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it shall be amended, and, if it shall be amended, or changed, in what

manner.

Now, title II, here, sets up, within the Federal Housing Agency, a new corporation, and that corporation authorizes the administrator to be, frankly, the entire corporation. He has a board of directors or a board of advisors, but they have no authority over him. Mr. ROOSEVELT. That is correct.

Mr. COLE. In addition to that it provides that all the money for this corporation shall be borrowed by the corporation on notes and obligations from the Secretary of the Treasury, up to $250,000,000. The whole set-up seems to me to be rather loosely drawn. My idea was, in asking you the question, whether or not you feel that this particular section had any particular advantage over the situation as it exists under the Reconstruction Finance Corporation. In other words, why do we not leave it in the Reconstruction Finance Corporation? Why in this bill?

Mr. ROOSEVELT. Well, it broadens the existing situation with respect to the Reconstruction Finance Corporation. They are limited now to only certain purchases, but this widens their authority to purchase.

Mr. COLE. I agree with you that it may widen the authority but not very much, Mr. Roosevelt. I do not think it actually widens the authority to purchase or the secondary market to the slightest extent. If so, I would like to have you point out where it does.

Mr. ROOSEVELT. Frankly, I am not familiar enough with the details of the existing situation.

Mr. COLE. Well, you see my point.

Mr. ROOSEVELT. Yes, sir. I wish I had known that you were interested in that. I would have spent a little more time in getting the facts for you.

Mr. COLE. One other point I would like to take up is the question of farm housing.

I am from the Middle West and naturally I have a great deal of interest in the agricultural sections.

Now, with respect to the sections having to do with farm housing, I am a little concerned as to whether or not this gives the Secretary of Agriculture too much authority in connection with the farmers. You know, the farmers are rather independent, and I find—

Mr. ROOSEVELT. I know.

Mr. COLE. And I find here considerable language which will authorize, upon the loaning of this money to a farmer, the Secretary of Agriculture to describe the means and methods of farming that the farmer, or borrower, shall follow.

I am very much concerned that the Secretary of Agriculture should not tell a farmer out in Kansas, for instance, provided he borrows from him, how he shall farm his land, what crops he shall plant and what crops he shall not plant under the guise of farm housing.

I assume that that they may not be done, but I rather think that this provision, in connection with farm housing, does permit that. I wonder if you have any comments in connection with that?

Mr. ROOSEVELT. I heard a very interesting discussion of this matter by the Assistant Secretary of Agriculture, Mr. Brannan. I believe those powers are given more as an advisory power to facilitate the repayment by the farmer of his loan through the adoption of better farming methods and practices.

Mr. COLE. I realize that that is probably the reason, but it says that the instrument under which the loan is made shall provide and contain "such covenants as the Secretary shall prescribe to secure the payment of the loan with interest, protect the security"

Mr. ROOSEVELT. The farmer is still completely independent and can refuse.

Mr. COLE. Just a moment. "And assure that the farm will be maintained in repair and that waste and exhaustion of the farm will be prevented."

I am concerned about what the small type may be in these loans and what the farmer may find himself confronted with in the event he does borrow from the Secretary of Agriculture. Will it control the farmer to such an extent that he will have no more control over his farm, do you think?

Mr. ROOSEVELT. No, sir; I do not read that into that provision. I do not read it as implying that they are going to completely set down the rules and regulations by which he is going to farm his farm. They are purely designed to see that the farm is not permitted, subsequent to the making of the loan, to deteriorate to such an extent that there will be no opportunity for repayment of the loan.

Mr. COLE. Frankly, I am concerned about that.

Mr. ROOSEVELT. That is a normal real estate situation, anyway.

Mr. COLE. No; I do not agree with you, sir, that that is normal in a farm loan. A farmer goes into a bank and borrows money. They want to know whether he will repay it, of course, and they will take a chattel mortgage, and that is the end of it.

