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Now with respect to the matter of credit, as you have just heard and as I am sure you very well know, within the last 2 or 3 weeks the Federal Reserve Board has released the voluntary restraint program, which restricted bank credit on a voluntary basis. Then, later, the Board relaxed and entirely suspended regulation W. In so doing we feel that there is a definite indication on their part that they feel that credit controls are no longer needed, particularly in those fields.

Now with respect to regulation X, and its accompanying regulations-and I would like to point out to you that regulation X itself regulates the credit on conventional loans, whereas the FHA has a program which goes along with it, as well as the Veterans' Administration, so we call it regulation X and its accompanying controls it has come to the point where in our opinion they are no longer needed.

We cannot see the difference, frankly. Why should housing, so necessary to the people of this country, be further controlled when other

segments of our economy are being decontrolled? We would like to point out to you, in addition, that a large percentage of the housing of this country would be built under FHA and VA controls in any event—that is, they have a means of regulating what the builder sells the house for, if it is a sale to the veteran, or the amount of the loan, if it is a loan which FHA insures.

They would continue their control on our economy, which wisely given to them, years ago, by the Congress. So, with them to a large extent doing a major part of the financing of housing in this country, we see no reason why any further controls are necessary at this time.

I would like to point out to you, at this time, that we were not opposed to the controls becoming effective when they were originally placed on our industry. We felt that, in the wisdom of the Congress and of those who were trying to make the defense effort work, we could not continue to do everything that we had done in an economy where we did not have a defense effort. But now we feel that that has passed, that time is gone, and it is time now that we talk about this thing on a basis in which the economy is free, and the forces of our economy that are normally at work are allowed to function.

I would like to point out that those forces are rather large in their scope. In the first place, the amount of money that is available at this time for mortgage credit is not as large as it has been in the past, at least at the going rates. As you possibly very well know, the Senate Banking and Currency Committee held å round table discussion on mortgage financing earlier this year, and as I recall it, some of the leaders in the financial field of this country were present at that conference. The discussion largerly centered around the fact that there was not the yield available from mortgage credit that there had been in the past, particularly for defense and military housing and for veterans' housing. Since that time a very great effort has been made to try to make money available for mortgages on defense and military housing. We have worked very diligently with the mortgage banking fraternity of this Nation in an attempt to bring that about through a private enterprise program. There is a bill now on the Senate side of the Congress for the purpose of making credit available for defense and military housing, which at this time is beginning to lag a little bit because of the lack of funds.

Now I point that out to you to show that the real lifeblood of the home-building industry is the credit end of it. If there is no money available, then the housing will not be built.

I also want to point out to you that in the recent months, the real control that is beginning to take place on our industry, as it has in many other industries, is this: The public of this country has begun to lose entirely its zest for purchasing anything for the sake of purchasing. It looks with a very critical eye on everything it buys, and insists on getting its money's worth. They, after all

, are the real controllers of our economy. They, with the banking group—and if I may say so, the builders themselves, who are looking not only at the market but at their product and the credit end of their program--are watching the economy carefully. Builders are starting houses only when they feel that there is a full and complete market for them.

I would like to point one thing out to you: There are people who say, “Well, you built 1,090,000 houses last year. Do you not think that you possibly could build that many this year?”

And I would say, yes, we possibly could. But I also want to point out to you that, for example, the automobile industry is an industry in which only three manufacturers make somewhere between 80 and 90 percent of the automobiles. They can change the flow of their product very readily. Our product is one that is made by at least 25,000 builders, the membership of our association, who build approximately 75 to 80 percent of the houses. And those houses are not built like automobiles. It takes months of planning before a subdivision is ready. Then when the subdivision is ready, it takes months of work with credit institutions, with the FHA, and the VA, and others, to get the plans in shape before the houses are started. Then a project takes from 3 to 9 months or a year before it is built. It is not a program where you can turn it on or turn it off readily.

