that that is all that it would cost them. When they become located in the house, they find that other expenses are necessary to make them home owners. They have just generally gotten up to their necks in debt. We believe that if the slightest recession should be experienced by this country numerous veterans would have to give up their homes or obtain other financing.

Senator LONG. Of course, the American Legion was in favor of these hundred-percent-loan provisions; were they not?

Mr. DINGER. That is right.

Senator LONG. Most of this housing is financed on those terms; is it not?

Mr. DINGER. Yes; under the GI and FHA combination loans.

Senator LONG. The question in my mind is whether it is a wise thing for Congress to make hundred-percent loans under those circumstances where the effect was to help people to obligate themselves for a lot more than they wisely should have obligated themselves. That is especially true when they purchased something that really was not worth what they agreed to pay for it.

Mr. DINGER. I think that is a very serious question. I believe the GI loan guaranty program has been policed a little more carefully than perhaps the FHA combination program. I also believe that most of the GI loans have been financed over a 20-year period and, should an emergency arise, that can be extended to 25 and perhaps, with legislation, for greater periods, which will bail those veterans out. I am thinking about the group that have had to buy not only new homes under Government financing, but under private financing. Some are homes that they cannot afford. They are beyond their means. With the slightest recession or economy that would cause them to lose a couple of days' work a week, it might make it impossible for them to keep those homes.

Senator LONG. In this type of situation, if private capital is not available and does not prove to be available for cooperative housing, would you be in favor of direct loans to cooperatives?

Mr. DINGER. You mean beyond the provisions which are provided in the amendment?

Senator LONG. That is right.

Mr. DINGER. My understanding of the amendment is that it will have the same desirable effect as a direct Government loan except that private capital will have an opportunity to invest.

Senator LONG. If private capital does not come forward and make the loans it would be impossible. I will ask no further questions because of a roll call at this time.

Senator SPARKMAN. Thank you very much, Mr. Dinger.

Will Mr. Williamson come forward, please? For the benefit of the record, will you please identify yourself and proceed with your statement in your own way?

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

Mr. WILLIAMSON. I appreciate this opportunity to express the views of the Veterans of Foreign Wars of the United States with respect to this important amendment to the bill S. 2246.

I would first like to state that the national conventions of our organization from 1945 through 1949 have adopted broad comprehensive housing programs, and each year we have presented such programs for the consideration of the committee.

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 S. 2246 to bring the GI home-loan program closer to the original intent of the Congress.

A third plank of our national housing program relates to housing cooperatives. It asks for legislation extending to the field of housing the cooperative principle, a principle that is fundamentally American.

At the 1949 convention of the VFW the delegates present unanimously approved resolution No. 304, attached herewith, which urges enactment of legislation providing for direct Government loans to nonprofit cooperatives.

Although the pending amendment is a substitute for title III of S. 2246, which provides for direct Government loans, we are realistic enough to accept the amendment as having distinct advantage over the original bill. The direct-loan concept 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 change in this amendment which provides a definite role for private capital in the financing of cooperative projects.

Another improvement in the amendment over the present title is the provision which encourages home ownership among families of moderate income.

A third change in the amendment does not, in our considered opinion, constitute an improvement. Rather it creates, we fear, a decided impediment to the smooth functioning of a national coopera tive 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 Public 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.

RESOLUTION No. 365. 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 21⁄2 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 21-26, 1949.)

Senator SPARKMAN. Thank you, Mr. Williamson, for appearing before us today. We appreciate it very much.

We will now hear from Mr. Leo B. Wilson. Mr. Wilson, we appreciate your coming and are sorry to have kept you waiting so long. It is my understanding that you have had a good deal of experience in trying to get one of these cooperatives started. Is that right? Will you please identify yourself for the record?

STATEMENT OF LEO B. WILSON, BATTALION CHIEF, WASHINGTON FIRE DEPARTMENT

Mr. WILSON. My name is Leo B. Wilson. I am a battalion chief in the Washington Fire Department. I am also president of the veterans' housing cooperative. I have no prepared statement because I did not know of this until this morning at 8:30. I think we have something that certainly should be of interest to the committee.

In 1946 we formed a nonprofit cooperative venture. Each of our members put in a minimum of $500. Prior to the purchase of land we got what we thought was a commitment from a responsible lending agency in Washington for the development and building of individual homes. Our plans called for six single-family houses on a 90-acre tract to be developed into 360 home sites. Our present membership is 81. That is as high as it ever has been, for the reason that when we started this organization with this commitment we determined to hold ourselves to a low membership until we could see that we had the entire 360 building sites committed for.

Then we ran across what we felt was organized resistance against the cooperatives' successfully carrying out their program. It was evi

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denced to us at a meeting that we had at the Department of Commerce auditorium. It was a veterans' meeting. When we got to the auditorium we thought we had nothing controversial to offer. At this meeting a Mr. Luchs, of Shannon & Luchs, who is representative also of the local real-estate board, acting more or less as a questioner from the floor, turned the meeting into more or less of a real-estate board meeting, whether we should go into the hiring of contractors and the taking in of real-estate people, with the consequence that our house price would be up to the same as if you went on the open market.

