bank, homestead association, insurance company, savings bank, or mortgage loan company any mortgage which the Corporation might have obtained under the provisions of paragraphs Q or R of this section, or to exchange bonds therefor. Such mortgage shall have been executed after the effective date of this act, and the purchase thereof or the agreement to purchase it shall be made under such rulings and regulations as the board may prescribe, and all such purchases shall be consummated within four years from the effective date of this act.

Next, subsection T will read as follows:

The amount of the loans which the Corporation may make under paragraphs Q and R of this section and the amount which it may use to make purchases under paragraph S of this section, shall not exceed, in the aggregate, $2.000,000,000, and the aggregate amount of bonds which the Corporation is authorized to issue and sell shall be increased to $4,000,000,000.

Now, I come from the section of Cleveland where we have approximately 40,000 union men out of work, and sooner or later you have got to take up the slack of the C.W.A. and the P.W.A., in what is being done by them today, and we feel there is the opportunity, if you can include this amendment either as a rider, which I would prefer, or as subsequent legislation to take up this slack.

Let me give you an illustration of the conditions up there and the demand for new homes. I will give you that illustration, which, I think, is a very good cross section throughout the country.

Here is a man, C. S. Kinney, who sent out a questionnaire to builders and real-estate men. He asked this question first:

In your opinion, what demand is there in the area in which you operate for homes ranging in price from $8,000 to $25,000?

This is a typical answer:

There are from 75 to 100 lot owners who are in the market for loans on new houses, who wish to start at once and have jobs with a good income, and many more people who are making inquiry daily on loans and prices of lots who wish to move to this locality.

The second question he asked was as follows:

Of how many lot owners or prospective home buyers has your office definite knowledge, who would build if financing were available under this plan? To which this is a reply:

In September I personally interviewed 300 lot owners, first, by sending a form letter inquiring how many were interested if they could secure financing, and then I followed up with a personal call, and I secured 77 signed agreements that they wanted to build houses on their lots if they could borrow on first mortgages to build with.

The third question asked was as follows:

What has been your experience with the following types of institutions with regard to securing financing of any kind within the past 2 years-building and loan associations, banks, insurance companies?

To which this is a reply:

I have visited banks and building and loan companies without any success and have been flatly refused, no matter how good a prospect I had or how large the man's income was. The insurance companies have made a few very small loans on new completed houses, and I have only found one of these, and a large bonus fee was charged for making the loan.

Mr. BROWN. I understood you to say in conversation before the meeting this morning that you proposed to increase the amount of money available to the Home Loan Corporation?

Mr. SWEENEY. Yes; to increase this money from 2 to 4 billion dollars.

Mr. BROWN. It would be absolutely impossible to do anything like you outline there without doing that.

Mr. SWEENEY. Why?

Mr. BROWN. Because the testimony here the other day showed there are applications now for $3,000,000,000 in loans. We have $2,000,000,000 and a little stock money which is, of course, largely used for expenses, as I understand it, so your proposal is absolutely correct in that respect, and you cannot do it with the present money. Mr. SWEENEY. You will probably have to find a way to get it, because I think this is the only way to get up that slack, and you can either do that through an issue of more bonds, or through the C.W.A. or P.W.A.

We have here this morning a gentleman who would like to be heard very briefly after the other Congressmen who want to be heard get through.

Mr. MEEKS. May I ask a question? I just came in and did not get all you said. What does the survey in your city show as to the number of vacant houses available, with a little repair, or something of that kind? In other words, what are your actual needs in home building?

Mr. SWEENEY. I can give you some figures on the amount of individuals who are willing to build if that is what you want.

Mr. MEEKS. No; I don't want that. I want to know how many vacant houses have you, approximately.

Mr. SWEENEY. I can give you some figures for certain sections out there, but no figures are available until the Government finishes the survey which the Department of Commerce is making, but in a certain section in Cleveland there are less than 10 vacant family houses, and out of 43 apartment houses there are less than 20 vacancies, and in that same area there are 87 families doubled up.

The only way you can find the man who wants a home is by actual contact with your people; otherwise you can make all of the surveys you want with regard to vacancies and doubling up, but the only way you can find out whether a man wants to build a home or not is by calling on him, by personal contact, and there is no way you can do that except through a sales force.

