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Mr. TALLE. Yes.

Mr. BROCKBANK. Very well, sir. They are an excellent product. In recent weeks the FHA has accepted plywood as a standard sheeting material, and we are using it very largely because of the fact that it can be put on in large sheets and does an excellent job.

Mr. TALLE. Is the hardware satisfactory?

Mr. BROCKBANK. Hardware is generally excellent; yes.
Mr. TALLE. Is the plumbing material all right?

Mr. BROCKBANK. The plumbing material, I would say at this point, is excellent. Many of the plumbing manufacturers have done a great deal of research, to try to cut down the amount of brass and copper used in their product. And one organization on the west coast has cut it down from where the whole valve or faucet is made of brass, to where there are only two rings of that material. The rest is rubber or other materials.

But of course our stretch-out program of the war has made going into that program quite unnecessary at this point. However, I feel that any contribution made to improve the product should be heartily received, and it is being heartily received.

Mr. TALLE. Is there any satisfactory substitute for copper, in say, eaves, gutters, and spouts?

Mr. BROCKBANK. Not yet. The aluminum industry has conducted a great deal of study on the use of aluminum, but they have not brought up a product that matches copper yet. It is still not as goodin our opinion.

We feel, however, that with many of the things that some of the big copper companies are doing to improve their production, that by the time a few more months roll by, that copper will be in much better supply than it is now. However, I realize that it is possible that it will never be in as great supply as it really should be for the whole industrial program of our Nation.

Mr. TALLE. That apparently is the only material which you find short, as far as your industry is concerned?

Mr. BROCKBANK. That is right.

Mr. TALLE. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. O'Brien.

Mr. O'BRIEN. Do you propose the elimination of all credit controls on new construction?

Mr. BROCKBANK. We feel that the regulations that will come about naturally on the part of the banking fraternity and the purchasing public will take care of it.

Mr. O'BRIEN. The banks do exercise a certain control, do they not, in addition to what we do by legislation?

Mr. BROCKBANK. That is right.

Mr. O'BRIEN. As to these scarcities of materials, have you found any real difficulty there, with regard to an enlargement of the realestate construction program?

Mr. BROCKBANK. Very largely our program has not had any real scarcity of materials since about 3 years ago, when the most scarce material, surprising as it may seem, was a gypsum product, Sheetrock. Mr. O'BRIEN. Your main difficulty has been legislative restrictions and the policy of the banks?

Mr. BROCKBANK. That is right. Well the policy of the banks, I think, has been regulated by the fact that there was competition for their money.

Mr. O'BRIEN. In Washington, if a person wanted to buy a new house, a three- or four-bedroom brick house in a residential location, it would cost in the neighborhood of 28 or 30 thousand dollars. What would be the down payment on that?

Mr. BROCKBANK. That would be a 50 percent down payment, as I remember it, but I have got it right here somewhere.

Mr. O'BRIEN. I believe you are right on that; it would be a 50percent down payment.

Mr. BROCKBANK. Yes; that is in the 50-percent bracket.

Mr. O'BRIEN. Do you think that has greatly restricted construction?

Mr. BROCKBANK. Yes, it has, and this is the reason why I think So. You see, a house that sells for that much money, used to be purchased by a large family which ordinarily would have more than two or three children in the family in order to require that house, for sometimes as little as 10 to 20 percent down payment.

The house is the same size, the cost of it has increased, but our brackets of down payments-that is the requirements of down payments, have gone up, instead of becoming about the same as they

were.

Mr. O'BRIEN. Is there a built-up demand for such construction which has been interfered with by these artificial restrictions?

Mr. BROCKBANK. There has been. However, the real pent-up demand, and the real need for a change in regulations is not in that bracket, in my opinion. It is down at the bottom of the ladder, where veterans returning with practically no savings, and where people in the low-income groups, spending all of their money to maintain their family, have no money to pay down. That is the real hardship in this whole program.

Mr. O'BRIEN. You think that we could afford to suspend all legislative control over real-estate credit?

Mr. BROCKBANK. You wouldn't suspend it all, because the FHA program is still a major factor, and that is a continuing program, and most all credit――

Mr. O'BRIEN. I am referring to the contents of this proposed bill. Mr. BROCKBANK. That is right.

Mr. O'BRIEN. In favor of suspending all of that?

Mr. BROCKBANK. Suspending it entirely; yes.

Mr. O'BRIEN. Leaving what remaining controls there are in the policy of banks, and in the policy of the FHA?

Mr. BROCKBANK. That is right.

The CHAIRMAN. Are there other questions?

Mr. BARRETT. Mr. Chairman.

The CHAIRMAN. Mr. Barrett.

Mr. BARRETT. I was just wondering if the witness, commenting on materials, would comment on using the cinder block for the foundation base, and what improvement or detriment it would bring to the property.

Mr. BROCKBANK. Sir, I am not familiar enough with cinder blocks to say. In my area I build all of the foundations with poured concrete and I am just not qualified to say whether cinder block is good for a foundation or not. I could not answer it, sir.

Mr. BURTON. Do you feel that the relaxation of controls would have a good effect on your industry and that there would be normal building?

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,

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 materialsMr. 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.
Mr. NICHOLSON. I do not mean a veteran.

son.

For a veteran-
For the ordinary per-

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 NATIONAL 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.

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