The bill seems to have been drafted in the most meticulous manner to the purpose and ends desired. Its preamble is a clear and concise statement of its purpose. I am not an expert in legislative documents, but I am told, and believe, that this bill is the finest piece of legislation of this, the Seventy-third Congress, second session.

The force and effect of this bill, as far as hundreds of thousands of individual citizens are concerned, should more than outweight the slight objections of building and loan and other mortgage and banking and financial institutions.

These banks may be helping themselves and helping each other in the present emergency, but are they helping the great general public? Certainly not in building operations.

One of our most astute financial factors, who has given evidence at these hearings, and the president of a life insurance company in which I have been insured for more than 40 years, referred to the recent period as a collapse of the real estate market. I wish he were here now so that I might ask him to correct that statement, because there was no collapse of the real estate market until the collapse of the stock and bond market. As a realtor of 45 years experience I think I can say without fear of contradiction that the collapse of prices and values of real estate in recent years never equaled the collapse of price and selling of stocks, bonds, and paper securities. Based upon the experience of ages, the security of loans on real estate, such as is proposed by this bill, is far more stable, in the long run, than the security of paper securities. Long-term loans on stable securities will take precedence, in the future. This bill is a step in the right direction.

There is an old-time saying which has become an axiom, that real estate is the basis of all wealth. In the last analysis, what factory, railroad, mine, store, shop, or business but what rests upon real estate? Therefore, in the long run, the best stable security should be real estate. The best of that should be the homes occupied by, loved by, owned by, bigger and better Americans. These are the kind of loans and the kind of people, I take it, who would be benefited by this bill.

The CHAIRMAN. We will be glad to put into the record any statement you wish to submit.

Mr. MCCARTHY. Those are all my observations, gentlemen, unless there are some special questions with reference to the particular State or part of the country from which I come that you might be interested in knowing. If anything occurs to you, I shall be glad to answer it. The CHAIRMAN. It is a very good statement. Thank you.

Senator BARKLEY. Mr. Chairman, I have been handed an additional statement which Mr. Schmidt wants to submit for printing in the record.

The CHAIRMAN. Let it go into the record. (The additional statement is as follows:)

FURTHER STATEMENT OF WALTER S. SCHMIDT, CHAIRMAN OF THE MORTGAGE FINANCE COMMITTEE OF THE NATIONAL ASSOCIATION OF REAL ESTATE BOARDS, CINCINNATI, OHIO Mr. SCHMIDT. Mr. Kingsley, as a witness, called into question my statement that the mortgage money of insurance companies now available was for mortgages based on 40 to 45 percent of present depressed

values a loan which I had stated was not of the type needed to encourage new construction. After the meeting, Mr. Kingsley said that he was sorry he had questioned this statement of mine and granted that his instructions to his representatives were that his company was interested in securing exactly such loans and was not interested in higher percentage mortgages. He said he would correct the record, but I understand left hurriedly without doing so.

There is an undoubted dearth of mortgage money in most urban centers not all, of course. In my judgment, a large percentage of the total sums formerly held for mortgage investment has permanently disappeared, and the only way to restore sound long-term credit facilities and reduce the rate to borrowers, is for the Government to throw the weight of its credit behind the mortgage structure, not as a taker of mortgages, but as a supporter and protector of the investment itself.

STATEMENT OF ROBERT W. ALDRICH RODGER, PRESIDENT OF THE RUTGERS TOWN CORPORATION, 22 EAST FORTIETH STREET, NEW YORK CITY

The CHAIRMAN. Mr. Rodger, state your name.

Mr. RODGER. My name is Robert W. Aldrich Rodger. I am president of the Rutgers Town Corporation of the city of New York. The CHAIRMAN. Have you examined this bill, Mr. Rodger? Mr. RODGER. Yes; I have examined this bill, Mr. Chairman. The CHAIRMAN. Will you state your views about it, please? Mr. RODGER. I will state in general what my views are about it, because I just want to mention one specific thing in this connection. The CHAIRMAN. Very well.

Mr. RODGER. I will make my time as short as possible. I understand that you are about ready to adjourn. I will say briefly that I am altogether in favor of this bill. I consider it to be the most flexible and the broadest measure that has ever been presented to the Senate and the House of Representatives.

What I want to say in particular is this: If this bill goes through it will make possible for me to build almost immediately 45 million dollars worth of housing which has been projected for New York City or Manhattan and been ready to go ahead for nearly 2 years. Two years ago Congress drew an act to stimulate the building of low cost housing and slum clearance. Just prior to the passage of that act I had formed this Rutgers Town Corporation of New York City and collected over 12 million dollars worth of land under option on the lower East Side. I expected to get my loans from the banks. You know what happened then. The bond situation became frozen, or the mortgage situation became frozen, and it was impossible to get loans from the local banks.

