visions as set forth there would touch half of the properties. I would say that $15,000 is an average of the home owned by the ordinary family of decency in our cities.

Senator COUZENS. That is entirely contradictory to the testimony introduced by Mr. Russell of the Home Loan Bank Board, and with which testimony I concur.

Senator BARKLEY. You mean as to the average amount of the average home?

Senator COUZENS. Yes. Mr. Russell gave very detailed testimony the other day when we started the hearings on the bill as to the percentage of homes and their values.

Mr. SCHMIDT. What cities was he referring to? Was he taking a general average?

Senator CoUZENS. Yes.

Mr. SCHMIDT. Well, I think that perhaps is true, Senator Couzens, if you take a general average all over our country, because in the

small town

Senator CoUZENS. That is what I am interested in.

Mr. SCHMIDT. I think you have got to be interested in more than that. You have got to be interested in our cities of size. People live in them to the extent of probably 20 percent of our population. Senator BARKLEY. Why should the average in Cincinnati be so much out of proportion to the average in the whole country?

Mr. SCHMIDT. Because that includes the small towns where your labor is perhaps half. They have no union labor usually in the small town. They have got the carpenters, and so forth, who work at probably half of what you have to pay in your cities. Your land is cheaper. It frequently has not the same facilities by way of sidewalks, streets, sewers, water.

Senator COUZENS. I think what Mr. Russell testified to would apply perhaps to the city of Detroit even.

Mr. SCHMIDT. I do not agree with you, Senator, because

Senator COUZENS (interposing). I do not expect I am going to agree with you, either, on this bill.

Senator BULKLEY. May we interrupt there just a moment to ask Mr. Russell whether that is correct. Would it apply to a city such as Detroit?

Mr. RUSSELL. Senator, I have here some figures from the United States census in 1930, and I would say to the committee that in view of the decline in values of homes since that time there would be even a greater proportion of homes now in the smaller value class, and the census figures here give 10,503,000 homes owned in America of all classes, and it gives value under $1,000, seven hundred and ninety-four thousand and some; $1,000 to $1,499, 570,000; $1,500 to $1,999, 531,000; $2,000 to $2,999, 1,167,000; $3,000 to $4,999, 2,343,000; and $5,000 to $7,499, 2,297,000; and from $7,500 to $9,999 is 989,000. Now that comes up to the top of the present pending S. 1317, and that is a little more than three fourths of all of the homes owned in America, and that is based on the 1930 values. Mr. SCHMIDT. What values? Tax values?

Mr. RUSSELL. The 1930 values as in the census.

Mr. SCHMIDT. Yes; but what values were in the census?

Mr. RUSSELL. The values that the Bureau of the Census gathered in taking the census in 1930.

Mr. SCHMIDT. Did they appraise everything, every home in the country?

Mr. RUSSELL. They visited every home in the United States. Mr. SCHMIDT. Did they appraise it? I don't think so. I think they may have taken the tax values.

Senator COUZENS. Did you? Did you appraise them all?

Mr. SCHMIDT. No; but he is making the categorical statement. Mr. RUSSELL. I do not know how reliable the United States census is, but I would say this, Mr. Chairman, that in my city the south side of my city, which makes up more than half the homes owned, there are very few homes in the south side that are of five thousand value. I have investigated many other cities also. Senator BULKLEY. That refers to Atlanta?

Mr. RUSSELL. Yes, sir.

Senator BULKLEY. Now, the figures that you have given us from the census are for the whole country?

Mr. RUSSELL. The United States as a whole.

Senator BULKLEY. And there is no separation as to the size of the cities?

Mr. RUSSELL. None at all; no, sir. But I have investigated that question, and while I have not the exact figures, I do find that in cities in the North and in cities in the South and in cities in the East and in cities in the West, these figures are fairly reliable.

Senator BULKLEY. Well, you do not mean to say that there is no difference between the large cities and the smaller towns?

Mr. RUSSELL. No, sir; I would not say that, but I would still say that even in the larger cities of the country probably half of the population that own their homes live in homes of $5,000 or less in value.

Senator BARKLEY. I presume these valuations fixed in the census report are valuations fixed by the owner at the time of the visit of the census enumerator?

