other sources at reasonable interest rates. Loans are limited to 40 years. Current interest rates for loans are 3% percent, or 3% percent for communities situated in redevelopment areas designated under the Area Redevelopment Act, Public Law 87-27.

The Housing Act of 1961 established a population limit of less than 50,000 for applicant communities, or less than 150,000 for communities situated in redevelopment areas.

By the end of December 1961, there had been 393 net approved loans for over $115 million made under this program.

URBAN RENEWAL ADMINISTRATION

Urban planning assistance: Under the urban planning assistance program, two-thirds grants are made to State planning agencies for aid to municipalities, counties, and communities with less than 50,000 population. Three-fourths grants are made for urban planning for municipalities and counties in designated redevelopment areas. Although grants are also made for State, interstate, metropolitan area, and regional planning, the bulk of the program is geared to communities of less than 50,000 population.

Financial assistance for the preparation of community plans has been made available to 2,001 localities of under 50,000 population. These represent over 85 percent of the total number of communities assisted under the program.

Urban renewal: HHFA also provides financial assistance to localities for planning and carrying out urban renewal projects. For communities of up to 50,000 (150,000 in redevelopment areas), the Federal share is three-fourths of cost instead of two-thirds.

Of the 470 localities participating in the urban renewal program, 100 of them are under 10,000. Localities of under 50,000 population total 291.

A total of 349, or 43 percent, of the 813 urban renewal projects being planned or undertaken in June 1961 were in cities of under 50,000 population. Of the nearly $2 billion Capital grant reservations made in the program, $293 million or 16 percent have gone to communities of under 50,000 population with $47 million alone reserved to cities of under 10,000.

FEDERAL HOUSING ADMINISTRATION

The latest statistics on FHA-Insured home mortgages by location of property cover the period of 1935-52. Some 19 percent of the FHA-insured mortgages in this period were in counties outside of standard metropolitan areas and in which the largest city had less than 50,000 population.

The dollar amount for the 585,000 FHA-Insured home mortgages in counties outside of standard metropolitan areas in this period was a little over $3 billion.

PUBLIC HOUSING ADMINISTRATION

Out of a total of 1,517 communities with PHA low-rent housing in preconstruction, Construction or management on September 30, 1961, 1,177 were outside urbanized areas; 853 of these were communities of less than 10,000 population and 650 had population of less than 5,000 according to the 1960 census.

Small cities in the South have especially benefitted under this program. The Atlanta and Fort Worth regions have almost 74 percent of the communities under 10,000 which have public housing low-rent projects in preconstruction, construction or management.

EXHIBIT 12

ADDITIONAL COSTS OF TOP-LEVEL POSITIONS

The following table shows the increase in authorized costs of top-level positions attributable to the plan, taking into account new positions established or provided for by the plan and positions abolished or rendered unnecessary.

As indicated in the recapitulation, a total of seven positions is established or authorized by the plan at a total annual salary cost of $145,000; and five existing HHFA positions at a total annual salary cost of $95,570 are abolished or rendered unnecessary by the bill. The net increase in annual salary cost is $49,430.

EXHIBIT 13

HOUSING PROGRAMS NOT TRANSFERRED

Farm housing: Historically, the housing functions which have been assigned to HHFA have had as their basic common objective the improvement of living conditions in urban areas. The housing functions of the new Department will be organized around this major purpose.

While Federal aids to both urban and farm housing are generally financial in nature, the problems of financing a farm home are inseparable from those of financing the farm itself. That is, the farm and the farm home are parts of the same economic unit.

As responsibility for the farm as a productive unit rests with the Department of Agriculture, it is believed that the farm housing program should continue to operate within that Department.

Federal Home Loan Bank Board: The Federal Home Loan Bank Board was created as an independent agency in 1932. At one time, it was a part of the former Federal Loan Agency. From 1942 until 1947 it was a constituent of the National Housing Agency and from 1947 until 1955 it was a constituent of the Housing and Home Finance Agency.

