I think the general opinion of those who have the N.R.A. in charge today-who will speak for themselves-is that most of the price-fixing devices today are unnecessary and perhaps undesirable.

Mr. WOLCOTT. In that respect cement in March 1934 was only 6.1 under the 100 index for 1926. The index price showed that it was only 6.1 below normal. Lumber, which I have mentioned, and perhaps I can follow through with it, went much lower, apparently, in 1932 than the other trades.

Miss PERKINS. They had great inventories, you remember. They were really selling at losses.

Mr. WOLCOTT. You might expect a bigger differential. That is only 13.6 below normal at the present time. So that I quite agree with you, of course, that something should be done to prevent this unusual rise in prices. I was interested in the statement which you made—I do not know whether you misspoke yourself or not-but did I understand you to say a minute ago that people worked a week of 8 hours a day for a dollar and a quarter?

Miss PERKINS. I said that I had seen pay envelops in which people had been paid a dollar to a dollar and a quarter for 6 days' work of 8 or 9 hours per day. That was true in some trades, and it represented a whole week's work. I have seen such pay envelops. Those came in to the N.R.A. and they have come in before to the Labor Department. There were wages being paid in this country which were almost inconceivable. That, of course, was the basis upon which the immediate move under the codes of the N.R.A. was to raise the minimum level of wages, and the complaint from the employer groups in some of those most competitive lines was to the effect that they could not meet each other's competitive price and pay any higher wages; that if one man cut his wages and sold his article at 10 cents lower, then everybody else must do that, and that everybody must cut below that. It got to the point where the only item to cut was wages.

Mr. WOLCOTT. That is deplorable, we all admit, and is worse than slavery, because under slavery the master generally provides enough to eat, and so forth.

Miss PERKINS. I would like to make certain that I have not let anyone to the conclusion that that was a general level of wages. That was in sporadic cases.

Mr. WOLCOTT. Can you give us an instance?

Miss PERKINS. I cannot give the cases. It is all before the N.R.A. hearings, in the public testimony. That is practically all over. One of the industries which I can name offhand now is the men's shirt industry.

Mr. WOLCOTT. New York?

Miss PERKINS. Pennsylvania, New Jersey, and West Virginia.
Mr. WOLCOTT. Sweat shops?

Miss PERKINS. No; not sweat shops; factories.

Mr. WOLCOTT. Factories?

Miss PERKINS. Unless you call anything which pays a wage like that a sweat shop. It is a sweated industry if it pays a wage below an impossibility of a living wage. These were some of the reasons which led to the price fixing in the original codes.

Mr. WOLCOTT. I think you are justified in going the limit in those instances.

Miss PERKINS. The wages in the cotton-textile industry in some parts of the country may run as low as $3 and $4 a week, which was pretty bad. That was the first code adopted, you will remember, and there was a great disparity in the wages paid. That was not universal.

Mr. WOLCOTT. No.

Miss PERKINS. But the mere fact that the mill up the creek, as one man put it, paid that wage, made the little mill there able to sell these products at a price lower than the mill paying the normal wage could sell for, and that tended to bring down the last ruling thing, wages, since every other thing had been cut, and they had gotten to the point where wages had become the chief competitive item in some industries, between different plants, and the only further cut they could make in price was made in the week's wages.

Mr. WOLCOTT. I had my attention called to an instance where, under a public-works project, for 48 hours of work a man received at pay check of $8, and I thought that was about the most exaggerated case I could imagine.

Miss PERKINS. We can show worse than that. If you will come over to the Department of Labor some day, I will bring them out for you.

Mr. WOLCOTT. You mentioned the fact that we want to get rid of cut-throat competition in business. I wonder if a great deal of that during the past few years has not been the desire of material men to unload, and that in normal times we would not have that?

Miss PERKINS. You mean unload inventories?

Mr. WOLCOTT. Yes; and in normal times we would not have that condition, and we do not need to expect such a condition as that with a gradual recovery. If we recover, there would be less cut-throat competition, because there would be more of a desire to expand the business activities and not a desire to get out from under, wherever they can.

Miss PERKINS. I think that is true. Of course, the extreme low which you read for lumber, cement, and the other articles, represented very largely the prices which were made necessary by the fact that there were heavy inventories and they were unloading without regard to what the replacement cost would be. We cannot expect to maintain those price levels in a healthy industry. Those articles will never be reproduced, if they are sold, at that price, or will never be made again.

Is there anything else, sir?

The CHAIRMAN. Thank you very much.
The CHAIRMAN. Mr. Eccles.

STATEMENT OF MARRINER S. ECCLES, ASSISTANT TO THE SECRETARY OF THE TREASURY

The CHAIRMAN. Gentlemen, Mr. Eccles is now ready to answer questions. I would just suggest that I will begin to recognize the members on my right and go down the line, as far as anybody desires, and then back the other way.

Mr. GOLDSBOROUGH. I have no questions.

The CHAIRMAN. Have you any questions, Mr. Reilly?

Mr. REILEY. There is one question which I would like to ask Mr. Eccles.

Why is it necessary to incorporate in part one the provision as to guaranteeing mortgages, existing mortgages on homes already constructed?

