difficulty in getting credit. That provision in the act will be of appreciable assistance in the second of those cases. I feel that on the net balance, the thing is constructive and clean, and would represent one of the best of a number of patchwork approaches toward bringing this country out of the depression. The thing is good, and will do a moderate amount of good. Every little bit of good is worth while, but it is just simply taking one small crack at a big problem that will never get very far until we break this vicious circle that keeps us on a consumers' goods economy and means that substantially the country as a whole has next to no long-term confidence. We hope you will put it in. We see no disadvantages. We see some good. I have tried to be honest in my statement.

Senator TOWNSEND (presiding). Thank you, Mr. Hettinger.

In the absence of the chairman and other members of the committee, I am wondering if we should go ahead this morning, or would you prefer to take up your side of the story tomorrow, Mr. Fahey?

Mr. FAHEY. I should think, Senator, it would be better to take it up tomorrow, especially since there is very little time before you would have to adjourn anyway. It may be that there are some gentlemen here who wish to be heard.

Senator TOWNSEND. Are there any other gentlemen here who desire to be heard this morning?

STATEMENT OF R. GRAHAM SMITH, REPRESENTING CONNECTICUT GENERAL LIFE INSURANCE CO., OF HARTFORD, CONN.

Mr. SMITH. Mr. Chairman and gentlemen, there is only one section of this bill on which I wish to comment, and that has to do with the reopening of the Corporation to new applications for a period of 60 days. We have viewed with some concern the growing participation of a number of Government agencies in the mortgage field. In a general way, there are some 10 or 11 of them, and they have amassed a control or an ownership of perhaps 8 or 9 billion dollars, perhaps 25 percent of all the mortgages in the United States. There is no attempt on my part at accuracy there, because the figures vary. The various agencies of the Government have not been coordinated. There has been no attempt made to sum that up as a mortgage problem, as a total credit control on the part of the Government. Each of these agencies has arisen as a result of some particular social need. We have supported the Home Owners' Loan Corporation, and feel that as a relief measure it has done a very good job. As long as it stays in the field of relief we will continue to support it; but we fear that if it continues to expand and enlarge it will go beyond relief into the field of a permanent mortgage-lending agency, and will continue to absorb a larger portion, along with the other governmental agencies, of the total mortgage debt of the United States.

We have reasoned this way. The reason that Congress is enlarging the present issue of the Home Owners' Loan Corporation is that applications were received for so long a time that there was built up a vast body of unsatisfied applications. The Home Owners' Loan Corporation has taken those unsatisfied applications and has sifted them down, and apparently believes that there is approximately one

and a quarter billion of worthy cases among the unsatisfied applica tions. That one and a quarter billion, in our opinion, should be taken care of; but if the applications are opened up again, what we fear is that there will be built up during that 60 days another body of unsatisfied applications, for which the next Congress will be asked to issue additional bonds, and you just keep on. Every time you reopen it for new applications you build up this body of unsatisfied applications, and you keep pyramiding the process. It is with that in mind that I wanted to register a recommendation that the use of this bond issue be confined to those applications already on hand at the Home Owners' Loan Corporation, which have been classed as pure relief cases. Thank you.

Senator TOWNSEND. Is there any other gentleman here who would like to be heard this morning? (No response.) If not, the committee will stand adjourned until 10:30 tomorrow morning, when I presume Mr. Fahey will take up the morning. The clerk tells me that Mr. Moffet is going on tomorrow. I did not know the order of procedure.

Mr. FERGUSON. I am quite sure Mr. Moffet will be glad to wait until Mr. Fahey is through.

Mr. FAHEY. I do not know, Mr. Chairman, whether there are any other gentlemen representing the United States Building and Loan League.

Mr. BODFISH. We have nothing further. If we do get into a discussion on some points, we would like to participate in it a little, but beyond that, we have told our story. The House bill is in satisfactory shape to us.

(Whereupon, at 11:30 a. m., the subcommittee adjourned until tomorrow, Friday, Mar. 22, 1935, at 10:30 a. m.)

HOME OWNERS' LOAN AND NATIONAL HOUSING ACT

FRIDAY, MARCH 22, 1935

UNITED STATES SENATE,

SUBCOMMITTEE OF COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The subcommittee met at 10:30 a. m., pursuant to adjournment from yesterday, in room 301 of the Senate Office Building, Senator Robert J. Bulkley presiding.

Present: Senators Bulkley (chairman of the subcommittee), Barkley, McAdoo, Townsend, and Steiwer.

Present also: Senators Gore, Bankhead, Adams, and Cutting.

Senator BULKLEY. Mr. Moffett is going to talk to us this morning, but if he will be good enough to indulge us for a few minutes, there are two other gentlemen who say they want to make very brief statements.

STATEMENT OF ROBERT H. WINN, REPRESENTING NATIONAL LIMESTONE INDUSTRY ASSOCIATED, WASHINGTON, D. C.

Mr. WINN. Mr. Chairman and gentlemen, I represent the National Limestone Industry Associated, a trade association of members of the limestone industry. In that capacity, and representing them, I desire to appear in behalf of the amendment which was inserted in the House bill which, in effect, relaxes the loans which may be made for the benefit of real-estate improvements and alterations up to $50,000. As I think the Senators are very well aware, all phases of the construction industry are in an exceedingly depressed state, the limestone industry now functioning and having been functioning for the past year, at about 12 percent of its normal operating capacity. The amendment as proposed, which permits the expenditure of a sufficient amount of money to take care of needed alterations in quality work, will grant some crumbs, we hope, to this particular section of the construction and building industry, with a consequent aid to the purposes of this Administration and of this act, in particular, namely, the relaxation of funds in excessively depressed and needy industries.