What happens here is that I am concerned that the Secretary of Agriculture is given the right to tell that farmer how he will plant his crops, what sort of fertilizer he shall use, and so forth, under the guise of attempting to show him that he can repay his loan.

I do not want that to happen to my farmers, and I am sure that my farmers do not want that to happen to them.

Mr. ROOSEVELT. I think you are reading a lot of possibilities into it. After all, the farmer is still completely independent. He is bargaining in this situation. He is not going to give away his authority over his farm any more than he has to. He is never forced to accept this loan.

Mr. BANTA. You say the farmers bargain. In this provision having to do with assistance to farmers there is a provision for an outright grant of 50 percent of the amount. That grant is not made initially or all at one time, and the Secretary of Agriculture may reserve the right to say when that grant is made, so the farmer who accepts assistance under this bill, and borrows a thousand or $2,000, and might have the right to have 50 percent of it forgiven, certainly has the sword hanging over his head, the sword being: "You farm the way I say or we will not forgive you that part of your loan which should represent a grant."

It is a pretty strong club. And it is in the bill. Just as Mr. Cole is, I am concerned to know whether or not this bill is worded in such a way as to do what the proponents say it will do. Just the mere fact. that you say the terms of this bill are such as to provide an over-all program for farm housing and slum clearance does not answer the questions with respect to the necessity for safeguards.

Mr. COLE. Returning to my question, "The Secretary of Agriculture may require any recipient of a loan or grant to agree that the avail

ability of housing constructed or improved with the proceeds of the loan or grant under this title shall not be a justification for directly or indirectly changing the terms or conditions of the lease or occupancy agreement with the occupants of such housing to the latter's dis advantage without the approval of the Secretary."

Mr. ROOSEVELT. I do not have a copy of the bill, and that is rather involved.

Mr. COLE. I am sorry.

I think they go too far under this title. I think it is set up with the idea of being a sort of a paternal guidance to the farmer, and I do not believe the farmers want that sort of thing. I do not think they need it. I do not think they require it.

Frankly, I do not find anybody out in my district saying: "We farmers want this." Therefore I am questioning whether or not this section, first, is necessary, and secondly, if it is necessary, whether or not it should be amended so that we do not have these misinterpretations.

It has been said to me that this results in serfdom for the farmer. I do not believe that. But I do believe that there is a possibility for misconstruction. I am not talking about the philosophy; I am talking about the wording of the bill.

Mr. ROOSEVELT. What is your district, Mr. Cole?

Mr. COLE. First District in Kansas.

Mr. ROOSEVELT. I am not familiar with the existing conditions of the district, but I do know something of the comparison of the living standards of the rural elements in other parts of the country as compared to those of the urban dwellers, and I am firmly convinced that some aid must be given to the farmer. I am in agreement with you that safeguards must be placed around this so that the farmer is under no circumstances ever in the position of becoming a serf or a peon.

Of course in some areas of the South the sharecropper or the tenant farmer is, whether he likes it or not, almost in that category already. Mr. COLE. One other question.

Mr. BROWN. Mr. Cole, will you yield to me there?

Mr. COLE. Do you want to talk about the South?

Mr. BROWN. We have slums in rural sections, and they need help like those in the large cities.

It is not the intention to control a man's farm. I think the witness is correct in his interpretation of that section.

Mr. ROOSEVELT. Thank you, sir.

Mr. BOGGS. Will you yield to me, Mr. Cole, for one question?
Mr. COLE. Yes, Mr. Boggs, I will be delighted to yield.

Mr. BOGGS. In Little Rock, Ark., we had considerable testimony about the farm situation before the Joint Committee. Of course I have no knowledge of Kansas, but I have the general impression that the farmers in Kansas are very prosperous.

Mr. COLE. They are very, very good farmers.

Mr. BOGGS. That testimony was very interesting. As a matter of fact, Senator McCarthy, who has been mentioned here, was quite interested, and we had similar testimony during the hearings at New Orleans, where our Mr. Gamble was chairman."

