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lowest point in 60 years, and the price level to the lowest since 1905, it has seen its sales increase; that is, its volume of business increase, 30 percent. The volume of its employment has increased over 55 percent. Its prices have increased a little over 60 percent. I can give you the exact figures as I have them here. Its minimum wages have increased nearly 100 per cent, and its total pay rolls have increased about 120 percent over last year. That is for the month of April, which is the nearest information available, and the pay-roll employment information and the price information are based on reports of the Bureau of Labor Statistics.

Senator BARKLEY. What has been the average increase in wages? Mr. COMPTON. This is the average.

Senator BARKLEY. You were speaking of the minimum. I am speaking of the average.

Mr. COMPTON. Well, I don't know what the average is. The total pay rolls, which would include the average, have increased 120 per

cent.

Senator BARKLEY. You have paid out more money for labor, but a part of that might include increased employment.

Mr. COMPTON. That is true. The increase in employment is 55 percent, so, as to last year, you would have a ratio of 155 to 220.

Senator BARKLEY. What proportion of the lumber industry was enjoying the minimum wage before the increase started?

Mr. COMPTON. I should say anywhere up to about 50 percent, a maximum of 50 percent, and probably it would run from 20 to 50 percent.

The CHAIRMAN. What amount of the cost of mill production is taken up by the labor cost?

Mr. COMPTON. What proportion of it?

The CHAIRMAN. Yes.

Mr. COMPTON. On the average about 65 percent is labor. That varies vastly as between regions. Particularly in your section and in the smaller enterprises it is a larger percentage. In some of the areas of the Northwest, for example, where the industry is highly mechanized, it is less, probably as low as 40 percent in some instances.

If I may answer Senator Barkley's question specifically, this is information published by the Bureau of Labor Statistics on the average prices of all kinds of materials. Present prices are as of March, the latest figures available in this tabulation, which is 86.4 percent of the average in 1926; that is, within 14 percent of 1926. As compared with a year ago it is 56 percent, that is, the low point was 55.9 percent, and the high point was 88 percent at the first of this year, with 86.4 percent at the present time. If I correctly understand your question that is the nearest available information.

The CHAIRMAN. You may proceed with your statement.

Mr. COMPTON. The labor employed in these industries combined in ordinary times is about one million, and that you will recognize is placing it in one of the largest employing groups. Now, that is not to be construed as meaning, of course, that at the present time there is anything like that employment, because, as I have already indicated, the volume in this industry had been driven down to about one third the volume of 5 years ago. And as a result the employment in sawmills alone-I mean sawmills and in the woods in the

primary operation-in 1929, was about 450,000 and had been driven down to somewhere below 200,000, and as of March of this year it was about 260,000.

The consumption of lumber, if I may include that part of the background from which you may consider the effect of this legislation if enacted into law, on employment and progress in this industry, in 1928 was about 38 billion feet. This is the national consumption of lumber, the most of which goes into buildings as you know. It was 121⁄2 billion feet in 1912, and last year it was about 15 billion feet. At the present time it is running, so far as the informtaion available to the National Recovery Administration or to the code authority is concerned, about 17%1⁄2 billion feet. That is a little less than one half of the consumption in the year 1928, which represented the peak.

Now, to compare that information with this pending legislation, and without going into the details of computation but stating it merely as an expression of opinion of these industries, it is thought if this legislation is enacted, and if it is effective in restoring in large volume residential construction, repair, and modernization of homes, we think it could be made, with the proper corollary activity on the part of the industries themselves, to restore a volume of consumption of about 25 billion feet a year. That would be a substantial increase from the present volume of 171⁄2 billion feet. But it is far less than the maximum of 5 years ago of 38 billion feet.

On the other hand, it is not at all likely, as we view it, that consumption will be restored at any time in the near future to that point, and my own thought is that we shall never again see a consumption of lumber as great as it was in the past decade. Not because there won't be, perhaps, as much housing, but there will be more economical housing and less waste. At least that is our hope.

And if that is done, if it can be instrumental in restoring consumption to approximately a level of 25 billion feet, it will bring about a possible restoration of employment to a point that is about 12 percent less than the maximum employment in the same industries in 1928. That would mean a very substantial increase in employment, as you will see.

