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have to be resold again. Furthermore, the suggested amendment would eliminate many technical and legal difficulties.

Myself and my associates are very impressed with the possibilities of the cooperative housing program. We believe and we have proven from actual experience in building and completing approximately 4,000 units to date that its low downpayments and monthly charges for large families of middle incomes fills, in part, the gap that now exists between subsidized Federal public-housing programs and newly constructed rental housing. It goes without saying that it was a pleasure to meet with you. Sincerely,

EFREM A. Kaak. Senator BRICKER. Thank you.

Tomorrow morning at 10 o'clock in this room the committee will again meet for the purpose of hearing testimony on this bill.

The witnesses tomorrow will be Mr. Wilbur C. Daniel on behalf of the American Legion; Edward D. Hollander, on behalf of the Americans for Democratic Action; William J. Levitt; and Clair W. Ditchy, on behalf of the American Institute of Architects.

The committee can now recess.

(Whereupon, at 12:05 p. m., the committee recessed, to reconvene at 10 a. m., Wednesday, March 17, 1954.)

HOUSING ACT OF 1954

WEDNESDAY, MARCH 17, 1954

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.O. The committee met, pursuant to recess, in room 301, Senate Office Building, at 10:10 a. m., Senator Homer E. Capehart, chairman, presiding.

Present: Senators Capehart, Ives, and Frear.
The CHAIRMAN. The committee will come to order.

Our first witness will be Mr. Kennedy, of the American Legion.
Good morning, Mr. Kennedy.
STATEMENT OF MILES D. KENNEDY, DIRECTOR, NATIONAL

LEGISLATIVE COMMISSION, AMERICAN LEGION Mr. KENNEDY. Good morning, Senator.

The CHAIRMAN. Mr. Kennedy, do you want to read your statement, or do you want to place it in the record and talk extemporaneously from it?

Mr. KENNEDY. Mr. Chairman, I would like at the beginning to thank you for giving the American Legion permission to appear before your committee.

The CHAIRMAN. We are delighted to have you.

Mr. KENNEDY. I would like to say for the record, and also on behalf of Mr. Daniel, who is chairman of the national economic commission, for whom this statement was prepared, asked me to express his compliments to you and the members of your committee and his regrets, due to conditions beyond his control; he was called out of the city last night and could not be here this morning. He testified yesterday before the House committee.

The CHAIRMAN. We are sorry Mr. Daniel isn't here, but we are delighted to have you.

Mr. KENNEDY. Mr. Chairman, as long as you are the only member here at the moment, in order to save time, with your permission, I would like to request that we be allowed to file these two statements which Mr. Daniel has prepared here. One is marked "Supplemental statement.” Have those both incorporated in the record.

The CHAIRMAN. Without objection, they will be incorporated in the record just as prepared, and each word you state before the committee, likewise will be placed in the record.

(The statement and supplement of Mr. Daniel follows:) STATEMENT OF WILBUR C. DANIEL, CHAIRMAN, NATIONAL ECONOMIC COMMISSION,

THE AMERICAN LEGION Mr. Chairman and gentlemen of the committee, my name is Wilbur C. Daniel ; I reside at Danville, Va. I am the chairman of the national economic commission of the American Legion, which commission has jurisdiction over housing matters for our organization.

At the outset, I wish to thank you for the opportunity of appearing before the committee to present the views of the American Legion in connection with the bill, S. 2938, commonly referred to as the Housing Act of 1954.

While we are not concerned with those provisions not affecting veterans, there are two sections which we must strongly object to in their present form. We respectfully request that they be given serious consideration by the committee.

The first provision the American Legion objects to is contained in title II: Home mortgage interest rates and terms, section 201 (pp. 10-41 of the bill).

Under the provisions of section 201 the President is authorized, without regard to any other provision of law except provisions hereafter enacted expressly in limitation hereof, to establish from time to time;

“(1) the maximum rates of interest (exclusive of premium charges for insurance and service charges, if any) for various classifications of residential mortgage loans insured or guaranteed or made under the National Housing Act, as amended, or the Servicemen's Readjustment Act of 1944, as amended; Provided, That no such maximum rate of interest shall, at the time established by the President, exceed 242 per centum plus the annual rate of interest determined by the Secretary of the Treasury, at the request of the President, by estimating the average yield to maturity. on the basis of daily closing market bid quotations or prices during the calendar month next preceding the establishment of such maximum rate of interest, on all outstanding marketable obligations of the United States having a maturity date of fifteen years or more from the first day of such next preceding month, and by adjusting such estimated average annual yield to the nearest one-eighth of 1 per centum.”

