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Mr. BROCKBANK. Mr. Congressman, I feel that our national economy is in such a shape that the largest segment of the No. 1 industry in America should be kept in a free position, where it could carry on, to a large extent, the great work that the construction industry has contributed to our national economy, and I feel that these controls put us in a straight-jacket where we cannot do that as we should.

We could very easily have a situation where to build every unit that is possible and to remodel every one that is possible, could easily be of very great economic value to our Nation, during this year, and we feel that we ought to be in a position to do that, if it is necessary.

Now I feel sure that if our program comes to the point where houses are not selling, the people cannot buy them with controls off, why then we have demonstrated that we have pretty much taken care of the pent-up demand and from there on it is a matter of taking up specific brackets of people in any particular area.

Mr. Burton. You see no danger of a run-away inflation in the event controls are relaxed or withdrawn?

Mr. BROCKBANK. Well, I feel that the banking fraternity have the real control after all—the amount of loan that they are willing to make, which is dependent upon their own judgment in their particular area, and not even upon the FHA's regulations.

I used to work for FHA, and I know that in many cases, where the FHA said that you could have a 20 percent down payment, the banks did not necessarily make a loan with a 20 percent down payment available to the purchaser. They might require 30 percent or some other amount in excess of that.

I feel that the banking fraternity of this country is in the most outstanding position of any to control the amount of credit, and I do not think they intend to have a run-away inflation. I think they will take care of it.

Mr. BURTON. You feel that supply and demand is now taking care of the situation?

Mr. BROCKBANK. That is right.

Mr. Brown. I gather from your testimony that the main reason why you are not constructing more houses is on account of the money market?

Mr. BROCKBANK. That is right.
Mr. Brown. Well how can you correct that?

Mr. BROCKBANK. We have felt for a long while that that was the real crush on our industry, put there by the financial institutions in order to control the very thing we are talking about.

Mr. BROWN. What can this committee do about that?

Mr. BROCKBANK. I am not sure that I have the answer to that, I know that at the round-table discussion it became quite apparent, from the testimony, as I understood it, from the bankers, that one of two things, or maybe three, had to happen.

That the country had to either decide that they would raise interest rates, or that FNMA would have additional funds, or that the veteran, and people wanting to buy houses, would not get them. That was all there was to it.

Now, I am not sure whether the financial situation has changed too much since then or not. I know that a few organizations have started

to make some defense and military housing loans, -and also some veterans loans, but it is not the same over this Nation.

Up in the New England area it is rather easy for a veteran or a home purchaser to get a loan.

Mr. BROWN. That is due to the fact that the lending institutions are more liberal there.

Mr. BROCKBANK. That is right, and they have the money. There seems to be plenty of money there.

Mr. Brown. We cannot do anything about the other communities that are not as liberal.

Mr. BROCKBANK. That is right.
Mr. BROWN. That is all.
Mr. O'Brien. I have another question, Mr. Chairman.
The CHAIRMAN. Mr. O'Brien.

Mr. O'BRIEN. Can you tell me whether there has been unemployment or full employment in the home-building industry?

Mr. BROCKBANK. In the last few months, sir, there has not been full employment.

Mr. O'BRIEN. For how many months back would that be?
Mr. BROCKBANK. I would say it runs back to last fall.
Mr. O'BRIEN. And that is not entirely due to strikes, is it?

Mr. BROCKBANK. No, sir, it has been due to a lot of contributing factors, one of which was that we were slowing down in the number of houses constructed.

Mr. O'BRIEN. Could you give me any estimate, or any figures?

Mr. BROCKBANK. I wish I could, but when we get right down to figures on employment, flatly, they are just not readily available in our industry. It is hard to get them. But I do know that the number of employees in the construction industry has increased very materially in the last few years, and there have been a lot of people trained to work in the construction industry who are now becoming very competent employees.

Mr. O'BRIEN. Your working personnel, to build these houses, seems to be readily available.

Mr. BROCKBANK. That is correct.
Mr. Burton. Production is now exceeding demand?
Mr. BROCKBANK. I would not say that entirely. I would say

that on the basis of the credit controls that are now available to us there are not as many people who can buy as who would like to buy.

