distinctly declares that the people of the United States ordain and establish the Constitution "in order to form a more perfect Union, establish justice, insure domestic tranquillity, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity."

11. As you may have read in the press, I own the largest collection of records regarding the Constitution and its framers outside of the Library of Congress. While collecting them in the past 20 years I have had occasion to estimate their value from the standpoint of their meaning. I found that the eminence given to the welfare provision was clearly designed to imply that there should be aid given whenever the welfare of a substantial number of people was involved and the States asked for aid.

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12. I found evidence that the reason it was not stated in the Constitution that the Federal Government should extend aid to the States if a large number of the people should happen to be in need was that no such condition was anticipated by the framers of the Constitution. As stated at page 25 of the outline I sent you on September 17, Thomas Jefferson actually wrote: "From Savannah to Portsmouth you will seldom meet a beggar I never yet saw a native American begging in the streets or highways." 13. George Washington estimated that the United States would enjoy a state of prosperity with a population of 200,000,000. Thomas Jefferson estimated that the United States could produce enough to feed the population of the earth. Hence, neither saw any necessity of having a provision in the Constitution to specify that the Federal Government should use its machinery to collect the taxes or mobilize the credit needed to promote the welfare of the people of the United States by making available the funds needed by the States and subdivisions thereof to put their unemployed to work.

14. By mobilizing the national credit and making it available to the States, counties, and municipalities, to put the 10,000,000 of unemployed to work, as set forth at pages 18 to 22 of the outline I sent you on September 17, the United States Government will only be doing what it did in 1917-18, when it mobilized the credit of the United States and loaned close to $120 per capita of the population of England to Great Britain; close to $100 per capita of the population of France to France. Those nations have 62 years in which to repay the loans.

15. It goes without saying that the people of the United States are entitled to at least as much as the people of England and France, and that the States, counties, and municipalities of the United States should be entitled to loans on their promise to pay, which was the basis on which the foreign nations obtained the loans.

I have one of the original forms used for the loans to the foreign countries before me as I am writing. It is side by side of the form used by the Reconstruction Finance Corporation for loans to States and the subdivisions thereof. The contrast is amazing.

16. Under the Constitution of the United States only you can call Congress to extraordinary session to remove this gross discrimination against the people of the United States and the States and subdivisions and to mobilize the national credit and make it available to the States, counties, and municipalities, so they can put to work the 5,000,000 unemployed and create work for additional 5,000,000, as shown at pages 19 and 20 of the outline of plan sent to you September 17. Therefore, I have taken the liberty of writing to you, feeling that it is my duty to bring the foregoing facts to your attention. With assurances of my hearty cooperation, I am,

Sincerely yours,

HENRY WOODHOUSE, Chairman National Recovery Council. Senator BULKLEY. And I want to put in the record resolutions of the Small Home and Property Owners Defense League, of South Shore, Staten Island, N.Y. This is submitted by Senator Copeland. (The resolution is as follows:)

APRIL 14, 1933.

This mass meeting of the South Shore (Staten Island) Small Home and Property Owners, through Staten Island's Representatives (Congressman Anning S. Prall, Senators Wagner and Copeland) wishes to express its apprecia

tion of the President's efforts for home relief, as represented by today's message to Congress.

We most emphatically reiterate, however, that the exigencies of the present crisis call for the more complete program of relief laid down by the Small Home and Property Owners Defense League, which program follows:

(1) No foreclosures or tax sales on small homes or pieces of property owned by workers or small business men.

(2) A moratorium on taxes, interest fines, assessments on small homes or property for duration of financial crisis.

(3) A State law to be passed by State legislature for above two demands. (4) Small home owners to be admitted to home-relief bureaus and all other relief agencies.

(5) No deficiency judgments against any home already foreclosed.

(6) No evictions to take place on those homes already foreclosed for the duration of the financial crisis.

(7) A State law to be passed to reduce mortgages and taxes to 3 percent interest.

With special emphasis on item 1 of the foregoing program as being of the utmost urgency at the moment.

