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Mr. VEIT. I am not qualified to reply to that in quite the way you put it. I would say if it were a large bond issue with a good market, an established market, it would be very easy for us to sell it. I know nothing about securities that are sold in terms of $500 or $750 or $1,250, but I do know securities that are sold in 10 million and 50 million.

In suggesting commitments to their small bank correspondents, the large banks will be free of any suspicion, however unjustified, of acting in self-interest if they function purely as advisers, rather than as purveyors of housing bonds. Their recommendation in solely an advisory capacity would, in our opinion, be far more weighty in broadening the market, and would alone produce effective results.

During the current year, the security dealers of the United States, in spite of many weeks devoted largely to flotations of the Federal Government, will have underwritten, it is estimated, more than $6,000,000,000 of corporate securities of all kinds and qualities. This has been accomplished amid intense competition, which has been to the interest of the borrower and investor alike. In the light of this record, we feel ourselves competent to distribute the necessary amount of housing bonds, an obligation of the highest type, that are contemplated in section 704. We see no reason to reopen a door that for good reason was presumably closed forever. A radical amendment to the Banking Act is, in our opinion, not called for to attain the aims of the Housing Act.

The CHAIRMAN. Thank you very much.

Senator ELLENDER. Did you say in your statement who your firm is?
Mr. VEIT. Shields & Co., a New York investment house.

Senator ELLENDER. Your stockholders are from where?

Mr. VEIT. We have no stockholders.

We own our own business. We do our own job. It is our own money we risk in these commitments.

Senator ELLENDER. Well, you talked about $50,000,000.

Mr. VEIT. Of course, that is not all ours. We form groups of anywhere from 1 to 50 houses, but they compete with each other. We have had very keen competition for the housing bonds, which has helped the project.

Senator MURDOCK. Keen competition with an interest rate of 1.61? Mr. VEIT. Keen competition and a lot of hard selling and spadet work has brought that interest rate down to 1.61.

Senator ELLENDER. We are of course grateful for the criticism you have laid against some portions of the bill. I am wondering how you feel about the bill as a whole.

Mr. VEIT. We believe in private enterprise, quite clearly. On the other hand, I might say we also believe in creating as many stock and bond buyers as we can get. We think that anything, if it is not carried to extremes, if it tends to raise the average well-being of the American people, is in the interest of all the people. In other words, you take a certain number of people and put them in better housing and they are going to be better people. That doesn't apply to everybody, of course. There are exceptions. We have got our clients' money in this thing. We are particularly impressed with the way it has helped the colored people in particular.

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Senator ELLENDER. From your statement I would, of course, assume you are for public housing.

Mr. VEIT. Yes.

Senator ELLENDER. If it is not carried too far.

Mr. VEIT. Well, you don't want to emasculate people's desires. Senator ELLENDER. Does your concern belong to the Mortgage Bankers Association?

Mr. VEIT. We would not be eligible. We don't deal in mortgage bonds.

Senator ELLENDER. Do you know whether you belong to any association that is opposed to the bill?

Mr. VEIT. No, sir; I don't think we do.
Senator ELLENDER. Thank you.

The CHAIRMAN. Thank you, Mr. Veit.


Mr. FARR. I will just go through this very quickly.

As to the provisions improving the operations of the Home Loan Bank Board and the Federal Housing Administration, I might say in general that if these changes will stimulate home construction, and will make possible better and cheaper financing, then they are quite acceptable. I believe they are intended to do that, with one glaring exception, and I will not attempt to discuss them in detail. The glar ing exception is the so-called builders' warranty.

We are unalterably opposed to this proposal.

It would force the Federal Government to umpire the smallest type of disputes between builders, owners, architects, real estate offices and others. I do not think you want to get into that. From a practical viewpoint, it would be a serious obstacle to production of houses as it would discriminate against the good builder who wouldn't build under these circumstances because he is conscientious, and it would encourage bad builders to go ahead because they are the type who would sign anything and chisel their way out.

I believe Mr. Blandford and Mr. Foley have already discussed this in some detail, so I will not expand further than to earnestly recommend that it be dropped.

Senator ELLENDER. Have you ever thought of the situation to such an extent that you can give us a way by which home builders can be protected, because, after all, that is what we are trying to do.

Mr. FARR. Here is our situation in Chicago. If I build any housing, that housing is supervised by the Chicago Building Department. They have building inspectors.

Senator ELLENDER. As to lumber, as to the quality of lumber? Mr. FARR. That is not necessary. We have an architect and the architect supervises it in my interest.

Senator ELLENDER. Irrespective of the size of the home?

Mr. FARR. That is right. You should pay an architect to do that job. When you cut him down to a nominal fee, then you cannot expect service from him. When you make a loan, the lending agencies

inspect the job. So we are covered by at least three inspections in nearly every case. Certainly, where you have FHA insurance, their inspection is pretty detailed, and I just don't see that you are accomplishing anything by that provision. I am very frank in saying that I think it is a discouraging thing to inject another restriction against

the builder.

