From the first we have believed that high interest rates are inflationary and we have seen nothing to make us change our views, for interest is a cost of business just as is labor.

The Nixon Administration seemingly is wedded to the idea that scarce money will bring about unemployment and thus a slackened demand for goods and lower prices. So far this policy seems to have been responsible for a rise in unemployment but little decrease in inflation. Incidentally, it seems to us that little is saved by taking a job away from a man and placing him on relief, making of him a tax consumer instead of a tax producer.

There has always been some inflation, and through the years prices have a tendency to rise, but we are simple enough to believe that the way to have is to produce and the way to lower prices is to take the brakes off industry and let it produce at lower costs through increased volume.

The people of North Carolina's Fourth Congressional District have clearly expressed their sentiments on this issue, and I speak today in their behalf.

I believe that this resolution is a salient approach to the existing problem, and I respectfully urge my Colleagues to support its early passage.

Mr. PATMAN. Mr. Chappell.

Mr. CHAPPELL. Mr. Chairman, I would commend these gentlemen, too for their efforts and they know that I have joined them in those efforts by cosponsoring this bill, too.

It is a difficult thing for me to understand, Mr. Chairman, and gentlemen, why we have not been able to make a more affirmative step in bringing this interest rate down.

Certainly we know that the Federal Reserve Board can lower— can do so by lowering the discount rate and by increasing the money supply. That is a very simple thing for them to do and why this Board has not seen the necessity for doing it, I cannot understand.

I have been in conference with a number of the small business people in my area in the last several weeks. A good number of those people have told me that unquestionably, that unless this thing changed and changed in a hurry, they were going to have to close up their businesses and some of these people have been in business for a good number of years.

And they explained that they find themselves in the situation that they are paying much more for their products which they buy, those in the retail field, because the big users, our prime money at the top, have had to pay more for that money and they have had, therefore, to pass it on to the retailer and then, of course, he, in order to buy those products, has to pay a higher interest rate and therefore he has had to add on to that his own price.

But, the real problem has been that he has been unable to get the money and so he can't keep his business going, so he is going to have to drop out of the picture.

I think this is going to be true more and more all over America unless we get something done about it.

I believe that any fairminded banker will admit that when the prime interest rate was announced in New York, the increase was announced, that he, automatically in this bank took this as the interest rate of his bank.

I sit as a member of the board of directors of a small bank and I know that is exactly the attitude that was taken there. I believe this is true all over America.

This increase in the prime interest rate was not founded on the basis of need, but rather on an artificial basis of trying to make the money market tighter, and I don't believe you can have success in a

business society that is founded on the principle of supply and demand when you artificially increase that interest rate to try to achieve something other than what that natural balance was designed to achieve.

So, I believe that all of us had better be about bringing down this interest rate and certainly the bankers of all-certainly the big bankers ought to take their share of responsibility in causing this increase in the interest rate and the results of it and be a little bit less concerned about trying to blame it on the politicians as such.

Chairman PATMAN. Thank you very much, Mr. Wright and Mr. Alexander and the members who participated.

Without objection, I will insert in the record at this point any other statements that we have from members who are unable to be here on account of other committee meetings and for different purposes, and we will allow 5 additional days for all members to extend their remarks on this particular subject.

(The statements referred to follow :)

STATEMENT OF HON. JOSEPH P. ADDABBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. Chairman, I am pleased to submit these views in support of H. Con. Res. 522, which I have co-sponsored, and similar Resolutions, urging the Administration to reverse its policy of high interest rates and to take appropriate steps to roll back the prime interest rate to 6 percent.

Recent economic statistics have alarmed many of us who have co-sponsored this Resolution. We see increasing signs that the nation is quickly falling into a period of recession. The sudden rise in unemployment was not a surprise but had in fact been predicted by a large number of economists.

For well over a year this Administration has pursued the path of high interest rates and tight money. The result has not been to curb inflation but rather to inflate prices and place a heavy burden on the small businessman as well as the consumer. The prices of food and other necessities has soared beyond predictions despite this high interest, tight money policy.

Perhaps the hardest hit of all is the prospective homeowner who faces home financing problems which make his goal unattainable at reasonable interest rates. The policy of the Administration has in fact crippled the housing market and forced a slowdown in construction of units so desperately needed by both moderate and low income families.

Mr. Chairman, I urge this Committee to take favorable action on H. Con. Res. 522 so that Congress, speaking on behalf of the American consumer, can make this Administration change course before we are so deep in a period of recession that we cannot reverse our direction. The cost of this high interest rate policy has been borne by the consumer and it is time to relieve the consumer from this insidious burden.

STATEMENT OF HON. WILLIAM R. ANDERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

The House Committee on Banking and Currency does the Nation a service by opening prompt hearings on House Concurrent Resolution 522, a measure to formally declare the opposition of the U.S. Congress to a futile and injurious administration policy of sustaining very high rates of interest.