Senator BULKLEY. We will have to conclude now for today and resume at 10 o'clock Monday morning.

(Whereupon, at 12:25 p.m., the subcommittee adjourned.)

A BILL PROVIDING FOR A FEDERAL INSTITUTION NEEDED TO DEAL WITH THE URBAN

MORTGAGE PROBLEM

(Submitted by a committee of the National Association of Real Estate Boards)

SUMMARY OF PROPOSED FEDERAL MORTGAGE BANK SYSTEM

This bill creates a general mortgage-discount system to take care of mortgages other than those primarily agricultural.

It contemplates a permanent discount system for long-term financing comparable to the Federal Reserve System for short-term paper.

The bill purports to be an amendment to the Federal Home Loan Bank Act so as to take advantage of that organization, save additional expense, and preserve the advantages of any State legislation which has been secured. The bill is divided into six titles:

Title I, sections 1 to 5: Contains, besides definitions, etc., the relation of the new system to the Federal home-loan system which it will displace as to future operations. It provides for transfers of prior appropriations, etc.

Title II, sections 201 to 208: Sets forth the purposes and organization of the new Federal mortgage bank and transfers to it of Federal appropriations.

Title III, sections 301 to 315: Provides for subscription to new bank systems, eligibility to become subscribers to system, capital structure, and general scheme of management.

Title IV, sections 401 to 407: Sets forth character of mortgages eligible for discount or transfer with or without continuing liability and provides for a reserve in latter case. Provides for issuance of bonds and basis therefor.

Title V, sections 501 to 505: Sets forth an emergency plan to continue at discretion of the President of the United States, providing for extension of maturity date of mortgages, reduction of interest rate to borrower, reduction of principal amount when excessive, and for immediate relief up to 50 percent of mortgages discounted.

Title VI, sections 601 to 609: Sets forth penalties for false statements, provides for access to records, etc., power to liquidate, circulation privilege, right to repeal, etc.

A BILL To amend the Federal Home Loan Bank Act approved July 22, 1932, to provide for the refinancing of mortgage indebtedness not included within the scope of that act, to create an institution for such enlarged purpose to be known as the Federal mortgage bank system, to provide for the supervision thereof, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I. REORGANIZATION OF THE PRESENT STRUCTURE

SEC. 2. As used in this act

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(1) The term general board " means the Federal mortgage bank general

board.

(2) The term "board" means the board of directors of a Federal mortgage bank.

(3) The term "committee " means the body heretofore set up as the board of directors and herein reconstituted as a committee of the board of directors of the Federal mortgage bank hereinafter created.

(4) The term "State" includes the District of Columbia, Puerto Rico, the Virgin Islands of the United States, and the Territories of Alaska and Hawaii. (5) The term "member", except when used in reference to a member of a board, means any institution which has heretofore subscribed to the stock of a Federal home-loan bank.

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(6) The term subscriber " means any person, partnership, association, company, corporation, banking or other institution engaged in the business of making first-mortgage loans on improved property not primarily devoted to agricultural uses, having subscribed for the capital stock of a Federal mortgage bank. (7) The term mortgage loan" means a loan made by a subscriber or nonsubscriber borrower under the terms of this amendment or by a member or nonmember borrower upon the security of a home mortgage under the terms of the original Act.

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(8) The term "mortgage" means a first mortgage upon improved real estate, in fee simple, or leasehold under a renewable lease for not less than ninety-nine years, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this amendment to become subscribers or, under the original Act of 1932, to become members under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(9) The term "home mortgage" means a first mortgage upon real estate, in fee simple, or leasehold under a renewable lease for not less than ninety-nine years, upon which there is located a dwelling for not more than three families, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this Act to become members, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(10) The term "unpaid principal ", when used with reference to a loan secured by a mortgage means the principal thereof less the sum of (1) payments made on such principal, and (2) in cases where shares or stock are pledged as security for the loan, the payments made on such share or stock plus earnings or dividends apportioned or credited thereon. (11) An amortized or "installment" mortgage loan means a mortgage loan to be repaid or liquidated to the extent of at least 50 per centum of the amount thereof is not less than eighteen years by means of payments at regular intervals made directly in reduction of the debt or upon stock or shares pledged as collateral for the repayment of such loans.

