Mr. LAWTON. There are a number of programs where the Federal Government aids the home building and loan associations and the private banks on the matter of the mortgages.

The CHAIRMAN. The answer to my question would be "Yes"; would it not?

Mr. LAWTON. Yes.

The CHAIRMAN. That is all.

Mr. WILSON. You will admit there is a wide disparity of opinion in this country about public housing and private housing.

Mr. LAWTON. Oh, yes.

Mr. WILSON. And you will admit that if all of these agencies are combined, it would be possible for private housing to be submerged and public housing to be placed on the top shelf.

Mr. LAWTON. Only as Congress enacted a law which will authorize public housing to an extent that would submerge the private housing. Mr. BROWN. It is all submerged now; is it not?

Mr. HOLIFIELD. I think the record should show, if the gentleman is through, that no change in function would occur unless by the consent of Congress, and that if there is to be an enlargement or an expansion of the public-housing program it would have to come from another law passed by Congress.

I cannot hardly conceive of Congress passing another law along that line at this time, and, therefore, any comments as to the confusion of function and policy is irrelevant.

Mr. LAWTON. As to this plan; yes.

The CHAIRMAN. Should there be an objection to the testimony? We could get a vote of the committee to see if it is irrelevant.

Mr. JENKINS. It is also true, is it not, that you might have at the head of that one organization a man who is more interested in public housing than private housing, and, therefore, his activities would be more directed along that line than the other.

Mr. LAWTON. Or the reverse.

Mr. JENKINS. Quite true.

Mr. HOLIFIELD. But he would still have to be assisted by funds from Congress to effectuate his prejudice.

Mr. BROWN. But is it not true that if this reorganization plan becomes effective, a number of temporary agencies which would otherwise expire would be continued on a permanent basis?

Mr. LAWTON. No, sir; it is not.

Mr. McCORMACK. Is the National Housing?

Mr. LAWTON. That is not continued. You are creating a Housing and Home Finance Agency under this plan. You will have a single housing agency.

Mr. BROWN. Would some agencies which would otherwise expire come under that agency?

Mr. LAWTON. No, sir. You cannot continue functions or agincies beyond the time they would otherwise expire by anything you do in a reorganization plan.

The CHAIRMAN. What about a reorganization plan which seeks to transfer permanently to the Labor Department this Employment Service?

Mr. LAWTON. You are not changing the function. The function exists.

The CHAIRMAN. I am talking about the functions. The transfers and the report sent down by the President said they would permanently be transferred.

Mr. LAWTON. That is right; it is a permanent function of the Government.

Mr. McCORMACK. What this gentleman means is that these activities are now permanent under the law. They exist as a result of permanent law. The United States Employment Service would exist by act of Congress, no matter where it is.

Mr. LAWTON. That is right.

Mr. McCORMACK. That is, until Congress acts to repeal it.

Mr. LAWTON. But all of the agencies in this plan are not all permanent. Some of them are temporary, and when the date is arrived at when the function expires, it will expire whether it is in the new agency or whether it is in the present location.

Mr. McCORMACK. Which ones outside of the National Housing are temporary?

Mr. LAWTON. The Defense Homes Corporation and the liquidation of the war-built housing under the Lanham Act.

Mr. HOLIFIELD. And the reorganization plan would have no effect on the instructions from Congress as to when those particular functions terminate.

Mr. LAWTON. It does not change that termination date one day. Mr. MANASCO. The Defense Homes Corporation was not created by an act of Congress.

Mr. LAWTON. It is a Maryland corporation.

The CHAIRMAN. Are there any further questions? If not we will proceed to our next witness, who is Mr. West.

STATEMENT OF GEORGE W. WEST, CHAIRMAN, COMMITTEE ON CONSTRUCTION AND CIVIC DEVELOPMENT, CHAMBER OF COMMERCE OF THE UNITED STATES, ATLANTA, GA.

Mr. WEST. My name is George West, Mr. Chairman and gentlemen. I live in Atlanta, Ga. I have been engaged since 1910 in businesses of the kind that deal with these agencies that are named in this proposal.

I am a member of the board of directors of the Chamber of Commerce of the United States, and chairman of their construction and civic development department committee.

This statement is rather brief. I can either file it, sir, and answer any questions within the scope of the chamber's policy, or I can read it.

The CHAIRMAN. We will print it right here, Mr. West, unless there is objection.