Now, we have studied all the home bills. They obviously would have great effect on industries of this type. I think it may be safely said that we are reasonably familiar with the various proposals made from responsible sources, and I think we are aware of the sources of criticism, criticisms from the standpoint of the building and loan associations. Of course, they have been a very vital factor in making available in years past funds for home building. And also to some extent for home modernizing and repair.

The objections stated here in behalf of building-and-loan financing institutions do not impress us as being very conclusive. We see no reason why this legislation should be harmful to that type of enterprise. It probably will be adverse, and it ought to be adverse to certain types that have been represented by the practices of some building-and-loan associations and other like institutions in the past, and which the building-and-loan associations themselves frankly oppose.

I mention that for this reason, that we do not regard our expression of strong endorsement of this pending legislation in all its major

features, as destructive of progress of the proper type of thrift hat is represented in the existing building-and-loan institutions and in their own proper desires for progress hereafter. We regard the fundamental principle of this legislation as a very ingenious embodiment of the insurance principle in probably the largest single area in which it can be helpfully introduced in this country, as promising in a national sense large results in terms of economy and instability and insecurity of home ownership. And in restoring what perhaps is vastly more important, the confidence of the people that do have money to invest in this particular type of investment, a character of investment as to which you well know confidence has been vastly shaken and is right now shaken. And that all this, by the use of this ingenious insurance principle, it seems probably can be made available at very low cost to the public, and perhaps in many of these features no cost whatever over a period of time.

I think, Mr. Chairman, if there is nothing further the members of the committee wish to ask, there is nothing further that I could add which would be of benefit or help to you.

The CHAIRMAN. Can you see any harmful effect or results to home owners by this legislation?

Mr. COMPTON. No; I cannot. I think it may with propriety be said, in advance of experience which anyone would have to have in order to test an enterprise of this magnitude, that it may not be effective in meeting all the adverse conditions with which the country now has to contend with respect to home ownership. But that I do not think is very constructive criticism of the legislation. It may be that some other legislation later on may be necessary. What is proposed here may be partially inadequate in some instances. see where it would be harmful.

But I cannot

The CHAIRMAN. Do you believe it is unwise to provide for amortized mortgages?

Mr. COMPTON. I think one of the most vulnerable and weakest features in the shape of the investment of individuals has been the straight mortgage or the unamortized mortgage. Liens come due and the value of the property on which they are based is not there in many cases. I should say that the amortization feature is one of the cardinal features of this proposed legislation, and that it would be much less valuable in carrying out the declared purposes of the bill if they were not included.

Senator BARKLEY. Without that wouldn't a great many home owners be denied the opportunity to make a loan at all?

Mr. COMPTON. I should think so. I should regard that as one of the cardinal and vital features of this proposed legislation.

The CHAIRMAN. Any other questions by members of the committee? (A pause, without response.)

We are very much obliged to you, Dr. Compton.

Mr. COMPTON. And I wish to thank you for hearing me.

The CHAIRMAN. We will now hear Mr. MacDougall.

Mr. MACDOUGALL. Thank you.

The CHAIRMAN. Please come around to the table and take a seat opposite the committee reporter. Please state your name, residence, and occupation.

STATEMENT OF EDWARD A. MacDOUGALL, CHAIRMAN OF THE HOUSING COMMITTEE, NATIONAL ASSOCIATION OF REAL ESTATE BOARDS; BUSINESS ADDRESS, NO. 60 EAST FORTYSECOND STREET, NEW YORK CITY

Mr. MACDOUGALL. Mr. Chairman, I will state that I am the chairman of the housing committee of the National Association of Real Estate Boards, with business address at no. 60 East Fortysecond Street, New York City. I am president of a real-estate and building-development corporation.

The CHAIRMAN. Now, Mr. MacDougall, have you examined the bill pending before us (S. 3603)?

Mr. MACDOUGALL. I have, Mr. Chairman.

The CHAIRMAN. State your views about it, if you will.

Mr. MACDOUGALL. As chairman of the housing committee of the National Real Estate Board, I want to endorse this bill in principle. The chairman of our mortgage committee has testified before your committee and has suggested certain amendments in which we concur. We believe it is a very constructive effort.