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SEC. 3. (a) As soon as practicable, the Federal Home Loan Bank System shall be modified and reorganized so as to become a part of the system set up hereinafter, and shall continue as a separate entity only so far as may be necessary to take advantage of State legislation authorizing particiption in the institutions set up under the original Act for this amendment to carry out the terms of the capital subscription agreements, to administer the undertakings already entered into, and to carry on the business contemplated by the Act 172878-33- -8

hereby amended so far as may be required upon the basis of the capital already subscribed, but no more capital subscriptions shall be taken and any further acts or undertakings shall be in conformity with the general policy of the new institutions hereby created so far as shall be consistent with the obligations heretofore entered into under or by authority of the Act hereby amended.

(b) The Federal Home Loan Board, created by section 17 of the same Act hereby amended, is hereby abolished and the authority and powers heretofore invsted in it are hereby transferred to the Federal mortgage bank general board, hereinafter created.

(c) The boards of directors of each Federal home-loan bank heretofore created shall from and after the setting up of the organization contemplated by this act be known as Federal home-loan bank committee, the chairman and vice chairman of which shall represent such committees upon the boards of directors of the Federal mortgage bank for such district, as hereafter set forth.

(d) The personnel of the Federal home-loan banks shall from and after the creation of the Federal mortgage banks become and be the personnel of such institutions as hereafter created, and shall be subject to the respective boards of directors of such institutions.

(e) The banking headquarters, books, and equipment of the Federal homeloan banks shall become the banking headquarters and property of the Federal mortgage banks.

(f) The business of the Federal home-loan banks heretofore carried on under the direction of the president of such bank and its board of directors shall hereafter be carried on under the direction of the president of the Federal mortgage bank, subject to its board of directors, but acting upon the advice and consideration of the Federal home-loan bank committee of such board, which shall have general charge and direction of the business existing at the time that the new institution is set up, but shall be subject to the final authority of the board of directors of the Federal mortgage bank.

SEC. 5. The unexpended balances of such appropriations as have heretofore been made for the purposes of the Federal home-loan bank board, or to be administered by that board, shall be made available for the purposes of the Federal mortgage bank system as hereinafter created, the transfer to be effective at such time as shall be provided in an Executive order to be issued by the President, authority to issue which is hereby expressly conferred on him. Authority is hereby conferred upon the Reconstruction Finance Corporation to subscribe to the stock of the Federal mortgage banks in an amount not to exceed the difference between the amount authorized to be subscribed to the stock of the Federal home-loan banks in paragraph (f) of section 6 of the act hereby amended and the amount actually subscribed prior to the date of the passage of this amendment.

TITLE II. PURPOSES AND ORGANIZATION OF FEDERAL MORTGAGE BANK SYSTEM

SEC. 201. It is hereby declared to be the policy of the Congress to effect reasonable reductions in interest and carrying charges of mortgage indebtedness, and to prevent the recurrence of emergencies in connection with such mortgage indebtedness, by adequate provision for the facilitation of credit and by the stabilization of those conditions which affect long-term credit relations.

SEC. 202. The purposes of this act are hereby declared to be

(a) The creation of a Federal mortgage bank system and such other agencies as may be necessary to effectuate the policy of Congress as defined in the preceding section.

(b) The taking of steps appropriate to meet the demands of the present emergency as well as to satisfy recurring emergency needs and permanent needs in the field of credit facilities for improved property other than that devoted primarily to agricultural purposes.

