and turned over to Mr. Fahey, and that was put under the National Housing Agency.

Mr. JUDD. That is what I wanted to know. My point is, did you suffer under this new or different administration as compared to when you were under the five-man Board?

Mr. WEST. I think when you have a nonsympathetic department of Government dealing with you, you always suffer, sir.

Mr. JUDD. You prefer to be under the five-man Home Loan Bank Board?

Mr. WEST. As far as the Chamber of Commerce is concerned, we think it ought to be back to the Federal Loan Agency, because we think these three functions which I have described, apart from all the others, are functions that involve in one case, reserve credit and in the other case, the insurance of savings of the people, and in the other case, the insurance of mortgages.

Mr. JUDD. Nevertheless, you want to have all the private industry in one field and all that which is public, with public money in the other field?

Mr. WEST. That is right, sir.

Mr. RANDOLPH. Although saying you are a private credit agency, yet you have been helped with public funds, governmental funds, is

that not correct?

Mr. WEST. Mr. Chairman, I dislike to try to find out even what the Congressman means, because I would like to answer you directly. When you say, "me" do you mean my institution or do you mean the Federal Home Loan Bank in Winston or the Board in Washington? Mr. RANDOLPH. I speak of the over-all private credit organizations. Mr. WEST. Now what was your question?

Mr. RANDOLPH. I say that although they are private, are they not governmental, have they not had the Federal funds, although you call them private?

Mr. WEST. The Federal Home Loan Bank System was originally chartered with Federal money, $134,000,000, and then our institutions bought into that stock. The Federal Savings and Loan Insurance Corporation was chartered with several million dollars of Government money and it is still Government money. We simply pay a certain amount for our deposits. It is an insurance corporation.

Mr. JUDD. You actually get no Federal money from this insurance corporation unless you go broke?

Mr. WEST. I would not get it because they would lock my door and

throw me out.

Mr. JUDD. I mean your company and your business, your Federal savings and loan association business does not actually use Government money unless it gets into financial difficulties?

Mr. WEST. It has accumulated now some $65,000,000 worth of reserves. It is intended when we-and the law will explain I think, better than I am trying to tell-accumulate that $100,000,000, that reserve which has been paid in by us, plus its earnings on its investment in Government bonds, will replace the Government's credit entirely. It is similar to FDIC, and I am sure you know about that, where you chartered it with $300,000,000.

Mr. RANDOLPH. You are opposed to public credit functions, yet in the first instance there was public money involved, is that not true?

Mr. WEST. Yes; I think there is public money involved in every one of them.

Mr. WHITTINGTON. With regard to your Federal Savings and Loan Insurance Corporation, do you make loans on residences or other houses that are constructed?

Mr. WEST. We make them on residences; yes, sir.

Mr. WHITTINGTON. In 1936, 1931, and 1932, did these Government home owners' loan corporations take out from your institution many of your borrowers that were not able to pay their accounts, bail them out so to speak, so as to get rid of your undesirables?

Mr. WEST. At that time my institution was not chartered.

Mr. WHITTINGTON. I do not believe that is the question I asked. Mr. WEST. They took four out of mine; yes, sir.

Mr. WHITTINGTON. Now whether it be four, four hundred, or four thousand, with all deference, whenever you came to the Government to get Government help, whether it is you, I, or any other individual, we are going to pay the penalty.

Mr. WEST. I am not questioning that, I agree with you.

Mr. WHITTINGTON. It makes no difference whether you had four or four hundred, the Government is not going to let you, when you want to get out, step out and let the other fellows stay in.

Mr. WEST. From that particular, I can only answer for myself, and the Chamber of Commerce, we did not petition the Government to start the Home Owners' Loan Corporation. They not only did that, but they bailed out defaulted institutions, many of which were banks and insurance companies.

Mr. HENRY. Mr. West, if I understand you correctly, I think you were speaking of your own savings and loan institution in Atlanta, Ga., when there was some mention made of comparison of your profits during the last 3 or 4 years, as compared to the previous period. If I understood you correctly, I think you said one of the reasons for profits being maintained or increasing, was the fact you had an increase in the volume of savings.

Mr. WEST. That is right.