Over the last 14 months interest rates have reached a high not witnessed in this country since the Civil War. As one result, the interest cost of an average $20,000 home on a 30 year note is almost double the original cost of the house and lot. Even at average FHA rates a $20,000 home costs its buyer $35,000 in interest. Further, the basic cost of the house and lot is increasing sharply, in part because the builder and developer must cover their own high-cost loans. As could be expected, new housing starts have diminished steadily, and the home building industry is in virtual chaos.

The high interest policy has ruined the Nation's effort to keep abreast of its new housing requirements and we have fallen behind; the policy has trapped the farmer who must often borrow in the Spring in order to harvest in the Fall.

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Small businessmen in hard, competitive fields are being crushed. Competition falters, unemployment grows and only the money lenders and the financial giants prosper as this inflationary policy proceeds.

The rationale for increasing lending costs is that such a measure is the heart of a disinflationary effort. We have had 14 months in which to judge the results. In the past year the consumer index showed the greatest rise in 15 years. Last year's cost of living increase was 7.6%-this in contrast to an average annual increase of 2.5% over the previous eight years. And while the cost of living soars, unemployment increases by nearly one million in the past year. The only bright news in this disenchanting panorama concerns the lending institutions, whose profits rose 13% last year.

It is apparent not only that high interest rates do nothing to cool a late 20th Century American inflation-but that high money costs become an integral part of the price increases of nearly every product. Thus the inflation is fueled-not cooled-by a high interest policy.

We must put an end to this disastrous experiment, and passage of H. Con. Res. 522 will constitute a powerful pressure toward that end.

STATEMENT OF HON. WALTER S. BARING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEVADA

Mr. Chairman, I wish to be on record in your proceedings as being in support of House Concurrent Resolution 522.

The economies of each and every state in this nation are besieged at this time with financial inadequacies which are halting needed growth and buliding activity for the ever-growing and demanding population level. I speak specifically about the inability of our average and even above average income wage and salary earners who cannot begin to afford the high interest rates of banks and other lending institutions.

These people are seeking housing today first and foremost. The color television sets and new automobiles are being set aside as priorities as American seek to purchase their own homes.

In my own State of Nevada rental units are full up. Families are not able to find housing and the construction of new units is almost at a complete standstill. This standstill in building activitiy includes the construction of new homes, all due to high interest rates.

And, with the increased price tag on all commodities today, the American consumer is being forced into the severely expensive time payment plans with the incredible high interest rates.

I feel that House Concurrent Resolution 522 points specifically at the principal problem of the discontented American consumer and taxpayer and that the Resolution should be given full emphasis and attention by the Administration. I concur that the high interest rate policy of this Administration today should be reversed and that the Federal Reserve Board return the prime interest rate to six per centum.

STATEMENT OF HON. TOM BEVILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA

Mr. Chairman, fellow members of the committee, I appreciate this opportunity to express my support of H. Con. Res. 522. Passage of this resolution, which I am co-sponsoring, asks the administration to reverse its policy of higher interest rates, and have the Federal Reserve Board take steps to gradually roll the prime interest rate back to 6 percent.

During the last 14 months, almost a million Americans were added to the list of unemployed and inflation has continued to rise at a fast rate.

During this same period, the small businessman, hit sharply by increases in interest rates, has curtailed business expansion, which has resulted in production cutbacks and job losses.

High interest rates and tight-money conditions have made it impossible for half the people of this nation to purchase their own home.

According to a recent study made by this Committee, over 100 million Americans cannot afford payments on the minimum loan for an adequate house. This study shows that to buy a home, a family must have a gross income of at least $13,000 a year and be able to make monthly payments of $226. And the increase in interest rates has caused rent to go up to an all-time high.

While these are but a few of the most obvious examples, there are many more. The areas hit first and hardest by rising interest rates are most noticeable. The actual impact, however, is far greater, because the influence of interest rates on prices reaches practically every area of our economy.

The policy of deliberately maintaining high interest rates which has been in effect for the past 14 months, is apparently having no measurable affect on lowering prices.

High taxes, high interest rates, rising cost of food, housing and medical care bear most heavily upon the low and middle income families of our country.

What is needed most at this time is a sound economic program which will put the United States on a stable course and avoid a recession.

I am heartened by the fact that many of the major banks across the country have cut their prime lending rate to 8 percent from the record 81⁄2 percent. I believe a large measure of the credit for bringing about this reduction in interest rates must go to this committee. For the Banking and Currency Committee has persistently focused attention on the need to reduce interest rates, and the effect these rates are having on the American economy.

This is a beginning. But we cannot stop at this point. I believe the President should use the prestige of his office to persuade the big banks of this country to continue to roll back interest rates, gradually, until the prime interest rate is back to 6 percent.

Additionally, I believe the President should insist that these big banks exercise restraint during the coming months.

Thank you.

STATEMENT OF HON. J. HERBERT BURKE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Chairman and members of this committee, I am delighted to have the opportunity of presenting my views to you in support of the need for lower interest rates.

