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Mr. DANIEL. While we are not concerned with those provisions not affecting veterans, there are two sections which we must strongly object to in their present form. We respectfully request that they be given serious consideration by the committee.

The first provision the American Legion objects to is contained in Title II, Home Mortgage Interest Rates and Terms, section 201, pages 40, 41 of the bill.

Under the provisions of section 201 the President is authorized, without regard to any other provision of law except provisions hereafter enacted expressly in limitation hereof, to establish from time to


(1) the maximum rates of interest (exclusive of premium charges for insurance and service charges, if any) for various classifications of residential mortgage loans insured or guaranteed or made under the National Housing Act, as amended, or the Servicemen's Readjustment Act of 1944, ás amended: Provided, That no such maximum rate of interest shall, at the time established by the President, exceed 21⁄2 per centum plus the annual rate of interest determined by the Secretary of the Treasury, at the request of the President, by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the calendar month next preceding the establishment of such maximum rate of interest, on all outstanding marketable obligations of the United States having a maturity date of 15 years or more from the first day of such next preceding month, and by adjusting such estimated average annual yield to the nearest one-eighth of 1 per centum.

This plan, if adopted, would change the method in which interest rates may be set on mortgages under the GI loan provisions of Public Law 346 of the 78th Congress, approved June 22, 1944, and Public Law 101 of the 83d Congress, approved July 1, 1953. The latter law amended the Servicemen's Readjustment Act of 1944 so that the Administrator of Veterans' Affairs, with the approval of the Secretary of the Treasury, may prescribe by regulation from time to time such rate of interest, not in excess of 412 percent per annum, as he may find the loan market demands.

When the original Servicemen's Readjustment Act, Public Law 346, 78th Congress, was written, great consideration was given by the proponents of same, in cooperation with representatives of the lending industry, the Treasury Department, and the Veterans' Administration, in the setting up by Congress of the present method of determining interest rates; and a ceiling was placed on the interest rate to be charged on VA loan guaranty mortgages so that there might not be a prohibitive interest rate charged to those who had served in the Armed Forces and to whom this legislation was intended to give assistance in reestablishing themselves on a sound economic basis.

The American Legion, after giving this problem serious consideration over a long period of time, felt that it was wise to insert this provision in the Servicemen's Readjustment Act in order to protect the veteran home buyer from excessive interest payments. To us it is crystal clear that a move is now underway to remove the protecting

ceiling also placed on said interest rates by Congress when Public Law 101 was enacted on July 1, 1953, at which time the rate was permitted to be increased to 42 percent. The American Legion opposed said increase in the interest rate.

The American Legion objects to the foregoing provisions as set forth in said section 201 (1) for the following reasons:

1. The American Legion recommends any change made should be by the Veterans' Administration and by no other agencies or individual.

2. The American Legion believes in the maintenance of a separate housing program for veterans under the sole jurisdiction of the Veterans' Administration. The American Legion wants the present policy continued.

3. We believe that the power to regulate interest rates should remain in Congress.

4. We submit that the phrase "the President is hereby authorized, without regard to any other provision of law"-section 201, page 40, lines 17-18-is too broad, and that only specific authority should be granted not only to the President but to any other Government official who may be concerned.

5. The American Legion is unalterably opposed to section 201 because it would unquestionably result in increase in the interest rate as fixed by Public Law 101 of the 83d Congress. In addition, the proposal carries with it a distinct possibility of discrimination between veteran home purchasers.

We would like to be permitted to invite the committee's attention to an article entitled "Easy Money Comes Back," which appeared at pages 100-102 of the February 26, 1954, issue of the U. S. News & World Report, a reputable and reliable business magazine. A true copy of said article is annexed and made a part of this statement. The article includes a chart showing interest rates average for longterm United States Government bonds for the years 1951, 1952, 1953, and 1954.

(See p. 684 for article mentioned above.)

Reference to the chart shows the percent yield for these years to be as follows:

(The chart referred to is copyrighted by U. S. News and World Report, and is not reproduced in the hearing.)

