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present system. I think that in itself would be desirable and would be decidedly worth while.

In other words, I think that what the real-estate business needs is a more modern system for getting the money that is required to carry on what is essentially a large capital operation, which has to be amortized over a long period of years. What you have legislated here through this committee over the most recent years has tended to modernize the system to some degree, so that instead of having these shortterm mortgages which come due with a great big flop at the end of years the borrower is able to pay off serially over a term of years. I

. think this bill is a further step in improving the opportunity for the real-estate and building business to get more money and I think that that is one of the main things required. I think that the passage of this bill will be helpful not only to the cooperatives, but I think it may stimulate what I suggested a moment ago, that similar corporations might be organized to issue debentures secured by mortgages and thereby tap further sources of money to go into real-estate building.

Mr. MULTER. One other thing: Having in mind that this bill is intended to help out the so-called middle-income group as differentiated from the lowest income group and the higher-income groups, in those areas where it may be necessary to charge 4 percent interest instead of 3 percent do you think the difference which will make the monthly rental charge about $3.50 more on the $7,000, about $4.02 more on the $8,000 unit, and about $4.50 more on the $9,000 unit. Do you think that that would deter those who might otherwise take advantage of this act from going ahead under it?

Mr. WEITZER. I suppose it would be some deterrent because you are dealing with people who have to figure pretty closely. Of course, we have seen the picture currently of people that are going over their heads because they simply have to have a place to live and as a consequence they are sacrificing in other directions. As a farmer, I might say it could hurt the market for milk, if the family has to pay $3 or $4 a month more for rent, why, they might decide to economize on milk and consequently I might not have as good a market for the milk I produce as I have otherwise.

In other words, this man has only a certain amount of money to spend and the minute that he has to go over a certain amount for his housing, he has to take it out of clothing or education or food or something else. In other words, he hasn't got any surplus to play with. Of course, this bill doesn't guarantee that the rate would be 3 percent. It just simply sets up that the money will be procurable at the going Government rate, whatever that might be. Right now we are in an easy money market and as nearly as I can judge we will continue to be in that market for as long a time as we have a terrific national debt, but no one can tell but what the base rate might jump to 312 percent and then you would probably have the 312 interest rate on the cooperatives, but whatever increase there might be in cost would certainly chase off some few people at the end of the row who were just exercising every possible economy they could already exercise and they just couldn't go that extra $3 or $4.

Mr. MULTER. Thank you.

The CHAIRMAN. I want to say to the committee that I do not want to cut off any questions but we are way behind schedule and it is very



imperative that we consider the Commodity Credit Corporation bill because it is delaying the Appropriations Committee in their consideration of the appropriations. I hope we can get through this, so we can get to the other matters.

Mr. NICHOLSON. How many posts in your organization?
Mr. WEITZER. About 612.
Mr. NICHOLSON. And the membership is what?
Mr. WEITZER. A little over 100,000.
The CHAIRMAN. Any further questions?
(No response.)

The CHAIRMAN. We were very glad to have your views, and they will be considered by the committee.

It now gives me great pleasure to present a former Member of the House of Representatives. His representation was characterized by industry and zeal. He was a good Member and he is now executive secretary of the Cooperative League of the U.S. A.

Mr. VOORHIS. You are very kind, Mr. Chairman. I wasn't sure until you got to the last part whether you were talking about me or not.



Mr. VOORHIS. Mr. Chairman and members of the committee:

My name is Jerry Voorhis and I come before you to urge favorable action by this committee on H. R. 6618, introduced by the distinguished chairman of this committee. I am testifying on behalf of the Cooperative League of the U. S. and the National Cooperative Mutual Housing Association, of which organizations I am the executive secretary.

First a word as to why our organizations are here to testify. We are concerned that the basic institutions of this country be strengthened in every possible way. How long the struggle for the allegiance of people between institutions of freedom and institutions of communism and fascism will go on we do not know. But we do know that there is no more basic

factor in that struggle than the strength, vigor, and downright happiness of the communities and neighborhoods that go to make up our Nation. And we know that good homes are probably the most important single factor in creating such communities.

