Our present archaic methods of home financing are forcing an apartment-house type of living upon an increasing segment of family population every year that goes by. For those reasons, Senator, I am whole-heartedly for this bill. It seems to me it is one clear element of what can be done and should be done. It sets up a uniform standard of appraisal for residential property. Other segments of finance that are necessary will follow, if only this is done on a national basis. But I believe the example that will be set by the enactment of this system would enable industry to go ahead and work out an entirely new system of financing, which will encourage an increase in home ownership in the future. Senator WATSON. Of course, you have not taken up the details of this financial structure and all that underlies it? Mr. SHERLOCK. I have studied the bill carefully, Senator; yes. Senator WATSON. And do you see any objections to the bill? Mr. SHERLOCK. I see some features that I might question, but I think that is immaterial. It seems to me that the main purpose of this was, primarily, to round out a system for an emergency and to set up a system that would tend to avoid the emergency in the future. Senator WATSON. Do you think it is wise to establish a system that would set up 12 separate banks? Mr. SHERLOCK. I certainly do. Senator WATSON. And do you think that the system would make them pay in the future? Mr. SHERLOCK. I certainly do. I think, so far as some of the points brought out here are concerned, they are infinitestimal, absolutely. Senator WATSON. Is there a special feature or department in the Ladies' Home Journal set aside for home development, and all that? Mr. SHERLOCK. Yes. It might be interesting for you to know that angle. That is where we get our contact with our readers. The first floor plans for houses ever published in a magazine of general circulation were published by Mr. Edward W. Bok, more than 35 years ago. The first magazine that ever undertook a department for home development and home architecture and home management and all that, was the Ladies' Home Journal. Every prevailing type of small-house architecture we now have, except the Norman French, and it came along after Mr. Bok's day, was introduced by the Ladies' Home Journal. The type of house known as the Dutch Colonial, even the very name was suggested and coined by Mr. Bok. During all these years we have had the small house architectural feature, showing what can be done. Back in 1929 we announced a new and complete house-plan service for our readers known as Journal house patterns. Since that time, Senatorand this has a bearing on what I have been talking about-we have averaged a sale of a thousand house plans per month right through this depression, something that was never heard of before. Senator WATSON. You say you managed it? How did you man age it? Mr. SHERLOCK. I should have said that we "averaged" a sale of a thousand house plans per month, Senator. But 8 out of 10 write later and say, "We can't build now because we can't get the money." Senator WATSON. I must have misunderstood what you said. What is the circulation of the Ladies' Home Journal? Mr. SHERLOCK. Two million nine hundred thousand, Senator, 10 per cent of all the families in the country. Senator WATSON. Is it going up, or down? Mr. SHERLOCK. It has gone up in the last year-in circulation, I mean. Senator WATSON. Yes. Have you any questions, Senator? Senator WATSON. Have you any further statement, Mr. Sherlock? Mr. SHERLOCK. Not at this time, Senator. Senator WATSON. Thank you very much for your statement. (Mr. Sherlock later submitted the following additional statement, which is inserted in the record at this point.) THE PROPOSED HOME LOAN BANK SYSTEM (By Chesla C. Sherlock, managing editor Ladies' Home Journal) I am in favor of the proposed home loan bank system, for the reason that any movement which seeks to aid prospective home owners to secure a home of their own is entitled to the united and whole-hearted support of every segment of business, industry, and finance. United effort in this one field alone will give us a sound measure of prosperity for many years to come. This would not be temporary inflation, but a sound and stable expansion of the boundaries of the American market. I have been an editor, in close contact with home makers during the past 11 years, during which time I have been a farm-paper editor; the first editor of Better Homes and Gardens, serving there five years, and during the past four and one-half years with the Ladies' Home Journal, of which I am now managing editor. I have not been so much interested in the market angle of the question; I have been interested primarily in the social aspects, because the only way in which to get a better quality of living into the family circle is to encourage home ownership. Statesmen and philosophers, from the beginning of time, have recognized the home owner as a better citizen, a safer neighbor, and a more stable asset to the community than any other type of person. There is a quality that flows out of home ownership that can come to a family in no other way. While these angles of the general question have been of paramount