SEC. 203. There is hereby created the Federal mortgage bank system which shall have its principal seat of business at Washington. The Federal mortgage bank system shall have the right of succession and such powers as may be necessary to give effect to the purposes of this act, including the power to charter Federal mortgage banks, to make contracts, and to purchase or lease and to hold or dispose of such real estate as may be necessary or convenient for the transaction of its business, the power to sue and be sued, to complain and. to defend in any court of competent jurisdiction, State or Fed

eral, and the power to select, employ, and fix the compensation of such officers, employees, legal counsel, and agents as may be necessary for the transaction of its business, including power to define their duties, to require bonds of them, and to dismiss them, and the power to prescribe, amend, and to repeal the by-laws, rules, and regulations of the Federal mortgage banks hereinafter created so as properly to carry out the purposes of this act.

SEC. 204. There shall be at the head of the Federal Mortgage Bank System a general board of directors, seven in number, of whom not more than four shall belong to any one political party. Each director shall be appointed by the President, by and with the advice and consent of the Senate, and shall hold office for a term of five years. The President of the United States shall designate one member of the general board of directors to serve for a term of one year, one to serve for a term of two years, two to serve for three years each, one for a term of four years, and two for five years each from the date of enactment hereof, and thereafter the term of each member shall be five years from the date of the expiration of the term for which his predecessor was appointed. Whenever a vacancy shall occur among the members the person appointed to fill such vacancy shall hold office for the unexpired portion of the term of the member whose place he is selected to fill. Each of the members of the board shall receive a salary at the rate of $10,000 per annum, provided that during the fiscal year 1933 and the fiscal year 1934, such reductions in such basic salary as shall be consonant with the provisions of the Executive order, issued by virtue of the provisions of Public Act No. 2 of the Seventythird Congress, approved March 20, 1933, and known as the "Economy Act", shall be made.

SEC. 205. The President of the United States shall designate one of the members as governor of the Federal Mortgage Bank System, who shall also act as chairman of the general board. He shall receive a salary of $12,000 per annum, likewise subject to the provisions of the Economy Act for the fiscal years 1933 and 1934. The governor shall be the chief executive officer of the system. The governor shall have general supervision over the administration of this act, and he is authorized, in accordance with the civil service laws, to appoint, and, in accordance with the Classification Act of 1923, as amended, to fix the compensation of such assistants, officers, and employees, and to make such expenditures (including expenditures for rent at the seat of government and elsewhere, and for printing, binding, law books, books of reference, and periodicals) as may be necessary to carry out the purposes of this act. In the absence or disability of the governor in his capacity as chairman of the general board, the duties of chairman shall be performed by some one of the other members to be designated as acting chairman by the governor in such order as he may determine. The President may also designate one of the members of the general board to act as general counsel for the Federal Mortgage Bank System, without additional compensation, whose salary shall be $12,000 per annum, subject to the provisions of the Economy Act of 1933. The Federal Mortgage Bank System, the members of its general board, its officers and its employees shall be entitled to the free use of the United States mails for its official business, in the same manner as the executive departments of the Government.

SEC. 206. There is hereby authorized to be appropriated such unexpended balances as may be transferred by virtue of section 5 of this act as amended, together with such additional amount as will bring the total appropriation authorized for the Federal Mortgage Bank System, administrative expenditures, for salaries, travel and subsistence expenses, rents, printing, binding, furniture and equipment, law books, books of reference, periodicals, newspapers, maps, contract stenographic reporting services, telephone and telegraph services, and all other necessary expenses of the general board of directors and the administrative personnel of the system for the fiscal year 1933, to $150,000; and for the fiscal year 1934 the appropriation for the same purposes is authorized to be appropriated in the sum of $300,000, but the governor shall furnish to the Director of the Budget a revised estimate of expenditure for the fiscal year 1934 not later than 90 days after the date of the enactment hereof.

SEC. 207. The governor shall cause to be made from time to time examinations of the laws of the several States of the United States and the regulations and procedure thereunder governing conditions under which individuals, companies, corporations, associations or institutions may become subscribers or nonsubscriber borrowers under this act, are permitted to do business or to be formed for the purpose of doing business, or relating to the conveying or