if you want a personal judgment, that we should take a careful look at the experience and the costs involved in the section 213 loans. If the experience is such that FHA does not need the half percent premium, then the committee should give serious consideration to cutting that to a lower figure. Even before that is done, your subcommittee has pointed to a problem that is involved in that the fees that are charged to a cooperative project, filing for FHA mortgage insurance, turn out to be four times what the fees are for a 203 mortgage. Those probably ought to be brought in line before a study is made of the reduction of the insurance rate. Perhaps at a later time we can express a firm opinion or the reduction of the interest rate.

Mr. BROWN. Have you any questions, Mr. Talle?

Mr. TALLE. No, thank you.

Mr. BROWN. Mr. Patman?

Mr. PATMAN. Mr. Campbell, this cooperative part of your statement relates to the middle income groups as I understand it.

Mr. CAMPBELL. That is right.

Mr. PATMAN. Then you also advocate the provision for housing for elderly people as proposed by Mr. O'Hara of Illinois?

Mr. CAMPBELL. I think the provisions of his bill have been transferred into the Rains bill now. Is that right?

Mr. PATMAN. It is my understanding that it is in the Rains bill. Mr. CAMPBELL. I believe that is right.

Mr. PATMAN. Is it proposed in the housing for elderly people that they would have their social security benefits adjusted to take care of the rents or would that be a part of their social security benefits? Mr. CAMPBELL. I really don't know that. I haven't made a study of that at all.

Mr. PATMAN. Would the housing be available only for people on social security?

In other words, only for those who are in need or would it be available to people who are not necessarily in need to the extent that they are eligible for social security benefits?

Mr. CAMPBELL. As I recall it, there are two sections of this provision. One is housing for the elderly under the same formula as college housing. In addition, there is a provision in the public housing section for 10,000 units for the elderly. As I recall it, there is no "means test" in the section where direct loans are made, but there obviously would be in the section dealing with public housing for the elderly. The public housing units for the elderly are subsidized. The others are not subsidized.

Mr. PATMAN. I want to commend you, Mr. Campbell, for this very fine statement. It is an excellent statement. It discloses that you have given a lot of thought to this subject. In fact, having known you over a period of 15 or 20 years, I know you have given a lot of thought to this subject of housing and I value your opinions on the questions embodying housing as well as other things. You have made a contribution to this committee in its endeavor to try to pass a good housing bill.

I know your testimony will be helpful to all the members of the committee.

The questions that was raised in answer to the Chairman's question about these housing mortgages selling below par, I think is worthy

of a lot of consideration by this committee. Don't you think that has practically stopped the cooperative housing?

Mr. CAMPBELL. That is right.

Mr. PATMAN. They are selling below par.

Mr. CAMPBELL. Up to the 27th of April, no use has been made at all of that $50 million FNMA authorization."

Mr. PATMAN. I know there are some people who are determined to raise interest rates in this country. I wish they would give consideration to the fact that every time they raise the interest rate, they unbalance every budget in America-the Federal budget, States, counties, cities, political subdivisions, all corporations, cooperatives, partnerships, individuals, families, and everybody's budget is unbalanced by an increase in interest rates. I can't understand why this determination to keep on raising interest rates is done. It is putting an awful strain on the economy of this Nation. I can't understand it. I don't question the sincerity, honestry, or patriotism of anyone. I know it is a question on which honest people can properly differ, but it is so obvious that they are using the method of trying to control inflation, or what they claim to be a method to control inflation, that just raises interest rates.

There are so many other weapons they can use, so many other ways they can go about controlling inflation. It is not necessary to raise interest rates every time you want to control inflation, and I just am very sorry that they have let these housing mortgages go below par, or Government bonds either, for that matter, because they are guaranteed by the Government, they are the same as Government cbligations, and instead of preventing speculation, it looks like speculation is being encouraged.