I want to point out to you that in recent months, builders who have had houses on display, have had an unprecedented number of people come to their houses, but when they find out how much they have to pay down, why, they go away without buying the houses.

I was in Boston a few days ago, at a home builders' show, and I frankly have never seen in my life so many people interested in the production of housing, as I saw in their home show. But when they come to talking about the product and how much they have to pay down on it, then they do not have the money.

Mr. FUGATE. And they cannot get it because there is no source from which they can.

Mr. BROCKBANK. That is right. And besides that, there are some other parts of this regulation which I think have not been thoroughly considered. When regulation X was put on, they cut the number of months that the man had to pay his loan off in. Then, in many cases,

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when the veteran came home, his parents would say, "Well here, John, is $500 or $600, or a thousand dollars, go and buy yourself a house and pay it back if you want to." Regulation X says that they can only get that money from their life-insurance policy.

Well, what people in the low-income group have a lending power on their life-insurance policies in sufficient amount to pay down payments on houses. They just do not have it; that is all.

Mr. FUGATE. Is it not true that there are many houses already constructed, ready for a family to move in, if they could manage the down payment?

Mr. BROCKBANK. In many areas in the country.
Mr. FUGATE. Right in Washington, in this area; is that not true?
Mr. BROCKBANK. That is true.

Mr. FUGATE. I have had a number of people in my office telling me that they have the houses built but that they cannot sell them because of the regulation.

Mr. BROCKBANK. That is right.
Mr. FUGATE. And there are no restrictions on materials or labor.
Mr. BROCKBANK. Essentially, the only restrictions on materials
Mr. FUGATE. That is as far as supplies are concerned.
Mr. BROCKBANK. That is right.
The CHAIRMAN. Are there further questions?
Mr. NICHOLSON. Mr. Chairman.
The CHAIRMAN. Mr. Nicholson.
Mr. NICHOLSON. What is the down payment, 33 percent?
Mr. BROCKBANK. It varies all the way up. For a veteran-

Mr. NichOLSON. I do not mean a veteran. For the ordinary person.

Mr. BROCKBANK. The FHA requirement is 10 percent down up to $7,000. It is 15 percent from $7,000 to $10,000, and it is 20 percent for $11,000 and $12,000, and then it jumps up to 23 percent at $13,000, 25.7 percent at $14,000 and goes up to 50 percent at $25,000.

The CHAIRMAN. If there are no further questions, you may stand aside. We are glad to have your views on the subject.

Mr. BROCKBANK. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Clerk, call the next witness.

We will have to adjourn a little before 12 o'clock because we have a bill on the Consent Calendar which will come up at that time.

The CLERK. The next witness is Senator Francis J. Myers, representing the National Foundation for Consumer Credit.

The CHAIRMAN. You may proceed, Senator Myers.
STATEMENT OF SENATOR FRANCIS J. MYERS ACCOMPANIED BY

WILLIAM CHANEY, EXECUTIVE VICE PRESIDENT, THE NA-
TIONAL FOUNDATION FOR CONSUMER CREDIT

Senator MYERS. Mr. Chairman and gentlemen of the committee, I appear here as counsel for the National Foundation for Consumer Credit, and I have with me Mr. William Chaney, the executive vice president of that foundation, a man who is well and favorably known to many Members of Congress and I am sure to some members of this committee, who I believe is as expert in the field of retail credit and consumer credit as any other man in the country.

The CHAIRMAN. You may proceed as you desire.

Senator MYERS. On Wednesday, May 7, the Board of Governors of the Federal Reserve System, as you well know, suspended regulation W.

We now ask the Banking and Currency Committee to delete from the Defense Production Act, that part of title 6, which provides the underlying legislative authority upon which this regulation rests.

We appeared before this committee and the Senate Committee last year and maintained at that time the same position which we maintain today, namely that the regulation should be repealed, as well as the legislative authority upon which it is based.

We also appeared in March of this year before the Senate Committee on Banking and Currency and took that very same position, which of course was before the Federal Reserve System itself had suspended the regulation.

At the time we appeared before the Senate committee, we filed a rather lengthy economic brief. That, of course, has been printed in the record of the Senate committee. Therefore, I do not wish to burden this committee with asking permission to print it again, but I refer you to that economic brief, which was presented to the Senate Banking and Currency Committee on March 17 of this year and was printed in the record of their hearings.

