GENERAL HOUSING

TUESDAY, MAY 11, 1948

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee reconvened at 10 a. m., pursuant to adjournment, Hon. Jesse P. Wolcott (chairman) presiding.

Present: Messrs. Wolcott, Gamble, Smith, Talle, Sundstrom, Kilburn, Buffett, Cole, Hull, Banta, Nicholson, Spence, Brown, Monroney, and Folger.

The CHAIRMAN. The committee will come to order.

We will proceed with the hearings on S. 866 and related bills.

We have with us this morning representatives of various veterans' organizations.

We will first hear from Colonel Taylor.

Colonel TAYLOR. Mr. Chairman and gentlemen of the committee, I want to express our appreciation for this opportunity of coming before the committee.

The CHAIRMAN. We are very happy to have you, Colonel Taylor. STATEMENT OF COL. JOHN THOMAS TAYLOR, DIRECTOR, NATIONAL LEGISLATIVE COMMITTEE, AMERICAN LEGION

Colonel TAYLOR. I have asked the clerk to put before each member of the committee a copy of the regulation which was adopted by the national executive committee just last Tuesday relative to our position on this matter, and the only thing that I care to read from it is this:

That the director of the national legislative committee be directed to present to the Congress further amendments to Senator Flanders' amendments to the TEW bill, S. 866, to incorporate therein the provisions of the Veterans' Homestead Act, H. R. 4488, as modified by the House Veterans' Affairs Committee print dated March 28, 1948.

And, with your permission, Mr. Chairman, I would like at this point to present to the committee for inclusion in the record the Veterans' Homestead Act as reported by the Veterans' Affairs Committee and now on the House calendar.

The CHAIRMAN. You want to make it a part of the unofficial records before the committee?

Colonel TAYLOR. Yes, sir.

The CHAIRMAN. Very well.

Colonel TAYLOR. And I will include the report on the bill, so that that will also be before the committee?

The CHAIRMAN. Very well.

Colonel TAYLOR. There is one other matter to which I wish to call the attention of the committee: that a review of S. 866 discloses that on page 3, line 19, there is a proviso that the Administrator of the Housing and Home Finance agency may prescribe, by regulation, a higher maximum rate of interest, not to exceed 42 percent.

Also on page 250, line 16, there is a proviso authorizing the Administrator of the Veterans' Administration to prescribe, by regulation, a higher maximum rate of interest, not to exceed 412 percent.

Now, in conformance with a resolution adopted by the national executive committee, we oppose these two provisos. The resolution referred to above is worded as follows, exclusive of the whereas clauses:

Therefore, be it resolved, That the director of the national legislative committee be directed to oppose vigorously any efforts on the part of the Congress to increase the present 4 percent interest rate provided for under Governmentinsured mortgages.

The CHAIRMAN. Why do they think we authorized the increase in interest rate? Did they give any consideration to why we did that?

Colonel TAYLOR. Mr. Chairman, I have with me Walter Alessandroni, the chairman of our Veterans Housing Committee of the American Legion, and with your permission, Mr. Chairman, I would like to present him at this time, because he is thoroughly familiar with H. R. 4488, having assisted in drafting it. He knows the provisos of it, and he is here to lend his aid and his assistance and to answer any questions you might wish to ask, and I want him particularly to answer the question that you have just presented to me.

The CHAIRMAN. Very well. Did the American Legion appear before the Senate committee on this bill?

Colonel TAYLOR. No, sir.

The CHAIRMAN. Why?

Colonel TAYLOR. Well, the only hearings that the American Legion has ever appeared on were on H. R. 4488.

The CHAIRMAN. Why did not the American Legion appear before the Senate committee on S. 866?

Colonel TAYLOR. Because we had no direction from our national organization to do that. We had no mandate, I might put it that way. The CHAIRMAN. Did you have the opportunity?

Colonel TAYLOR. Did we have the opportunity to appear?

The CHAIRMAN. Yes.

Colonel TAYLOR. Well, sir; I think upon request we have the opportunity to appear before any committee on legislation that we consider vitally affects veterans. But we did not, because we had no mandate and we never do appear before a committee unless we have specific directions in the form of a mandate. That is why I am here today, and is it why I have Chairman Alessandroni.

