62 loan where the owner was out of a job, and perhaps the property in such a condition that it could not be refinanced and be saved at all upon anything like a reasonably sound basis. Mr. FAHEY. On that point, Mr. Congressman, I do not think we really have any dependable information, because there are so many applications. For example, a man has a home which is worth $3,000, and there is a first mortgage against it of $1,500, and a second mortgage of $800 more. Now, as a matter of fact, under existing conditions it is possible for us to secure a modification of that obligation which the mortgagee is not only content but glad to accept, and the home owner is thus relieved of an inordinate burden and is able to go on all right. I think I said to this committee that in many cities where there was overbuilding and where the financing was not sound, we have found first mortgages that represented the entire cost of the building and the obligations of the builder, and a very considerable number of commissions as well; and the second mortgage on top of that was nothing but paper and unjustifiable. In those cases we have been able to readjust those mortgages and bring them down to a reasonable value and refinance on a reasonable level, and those homes could be saved to their owners and should have been saved. Mr. WILLIAMS. The point I had in mind is, to what extent that has gone in this country, as to how many homes there are that ought to be saved by this or any other sound reasonable plan. Mr. FAHEY. It would be next to impossible for us, with any information we have in hand, to give you any figures that we would consider worth while. Mr. Chairman, I have already referred to exhibit no. 1 here, answering the questions relative to the applications achieved and loans closed. I would also like to place at your disposal exhibit no. 2, which is the estimated number of urban homes foreclosed in the United States, by months, during the years 1926, 1932, 1933, and thus far in 1934. Mr. WILLIAMS. Let me ask you whether you have that broken down? Mr. FAHEY. No; I do not think there is any such break-down in existence, not a dependable one. The third exhibit shows the permits issued for residential buildings in 257 identical cities showing number of families for which new homes were provided as a result of the issuance of these permits. This chart is based upon the figures gathered by the United States Bureau of Labor Statistics, and it carries the information up to the end of last year, 1933. The CHAIRMAN. Those exhibits will be incorporated in your statement. (The exhibits referred to and submitted by Mr. Fahey are as follows:) EXHIBIT NO. 1.—Number and amount of applications received and loans closed by the Home Owners' Loan Corporation from date of opening to May 18, 1934 [Prepared by Division of Research and Statistics, Federal Home Loan Bank Board, Washington, D.C.J EXHIBIT NO. 2.-Estimated1 number of urban homes foreclosed in the United States, by months, during the years 1926, 1932, 1933, and 1934 1 Based upon reports received monthly by the Division of Research and Statistics of the Federal Home Loan Bank Board from recorders' officers, and other local governmental officials in 1,058 communities scattered throughout the United States, and including 54.1 percent of the population of the country. Mr. SPROUL. Could you give us information as to how many loans were made in each case? Mr. FAHEY. No; but we can give it to you and will be glad to do it if you wish. The Bureau has gathered these statistics from these 257 cities, year after year from the same cities, and they are therefore dependable figures. Aside from that particular copy of exhibit no. 3, I have some extra copies here if the members of the committee are interested. The CHAIRMAN. We thank you very much, Mr. Fahey. I want to say, Mr. Eccles, that we probably will not reach you tomorrow morning, due to the fact that we have received requests that Miss Perkins would like to appear in the morning, and I promised we would give her the right-of-way. Inquiry has been made, Mr. Fahey, regarding information you have as to the number of homes now vacant throughout the country? Mr. FAHEY. We have had information from time to time from various sources on that point. We have not felt it was any too reliable. Our general impression is that the opinions expressed as to the number of vacant homes and the number of foreclosed homes FAMILY DWELLING UNITS as indicated by building permits in 257 identical cities 1921 22 23 24 25 26 27 28 29 30 31 32 33 34 Jack Brandt, Jr. which the lending institutions have for sale is considerably exaggerated. We do not believe that there is anything like the number of vacant homes in the country as commonly referred to. The CHAIRMAN. We will now adjourn until 10:30 o'clock tomorrow morning. (Thereupon, at 5 p.m., the committee adjourned to meet tomorrow, Saturday, May 26, 1934, at 10:30 a.m.) NATIONAL HOUSING ACT SATURDAY, MAY 26, 1934 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met at 10:30 a.m., Hon. Henry B. Steagall (chairman) presiding. The CHAIRMAN. Gentlemen, we have with us this morning Miss