Mr. MEEKS. The point I had in mind, gentlemen, is this: Here we are engaged in loaning hundreds of millions of dollars to distressed mortgages to save these homes for the people, and why do we want to go right back and put ourselves in the same hole again; that is what I would like to find out.

Mr. SWEENEY. The reason is that the financial institutions will not loan money out for this purpose today.

Mr. MEEKS. Why do we want to start a program of that kind, is what I want to know.

Mr. SWEENEY. There is no opportunity to go to the home-loan bank to get money for repairs, and when the owner goes to a building and loan company he is turned down.

I have taken up my time, gentlemen, and I will not burden you with further comment.

Mr. FARLEY. What information can you give us as to the reason given by the building and loan associations in your State, and the

banks, as to why they do not loan these applicants money—what reason is given for that?

Mr. SWEENEY. I do not know; it is just an arbitrary rule; and also, most of them have their assets frozen now.

Mr. FARLEY. It is lack of available funds, then?

Mr. SWEENEY. Yes.

Mr. BROWN. This approval by the Treasury Department of the type of security they get is one of the principal reasons we are not getting our money out to the people, because the Treasury Department will not stand for the kind of loans the banks can make.

Mr. SISSON. I think possibly Mr. Farley did not get the preliminary statements on your statement we had before he came in. A large part of this relief which you are proposing in this amendment here would be, I take it, expended for repairs, would it not, Mr. Sweeney?

Mr. SWEENEY. Yes; that is correct. We have in Cleveland probably one plumber at work out of three, and the carpenters are that way and all of the other trades in our town. I suppose that is true in New York City and all throughout the country. We all know the distress, we meet these people when we go home on vacation, and they are asking us what are the chances of looking for some sort of relief.

You gentlemen will probably get a letter in a few days from Mr. McDaniel, giving a complete survey and endorsing this kind of legislation.

Mr. SISSON. Mr. Chairman, there is at least one bill before a subcommittee of this committee for an amendment of the Reconstruction Finance Corporation Act for practically the same purpose as the amendment of Judge Sweeney.

That was introduced by Mr. Wadsworth, who appeared and discussed it, and I remember somebody on the subcommittee made the suggestion to him that there was not any set-up in the different localities to pass upon these loans, making appraisal and so forth in the Reconstruction Act or administration. I think Mr. Wadsworth made the reply that might be done through the Home Owners' Loan Corporation.

Governor Christianson, who is here this morning and interested in this legislation, made the suggestion before the meeting this morning that it would be much better to start this year rather than in the Reconstruction Act, because we are practically sure this is going through.

I am calling it to Judge Sweeney's attention, because I think Mr. Wadsworth, if he knew this purpose was going to be accomplished here, he would be glad to join with you, Judge Sweeney.

Mr. REILLY. Mr. Chairman, there are several bills before the subcommittee of this committee involving the matters Judge Sweeney has spoken of. I think it is generally recognized by the committee we ought not to cumber up this bill guaranteeing bonds with any question of this kind.

Mr. CROSS. I think an amendment of that kind will defeat the whole bill.

The CHAIRMAN. It is generally understood the Home Loan Administration is considering legislation of this type to accomplish this

purpose, and I think their suggestions as to this legislation will be. submitted very soon. But to what extent or just what will be done as to this has not been determined, although it is earnestly desired this particular legislation be expedited.

Mr. REILLY. Mr. Chairman, just as soon as this committee gets through with this bill I intend to call a meeting of our subcommittee and take up this whole question of all of the bills of the character of the one submitted by Mr. Sweeney.

The CHAIRMAN. We will next call Congressman Ellenbogen. STATEMENT OF HON. HENRY ELLENBOGEN, A MEMBER OF THE HOUSE OF REPRESENTATIVES FROM THE STATE OF PENNSYLVANIA

Mr. ELLENBOGEN. Gentlemen, I will try to be as brief as I can, and I want to say to the committee before I make my remarks that I have made a study of the authorization of the Home Owners' Loan Corporation, extending from the time the corporation became functioning in June of last year, and I have been in very close contact with the offices in Pennsylvania and the national office here. I have with me some figures and material I believe will be of assistance to the committee.

