A. F. of L., from the various veterans' organizations, from people representing all of the various groups in this country who are interested in housing, and I happen to know that this legislation grew out of the contribution of thought and time and study of a great many people and a great many organizations, and that it represents an honest coming together of minds, not in a way satisfactory perhaps to any particular person, completely satisfactory, but does represent a coming together of the minds of all of the various people and groups who have been interested in working it out. I would like to enter in the record at this point some correspondence between Senator Maybank and Senator Lyndon B. Johnson concerning an idea submitted by Mr. Clint W. Murchison of Dallas, Tex., in April 1949, which is similar to the procedure incorporated in the Maybank amendment. (The material referred to follows:)

Hon. LYNDON B. JOHNSON,

United States Senate, Washington, D. C.

UNITED STATES SENATE,

June 1, 1949.

DEAR SENATOR JOHNSON: I have your May 18 letter enclosing a letter dated April 19 from Mr. Clint W. Murchison, of Dallas, Tex., and a letter dated April 15 from Mr. Coleman A. Hunter, executive vice president of the Atlantic Life Insurance Co. of Richmond, Va. Both discuss Federal aid for mortgage loans on housing.

Mr. Murchison suggests that RFC issue $5,000,000,000 of its 5-year 2-percent notes and sell them to banks, primarily to those who now hold FHA mortgages. The RFC would acquire title to the mortgage loan and reduce the interest rate to 34 percent. It would use the banks as servicing agents, paying them onefourth of 1 percent service charge. If the mortgagor defaults, RFC would take over servicing of the loan. The income to RFC on the mortgages would be used to amortize its 5-year notes and to create a 1-percent reserve to cover the losses RFC sustains on foreclosures. The RFC would agree to purchase only mortgages at least 3 years old so that the credit record of the mortgagor would be well established.

I am forwarding the proposal to the operating agencies in the executive branch to obtain their opinion of the proposal. I shall advise you of the results. Sincerely yours,

BURNET R. MAYBANK, Chairman.

UNITED STATES SENATE,

May 18, 1949.

Senator BURNET R. MAYBANK,

Chairman, Banking and Currency Committee,

Senate Office Building, Washington, D. C.

MY DEAR SENATOR: Enclosed are two letters-one from Mr. C. W. Murchison to me and one from Mr. Coleman A. Hunter to Mr. Murchison, which are very interesting.

I wonder if one of your staff members who is familiar with FHA loans would take the time to look at this and give me his frank appraisal of the suggestions outlined in these two letters.

Sincerely,

LYNDON B. JOHNSON. DALLAS, TEX., April 19, 1949.

Hon. LYNDON JOHNSON,

United States Senate,

Washington, D. C.

DEAR LYNDON: Enclosed is a letter which I asked Coleman Hunter to write me with reference to FHA loans. In the letter he states that a reduction of interest rates would not mean anything, but I contend that a reduction of interest rates, as well as an extension of time, would materially affect the maker of one of these notes, in that you can cite the FHA terms of the loans, which bear 5-percent interest and have a 25-year maturity. Just for the sake of argument, if the loan had a 30-year maturity and a 34-percent interest rate, and using

$10,000 as a basis of computation, you would have a carrying charge of approximately $55 per month. Using a 5-percent rate and a 25-year maturity, your carrying charge an an identical loan would be $75 per month. Now I know many an old boy who would take that 20 bucks and buy a refrigerator with it. My idea is to make it mandatory on the RFC to issue its 5-year 2.2-percent paper to the extent of $5,000,000,000 and allow the banks to own this paper, which they would be more than glad to get. If necessary, make it legal reserve with the Federal Reserve banks for their reserve requirements. Have the RFC reset the loan on a 3-percent basis, allowing the banks one-fourth of 1 percent for collecting and servicing and, further, allow the banks to establish branch offices for this purpose only. Have the RFC to service directly all loans which come into default and have them set this paper aside for the one and only purpose of servicing their short-term notes which would be held by the banks; and also have the RFC set up their 1 percent as reserve which, in my opinion, would be sufficient to take care of any foreclosures which they might have, bearing in mind that when and if they should foreclose they probably will not have over 10- to 15-percent loss, if any.

This credit should be available to all types of housing loans, except that I do believe that this loan should have at least 3 years age before it would be allowed to be rediscounted with the RFC. With 3 years' experience on the borrower, I think by that time he would have safely established his responsibility. This is giving you the high spots on it, but there is certainly nothing wrong with it. The banks will go for it like shooting fish because they will be allowed to make 2 percent on short-term money and they will be able to make onefourth of 1 percent for servicing the loan.