After Congress passed this act the R.F.C. was formed and I put in the first application for a Federal loan. We are still before them, and only last Tuesday I appeared before the board of review not only in connection with the Rutgers town Manhattan project but also with another project in Queens to be built on 326 acres of land over there, which is worth some 6 million dollars.

We have altogether 90 million dollars worth of housing to proceed immediately in New York City just as soon as this legislation goes

through, because I believe it will open the way for the local banks to make us those loans, because without the Government guarantee as to principal and interest it will be impossible for the banks or for us to dispose of our bonds.

The CHAIRMAN. Will those mostly be Mr. RODGER. They will all be homes. will rent for from $6 to $12 per room. rent for from $5 to $10 per room.

homes?

The projects on Manhattan
The homes in Queens will

Senator GOLDSBOROUGH. What will be the cost of the houses? What is the range?

Mr. RODGER. These are multiple dwelling houses, all apartment houses.

Senator GOLDSBOROUGH. All apartment houses?

Mr. RODGER. All apartment houses. You cannot build for the lower income groups without building multiple dwellings. You cannot get the expenses down low enough. It is not feasible. And naturally I am for this legislation. If you are at all interested in it

Senator GOLDSBOROUGH (interposing). What is the value of this land on these two projects?

Mr. RODGER. The total value of the land is 18 million dollars. We have that land under option and ready to proceed under it without any delays.

If you have seen the United States News this week-I just have a copy with me it shows the picture of a slum clearance project before and after, and it happens to be my project, if you want to put that in the record.

The CHAIRMAN. We get the News here.

Mr. RODGER. It is on the first page. And this is the only building project for Manhattan. The Municipal Housing Authority, which was recently formed in Manhattan, is going to build over in Brooklyn. They are very much limited as to the amount of buildings that they can do. They would not make a dent in our unemployment problem on Manhattan. We have over 200,000 men in the building trades who are unemployed at this moment.

The CHAIRMAN. In New York?

Mr. RODGER. In New York City. And we will employ over 50,000 men on these two jobs locally, to say nothing of several times that number in other sections of the country.

Now, I thought it would be interesting to you to know that something specific is ready to start the moment this legislation is passed. Senator GOLDSBOROUGH. I assume from what you say you take no exceptions to any of the titles of the act, but you approve the thing in the whole?

Mr. RODGER. I approve the thing in the whole. I take no exceptions, because I think the bill is the broadest measure and the finest for employment that has ever been conceived; and I have seen them all. The CHAIRMAN. That is very helpful.

Senator BARKLEY. Is your project for renting entirely, or do you propose to sell some of these?

Mr. RODGER. The project is for renting entirely. We can not sell multiple dwellings. We have tried to sell them to the poor. There has been some selling of dwellings to the poor on the cooperative basis, bit it has not been very successful.

The CHAIRMAN. What size are the multiple dwellings?

Mr. RODGER. On Manhattan they run from 8 to 12 stories. In the Queens project they are mostly three-story buildings. You see, the Queens land is 50 cents a square foot and the Manhattan land is $1.10 a square foot, and that makes the difference. We bought that land at a price that is almost equal to its present mortgage value. Senator BARKLEY. That comes under title II, the mortgage insurance feature?

Mr. RODGER. Yes; that is right. My secretary here wants me to tell you that we have passed the R.F.C. board of engineers; that is, the engineers advisory board of the Reconstruction Finance Corporation, and I think we had a very successful session at the Board of Review Tuesday. At least they looked that way.

The CHAIRMAN. That is very good. We are much obliged to you. I received a latter here. I have not read it over very carefully, but it seems to me it has some statements of fact in it relevant and it may be helpful. I would like to have that inserted in the record. It is from Mr. Walter F. Ring of New York.

(The letter presented by the Chairman is as follows:)

Hon. DUNCAN U. FLETCHER,

JAMAICA, N.Y., May 21, 1934.

Chairman Senate Committee on Banking and Currency,

Senate Office Building, Washington, D.C.

DEAR SENATOR FLETCHER: I desire to present to your committee a few salient facts and suggestions for the members' consideration in connection with the hearings on the National Housing Act (S. 3603).

Since early October 1933, I have been furnishing facts and urging the enactment of legislation primarily to permit desirous new homeowners to build their homes now and thus help the unemployment situation. The facts in detail and suggestions have been submitted to the Honorable William F. Brunner, Member of Congress from New York, the Honorable John H. Fahey, and others. I will be as brief as possible in order to get outstanding facts before your committee. I feel qualified by 25 years of practical experience in the active participation in the development of Queens Borough; by interest in the erection and financing of over 5,000 homes and a friendship and/or acquaintance with the officers of many of the loaning institutions of the city.