The CHAIRMAN. Very well.

Mr. Alessandroni.

Colonel TAYLOR. Walter, will you step up here and speak to the committee on this matter?

The CHAIRMAN. We are very glad to have you proceed, Mr. Alessan

STATEMENT OF WALTER ALESSANDRONI, CHAIRMAN, NATIONAL HOUSING COMMITTEE, AMERICAN LEGION

Mr. ALESSANDRONI. Thank you. My name is Walter E. Alessandroni, Chairman, National Housing Committee of the American Legion.

In answer to your question, Mr. Chairman, the Legion believes that if the Government is going to insure loans, in the present market, and, in addition, to provide a secondary market, that 4 percent interest is adequate.

I might also point out that any attempt to grant an increase

The CHAIRMAN. What did your survey show with respect to that? We have been working on this subject for months, and the Administrator of the Housing and Home Finance Administration, who is pretty close to this situation, tells us that he needs a flexible interest rate to meet the market. Now, upon what basis did the American Legion conclude that we should not amend the interest rate or authorize a flexible interest rate to meet the market in order to get home financing? I am interested in the thinking of the American Legion. What did they predicate their finding on?

Mr. ALESSANDRONI. It is predicated on the two factors that we are giving aids to people who are lending money in two ways-both by guaranteeing the loan and, secondly, by creating a secondary market. through which they can get rid of their paper, and it is believed that 4 percent is sufficient.

The CHAIRMAN. On what do you predicate that belief? That is what I am trying to find out. What studies did you make to determine whether 4 percent was sufficient? We found that municipal issues were yielding 3.1 or something like that, and Federal Housing Administration paper was yielding 2.96 percent, I believe. And we recommended in this committee, and sent a bill over to the Senate authorizing a flexible interest rate, so that there would always be a market for Federal Housing Administration paper. We are interested in the thinking of the American Legion behind their action in wanting this interest rate frozen at 4 percent.

Mr. ALESSANDRONI. I can only give the answer I just gave, Mr. Chairman. We have no statistics except to point out that it does not seem necessary, in today's market, in which we are already giving two aids, to give a third aid in order to attract this money. We feel it will necessarily come of its own accord if kept at 4 percent.

The CHAIRMAN. I did not mean to interrupt your statement. Will you go ahead?

Mr. ALESSANDRONI. Yes, sir. I have no general statement to make, Mr. Chairman, except to answer any questions that the members of the committee might have.

I might say briefly, in addition to what Colonel Taylor has already said, that the American Legion's position on housing has been, and still is today, that the Congress' first concern should be about veterans' housing, because primarily that is where the greatest need is. Unless we get some specific legislation which gives the veteran some absolute priority, he will be lost in the shuffle of the higher prices as the prices go up. Clearly one of the things which is going to make the prices of housing go up is the easier credit that is going to be afforded. As the prices of houses go up and the veteran is limited in what he can

afford to pay, he is, of course, shut out of the market even though he has some kind of semblance of priority. So we are asking specifically at this time that your committee give consideration to amending the bill now before you by adding to it the provisions of the Veterans' Homestead Act which has been reported out of the Veterans' Affairs Committee as of a few weeks ago.

We think the provisions of that bill will fill a void that is now present in the pending S. 866. It is veterans legislation. The Legion makes no claim that it will solve the Nation's housing problem, but it will materially assist thousands of veterans who desire to assist themselves. It is a plan for cooperative housing in which credit aids are given such as are not provided by any other form of legislation, and those veterans who will band together to build, for rent or sale, lowpriced housing within their means.

We think that if the Congress is going to pass an omnibus housing bill, there must, of necessity, be included in that bill specific provisions above and beyond those presently existing, for veterans' housing. The CHAIRMAN. May I ask, Mr. Alessandroni, did you present this

matter to the Senate?

Mr. ALESSANDRONI. Did we present this matter to the Senate?
The CHAIRMAN. Yes.

Mr. ALESSANDRONI. Does the Chairman mean H. R. 4488?
The CHAIRMAN. Yes.

