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and which would make permanent the present National Housing Agency, is not a reorganization in any proper sense. It will not abolish unnecessary functions and unnecessary personnel. It will not create a more economical or more practical method of handling within the Government problems connected with real-estate financing. It will not eliminate duplication or increase efficiency. For these reasons it is the opinion of our association that this part of the President's proposed plan is unnecessary and unwise and should not be adopted at this time. While your committee will hear many considered reasons why this part of the President's plan should not be approved, I would like to direct my attention today to this one basic weakness; namely, the proposed plan does not really "reorganize" at all. It adds. It combines. It increases. It multiplies. But it does not reorganize.

What the plan does is to impose upon Federal Housing Administration and Federal Home Loan Bank Board the unweildy and unsympathetic weight of another holding company. It will give this holding company, the National Housing Administration, not general powers of policy coordination but, instead, powers of "superintendence, direction, coordination, and control of its constituent units." It will give the National Housing Administrator complete authority over the regulations and over every detail of operation of the Federal Housing Administration, the Federal Home Loan Bank Board, and the Federal Public Housing Authority. It will take from these agencies control over their statistical activities.

During the war, this association was not, opposed to the creation and operation of the National Housing Agency. As we have previously stated:

The Federal Government, in our opinion, acted wisely in simplifying its organization in order to expedite war housing and to prepare the Nation for any emergency which might arise and to improve our war effort and production.

We believe that many benefits were derived from this simplified organization and that the program for war housing and for financing such housing was expedited and was very beneficial during the wartime emergency.

But it is our opinion that since the war emergency has passed, the Federal Housing Administration and the Federal Home Loan Bank Board should be divorced from the National Housing Agency and the functions of housing finance, of credit, and of the insuring of credit should not be involved with the many technical problems of housing construction and research.

It is true that these two problems are related, but as with most first cousins, marriage between them is bound to be biologically unsound and economically unproductive.

We believe that Government agencies created in a time of emergency should be liquidated as soon as that emergency has passed. We see nothing sacred in the birth of an agency which compels its perpetuation after it has served its purpose.

We see no reason to adhere to what I sometimes call the mother-inlaw principle-once arrived, here to stay forever.

The members of our organization are particularly concerned with the Federal Housing Administration and the Federal Home Loan Board. We have done business with these two organizations since they were established. We have their confidence and they have ours.

They were established by Congress to perform necessary definite functions, and they have performed them splendidly.

You gentlemen must sometimes wonder if you are ever to hear a businessman speak well of any governmental agency. You are now witnessing that phenomenon. Here are two agencies of which over 1,100 business concerns who are our members are now saying, “We like them. We would like to continue to do business with them. But we do not much like their proposed new permanent boss, the National Housing Agency. That looks like a different breed of cat to us.”

These two organizations which are our friends are in many ways similar to the thousands of soldiers in our citizens' army. These agencies were drafted in 1942 by the issuance of Executive Order No. 9070 for service under a commander, the National Housing Agency, whom they did not choose and whose supervisory services they did not need in peacetime. During the war their liberties were curtailed and their energies diverted from normal channels. We believe they performed their military service well, and without criticism of their superiors.

But now, the war is over. We have demobilized our soldiers, and we should demobilize their agency counterparts. Now that the National Housing Agency's job of commanding officer is done, it should be retired and the recruits should be permitted to get back into civilian clothes.

What these agencies need is rehabilitation and not restraint.

We believe that if this part of the proposed plan No. 1 is adopted the former hari: onious and productive relationships between these agencies and the institutions which we represent may be impaired. We are not certain of this, but there have been many indications that it will happen, and we see no reason to incur this unhappy possibility when it is entirely unnecessary.

We would remind your committee that under this proposal the direct responsibility of these agencies to the Congress will be obscured, and your ability to deal directly with them and to inquire into their affairs and to consult with their heads will be seriously circumscribed.

We would also like to direct the attention of your committee to our belief that the functions proposed for consolidation under this part of the plan are fundamentally different. You have heard this from other witnesses before your committe. No chemist even in this age of the atomic bomb has yet advertised that he was able to successfully combine oil and water without the aid of an outside agent. Yet under this part of the proposed plan its authors are attempting by a stroke of the pen to amalgamate such basic variables as the credit operations of the Federal Housing Administration and the Federal Home Loan Bank Board and the welfare functions exercised by the Federal Public Housing Authority.

No, gentlemen, in this case the hand is not quicker than the eye. The result of a consolidation of these functions will either be the weakening of sound principles of credit in the interests of welfare or restriction of the principles of welfare through application of the point of view of a credit operation.

We believe that the financing operations of the Federal Government as carried on by the Federal Housing Administration and the Federal Home Loan Bank Board should be returned to the Federal Loan Agency, and that the public housing and welfare functions of the Federal Government should be returned to the Federal Works Agency.

If it is desired to coordinate the policies of these two distinct types of operations to achieve a unified housing program, we believe that that coordination can and should be accomplished and our organization will be glad to offer suggestions as to the manner in which this can be accomplished whenever we are invited and given an opportunity to do so.

While we are not so didactic as to say that our ideas along this line are the only correct solution to this problem, we are definitely sure of one thing that the proposed plan is not the correct one.

There is one further but significant item. You will not find anywhere in the proposed plan any reference to the home financing functions of the Veterans' Administration. We are not sure of the reasons why the President's plan does not include this material feature. We are sure, however, that without some reference to the lending functions of the Veterans' Administration, no proposed reorganization plan can be said to be complete or well thought out.

How can it be, when during the next few years it is universally agreed that the Veterans' Administration will be the most important single Federal agency in the mortgage field.

Look at the facts and figures. The Veterans' Administration has already handled over $272,000,000 of home loans. During the next 10 years it is estimated that it will handle over $15,000,000,000 when the total mortgage debt in the United States as of December 31, 1944, was only $31,500,000,000. It must be clear that with this omission the proposed plan is not really what it claims to be.

The CHAIRMAN. Thank you very much, Mr. Hollyday, for your statement.

If there are no questions, the committee will stand adjourned until 10 tomorrow morning.

(Whereupon, at 12:30 p. m., the committee adjourned to reconvene at 10 a. m., Thursday, June 6, 1946.)

REORGANIZATION PLAN

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

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