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THURSDAY, JUNE 6, 1946

HOUSE OF REPRESENTATIVES, COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, ,

Washington, D. C. The committee reconvened at 10 a. m., the Honorable Carter Manasco (chairman) presiding.

The CHAIRMAN. The committee will come to order.

The first witness will be Mr. George W. West, chairman, construction and civic development department committee, Chamber of Commerce of the United States. You may proceed, Mr. West.

STATEMENT OF GEORGE W. WEST, CHAIRMAN, CONSTRUCTION

AND CIVIC DEVELOPMENT DEPARTMENT COMMITTEE, CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. WEST. My name is George W. West and I am appearing on behalf of the Chamber of Commerce of the United States. I am president of the First Federal Savings and Loan Association of Atlanta, Ga., and a member of the board of directors of the National Chamber and the chairman of its construction and civic development department committee.

Both the National Chamber's board of directors and the department committee have had before them at different times for their consideration and action the proposal, now contained in the Reorganization Plan No. 1 for a permanent National Housing Agency. This reorganization plan was recently submitted to Congress by the President, acting under the authority given him by the Reorganization Act of 1945. Unless disapproved by both Houses of Congress, as is proposed by House Concurrent Resolution No. 155, within 60 days it will become law.

This far-reaching proposal was first made over a year ago by officials of the temporary wartime National Housing Agency. At no time, however, have the directors of the National Chamber or the members of its construction and civic development department committee been able to see anything to be gained in the continuation of this wartime agency as a part of the permanent peacetime organization of the Federal Government. On the contrary, it is their judgment that much will be lost.

The National Chamber's 2,353 organization members, which consist of both chambers of commerce and trade associations, also have had before them this proposal for a permanent National Housing Agency. As early as 1945 through referendum vote they expressed themselves against its continuation. They urged Congress to see to it that the

Federal Housing Administration and the Federal Home Loan Bank System are taken out from under the war controls now exercised over them by the temporary National Housing Agency. They urged that at the earliest practicable time these two permanent agencies should be restored to their relatively independent prewar status. The National Chamber's organization members are strongly of the opinion that the emergency activities of the wartime National Housing Agency are essentially temporary in character and should not be made permanent. On February 7, 1945, Eric A. Johnston, who was then president of the National Chamber, appeared before the Subcommittee on Housing and Urban Redevelopment of the Special Senate Committee on Postwar Economic Policy and Planning. He made a strong plea for the early release of the Federal Housing Administration and the Federal Home Loan Bank System from their war controls. He called attention to the fact that the National Housing Agency was established in February 1942 by Presidential Executive Order 9070, under the authority of title I of the First War Powers Act of 1941. This war agency, he pointed out, placed under one direction all activities of the Federal Government directly affecting war housing in any way, including: (a) The Federal Housing Administration and its functions, powers, and duties, including those of the Administrator thereof. (b) The Federal Home Loan Bank Board and all the functions, powers, and duties of the Board and of its members. This Board (1) charters and supervises Federal savings and loan associations, (2) supervises 12 regional home loan banks, (3) serves as the board of directors of the Home Owners Loan Corporation, (4) serves as the board of trustees of the Federal Savings and Loan Insurance Corporation. (c) The United States Housing Authority and its functions, powers, and duties, including those of the Administrator thereof. This sweeping wartime reorganization replaced the Federal Home Loan Bank Board of five members with a single Federal Home Loan Bank Commissioner. It continued the Federal Housing Administration, as formerly, under a single head. The United States Housing Authority was renamed the Federal Public Housing Authority, and given responsibility for spending Lanham and other available funds to build war houses and to reconvert old houses to war-housing uses. The functions of the Federal Home Loan Bank Board continued under the new National Housing Agency much as before, with adaptations of course to various wartime measures and conditions. The Federal Housing Administration suspended most of its normal activities and undertook through a new title VI, added to its act, to insure against loss the private builders who built war housing for sale or for rent. The United States Housing Authority became the construction and operating arm of the wartime National Housing Agency. It was thus given an important war job, which has also served to keep alive its organization. In setting up this wartime National Housing Agency it was contemplated both by the President and by the Congress that, under the terms of the First War Powers Act, it would automatically come to an end 6 months after the end of the national emergency. It was not contemplated by the Congress, or by the President at that time, that there should be continued parmanently under one agency the .* activities brought together solely in the interest of the war effort. While permanency thus was not contemplated by Congress, or by the Executive order setting up this wartime activity, it was contemplated by the officials in charge of this wartime housing agency. Long ago they made elaborate presentations to Congress and to the public pointing out the need, as they saw it, for a single housing agency to control all the activities of the Federal Government in the housing field. ~ The reasons for our disagreement with this proposal are solo

