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This is necessary because one of the implicit characteristics of Americans is their trust. Some cynics call this, instead, gullibility and remark that a sucker is born every minute. But trust is inherent in our way of life and too many recognize this and like leeches take advantage of it. This is where Š. 2672 can help.

Senator WILLIAMS. Excellent.

Mr. FREAR. Mr. Chairman, I have brought some photographs of the land in eastern Oregon that is typified by these subdivisions and I will leave these here for the committee record.

Senator WILLIAMS. Excellent. I understand that the county you have focused on in Oregon, our assistant here tells me, is a very large county—as a matter of fact, the largest in the State and I gather it is an undeveloped area?

Mr. FREAR. Yes, sir. I think many people couldn't grasp what remote really means, when you are remote. If 20 miles is remote in Florida, think what 110 miles is in Oregon, where he's 110 miles to the nearest town, and this will be a town of 4,000 people, where the nearest doctor is 90 miles away, where the nearest high school is 105 miles away, where the nearest water is 20 miles away—this is what remote is.

Senator WILLIAMS. What you are suggesting is when you use descriptive words, you just don't use language, you describe what is behind the language.

Mr. FREAR. That is right.

Senator WILLIAMS. Long ago, in the other committee that really developed the idea of bringing this area to Federal regulation, we had a commissioner, land commissioner from Arizona and he described a development that was said to be near water. These were in the days when Senator Barry Goldwater was on the committee and he whispered to me, “Well, 'near' is a relative word, but I happen to know that the closest water is 40 miles."

[graphic]

This is the road leading away from Christmas Valley, Oreg. This is how land

looked before man intruded with utility poles, trailers, and signs. It is 110 miles to the nearest town of Bend, Oreg., population 12,500. It is not quite that far to the nearest treeCaption and photo provided by EUGENE REGISTERGUARD, PAUL PETERSON.

[graphic]

Water is always a scarce commodity on the high desert country of Oregon. And

here at Klamath Falls Forest Estate, children of one resident family play in a well their father is attempting to dig. Best estimates are that he has 90 feet more to dig, an impossible task without proper equipment. But being unemployed, he has no other choice; wells cost $1,700 or more in this country. Caption and photo provided by EUGENE REGISTER-GUARD, PAUL PETERSON.

[graphic]

This is Meadowland Ranches subdivision in Harney County, Oreg. Elevation

about 4,000 feet. Climate, high desert. Flat plain with sagebrush principal vegetation, soil frequently spotted with alkali flats. This, prospective purchasers are told, is ideal farming country.-Caption and photo provided by EUGENE REGISTER-GUARD, PAUL PETERSON.

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If

you are going to say near water, or near schools, or near developed community, you should say just how near, among other things.

Mr. FREAR. Also how do you get there, get there on a dirt road or no road?

Senator WILLIAMS. Evidently, if there is a State law that requires disclosure in Oregon, Mr. Jenson, who is the administrator of the law, did use that word "babysitter.” He didn't intend to be a babysitter for every purchaser (comments by Mr. Jenson on p. 417). Hasn't the Governor done anything to try to tighten up that law?

Mr. FREAR. It is my understanding that the administrators of the State think that the existing law is adequate and that they are requiring basic information be produced by the subdivider and that this is published and is required to be given to each prospective land purchaser and that from this point out, it is then the land purchaser's baby.

I think, however, that I prefer the California law, which goes a little bit further, which even goes further in recognizing that people may

be thousand miles or more away. California tells more about the land and also even values it, gives it an appraised price.

Senator Williams. With it all, as a general proposition, State law alone is not adequate for the disclosure to the prospective buyer of what he is getting.

Mr. FREAR. I think this also relates to the fact that most people do not expect State law to deal with the problem. After my series was published, I got numerous letters from people in California wanting to know about what they can do to be sure that they aren't getting gypped, and I told them that your own State has a very strong law and within a few miles from where you live you can get all of the information you need to know, and if you read it carefully you will know. Well, I think this is an area that people naturally look to the Federal Government.

Senator WILLIAMS. Do you see the analogy here in this legislation to the situation that developed in equity securities and the disclosure that is required there and the power of the SEC to enjoin where the disclosure is not accurate?

Mr. FREAR. The one thing that disturbed me a little about the bill is that the fact that in my reading of it, it makes the registration statement made by the developer himself, and this gives, I think, all types of opportunities for using the words that they choose to use, which can have a lot different meaning and can give different shades of meaning and I would hope that I read the proposed law wrong and that this registration statement will be made by the SEC.

Senator NEUBERGER. I just think it is being idealistic, but impractical in your suggestion on page 5 that the registration statement tell about the doctor and all of these things, because of course, if any promoter did tell these truthfully, he surely wouldn't sell any lots.

Mr. FREAR. But this is already required in Oregon law. The Oregon statement and California statements both require this information

Senator NEUBERGER. But then your article appeared just last September. We had a hearing where we heard the same stories really 2 years ago, wasn't it, in 1964. Evidently it is still going on. Ninety

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now.

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nine percent of these lots are sold. When did the Oregon law go into effect?

Mr. FREAR. I think it has eliminated worse abuses. I think there are still abuses going on. This is the question. We need still stronger

Senator NEUBERGER. Even seeing all of this? I mean when somebody advertises at Christmas Valley, does he have to say the nearest doctor is 49 miles away?

Mr. FREAR. Yes.
Senator NEUBERGER. And still people go and buy?

Mr. FREAR. Yes, because the question then comes, I think, that the Oregon registration statement is a little overlegalistically drawn, and a little complicated to understand and I think we should recognize that people who are buying this land, the reason they are buying it, they are not going to real estate brokers or lawyers or title companies or anything, and they need to have this information spelled out clearly and without anySenator NEUBERGER. But like the example of Mr. Paulson, if a bro

. chure like this goes to somebody in New Jersey to buy land in Oregon, does it

say

it is 49 miles to the doctor and 110 milesMr. FREAR. Under Oregon law, that brochure would merely be reviewed to make sure there are no misstatements of fact. What the purchaser would get upon getting ready to buy it is a mimeographed pamphlet by the State of Oregon that he would have in addition to the brochure.

Senator NEUBERGER. Then it is a circumvention really of the law, if the brochure can go out advertising land in Oregon and doesn't tell that, then it seems to me it would be in violation of the law.

Mr. FREAR. I think the law specifically says that this information must be given in the statement to the purchaser. It does not say in the advertisement. It merely provides that the real estate commissioner can review any advertisements and make sure that there are no misstatements.

Senator NEUBERGER. I have been working a long time on some consumer legislation known as truth in packaging, and the opponents of the legislation constantly said that we didn't need the legislation because there was already sufficient law and they are always citing the Federal Trade Commission, which controls advertising.

Do you know anything about advertising as affected by the FTC in this sense?

Mr. FREAR. Yes, I think that people could make the same argument in terms of land sales, because under the fair trade, people out in Harney County were convicted of land fraud, and yet people are still buying this land.

The problem is that this law can only take care of the worst abuses, which it has and it has closed down immediately on land like Lake Valley estates in Harney County.

Senator NEUBERGER. Do you think there will be any opposition from real estate brokers in Oregon against this law that we propose?

Mr. FREAR. I have found very curiously that I could not get any interest from real estate brokers either for or against, and I made this attempt when I was doing research for my articles to find out whether

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