Mr. RUSSELL. I assume so.

Senator BARKLEY. Nobody ever underestimates the value of his home except for taxes.

Mr. RUSSELL. It is likely, therefore, that these figures are too high.

Senator BARKLEY. Yes.

Mr. RUSSELL. And there are even a greater number in this smallerhome class. The singular part of the situation is that the big lenders of money, like the insurance companies, have declined entirely to lend money on the one-, two-, and three-thousand-dollar homes, and they therefore overlook that class entirely, and the real lenders of the United States find it more profitable to deal with the bigger unit and are not much interested in the small unit. The $1,000 or $750 home they are not interested in, they do not work on, and it does not pay to work on, and therefore many times in figuring that question I think it is misleading, because it is the big home that is a profitable transaction and that the big lenders of the country follow.

I think the census figures are reasonably reliable.

Senator BULKLEY. Do you have any personal knowledge of home conditions in New York City?

Mr. RUSSELL. I have some personal knowledge, not from actual experience in lending money in New York City, as I have in my own home city, but I have been to New York City and studied the question some, as I have in many other cities, and I would say that there are a great many more homes of the small-value type than most people realize in New York City and in the suburban area that is a part of Greater New York.

Senator COUZENS. I want to point out in just one bank that closed recently there were 55,000 individual mortgages there with only an average of $2,800.

Mr. SCHMIDT. I know that, Senator.

Senator COUZENS. So that I think the census is nearer right.

Mr. RUSSELL. When people undertake to say that our big cities are different from other cities very frequently they are very much mistaken. There are a lot of people that make under $100 a month in Detroit. There are a lot of them in New York City that earn less than $150 a month, and they cannot afford to own a home of the class referred to. If they own any home at all, it has got to be of the class of 1, 2, 3, and 4 thousand dollars. A man that earns $150, or $1,800 a year, cannot afford to own more than a $4,000 home.

Senator BULKLEY. I imagine a good many of them do not own their homes. But we want to get back to Mr. Schmidt. Thank you very much, Mr. Russell.

Mr. SCHMIDT. According to his statement, Mr. Chairman, I believe there were still 25 percent of the homes which were in excess of $10,000. I do not know how those figures were taken for the census. They may have been tax values. That is what is frequently done. They may have been an estimate of value.

In any event, the fact does remain that the property cost in our major cities, of which I was talking, is much in excess of the cost in our smaller cities. It is also likewise true that the cost of a home in a northern city is very considerably in excess of the home in Atlanta, from which city I think Mr. Russell comes.

Senator BULKLEY. Do you have some personal knowledge about home conditions in Cincinnati?

Mr. SCHMIDT. Yes; very intimate knowledge.

Senator BULKLEY. What would you say is the proportion of homes that are more than $10,000 value?

Mr. SCHMIDT. I would say 20 to 25 percent. That was about my judgment.

I think it is a mistake to eliminate that class of our people, which after all is probably the most thrifty and substantial of our population. I think that the very wealthy class have no need of this instrumentality, and that consideration need not be given, but I do think that there are many, many of our good citizens who require mortgages that are in excess of $8,000. I think that is prima facie. Won't you admit that, Senator Couzens, that there are many of our citizens who require mortgages in excess of $8,000?

Senator COUZENS. I should say that would be true.

Mr. SCHMIDT. That is my only statement.

Senator COUZENS. But I do not believe the Government should cover the whole area, the whole field.

Mr. SCHMIDT. Why not? They are substantial citizens.. They are entitled to the benefits of such help as the Government can lend in periods of stress.

Senator COUZENS. No; I am just as much in sympathy with the Government going as far as it reasonably can, but it can not cover the whole field of investments in homes throughout the Nation, and so therefore it seems to me that it is the Government's responsibility to help those that most need it out of the group when they cannot help them all.

Mr. SCHMIDT. Well, if you feel that it is impossible to cover the whole field, why, then your statement is correct.

Senator COUZENS. I certainly do.

Mr. SCHMIDT. Personally, I think that at least it might be attempted to cover that field and render equal benefits of government to all of our citizens instead of to those in the lower brackets.

In any event, I do feel that the provisions in the bill as proposed eliminate a great class of citizens who are perhaps the most thrifty and the most worthy of help.

