Would you still take the same position that we would not have authority under the Reorganization Act?

Mr. RUSSELL. If in all other respects the subject matter was the same, I would say that the Reorganization Order No. 1 was illegal. The CHAIRMAN. Under section 4, as I recall, of the Reorganization Act:

Any reorganization plan transmitted by the President under section 3 shall change, in such cases as he deems necessary, the name of any agency affected by a reorganization, and the title of its head; and shall designate the name of any agency

and so forth. Concerning this plan, I think it is very loosely drawn and I do not like the policy of putting the lending agencies under the building agencies, but I am just wondering if it is not in conformity with the provisions of Public Law 263 of the Seventy-ninth Congress.

Mr. RUSSELL. Mr. Chairman, I submit to you that if plan No. 1 had abolished the present National Housing Agency and sent these agencies here back to the reorganization Mr. Roosevelt set up under the Reorganization Act of 1939, it would have been legal, or if it had abolished the National Housing Agency and transferred these three permanent agencies of the Government to the Treasury Department or to the RFC, it would have been legal, but there are two illegalities in the action before the committee.

One of them is that without any doubt and in spite of a lot of double talk, it continues a temporary war agency and it continues very substantial functions that were never known before the temporary agency was set up, that we never appropriated money for until the National Housing Agency was set up. The appropriations are where I looked to see what I pay for when I look to the United States.

The CHAIRMAN. Did I understand you to say that if we changed the name of this new set-up under the new set-up under part V of the Reorganization Plan No. 1, that it would have been in conformity with the reorganization?

Mr. RUSSELL. I did not say that, Mr. Chairman; I said if you would merely substitute another name, such as the one you have mentioned, that it would be illegal. I say that a legal reorganization could have been accomplished under the Reorganization Act. I said that these three agencies could have been sent back to the Federal Loan Agency where they were reorganized under the Reorganization Act of 1939. I say that they could have been transferred to the Treasury Department, but I say that to enact this law that the President undertakes to enact by directive, he violates the Reorganization Act in two respects; one, he continues an agency, and two, he continues certain functions drawn up in that agency and there has been established by congressional appropriations over these years.

The figures are in the book and they are substantial figures in addition to the functions carried on by these three agencies.

Mr. JUDD. What you are saying is that you can change the name, but if it carries on the same functions, why it is the same agency. Actually he is continuing the agency and merely changing the namesno, he did not; but he could change the name of the agency. Even if you accept that techninality, that changing the name from No. 1

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to No. 2 means that No. 1 has been discontinued even though it carries the same functions, the very fact it does carry the same functions, it is in violation of section 5 (a) (4), because it says you shall not continue any function beyond the period authorized by law. Is that right?

Mr. RUSSELL. That is my view.

When Executive Order 9070 was issued in 1942, creating the National Housing Agency as a temporary war agency, patriotic motives prevented us and others from making any objection. Since the wars have been won, the Wagner-Ellender-Taft bill, S. 1592, has been introduced and passed in the Senate. It provides in title I thereof, substantially the same thing that is provided for in part V of the Reorganization Plan No. 1 of 1946.

That bill has been, and is, just about unanimously opposed by everybody in the United States with any experience and practical knowledge of real estate, housing, home building, and home ownership. It is opposed by the building material people, the builders, the real estate people, the bankers, mortgage bankers, and savings and loan people. Our opposition to it has been primarily on account of the provisions in title I of it which we believe to be designed to socialize housing in the United States and directly in conflict with our program of thrift and home ownership which has provided more homes than any other type of institution.

It is amazing and astounding to us, in view of the status of S. 1592, before the Banking and Currency Committee of the House of Representatives, the Reorganization Plan No. 1 of 1946 should include part V, undertaking to do, by Executive order, what we believe clearly is opposed by a great majority of the people of the United States and could not be accomplished by legislation. We believe that part V of the plan is not only prohibited by section V of the Reorganization Act, but also that it is in direct conflict with the purpose and intent of this committee and the Congress in prohibiting the continuation of war emergency agencies and functions by Executive order.