interest to me as an editor, I have also seen at close hand the business and economic angles that flow out of home ownership, and, because these angles are of the most pressing importance to us now, I shall confine my remarks largely to them, as justification for my support of the proposed home loan bank system. We have got to choose right now what we are going to do about the matter of home ownership in this country. We are right at the crossroads. Home ownership is at a lower percentage, so far as we can determine, than ever before in the history of the Nation. For over 80 years that percentage has constantly declined. It is a disgraceful commentary to make upon a nation that has prided itself for its material progress in that period; a nation that, within this time, increased its population five times and its national wealth fifteen times. The chief reason for the slump in home ownership has been that we have surrendered the old Anglo-Saxon ideal of a detached house for every family. In its place we have embraced the Mediterranean ideal of multiple dwellings under one roof. We have put too many of our families in apartments, flats, and tenements. And every time we have encouraged a family to surrender the detached house for an apartment, we have shrunk and restricted the boundaries of our domestic market. The family in an apartment always occupies less floor space than the same family in a house. I am sure that fact is obvious to all. But limiting the floor space occupied is not all the contraction that takes place-it extends to every single activity and purchase that family may make. And the chief reason for this has been lack of adequate financing facilities for the small home owner. When I say that we are at the crossroads, I mean that we have got to choose which one of these standards of family life is to prevail as the distinguishing feature of national life in the future. If finance is to continue to hamper the natural desire of our people for homes of our own, we are going to become a nation of renters more affirmatively in the future than we are now-and that means that business and industry will face a constantly diminishing market. Eventually you will find every family living in one or two rooms and paying out as much in rent as a 5-room cottage or bungalow, properly financed, would cost in the suburbs. It is unthinkable that we should be so shortsighted as to overlook this fact. Experience shows that the family living in a detached house will increase the occupied floor area by at least two rooms over the family, in the same circumstances, living in an apartment. Permit me to illustrate some other features that have a tremendous bearing upon business and industry. Suppose we take a large apartment housing 100 families. It occupies a plot of ground no larger than that occupied by one cottage, with lawn and garden, in the suburbs. Only one small plot of land sold to house 100 families! Suppose we look at the roof over the heads of those 100 families-only one roofing manufacturer found a market there, and divided by 100, that market was reduced almost to the vanishing point per family. Suppose you encourage those 100 families to live in detached houses; then you have a market for 100 roofs, vastly extended in size per family. In apartment buildings, the windows, floors, walls, hardware, plumbing, insulation, windows-materials used in construction-are all standardized. Only one manufacturer in each line gets an order; he thinks. in his shortsightedness, that it is a fine order, but he has not stopped to consider that the tonnage he sells per family has been greatly restricted, over what it would have been, for his industry as a whole, if those 100 families were moving into a detached house. Consider if you will, for a moment, the extra two rooms per family, experience shows, would be occupied in a house as against the apartment. In many instances more than two extra rooms would be constructed--but, in any event, this extension of the occupied floor area is a clear gain for the building industry, and for every business in the land that must look to the home as its ultimate market. These rooms not only would be built, but they would be carpeted and painted and papered and furnished. We require in normal times from 200,000 to 250,000 new homes each year to take care of the new families alone. Most of these families would start out in a home of their own, if proper financing facilities were available—if it comparatively were as easy for them to finance their home as it is to finance their automobile, radio, mechanical refrigerator, or washing machine. There is not a single young woman out of this group who does not want to begin in her own home. And I venture to add that at least 11,500,000 of the women who have been renters all their lives feel the same way about it. Too many of them have written me and said so in the last 11 years for there to be any doubt in my own mind. But suppose we consider only the 200,000 to 250,000 new families each year. If they could be encouraged to build their own homes, the extra market immediately created, as against apartment dwelling, would amount to 400,000 to 500,000 extra rooms, to say nothing of