think it is possible to raise the percentage of home ownership in this country up to at least 75 per cent. At present only 45.6 per cent of our families are home owners.

Senator WATSON. And that is a question of finances?

Mr. SHERLOCK. A question of finances, absolutely.

I have been diverted here a little bit. If I may, I would like to give you briefly the reasons why I am in favor of this bill. I have outlined them here on two sheets of paper.

I am in favor of the proposed home loan bank system for two major reasons: First, because of the effect for good it will have upon the present situation; and, second, because of the good it will foster as a permanent feature in our financial structure.

Let us take up the present situation. It will relieve the present situation as it affects the small home owner, first, because it will enable many home owners to save their homes from needless foreclosure.

I am not in the banking business. I have no connection with it whatever, except as an occasional borrower. Nor am I in the mortgage-loan business, the building and loan business, or anything else. But I have had letters coming from all over the country from people saying, "How can we do our share to bring prosperity back when we are about to lose our home?

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Our own family physician has had the first mortgage on his house called, to the extent of $7,000, and he is in the same position everyone else is. He can not collect money that is due him, and yet he is going to lose his home, his office, and everything else, and be more or less, in his mind, at least, a disgrace to the community because he was caught this way, through no fault of his. And that is the situation that exists all over this country. That is point No. i. It will save a good many homes from being foreclosed.

The second point is that it will relieve the situation right now, so far as the small home owner is concerned, because it will encourage the construction of new homes by citizens who wish to invest the remainder of their savings in the safest investment of all-a home. The second major point coming under the present situation is that it will start the wheels of industry to moving. It seems to me that that is the biggest thing, so far as the immediate present is concerned. The building industry is our key industry, so far as the absorption of foodstuffs, raw materials, and labor is concerned. Nineteen hundred and twenty-six was the last normal building year we have had, because residential building was on a fairly normal basis, and in 1926 the building industry as a whole paid out a labor bill of $3,000,000,000. It will start the wheels of industry to moving, because, first of all, as I pointed out in the original statement, there is a widespread demand for home construction and remodeling, and particularly right now is there demand for remodeling.

In the Ladies' Home Journal we have published articles descriptive of the effort that is being made in the cities of Muncie, Ind.; Rochester, Columbus, Wilmington, and numerous other cities, along this line of home modernization. In Rochester alone the women of the community went out-and, Senator, here is where the women come into the picture the women of the community went out with pledge cards and secured over 60,000 hours of work for labor alone, in the remodeling of homes, primarily in rehabilitation. There is a

demand, but they are stopped everywhere by the statement, "We have not the money." Some people are able to pinch out $5 to have a screen door fixed, or something like that, but they would do a great deal more than that if financing facilities were adequate.

The second point under that heading is this: I want to deny emphatically that we are overbuilt. We are overbuilt only on obsolete houses, apartments, and tenements that are insanitary, unwanted by real Americans, and a disgrace to our ideal of home life.

Senator, I lived in the city of Des Moines for 15 years, and I was proud of the fact, and Des Moines is proud of the fact that it had the highest percentage of home ownership of any class A city in the United States-51.1 per cent of the families in that city owning their homes-and yet, according to a survey that was published in Fortune magazine only last month, it was found recently that out of the eighteen thousand and odd dwellings in that city, 5,000 of them did not so much as have running water or plumbing facilities of any sort!

We are overbuilt on that kind of houses; yes. And it seems to me that any attempt to maintain the status quo, to protect an investment in something that is obsolete, is a national disgrace.

The third point under that heading is that we have a constant need for at least 250,000 to 500,000 new homes per year to take care of the increase of new families alone. We have not built these in recent years. As I said before, the last normal building year we have had in the building industry was 1926. There has not been the necessary amount of residential construction since 1926.

Senator WATSON. What is the reason we did not go on building in 1927, 1928, and 1929?

Mr. SHERLOCK. That is my next point, if you please, Senator. Senator WATSON. Certainly.

Mr. SHERLOCK. The building industry shows that clearly. That is why the prices of materials are down now. There is no demand for them because of lack of money.

