end of the scales, the possibility of increase in fees and so on should balance the increase in cost on, over a fair period I mean over a reasonable period. I don't think we can undertake to subsidize something just because costs have gone up.

Senator HICKENLOOPER. It seems to me what is being proposed here is the construction of housing units-let us just take arbitrarily 30 years as their reasonable useful life. The proposal is being made that the Government go in and virtually subsidize a substantial portion of that permanent construction in order to meet an emergency for 4 or 5 or 6 years.

Now, it seems to me that if it is a question of subsidy I would rather subsidize, as suggested by Senator Taft a moment ago, the GI, and pay his rent; let the building carry itself on a normal proposition; let the college or university-the State, in some cases make the capital investment, own the property and receive a fair return that will in due course amortize it.

I don't know much about the housing experiences of colleges and universities generally. I have a very little knowledge of the experiences of several, maybe a half dozen at the outside. I don't know of any in the last 15 years that have built dormitories, but what have not only been able to secure money to build them, but to amortize them and pay for them with much more rapidity than they anticipated, at very modest rates, and they didn't have any subsidy.

Mr. BROWN. I don't want to overemphasize the subsidy side of this, because the point at which the committee definitely went along was in terms of the provisions of S. 1592 which mean a guarantee on the part of the Government as part of this over-all building program. Perhaps it was an error to even throw in this other proposal, but I do know that in doing so I am expressing the wish of a good many of the institutions.

Senator HICKENLOOPER. I can see the urgent necessity of immediate housing that will require housing of a type that maybe a lot of us wouldn't care to live in permanently, that is, these Quonset huts and various other types of houses, but that is the immediate way of meeting this emergency. These people have to be housed this winter and next fall. There are some other things that enter into it in the way of the type of building to develop, but that is another story. But when you are talking about permanent dormitories or housing units I cannot justify in my own mind the contribution of the Government by way of a subsidy or otherwise directly to institutions for these permanent units when the emergency need will be over at least so far as the present is concerned in a very few years.

I would rather see it be given to the individuals who occupy them and let them pay a reasonable fair value for those things, but financed on the bases they have always been.

Mr. BROWN. That would not imply that three things provided in this bill might not be a very definite assistance to them, namely, the long period of payment, and low interest rate and the high guarantee.

Senator HICKENLOOPER. Didn't we hear yesterday, Mr. Chairman, that the FHA

Senator TAFT. The FHA thinks it is too liberal and unsound the way it is now.

Senator HICKENLOOPER. The amortization becomes unsound.

Senator TAFT. May I ask, Mr. Brown, I notice you say there is a definition beyond these provisions that you would like to recommend. I take it that is your own personal view rather than the official view of the council.

Mr. BROWN. That is correct, sir, and I indicated the two things. that are the official expression of the judgment of the American Council through this committee on relationships. The first was support of the over-all bill S. 1592, and the second, support for the immediate action on the Lanham Act, section 5. Beyond that it is a matter of discussion with a considerable number of people, and I should not want it to have the same weight that the other recommendations have.

Senator TAFT. Do you know of any universities that have sat down with the FHA and the present FHA law and tried to work out the financing of a dormitory?

Mr. BROWN. I haven't discussed that in detail enough to answer it. Senator TAFT. I have always thought it would be perfectly possible. I would like to see the actual figures of some project to see if that could not be done even under the present law. I am in favor of making it more liberal, but I wondered if you had to wait for the law or whether you couldn't go right ahead under the present law. Mr. BROWN. I would assume we could go ahead, but we are anxious for these more liberal provisions.

Senator TAFT. The term would be a little shorter, but I don't see why the interest rate should be higher.

Senator HICKENLOOPER. Do you happen to have any figures on the usual cost for apartments such as these married students might need per unit-for apartments in an apartment building?

Mr. BROWN. I was talking yesterday by telephone with one of the representatives of the Land Grant College Association. Possibly I ought not to pass on their action on that, but I know it will come officially to this committee.

To answer your question unofficially entirely, they have requested that that thousand dollar per room limit be raised and the statement to me was that it was wholly inadequate. He didn't tell me how much they wanted it raised.

Senator HICKENLOOPER. Well, just by way of illustration, I would say that a $3,000 unit would probably be amortized very easily at 4 percent over a period of 10 years. That is about $30 a month$27 or $28 a month, somewhere along in there, at 4 percent, would amortize itself in somewhere near 10 years.

The CHAIRMAN. Do you mean per room? $3,000 per room?

Senator HICKENLOOPER. No; I am speaking of apartment housing, for a $3,000 unit. It might be in a building that had 100 apartments in it and that would cost $300,000. But at somewhere near $30 a month that apartment would amortize itself over a 10-year period at 4 percent.

Senator TAFT. Can the buildings being built for married couples be of any value to single people after they are actually through with these married people in colleges?

Mr. BROWN. There is a general feeling among the colleges that this marriage problem is going to continue. It has been more or less traditional that one didn't marry until one was through college, particularly because there just were no facilities for married people, but once these apartments are made available college people will be likely

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to marry while in college. Whether that is true or not I don't know. I am just giving you the general impression and nothing more.

Senator TAFT. I wondered if they can be built in a way that would make them economical to use for single or double purposes?