mental. We do not believe that either the purposes of a more efficient

organization of the Federal Government's housing activities or the public interest will be served by combining under the dictatorial control of one Government official the responsibilities, on the one hand, which the Federal Government has undertaken with respect to the private home financing activities of this country, and the responsi

in financing the building and in subsidizing the rentals of publicly

bilities, on the other hand, which this same Government has #

owned housing. This is indeed an attempt to mix oil and water. We are compelled to believe that the persistent and long-continued effort to force the merger of these two entirely different functions is motivated by something more than an interest in a better organization of Government activities. The widespread propaganda for this proposal reveals a determined purpose to subordinate the Federal Government's activities in the field of private credit to its activities in the field of welfare housing. We do not believe that either the welfare activities of the Federal Government or those activities which are designed to strengthen the private home financing facilities of the country will benefit by this unfortunate union. To merge these completely distinct functions, as is done by the President's Reorganization Plan No. 1, will mean that either sound and reasonable principles of credit will be weakened by diverting them to the uses .Pcharity, or, on the other hand, that the principles of welfare where they properly apply will be restricted to the point of view of a mortgage credit operation. There is no doubt in the case of the National Housing Agency but that the former alternative would prevail because that agency is in the hands of ardent public housing advocates. A main purpose for setting it up as a permanent agency is to strengthen and broaden the

influence of public housing activities in the United States. ----" "

The Federal Housing Administration is an agency set up by Congress to insure mortgage loans. Six and one-half billion dollars of home mortgages have been insured by this agency whose Administrator is responsible to Congress. He should continue to be responsible to Congress for the regulations and decisions he makes in carrying out the important purposes for which this mutual insurance fund was established. The Reorganization Plan No. 1 impairs his responsibility by

making him completely subordinate to the proposed permanent Na- .

tional Housing Administrator. As a matter of fact this peacetime National Housing Administrator would have much greater power and control over the agencies under him than was given his counterpart in wartime.

88368–46—9

The Federal home-loan banks are banks for making advances to their members who in turn are State-chartered or Federal-chartered savings-and-loan institutions and in some instances insurance companies. The act setting up this Federal Home Loan Bank system created a Board of five members to supervise its activities. This Board, under the terms of this act, is responsible to Congress for the regulations and decisions it makes in administering this important private credit function.

Acting under his wartime powers the President abolished the Federal Home Loan Bank Board. In its place be made one administrator

responsible for the operations of this banking system. It is now .

proposed under the Reorganization Plan No. 1 not only to continue ermanently the administration of the Federal Home Loan Bank §. in the hands of one administrator, instead of a board as provided by Congress, but in addition to place this administrator completely under the control of another administrator. We are thus confronted with the startling proposal to place the assets of thousands of savings and loan institutions throughout the country, which total over $6,000,000,000, under the direction—not of a five-man board which Congress felt was necessary when it created the Federal Home Loan Bank System in 1932—not of a single administrator which has been the case during the war period—but under an administrator who is subject to another administrator who in turn will be charged with the broad welfare objective—as set forth in the President’s message transmitting this Reorganization Plan No. 1–of seeing to it that j family in the United States ultimately obtains a suitable welling. one operations of the Federal Home Loan Bank System and the Federal Housing Administration, which involve the savings of millions of people amounting to billions of dollars, are placed in unnecessary jeopardy by this proposal to set up a permanent National Housing Agency. }. officials of this wartime agency, are primarily interested in his housing and in housing welfare activities and not in safeguarding the interests of private investors and the savings entrusted to private lending institutions. If there is a need, as some think there is, for correlating Federal mortgage-credit policies and maintaining a proper relationship between them and the direct use of Federal funds for housing, then Congress should give consideration to creating a board to perform this function. One such proposal now before the House contemplates a board composed of the Secretary of the Treasury, the Secretary of Commerce, and the heads of the four principal housing agencies, namely, the Federal Home Loan Bank Board, the Federal Housing Administration, the Veterans' Administration, and the Federal Public Housing Authority. A board of this kind could review the general policies and operating conflicts of the several agencies, could settle differences, and could make recommendations to the President and the Congress where modifications in law are considered advisable. We can have a grouping and correlation of certain activities without merging and consolidating them. The advantages of such a coordinating board are that it would not interfere with the functions created by Congress and no superagency would be set up. Such a board would serve a useful purpose. The Federal Loan Agency to

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