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Mr. MITCHELL. What would be your time of the amortization?
Mr. THOMPSON. From 30 to 40 years.
Mr. MITCHELL. And what percent of the total cost would you loan?
Mr. THOMPSON. Completely amortized.
Mr. MITCHELL. You say you couldn't go 100 percent?

Mr. THOMPSON. Right within the framework of FHA now there is a provision for cooperative housing.

Mr. MITCHELL. But it has not been used ?
Mr. THOMPSON. Oh, it has. Of course it has.

Mr. MITCHELL. Will you give those figures to the committee so we can have them later?

Mr. THOMPSON. Absolutely.

The CHAIRMAN. I suggest the witness be permitted to conclude his statement and then he can be interrogated, because we have two other witnesses this morning. We want to get along as well as we can.

Mr. THOMPSON. If we really want to provide for all families in the middle-income class, then let us open the doors wide. The potential cost would be $60,000,000,000. Add the $17,000,000,000 liability, which is current, in GÍ and FHA insured loans, or $77,000,000,000, and you have the true picture. You have already committed the people to pay about $16,000,000,000 under the public housing bill passed last session. This brings the grant total to around $93,000,000,000. Let's tell the public the whole story.

Let's tell the people that the so-called low-income housing bill which became law 7 months ago is still a piece of legislation yet to be paid for; that more than $150,000,000 will be needed to pass out to public housing authorities just to make plans and surveys. And that not one single housing unit has yet been constructed as of today, more than 7 months after the bill became law.

The public should know that in New York City, a high-cost area, State public housing and limited dividend housing is costing up to $15,000 per apartment to build. The socialized apartments authorized under the public housing bill can cost equally as much.

According to Government statements, this housing must be constructed in cost brackets from $6,000 to $8,000 to meet monthly outlay of $45 to $73 on the part of the occupants.

Mr. Multer pointed out in the hearings yesterday that there is no claim being made by proponents of the bill that a saving will be effected on the construction costs of housing under this bill. I most heartily agree with Mr. Multer on that. So then, wouldn't such buildings have to be of cheaper and poorer construction than public apartments, to be within the six to eight thousand dollars ?

Mr. MULTER. Why?

The CHAIRMAN. I suggest that if we indulge in this character of interrogation, we will never get through.

Mr. THOMPSON. I will double-talk from now on to get through quickly here.

Are we prepared in the period of increasing costs of Government to legislate still more financial obligation, without telling each and every taxpayer that the per capita indebtedness already is over $1,800—and that by the table of incomes reported by Mr. Foley some one-third of the people are in too low an income bracket even to begin paying their share of the per capita debt, which means it may be as much as $2,500 ?

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Yes, $2,500, not counting the $18,000,000,000 obligation in the public housing bill and this bill, is passed.

Perhaps some of this legislation could accomplish a part of the purposes for which it is proposed, but at what price? There must be à limit somewhere along the line if we are to go on as a privateenterprise nation.

An article copyrighted by the New York Herald Tribune appeared in the Washington Post January 29, 1950. Mr. Robert Bird, who wrote the article, says on a "newly built house in a 100-house development in Nassau County, Long Island, purchased for $10,000 from the builder, 639 taxes were uncovered in the construction, development of site, and purchase financing. They were taxes of one kind or another

, collected by State and Federal Governments from the contractor, manufacturers, jobbers, dealers, subcontractors, whose materials and services went into the house."

Life magazine recently conducted a survey and reports that taxes represent $3,000 in the cost of a $10,000 house. Imagine it—a $10,000 house would cost $7,000, a $7,000 house could be bought for only $4,900.

Perhaps before the Congress adopts "cures” it should stop and consider causes. Maybe crushing taxes are the cause of high prices as these articles indicate. I feel sure, Mr. Chairman and members of the committee, if you will attack the cause instead of the symptoms you will help to preserve the American family dream of real home ownership. More than that, you would win the undying gratitude of the people of the Nation.

Private industry, for many generations before the inception of the Federal Housing Administration and the Veterans' Administration, provided housing and the moneys to finance it for all classes of our people. It is today providing such housing and the moneys to build and purchase it.

Private industry can and will continue to provide adequate mortgage financing through the conventional type of mortgage as well as the Federal Housing

Administration insured mortgage and the Veterans' Administration partially guaranteed mortgage.