Therefore we want to see the housing problem solved by all the best means available. We certainly want to see more homes built commercially for sale to those who can afford them. We are gratified at the very considerable number of homes now being constructed for this market, limited though it is to about the upper third of the people on the income scale. Congress has provided through FHA very well for this type of home building for the upper income group.

Certainly we believe too that Congress acted with great wisdom in enacting the Housing Act of 1949, to make possible good housing for some of those in the lowest-income groups who simply cannot raise their children in good character-building surroundings unless somewhere along the line public action is taken to make that possible. We believe that slums are a menace to our civilization and a point of weakness in the great struggle for human liberty which I have just re

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ferred to. We are glad Congress recognized that fact too in the Housing Act of 1949.

But at least one-third of the citizens of the United States-about 40,000,000 to 50,000,000 people in all fall into the middle-income group. These are people with incomes roughly between $2,500 and $4,500 a year. They are people who can afford monthly payments on their homes of somewhere between $45 and $70 a month, but not more. They are the people of whom it has been repeatedly said that they are "too well off to be eligible for public housing but too poor to afford FHA financed housing.” They are, as will be evident, the precise group that will be reached by the effects of H. R. 6618 now before this committee, since it is forecast by authorities in the housing field that the savings possible under this measure will bring monthly payments within almost exactly the same figures as I have just indicated.

Now this middle-income group asks no subsidy from their Government and this bill provides none. But if they are to have good homes in which to rear their families--and that is important not only to them but to the Nation as a whole—then the costs of housing to them must somehow be reduced without cost to the Public Treasury. That is exactly what this bill aims to do. It will accomplish it in two ways: First, by the savings which cooperation and joint action make possible; second, by a substantial reduction in the financial charges laid upon housing and home ownership.

All the middle-income people are asking in this bill is that Congress free some of their own credit for their own use—just as has been done in so many instances heretofore with such well-known results. Examples are the RFC, which has served industry; the REA, which has made electricity available, through their own efforts, to our farm people; the farm credit system, and many others. I would like to point out that REA cooperatives have not only bolstered the position of the independent farmer and solved largely a great economic problem but that this has been accomplished at even lower interest rates than the housing bill before you contemplates, and without a penny's loss to the United States Treasury.

I would like to say in addition, Mr. Chairman, that this bill provides no more competition by the Government with private industry or anybody else than the RFC contemplates when the RFC makes a loan to a large industry. This is a case of making credit available for the carrying on of business by the people, and that is all it does. It has been done over and over again.

Mr. Talle. May I break in there, Mr. Voorhis?

Mr. TALLE. When you mentioned large industry, a sort of nightmare came into my mind, because that is the fault I find with the RFC. They lend money to the big fellows, but the little fellow who should be served has a heck of a time getting any attention at all.

Mr. Voorhis. I can't disagree with that, Mr. Talle. I remember voting for a bill once when I was in Congress to authorize the making of loans to small business by the RFC, and I made a statement on the floor at the time that I was very glad to vote for the bill but I wasn't a bit sure what the results would be.

Nonetheless, the point I am trying to make here is that you are not doing any more for middle-income housing in this bill than Congress



has done over and over in many instances and on the whole I would say that RFC was probably the means of saving an economic situation in the depression which was most important.

Mr. TALLE. I agree with that.

Mr. MULTER. As a matter of fact, along that same line, the Small Business Division of RFC, during the war and since the war, without that Division, RFC has been making loans to small business. The point I think you are trying to make is that RFC, helping either small or big business, is no more competition in the financial market than this bill will be.

Mr. Voorhis. That is exactly right.

May I add, Mr. Chairman, just as a point of comment that if we take the rural parts of the country only and consider the volume of business which private electric power companies are doing in rural America today, we will find that that business is substantially greater than it was before the REA Act was passed. In other words, what happened here was that the application of the people's credit, plus the principle of cooperation, actually made more business for private companies in that particular field than they had before and I would anticipate that the same exact thing is going to happen if this bill is passed.