I want to get these builders to build more houses. I don't care whether I build another one myself or not, but I do want to see a large mass of building, not only by big builders, but by little builders. Chicago has been built by little builders. We don't have but very few men who build 100 houses in a year. Most of them build less than 10. But we have got to get onto the bandwagon every builder who can produce decent, adequate housing right now. I don't mean 2 years from now. I mean, let's get some going this month. Let's get a lot of them going in the spring, because we just cannot wait. Under this bill you are not going to stimulate housing very much for at least a year. It is going to be more nearly 2 years than 1. What we want is housing right now.

As to the 95-percent mortgage on $5,000 houses, we think that perhaps this cuts equity too low. There is considerable merit in higher equities from the standpoint of responsibility of ownership. We want to say, however, that we would gladly back any sound proposal along this line which would make it possible for more families of low income to own houses of their own. The wide distribution of ownership of property has been a positive, cardinal policy of our association since its founding.

As to cooperative housing, it has been the practical experience of real-estate people over many years that it does not work successfully. In the twenties there were many cooperative projects built. Almost uniformly, they turned out badly. All you have to do is to look at the record and you will see what I mean.

The yield insurance provision seems rather impractical to us. We see little in it that would attract much investment. A few large corporations might be willing to put some money into such projects, but it is questionable whether this type of housing ownership is desirable in the final analysis.

The National Association of Real Estate Boards strongly favors a program for urban redevelopment. In fact, we would like to see this problem thoughtfully worked out in a separate bill. If that were done, however, we would want to see legislation that would assure local control of the projects from start to finish, and Federal financial assistance made in lump sum grants on a 50-50 matching basis for land assembly purposes. We don't like annual appropriations. We think when you are making a commitment it might well be made in an amount so that you know how much it is going to cost, and you know it is going to be done.

We favor putting the Federal contribution into an outright grant, because in that way you know exactly what it will cost the United States Treasury. The annual contribution method in a sense is the blank-check type of operation, obligating the Government over a long period of time. The annual contribution is vicious, also, in that it insures Federal domination of the municipality. We feel it would be better in the long run to make outright grants on a matching basis

and then let the city do the job that it ought to do itself. Cities in general have sufficient credit to be able to start this highly essential type of operation if grants are used. Such grants should be for land assembly only.

We feel also that this kind of a program would improve if its legislation were to emphasize more strongly the idea that redevelopment must include all types of construction and land use. I do not know if it was the intention of the drafters of this legislation to imply that redevelopment would be principally for housing, but I sense that in this bill. Blighted areas should be redeveloped for the use most suitable for them, and should include commercial building, industrial development, public buildings, park and recreational space, and similar uses, as well as for housing. Many areas which should be redeveloped are totally unsuited for housing. Others would lend themselves best to this purpose. Any legislation should make clear that redevelopment programs under it should be comprehensive, and not merely confined to housing.

I suppose you gentlemen who have listened to other presentations by our association are thoroughly familiar with our attitude toward public housing. We think that public housing has failed to do what its sponsors have claimed for it; that it has not taken care of the people it should have; it is building political constituencies founded on shelter; it puts a premium on dependency; it is so expensive that it can care for only a fraction of the population, and that if it is continued or extended it will inevitably produce serious social dislocation. It has supported at low subsidized rents many who are employed and are able to pay adequate rent in privately owned buildings. We don't believe in it; we think that its proponents have hoodwinked the Nation by promising one thing and delivering another, and we challenge it as social policy.

I will save your time and mine by saying simply that we are unalterably opposed to it and to the section of the bill pertaining to public housing. In fact, we feel that this section is actually the essence of the whole measure, and for that reason we oppose the bill itself. The public-housing provisions would make lavish grants of public money to the tune of $88,000,000 a year. On the basis of simple arithmetic and disregarding interest costs, $88,000,000 a year would be upwards of three and a half billion dollars the Federal Government would pay out on the rent bills of the relatively few families who would benefit.

We are against this program. On the positive side, we favor a genuine slum clearance and housing program that will give to private enterprise the tools needed so that it can attack effectively the slum-clearance problem and the problem of low-rent housing. We have outlined legislation along these lines, and it has been placed in the hands of your committee. You can read our positive proposals yourselves, and so I will not go into their details.

That, in general, represents our attitude on this bill. I can sum up by saying four things:

1. The country desperately needs immediate construction of dwellings, and every possible effort and coordination should be made by the Government to speed production of houses. All of our attentions and energies should be spent in this direction. I do not believe our

country has ever had a housing crisis equal to that today-and it is a crisis caused by only one thing-shortage and lack of construction. 2. This bill, dealing with long-range programs, would not contribute to relieving the shortage, nor put a single veteran in a house for many, many months-perhaps years.

3. We ought to be working on the problems of producing housing and this measure, by throwing great fear into the building industry, is one of the elements holding back construction today.

4. The suggested redevelopment program could be improved in details, and ought to be embodied in separate legislation.

The CHAIRMAN. Thank you very much, Mr. Farr.

The committee will adjourn until 10:30 o'clock tomorrow morning. (Whereupon, at 6:15 p. m., an adjournment was taken until Thursday, December 6, 1945, at 10:30 a. m.)

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