At first glance, many would presume that the suspension of the regulation should satisfy business and the public, whereas in fact just the opposite is true. In behalf of the National Foundation for Consumer Credit and its members and in behalf of American business generally, we urge the committee to strike the supporting legislative authority from the act now under consideration, and we shall tell you why.

I would ask at this point that we have printed in the record, Mr. Chairman, a 2-page statement which indicates the position of retailing generally on the subject of regulation W and their position is exactly the position that we present to you today.

The CHAIRMAN. It may be inserted in the record.

(The information referred to is as follows:) CHAMBER OF COMMERCE—EXCERPT FROM POLICY STATEMENT, APPROVED

APRIL 1952 ANNUAL MEETING On the basis of actual experience, no justification for Government controls of consumer credit can be shown except as a war measure for limitation of nonessential production.

Consumer credit performs an essential function in the processes of production and distribution. Interference with its normal flow offers an obstruction to effective operation of the free-enterprise system. AMERICAN RETAIL FEDERATION FOR RETAIL INDUSTRY COMMITTEE 1-EXCERPT

FROM TESTIMONY BEFORE SENATE BANKING AND CURRENCY COMMITTEE, March 17, 1952

* * * That it is the viewpoint of the retail industry that regulation W appears to be ineffective as a control device. There is adequate production and a plentiful inventory at all levels of the economy of the major consumer durables subject to the regulation. There is no upward price pressure in these lines.

To the extent that there are loans outstanding against this supply, consumer purchases of the durables on the installment plan make it possible to retire these loans and thus reduce the monetary supply.

Restraining the purchase of these consumer durables to curtail consumer debt simply creates more debt in other levels of the economy. 1 Some 65 National and State retall and service associations. See list Retail Planning Committee attached.

The regulation may dampen the sale of some goods, but it shifts consumer expenditures to other lines; and instead of increasing consumer savings it often promotes liquidation of present savings in order to put purchases on a cash basis,

Thus at a time of ample supply, the regulation has the effect of discriminating against one type of purchaser, and against types of retail outlets which serve that purchaser, and shift the debt burden from one level of the economy to another.

A complete review of consumer-credit controls will be presented by the National Foundation for Consumer Credit, a member of the Planning Committee. ROSTER, RETAIL PLANNING COMMITTEE OF THE RETAIL INDUSTRY COMMITTEE American National Retail Jewelers Association American Association of Nurserymen American Booksellers Association, Inc. American Hotel Association American Institute of Laundering American Retail Coal Association American Retail Federation Association of Credit Apparel Stores, Inc. Associated Furniture Dealers of New York Associated Retail Bakers of America California Retailers Association Chamber of Commerce of the United States Colorado Retailers Association Delaware Retailers Council Florida State Retailers Association Georgia Mercantile Association Grain and Feed Dealers National Association Idaho Council of Retailers Retail Paint and Wallpaper Distributors of America, Inc. Associated Retailers of Indiana Associated Retailers of Iowa, Inc. Institute of Distribution Kentucky Merchants Association, Inc. Limited Price Variety Stores Association, Inc, Linen Supply Association of America Louisiana Retailers Association Mail Order Association of America Maine Merchants Association, Inc. Maryland Council of Retail Merchants, Inc. Massachusetts Council of Retail Merchants Michigan Retailers Association Missouri Retai.ers Association National Appliance and Radio-TV Dealers Association National Association of Chain Drug Stores National Association of Credit Jewelers National Association of House-to-House Installment Companies National Association of Ice Industries National Association of Independent Tire Dealers National Association of Music Merchants National Association of Retail Clothiers and Furnishers National Association of Shoe Chain Stores National Consumer-Retailer Council National Foundation for Consumer Credit, Inc. National Industrial Stores Association National Institute of Cleaning and Dyeing National Luggage Dealers Association National Restaurant Association National Retail Dry Goods Association, National Retail Farm Equipment Association National Retail Furniture Association National Retail Hardware Association National Retail Lumber Dealers Association National Retail Tea and Coffee Merchants Association National Shoe Retailers Association National Stationery and Office Equipment Association Nevada Retail Merchants Association

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