the fact that all the other rooms in the house would be larger, better, and more commodious than the apartment rooms. The building industry is our key industry, so far as the absorption of raw materials, labor, and foodstuffs is concerned. In 1926, which was a normal building year, it paid out $3,000,000,000 in wages alone, leading all industries in its labor bill. It not only absorbs the largest segment of labor directly, but the product creates immediate employment for a tremendous amount of other labor. The building industry sets more wheels to turning than any other industry. Its ramifications, direct and indirect, are nation-wide. Directly, it consumes the major portion of our lumber, stone. brick, paper, paint, and insulation output. It creates an immediate and continuing market for automobiles, furniture, carpets and rugs, linoleum, heating equipment, plumbing, hardware and household goods of innumerable variety. We are not overbuilt. With 55 per cent of our families still renting, according to the latest available census figures, we are not overbuilt. But aside from any possibility of increasing the percentage of owned homes and thereby enlarging the demand for small residences, I still challenge the statement that we are overbuilt. There are thousands of communities in these United States where not a single residence has been created in the past three years. This fact is evident to anyone who has traveled over the country in that period. I am speaking mostly of the smaller communities. But what of the larger centers? Early in February the Cambridge Associates, of Boston, announced that after a survey in 50 of the larger cities it was found that the need for space now amounts to $40 per capita. If this low average were spread over the entire country it would indicate that there is a need right now for $4,800,000,000 worth of space, but I am convinced that double that amount would be nearer correct, for the smaller communities have not figured in the calculations at all. Therefore, the people who claim we are overbuilt are in error, any way you look at it. The violent swings up and down in the building industry are due almost entirely to the amount of residential building that may be done. Commercial building runs along on a fairly even keel in bad times, as well as good. That is due to its nature. The reason for the swings on the residential side is due to lack of proper financing facilities, and nothing else. Nearly two years ago President Hoover aptly said: "The result of the inability freely to secure capital has been a great dimunition in home construction and a large segment of unemployment which could have been avoided had there been a more systematic capital supply organized with the adequacy and efficiency of other segments of finance." The fluctuations have not been due to fluctuations in the desire for a home. That desire for a nest of our own is inherent in all of us; not a single housewife or mother will deny that. Indeed, the desire for a home is at higher pitch to-day than ever before. People have come through the depression with an increased appreciation for the fundamentals of life. More people are resolved to have a home of their own than ever before, because of the worry, fear, and uncertainty they have just been through. We have had a remarkable evidence of that fact at the Ladies' Home Journal. Since the depression started in November, 1929, we have averaged a sale of 1,000 house plans each and every month to our readers, right down to the present. Such a record has never been heard of before in our experience, and we have been preaching good architecture to our readers for more than 35 years. Fluctuations in residential building from year to year have not been due to lack of available land. Land is not plentiful one year and scarce the next. Our transportation facilities have been developed to such an extent that the land available for home construction has been multiplied many times over what it was a few years ago. With good roads nowadays, the family can live 15 or more miles in the country and still be closer to the place of employment than it was 20 years ago. The automobile has vastly improved any chance there might be to make this a Nation of home owners. Fluctuations in residential building have not been due to lack of available materials. Building materials manufacturers are better organized than ever before in our national history to serve the home builder. Lumber, stone, brick, tile, cement, steel and fabricated metals-indeed, more materials are available for the home builder than ever before. And dozens of entirely new products have been perfected that were unknown to the builder of yesterday. You can build a better house to-day, for less outlay, than our grandfathers could build. It is not lack of materials. These fluctuations have not been due to lack of adequate design-we have thousands more architects than we had 30 years ago. It is not due to inability to get good construction-we have more highly skilled workmen available than ever before. Nor is it due to a failure to have proper zoning laws, some gentlemen to the contrary notwithstanding. These are all secondary considerations-smoke screens