Mr. MULTER. I for one would like to have that. Will you please submit to the committee instances where there has been no cooperation, or any other complaint levied against the agency in any region? I think this committee would like very much to know.

Mr. BRYANT. You are putting me on a difficult spot, Congressman. I have a particularly bitter letter from one cooperative here which says, "Please do not mention this to anybody for fear of reprisal from the FHA office."

Mr. MULTER. We get these statements repeatedly and we must disregard statements of generalities. We cannot go to the agencies and inquire on the basis of such generalities.

Mr. MITCHELL. Is there any reason why the committee could not have that for its own use and not put it in the record? Certainly I can understand why the cooperative would not want its confidential complaint made available to the people who may be administering a program to which it will apply later.

Mr. BRYANT. That is right, or are now working with and trying to get something through. I will be glad to submit such a statement to the members privately.

Mr. MULTER. I will go along with that, that it be kept out of the public record but each member of the committee be supplied with the information.

Mr. BRYANT. These cooperatives are dependent on FHA financing. They cannot get private financing.

I would like to mention one particular cooperative in California that had raised $350,000 cash, bought 106 acres of land and for 4 years tried to work with FHA. For 2 years they were told verbally by FHA that they would put the mortgage through. However, the word around the lending institutions was that this cooperative was not to go through. Two days before a letter of rejection from FHA on the grounds the the cooperative appeared unstable, after 4 years and this much cash, and before this letter of rejection came through, several speculators called to ask to buy that land because they had been told by someone in FHA that the project was going to be rejected. The members of this group will lose over $150,000 of their life savings as a result of the refusal by FHA to put the cooperative through. It is a single-house cooperative.

Mr. MULTER. What was the cost of the operation?

Mr. BRYANT. Two hundred and sixty-eight houses at about $3,000,000. They had a builder, contract signed and bank financing approved, pending FHA insurance. They worked for 4 years to get that and were given a complete run-around all the way through. Friendly employees in that FHA office told us of the attitudes of FHA officials, that they never intended to put it through under any circumstances and were making deliberate obstructions. I would write that off as one case unless I had heard the same thing from a dozen other cooperatives around the country.

Mr. MULTER. What finally happened to the California one you are talking about?

Mr. BRYANT. They put the land on sale at considerable loss. They gave up. They had no more funds.

Mr. MCKINNON. Will you answer for Mr. Rains' benefit and we will point it out in the record-since he is not here at the moment

and for my benefit too, your explanation why you feel it is right to give one group of people a better interest rate than another group of people, all of those being citizens of the United States?

Mr. BRYANT. Because an individual family applying for a mortgage loan is an entirely different kind of a risk from a corporate or group risk. This is not a strange thing in American life we have many types of corporate activities-simply to solve this financing problem, including all kinds of private corporations which can raise money better than a group or a partnership and can go in and get money. This corporate structure is a different risk at 3 percent than the present 4 percent to a veteran or 5 percent to a home owner under FHA.

Mr. MCKINNON. That is true, but this is different because the United States Government is coming in with its credit to assist one group of people but the United States is not pledging its credit to assist another group of people.

Mr. BRYANT. I heard the Senate hearings where one of the opposition group said they were opposed to lending to special groups, which was a little bit comical, frankly. I think the conclusion is that it is in the public interest to aid in encouraging a form of home ownership to a group which would not otherwise come into the market. That, I think, is the clearest formulation.

Mr. MCKINNON. Would you say we should attack the first problem first? I mean a lot of things enter into high cost of building besides financing.

Mr. BRYANT. We have mentioned in the savings, which might be $35 a month on a five-room apartment, only a third of that may be the savings in financing. Maybe a half will be the savings in management and maintenance and the balance from lower collection and vacancy losses and by group activities. All of these together accomplish this end result.

Mr. MITCHELL. I wonder if I could ask one question. I am wondering whether, although you cannot be here tomorrow, it would be possible for you to return at a later time during the committee's hearings? Mr. BRYANT. Yes; I would like to.

