the intent of the Congress was so clear in the course of hearings that there never has been any dispute that I know of as to the application we have given to that language.

Mr. BANTA. Of course, I do not know what hearings to which you refer whereby you get the intent of Congress. I suppose it would be up to the courts whether there is any ambiguity in the statute itself to find out what the intent was. Perhaps you have something in the report, or some statements made in debate or in the hearings upon which to base that opinion, but the language of the law itself, it would seem to me, would be subject to an interpretation such as I have indicated it might have. If you deny credit to a veteran who finds it necessary to move from one place to another, after he has entirely satisfied the first lender and finds it necessary to obtain another loan in an entirely different location, I think he could still do that, without exceeding the aggregate amount of the loan.

Mr. KELSEY. Mr. Congressman, I believe that an interpretation such as you have given might carry the purposes of the act well beyond what we believe, without having specific hearings here before us, was the intent. In other words, it would permit a veteran to purchase. a house and gain this benefit of the Servicemen's Readjustment Act, which includes in each case a gratuity payment of 4 percent, to be credited to the loan account for the veteran in respect to the amount guaranteed, so that on a $4,000 guaranty there would be a gratuity payment of $160 by the Veterans' Administration to be applied on the loan account of the credit of the veteran. If we were to carry forward on your theory, as I see it, sir, the veteran could, within the last few years, possibly have bought a house and sold it, and received this benefit, then again purchased another one, again received the benefit, and, because of the very title of the act itself, and the purpose of it, to assist veterans in readjustment to civilian life, it appears that this first adjustment and the benefit which comes from it was what was intended. Of course, even in the sale, there is some benefit to the veteran because of the fact that there has been a loan made at a first interest rate not to exceed 4 percent per annum, and a veteran has certainly received an advantage in his readjustment to civilian life through that assistance. It seemed to us, with the background of information we had, the hearings and the intent, that that was clearly intended.

Mr. BANTA. You are referring to the first year's interest?

Mr. KELSEY. Under the amendment to the act, it is not tied up with the first year's interest. It is simply 4 percent of the amount of the guaranty.

Mr. BANTA. Five percent of the amount guaranteed?

Mr. KELSEY. That is right.

Mr. BANTA. Which, of course, is actually equal to the first year's interest. No, it would be equal to half the first year's interest.

Mr. KING. Assuming an $8,000 loan, that would be correct, Congressman.

Mr. BANTA. It would be 4 percent of the amount guaranteed? Mr. KING. Yes, assuming an $8,000 loan and a $4,000 guaranty, that would be a correct statement.

Mr. BUCHANAN. Mr. Chairman.

Mr. BANTA. May I ask one more question first?

To give an example which I think would answer your question a little more clearly, let us say that a veteran bought a $6,000 house, and because of the limitation that the guarantee may not exceed 50 percent of the amount of the purchase price, he would use $3,000 of his guarantee entitlement, and still have a thousand dollars left for real estate. Let us say that he wanted to buy a truck then for $1,000. He would have remaining a $1,000 guarantee entitlement for realty, but in proportion he would only have $500 guarantee entitlement for personalty. So that he would have $500 guarantee remaining to use for the purchase of this truck. If that transaction was concluded, he would have exhausted his entitlement and there would be no further loan available for guarantee. Does that answer your question, sir?

The CHAIRMAN. I believe it does. The limit on his personal loans is $2,000.

Mr. KELSEY. That is correct.

The CHAIRMAN. He cannot get half of the purchase price of a house guaranteed on top of that?

Mr. KELSEY. That is right, sir.

The CHAIRMAN. But if he has a $3,000 guarantee on a home, he can still use the balance of that?

Mr. KELSEY. $500 on personality, or if later on he should desire to expand his home, he could get a further real estate loan and a further guarantee of a thousand dollars.

The CHAIRMAN. So that the aggregate would not be more than $4,000.

Mr. KELSEY. That is right.

The CHAIRMAN. As he retired that loan, I suppose again he could build it up to $4,000?

Mr. KELSEY. No, sir, his entitlement has been exhausted once and for all under the law, sir.

Mr. BANTA. Does any provision of the law limit his entitlement?