(The statement is as follows:)

STATEMENT BY GEORGE W. WEST, OF ATLANTA, GA., CHAIRMAN, COMMITTEE ON CONSTRUCTION AND CIVIC DEVELOPMENT, CHAMBER OF COMMERCE OF THE UNITED STATES, BEFORE HOUSE COMMITTEE ON EXPENDITURES, MONDAY, JUNE 9, 1947

The purpose of this statement is to express the opposition of the Chamber of Commerce of the United States to the plan for consolidating Federal housing agencies embodied in the President's Reorganization Plan No. 3 of 1947, and therefore to support House Concurrent Resolution 51 expressing the disapproval of Congress to this plan.

The position of the national chamber is clearly set forth in a declaration of policy which has been approved by its membership, consisting of approximately 2,700 trade and commercial organizations, with an underlying membership of over 1,000,000 American businessmen. This policy reads:

"Congress should take steps at once to see to it that the Federal home-finance agencies regain their relatively independent prewar status. They should not be handicapped by being made a part of either a war-housing liquidation activity or of a subsidized rental Government housing activity."

Reorganization Plan No. 3 is the latest in a series of attempts by the executive branch of the Federal Government to extend its control into the business of housing the American people. This trend was clearly apparent before the war and obtained additional impetus through the necessity for channeling the flow of limited materials and manpower during hostilities. Now that the way is once more open for our economic activities to respond to the law of supply and demand, a powerful group within the Government is seeking to continue and extend its authority in the housing field.

Reorganization Plan No. 3, like the similar plan rejected by Congress last year, would give this group permanent status and would place its members in a strategic position to work for the retention and strengthening of Government direction over housing.

Conditions of the moment tend to distort our thinking about the housing problem. Today the assertion is freely and frequently made that private enterprise has failed to provide the American people with adequate housing and that, therefore, the Federal Government must assume part, at least, of the task. I challenge this reasoning on two counts:

First, I know of no country which has done anywhere near as good a job of housing its population as we have, and therefore I deny the implication of failure. Second, I see no reason for accepting the assumption that the Federal Government can provide housing more economically or more expeditiously than private enterprise. Certainly, the experience we have had thus far with public housing gives no reason to expect such an outcome. If our experience of the past is any guide, we will solve our housing problems faster through the function of a free economy than we will through an experiment in Government planning. Existing housing agencies affected by this reorganization plan fall into two very different classifications. On the one hand we have the United States Housing Authority and its successor, the Federal Public Housing Authority, which in time of peace are concerned primarily with the promotion of federally subsidized low-rent housing projects. On the other hand, we have the Federal Housing Administration, the Federal Home Loan Bank Board, the Federal Savings and Loan Insurance Corporation, and the Home Owners' Loan Corporation, all of which are concerned with the financing of homes built by private enterprise. There is a world of difference between the subsidization of housing as a socialwelfare activity and the stimulation of private home financing by means of a self-supporting mortgage insurance system-these operations and their objectives are as far apart as the poles. To give a single administrator control over the policies of such diverse agencies is to risk serious distortion of one or the other operation.

The national chamber is in full sympathy with the expressed desire of the President to simplify the structure of the executive branch of the Government in order to promote efficiency and economy, and will support realistic efforts directed to this end. On several occasions we have advanced specific suggestions for this purpose. One promising plan is embodied in H. R. 2797, introduced on March 26 by the chairman of the Banking and Currency Committee and referred to it for consideration. This measure would set up a board composed of the heads of the various housing agencies to serve as a medium for coordinating their general policies. This same device is used as a part of Reorganization Plan No. 3, which sets up a National Housing Council to coordinate the policies of those housing activities not transferred to the control of the new Administrator. If there is merit in this idea-and we believe there is-it could as well be used to solve the entire problem of coordination.

The issue currently before this committee, however, is the acceptance or rejection of a specific plan without any opportunity to suggest changes or modifications. On this basis the national chamber has no choice except to oppose a proposal which would achieve only a partial and questionable simplification at the expense of extending Federal influence into the housing industry.

The CHAIRMAN. Is there anything in addition to what is in here that you care to say upon the facts or statements as presented by the preceding witness?

Mr. WEST. We are opposed to this plan.

I should like to make one statement that I think would clarify just one of these agencies. The Federal Home Owners Bank System, is presumed at some time to belong entirely to its stockholders and not to the Government. It happens to be a stockholder like the Federal Reserve Bank System. It is a reserve credit system.