Senator GOLDSBOROUGH. By whom were those amendments suggested?

Mr. MACDOUGALL. By Mr. Walter Schmidt, of Cincinnati, chairman of our mortgage committee, who testified before your committee. I have a copy of the amendments before me.

I want to speak particularly on the broader aspects of the problem of housing, the need of housing, as it occurs to us, based upon several years' study of this problem.

There is one practical suggestion we think might be made in the way of an amendment, and that is on page 6, line 11, to eliminate the words "owner-occupied."

Our reason for suggesting that amendment is that it is our belief that a Federal agency must of necessity be provided as a means of establishing or reestablishing mortgage credit in the United States. Our system of financing homes by short-term first mortgages and large second mortgages, we believe to be entirely impracticable, as demonstrated by the complete collapse in large centers of population.

As an emergency proposition the National Real Estate Board did not oppose this feature in the original Home Loan Act, but we have learned since the enactment of that bill that there are a great many home owners, desirable citizens, who have made every reasonable effort to maintain the ownership of their homes, who in many instances have had to vacate their homes, the wife going back to the farm, if you please, and the husband living in a hall bedroom, if you please, until he could get adequate employment, while the building the he was formerly buying, that he could no longer pay for under the terms of the original mortgage contract, had to be rented to obtain sufficient income to maintain the credit of that transaction. So we believe that it would be worthy of the serious consideration of your committee to think of it along those lines.

Senator BARKLEY. Would you draw any distinction in the law between that situation and a situation where there had not been any home ownership?

Mr. MACDOUGALL. No. I would not do that in the law, Senator, but I would do that as a matter of administrative policy, that no

home loan should be applied to other than a prospective home owner, a man who is ready to buy a home.

I have this thought in mind. We have learned, by a careful survey over a period of 3 years, and especially in the last 6 months, that there are a great many homes that have been abandoned because the owners have been promised relief by financial institutions, and they have not been able to secure the relief anticipated. The mortgage is past due.

To illustrate, in the State of New York we found it necessary to go to our legislature and ask for a moratorium. It was granted for a period of 1 year on the basis that judgment could not be entered in foreclosure where interest and taxes had been paid, but where the principal was due, or an installment was due and not paid. That has just been extended for another year to meet the condition that otherwise would have brought on complete collapse. There are over two billion dollars of mortgages in distress now in the city of New York, with which no doubt you are all familiar from newspaper reports, and there is no adequate agency in existence now in which, apparently, the public has sufficient confidence, to purchase mortgages or lend money on mortgages.

At a recent interview in Washington it was stated by an important official of the home loan bank that the financial institutions claim now that they have funds to lend for existing mortgages in distress. that would not come under the Home Loan Act-because, as you know, there is a limitation that no loan shall be granted above $14,000, although the act itself provides a loan is eligible on property appraised up to $20,000, on an 80 percent basis. That seems to be a misnomer. We believe you should give consideration to the proposition that a borrower could get 60 percent, or 80 percent of the value of a mortgage, not exceeding, say, $20,000, if that, in the judgment of your committee, is the proper limitation.

The statement was made, as I have referred to it, that there were adequate funds to meet the needs, but they could not find borrowers. As chairman of the mortgage committee of the New York board, I sent out an inquiry to a number of our representative board members, to our New York State Board, to the State Board of New Jersey, and a great many other local real-estate boards, to inquire if they could find mortgage money available to erect new houses at moderate prices, say within a limit of $20,000 to $25,000, a class of house that might be eligible, under ordinary circumstances, under the Home Loan Act. We had replies which were sent to Washington, and I think they are in the hands now of the home-loan bank, Mr. Fahey. There were 72 instances in which responsible builders, builders of our acquaintance, who are men of standing and of experience, say that they are ready to proceed with the erection of 700 individual houses if they could get adequate mortgage loans. In many instances the prospective buyer is prepared to pay from 25 to 40 percent cash on the transaction. Now, with the demand of the capital goods

The CHAIRMAN. Are those low-cost houses?

Mr. MACDOUGALL. The inquiry was based on houses that would cost within $25,000. That takes care, based on our observation and experience, of the professional man as well as tne man who pays a lesser amount.

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