Mr. HENRY. Those savings were investable. Now is it not true that if you could be assured of that volume being maintained or increased, you would not be so worried about your profits?

Mr. WEST. We would not, sir, but we do not ever expect to loan money on a public housing project, because Congress does it themselves.

Mr. HENRY. I understand you make quite some volume of profits, do you not, from sources other than loans on homes?

Mr. WEST. We do not do so, except on Government bonds. We cannot put our money in anything else.

Mr. HENRY. Supposing you did not have a single loan, they were all paid off, but your savings increased in such a volume that you could invest it all in United States Government bonds, you would still be making a profit, would you not?

Mr. WEST. Hardly sir, when we pay 2 percent and all of my competitors pay 3 and 311⁄2 for money.

Mr. HENRY. I know it is true because in the case of many banks, and I cannot see why it would not be true in a savings and loan institution.

Mr. WEST. Do not forget that in a savings and loan institution we pay for all our money. The bank pays no money on anything but time deposits. Out of 300,000,000 time deposits in the bank in my town-I mean $300,000,000 on deposit, there are only $30,000,00 on time, for which they pay 1 percent.

Mr. HENRY. You can still conceive of a situation, could you not, in your own institution, where all of your mortgage loans might be paid off, and yet if you had sufficient increase in savings in that institution, you could take all of that money and invest it in Government bonds and there would be no increase in your overhead expense, because all you would have to do is to cut coupons, and you will still make money?

Mr. WEST. As a matter of fact, that is the socialistic principle that prevails in Britain at this time, in which it looks to me as though the institutions over there are liquidating. They are putting all their money in Government bonds and doing nothing, and the Government is going to make loans themselves on homes.

Mr. HENRY. I am not socialistic at all, but what I was trying to do is to help you in your argument by showing that even if you did make money that you would not be operating in accordance with the purpose for which your business was organized.

Mr. WEST. For your information, we had half of our portfolio a year ago in Government bonds. If you want a hard time living, you try to pay a 3-percent dividend and earn 2 percent from the Government bonds.

Mr. HENRY. Personally, I could not see how building and loan companies could continue paying 3 percent when money is not worth that.

Mr. WEST. The Government pays 2.9 today.

Mr. HENRY. It is not payable on demand.

Mr. WEST. It is not payable with that yield, but after 60 days it is payable. At the end of 1 year, you pay no rent on it at all. The CHAIRMAN. Are there any further questions?

Mr. RICH. If you are operating your business and paying 3 percent and you only get 2.9 from the Government, how can you exist?

Mr. HOFFMAN. They probably do so much of it, that is the same old answer.

Mr. RICH. I see how the Government does things, and can continue to do that, but I cannot see how a private enterprise can do it.

Mr. WEST. We do not pay but 2 percent for money in my institution and I will call to the Congressman's attention that under the GI bill of rights, for the $2,700,000 I have loaned, the rate is 4 percent, and there is no monkey business, it is 4 percent. It is the cheapest rate that anybody has ever heard of on a home loan in this country yet. Mr. RICH. Will you be able to finance the people in your locality with loans if the Government were not in the loan business?

Mr. WEST. Well, sir, for 120 years in these United States institutions like I operate in my town have furnished the capital and more than a third of it was used to finance homes in these United States.

Mr. RICH. You believe that private enterprise throughout the country would be able to do a lot of the work the Government is doing now in that field?

Mr. WEST. I think that is a question of "Can you pull your boots up by your own straps." I think the Government belongs to me. What can it do that I cannot do?

Mr. HENRY. Well, I am against Government ownership and Government operation of anything but the post office and a few of the things that are essential, because I think that the thing that made this country great has been private enterprise, and the capitalistic system-call it that, because that is what it is, because every man that owns anything is a capitalist, regardless of how great or how small. The initiative of private enterprise has been the incentive for people to go out in this country and do things and make this a great country, but when we put the Government in competition with enterprise and begin tearing down our business and all forms of business, we then become a socialistic or communistic government and eventually we are going to fail or just be like Russia if we do not stop. The quicker we get Government out of busines, we will be better off. Do you agree to that?