This plan, if adopted, would change the method in which interest rates may be set on mortgages under the GI loan provisions of Public Law 346 of the 78th Congress, approved June 22, 1944, and Public Law 101 of the 8:3d Congress, approved July 1, 1953. The latter law amended the Servicemen's Headjustment Act of 1944 so that the Administrator of Veterans Affairs, with the approval of the Secretary of the Treasury, may prescribe by regulation from time to time such rate of interest, not in excess of 412 per centum per annum, as he may find the loan market demands.

When the original Servicemen's Readjustment Act (Public Law 346, 781h Cong.) was written, great consideration was given by the proponents of same, in cooperation with representatives of the lending industry, the Treasury Department, and the Veterans' Adiministration, in the setting up by Congress of the present method of determining interest rates and a ceiling was placed on the interest rate to be charged on VA loan guaranty mortgages, so that there might not be a prohibitive interest rate charged to those who had served in the Armed Forces and to whom this legislation was intended to give assistance in reestablishing themselves on a sound economic basis.

The American Legion, after giving this problem serious consideration over a long period of time, felt that it was wise to insert this provision in the Service men's Readjustment Act in order to protect the veteran home buyer from er cessive interest payments. To us it is crystal clear that a more is now under way to remove the protecting ceiling also placed on said interest rates by Congress when Public Law 101 was enacted on July 1, 1953, at which time the rate was permitted to be increased to 112 percent. The American Legion opposed said increase in the interest rate.

The American Legion objects to the foregoing provisions as set forth in siid section 201 (1) for the following reasons :

1. The American Legion recommends any change made should be by the Veterans' Administration and by no other agencies or individual.

2. The American Legion believes in the maintenance of a separate housing program for veterans under the sole jurisdiction of the Veterans Administration. The American Legion wants the present policy continued.

3. We believe that the power to regulate interest rates should remain in ('ongress.

4. We submit that the phrase ** * * the President is hereby authorized, without regard to any other provision of law * * (sec. 201, p. 40, lines 17-18) is too broad and that only specific authority should be granted, not only to the President, but to any other Government official who may be concerned.

5. The American Legion is unalterably opposed to section 201, because it would unquestionably result in increase in the interest rate as fixed by Public Law 101 of the 83d ('ongress. In addition, the proposal carries with it a distinct possibility of discrimination between veteran home purchasers.

We would like to be permitted to invite the committee's attention to an article entitled “Easy Money Comes Back” which appeared at pages 100-102 of the February 26, 1954, issue of the U. S. News & World Report, a reputable and reliable business magazine. A true copy of said article is annexed and made a part of this statement. The article includes a chart showing interest rates average for long-term United States Government bonds for the years 1951, 1952, 1953, and 1954. Reference to the chart shows the percent yield for these years to be as follows:

Year 1951, from 214 to nearly 234 percent.
Year 1952, from 212 to 234 percent.
Year 1953, from 234 to 3 percent.

Year 1954, from 242 to 234 percent. As has been stated above, the interest rates on VA loans to veterans was increased to 442 percent pursuant to Public Law 101, 83d Congress, approved July 1, 1953. Using this 4122-percent rate as a base, and adding the 212-percent increase above average for Government long-term United States bond yield, as herein proposed, for the years 1951 to 1954, both inclusive, reference to the chart from the U. S. News & World Report readily shows that, had the maximum rate proposed under section 201 been in effect during the years in question veterans would have had to pay the following rates of interest on their mortgages :

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We respectfully submit there is absolutely no reason to justify the increase proposed over the present rate of 412 percent.

We see no reason why veterans should be required to pay increased interest rates, which are bound to follow if the provisions of section 201 are enacted.

It is our firm belief after earnest consideration of this problem that the 412percent rate when viewed in connection with the additional benefits which accrue to the investor, is adequate on the present market and will be more than adequate in the near future.

Last year the money interests told us that if the rate were increased to 4142 percent they would be satisfied; now they want it to go to 542 percent or higher; we have a strong feeling that in the not-too-far-distant future they will be asking Congress to make the rate 6 percent. In fact, it might well go to 6 percent under the provisions of section 201 (1) of the bill.

The American Legion submits that the provisions of S. 2938, as now contained in section 201, page 40, lines 9 to 25, and in lines 1 to 14, both inclusive, on page 41, should be stricken in their entirety.