Year 1951, from 2144 percent to nearly 234 percent; year 1952, from 212 percent to 234 percent; year 1953, from 234 percent to 3 percent; year 1954, from 22 percent to 234 percent.

As has been stated above, the interest rates on VA loans to veterans was increased to 412 percent pursuant to Public Law 101, 83d Congress, approved July 1, 1953. Using this 42-percent rate as a base and adding the 22 percent increase above "average for Government long-term United States bond yield," as herein proposed, for the years 1951 to 1954, both inclusive, reference to the chart from the U. S. News & World Report readily shows that, had the maximum rate proposed under section 201 been in effect during the years in question, veterans would have had to pay the following rates of interest on their mortgages:

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We respectfully submit there is absolutely no reason to justify the increase proposed over the present rate of 412 percent.

We see no reason why veterans should be required to pay increased interest rates, which are bound to follow if the provisions of section 201 are enacted.

It is our firm belief after earnest consideration of this problem that the 412 percent rate, when viewed in connection with the additional benefits which accrue to the investor, is adequate on the present market and will be more than adequate in the near future.

Last year the money interests told us that if the rate were increased to 42 percent they would be satisfied; now they want it to go to 512 percent or higher; we have a strong feeling that in the not too far distant future they will be asking Congress to make the rate 6 percent. In fact, it might well go to 6 percent under the provisions of section 201 (1) of the bill.

The American Legion submits that the provisions of H. R. 7839, as now contained in section 201, page 40, lines 9 to 25, and in lines 1 to 14, both inclusive, on page 41, should be stricken in their entirety.

The other section in this bill which the American Legion objects to is to be found in title VIII, Miscellaneous Provisions, section 801, at page 104, et cetera.

Title VIII deals with the preferences now granted veterans in the purchase of surplus housing and opens wide the door for the elimination of veterans' preference in these purchases.

While we have confidence in the present Administrator of the Housing and Home Finance Agency, we must say that there are still in that agency those who feel that preference in the sale of surplus homes to veterans should be eliminated, and they have often so expressed themselves. They have absolutely no regard for the interests of veterans. Therefore, the American Legion feels that while the present Administrator may be sincere in his objectives, if he were given the power of determination in selecting surplus housing for sale under the provisions of section 801 of the bill, we are fearful that those who would actually be responsible for and really determine policy for the Administrator, will use this authority to gain their personal desires to take away from veterans their opportunities to purchase surplus housing.

It has been the privilege of our representatives to work closely with the Housing and Home Finance Agency for some time, and we have watched with a great deal of interest the sale of surplus buildings, In all our experience we have found nothing to show that veterans' preference hindered, at any time, the sale of these properties, or worked a hardship on the agency itself in its determination to dispose

of surplus buildings. In fact, in most instances we have found that there have been more buyers than buildings available for sale, and again the American Legion urges this committee to study the pr visions of title VIII in order to retain veterans' preference now legally given to the qualified individual who seeks an opportunity to secure low-priced housing and establish himself in society.

We call the committee's attention particularly to the provisions of the new subsection (g)-page 104, line 20, and so forth-which states, in part:

(g) The Administrator may dispose of any permanent war housing without regard to the preferences in subsections (b) and (c) of this section *

Stripped of its legal meaning, this is nothing more or less than a bold attempt to knock out the preferences now granted veterans who may qualify to purchase housing of the type in question.

The American Legion strongly opposes the section 801 in its entirety, and asks that it be stricken from the bill.

There is absolutely no reason under the sun why the preferences granted veterans to obtain said housing as contained in the acts approved October 14, 1940, and subsequent thereto, should be taken away from the veterans at this time.