Mr. WEST. I would agree with the Congressman to this extent, that private capital as you know is timid capital. If you tell me the Government is going to build, buy, and own and operate 5,000 houses in Atlanta, I am not going to go out and build, I do not think, 10, 15, or 20 houses in an attempt to compete with that rental scale, as long as the public will put up money for the Government to spend.

Mr. HENRY. How long can the public continue to do it?

Mr. WEST. I think that question is too heavy for me, Mr. Chairman. Mr. JUDD. How much would you be paying 4 years ago to your investors, so to speak?

Mr. WEST. I think 4 percent.

Mr. JUDD. It is now down to 2 percent?

Mr. WEST. Yes, sir.

Mr. JUDD. And in that sense, the people of your area have been hurt and you think it is partly due to the fact of the competition of the Government which made a lot of cheap loans that would have otherwise come to you?

Mr. WEST. I would make the observation that this administration, meaning the one that is in office now, and the one that it succeeded, has one uniform practice, and that is reduction of interest rates, right straight down. I do not think it has ever been changed.

Mr. JUDD. What would you suggest doing for the people? You say the Federal Housing projects are glorified poorhouses. All the people are not going to be able to borrow money from you. What is going to happen to them from the standpoint of getting housing?

Mr. WEST. Well, of course, I think, paupers and poor people belong in the poorhouse. They need, and I think I am willing to contribute to the welfare agency of the Government, be it local, county, State, or Federal

Mr. RANDOLH (interposing). You do not mean that.

Mr. WEST. If I did not, I would not be saying it-that will study that man's problems, and those of his family, and it is assumed that in this country a man does not make a 20-year lease on a home as a pauper. It is assumed in this country with ambition and the relief from adverse circumstances which might have been, with or without their control, he, she, or what not, that they can be put back on a profitable basis and not remain constantly at 10 off the list. I call to the at

tention of the Congressman that I am in the housing business. If you are going to give families 10 off the list in public housing, they ought to have 10 off the list in groceries, boots, saddles, and everything else.

In the public housing project in Atlanta, they have a tenant's association that saved enough money in the association fund to have their pictures taken in the Atlanta newspapers buying Government bonds with the money.

Mr. RANDOLPH. Do you mean paupers or poor when you say they belong in the poorhouse?

Mr. WEST. I said I thought the pauper belongs in the poorhouse. I think poorer people have always occupied poorer shelter. I think that is a natural sequence, even in old automobiles.

Mr. RANDOLPH. Well, I misunderstood. I thought you said the poor should be in poorhouses.

Mr. WEST. Well, I don't know the difference between poor and pauper. Well, I presume you are poorer at times than you are just poor. I do not know how far you would have to go until you are considered poor.

Mr. HOFFMAN. I think I see what Mr. Randolph is getting at, and I would like to call to his attention and the attention of the other members of the committee, that when we were considering the wage-hour bill in the committee the other day, this question was asked: "If I cannot earn a minimum wage and can earn something below that, when I find a job, should the employer be permitted to pay my way?" The answer was, if I could not earn the minimum wage, I should go on charity, and I know no difference between the term "charity" and the poorhouse. It is very evident that we are not going to be able to supply everybody that wants a house with one. We will never be able to give every individual who is not able to support himself, to get the care he needs, the care he should have, his own home, and so would it not be better, if you are going to have some governmental institution, and I think this falls in with the thought the gentleman may have had in mind, instead of having individual monstrosities or brooder houses or hogpens like we see around the country as we drive around, constructed by the Government, with the housing of people, would it not be better, Mr. Randolph, if we had, what we said, a glorified poorhouse? We could put on some New Dealer's name and it will make it all right. Give them heated, modern apartments with electricity. If it is a man and a wife, old folks, let them live together and draw from the commissary. One thing sure, you cannot keep all these people, can you, where they cannot take care of themselves in their own homes?

For instance, I am getting along. Perhaps I need a nurse or an attendant. Maybe my poor old wife does. What are you going to do with us? As long as you make the suggestion about the poorhouse, I do not want it to go out here that anybody, not the witness, favors putting people in the old-fashioned poorhouse; you know, carting them over the hill to the poorhouse.

Mr. RANDOLPH. The witness has stated, and the record will show that he used the word "poor." He said, "poor people belong in the