We of the industry believe that every new home owner or farm owner created is just that much more additional insurance against our country following the so-called trend of state socialism. Pride of ownership is a community asset not only in the form of additional ad valorem taxes to the municipality but also in insuring continued good citizenship. It would be destructive to family life for children to look to Government rather than to their parents for their shelter and other necessities of life.

I mentioned many times before that there has been no demonstration that private industry is not presently meeting the demand for housing for middle income families. I am convinced that the figures and facts presented by Messrs. Foley and Richards represent sustaining evidence that private industry is not only providing for the middle income class-demonstrated by more than one-third of our new housing costing less than $6,500—but it is also providing for housing for all classes.

Industry is not quite like Government agencies. When industry runs out of money it cannot go to the Congress and ask for a deficiency appropriation. Instead, our industry depends upon selling its product which is homes. To sell that product we must cater to the market. It is an unreasonable assumption that this industry provides for only one class of people. We provide for everyone because our market covers all classes of people.

As proven during the war, our people have unsuspected resourcefulness. They have it in them to fight through any situation that confronts them. If, however, they are told that Government paternalism can relieve them of the necessity of solving their own problems, many will not try to succeed on their own.

On the subject of direct lending, our association believes that the Congress and this committee, particularly, want to preserve the priceless human values in a voluntary society with individual liberty. On behalf of my association, I urge most strongly that direct lending by Government, however disguised, be avoided.

We oppose the bill because, as I have said many times before, it permits the Government to make direct mortgage loans. I make that statement despite the denial of its accuracy by the proponents of the bill. I make it in the face of claims of other supporters that inasmuch as the moneys to be lent by the proposed National Mortgage Corporation for Housing Cooperatives will be secured through the sale of debentures by that Corporation to private investors, it is not direct Government mortgage lending. I assert that it is definitely direct Government mortgage lending.

I was pleased to learn that even Mr. Foley during his presentation before this committee admitted to Congressman Kilburn January 31 that in effect the bonds to be sold by the Corporation would be the same as Government bonds. It would follow, then, that lending of money so raised would be in effect direct Government lending.

Even a casual reading of the provisions of the bill clearly indicates that the Government through the proposed National Mortgage Corporation for Housing Cooperatives will directly invest its funds in the mortgage loans to be secured by the nonprofit and cooperative projects. That corporation or the Housing and Home Finance Agency Administrator, as proposed by the bill, could control the selection of the site, pass upon the plans and specifications.

The Corporation or the Administrator could pass judgment on those who are to be tenants or owners under this plan.' HHFA, without question, would invest moneys of the agency in the project to the extent of its entire cost plus needed working capital and initial operating losses. As security for the investment of its funds, that Government agency, the proposed new Corporation, would receive a mortgage and, I presume, a bond or note. That agency would service the mortgagethat is, collect interest, amortization payments and either collect moneys for real-estate taxes or see to it that the real-estate taxes are directly paid by the Corporation that owns the project. That, I insist, is in effect direct Government mortgage lending in every conceivable

I repeat-direct Government mortgage lending is unnecessary for cooperative housing or any other type of housing, as the facts prove. Private industry has available the savings of the people to provide for housing. Private lenders who are trustees of these savings funds will provide ample funds within the accepted and time proven form

sense.

61731-50—19

ulas for the investment of mortgage funds in economically sound housing

I am not alone in the conviction that the Government or the State or the municipality should only do for the people what they cannot do for themselves. I am not alone in the opinion that Government should only provide such services to the people that they cannot adequately or properly supply for themselves.

I submit that direct mortgage lending is an invasion upon the rights of private industry which, when narrowed down to its component parts, is the people. The people have demonstrated their ability through the American system of opportunity to finance their homes as well as countless other necessary commodities and services.

I, of course, know there are people and groups of people who differ with the convictions and the opinion of the great majority of people and the great majority of groups of people, which convictions are embodied in the statements that I have just made. It now appears that never before have so many people of this country been so tolerant of the idea that the Government must do for them what they should and could do for themselves.

Never before has it seemed that so many people have listened so patiently and subscribed so promptly to the attractively disguised gospel that Government should assume the responsibility of the destiny of their economic existence as well as their habits of working and living. Never before have these same people been so indifferent to the unquestioned fact that Government can only give to the people what it takes from the people.

