Then, they do have high interest rates, I believe, my good friend. Senator CLARK. I wonder what country you are talking about. Mr. WITTAUSCH. This is in Austria. Senator BUSH. Where? Mr. WITTAUSCH. Austria. Senator BUSH. How about Latin America? Mr. WITTAUSCH. I am sure that short-term funds in Latin America earn even more than that. What we are trying to do is encourage local funds to be invested in something that, by necessity, must become a long-term loan. And the only way we can do that is to encourage local funds to come into an institution with some degree of assurance of a return. Senator BUSH. The point I am trying to develop is this: You collect deposits here. You collect savings here. You are going down into Latin America as a saver comes to you here, so to speak. You are going to become one of their depositors or shareholders under this bill. Is that not right? Mr. WITTAUSCH. We are not exactly looking at this from a point of view of being investors or participants as the bill specifies, looking to a return on our investment of more than we would get here. The purpose of this bill, as I see it, is to give local institutions the kind of opportunity to do what Senator Javits mentioned of bringing a little spark of, whether you call it romance or appeal, which shows that we have the confidence in the people locally in these communities to invest their money in an institution which will provide them with homes on the same bases as citizens of the United States have an opportunity to get. Senator BUSH. In other words, this is not a business venture, but a pro bono publico venture. Senator CLARK. With profit. Mr. WITTAUSCH. At least, with no loss. Senator BUSH. We hope. Mr. WITTAUSCH. Because the thing is, as I mentioned, insured, guaranteed, under the foreign investment funds. The important thing that I learned from my experience abroad is that the evidence on the part of the United States to show a willingness to participate in the local problems, to work with the local people and to have confidence in their efforts, has a tremendous snowballing and multiplying effect. Senator BUSH. I certainly share the objective. That is a very laudatory objective, and we ought to accomplish it in many different ways. What I am trying to figure out is whether this bill is an appropriate vehicle of that kind of a pro bono publico effort. It just does not seem to me to be in keeping with the character of the Federal savings and loan associations or other savings institutions here. Mr. WITTAUSCH. I think the other institutions now make investments abroad. The savings and loan industry has not been permitted to make investments abroad for statutory reasons. This amendment permits this kind of investment. We think of it, as you say, for a pro bono publico effort without a loss to the local depositors and, as a result, create the kind of person-to-person or people-to-people good will that we think has a tremendous political wallop in the communities that would participate in this. Senator BUSH. I could not agree with you more about the desirability of that kind of relationship. Do you think that the bank that you represent would be likely to go down there and deposit the limit under this bill? Mr. WITTAUSCH. I am quite sure that Mr. Bodfish would be among the first to lend both his knowledge and what funds our directors would approve for this purpose and what technical assistance he can, as he has done many times to get these things started. This was our whole effort in the countries. And where it was started, the savings that you see from people seeing, sometimes, for the first time a chance to really participate in something that is their own instead of being channeled down through a Government organization has a selfgenerating and uplifting effect that I think we would be remiss in not supporting. Senator BUSH. Thank you, Mr. Chairman. Senator CLARK. Thank you, Mr. Wittausch. (The following was received for the record :) HARTFORD FEDERAL SAVINGS, Senator PRESCOTT BUSH, Washington, D.C. DEAR SENATOR: Thank you for the copy of S. 3282, the contents of which we were commenting on when Frances and I last met with you and Dave Clarke. I have studied the bill and am of the following opinion: I do not believe that our institutions should be authorized to make direct investments in associations outside of the United States without more control and direction. I am hopeful, however, that in keeping with the President's request private enterprise in the form of American individuals and corporations will be permitted to make direct investments in those countries in which we have a friendly interest. We should encourage such a program to aid in creating or maintaining stable Governments and to increase standards of living. I was impressed during my visit to Guatemala on their need for advice and technical assistance. I assume other nations are similarly in need. I feel sure that some countries need seed capital, or temporary loans, to effectively create in their countries home financing systems which can be self-sustaining. I am sure you will agree with me that a nation of homeowners has a better opportunity of maintaining a stable government and economy than