The Board again became an independent agency under the Housing Amendments of 1955. Opponents of the change argued that the major purpose of the Board was the encouragement of additional credit for housing and that this function logically belonged in HHFA. However, advocates of the legislation to grant independence to the Board emphasized that fact that the Board had responsibility for the supervision of private financial institutions and that its functions were largely regulatory, or even quasi-judicial, in nature.

Because reasonable arguments can and have been made on both sides of the issue, there appears no reason for asking the Congress to reverse its recent action. During consideration of the Housing Amendments of 1955, it became clear that there was strong bipartisan support for the Board's independence, both in the House and in the Senate.

There is nothing in the administration proposal which would in any way affect the present independent status of the Federal Home Loan Bank Board.

Veterans' Administration home loan program: The home loan guarantee program of the Veterans' Administration is similar, both in purpose and in general approach, to the FHA's mortgage insurance program. For this reason, it has been proposed many times that this program be transferred to the agency responsible for the major housing programs of the Federal Government.

It has been the position of HHFA for many years that, while any new veterans' housing program might well be administered within the framework of FHA, the present guarantee program should remain in the Veterans' Administration until it is liquidated.

EXHIBIT 14

POWERS OF THE SECRETARY COMPARED WITH THOSE OF THE HOUSING AND HOME FINANCE ADMINISTRATOR

The Housing Administrator derives his basic authority as head of the Housing and Home Finance Agency from Reorganization Plan No. 3 of 1947 which created the Agency. The Administrator's relationship to the five major constituents falls into three categories:

In the case of the programs of the Urban Renewal Administration and the Community Facilities Administration, the statutory powers are vested in the Administrator and delegated by him to the Commissioners of the URA and CFA or to the regional administrators. The Commissioners of the URA and the CFA and the regional administrators are appointed by the Administrator.

The Federal National Mortgage Association falls into a second category because the statutory powers are vested in the Association as a corporate entity. However, the Administrator is Chairman of the Board and appoints the other members of the Board and the officers of the Association. Thus, the program of the FNMA, like those of the URA and the CFA, is in effect administered through the constituent, subject to supervision, coordination, and direction by the Administrator.

The relationship of the Administrator to the Federal Housing Administration and the Public Housing Administration is different in that the statutory responsibility for their basic programs is vested directly in the constituent, subject to the "general supervision and coordination" of the Administrator. Also, the Commissioners of these two constituent agencies are appointed by the President, with the advice and consent of the Senate.

The significance of the reference to "general supervision and coordination" in Reorganization Plan No. 3 of 1947 can best be understood by contrasting it with a provision in Reorganization Plan No. I of 1946 which failed of approval by the Congress. The 1946 plan would have provided that the constituent agencies of the proposed permanent "National Housing Agency" shall be subject to the "general superintendence, direction, coordination, and control" of the Administrator. The legislative history of the 1946 plan reveals quite clearly that the references to "direction" and "control" contributed to the failure of the Congress to approve the plan. The 1947 plan, which omits these words, must therefore be construed in the light of the objections made to the 1946 plan.

Under Reorganization Plan No. I of 1962:

1. The functions and powers of the Housing and Home Finance Administrator and the Public Housing Commissioner would be vested directly in the Secretary, who could redelegate them.

2. The Federal Housing Administration would be transferred as an entity, under its own name, to the Department. Its functions would be transferred to the Secretary as head of the Department, to be carried out under his direction by the Federal Housing Commissioner appointed by the President with the advice and consent of the Senate.

3. The Federal National Mortgage Association would also be transferred as an entity , under its own name, to the Department. The Secretary would have the same powers as are now possessed by the Housing and Home Finance Administrator to manage the affairs of the Association. He would serve as Chairman of the Board of Directors and appoint the other members of the Board and the Association's principal officers.

4. The statutory powers now vested in the Administrator with respect to the programs of the Urban Renewal Administration and the Community Facilities Administration would be transferred to the Secretary who would continue to appoint the heads of these constituents in the same manner as they are now appointed by the Administrator.