Mr. HAYS. I wonder if Mr. Multer would mind modifying the request about this information. I do not believe we should ask him to furnish all members with this information.

Mr. MULTER. I asked for the information and if no other member wants it, I will keep it, or if it is submitted to me alone, and any member who wants to see it, I will submit it only to that member. Mr. HAYS. The committee will now adjourn to meet tomorrow at

10 a. m.

(Whereupon, at 12:05 p. m., the committee adjourned until 10 a. m., Thursday, February 2, 1950.)

COOPERATIVE HOUSING

THURSDAY, FEBRUARY 2, 1950

HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., the Honorable Brent Spence (chairman) presiding.

Present: Messrs. Hays, Buchanan, Multer, Deane, O'Brien, McKinnon, Dollinger, Mitchell, O'Hara, Wolcott, Gamble, Talle, Kilburn, Cole, Hull, and Nicholson, and Mrs. Woodhouse.

The CHAIRMAN. The committee will be in order.

We will hear first from Mr. Williamson, representing the Veterans of Foreign Wars.

STATEMENT OF JOHN C. WILLIAMSON, ASSISTANT DIRECTOR, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS

Mr. WILLIAMSON. Mr. Chairman and members of the committee, I am pleased to have this opportunity to express the views of the Veterans of Foreign Wars of the United States with respect to H. R. 6618, a bill designed to assist the middle-income group to acquire homes of their own through their participation in cooperatives, or through the efforts of nonprofit corporations.

The utilization of the cooperative principle to assist families of moderate means to a more beneficial participation in our national bounty is no innovation in our American system. Unfortunately, many opponents of this measure seek to attach something alien, something sinister to this legislation because it provides an inducement to families of moderate income to participate in cooperatives as a means of acquiring decent homes at monthly cost within their means to pay. The million and a quarter members of the Veterans of Foreign Wars of the United States have one experience in common-an experience which taught them to live and work with their fellowmen. The comradeship born of war has survived to live in the more than 10,000 posts of our organization, the great majority of which are nonprofit corporations organized and chartered under State law. Several of these posts have already organized housing cooperatives and others await the guiding and helping hand provided in this legislation. Two years ago the James A. Manley Post, VFW, in Wilmington, N. C., acquired a war-housing project of 584 masonry-type units through the assistance of the Federal Public Housing Authority, the Office of the Housing Expediter, and Federal Housing Administration. The success of this cooperative project was such that the Wilmington plan became a byword in the VFW national housing effort. Unfortunately, many other

posts in our organization sought to emulate the experience of the Wilmington group but were unsuccessful. Of course that is understandable because war-housing projects presented special and rather limited circumstances.

Cooperative housing projects, through legislation such as H. R. 6618, would provide saving to the individual in construction, financing, and maintenance costs. The Wilmington project was constructed under the Lanham Act and the rather modest cost of the project permitted a 40-year term of financing by FHA at 312 percent interest. An additional saving was and is being realized through self-help as most of the maintenance work is done by the cooperative owners themselves.

The Fiftieth National Convention of the Veterans of Foreign Wars, which convened in August 1949, unanimously adopted a resolution in favor of direct Government loans to cooperatives with a maximum amortization period of 60 years at the going Federal rate of interest. I am submitting with this statement a copy of this resolution.

Although the pending bill is a substitute for the provisions for cooperatives in the bill H. R. 6070, previouslly considered by this committee, we are realistic enough to accept the substitute as having distinct advantage over the original bill. ~ The direct-loan principle is by any standards an extreme one, and ought not to be resorted to so long as private enterprise, with reasonable Federal assistance, can do the job. Apropos of this principle is the statement issued by our national legislative committee on October 30, 1949, that private enterprise and private financing must be given every encouragement, short of direct subsidy, to accomplish our national housing objectives. We welcome, therefore, the provision in this bill which provides a definite role for private capital in the financing of cooperative projects.