In our organization we had our own engineer, a veteran. We had bricklayers, plumbers, electricians, carpenters, painters, and everything we needed for our program. The only man we did not have as a member of our program was a superintendent. He was a man with 35 years' building experience. We felt we had a set-up that could not lose. All of these members have contacts in the various trades and could assure no shortage of labor. Cost estimates were established at prevailing wages. There was no cut in wages.

However, we did anticipate utilizing those members who could work in their off-hours in building up a substantial amount to use as down payments on their houses in the man-hours they could devote.

The first period of operation continued for about 6 months. Then this building agency withdrew their commitment for no reason that we were able to establish. They had accepted from us applications for veterans' guaranteed loans and had accepted our $15 for appraisals through this lending agency and had appraised the house at a price that we knew was more than it was actually going to cost us. As a result of what we feel was concerted efforts of the real-estate business in Washington, this was withdrawn.

We found that the opposition came from one member of the board of directors of this lending institution and he was also on the Washington Real Estate Board.

Then there was a period where we went from one lending agency to the other, meeting with the same results. They said, "Oh, yes; we will make these loans. Just leave your plans here and come back in a couple of days and we will discuss the details." When we came back we never got any answer except that they were not interested. We felt that possibly we had raised so much resentment with the conventional type of home that we had so we were ready to gamble with prefab homes. So the Harman Homes in Wilmington, Del., started to deal with us.

Senator LONG. What town were you in at the time?

Mr. WILSON. In Washington, D. C. At Harman Homes we ran across a period where everything went fine. The small-loan corporation was going to give us operating capital and under FHA financing the loans would take place. However, the real-estate people entered into that again, a Mr. Buchanan, a real-estate man in town, acting as mediator. We were traveling back and forth to the factory. Mr. Buchanan, on our piece of land near Beltsville, erected four Harman Homes. The selling price of those was from $12,000 to $14,000. He did find purchasers. The selling price of that home when we were dealing with Harman direct was $4,700 delivered to us as a package. It was estimated that 700 man-hours were required to assemble it. We feel that the difficulty we have encountered is directly attributable to the real-estate people.

The banks and lending agencies that we did contact always had a representative or two of the real-estate board on their board of directors. We have been unable to finance our project to date. However, we went back to our original plan of conventional homes with a commitment from the FHA as to the value of the house.

In other words, they would give us a $12,000 appraisal on a house where we had cost estimates of $9,200 for the land and the house. complete. Under section 207, which we thought would surely get us a means of financing this, we ran across a requirement from FÍA of $350,000 cash in the bank outside of our land. In order to attempt to get this, we had conferences with the VA, RFC, FHA in the hope of utilizing our business-loan guaranty, foregoing any possibility of getting assistance on that in the final purchase of our homes. We had 220 VA business-loan guaranty certificates which we offered as collateral for that loan, amounting to 50 percent of the value of the loan, plus a mortgage on the land, 90 acres, which we have. We thought possibly that would be the answer to the question under 207.

We were able to get nothing but a lot of conferences. At first they would start off very agreeably, then dwindle away to nothing.

I heard some very interesting testimony this morning from the banks and also from the representatives of the types of homes that are coming out. Our group has outgrown these two veterans' houses. The banks that we have contacted here are not interested in promoting a cooperative effort.

That is all I have to say, gentlemen. I will be glad to answer any questions.

Senator SPARKMAN. What has happened to your cooperative? Is it still in existence?

Mr. WILSON. Yes, sir.

Senator SPARKMAN. How many members are there?

Mr. WILSON. Eighty-one.

Senator SPARKMAN. Are they all veterans?

Mr. WILSON. We have three nonveterans. One is our attorney. One is a brother of a former veteran who was a SPAR who moved out of the area. One of our members was in need of cash and found a purchaser for his share and we agreed to let a nonveteran purchase. Senator SPARKMAN. You have been working how long?

Mr. WILSON. Three years.

Senator SPARKMAN. And you are right where you started?
Mr. WILSON. Except that we have the land.

Senator SPARKMAN. You own the land?

Mr. WILSON. We own 90 acres of land. We paid $20,000 in cash and we have a mortgage on the balance. We have spent altogether, on developing this plan, $67,000 and we are no nearer to getting a home than we were when we started.

Senator SPARKMAN. You feel pretty definitely, then, that we do need some kind of legislation?

Mr. WILSON. Absolutely.

Senator LONG. It has not been your experience that private capital will not take care of lending the money to you?

Mr. WILSON. They may if you have a definite club of a direct loan. We want private capital to make this loan. We are not after direct Government assistance if we can get it through the conventional channels.