EXHIBIT 15

HOOVER COMMISSION RECOMMENDATIONS

The following recommendations were made by the Commission on Organization of the Executive Branch of the Government (the first Hoover Commission) in its report on "General Management of the Executive Branch."

"Recommendation No. 14: Under the President, the heads of departments must hold full responsibility for the conduct of their departments. There must be a clear line of authority reaching down through every step of the organization and no subordinate should have authority independent from that of his superior.

"Recommendation No. 16: Department heads must have adequate staff assistance if they are to achieve efficiency and economy in departmental operations.

"Recommendation No. 18: Each department head should receive from the Congress administrative authority to organize his department and to place him in control of its administration.

"Recommendation No. 19: We recommend that, to lay the foundations of authority and discipline, the staff officials and, as a rule bureau chiefs should be appointed by the department heads, and that proper consideration be given to the promotion of career employees.

"Recommendation No. 20: We recommend that the department head should be given authority to determine the organization within his department. He should be given authority to assign funds appropriated by the Congress for a given purpose to that agency in his department which he believes can best effect the will of Congress."

Since Congress in 1949 was dealing with the question of organization in the field of housing, the Hoover Commission noted in their report on "Federal Business Enterprises" that they were not in a position to present complete recommendations in this area. However, they did recommend "that all housing activities be placed in one agency under a single administrator who should be given the type of authority which we have recommended for the heads of all agencies."

The second Hoover Commission made no specific recommendations with respect to the general powers and functions of the heads of departments.

EXHIBIT 16

GENERAL TRANSFERS OF AUTHORITY TO DEPARTMENT HEADS

Various reorganization plans and statutes have transferred generally to the heads of executive departments the functions vested in other officers, agencies, and employees of their departments. Those acts, which also generally authorized the delegation of the functions transferred, are listed below together with the exceptions to the general transfers of functions contained therein. In all cases, with the exception of the Department of Defense and the Department of Health, Education, and Welfare, all functions, except as noted, are vested in the Secretary who is authorized to delegate these functions within the department.

State: The Secretary may promulgate rules and regulations necessary to carry out his functions and those of the Department and he may-delegate the authority to perform those functions (5 U.S.C. 151c); he may also prescribe duties for Assistant Secretaries and other employees of the Department and make changes and transfers therein (5 U.S.C. 154). The Secretary is authorized to administer, coordinate and direct the Foreign Service and the personnel of the Department, and the authorities vested in various officers with respect to the Foreign Service and Department personnel were transferred to the Secretary by the act of May 26, 1949 (22 U.S.C. 811a).

Treasury: Reorganization Plan No. 26 of 1950 effected a general transfer of authorities to the Secretary. The plan, which was effective July 31, 1950, excepted from the transfer functions vested in hearing examiners by the Administrative Procedure Act and functions vested in the Comptroller of the Currency; the plan was also subject to the provision of the act of January 28, 1915, requiring the Coast Guard to operate as part of the Navy in time of war or when the President so directs.

Justice: Reorganization Plan No. 2 of 1950 effected a general transfer of authorities to the Attorney General. The plan, which was effective May 14, 1950, excepted from the transfer functions vested in hearing examiners by the Administrative Procedure Act, functions vested in Federal Prison Industries, Inc., the Board of Directors and officers of Federal Prison Industries, Inc., and the Board of Parole.

Post Office: Reorganization Plan No. 3 of 1949 effected a general transfer of authorities to the Postmaster General. There were no exceptions to the plan which was effective August 20, 1949.

Interior: Reorganization Plan No. 3 of 1950 effected a general transfer of authorities to the Secretary. The plan, which was effective May 24, 1950, excepted from the transfer functions vested in hearing examiners by the Administrative Procedure Act and functions vested in the Virgin Islands Corporation, its Board of Directors and officers.