Mr. COLE. Is that quite comparable, Mr. Voorhis? Much of the REA power is from private sources.

Mr. Voorhis. Well, sure. I am not talking about the source of the power at the moment. I am talking about distribution as well.

Mr. COLE. I realize that. In your statement, you said that as an example, the fact that REA is not a competitor of private power, and you pointed out the fact that private power has increased and it has increased by using REA to a certain extent, has it not?

Mr. Voorhis. By buying power from REA sometimes, yes; and, of course, it goes the other way, too. The only point I am trying to make is that I didn't say that REA competes with private power because it does, but what I am saying is that it is a good thing it does because it opened a whole new vista of business that formerly was completely neglected, and I think that this bill will widen the market for housing in a somewhat similar way.

Mr. COLE. I am inclined to think, however, as you say, that a distinction between any competition that REA has with private power and any competition that this may have for private building-don't you think there is a difference in comparison?

Mr. VOORHIS. I don't think a basic difference. I would certainly agree that they are two different fields.

We are not here to advocate the use of the general method of cooperation for its own sake, even though it is the oldest and best-tested method in all human history whereby free people have been able to attack and solve pressing problems through their own voluntary action. Rather we are here because we most earnestly believe that the application of cooperative methods is the best available way in which the need for good homes on the part of these millions of our citizens can be met without public subsidy or assistance.

When I was before this committee last August to testify on this same subject, I outlined what we believed were the essential features of a workable bill. These were:



1. A special agency to administer it, within HHFA to be called something like a Cooperative Housing Administration which would examine and pass upon loan applications and administer the act under an administrator appointed by the President.

2. The rendering of technical assistance and guidance to cooperative housing groups through that agency and the making of such preliminary advances as might be necessary to cover essential costs prior to construction.

3. A rate of interest not in excess of 3 percent or the cost of money to the Government plus one-half percent.

4. A reasonable equity payment.

5. The absence of unworkable restrictions on the incomes of those occupying the housing.

6. Measures adequate to protect the genuine cooperative character of the borrowing group and thus to secure beyond reasonable doubt the absolute soundness of loans made.

Nothing has happened, certainly, since August to cause us to change our minds about these provisions as the basically essential minimum of a good bill. Indeed, since that time very important meetings have taken place which have resulted in almost complete agreement among all of the great membership organizations of this country behind the provisions just listed.

Needless to say, therefore, we are deeply gratified to find the HHFA also earnestly urging passage of the pending bill H. R. 6618, containing, as it does, all but one of these essential measures mentioned above. Personally, I have another reason for believing H. R. 6618 is a good bill. For, in testifying here last August I had this to say:

We cannot refrain from making this suggestion for the consideration of the committee. Why could not a bank for cooperative housing be established? If such a bank were authorized to sell debentures either to the Treasury or to any other willing investors, it could then use the proceeds for the making of loans to cooperative-housing associations. The bank would, of course, make such loans only upon recommendation of the Cooperative Housing Administration.

The pending bill is, as the committee well knows, based upon the proposed National Mortgage Corporation for Housing Cooperatives, an institution which would function essentially as was suggested here last August.

So, we feel the bill should be passed—and substantially in its present form. There is one amendment, however, that we most strongly urge. We believe the middle-income group is as important in our Nation as any other income group. We also believe it no more than wise to have the administration of so important a piece of legislation as this is in the hands of an agency which will be solely devoted to its successful operation. For these reasons we strongly urge that the Administrator for middle-income housing be appointed by the President and occupy a position on a par with the Administrator of the Federal Housing Administration and the Public Housing Administration. It will not by any means follow from the mere passage of H. R. 618 that a great deal of housing will be built at once. This bill proposes not a quick, easy, superficial solution to a great problem but rather a somewhat slower, more long-range and far sounder and more fundamental solution. It will take an administration with direct responsi


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