The only people you will have to fight are the insurance companies and a few collection agencies which are now getting one-half of 1 percent.

For your information, there is $30,000,000,000 of FHA and GI loans. The other $26,000,000,000 which I mentioned the other day is made up principally of farm loans and multiple-housing loans.

There is an interesting article in the Harvard Business Review on this subject and if you do not have it, I will ship it to you if you would care to read it. Sincerely,

C. W. MURCHISON.

Speaking for your own organization, do you know of anything in this legislation that is not open and above board, or do you know of any motive back of it that could be attributed to an effort, on the part of those who have built this legislation, to mislead the American people?

Mr. REUTHER. I think that there is only one simple motive behind this legislation so far as we are concerned, as far as the veteran groups, the other labor groups, church groups, people that worked with us on it; that is, simply to make it possible for millions of American families to get decent housing on the kind of basis that we think is an American approach to this problem. We want to encourage home ownership. We think that is one of the things that makes America strong. The more people we can get owning their homes, the better. We think this cooperative approach will make that possible; will facilitate people who now do not have decent housing to get it on the basis of their owning the house.

Anyone who tries to say there are other motives must have sinister motives himself in challenging this kind of legislation.

I would like to read into the record Mr. Russell's answer about why he was pushing this other bill. On page 256, he says before the House committee: "If you pass this bill, I don't believe the TaftEllender-Wagner bill will pass the House."

Senator SPARKMAN. Was it just preceding that that he asked whether or not his answer would be on the record? I just saw it in looking it over hurriedly.

No; he did not ask that. The chairman asked that. The chairman of the committee. That is on page 255.

Mr. REUTHER. Some of his answers would have been much better off the record, I believe.

I would like to get into this whole question of this camouflage. Mr. Russell and the other people who have raised the question of socialism are obviously trying to wage an ideological battle just to throw up smoke screens and confuse the issues to try to block decent housing. We have done research work to find out where this idea of cooperative housing started in America. Was it brought over in a black bag from Moscow; where did it get started? The earliest that we can find out of a cooperative housing project was the housing project started in New York by the Rockefeller Institution. The Rockefeller Institution has been charged with many things, but they have never been charged with being advocates of socialism.

Here is a book, The New Day in Housing, written by Lewis H. Pink, with an introduction by Alfred E. Smith, which goes into the whole history of people trying to get decent housing. On the front cover it has a picture of Thomas Gardens Cooperative Apartments, erected by John D. Rockefeller. Here is a pamphlet put out in New York City called Queensview, a nonprofit cooperative housing development for families of moderate incomes.

On the back it lists the board of directors who are sponsors of this cooperative housing project. Mr. Bernard F. Gimble, president of Gimble Bro.; Beardsley Ruml, chairman of the board, R. H. Macy; Mr. David Sarnoff, chairman of the board of Radio Corp. of America; Howard C. Shepard, president of the National City Bank; Gerard Swope, honorary president, General Electric Co.

These people are sponsoring this cooperative housing project. Anybody who attempts to say that these fellows are advocating socialism in America is either insane or is just downright dishonest. Obviously, the cooperative idea is not a socialistic approach to housing. The cooperative idea is a sound American principle by which people get together to help one another try to make progress in the world.

Senator SPARKMAN. Of course, those are privately owned cooperatives. I mean, they are built without Government funds.

Mr. REUTHER. But the same idea holds, this idea of people cooperatively getting together to build a house, either a project of singledwelling houses or an apartment house. The cooperative idea that is being challenged as a socialistic concept toward housing is as much a part of this approach, using private funds, as it would be in this case. In this case, what you are doing is merely facilitating the getting together of individual family groups so that they can build housing; you are merely facilitating their building of cooperative housing, you are making Government funds available to give them the start they can't get without those funds.

The cooperative idea is the same both in the approach under this bill and the approach under this project sponsored by these gentlemen. Senator SPARKMAN. The point, I take it, is you are answering the argument which Mr. Russell made that it was socialistic. If I understand, then, you contend that if it is socialistic it must be on one of two grounds: Either the cooperative idea is socialistic or the fact that funds come directly from the Federal Government, or as in this case, guaranteed by the Federal Government, would make it socialistic.

As I understand, you say Mr. Russell cannot with justification argue that the participation by the Federal Government makes it socialistic, because he has shown that he is willing to go along with that kind of a program, many times bigger than this.

Mr. REUTHER. Right.