Agriculture: Reorganization Plan No. 2 of 1953 effected a general transfer of authorities to the Secretary. The plan, which was effective March 25, 1953, excepted from the transfer functions vested in hearing examiners by the Administrative Procedure Act, functions vested in the Department's corporations and the boards of directors and officers of those corporations, functions of the Advisory Board of the Commodity Credit Corporation, and functions vested in the Farm Credit Administration, its agencies, officers, and entities.

commerce: Reorganization Plan No. 5 of 1950 effected a general transfer of functions to the Secretary. The plan, which was effective May 24, 1950, excepted from the transfer functions vested in hearing examiners by the Administrative Procedure Act and functions vested in the Civil Aeronautics Board, the Inland Waterways Corporation. and the Advisory Board of the Inland Waterways Corporation.

Labor: Reorganization Plan No. 6 of 1950 effected a general transfer of functions to the Secretary. The plan, which was effective May 24, 1950, excepted from the transfer the functions of hearing examiners under the Administrative Procedure Act.

Health, Education, and Welfare: No general transfer of functions has been effected. Reorganization Plan No. I of 1953, which created the Department, made the Department subject to administration under the supervision and direction of the Secretary. The plan, which was effective April 11, 1953, vests in the Secretary the functions of the Federal Security Administrator, authorizes him to prescribe the functions of the Under Secretary, Assistant Secretaries, and Commissioner of Social Security, and authorizes him to establish central administrative services. However, no professional or substantive functions may be removed from any officer in connection with the establishment of such central services. The plan transferred the agencies of the Federal Security Agency to the Department together with their respective functions and resources.

Defense: No general transfer of functions has been effected. The National Security Act of 1947 placed the Department under the direction, authority and control of the Secretary, and it authorized the Secretary to prescribe the powers and duties of the other officers and employees of the Department of Defense. The act authorizes the Secretary to (1) assign and reassign the development and operational use of weapons systems; (2) provide for the carrying out of common supply or service activities by one agency; and (3) transfer, reassign, abolish and consolidate functions or take other steps to improve the operations of the Department, provided that, if the action affects a function established by law, the Secretary shall first report thereon to the Armed Services Committees and the action may be barred within 40 days by resolution of either House of Congress. The act further provides that each military department will be separately organized under its own Secretary but shall function under the direction, authority and control of the Secretary of Defense. Reorganization Plan No. 6 of 1953 transferred to the Secretary the functions of the Munitions Board, the Research and Development Board, the Defense Supply Management Agency, the Director of Installations and the approval of the selection of the Director of the Joint Staff.

EXHIBIT 18

SUMMARY or DIFFERENCES BETWEEN THE 1961 BILLS AND REORGANIZATION PLAN NO. I OF 1962

Insofar as the Reorganization Act of 1949 permits, Reorganization Plan No. 1 of 1962 follows the provisions of S. 1633 and H.R. 8429 as reported to the Senate and House of Representatives.

The significant differences axe identified below:

1. The bills contained a declaration of purpose (see. 2) which, because it expresses the intent of Congress in connection with the legislation then under consideration, is inappropriate to a reorganization plan.

This declaration provided:

"DECLARATION OF PURPOSE

"SEC. 2. The Congress hereby declares that the general welfare and security of the Nation and the health and living standards of our people require, as a matter of national Purpose, sound development and redevelopment of our urban Communities in which the vast majority of our people live and work.

"To carry out such purpose, and in recognition of the increasing importance of

urban communities in our national life, the Congress finds that establishment of an executive department is desirable to achieve the best administration of the principal programs of the Federal Government which provide assistance for housing and for the development and redevelopment of our urban communities; to give leadership within the executive branch in securing the coordination of the various Federal activities which have a major effect upon urban, suburban, or metropolitan development and redevelopment; to encourage the solution of problems of housing and of urban, suburban, and metropolitan development and redevelopment through State, county, town, village, or other local and private action, including promotion of interstate, regional, and metropolitan cooperation; and to provide for full and appropriate consideration, at the national level, of the needs and interests of urban areas and of the people who live and work in them."