What is the situation so far as the larger cities are concerned? Cambridge Associates, a statistical organization of Boston, announced only the first week of this month, February, 1932, that a survey had been made in 50 of our larger cities to see whether there was a condition of overbuilding, and whether space was needed. It was found that the need for new space right now, this month, amounted to $40 per capita in those 50 larger cities. If we spread this average over the entire country, it would indicate a need right now for $4,800,000,000 worth of new construction.

Personally, I think that is only about half what the amount should be, because there are thousands of small communities where no new construction has been undertaken in several years past, and it is perfectly obvious to any person who travels over this country, as I do. Let me say that for the last year I have traveled over the country on business 136 working days, and I have traveled over 50,000 miles, primarily on this very thing, on the building side and the homemaking side.

Senator WATSON. When you got into a town, how did you investigate that, Mr. Sherlock?

Mr. SHERLOCK. First of all, if you do not see a new excavation made for a basement anywhere, you know there is no new building

going on. That is the first thing I look at, when I come into a town, in the outer edges of the town, where the newer construction naturally would be found.

The next thing has been to confer with the leaders in the building industry, and in the building materials industry, and ask them, "What are you doing? Where is your business good? Where is it bad?" And so forth. I also conferred with chambers of commerce secretaries. In many communities they have home modernizing bureaus. For the past three or four years they have been trying to save the building industry, or at least keep their labor employed, by a rehabilitation campaign. Conferences were held with advertising men, and so on down the line each and every angle— financing, building and loan people, bankers, in many instances, and from our readers themselves, because that is the surest way to keep your finger on the pulse of the Nation, and know what is going on, from what they write you and tell you. We editors have a saying that if one reader writes and tells you so, there are at least 100 others who think so but do not write and tell you.

The fifth point under the heading of starting the wheels of industry moving is that right now we need to encourage more of our families to buy homes, and I believe (supplementing the point that we are not overbuilt, as I said to you in the opening statement) we are not overbuilt at all until we have at least 75 per cent of our families living in their own homes. When we get up to that point, and have in addition a 5 per cent surplus, then I am willing to listen to you on the statement that we are overbuilt.

The third big reason why I think it is essential right now as an emergency proposition is that existing credit facilities for home financing have ceased to function to any appreciable extent to-day.

I think the testimony I have listened to the last two days brings that out adequately. There is no money available for new construction or rehabilitation. The very gentlemen who have come here denying that we need this system are in a position to know how true this is.

Let me say that this demand is being throttled at its source by the refusal or inability of bankers and mortgage-loan companies to provide the money. The whole thing heads back to finance, Senator. And, in addition, there is no money available to-day for the protection of the short-term mortgagee whose mortgage has been called and who is about to lose his home.

I would like to talk, if I may, with your indulgence, on the permanent benefits that I see following the introduction of this as a permanent segment of our financial structure.

First of all, it will encourage home ownership by extending continuing financing facilities in this direction. One of the gentlemen this morning brought out a point that I have seen over and over again in my experience in the past 10 years, and that is that it is the stop-gaps that come now and then that dam up this demand, this normal continuing demand for homes, that causes your booms every so often, that cause your overexpansion, that cause, in large measure, many of the evils that exist in the small residential field, such as "jerry" building, speculative building, building of houses that are only worth 20 cents on the dollar, if that. We need this as a continuing thing, because if the flow of credit in this field is

continuous you will not have these violent swings up and down. The normal demand will call for a steady, orderly building because capital will be orderly in its flow to meet the need.

I am willing to admit now that you are apt to have a mild boom until you catch up with the present needs, because the present needs are abnormal, just as the conditions are abnormal.

The constant slump in the percentage of home ownership during the past 80 years is evidence of the fact that capital has not been freely available at all times for the prospective small home owner. We need a credit structure such as this as emphatically in good times as we do in bad times. That is the answer to the question you asked me a short time ago.

I have continually preached a program of home ownership every opportunity I have had in the past 10 years. In good times what happens? What happened in 1927, 1928, and 1929, you asked? We persuade a subscriber, by logic, or argument, or sentiment, or whatever it may be, that the first thing to do is to get a home. In good times, she goes down to her banker. He is interested in the 10 per cent that he can get on call money in Wall Street, and what does he tell this prospective home builder or home buyer as I can prove by thousands of letters? He say, "Well, prices are too high. Don't buy now. This is a poor time to buy or to build a home. Materials are out of sight. They are the highest they have ever been. Labor is way beyond reach. Times will be better; that is, prices will be lower a little later."