Another change in this bill over the original cooperative legislation does not, in our considered opinion, constitute an improvement. Rather it creates, we fear, a decided impediment to the smooth functioning of a national cooperative housing program. We refer to the provision in the amendment which provides that the program shall be administered by an official appointed by the Administrator of the Housing and Home Finance Agency, and that the official so designated would be the head of a division in the office of the Administrator.

We feel that the cooperative housing program is of sufficient importance to warrant a form of organization comparable to the Federal Housing Administration, the Fublic Housing Administration, and the Federal Home Loan Bank System. Such an organization would provide the dignity, caliber of leadership, and responsibility so vital to a program of this nature. We are fearful that under the language of the amendment the cooperative program might be relegated to a subordinate role. We strongly urge that the Congress not only approve the principle of cooperative housing as set forth in this amendment, but give the cooperative program the organizational weapon best suited to carry out its important functions; and that weapon we insist is not provided in the language presently before the committee.

Our endorsement of this cooperative housing bill represents what we hope is the final phase of the VFW comprehensive national housing program originally launched by our 1946 national encampment.

Public Law 171, Eighty-first Congress, providing for the construction of 810,000 public low-rent housing units was one of the planks in

the VFW program. Another, and by far the most important, is the program for encouraging participation of private enterprise in the section 501 GI home-loan program. We are grateful that the Congress recently expanded the secondary market for such loans and we look to other provisions of H. R. 6070, such as the elimination of the section 505 loan and the extending of the amortization period to 30 years, to bring the GI home-loan program closer to the original intent of the Congress.

However, despite the encouraging participation in the GI homeloan program, we find on all sides evidence that the middle-income families those in the $2,500 to $4,500 bracket—are unable to participate to advantage in this veterans' program. For one thing the cost of homes, particularly in the urban areas of the North and Northeast have made home-acquisition for this group almost prohibitive even under the liberal financing program of the GI bill of rights.

One hundred percent financing at 4 percent interest of even a $10,000 house is of no benefit to the veteran whose income is only $3,000 per year. Unfortunately, many veterans in this group have been forced to purchase homes beyond their means. Others are forced to defer the purchase of a home for many years until they have acquired a sufficient down payment so as to bring down the monthly payments. In the interim these veterans continue to rear their children in an unsuitable living environment.

The solution for this group lies in the formulation of a program that will not only reduce the cost of construction, but also of financing and maintenance.

We believe the formula is provided through the nonprofit features in this legislation. We feel that the enactment of this bill will bring closer to realization the goal of the VFW of "A home for every veteran."

RESOLUTION No. 364

VETERANS NONPROFIT COOPERATIVES

Whereas the Veterans of Foreign Wars has for the past several years advocated a comprehensive housing program including public housing to satisfy the needs of the lower-income groups; and

Whereas the Veterans of Foreign Wars support of public housing has been largely in the public interest and less than half of the members and potential members of the Veterans of Foreign Wars can qualify for admission to public housing, the time has now come to seek legislation to satisfy the needs of the middle-income groups in which the larger portion of Veterans of Foreign Wars membership falls; and

Whereas one of the major fields in which economy may be practiced is in the financing of the home and in mass production; and

Whereas private sources appear reluctant to advance loans to veterans mutual groups; Now, therefore, be it

Resolved by the Fiftieth National Encampment of the Veterans of Foreign Wars of the United States, That the national organization seek enactment of Federal legislation providing for:

(a) Direct Government loans to veterans' nonprofit cooperatives.

(b) Loans made at going Federal rate of interest (approximately 22 percent). (c) Loans amortized over the useful life of the property but not to exceed 60 years.

(d) A separate agency under jurisdiction of the Guaranty Loan Division of the Veterans' Administration to administer this direct loan program.

Approved by the Fiftieth National Encampment, Veterans of Foreign Wars of the United States, Miami, Fla., August 21 to 26, 1949.