2. The bills elaborated in section 3(b), on certain functions to be performed by the Secretary in connection with studies of housing and urban development problems, his advisory relationship to the President, and his role in coordinating Federal activities affecting urban areas. Section 3(b) also added additional functions with respect to providing a clearinghouse service to State, county, town, village, or other local governments. This section, therefore constituted legislation outside the purview of a reorganization plan.

The omitted section read:

"SEC. 3(b). The Secretary shall, among his responsibilities, conduct continuing comprehensive studies, and make available findings, with respect to the problems of housing and urban development; advise the President with respect to Federal programs and activities relating to such problems; develop and recommend to the President policies for fostering the orderly growth and development of the Nation's urban communities; exercise leadership at the direction of the President in coordinating Federal activities affecting urban areas; provide technical assistance and information, including a clearinghouse service, to State, county, town, village, or other local governments in developing solutions to urban problems; and encourage comprehensive planning by the State and local governments with a view to coordinating Federal, State, and community development activities at the local level."

3. S. 1633 and H.R. 8429 also contained two sections relating to small towns and communities (sec. 3 c and d).

The first of these sections directed the Secretary to give consideration to the special problems of small towns and communities. The second defined "urban areas" and "urban communities" and provided that nothing in the bill should be construed so as to deny or limit the benefits of any program assigned to the Department on the basis of corporate status or population.

Although these sections did not in fact change the existing situation with respect to smaller communities participating in Housing Agency programs, they were added to the original bills in order to give additional reassurance to those who felt that the pending legislation would favor the big cities. Since they constitute legislation outside the purview of a reorganization plan, they do not appear in Reorganization Plan No. 1 of 1962.

The sections omitted are:

"SEC. 3(c). In carrying out his functions under this act, the Secretary shall give consideration to the special problems of small towns and communities, including their needs for planning their future growth and for housing and community facilities, and shall provide appropriate assistance to such towns and communities in meeting these needs.

" (d) For the purposes of this Act, the terms 'urban areas' and 'urban communities' are intended to include all communities, regardless of size, whether incorporated or unincorporated, which may be eligible for assistance under laws administered by the Department. Nothing in this Act shall be construed to deny or limit the benefits of any program, functions, or activity assigned to the Department by this or any other Act to any community on the basis of its population or corporate status, except as may be expressly provided by law."

4. A number of administrative and technical provisions which appeared in S. 1633 and H.R. 8429 do not appear in the reorganization plan. These are:

Section 5(c) : Relating to the pay of the FNMA President. This section is no longer appropriate in view of the deletion of the material in section 7(c) of the bills.

Section 6(a): Adding the Secretary of 'Urban Affairs and Housing, as well as the Secretary of Health, Education, and Welfare, to the line of Presidential succession.

Sections 6(b) and 6(c): Making title 5 U.S.C. applicable to the new Department,

Section 7 (c) : Relating to appointments of officers. and employees and authorizing 9 positions at salary rates not in excess of OS-18 plus $1,500.

Section 7(d): Authorizing an additional number of positions in grades GS-16,17, and 18. (Recommendation not dependent on departmental status.)

Section 7(e) : (Second sentence) Repealing the prohibition in the Housing Act of 1949 against the redelegation of certain functions by the Housing and Home Finance Administrator.

Section 7(f): Authorizing the employment of consultants at not to exceed $100 per diem.

Section 7(g) : Authorizing the establishment of a working capital fund for expenses in connection with the provision of common administrative services.

Section 7(h) : Relating to the departmental seal.

Section 8: Relating to the time when the Department's annual report is to be submitted.

Section 10: Separability clause.

5. Other provisions of S. 1633 and H.R. 8429 are omitted because they are covered by the Reorganization Act of 1949 without specific mention in the reorganization plan. These are:

Section 9: Savings provisions. The last sentence of this section, relating to lapsed positions, is covered by section 6 of the plan.