The other section in this bill which the American Legion objects to is to be found in title VIII--Miscellaneous Provisions, section 801, at page 104, etc.

Title VIII deals with the preferences now granted veterans in the purchase of surplus housing and opens wide the door for the elimination of veterans' preference in these purchases.

While we have confidence in the present Administrator of the Housing and Home Finance Agency, we must say that there are still in that Agency those who feel that preference in the sale of surplus homes to veterans should be eliminated, and they have often so expressed themselves. They have absolutely no regard for the interests of veterans. Therefore, the American Legion feels that wbile the present Administrator may be sincere in his objectives, if he were given the power of determination in selecting surplus housing for sale under the provisions of section 801 of the bill, we are fearful that those who would actually be responsible for and really determine policy for the Administrator will use this authority to gain their personal desires to take away from veterans their opportunities to purchase surplus housing.

It has been the privilege of our representative to work closely with the Housing and Home Finance Agency for some time, and we have watched with a great deal of interest the sale of surplus buildings. In all our experience we have found nothing to show that veterans' preference hindered, at any time, the sale of these properties, or worked a hardship on the Agency itself in its determination to dispose of surplus buildings. In fact, in most instances we have found that there have been more buyers than buildings available for sale, and again the American Legion urges this committee to study the provisions of title VIII in order to retain veterans' preference now legally given to the qualified individual who seeks an opportunity to secure low-priced housing and establish himself in society.

We call the committee's attention particularly to the provisions of the new subsection (g) (p. 104, line 20, etc.) which states, in part:

“(g) The Administrator may dispose of any permanent war housing without regard to the preferences in subsections (b) and (c) of this section (italics ours).

Stripped of its legal meaning, this is nothing more or less than a bold attempt to knock out the preferences now granted veterans who may qualify to purchase housing of the type in question.

The American Legion strongly opposes the section 801 in its entirety and asks that it be stricken from the bill.

There is absolutely no reason under the sun why the preferences granted veterans to obtain said housing as contained in the acts approved October 14, 1940, and subsequent thereto, should be taken away from the veterans at this time.

It is our recommendation that section 801 be omitted in its entirety and that the law remain unchanged. We submit that this is just one more indication of the campaign being waged to whittle away veterans' preference. In the 1st session of the 83d Congress attempts were made in both the House and the Senate to wipe out, in their entirety, veterans' preference laws governing employment in Federal civil service by attaching riders to the appropriation bills for the Departments of Justice, State, and Commerce. Thanks to our friends on both sides of the aisle, in the House and in the Senate, these nefarious schemes were defeated.

The American Legion is alarmed and disturbed to think there are those who would seek to destroy or materially weaken the veterans' preference laws now on the statute books and we intend to oppose any and all such attempts with all the power at our command, in keeping with resolutions duly adopted at our national conventions and by our national executive committee.

Under the Housing Act of 1949 (Public Law 171, 81st Cong.), section 15, (8) (b) (ii), veterans and families of veterans and servicemen did not have to comply with the substandard housing factor for admission to public housing projects. This provision expired, however, on March 1, 1954. We note no similar provision is contained in S. 2938.

The Housing Act of 1949 set as a requirement for occupancy that applicants must show that they were living in substandard housing. The act, however, as indicated above, waived this requirement for veterans.

This was a most beneficial and proper concession to veterans and their families, but it was of little practical value, because little housing has been actually constructed under the 1949 act until recently, and this year will probably see the greatest amount completed.

Once before this waiver was continued when it expired, and there isn't any question in our minds that this preference should again be granted to qualified veterans.

We would like to be permitted to invite the committee's attention to the fact that under date of March 1, 1954, the Senate passed S. 2937, introduced by Senator Sparkman under date of February 11, 1954. Senator Sparkman's bill would have extended the period for 5 years or until March 1, 1959. However, the Senatepassed bill extends the law only to August 1954.

We also call the committee's attention to H. R. 7743, a companion to S. 2937, introduced on February 4, 1954, by Congressman John C. Watts, and to H. R. 3159, introduced by Congressman Carl Elliott on March 2, 1954, both of which are now pending before the House Banking and Currency Committee.

We submit that no issue of whether a person is in favor or not of public housing is involved. This only applies to public housing that has already been authorized. Adoption of the bills S. 2937, H. R. 7743 or H. R. 8159 would not add one additional public housing unit, but their defeat will take away the veterans' preference.

As thousands of veterans who are not too well off financially will be affected by this legislation, we urge the committee to incorporate in S. 2938 the provisions of 8. 2937, as originally introduced.

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