too often permitted to obscure the real issue. Then, what is the trouble? Simply lack of adequate financing facilities. The blame rests squarely upon our failure to make it comparatively as easy to buy a home as it is to buy anything else we buy. The spectacle we present is disgraceful, to say the least. Here we are with millions of competent workmen out of employment, eager and willing to earn their daily bread by honest toil. We have hundreds of thousands--a potential of even millions of families wanting a home of their own. We have the land available; we have adequate transportation facilities; we have the materials, and the necessary skill. We have this great potential need and demand pent up in a reservoir where it can not escape. We all recognize the good that this accumulation of wants and needs would do all of us, in every way, yet we are confronted by the spectacle of archais finance standing with its back to the floodgate of prosperity, and yelling in horror-stricken tones, "We are overbuilt. We do not need it. You'll lose your shirt, if you do." Well, I have no patience with that. And I know that the people of the country, the small home makers constituting the real American market-the $40 to $75 per week families-agree with me. They have no patience with the obstacles that clumsy financing policies have set up in their way. They are beginning to look into these things with determined interest. Indeed, one of the healthy things that has come out of this depression has been the utter deflation, so far as the public is concerned, of any opinion it might have entertained of the infallibility of certain attitudes of mind in finance. We have examined these minds closely and we have made the interesting discovery that, like the Chinese gods, they have holes in the back of their heads. The purpose behind the proposal for a home-loan bank system was to benefit the country at large and as a whole, not to aid any particular segment of finance, business, or industry. The people understand this, and they realize that the greatest need facing the family is a home of its own. If impediments have been built up which prevent that need being supplied, then it is a proper function of government to dig out that impedimentblast it out, if necessary. I am surprised that we have been able to maintain the percentage of home ownership that we have in face of the obstacles that finance has set up. It has been easier to spend the family dollar for anything else other than the most essential thing the family needs. It is a splendid commentary on the inherent thrift and character of the American people that such a large percentage of them have won through every obstacle to home ownership. But the penalties which existing methods of finance have imposed are not only working a hardship upon those hardy souls who have ventured to come to grips with it, but it is also slowly destroying the whole domestic market, by strangling it at its source. I know of no bill that has been before Congress in the last 20 years which, when enacted, will have more far-reaching effect for good, for more years to come, than this proposal for a home-loan bank system. I am therefore for the proposed home-loan bank system for the following reasons: 1. Present existing financing facilities are inadequate in encouraging home ownership. The constant slump in the percentage of home ownership during the past 80 years is evidence of the fact that money has not been readily available to the prospective small home owner. The proposed home-loan bank system will enable those agencies, set up by the people themselves for the purpose of financing a home, to supply the deficiency now so seriously present. 2. Present existing financing facilities have practically ceased to function. I have evidences every day that there is a demand for construction and remodelling of homes, which would start the wheels of industry to moving, that is absolutely throttled at its source by the refusal of bankers to provide the money. One man was refused $5,000 two weeks ago, for this purpose, even when he offered sound securities to double the amount, as collateral, in addition to the mortgage. 3. Our present archaic methods of home financing are doing more to destroy the traditional American ideal of home life than anything else in our social system. It is forcing an apartment-house type of living upon an increasing segment of family population every year that goes by. That tendency must be stopped, for it is not only overturning the Anglo-Saxon ideal of home and family life, but it forces a constantly restricted market upon all business and industry which must look to the American home as its ultimate market. 4. There is at the present time a widespread demand on the part of the people for homes of their own. At no time in the present generation has there been a more determined desire to acquire a home than now. Hundreds of thousands of families have in recent months awakened with a financial headache, and they are saying, "The first thing we will do will be to buy a home. If we had done that three years ago-well, we would still have a roof over our heads, anyway." At the Ladies' Home Journal we have averaged |