I would like, with the chairman's permission, to incorporate that evidence at this point in the record. It is not very long. It is the testimony of Mr. McMillen, of Little Rock, Ark.

The CHAIRMAN. Without objection, that may be done. (The testimony above referred to is as follows:)

STATEMENT OF H. W. MCMILLEN, GENERAL COUNSEL, NATIONAL ASSOCIATION OF RURAL HOUSING AUTHORITIES

Mr. MCMILLEN. I am H. W. McMillen, general counsel of the National Association of Rural Housing Authorities, and I want you to hear the rural side of the rural problem.

My friend, Mr. Bemis, was from Prescott, but I believe every other witness was from Little Rock. Little Rock is no more typical of Arkansas than New Orlean is of Louisiana or New York is of the United States. Arkansas is typically a rural State.

Mr. BOGGS. Would you say Little Rock was better or worse typically?

Mr. MCMILLEN. Frankly, I was born in a small town, and I am a small country lawyer, living there by choice and not necessity, and I prefer the small town. I know absolutely nothing about housing conditions in Little Rock, or Chicago, or Detroit, but I believe I know something about the housing in the small towns of the rural area. Acting as the company attorney for the HOLC, because my firm represented three banks, I made inquiries in the FHA. The first FHA was made in my home town and the first new construction under FHA was made in Arkadelphia, my home town. The local banks made over a million dollars in that one thing. Before being connected with the HOLC and the FHA, I helped to organize a housing authority and rural regional authority, representing a REA Cooperative, and handled loans for the Farm Security Administration and loans for the Federal land bank. I have been in the housing problems in the small rural areas of Arkansas for the past 15 years. According to the 1940 statistics, in Arkansas alone, there were over 150,000 homes, rural homes in need of major repairs. I don't know what has been done. I am sure the census today would show that at least half of the rural homes in Arkansas need repairs. You have talked about the slums of Detroit, and New York and Cleveland, and hinted at slums in Little Rock, but the slums in Arkansas are in the rural areas. You have homes and people living in them and trying to get along in them, where they have to do their cooking on an open fireplace which is both living room, dining room, and kitchen. You have homes that you have to set half a dozen milk pails around in when it rains, and you don't have to get the cat out by opening the door; he can jump out of the window without any thouble at all. If Senator McCarthy would go with me I think I could show him slums that would make any city slums in the United States ashamed. We have them, and I think, Mr. Chairman, that you have some in Louisiana, and there are some in Texas, and some in Alabama, and as far as anything having been done for the small town, and the country, and the farms, I submit that it has not been done in the 10 or 12 years that we have been wrestling with the housing problem. I don't care whether you go into the city or the country, your groups divide yourselves into three classes. First, the people who have to take their money out of their savings or out of their own resources to build their own house or pay cash for it. Second, that group that needs some sort of aid, and if given the proper aid and proper materials can provide themselves with adequate housing, and third, those people who, even with the most liberal consideration, cannot at the present time provide themselves with adequate housing. I worked for the Federal housing in this State for 18 months. It was my job to go all over the State and talk to bankers and lumbermen and others, and when I began working for the FHA there was not a bank in the city of Little Rock that would dare to make an FHA loan. It was not sound.

I was a young upstart and I did not know anything about it. Some of the men who have testified have made their fortunes and accumulated money made out of the FHA, and we would have by far worse housing problems today if we did not or if it had not been for the FHA. It has done a remarkable job; it has done a remarkable job even in this State, but even in this State you cannot get an FHA loan approved in a town of 1,500. I say you can get one possibly in a town of 3,000, and then the FHA economists say the field is full. That community is not economically sound to the extent it would take on any more housing, and, consequently, we get, or when you get below a town of 5,000, as my town is, FHA is not getting the job done. When you go to farm homes and talk FHA, you might as well be wasting your breath. If you look at your farm communities, and I am not talking about just the farm of 150 acres; I am talking