Mr. ALESSANDRONI. No. H. R. 4488 was introduced in the Senate. There have been no committee hearings as yet.

The CHAIRMAN. I mean did you present it to the Banking and Currency Committee when they had S. 866 up?

Mr. ALESSANDRONI. H. Ř. 4488?

The CHAIRMAN. Yes.

Mr. ALESSANDRONI. No, sir.

The CHAIRMAN. Why did you not present it to the Senate committee?

Mr. ALESSANDRONI. Because it was referred to another committee. It was referred to another committee. It was referred to the Senate Finance Committee.

The CHAIRMAN. Mr. Alessandroni, that is no reason at all, if I may be abrupt, because you are before this committee now, the House Banking and Currency Committee, and that bill is not before this committee. You are asking us to add it to this bill. Why did you not ask the Senate committee to add that bill to S. 866? Why did you not ask the Senate committee to add that bill to S. 866 as you are asking this committee to add it now?

Mr. ALESSANDRONI. Because, as was pointed out, at that time the American Legion did not have the policy it has today.

The CHAIRMAN. You had a mandate on that bill right along, had you not?

Mr. ALESSANDRONI. On H. R. 4488?

The CHAIRMAN. Yes.

Mr. ALESSANDRONI. That is correct.

The CHAIRMAN. Why did you not ask the Senate Banking and Currency Committee to add it to S. 866?

Mr. ALESSANDRONI. Because our bill had been referred to the Senate Committee on Finance.

The CHAIRMAN. All right. Go ahead.

Mr. ALESSANDRONI. That briefly, gentlemen, is the Legion's position. We think this is the pertinent time for discussion

The CHAIRMAN. Let me ask you about the Legion bill which has been before the Veterans' Affairs Committee. What is the total authorization in that bill? What does it amount to? What is it for? We have never had it before this committee.

Mr. ALESSANDRONI. The bill provides for a billion dollars a year in repayable loans, for 5 years. It provides for 200 million dollars to be appropriated to the Federal Works Administration, which is the only outright cost to the Government, as a subsidy, for assistance in public. improvements to the homes that are to be built. It provides for 750 million dollars for aids to certain types of lending associations.

The CHAIRMAN. It provides for $3,750,000,000 for lending institutions altogether?

Mr. ALESSANDRONI. If that is five times that amount, yes.
The CHAIRMAN. Yes.

Mr. ALESSANDRONI. Except that it must be pointed out

The CHAIRMAN. Is this substantially correct? Section 511 of H. R. 4488 provides for loans to local organizations in the potential total of 5 billion dollars.

Section 512 provides for grants for public facilities of 200 million. dollars, as you said.

Section 513 provides for investment in lending institutions of $3,750,000,000.

Section 514, Farm Loans, 500 million dollars, for a total of $9,450,000,000. You also want us to pass S. 866, do you not? Do you know how much there is involved in S. 866?

Mr. ALESSANDRONI. Well, I would like to first comment, if the chairman please

The CHAIRMAN. Do you know how much is involved in S. 866? Have you made an analysis of it to determine that?

Mr. ALESSANDRONI. Yes, except

The CHAIRMAN. How much?

Mr. ALESSANDRONI. Well, I do not

The CHAIRMAN. I will tell you. There is over 10 billion dollars in S. 866. Is the American Legion asking us at this session of Congress to obligate the American Government for $19,450,000,000?

Mr. ALESSANDRONI. That will solve the housing problem unquestionably; yes.

The CHAIRMAN. It would solve a lot of problems, of course, but where are we going to get 19 billion dollars? Is that the American Legion program, that this Congress should authorize 19 billion dollars this year to build houses? Is that the program of the American Legion?

Mr. ALESSANDRONI. That is not the program of the American Legion. The CHAIRMAN. Well, tell us what the program is. The American Legion has a mandate to tell us to pass S. 866 and also a mandate to tell us to pass H. R. 4488 which totals, according to my figures, over 19 billion dollars. Now, tell us about it.

Mr. ALESSANDRONI. I would first like to explain the figures as calculated by the chairman. There is a distinction between the contingent liabilities provided in the bill and the outright payments. During the