It is our recommendation that section 801 be omitted in its entirety and that the law remain unchanged. We submit that this is just one more indication of the campaign being waged to whittle away veterans' preference. In the 1st session of the 83d Congress attempts were inade in both House and the Senate to wipe out, in their entirety, veterans' preference laws governing employment in Federal civil service by attaching riders to the appropriation bills for the Departments of Justice, State, and Commerce. Thanks to our friends on both sides of the aisle, in the House and in the Senate, these nefarious schemes were defeated.

The American Legion is alarmed and disturbd to think there are those who would seek to destroy or materially weaken the veterans' preference laws now on the statute books, and we intend to oppose any and all such attempts with all the power at our command, in keeping with resolutions duly adopted at our national conventions, and by our national executive committee.

Under the Housing Act of 1949, Public Law 171, 81st Congress, section 301, 15 (i) (b) (ii), veterans and families of veterans and servicemen did not have to comply with the substandard housing factor for admission to public-housing projects. This provision expired, however, on March 1, 1954. We note no similar provision is contained in H. R. 7839.

The Husing Act of 1949 set as a requirement for occupancy that applications must show that they were living in substandard housing. The act, however, as indicated above, waived this requirement for


This was a most beneficial and proper equalization to veterans and their families, but it was of little practical value because little housing has been actually constructed under the 1949 act until recently, and this year will probably see the greatest amount completed.

Once before this waiver was continued when it expired, and there isn't any question in our minds that this preference should again be granted to qualified veterans.

We would like to be permitted to invite the committee's attention to the fact that under date of March 1, 1954, the Senate passed S. 2937, introduced by Senator Sparkman under date of February 11, 1954. Senator Sparkman's bill would have extended the period for 5 years or until March 1, 1959. However, the Senate-passed bill extends the law only to August 1, 1954.

We also call the committee's attention to H. R. 7743, a companion. to S. 2937, introduced on February 4, 1954, by Congressman John C. Watts, and to H. R. 8159, introduced by Congressman Carl Elliott on March 2, 1954, both of which are now pending before this committee. We submit that no issue of whether a person is in favor or not of public housing is involved. This only applies to public housing that has already been authorized. Adoption of the bills H. R. 7743 or H. R. 8159 would not add one additional public-housing unit, but their defeat will take away the veterans' preference.

As thousands of veterans who are not too well off financially will be affected by this legislation, we urge the committee to approve either H. R. 7743 or H. R. 8159, as a separate piece of legislation, or incorporate their provisions in H. R. 7839.

Wherefore, in closing, the American Legion respectfully requests that the committee amend the bill H. R. 7839 by

1. Striking there from the provisions of section 201, now contained in lines 9 to 25, both inclusive, on page 40, and in lines 1 to 14, both inclusive, on page 41;

2. By striking therefrom the entire section 801, pages 104 and 105; and

3. By inserting the provisions of H. R. 7743 or H. R. 8159 at a proper place in H. R. 7839.

The following information was obtained from a member of the House of Representatives, who gave the American Legion permission to use the data, but requested that his name be omitted, and is copied from a letter dated March 3, 1954, written by Mr. Ralph H. Stone, Deputy Administrator for Veterans' Benefits, to answer the Congressman's inquiry regarding interest charges, as follows:

2. Congressman

letter requests that, based on the formula in section 201 (1), the maximum rate of interest be established for certain dates. Based upon information from the Treasury Department, which reflects yields to maturity of all marketable Government obligations maturing in 12 years or more, the maxima for the dates requested are as follows:

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The Treasury Department has not made the calculations necessary to fit the precise language of the proposed section 201 (1); however, the yield (or interest rate) on the same type of securities maturing in 15 years or more would be only slightly higher (perhaps to four hundredths), and not sufficiently different to change the maxima cited above.

3. The Congressman's letter further requests that an estimate be prepared of the amount of increased interest which would have been involved on the veteran loans guaranteed by the Veterans' Administration during calendar 1953 if maximum interest rates had been in effect as allowed by section 201 (1) instead of the interest rate established by existing law. The Congressman requests that this be estimated (1) for the total permissible life of each loan and (2) during the first year of the loan's existence.

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