a nation whose families do not have this sense of security, which is only created by having a shelter which can be called home in which they can rear their families. We feel certain that family ownership through private financing is the best way of building this base for democracy and security. With these facts in mind, I would like to see our businessmen, individuals, and American corporations make sound investments in foreign nations which our Government feels should be assisted, thereby creating a family of friendly nations. A major assistance in this program, I am certain, could be accomplished through expanding the savings and loan system throughout the world. We have demonstrated in many nations that it is a constructive movement having successfully solved housing problems throughout the British empire, West Germany, Switzerland, South Africa, Rhodesia, and to some extent in Turkey. As the size of home financing institutions grow, the more democratic these nations become. S. 3282 is directed to this end, but I would suggest that some restrictions and controls be inserted so that the effectiveness of the objectives will be more assured. I feel it would be better if associations were permitted to invest in a fund which would be made available and distributed to home financing institutions in foreign nations in need of seed capital, or loans, to develop homeownership for the inhabitants of those countries. I believe, in addition, that such nations should be specifically enumerated by the State Department and the fund itself managed and supervised by the Federal Home Loan Bank Board or a subordinate agency. I have heard criticism of this bill, because it is assumed that some associations would make such advances or investments because of the high rates of return on these investments. I believe there should be an equitable return on any such investments to justify the disbursement of public funds though this is not the primary objective of the enterprise. Under these conditions I believe there would be a better determination of the soundness and security of the investment to be made and, further, that the funds would be distributed to the areas in greatest needs, being beneficial both to the recipient nation as well as to the objectives of our own Government. I believe most sincerely in the objectives of this bill, as they are in keeping with the temper of our Congress and the administration. I most sincerely hope that the subcommittee on housing will recommend the approval of S. 3282 modified in such a way to protect the interest of all concerned but still to obtain the objectives which we are all trying to accomplish. I respectfully request that this letter be submitted to the Subcommittee on Housing of the Banking Currency Committee as my statement to be included in the hearing on this bill. Thank you for this consideration. JAMES E. BENT, President. Then, the committee will stand in recess until 10 o'clock tomorrow morning. (Whereupon, at 12:28 p.m., the hearing recessed, to reconvene at 10 a.m., Thursday, May 12, 1960.) HOUSING LEGISLATION OF 1960 THURSDAY, MAY 12, 1960 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON HOUSING, Washington, D.C. The subcommittee met, pursuant to recess, in room 5302, New Senate Office Building, at 10:05 a.m., Senator John Sparkman (chairman of the subcommittee) presiding. Present: Senators Sparkman and Clark. Senator SPARKMAN. Let the subcommittee come to order, please. Other members plan to be here. However, we do have a problem. The Senate has just gone into session, and it may be that we shall be having some rollcalls this morning. So I think we had better get started and move along just as fast as we can in order that we may complete today's list of witnesses. Our first witness is Mr. Charles L. Farris, president of the National Association of Housing & Redevelopment Officials. Mr. Farris, will you come around, and for the benefit of the record identify your associates. STATEMENT OF CHARLES L. FARRIS, PRESIDENT; ACCOMPANIED BY JOHN D. LANGE, EXECUTIVE DIRECTOR, AND ROGER SCHMIDT, ASSISTANT DIRECTOR, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS Mr. FARRIS. Mr. Chairman, in addition to being president of NAHRO, I am also the executive director of the St. Louis Housing and Land Clearance Authorities, and I am accompanied by Mr. John D. Lange, who is the executive director of NAHRO, and by Mr. Roger Schmidt, who is the assistant director. If it would suit your convenience in terms of time pressures with which you are faced, we have a statement which we will present to you, which I will digest, if that would be satisfactory. Senator SPARKMAN. That is very good. The statement will be printed in full at the end of your presentation. You may proceed to summarize it. Mr. FARRIS. Unfortunately, the statement is one that is not very easy to digest, but we will try to eliminate detail. We will attempt to keep it as short as possible. Our membership last October adopted a program resolution to guide our activities during the 1960 year, and we expressed the view that American cities have only barely begun the renewal job. We say that the job can never be achieved if we fail now to evaluate re |