Mr. KELSEY. There is no limitation in the law as to the use of the guarantee one time as such, but probably, to answer your question better, the limitation of the guarantee is $4,000. So once he reaches that limit

Mr. BANTA. But suppose he gets a guaranty of $4,000, buys an $8,000 home, and because of change of residence, or change of job, taking him to another city, he sells that home, recovers all the money, pays the loan, and finds himself in a city a hundred miles away and in need of a loan with which to purchase.

Mr. KING. Congressman, that is covered by section 500 (a) of Public Law 268, Seventy-ninth Congress, which states, as a proviso: Provided, That the aggregate amount guaranteed shall not exceed $2,000 in the case of non-real-estate loans, nor $4,000 in the case of real estate loans. Upon that very clear intent, we have predicated the rule to which Mr. Kelsey referred, to the effect that there cannot be any further use of a guarantee privilege once the right has been originally exercised.

Mr. BANTA. It seems to me that it might lend itself to a different construction. I would think of it as being the aggregate amount outstanding at any one time.

Mr. KING. I cheerfully concede, Congressman, that that is a very lawyerlike interpretation of what that language might mean, but

the intent of the Congress was so clear in the course of hearings that there never has been any dispute that I know of as to the application we have given to that language.

Mr. BANTA. Of course, I do not know what hearings to which you refer whereby you get the intent of Congress. I suppose it would be up to the courts whether there is any ambiguity in the statute itself to find out what the intent was. Perhaps you have something in the report, or some statements made in debate or in the hearings upon which to base that opinion, but the language of the law itself, it would seem to me, would be subject to an interpretation such as I have indicated it might have. If you deny credit to a veteran who finds it necessary to move from one place to another, after he has entirely satisfied the first lender and finds it necessary to obtain another loan in an entirely different location, I think he could still do that, without exceeding the aggregate amount of the loan.

Mr. KELSEY. Mr. Congressman, I believe that an interpretation such as you have given might carry the purposes of the act well beyond what we believe, without having specific hearings here before us, was the intent. In other words, it would permit a veteran to purchase a house and gain this benefit of the Servicemen's Readjustment Act, which includes in each case a gratuity payment of 4 percent, to be credited to the loan account for the veteran in respect to the amount guaranteed, so that on a $4,000 guaranty there would be a gratuity payment of $160 by the Veterans' Administration to be applied on the loan account of the credit of the veteran. If we were to carry forward on your theory, as I see it, sir, the veteran could, within the last few years, possibly have bought a house and sold it, and received this benefit, then again purchased another one, again received the benefit, and, because of the very title of the act itself, and the purpose of it, to assist veterans in readjustment to civilian life, it appears that this first adjustment and the benefit which comes from it was what was intended. Of course, even in the sale, there is some benefit to the veteran because of the fact that there has been a loan made at a first interest rate not to exceed 4 percent per annum, and a veteran has certainly received an advantage in his readjustment to civilian life through that assistance. It seemed to us, with the background of information we had, the hearings and the intent, that that was clearly intended.

Mr. BANTA. You are referring to the first year's interest?

Mr. KELSEY. Under the amendment to the act, it is not tied up with the first year's interest. It is simply 4 percent of the amount of the guaranty.

Mr. BANTA. Five percent of the amount guaranteed?

Mr. KELSEY. That is right.

Mr. BANTA. Which, of course, is actually equal to the first year's interest. No, it would be equal to half the first year's interest.

Mr. KING. Assuming an $8,000 loan, that would be correct, Congressman.

Mr. BANTA. It would be 4 percent of the amount guaranteed? Mr. KING. Yes, assuming an $8,000 loan and a $4,000 guaranty, that would be a correct statement.

Mr. BUCHANAN. Mr. Chairman.

Mr. BANTA. May I ask one more question first?

75674-48 -47

The CHAIRMAN. Mr. Banta.

Mr. BANTA. Does the act provide that the loan could be guaranteed if made by an individual?

Mr. KING. Yes, sir, it does.

Mr. BANTA. Instead of a bank or institution?

Mr. KING. Yes, sir, that is section 500 (e) of the act I just cited. Any individual in the country who is willing to make a loan to a veteran can make it under that section.

Mr. BANTA. Is that in the original act, or is that to be found in the amendment?