We have had more than 4 years of experience with the National Housing Agency and we do not like it. They say one thing and do something else. They have talked home ownership and built public housing. In the 4 years, 1942, 1943, 1944, and 1945, they have actually accomplished the building of substantially more than one-third of all new housing units as public housing, built, owned, and operated by the United States and local housing authorities under its control.

They propose to continue this system. In order to continue it, they seek a dictatorship of American housing under a single administrator, with an organization in Washington and throughout the country, with power to act and with means of propaganda heretofore unheard of in our American system of Government.

They accomplished the building of 40 percent of all new houses built as public housing during 4 years when the Government needed its funds and when the public had more equity money than ever before in our history and mortgage money was available on the best terms ever known in this country and while many small builders were anxious to build houses which ordinary citizens wanted to build. They not only built 40 percent of the housing during this 4-year period with Government money-and the total built was about 1,800,000but they succeeded in channeling the building permits and priorities

which they controlled for private housing to a handful of large builders who would and could build under extreme Government controls effected through this system, and I say to you it was nearly all tenement housing. They did not let us build a house we wanted to build, hardly.

The CHAIRMAN. I thought your policy was to eliminate slums. I am surprised that they were building tenement houses.

Mr. RUSSELL. I saw one in Harrisburg, Pa., that looked more like a slum than I ever saw. It looked like a picture they take of the slums, because it was washday.

We object not only because of experience with the system but also because of the clear intent and purpose under part V of Reorganization Plan No. 1 of 1946. The Administrator of the National Housing Agency is given the greatest possible dictatorial power over the whole field of housing and home ownership and in a large measure, the whole field of real estate.

The Congress created the five-man Federal Home Loan Bank Board to encourage thrift and home ownership, and it has done an excellent, effective, and economic job at the expense of the savings and loan associations dealt with and without a burden on the taxpayers. The Congress created the Federal Housing Administration which is largely competitive and serves all mortgage institutions and therefore its benefits have extended to many millions of our population.

Public housing was set up as the United States Housing Authority as an independent agency to travel on its own merits and demerits. It has received no authorization from Congress since 1937. Its authorization for 1938 was defeated in the House, in 1939, by an overwhelming vote of more than 2 to 1, and it has since been unable to get any authorizations.

Part V of Reorganization Plan No. 1 of 1946 would give the National Housing Administrator complete control of these three activities. His chief interest and concern to date has been and, in the future, will be, under such a system, public housing and control of private housing, home finance, and home ownership. We do not want to be associated with any such program and we do not wish to be under the control and dictation of such a scheme. We are perfectly willing to return to our status as provided by the Congress.

Furthermore, if coordination of Government activities is desirable, we are perfectly willing to be coordinated with all private home financing instrumentalities of the Government and with other private lending functions, such as the Federal Loan Agency or the Reconstruction finance Corporation or in the Treasury Department.

We seriously submit, however, that the private home finance facilities referred to as created by Congress have performed efficiently, effectively, economically and well without expense to the taxpayers and that they ought not to be associated with, or be put under the control of, any public housing group.

The five-man Federal Home Loan Bank Board was authorized by Congress and has made extensive administrative law affecting the 3,600 members of the Federal Home Loan Bank System, including the 1,500 Federal savings and loan associations and the system of insurance of savings and loan accounts protecting about 6,000,000 savers. This part V would transfer to the National Housing Administrator power over and power to change this administrative law. It includes

also the broadest kind of power over personnel in the Federal home loan banks and over examiners and supervisors of all these local institutions in your town and mine. It includes power by administrative law to say who can be the directors of these associations, locally, and to regulate the acts of local employees.

It includes power to prescribe appraisal and even to require Government appraisal. It includes power to prescribe minimum home sites and, therefore, to control subdivision of land. It includes power to prescribe building standards and, therefore, to control what kind of a house we can finance at the fork of the creek and much other power over many other local activities. Such power in one man in Washington in the first place will not work, and in the second place, is completely inconsistent with our whole system of Government and all of our methods of doing business.