Perkins, the Secretary of Labor, who will make a statement on this bill, H.R. 9620, and I have arranged the plans for this morning in order to accommodate the situation in which Miss Perkins finds herself. She could not get here very well before today and might not be able to come later. I am sure that the committee will be pleased with the arrangements which we have made. STATEMENT OF HON. FRANCES PERKINS, SECRETARY OF LABOR The CHAIRMAN. We should be glad to have you proceed in your own way, as long as you wish, or would you prefer to be interrogated as you go along? Miss PERKINS. I will state to you, sir, what I think I know about the bill. The CHAIRMAN. And then, of course, answer questions? The CHAIRMAN. That is perfectly all right. Will you proceed? Miss PERKINS. May I say, sir, that I am not familiar in any detail with the provisions of the bill which relates to the financing and the mortgages. I have left that to those whom I believe to be wiser in the matter of mortgages and loans, and financial arrangements than am I, and nothing in the Department of Labor's experience or special knowledge can contribute to your own experience and the experience of those who have these matters in charge on that subject. However, I do want to say this: That from the point of view of the Department of Labor and my own experience, this bill seems to me to be of very great importance at this time because of the results which it will have in providing employment for building-trade mechanics who have long been out of work and who are themselves a basic part of our internal market, our purchasing power in this country, and also the importance arising from the stimulation of capital-goods industries, that will flow out of this bill, and the importance that that will be to the program of recovery in this country. As you undoubtedly know, the amount of unemployment in the building trades has been very great. It has been out of proportion to the unemployment in all the other industries, and there are at this time almost 2,000,000 people regularly out of work, who were formerly attached to the building trades and who believe themselves to be attached to the building trades, the estimate being some 1,800,000 or 1,900,000. There has been, as you know, only a very modest and very small revival of employment in private building, and such employment as we have had in the building trades, has almost been entirely due to the public-employment program, the Public Works program. There are at the present time about 350,000 people working on the Public Works program. It has mounted gradually, month by month, until it has now reached about that amount. By the last of August or the first of September when the Public Works projects will reach their peak of employment, it is anticipated that about 1,000,000 people will be at work on Public Works projects. Thereafter, there will begin to be a falling off. That will be the peak, and thereafter there will be a falling off. As you know, the employment of public works or any kind of building construction is never steady. First the excavation men go in, and then the erectors, the masons, the carpenters, and the plasterers, and it is never a steady employment for anyone, but the peak will be reached, as far as we can estimate in advance, some time between the middle of August and the middle of September, and at that time we anticipate that there will be a total of about 1,000,000 who will be employed at that time, and then there will be a falling off thereafter. This is a very serious decline in the number of people, and there has been a very serious decline and a very serious amount of unemployment among the building-trades mechanics who, as you know, are among the skilled, high-paid men, with high standards of living, and who are, therefore, accustomed to spending their incomes for the purchase of manufactured goods and the purchase of farm products, all of which goes to make not only a serious unemployment problem but a situation which can be described as a lack of purchasing power and lack of market, which will continue still further the depression. The manufacturing industries, as you know, have improved considerably in the past year in the matter of employment. The index of manufacturing employment in April 1934 was 82.3 and the index of manufacturing pay roll was 67.3. This is an improvement over a year ago, 1 year earlier, April 1933, when the index of manufacturing employment was 55. It has gone from 55 to 82.3. That means, roughly, that for every thousand workers employed in American industry for the 3 years, for the average 3 years, 1923, 1924, and 1925, 823 were employed last month, and that for every thousand dollars of weekly pay roll paid out by the manufacturing industries in that same year, $673 was paid out during the last month. The significant factor of this employment situation is its rather spotty nature. The industries producing the materials which are used in construction have not shown an advance anywhere proportionate to that of other industries. For instance, in the cast-ironpipe industry, which is, of course, one of the industries that has de |