It is a terrible thing. It looks like we want to do the same thing we did in 1953 and 1954. You will recall in 1953 the bonds were forced down to about 92 and then, of course, a lot of people bought up bonds. Then they went right on back up in 1954 and they sold their bonds, and the profits of just a few of the commercial banks in this country engaging in speculating activities-that is, buying and selling government bonds, their profits ran from $39 million in 1953 to $416 million in 1954, or a profit of 966 percent in 1 year. Now those are official figures, and it looks like we are going through the same thing again, run bonds way down, then allow them to go up, buy them low, sell them high.

Now that is very fine for people in the know, you know, who are just thinking about their profits and not thinking about the country and not thinking about other folks. I guess it is all right from strictly a personal selfish standpoint, for the person who is in position to engage in speculative activities like that, but it is awfully hard on the country, hard on home builders.

You are also interested in farming, aren't you, Mr. Campbell? Mr. CAMPBELL. Yes, indeed.

Mr. PATMAN. Your cooperative has a lot of interest

Mr. CAMPBELL. The majority of our members are farmers.

Mr. PATMAN. Family-type farmers, aren't they?

Mr. CAMPBELL. All of thm.

Mr. PATMAN. Don't you consider interest rates about the most important factor in causing the farmers to take less for what they sell and pay more for what they buy than most anything else?

Mr. CAMPBELL. It makes a tremendous difference in the farmer's income. It makes a great difference in his living. You remember in the REA program what a difference it has made for the farmers to be able to borrow money at 3 percent and in some cases at 2 percent, to build electric lines, where they couldn't possibly have built those same lines and served themselves at 6 percent interest, for example.

Mr. PATMAN. I think it goes way beyond that. I asked Mr. Martin, Chairman of the Federal Reserve Board, about the farmers' interest rate, and he was very quick to point out that the farmers' rate generally was rather low in comparison to some other rates, but that is not the whole story the way I see it.

Now when a farmer produces something, and it moves to the market, we will say it moves through at least 10 hands-and I think that is the minimum. I believe you agree to that-from the farmers to the consumer, including the manufacturing, processing, packaging, transporting, and distribution systems. Now we will take for instance, an increase of one-half of 1 percent in the basic interest rate.

Well the farmer, when that product begins to move to the consumer, it is taken out of his price. He is unprotected. He just can't do a thing about it, and so it is every one of the 10 that takes out the increased interest rates clear on down to the consumer.

Let's take his price. That means the farmer gets less. Then on the other hand, when he buys a piece of machinery, everything from the iron ore, and the barge, and the blast furnace, the pig iron, the steel, and the fabricating and the transporting, and the distribution of the farm machinery right on down to the farmer, we will say there are just 10. That interest rate has been added on every time, the farmer being the only unorganized one and unprotected one.

Therefore, the farmer has had the interest rate taken out of what he has sold he has had added onto what he buys, and he is considerably crippled, and have you noticed that since the interest rate was broken March 4, 1951, when the Open Market Committee defied the Government of the United States, and the President of the United States, went contrary to their agreement with the President, and broke the long-term interest rate of 22 percent, March 4, 1951, haven't you noticed that ever since then, the farmer has been going down, down, down, in what he sold, and that everything that he is buying has been going up, up, up?

Have you noticed that, Mr. Campbell?

Mr. CAMPBELL. I hadn't identified it with that date, but it certainly is true that the farmer's income is down about 30 percent since 1951.

Mr. PATMAN. That is right. I have watched it. This is not partisan in the sense that it is a matter between the Democrats or Republicans. It started under the Democrats, and it came on down to 1952 and has continued on down. It has continued ever since that time. Of course, I think the Republicans should have stopped it. They didn't. I think the Democrats should have stopped it. They didn't stop it. President Truman, to his credit, it can be said, he opposed it, and he had a promise out of the Open Market Committee it would not be done, but they violated that promise. They violated that promise, and ever since then they have been increasing interest rates and increasing interest rates, all the time, all under the guise and

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under the pretense of fighting inflation, when I think it is the flimsiest kind of excuse.

I hope that something can be done about it. It is a great challenge to this Congress. I think every Member of Congress has an obligation and responsibility in it. We are just seeing it go on here every day. You take since 1952, for instance, the amount of interest, aggregate interest paid by the people generally has increased over $1 billion. It is just a coincidence, I am sure, but the loss taken by the farmer has been $4 billion.

