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This has been done in Vermont and Connecticut, as examples, where interest rates under 2 percent were obtained. The decision to authorize and issue revenue bonds is again that of the taxpayers of the State, if such method be their pleasure. There appears no true necessity for Federal financing in these cases. Indeed, is not a Federal program of loans which includes State colleges and universities an intrusion into purely State affairs?

The situation is somewhat different in the case of private colleges, especially the smaller ones. Of the more than 1,850 colleges and universities listed by the United States Office of Education, over 1,000 are in the 500-or-less-students class. Regardless of whether or not they are all basically sound financially, their small size makes borrowing more difficult. Nevertheless, if loans are to be repaid, the essential security must be the same whether the loan is through Federal or private sources. Certainly in the aggregate they possess great financial strength, and it is evident that reasonable plant expansion is entirely possible at reasonable cost if mutual security measures are adopted whether or not they are aided by a Federal insurance program rather than by direct loans.

It is my belief that enactment into law of S. 1744 is not in the public interest because:

(1) The necessity for expanding the college-housing program is not established in view of large uncommitted balances available under the present program.

(2) The necessity for liberalizing the college housing program is not established in view of the absence of proof through comprehensive studies or otherwise demonstrating such liberalization to be the only or even the most satisfactory solution.

(3) The expansion and liberalization of the present program as contemplated by S. 1744 would have the practical effect of ruling out private lending except for a few large institutions issuing taxexempt bonds, and would therefore establish a precedent logically resulting in the Federal Treasury eventually assuming a burden of financing estimated as well into the billions of dollars.

(4) A program of direct Federal loans is not the best method of granting financial aid by Government to our colleges and universities.

In conclusion, I believe that “the Lord helps them who help themselves.” The sound way for financing the building programs of our colleges and universities is through the use of the ample private funds available, and the colleges and universities themselves can do much to make these funds available at lower rates. A program of direct Federal loans represents the easy way not the best way, and certainly should be a last resort. If Federal funds are to be used at all, I believe either grants-in-aid or an insured loans program would represent the best use of the taxpayers' funds and would not compound the cost by causing large Federaì holding of bonds or loans the income from which would otherwise be taxed by the Government.

Thank you very much for the opportunity of presenting this statement for your consideration.

Senator MONRONEY. Thank you very much, Mr. Emerson, for appearing and giving us the benefit of your advice.

. I do not believe there are any questions to be asked.

The committee has a statement from Mr. H. R. Northup, executive vice president of the National Retail Lumber Dealers Association,

STATEMENT OF H. R. NORTHUP, EXECUTIVE VICE PRESIDENT,

NATIONAL RETAIL LUMBER DEALERS ASSOCIATION I appreciate this opportunity to present to the committee the view of the members of the National Retail Lumber Dealers Association on Senate bill S. 1800 pending before your committee.

This bill would provide for the continuation of certain programs of the Housing and Home Finance Agency. Mortgage insurance authorization

S. 1800 would increase the authorization for FHA mortgage insurance by $4 billion. This additional authorization is necessary to assure continuation of the FHA programs and should be approved. Home repair and modernization

One very important provision of S. 1800 is section 2 which would extend the FHÀ title I home repair and modernization program for 5 years to July 1, 1960.

This program has, over the last 20 years, provided a means of financing home repair for over 18 million homeowners. In 1954, over 112 million borrowers used property improvement loans insured by FHA.

The title I program has had the effect of lowering and stabilizing financing charges on property improvement loans and has stimulated interest of lending institutions in this type of loan.

Many families have found it necessary to expand their living quarters because of an increase in the size of their families or for other

Others have used the program to prevent deterioration of their property.

The title I program is a necessary adjunct to the urban renewal program for neighborhood conservation and improvement provided for in the Housing Act of 1954.

Lumber and building material dealers have a vital interest in the title I program. The repair and modernization business is a major source of revenue to dealers which would not be available without adequate financing of major improvements.

We, therefore, urge the continuation of this program.

In your consideration of the continuation of the title I program, we suggest that thought be given to certain amendments which, in our opinion, would improve the program.

The President's Advisory Committee on Government Housing Policies and Programs recommended that "Title I of the National Housing Act should be amended to permit the insurance of class 1 (a) loans to finance the modernization and repair of existing structures up to a maximum amount of $3,000 and up to a maximum term of 5 years and 32 days."

The basis for this recommendation was that the present statutory limitation of $2,500 is not sufficient in terms of today's prices to finance home modernization operations while the present 3-year maximum

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term requires a debt service on larger loans that is beyond the ability of many families to carry.

Last year the Congress amended the law to make title I available to new house owners only after a 6-months occupancy. We believe that your committee might find it advisable to reexamine this

provision to determine (1) whether it accomplishes the purpose for which it was intended; and (2) whether it is unnecessarily discrimatory against new homeowners who, by reason of this restriction, are forced to finance home improvements through other more costly channels.