Senator BARKLEY. Assuming that Congress should not feel at liberty to try to cover the whole field but should limit it to homes and should amend this bill that is pending so as to increase the amount to $20,000

Mr. SCHMIDT. I think that would be all right.

Senator BARKLEY. That would eliminate your objection?

Mr. SCHMIDT. I do not think it ought to go beyond that amount. Senator COUZENS. Of course, that probably means a $35,000 or $40,000 home as at the date that it was built, and I think that is going too far.

Senator BARKLEY. Well, we have got to base whatever we do on present values. We cannot loan a man money on the old values.

Senator COUZENS. I recognize that, but I was saying that you put down $20,000 in this bill and it probably means a $30,000 or $40,000 home.

Mr. SCHMIDT. According to the provisions, Senator, it is about two thirds. In any event, I think the present limit is too low. There are probably limits beyond which it should not go.

Senator COUZENS. This committee reported out to the Seventysecond Congress a bill limiting it to $8,000.

Senator BARKLEY. That was a temporary bill only for two years. Senator CouZENS. I understand.

Senator BARKLEY. And it was a distress bill. It was not thought out at that. It was put in as a sort of an afterthought.

Mr. SCHMIDT. The next objection that I draw to this proposed legislation is the implication regarding the forfeiture of your principal. I think that if that legislation passes we will have required practically the forfeiture of principal on the part of various holders of mortgages, which I think is a very dangerous precedent for the Government to encourage.

I think that the moratorium provision for 3-year relief from payments on top of 80 percent mortgages is unsound from a governmental standpoint. Our provision is that the 80 percent must include any waivers of interest during that 3-year period. In other words, waivers of interest cannot be made beyond 80 percent.

Senator COUZENS. What would you say with respect to the 3-year moratorium and the 80 percent? Would you rather cut that 80 percent down or change the 3-year moratorium? I agree with you that they are not consistent.

Mr. SCHMIDT. What we did, Senator, was to provide that the 3-year moratorium might apply provided the amount of relieved interest did not exceed 80 percent of the value. Do you see?

Senator CouZENS. I am afraid I do not see. You mean waive interest and principal both?

Mr. SCHMIDT. This present 1317 provides that the mortgage of 80 percent may be made.

Senator ČOUZENS. Yes.

Mr. SCHMIDT. At this time; and that thereafter the Government may waive the payment of interest or principal payments for a period not to exceed 3 years.

Senator CouZENS. Yes.

Mr. SCHMIDT. In other words, taking the interest alone-that is, what would affect the validity or security of the mortgage-you would have approximately a 100-percent mortgage at the end of that 3-year time.

Senator COUZENS. Yes; but of course if it was an amortized loan it would be more than the interest over the 3-year period.

Mr. SCHMIDT. Oh, yes.

Senator COUZENS. What I am trying to get at is if you disagree with the 3-year moratorium, plus the authority to loan up to 80 percent, both of them, it seems to me, should not be in the bill. Which way would you prefer?

Mr. SCHMIDT. We would prefer that there be the moratorium provided the amount forgiven did not bring the amount due on the mortgage to a sum in excess of 80 percent of the worth of the property determined at the time the mortgage was taken.

Senator COUZENS. I think that is too liberal, too.

Mr. SCHMIDT. I think it is very liberal.

Senator CoUZENS. Too liberal.

Mr. SCHMIDT. I think that is very liberal, but it is not nearly as liberal as the present provision.

Senator COUZENS. I think that is true.

Mr. SCHMIDT. I agree with you, Senator. That is the only respect in which I feel that our bill perhaps is not a very conservative instrumentality. But I do feel that 80 percent mortgage is too much. Senator COUZENS. Either that is too much or a 3-year moratorium is too much.

Mr. SCHMIDT. Both. I think both are too much, frankly. However, there is a situation that goes to the basis of good citizenship, and perhaps the Government must take a little chance in order to preserve it.

I think the bill is too severe in requiring owner occupation. There is many an owner today who cannot afford to live in his home. He has rented it. I think that should be eliminated.

Senator COUZENS. What would you say, then, if it were eliminated on a man who built a hundred speculative houses? Would he be at liberty to come under this plan?

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