It was started under Mr. Hoover, to have that bank system in which my savings and loan association must own stock and does own $100,000 worth, mixed with Government houses, which is ridiculous.

Mr. BROWN. You do not want your money spent for some other purpose than that for which it was originally contributed or paid in. Mr. WEST. Nor do I want a contribution to come from the Federal Home Loan Bank System to support, as it does now, the National Housing Agency or the HHFA as this reorganization plan projects. Mr. BROWN. You do not want your own money used to put you out of business, do you?

Mr. WEST. No, sir. We do not want to support an organization when we think the Bank System in itself is inclusive. That Bank System pays us a dividend, 1 percent now, on that $100,000 we have invested in it. The Winston-Salem bank which we own that stock in, now has a majority, or more of private-enterprise capital than Government capital.

The CHAIRMAN. You said in answer to Mr. Brown that you did not want some Government agency handling your money. Will you tell us for the record just how that come about?

Mr. WEST. Well, at the present time these 19,000 people on the National Housing Agency pay roll are practically supported by a levy against the Federal Home Loan Bank System.

The CHAIRMAN. Over and above the general tax levied on housing? Mr. WEST. That is right. Over and above what it would pay if it were not for the National Housing Agency. Of course, the National Housing Agency is a war-created agency that will expire.

The CHAIRMAN. Will you explain how the two operate at Atlanta, Georgia?

Mr. WEST. Do you mean the Federal Home Loan Bank System? The CHAIRMAN. No; I mean these building programs.

Mr. WEST. Well, the Federal Home Bank System is a reserve credit banking system operated by the Government with presumed to be at some time totally private capital. It, of course, extends the line of credit to savings and loan associations and loans them money if they want to borrow money.

The CHAIRMAN. They use it for what?

Mr. WEST. For whatever they want to use it. Anybody borrows money, and it has to operate, of course, within the scope of its charter, if it has a State charter or Federal charter.

Mr. BROWN. It is to build homes.

Mr. WEST. That is right.

The CHAIRMAN. How would they come into conflict with the public building?

Mr. WEST. Well, Government housing is a welfare agency. It is designed to have poor people better sheltered at the expenses partly to the Government, the same as we would make a contribution to food and clothes.

The CHAIRMAN. Mr. Bender?

Mr. BENDER. No questions.
The CHAIRMAN. Mr. Manasco?
Mr. MANASCO. No questions.

The CHAIRMAN. Mr. McCormack?

Mr. McCORMACK. Mr. West, are you opposed to low-group housing outside of this organzation?

Mr. WEST. Do you mean Government housing? I think it is misnamed "low cost. Do you mean it costs low to build or it rents for less?

Mr. McCORMACK. Low-cost housing.

Mr. WEST. I have never seen anything when the Government built it where there was low cost.

Mr. McCORMACK. Of course you and I have not got a meeting of the minds. I am talking about low-cost housing on rentals. Are you opposed to that?

Mr. WEST. Yes.

Mr. McCORMACK. Is the Chamber of Commerce opposed to it? Mr. WEST. Yes; we are opposed to the Government putting any more money into Government housing.

Mr. McCORMACK. In other words, the Chamber of Commerce is absolutely opposed to any Government low-cost housing projects? Mr. WEST. Additional funds going into Government housing. There is some $3,000,000,000 now.

The CHAIRMAN. You do not mean you are opposed to low rentals, which might be an implication in this question.

Mr. WEST. Rentals are just a competitive price like anything else. The CHAIRMAN. You are not opposed to a tenant getting lower rent at any time?

Mr. WEST. No, sir. He can get as low as he can.

Mr. McCORMACK. Do you understand what I mean by "Government low-cost housing," that is, projects?

The CHAIRMAN. I want to understand what the witness means, if

I may.

Mr. McCORMACK. I am questioning him. You can ask him your own questions.

The CHAIRMAN. I want to know what the witness means when he says "yes."

Mr. McCORMACK. You can ask me to yield, and I will yield. You can ask him in your own time.

The CHAIRMAN. I am suspicious of those foxy questions.

Mr. McCORMACK. Did you understand my question, Mr. West? Mr. WEST. I think I do. You are simply asking me whether or not I am in favor of Government housing and renting for less than the standard rental.

Mr. McCORMACK. There was not anything foxy about my question?
Mr. WEST. There was not anything foxy about my answer.
Mr. McCORMACK. No. I admire you for it.

The CHAIRMAN. Will the gentleman yield?
Mr. McCORMACK. Just a minute.