This program has been in effect for 20 years and has become an accepted method of financing home repairs, as much as the mortgage insurance and guaranty programs of FHA and VA are now accepted by most lenders. We believe that it would provide more stability to the program and to home modernization if the title I program were made permanent instead of a periodical renewal of the program by legislation.

We do not want to be misunderstood in making these recommendations. Of primary importance is the extension of the title I program. Our suggestions for amendments would, however, we believe, improve the program. Public housing

In the past, an authorization for public housing has been on the statute books and the issue of the number of units to be approved has arisen each year under appropriation bills for the Public Housing Administration.

Because the authorization existed, we are confident that many Senators and Representatives supported the appropriations for a limited number of public housing units only because they felt there was a moral obligation of the Government to provide such funds.

Your committee, however, has a much greater problem to consider in connection with S. 1800. It is no longer a question of a moral obligation to provide funds for an authorized program. You, as a legislative committee, must decide whether or not additional authorizations should be granted to continue this program. Without such authorizations the program ends.

A thorough study of the public-housing program will, we are confident, convince your committee that a continuation of the program not be justified. Such a study will reveal that public housing is not serving the purpose for which it was intended; that it is more costly than anticipated by Congress; and that it is "political housing."

Without reiterating the arguments against public housing made in the past, we want to emphasize that your committee has a much greater responsibility than Appropriations Committees have had in the past. You must decide whether socialistic housing is to remain part of our Government policy or whether the program is to be terminated as an unsuccessful experiment.

This association and its members urge your committee to permit the public housing program to terminate. Military housing

Senator Capehart's bill, S. 1501, would create a substitute for the present Wherry Act housing program for servicemen.

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We agree that adequate housing for military personnel is an important morale factor and is an added incentive to make the military service a career.

We question, however, the method of providing this housing as proposed in S. 1501.

To require FHA to insure the mortgages on homes declared to be necessary by a branch of the military service without giving FHA any discretion or authority to make an independent determination as to the impact of such housing on other housing in the community, make an inspection of the property, and provide other functions necessary to protect the Agency and the Government is, we believe, unsound.

It also strikes us as being unnecessary for one agency of the Government to insure mortgages which another branch of the Government will assume, following construction of the housing.

In any legislative program for military housing such housing should be limited to those installations which, insofar as it can be predetermined, are permanent installations.

Senator MONRONEY. There are no further witnesses today.
The committee will stand in recess until 10 o'clock Monday morning.

(Whereupon, at 12:10 p. m., the subcommittee recessed until 10 a. m., Monday, May 16, 1955.)

HOUSING ACT OF 1955

MONDAY, MAY 16, 1955

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

SUBCOMMITTEE ON HOUSING,

Washington, D.C. The subcommittee met, pursuant to recess, in room 301, Senate Office Building, at 10:05 a. m., Senator J. William Fulbright presiding.

Present: Senators Fulbright, Lehman, Douglas, and Capehart.
Senator FULBRIGHT. The committee will come to order.

We will open the hearings on the college housing bills, S. 1744 and S. 1766. I would like to insert in the record at the beginning a statement that I made on the introduction of this bill, and also following that I have letters from the president of Springfield College, Springfield, Mass., Donald C. Stone, and from the President of Loretto Heights College, Loretto, Colo., Sister Frances Marie; and a telegram from L. J. Elias, past president, Northwest Association of Junior Colleges.

(The material referred to follows:) College housing

STATEMENT BY SENATOR FULBRIGHT INTRODUCING COLLEGE HOUSING BILL

Mr. President, in 1950, upon the initiative of my friend, the Senator from Alabama, Mr. Sparkman, the Congress recognized the critical housing need of students and teachers in colleges and universities all over the country. To help meet this need, the Housing Act of 1950 inaugurated a program of long-term loans at low-interest rates to provide funds for the construction of dormitories and residences at rentals which college students and teachers could afford to pay. Because of the war in Korea, the program did not become generally effective until 1953. A complete summary of the program, as it has operated to date, was introduced into the Congressional Record on February 4, 1955, by our colleague from Virginia, Senator Byrd.

I have studied this summary and have studied data expressing the continuing critical housing situation facing our colleges and universities, and am convinced that the college housing program should be strengthened. Here are some of the factors which lead me to such a conclusion.

1. Increasing enrollment.-In the fall of 1954 enrollment in our higher educational institutions reached approximately 2.5 million-an alltime high. According to the Department of Health, Education, and Welfare, this enrollment will rise steadily. By 1960, enrollment will reach 3 million-an increase of about 20 percent over 1954. By 1965, it will reach almost 4 million-an increase of about 60 percent over 1954. This increase of prospective students is inevitable, and is attributable to our normal population growth accentuated by the high birth rate of the 1940's.

2. Present inadequacy of college housing.Not only is present housing inadequate to meet the need for future enrollment—it is inadequate for enrollment in 1955. Mr. Albert M. Cole, Administrator of the Housing and Home Finance Agency, reports that old barracks and other temporary structures pressed into use in the late forties are deteriorating beyond use. He says that, “Many of these must now be removed because they are fire hazards, uneconomical to maintain, and because the special permits under which they were erected have expired.”

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