I am sure that each of you is aware that our economy faces an extreme crisis. The Administration and many of us here in the Congress are concerned about the inflationary spiral as well as the possibility of a recession, but it is an old axiom that you can't have your cake and eat it, too.

Although we in the Congress are certainly anxious to insure the health of our economy, for the sake of our nation and its people, yet there comes a time when doses of medicine previously prescribed are no longer the answer for a patient who now suffers from a different ailment.

In my opinion, the time has come when the medication should be changed.

I have never favored higher interest rates and I voted against the increase of interest rates in connection with school and VA loans.

I realize that I am not an economic expert in the vein of many of our economic planners and I have no way of knowing with certainty whether or not the increased interest rates have cooled off our economy to a great degree, but I do feel that despite the fact that medication has been prescribed, the fever of inflation does not appear to have subsided to any material degree.

Nevertheless, I was quite pleased recently to join with several of my colleagues in the House in sponsoring legislation which is now pending before your Committee H. Con. Res. 522-expressing the sense of the Congress that "the administration should make every effort to reverse its policy of high interest rates in all programs and at all levels, and that the Federal Reserve Board take steps to gradually roll back the prime interest rate to 6 percent", although I am hopeful that even this may again be reduced to 4 or 5 percent at some future time.

Our economy is very precariously perched on delicate scales, which could be tipped by the slightest added weight. If these interest rates continue at the present level, their favorable aspects could be reversed and that last ounce or two of monetary restraint could send the patient-our economy-into a state of shock and a dangerous coma.

I am thinking-and so must the Congress and the Administration-of the many persons and groups in our nation who have been paying the price of higher interest rates, while at the same time have suffered the effects of inflation: the small businessman; the consumer whose interest lies in every facet of our open market; and let us not forget the housing industry, which simply must realize a relaxation of higher interest rates if it is to survive at all.

As is stated in H. Con. Res. 522, the Federal Reserve Board is urged to roll back its prime interest rate to 6 percent. The National Association of Home

Builders has recommended legislation that would make it clear that one purpose of the Federal Reserve Board is to "assure a stable residential mortgage market with adequate funds to meet the nation's needs".

I wholeheartedly concur in this recommendation and I feel confident that this Committee, which is charged with the responsibility of formulating effective housing legislation, will take constructive and prompt action in this regard.

Of course, protecting the housing industry and helping it become and remain a healthy part of our economy is also the responsibility of the Executive Branch. Thus, I feel that the introduction of H. Con. Res. 522 by several of my colleagues and myself is proper and necessary.

To sum it up, it is my feeling that it is imperative today's interest rates be lowered, or the patient might die of an overdose of our planners' ill-advised medicine.

STATEMENT OF HON. PATRICK T. CAFFERY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. Chairman, my statement supporting efforts to lower interest rates is not heavy-laden with economic data showing the counter-productivity of efforts to stem inflation with high interest rates. My testimony is not one of a witness expert in economic matters, but rather the urging of a representative of the people.

The current high interest rates are working a very real and widespread hardship on the people, particularly those who are least able to contend with such a hardship. For example, there is no way the figures and columns of a statistical report can convey the meaning of a home that will not be built by a family that has saved and sacrificed for years and now finds it impossible to afford the present day interest cost which inflates the price of new housing.

Many will say that such occurrences are the desired effects of the high interest rate policy; that by discouraging families from building homes we are taking the wind from the sails of inflation.

I say that such a policy is harsh punishment on those citizens least to blame for the inflationary spiral. The cause of the inflation we are suffering from today is basically the excess spending by the Federal Government. Making the prospective homeowner pay his hard-earned income in rent instead of investing his money in his own home is no cure for inflation. It merely makes the rich, richer and the poor, poorer. Millions of low and moderate-income families have already been priced out of the housing market and decent housing is beginning to be a luxury even to the relatively well-off middle-income families. Shall we continue the high interest rate policy until only the rich are able to own their own homes?

No less of a problem is the high cost money to the small businessman. How many small businesses have been gobbled up by larger competitors who had better access to credit than did the small independent businessman? Will concentrating more and more business activity in the hands of a few cure our inflation ills? No, it will not.

It is not only the small businessman who pays dearly for credit with which to operate. During 1970 our own Federal Government will have to pay $2 billion more in interest payments than it did in 1968. Who will pay the extra $2 billion? Each and every citizen will pay.

Mr. Chairman, we must face the fact that our nation is in the grip of a high interest rate crisis that could have grave consequences for all the American people. I join with my colleagues in expressing my opposition to the current policies now in force and respectfully urge the Congress of the United States to make a strong statement in support of a rollback of the current high interest rates.

STATEMENT OF HON. BOB CASEY, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF TEXAS

Mr. Chairman, distinguished members of the Committee, it is a privilege for me to have this opportunity to excess my support for enactment of H. Con Res. 522.

There is little need, in my judgment, to belabor this Administration's high interest rate policy and the detrimental impact it is having on our economy. The members of the committee, as I am sure most of my colleagues in the House, are well aware of the hard economic facts of life. Every sector of our economy is suf