But as I have gone over this Nation and talked with our builders, all over the country, I am finding them very cautious about their program. It may be true that they are building houses, right now, on à basis that looks like we may produce a million houses this year, but at the same time they are keeping themselves in a position where they can readily slow their program down if it appears that the economy is not ready for their product.

And as † say, while it may appear to some that it is not slowed down fast enough, it really is slowed down on the basis of the months of time that it takes to start our products going on a high-production basis.

I would now like to point out something else to you, with respect to the experience I have had recently, in going out and talking with our builders over this country. They say-and I can assure you that it is true from my own experience in meeting the public—that the public is deeply interested in their product, and I will say this conscientiouslyin the low-priced bracket and for veterans, that is particularly true.

And yet, when you get down to the actual operation of making the sale, the people are saying, from one end of this country to the other, especially in the low-income brackets, "We do not have the money to pay down."

I would like to say to you that I have been stumping this country trying to get our builders interested in taking care of the people in

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the low-income groups and the veterans, and particularly people in minority groups, and they are of the opinion that this is the time when those people ought to be given an opportunity to buy a house with a low down payment. I seriously would like to call your attention to the fact that people in the low-income groups are the kind of people that might be easily affected by a movement toward some kind of "ism” other than Americanism. They are the people that need housing on a low down payment and low monthly payment basis now. I hope that you clearly understand that importance and that you will help us in getting this done. And when we say that, we mean that regulation X is seriously affecting us.

We have heard some statements to the effect that if the controls were kept on, that the credit could be forced into the defense and military housing program. Our experience in the round table discussion that I have already referred to gave us a very clear impression that that would not be effective; that the real effective thing, mortgage money, is at this time trying to compete with money for the financing of defense plants, of inventories, of municipal bonds, of lots of things. That is the real competition for the money, and it will not go into defense or military housing or anywhere else unless the situation is attractive.

And yet, the need at this time is not only for the defense and military housing, but also for the veterans housing. There are veterans in this country who have not been supplied with a house yet by any means, and they need some effective help at this time. We are sure that even if credit controls were kept on for the purpose of channeling the money into defense purposes, it would not go through without the help of the FNMA program, or a change in interest rates. And we feel that the change in interest rates is something that will not occur this year.

We would like further to say to you that we have an interest in another part of this act, and that part is with respect to the wage stabilization program. We have been quite seriously affected by the wage stabilization part of this act, because, for the construction industry, an organization has been set up called the Construction Industry Stabilization Commission.

This bas jurisdiction over wage stabilization for construction, including heavy construction and residential construction. Now this Commission recently issued an order making it possible for anybody, in the construction industry to raise wages by 15 cents an hour, and fringe benefits by 742 cents an hour.

Well, that might have been a reasonable thing to have done in a community that was being hard pressed for an increase in wages. But to do it on a national basis made that whole program a target, rather than simply making it possible for it to occur. All over the country we have had a very strong urge for wages to be pushed up to the limits. In fact, in the city of Detroit, at this time, and I think all over southern Michigan, there is a strike on, asking for the entire amount that was made available through the Construction Industry Stabilization Commission, even though I am informed, from talking to our builders in that area, that there are many people in the construction industry who are out of work-which seems a rather strange thing to have occur at this time.

We feel that this is adding to inflation, rather than stabilizing the industry, and we feel very strongly that the relations between the

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builder and his employees should be reinstated on the basis it was on before this program became effective.

Let me tell you a little bit about that. One of the first things that this Commission did was to issue a regulation that they call regulation 1.

This regulation makes it illegal for certain wages practices to be continued that were standard in our industry for many years. This is what I meant by that: Many of our builders have attempted to follow some of the suggestions that have come from studies of the construction industry over the past years, to keep their men employed the year-round, and to offer them some incentive for good workmanship. All those things were made illegal, even though they were put in practice by builders years before the Defense Production Act became effective.

Some of our builders had had men employed on a basis of a few cents an hour over the standard rate because of their fine workmanship, for many, many years, and all of that became illegal.

of our men have given their employees a bonus for good work. That became illegal.