There exists today a demand for new homes by thrifty, desirous home owners who have their equity in hand. The majority of these potential owners cannot be forced to purchase the distressed and repossessed homes which glut the market; there are many human reasons for this fact, but notwithstanding the demand for new homes, the loaning institutions, as a class, are attempting against their own best interest, to prevent the erection of new homes so as to force the sale of their distressed holdings. This policy is as unsound as if it were decided not to manufacture new automobiles until the second-hand market was about depleted.

The size of the demand for newly constructed homes is debatable; surveys will not accurately determine it, but there is no question but that the demand is of sufficient size that it can be kindled into a cheering blaze for distressed labor. The only factor holding back this instrument of gainful reemployment is mortgage money.

I can submit confessions of the impotency of the loaning institutions; I can submit evidence of their objecting to Government trespassing on their presumed preserves. I know from personal contact, by observation and by confessions that private investors in mortgages and certificates will be out of the market for several years. I know, by the records, that the savings in thrift institutions, during the past year, have been withdrawn faster than new savings were deposited; I know from contact and observation that equity money for the organization of new mortgage factors is sadly lacking. I know that many loaning institutions are borrowers from the Reconstruction Finance Corporation, which precludes them from being classed as willing lenders. I know that a normal flow of funds into the loaning institutions will take place only when labor is reemployed at gainful occupation.

Thus the paramount job is to put men to work and I insist that several million men can be put to gainful occupation to meet a legitimate demand, not a specu

lation, not some utopian dream, but a real honest existing demand and a latent demand that can be stimulated by favorable terms.

This reemployment will have favorable repercussions on the chaotic mortgage situation, on the distressed home situation and will help save the present good work of the Home Owners' Loan Corporation from developing into a catastrophe of "Government-owned shacks" which will blight the neighborhood.

I stress the general opinion among practical real-estate men, in this, the fastest growing home community in the United States, that the Home Owners' Loan Corporation is engaged in what may prove to be the wholesale purchase of distressed homes at inflated values.

It requires no vivid imagination to picture the results if, because of unemployment, the home owner continues to be distressed. The Government will not care to dispossess him, and the owner being without the means to maintain repairs, etc., the home will soon become a "Government shack" and a blight on the neighborhood. What was planned as constructiveness may turn out to be destructive. Every effort must be made to prevent the occurrence of this situation.

The first step to help the distressed home owner has been taken and the second, and very important step, is about to be taken.

It is a theory that many home owners in these times will borrow money for modernization. They may borrow for necessary and pressing repairs, but it is a fact that, if they are distressed, they will not seek new burdens. The thrifty owner will, as a rule, make repairs and modernize only out of cash in hand and he will and is doing it, more or less, right now. I know this by personal observation and contact, yet I am not opposed to helping the exceptions to the rule.

To stress repairs and modernization in preference to new home construction is "putting the cart before the horse."

New home construction for worthy, thrifty desirous new home owners can only be accomplished, at the present time, by sound direct substantial Federal help, and any involved plan which complicates the operations will only defeat the purpose.

Get legitimate home construction under way in the right way to meet a real demand, not a speculation, and the picture of "Government shacks" will not materialize.

It is a theory and not a fact that the present lending institutions can right now make loans sufficient to meet the situation. They will make a few loans to "save their face", but beyond that they are so mired that it will take several years before they become untangled:

The National Housing Act, now under consideration, provides many commendable long range features which I heartily approve but it will not, in my opinion, take care of the immediate requirements to assist the desirous worthy new home owner.

The act provides for the organization of national mortgage associations with not less than $5,000,000 initial capital, subject to the approval of the Federal Home Loan Bank Board. In my opinion, such organization, in any appreciable number, in these times could not be organized in time to save the situation. Individual men or groups could in the past use their telephones and raise the money, but not today. Given time to acceptably organize, they will function for the benefit of the home owner. A reduction of the initial capital to $1,000,000 would help, but the red tape of organization would delay them from functioning until the spring of 1935.

I suggest an amendment to provide, that for a period of 18 months, from the date of enactment, the Home Owners Loan Corporation be empowered to use its present facilities to make direct mortgage loans to desirous new home owners up to 80 percent of appraisal based on prevailing costs. Interest at 4 percent and monthly amortization so as to fully repay the indebtedness within 20 years. The loans may be made by fully guaranteed 3 percent bonds which the hone owner could use in paying for construction.

Responsible home builders do not ask for direct help, on the other hand, they can assist by taking the bonds in payment for work performed, but they do ask that the Government bridge the gap caused by the failure of the loaning institutions to function, and this help is to go to the desirous, thrifty home owner. I am mailing a copy to the Honorable John H. Fahey and the Honorable William F. Brunner.

Respectfully submitted.

Very truly yours,

WALTER F. RING.