I have introduced three bills on the subject, some of them quite extensive, which were very favorably received by the administration. I would like to say I agree with the gentleman from New York, Mr. Sisson, that in this bill we are dealing with, we are not dealing with simply the guarantee of the principal of the bonds, we are dealing with the subject of the Home Owners' Loan Corporation, and every amendment or change relating to it should come at this time and not at some future time, because there may not be a future time.

I do not want to deceive the committee and do not want to deceive myself that when the Home Owners' Act was drawn it was drawn purely for the purpose of relieving distressed home owners. I feel, however, that the time has come when we shall somewhat deviate from the purpose.

I believe it should be changed so that it should not only be a bill really for home owners, but a part of the recovery program, and I feel encouraged in that position by the bill that has been submitted by the Board of the Home Owners' Loan Corporation.

For instance, I find in the amendment, section 2, paragraph P, dealing with repairs, that the corporation has submitted to this committee and to Congress a plan which deviates from their original purpose.

You will remember that the act as passed in Congress provided only for such repairs as were necessary to preserve the lien, for instance, if a roof were leaking or a wall caving in, and it was necessary in order to preserve the lien of the mortgage, the Corporation had the power to repair that under the act passed last year.

But now, gentlemen, the corporation proposes to go into the field of repairs generally, and modernizations and extensions and so forth. Therefore, I say they have agreed fundamentally, and I think we should develop the fundamentals before we get to the details. So I say they have fundamentally agreed with the view

point some of the Members of Congress, including myself, have, that this machinery we have set up which is functioning in every county in this country to some extent, should now be used for the purpose of recovery as well as for the purpose of relief to home owners, and the Home Owners' Loan Board has officially endorsed that position in the amendment they suggest in paragraph P on page 5. Mr. BROWN. Section P relates solely to houses on which they have heretofore issued mortgages?

Mr. ELLENBOGEN. Yes, I understand; and I was coming to that presently. You see until now the only repairs permitted were those absolutely necessary to prevent the house from falling down.

Mr. BROWN. We are going now into the subject that our subcommittee is suposed to go into as soon as it meets, and I personally do not think we should occupy the time of the full committee with an extended statement relative to a matter which the subcommittee has jurisdiction over.

Mr. ELLENBOGEN. I will say to the gentleman I am going to bring it up on the floor of the House. This is germane to the bill, and it is right in the bill.

On the subject of repairs, gentlemen, this bill, H.R. 8403, proposes that the repairs should be limited to houses on which the Corporation has a lien. But I cannot for the world see that at all, because I think the amendment can only be for the purpose of stimulating the building trades and to put money into circulation.

If that is the purpose-and anyone who reads it and thinks about it I feel can come to no other conclusion here—then why should we limit it to houses on which the corporation has a lien. For instance, suppose someone has a dwelling which is free and clear, certainly a lien on that is good, it is superior to the lien proposed in this bill, and he should have the privilege of applying to the Home Owners' Loan Corporation and obtaining a loan for the purpose of making repairs.

Mr. REILLY. I might say the purpose of this was to give the Corporation a chance to improve its own property and rent it and make it rentable. The Corporation may have to take back a home, and this would give them the privilege to put it in repair and rent it.

Mr. ELLENBOGEN. But the amendment does not give that power to the Corporation; it gives it power to make loans to make repairs. Mr. REILLY. It is to improve their own property they have the mortgage on.

Mr. ELLENBOGEN. I feel very strongly we have come to a place where we must do something for the building industry, for two reasons: First, there is no surplus of dwellings but there is a shortage. Different agencies have made a survey, and while they disagree as to the figures, they all agree there is a shortage. The lowest figure they have is that 500,000 homes should be built in the next few years, and the highest figure we have is 800,000 homes should be built in the next few years.

I think we should make provision, not only for repairs, but for new construction. My suggestion on that is a billion and a half dollars of bonds be issued by the Corporation for the purpose of repairs and new construction, and that the bonding power of the Corporation be extended to that extent, and those bonds be included in the bonds in addition to the 2 billion dollars now authorized.