The proposed bill, if it becomes law, will invite and encourage political and private pressures leading to many unsound mortgage investments and excessive and unnecessary expenditures in Government placement and servicing of mortgages. The direct and indirect costs of the Government will be far in excess of costs under the privateenterprise system. A very substantial and unwarranted administrative expense will be added to the already enormous cost of the Government.

I know we will all agree with the statement that this country was founded on the belief that the free initiative of individuals is the key to economic progress. It appears, though, that for the moment the favor goes in preference to statism and the nationalization of enterprises. But to make of this statism the normal rule of public economy would be to reverse the order of things. The mission of public law is, in effect, to serve private right, not to absorb it. The economy is not by nature an institution of the Government; it is, to the contrary, the living product of the free initiative of individuals and of groups freely constituted.

I most earnestly urge you, Mr. Chairman and members of the committee, to consider the most serious and detrimental effects that the enactment of this bill into law will have upon our American economy.

The CHAIRMAN. That concludes your statement.
Mr. MULTER. Just one matter. I will be

Mr. Thompson, this is quite apart from the statement you have already made. Are you in favor of, or opposed to, the continuance of section 608 mortgages?

Mr. THOMPSON. I think section 207 will take care of that very nicely. I don't see any need for its further continuance.

very brief.

Mr. MULTER. You think 608 has now fulfilled its purpose and we can dispense with it?

Mr. THOMPSON. I do.

Mr. MULTER. Don't you think that, if this bill should be enacted, when the time comes that it has served its purpose, we can dispense with this provision just as it is now suggested that we dispense with section 608?

Mr. THOMPSON. Oh, I think the Congress always has the legal right to enact legislation and then to ultimately let it expire or, by enacting other legislation, revoke it.

Mr. MULTER. At this point, may I have unanimous consent to enter in the record an item which appeared in the New York World-Telegram and Sun, February 6, 1950, a project for 1,118 families by the Equitable Life Assurance Society, built, maintained, and owned and to be operated by it.

Mr. GAMBLE. What is the name of it?
Mr. MULTER. The New Ford'ham Hill.
Mr. GAMBLE. That is the one out in the Bronx?
Mr. MULTER. Yes. Fordham Hill.
(The item referred to is as follows:)

[From the New York World-Telegram and Sun, Monday, February 6, 1950)

EQUITABLE'S BRONX SUITES Now RENTING

(By James L. Holton, real-estate editor)

Scores of prospective tenants turned out yesterday to take their first look at Fordham Hill, the vast new housing development now nearing completion at Sedgewick and Webb Avenues in the Bronx.

This modern apartment group is being built by the Equitable Life Assurance Society of the United States. It occupies the former site of the Webb Institute of Naval Architecture, a tract of 742 acres overlooking the Harlem River, at one of the highest points in the city.

When completed this spring-occupancy for the first 620 suites is being promised by March 15—the nine 16-story buildings in Fordham Hill will offer accommodations to 1,118 families.

BUITES HAVE LARGE ROOMS

According to Thomas I. Parkinson, president of Equitable Life, rentals in Fordham Hill will range from $105 to $133 a month for 372 rooms and from $135 to $171 a month for 442 rooms. Gas and electricity will be included in these monthly charges.

The suites boast many postwar innovations for space and labor-saving. All apartments_have cross-ventilation. Living rooms feature large "picture" windows. The kitchens and closets have sliding doors, to economize on space.

Each suite will be hooked into a master television aerial. Two-bedroom units will have divided baths. Complete kitchens with cupboards, range, refrigerator, closet space and gleaming stainless steel sinks and drainboards will appeal to the housewife.

Leonard Schultze & Associates, architects, were the designers of the Equitable project. Starrett Brothers & Eken are the builders. A rental office at 2391 Webb Avenue on the housing site was opened yesterday.

CLINTON HILL OTHER PROJECT

The big Bronx project is the Equitable's second large housing development here in the city. The Society's Brooklyn colony, Clinton Hill, built during the war, now houses some 1,200 families, but at much more moderate rents.

Mr. THOMPSON. Mr. Chairman, might I ask Mr. Multer a question? Mr. MULTER. I have no objection if the chairman hasn't.

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