Some of them have given workers Christmas presents, and things of that kind, for their long employment. That became illegal.

In other words, sections 402 (c), 402 (d) (2), 402 (g), and 404 of the Defense Production Act, which say that those things that were in effect from May 24 to June 24, 1950, would be carried on, and that they would prohibit stabilization at less compensation than was paid during those periods, and prohibit compelling a change in business practices in the industry affected, and requiring consultation of representatives of the industry affected, were not taken into account, and this regulation was promulgated: Many of our people have been questioned very seriously with respect to this problem, and the Builders Association of Metropolitan Detroit, an affiliate local association of ours, joined by many other associations, made a plea to the President for a decision on this very serious matter. That decision was asked for months ago, and only next week will we have the first conference on the matter.

We feel that those things that were in effect when the law became effective should be continued. We don't believe it was the intent of the Congress to change those factors. Yet they have been changed, and many of our people have been seriously affected by it. We think that hurts the very thing that Congressman Rains wants to accomplish, by his program of going over this country, namely, a better product. We think a better product comes from the incentive of the men working on the product to do a good job, and we have to offer these people some incentive to do that. They do not just do it out of the goodness of their heart. They do it because of something we do for them. Those things are accomplished by a program that has been in our industry for years and we think it ought to be continued. The fine workmanship of a good painter, of a good finished carpenter, of a good roofing man, of a good cement finisher, of a good plasterer, just cannot be overlooked.

If a man has a desire to do a fine job, he should receive some compensation for it. That has been going on, and now it is illegal, and we do not feel that it should be taken away from us.

Now, in the House bill, H. R. 7342, Congressman Dondero has written a statement which would compel relief from what we consider to be an unfair practice of the Construction Stabilization Commission. This is what it says:

This would amend section 402 (d) of the Defense Production Act to require that incentive compensation paid by the individual employee during the base period should be considered in fixing ceilings.

I mean that is the effective part of it. If wage controls are to be continued, which we hope they are not, we would much prefer that this complicated situation be handled by appropriate amendment of the Board's regulations, in order that we might have what we consider to be a program that bas been effective in the past continued into the future.

That essentially is what we would like to bring to your attention, and we hope that it receives favorable consideration.

The CHAIRMAN. Historically what has been the down payment on housing?

Mr. BROCKBANK. Chairman Spence, the down payments of FHA and VA, under regulation X, bave been considered to be the standard. Now, NFHA, up to $7,000 it was 9 percent down; then from $7,000 up to $10,000, it varied a little bit, 8 percent at $8,000, 10.6 percent at $9,000, and 12.3 percent at $10,000.

And it went on up so that when you got to $16,000, you got an 80-percent loan. That is, if the value was $20,000 you got a $16,000 loan, which was a 20-percent down payment. That has been a standard method. When the FHA adopted it for conventional lending it became a standard method, and of course when the Veterans' Administration came in, why, many homes were made with smaller down payments, and some without any down payments.

The CHAIRMAN. Do you think that same program would be inaugurated again if there were no controls?

Mr. BROCKBANK. I see no reason why it would not be, but I would like to point out to you that in a period when money is not available in the great quantities in which it was in 1950, bankers themselves will effect control on it. They may say, “In our area where we are quite short of funds we are going to require a 5-percent down payment," or they may require 10 percent.

But it is purely a matter of negotiation, then, between the mortgagor and the mortgagee, as to how much he pays down. It is not a problem that we have to solve by looking on a chart and finding out what controls are applicable.

I would like to point out to you also that in many cases people have bought a house, say, for $7,000, and then wanted a dishwasher, or something added to it, that brought them up to $7,100 and $7,200. That throws them entirely into another bracket which requires a much higher down payment, just because they wanted some small thing.

In many cases they could have gone out and bought it for less of a down payment than the increase on the price of their home.

The CHAIRMAN. Do you have any control over the construction that is performed by your members? I mean to say, if a man habitually fails to comply with plans and specifications, and complaints are directed to your organization, do you have any control over him?

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