about the same town that is the raising center of that area. There is no place in the State of Arkansas, and I don't think this statement can be disputed, there is not a place in the State of Arkansas where a man that is entitled to credit can go and get credit with reasonable terms to provide himself with a house in the rural area and the small towns of Arkansas. Probably there is 5 percent of the people in the rural area that have, with their own means, the ability to build their own house, and when those 5 percent have provided themselves with housing, the rest of them have to do without it. There is nothing we can do here in this State. Our private banks, State organized, and national banks are prohibited from making real-estate loans for a period of more than 5 years unless insured by the Government. We cannot get a loan through local banks. Mr. BOGGS. What do you mean by "prohibited”?

Mr. McMILLEN. I believe that the national bank law prohibits the national banks from making more than a 5-year loan. I may not be right about it. Then, at least our bank commisioner in this State does not approve any real estate loans not amortized over 5 years. Whether that is the Arkansas law or not, I don't know, but I don't think it is, but that is the way they operate. Mr. BoGGs. What do you recommend for your rural problem?

Mr. MCMILLEN. You have to set down a program in the rural areas on a national basis. That will do the job. You have done it in the cities through FHA and FPHA. You have to make it possible for those groups that don't have the cash money to get housing somehow. If you give them 25, or 30, or 40 years' period, they could provide themselves with houses. Others might not be able to do So even then. I am sure you are going to say that we have the Federal land bank. This is the way the Federal land bank works: If you have a farm worth $75 an acre on which there is a drainage tax of $1 a year, they go and make an appraisal, of the farm and tax for all of the drainge taxes. That reduces the value of the farm to $40 an acre, and divided by two, and out of the $20 an acre, it is necessary to pay off the existing mortgage, and if you have enough left you can build a house. The Farm Security Administration is not doing the job. The Farm Home Administration, they have the money to make one loan in our county this year. That is not enough. Their dominant supervision is obnoxious to the type of farmer we want to appeal to. Federal Housing has the mechanics, but they do not have the know-how, to make a farm loan. Their thinking is centered on the cities, and they cannot think in the terms of farm. That is, you have to set up a National Rural Housing program, designed to take care of the small rural communities and towns and farms.

Mr. BOGGS. Do you know anything about the Taft-Hartley bill?

Mr. MCMILLEN. May we go off the record?

Mr. BOGGS. Yes.

(Discussion off the record.)

Mr. BOGGS. You mean that after wrting the bill, you don't approve it? Mr. MCMILLEN. It is written like all bills are written. For the existing problem, which is agriculture and the other housing. You had to get something satisfactory about both groups. Agriculture wants you to think in terms of a farm. They don't want to take the house away from the farm. They fail to recognize in the farm is the place where the man makes his living; and it would be just as consistent to ask me to mortgage my law office with all its books as to ask them to put on over-all mortgage on the farm simply to produce the house, but that is agriculture's thinking. Then you have your housing, and they cannot think of anything but in terms of the urban area. The original United States Public Housing Act was an urban bill from beginning to end; that was the bill of 1937. Some rural Congressmen inserted two words "and rural" in the act, and that is the only basis they ever had rural housing under the FHA. The Wagner-Taft bill is by far the best approach yet made. It is the first time it was ever considered as an over-all appeal or picture. I don't think it is perfect by any means.

Mr. BOGGS. What do you recommend to solve the problem?

Mr. MCMILLEN. The Wagner-Taft bill is the best approach. I don't know whether it can be done, but if we could set up a separate agency that was neither agriculture and neither housing. It is a question of administration, of dual administration that is worrying me.

Mr. BOGGS. Do you want to set up another agency?

Mr. MCMILLEN. That is what I wanted to avoid, but you have got a hybrid problem.

Mr. BOGGS. How do you plan, or how are you going to separate the farm from the farmer's house?

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