Mr. BROWN. That is the plan I know one institution has under way now. They' are one-room apartments which can be used also without kitchen facilities, making them as convertible as is possible. I know also at the University of Minnesota they have had housing for married students for a decade or more for which there has always been much more demand among their graduate students than supply is available.

The CHAIRMAN. Well, thank you very much, Doctor.

Mr. BROWN. You are entirely welcome.

The CHAIRMAN. Tomorrow, Friday, at 10:30, we are going to have John H. Fahey, Commissioner Federal Home Loan Bank Association; Mr. Sidney Maslen, American Association of Social Workers, and Mr. Clark Mock, Family Welfare Association of America.

Tomorrow morning at 10:30, and I hope everybody will be here on time.

(Whereupon, at 3:45 p. m., an adjournment was taken until Friday, November 30, 1945, at 10:30 a. m.)

GENERAL HOUSING ACT OF 1945

FRIDAY, NOVEMBER 30, 1945

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met at 10:30 a. m., pursuant to adjournment on yesterday, in room 301, Senate Office Building, Senator Robert F. Wagner, chairman, presiding.

Present: Senators Wagner (chairman), Murdock, Taylor, Carville, Butler, and Buck.

Present also: Senator Ellender.

The CHAIRMAN. The committee will come to order. This morning we have the distinction of having Mr. Fahey as our first witness. You gentlemen of the committee all know him well and favorably, and I am sure admire him very much.

Mr. FAHEY. Well, I certainly appreciate the time which this committee devotes to its work and the privilege of appearing before it. The CHAIRMAN. Mr. Fahey, would you rather proceed with your statement first and have any questions, that members may want to propound to you, asked after you conclude?

Mr. FAHEY. I think, perhaps, it would be better to let me go through my statement first and then be questioned. I think that would probably save a good deal of the committee's time.

The CHAIRMAN. All right; you may proceed.

Mr. FAHEY. But I do not care. It is agreeable to me either way. The CHAIRMAN. All right; you may proceed.

STATEMENT OF JOHN H. FAHEY, COMMISSIONER, FEDERAL HOME LOAN BANK ADMINISTRATION, WASHINGTON, D. C.

Mr. FAHEY. Mr. Chairman and gentlemen of the committee, I have been advised that your committee would like first to have my views, with reference to sections 301 to 306, inclusive, of S. 1592, and then as to other portions of the bill.

Title III of the bill contains in sections 301 through 306 proposed amendments of the basic statutes which deal with the Federal home loan banks, Federal savings and loan associations, and the Federal Savings and Loan Insurance Corporation, units of the Federal Home Loan Bank Administration.

Separate measures incorporating similar amendments have been pending before your committee since the spring of 1944. These measures are S. 179, a bill to amend the Federal Home Loan Bank Act, which was introduced by the chairman of your committee; S. 180, a bill to amend section 5 of the Home Owners' Loan Act of 1933,

dealing with Federal Savings and loan associations, which was likewise introduced by your chairman; and certain bills to amend those provisions of title IV of the National Housing Act dealing with the premiums and dividends of the Federal Savings and Loan Insurance Corporation, including S. 103, which was introduced by Senator Taft on January 6, 1945, and H. R. 4428, which was passed by the House on November 5, 1945.

Hearings were held before a subcommittee of your committee on May 23, 1944, on S. 756, S. 757, and S. 1034 of the last Congress, which were predecessor bills to the pending bills which I have just mentioned. As suggested, may I offer the following comments concerning sections 301 to 306, inclusive, incorporated in S. 1592, which cover much the same subjects:

Amendments to section 5 of Home Owners' Loan Act of 1933: Section 301 of the bill would amend section 5 (c) of the Home Owners' Loan Act of 1933, as amended, which deals with the powers and functions of Federal savings and loan associations. The chartering and supervision of these associations is in the Federal Home Loan Bank Administration.

Under existing law, a Federal savings and loan association may make real estate loans only on the security of first liens on homes, or combinations of homes and business property, within 50 miles of its home office. Not more than $20,000 may be loaned on the security of a first lien on any one such property, except that not exceeding 15 percent of the association's assets may be loaned on the security of first liens on other improved real estate without regard to the $20,000 limitation and the 50-mile limit. An association which is converted from a State-chartered institution may continue to make loans in the territory in which it operated while under State charter.

The present bill would retain these provisions, including the 15percent limitation but would moderately liberalize them in certain respects. In the first place, Federal associations do not now have adequate authority to make loans which have the insurance protection afforded by the National Housing Act. Thus, because of the first-lien requirement, they cannot make use of those provisions of title I of the National Housing Act which permit title I loans, repair and modernization loans, to be made without the expense and delay of taking a mortgage or other lien.

The amendment in section 301 at page 20 of the bill, lines 3 through 7, is obviously intended to broaden the powers of Federal associations to make National Housing Act loans, including these title I loans. While line 3 is a misprint, I am informed that the language in the bill as actually introduced refers to any mortgage or obligation which is insured or as to which a commitment for the insuring thereof has been made, or as to which the association has insurance, under title I or title II of the National Housing Act, as amended.

It is most important that this amendment be adopted without delay. Because of labor as well as material shortages during the war, it has been necessary to defer the modernization, improvement, and upkeep of homes. Prompt attention to these accumulated needs is one of the quickest and most economical ways to help the grave housing shortage we confront. Properly utilized opportunities will provide additional and greatly needed space in many homes. Such work may be done more speedily than building entirely new homes