Senator SPARKMAN,. Then you say that certainly you cannot charge Mr. John D. Rockefeller and the president of the National City Bank and these other gentlemen whom you have named with advocating socialistic programs. Can't we go one step further and say: Has anyone to your knowledge ever jumped on the rural electrification program as being socialistic because it used money directly out of the Treasury of the United States for carrying on its program? Have you ever heard anyone jump on the rural electrification program because of that?

Mr. REUTHER. I suppose when that legislation was first considered, the power interests in America called it socialistic and everything else. Senator SPARKMAN. I am talking about the present time.

Mr. REUTHER. No; I don't think that charge is raised now.
Senator SPARKMAN. Does anybody criticize it?

Mr. REUTHER. Not that I know of. I think it is accepted as having made a great contribution toward the economic development of rural areas in America.

Senator SPARKMAN. And Congress itself certainly confirmed and ratified it during the last session when with virtually no opposition it passed the rural telephone bill; isn't that true?

Mr. REUTHER. That is right.

Senator SPARKMAN. Of course, year after year, Congress legislates and appropriates for the various farm cooperatives and cooperatives of different types in our American economy; isn't that right? Mr. REUTHER. Correct.

Senator MAYBANK. Mr. Chairman, I am sorry to be late this morning. I came in the other day, but left early.

I read in the paper about having introduced a Socialist bill. I asked to be excused because we had a meeting simultaneous with this one. Senator SPARKMAN. Yes. SEC.

Senator MAYBANK. Yes.

The President had sent some names over in October. We wanted to get them confirmed. All I knew about these charges was what I read in the paper. I haven't read the record. I wanted the record to show that I was here. I had to leave to attend another meeting. As chairman of the full committee, I have to go to different meetings. Senator Douglas was there, too.

Senator SPARKMAN. May I say this: I recall very well that the chairman of the full committee explained his necessary absence when he left. Mr. Russell was on the stand at the time.

Senator MAYBANK. As soon as I left he brought up that subject. Senator SPARKMAN. Despite the interpretation that Mr. Russell put upon it, I did not call him a liar. I have never shown any discourtesy-I have tried not to show any discourtesy to any witness, regardless of how I may differ with his approach, or his testimony.

The only part I took objection to was his statement that this legislation was designed and intended to mislead the American people. I called his attention to the fact that the chairman of this committee, Senator Maybank, had introduced the bill, and I knew that he would

not intentionally mislead. I did not call him a liar. I did tell him that his testimony was not correct, and was unfair.

Many times I have told witnesses that I did not regard their testimony correct. I have never yet had one to take offense before this. Senator MAYBANK. As a matter of fact, before any legislation is passed I study it at length. I conferred with the House officials.

Mr. REUTHER. I would like to deal with another group that appeared in opposition; the National Association of Real Estate Boards, and show you how inconsistent they are on this whole question.

Senator LONG. Before you get to that, Mr. Reuther I am sorry I wasn't here when you commenced your statement-isn't the idea of people owning their own homes, the private ownership of property, the very foundation of our capitalistic system?

If those people want to ward off or protect themselves and this Nation from going socialistic, wouldn't they do well to help men to own their own homes rather than work for a lifetime paying tribute to a landlord from the day they are born until they die?

Mr. REUTHER. There is no question about it. The cooperative idea embodied in this bill, if carried out, would make possible millions of people who now rent inadequate and unsatisfactory housing getting their own houses which will constitute a bulwark against socialism, against the drift toward State ownership. There is no question about that whatever.

Senator LONG. The man who owns stock in a cooperative and who is living in an apartment building owned by the same cooperative in which he is a stockholder is entitled to feel that he owns a part of the building.

Mr. REUTHER. He does own it. He and the other people own it the same as other stockholders own a corporation. If you are against the idea of people owning a cooperative building you are against people owning corporation stock.

In the case of the cooperative, they own for use by themselves. In the corporation they own together to make profits. The ownership is the same.

Senator LONG. Lots of corporations don't seem to have objection to their employees owning some stock in the corporation; do they?

Mr. REUTHER. No; they do not.

Senator LONG. Especially if it is not voting stock.

Senator SPARKMAN. Mr. Reuther, before you go further, let me show you this chart: "Private cooperative home societies for 250,000 families per year, with local, State, and Federal assistance requiring State and Federal laws."

You notice the method here calls for the election of a board, five to seven trustees, we won't go into all of the details, but if you notice it also provides for an RFC loan, a subordinate loan, equal to 47 percent of total development costs, for a term of 40 years, at 3 percent annual charge for interest repayment and principal, and so forth.

Do you see any material difference in the RFC making loans for this kind of thing and the Federal Government guaranteeing it the way we propose to do here?

Mr. REUTHER. There is no difference in principle. The principle is the same.