Then what happens when prices come down and labor comes down? There is not any money available. The banker is busy scrambling to maintain his liquidity, as he calls it, and what chance has our prospective home owner?

Let me add another thing. I am not quarreling with the bankers. I am merely stressing here, if I may, by example, a condition that exists and has existed in the past 80 years, due to our lack of an adequate financial set-up in this direction.

Let me just add one thing, if I may. The people were forced by necessity originally, because of lack of adequate financing facilities in this respect, to organize their own financing institutions for the sole purpose of aiding them in acquiring homes of their own. It that was not true, you would not have a single building and loan association in the country to-day.

The second one of the permanent benefits-and I consider this one of major importance-not only immediately, but over the years, is that it will encourage the extension rather than the contraction and restriction of the boundaries of the American market. This is of paramount importance to the future of industry, business, labor, and finance.

Let me illustrate. Experience shows that if you persuade a family to leave an apartment or an apartment type of dwelling and to move into a home of their own, it will occupy at least two rooms more than it did in the same circumstances in an apartment. If you persuade a family to leave an apartment and move out to the suburbs, it incidentally becomes an immediate prospect for the motor-car industry. The motor-car industry talks a great deal about 2-car families. You never heard of a 2-car family in an apartment, in the field we are talking about. The surest way for

the motor-car industry to extend the boundaries of its market is to unite behind a program of home ownership.

Suppose we look at the roofing manufacturer's business. We have, let us say, an apartment house housing 100 families. That apartment house occupies a plot of ground no larger in extent than an ordinary. bungalow in the suburbs would occupy with its yard and gardens surrounding it. One piece of real estate has been sold to 100 families, with one roof over the heads of 100 families, and the extent of that market per family has been contracted so that it is almost infinitesimal.

Suppose they are persuaded to go into homes of their own. What happens? Look at the instant expansion and extension of the boundaries of the American market. Think of those two extra rooms, as the very minimum they will occupy. What happens? Those rooms must be constructed. They must be painted, papered, carpeted, and furnished.

Some years ago a manufacturer of glass in Toledo, Ohio, figured out how many trainloads of extra glass it would take, Senator, merely to cover the pictures on the walls of those extra rooms. Think of it-an insignificant item like that! And yet for 80 years the lack of proper credit facilities has been constantly contracting and restricting the boundaries of the American market per family.

I wonder why banking and certain other interests are opposing this, when it means a greater market for them in years to come, and a better quality of living in every family circle.

My second point has been covered to some extent. Apartment families can, by proper credit facilities, obtain more home for their money when they acquire a home of their own, than they can afford as renters. Mr. Joseph P. Day, of New York City, has quite a reputation as a man of knowledge and experience along real-estate lines. He has sold some $80,000,000 worth of New York real estate in his business career. He states that the average rental cost of a room in a good neighborhood in New York City is $15. This does not mean Park Avenue, but in a good neighborhood. Suppose we have a family there with six rooms. They are paying $90 a month. He states that that same family can go out into the suburbs of New York City and can build a house containing eight rooms, and in addition a garage, for which they must pay $20 a month additional in the city of New York, if they rent, which would bring their rental up to $110 per month in the city of New York. They can go out and have a 7-room house and a garage at a cost of $75 per month to them, and a down payment of $700. He says there is no question about it, provided you settle this second-mortgage thing that has been the bugaboo, the stop-gap, that has stopped this increase in home ownership all these years.

The third point, as a permanent benefit that I see-and here is where I am getting into the side I like best, Senator-is that it will hasten the day of the restoration of the old Anglo-Saxon tradition of a detached house for every family. It seems to me we are right at the crossroads to-day. We have to decide whether that is to be the American ideal of home life in the future, or whether we are going to allow this Mediterranean notion of multiple dwelling under one roof to become the American expression of home life and set the standard of living for us over the years ahead.