The Federal Housing Administration was created by Congress in 1934 and has carried on a program which has been popular with the people of the country and with Congress. Substantially all the people who have studied that system, and who are interested in it, object to the provisions of this plan which would authorize the transfer or control of its most vital functions to the National Housing Administrator.

The facts are, gentlemen of the committee, that the uncounted thousands of building material producers in this country can, and will, produce building materials if permitted to do so. The forty-odd thousand home builders can, and will, build homes for the people, like the people want them, if they are permitted to do so.

Some 6,000 savings and loan associations, 15,000 banks, and a great number of insurance companies and mortgage companies and individuals will finance homes, and on the most favorable basis ever known in this country, if they are permitted to do so. After the fighting of the wars is over, we ought to be looking in the direction of permitting American economy to function instead of in the opposite direction of a national socialist economy.

The National Housing Agency, if you permit this plan to go into effect, will have such great power and will have such great means of propaganda that it can make it appear to the people that the only way to get a shelter over their head is to have the Government do it.

This is not true, and you gentlemen of this committee know it is not true. I have come to you after 25 years of study of thrift and home ownership in the United States. In the last 12 months I have traveled almost throughout this country and have discussed housing and home ownership and veterans' housing with all groups interested in the question. I never in my lifetime saw such confusion in the housing field as we have today. The average small builder is utterly unable to function. I never saw as unanimous opposition to any public question as we have from all of those interested in this question against title I of the Wagner-Ellender-Taft bill, which is part V of Reorganization Plan No. 1 of 1946.

This plan is the clearest illustration today of the method of taking advantage of emergency, or creating one, if necessary, to accomplish national socialist objectives. The first public housing was authorized in the excitement of 1933. The largest single public-housing program took place under the Lanham Act in the emergency of war.

In the teeth of the Lanham Act, which prohibits use of that housing as public housing, the National Housing Agency has come to Congress and got more than $400,000,000 in the last year to move Lanham Act housing and transfer it to the public housing authorities for public houses. A few units were moved to college campuses to camouflage the operation.

At present, with an admitted housing emergency, the situation is being implemented by a perfectly hopeless regulation so that the public is well-nigh frantic for housing. In this situation, when the Congress has declined, to date, to do the same thing in the WagnerEllender-Taft bill, we have an Executive order to accomplish the same result. It is your country and mine. I have great confidence in the House of Representatives.

Mr. Chairman, I would be glad to try to answer any questions if any members of the committee have any questions.

The CHAIRMAN. I think you made a very fine statement, and we thank you, Mr. Russell.

The next witness is Mr. Philip W. Kniskern, National Association of Real Estate Boards,

STATEMENT OF PHILIP KNISKERN, NATIONAL ASSOCIATION OF REAL ESTATE BOARDS

The CHAIRMAN. You may proceed, Mr. Kniskern.

Mr. KNISKERN. Mr. Chairman, I am Philip W. Kniskern, of Philadelphia. Among other activities, I am president of the First Mortgage Corp. of that city; chairman of the board of directors. of the Quaker City Federal Savings and Loan Association; and a past president of the American Institute of Real Estate Appraisers. I appear here on behalf of the National Association of Real Estate Boards, of which I am a director and a past president. The National Association of Real Estate Boards represents 800 local real estate boards and their 30,000 firm members throughout the country.

I think I can take pardonable pride in the fact that during the days when the Home Owners' Loan Corporation was making its loans, I served as the appraisal adviser to the Federal Home Loan Bank Board, and in that capacity directed the appraisal activities throughout the country.

Through my present business connections I am in constant daily contact with the activities of the Federal Home Loan Bank Administration and the Federal Housing Administration, where I am originating and servicing FHA mortgages. Furthermore, I have had intimate contact with the Federal Public Housing Administration through service as chairman of the National Advisory Committee, cooperating with the war program of converting homes and other existing structures into residence units for war workers.

I am in opposition to the creation of a permanent National Housing Agency as proposed in Reorganization Plan No. 1. My reasons for opposing this Reorganization Plan No. 1 may be broadly grouped into four general classifications:

(1) The plan is dangerous because superficially it sounds plausible and rather intriguing, but when one studies its real effects, it is found to be most misleading and very beguiling.