You know, as people spend their money, the more they have to spend for interest, the less they have to spend for necessities and comforts of life, and I think it is a terrible thing and I wish your organization would give consideration to that and see if you can do something to help us stop it.

Mr. CAMPBELL. It is quite obvious the increase in interest rates is going to cut down the amount of home building this year from a possible 1.3 million or 1.4 million to possibly 1.1 million, 1.2 million units. The industry generally credits that drop in potential this year to the increase in interest rates.

Mr. PATMAN. I know that we think that we have built-in protection against depressions, and I believe that a depression is, if not manmade, is man permitted. We don't have to have them. We can stop them. They are not necessary, but they can come up on us awfully fast, and there are some very bad signs in sight right now. You take General Motors, cutting out today, no production today. That is just one indication-overproduction.

You see, back during the great depression, they said it was overproduction. We had overproduced. We hadn't overproduced. People just didn't have the ability to buy. They didn't have purchasing power. We can look back now and see that they were starving during a time of plenty, just failure to have purchasing power, and I do hope these people, our money managers and our money masters placed in charge by this Congress, and over whom, for obvious reasons, we have no control, will at least have a heart and not be so cruel as they are doing right now, and it looks like they are forcing this country into another devastating depression.

Mr. BROWN. Any other questions?

Mr. PATMAN. That is all.

Mr. BROWN. Mr. Betts?

Mr. BETTS. I have no questions.

Mr. BROWN. Mrs. Sullivan?

Mrs. SULLIVAN. None, thank you.

Mr. BROWN. We are very glad, Mr. Campbell, to have your testimony. You may be excused now.

Mr. CAMPBELL. Thank you very much.

Mr. BROWN. Mr. Clerk, does this finish all the witnesses today? Mr. CARDON. Yes, sir.

Mr. BROWN. When do we meet again?

Mr. CARDON. Ten o'clock Monday.

Mr. BROWN. Let's adjourn now to convene at 10 o'clock Monday. (The following statement was submitted to the committee for inclusion in the record:)

Hon. BRENT SPENCE,

AMERICAN ASSOCIATION OF

LAND-GRANT COLLEGES AND STATE UNIVERSITIES,

Washington, D. C., May 21, 1956.

Chairman, House Committee on Banking and Currency,

House of Representatives, Washington, D. C.

DEAR MR. SPENCE: The executive committee of the American Association of Land-Grant Colleges and State Universities has asked me to submit for the record of the current hearings on H. R. 10157, the Housing Act of 1956, a brief statement as to the association's position on this legislation.

In a desire to conserve the time of the committee, this association, along with several others, authorized President Hurst Anderson of American University to represent them when he appeared before you as a witness representing the American Council on Education. As Dr. Anderson stated, our member institutions support retention of the present formula for computing the interest rate to be paid by colleges and universities on housing loans, and an increase in loan fund authorization as provided in H. R. 10157 to take care of the anticipated volume of loan applications.

We are cooperating with the American Council on Education in its study of the financing of college housing facilities, which should give a sound factual basis for discussion of a matter about which there is now insufficient information. We do know now that there has been a considerable volume of non-Federal financing of college housing construction since the present Federal loan-rate formula went into effect, some of which is definitely by private lending interests. We emphatically do not agree with the suggestion of representatives of the Housing and Home Finance Agency that the loan interest rate be raised sufficiently to get most public colleges and universities out of the Federal program. Such an action would make college housing amortization more expensive for both private and public colleges and universities, and would represent a somewhat astonishing attitude as to the relationship of public institutions to public funds. Our executive committee has asked me to say also that it believes the use by the Housing and Home Finance Agency of the services of the United States Office of Education to make certain determinations in connection with the program has been helpful and is educationally sound. This arrangement was entered into when the program was initiated some years ago, following a conference between representatives of the Housing and Home Finance Agency, the Office of Education, and invited representatives of several educational groups.

Sincerely,

RUSSELL I. THACKREY, Executive Secretary.

(Whereupon, at 3: 17 p. m., the committee adjourned to reconvene at 10 a. m., Monday, May 14, 1956.)