Mr. KING. That is to be found in Public Law 268 of the Seventyninth Congress. The difference is this, Congressman: That where a loan is made by a noninstitutional lender, it has to have prior scrutiny by the Veterans' Administration.

The CHAIRMAN. Mr. Buchanan.

Mr. BUCHANAN. Your figures are for a 10-month period from May 1947, through February 1948?

Mr. KELSEY. Yes, sir.

Mr. BUCHANAN. I wonder if you could quickly run down the figures on new applications for loans, indicating whether there is a declinewhich I am sure there is.

Mr. KING. I can only give you that from memory, Congressman. It goes roughly this way: Speaking in terms of home loans only, about 52,000 in September of 1947, running down to about 27,000 in April of this year-a decline of about 45 percent. The decline has been almost continuous.

Mr. BUCHANAN. And attributable to what factors or causes, would you say?

Mr. KING. I think the salient factor to which that decline can be attributed is the lack of secondary market for the GI loan. The market, as you know, was taken out on June 30, 1947. Our decline began sharply in September.

Another factor, which undoubtedly contributes to that, is that the price of homes is getting beyond the ability to pay of the average

veteran.

Thirdly, there has been some inclination to anticipate a higher interest rate. Mortgage loan credit in general throughout the country was set back fairly sharply over the winter-and more than just a seasonal trend was reflected in that set-back.

Mr. BUCHANAN. Would that same trend be true in the case of loans for business purposes, and for farm loans as well?

Mr. KING. No, sir, there would not necessarily be any corresponding factor. I do know that over the last month there has been some small percentage of set-back in both our business and farm loan programs, which we think reflects the general tightening of credit throughout the country.

Mr. BUCHANAN. It is reaching a saturation point?

Mr. KING. No, sir, I do not think it is a saturation point. I just think it is a tendency, on the part of many lenders, to deflate a little bit.

Mr. BUCHANAN About 1 in 12 veterans, then, have availed themselves of the right to buy homes under this plan?

Mr. KING. That is right; yes, sir.

Mr. BUCHANAN. That is all, Mr. Chairman.

The CHAIRMAN. Are there further questions of Mr. Kelsey or Mr. King?

(No response.)

The CHAIRMAN. If not, thank you very much, gentlemen.

Mr. KELSEY. Thank you, Mr. Chairman.

The CHAIRMAN. You will be available, I assume, to present any further information which might be requested by the committee? Mr. KELSEY. Yes, sir.

The CHAIRMAN. Mr. Propper.

Mr. Propper is executive vice president of the National Committee on Housing, Inc.

Mr. Propper, we are very happy to have you proceed.

Mr. PROPPER. I appreciate very much this opportunity to testify, Mr. Chairman.

The CHAIRMAN. Will you further identify yourself, Mr. Propper, where you are from, and so forth?

STATEMENT OF HENRY M. PROPPER, EXECUTIVE VICE PRESIDENT, NATIONAL COMMITTEE ON HOUSING, INC.

Mr. PROPPER. My name is Henry M. Propper. I am executive vice president of the National Committee on Housing, Inc., a privately organized and supported committee, the officers, directors, and members of which represent all points of view and interests in housing throughout the United States. We have been actively concerned with the war and post war emergency in housing and appreciate very much the opportunity to appear before this committee.

Mr. SMITH. Mr. Propper, what is your background?

Mr. PROPPER. I have been in housing, in various capacities, over a period of 25 years, sir, starting with the postwar housing shortage of the early twenties. I became associated with City Housing Corporation in New York, and took an active part in the building of two rather large-scale developments consisting both of small houses and multifamily houses for rent. At various times, in the intervening period

Mr. SMITH. Just a minute; were those houses you built in New York City public housing projects or private houses?

Mr. PROPPER. No; this was private housing, built by a limited dividend corporation. I have also been associated with other housing developments. I have engaged in public relations work, and during the war I was in charge of the war housing program in New York State.

Mr. SMITH. Just what do you mean by "public relations work”? Mr. PROPPER. As a public relations counsel, particularly in the housing and allied fields.

Mr. SMITH. And what were your specific duties as public relations counsel?

Mr. PROPPER. Advising various housing interests on public and community relations. That activity covered the period from about 1930 to 1940.

From 1940 to 1944, I was in charge of the war housing program in New York State as an assistant to the State commissioner of housing.