Thank you.

Senator BULKLEY. The point is, you want to keep that $50,000 limitation.

Mr. WINN. That is the point; we want to keep the $50,000 limitation in.

61

122165-35- -5

STATEMENT OF C. T. PENN, VICE PRESIDENT, INDIANA LIMESTONE CORPORATION

Mr. PENN. Mr. Chairman and gentlemen, I am the vice president of the Indiana Limestone Corporation. We are large factors in the stone business, having mills and plants principally located in Indiana, but in many other States, such as Texas, New York, Kansas, North Carolina, and Illinois. We quarry and fabricate stone.

As Mr. Winn has stated, our industry is prostrated. My particular company, by way of illustration, employed approximately 6,300 men in 1928, and we are down to 250 at the moment. We feel that this $50,000 limitation which you set up for guaranteed loans will open up a tremendous potential market. We have had surveys made ourselves by the various customers, small fabricators of stone, scattered in every State of the Union, and we find that there are literally tens of thousands of store fronts, apartment buildings, and commercial structures that could be put in first-class condition, improved, modernized, and renovated for expenditures varying from possibly $10,000 to $25,000 and on up to $50,000. We are looking for markets, and this, in our opinion, opens up a potential market for the use of our product in every State and city, which will be tremendously helpful in rehabilitating our industry.

STATEMENT OF JAMES A. MOFFETT, FEDERAL HOUSING
ADMINISTRATOR

Mr. MOFFETT. Mr. Chairman and gentlemen, I think the first comment is on page 15 of the House bill, 6021, in line 12, where the words "orphanages, colleges, schools appear. They should also be inserted in line 19, after "commercial buildings." Apparently that was left out in the printing.

Senator McADOO. You want to repeat the language?

Mr. MOFFETT. That was the intent; yes. On page 15, line 19, after the word "hospitals " the words "orphanages, colleges, schools" should appear.

In line 12, you will note, on page 15, it says "orphanages, colleges, schools." The language should be repeated in line 19, after the word "hospitals."

We are very anxious to secure this amendment to insure up to $50,000. We feel that there are ample funds under the act as it now stands to take on this additional business, and that we would generate a lot of new construction.

Senator BULKLEY. What section is that?

Mr. MOFFETT. Section 26, page 15, permitting insurance of industrial loans up to $50,000. The survey, through a questionnaire, indicated that there was a market in the industrial and manufacturing end of about $1,500,000,000. That did not include the other field covered by commercial buildings, hotels, offices, hospitals, and so forth. That would probably open up a further market.

Senator MCADOO. What is your definition of "commercial buildings," Mr. Moffett?

Mr. MOFFETT. That would be offices, stores, manufacturing plants, I assume, and department stores.

Senator STEIWER. I do not have the Housing Act before me. As I remember, the first portion of the language set out in section 26 is in the existing law, is it not?

Mr. MOFFETT. Yes, sir.

Senator STEIWER. Then, where is the amendment? The amendment is in providing the figure of $50,000 in line 16?

Mr. MOFFETT. I think it starts in line 9, does it not? It saysand improvements on real property other than apartment houses, hotels, offices, and other commercial buildings, hospitals, orphanages, colleges, schools, and manufacturing or industrial plants; and no insurance shall be granted under this section to any such financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by it in excess of $50,000 for the purpose of financing alterations, repairs, and improvements on real property

and so forth.

Senator MCADOO. Suppose a man wanted to build a business building, like a large market, for instance, for $25,000, in a city like my city of Los Angeles, and he had a proposition from responsible people to lease the market at a very favorable return. That would be new construction. Would it be possible, under this act, to make a loan on that kind of construction?

Mr. MOFFETT. I would think, following our rules and regulations on the $2,000 limitation, it would permit a garage to be constructed, or a new room, or an addition to a home. That is new construction. We would call it an improvement. I would assume, following that up, that an existing manufacturing plant could add an addition for the installation of new machinery, or some general improvement in its operation or in its equipment. It would primarily, I think, cover the installation of new machinery, air conditioning, or new elevators, and such things as that.

Senator MCADOO. It would not cover new construction of that useful character.

Mr. MOFFETT. It could cover that.

Senator McADOO. You would have to stretch the interpretation here to do it, would you not?

Mr. MOFFETT. It says "improvements on real property "—additions or betterments. It might mean a new boiler room.

Senator MCADOO. I should think that language is broad enough. Mr. MOFFETT. Or a garage, or farm buildings, which we permit today up to $2,000.

Senator MCADOO. It says

improvements on real property other than apartment houses, hotels, office and other commercial buildings, hospitals, orphanages, colleges, schools, and manufacturing or industrial plants-

You accept those, do you not, with the $2,000 limitation?
Mr. MOFFETT. Yes, sir.

Senator McADOO. But you then go on and grant the power to insure up to $50,000 on those same structures.

Mr. MOFFETT. Senator, there is a limitation on a home, up to $2.000.

Senator MCADOO. I understand that.

Mr. MOFFETT. Beyond $2,000, we can insure up to $50,000.
Senator MCADOO. If this bill passes.