Mr. ECCLES. Possibly to provide long-term mortgage money at low interest rates.

Mr. REILLY. You already have a set-up for guaranteeing mortgages, issuing bonds. Why do we want another one?

Mr. ECCLES. I did not know that we had a set-up guaranteeing mortgages.

Mr. REILLY. We practically do that when we issue bonds for them. That is what this amounts to.

Mr. ECCLES. How do you mean?

Mr. REILLY. We guarantee mortgages by issuing bonds. You provide in that set-up there to issue bonds ultimately in taking up these mortgages.

Mr. ECCLES. When they default.

Mr. REILLY. When they are foreclosed.

Mr. ECCLES. That is right.

Mr. REILLY. If we are going into the business of guaranteeing existing mortgages, why provide for another set-up?

Mr. ECCLES. As I understand the purpose of the mortgage insurance, it provides for the insuring of not necessarily existing mortgages, mortgages upon existing properties up to 1 billion dollars. They may be mortgaged or they may not be mortgaged. It provides for insurance of mortgages on new construction, from the time the bill passes until 1937.

Today it seems to be rather difficult to get long-term mortgage money at reasonable interest rates. The banks of the country, as has been brought out here, have a great quantity of excess funds. I am speaking of commercial banks. The savings in the commercial banks at the present time are something around 13 to 14 billion dollars. The savings in the mutual savings banks, I understand, are around 9 billion dollars. There is a total of around 23 billion dollars, between 22 and 23 billion, I think, are the last figures of total savings funds in the banks.

The commercial banks cannot invest their savings funds today in long-term mortgages. They are limited to a period of 5 years and 50 percent.

It would seem to me that those savings funds would do possibly greater social value if they would go into the insured mortgage ,field-and I believe the insured mortgage would induce those funds to go into that field-than the funds are doing at the present time.

Mr. REILLY. The principal object of section 1 is to provide for repair and renovating of homes. Would it destroy the effect of that section if that guaranteeing of mortgages were stricken out of it?

Mr. ECCLES. I am not familiar with the details of the bill. I am not an attorney. I helped work out the plan of developing, but of course the attorneys drafted the bill to meet the program which those who worked on the plan outlined. The modernizing and repair program provides for an insurance of modernization

and repair receivables taken by lending institutions up to a total of 20 percent of the total amount of receivables held by an one institution. Today funds are not available for modernization and repair. This plan provides for what we feel is an availability of funds over a long period of time at low interest rates. It would induce many people to borrow funds and it would also result in inducing leanding institutions, because of this insurance feature, to lend the funds.

Mr. REILLY. The insurance feature is the insuring of money loaned to remodel houses?

Mr. ECCLES. That is right. There are two parts of the insurance plan. One is the insurance of 20 percent of these modernization receivables, and the other is a mutual mortgage insurance plan which to the borrower pays a premium when the loan conforms to independent appraisal and as to terms.

Mr. REILLY. I might say that there was organized last fall throughout many of the counties in Wisconsin, a program for remodeling, such as outlined in this bill, and the only trouble was that there was no way of getting the finances. There were 20 counties in Wisconsin where they had a committee set up to go ahead, but there were no funds. I think you have a fund here which will complete that plan. There is plenty of money in the banks if the banks knew they could loan it to responsible home owners and have them converted, as you provided in this bill, at any time into funds.

Mr. ECCLES. We made rather a close check and survey while this. program was being developed. We brought in here the finance institutions, the insurance companies, and quite a substantial group of bankers. We were assured of the support of the American Bankers' Association. We had in the conference Mr. Broderick, the bank commissioner of New York; Mr. Miller, who was a former president of the Reconstruction Finance Corporation; Mr. Bennett and Mr. Crowley, of the Deposit Insurance Corporation, who were familiar with the bank situation, and a half dozen other prominent bankers, and it was their feeling that there would be no question but what the banks of the country would cooperate in the providing of funds under this type of plan.

Mr. REILLY. I do not think there is any question.

Mr. ECCLES. This plan does not contemplate the loaning of funds to home owners only. It contemplates the loaning of funds up to $2,000 to any property owner, a man with an apartment or a small store or a place of business, and we contemplate getting a very substantial amount of funds out in that field, as well as in the home field.

It is also contemplated that a drive would be made, upon a national scale, for the purpose of education and direction of the program, and that every effort would be made to induce business institutions of all types, who have a great deal of deferred-maintenance work, which had ample funds of their own, to also join in this program, and although a method of financing is not provided here for largescale financing, we have been assured that many of the larger institutions which have funds are in need of repair and replacement. And any volume of construction business would require on their part to participate in it an expenditure of funds.

Mr. REILLY. It was estimated in this drive in Wisconsin that there were 200,000 homes in Wisconsin whose owners had the means and were able to remodel their homes or to do some repairing, and that if there was a set-up like this and a drive inaugurated to have that work done as a patriotic effort, it would help the country out of this situation.

Mr. WILLIAMS. Mr. Eccles, I have been very much concerned about these loans, or this insurance, rather, on existing loans.

Mr. ECCLES. Existing properties?

Mr. WILLIAMS. On existing properties.

Mr. ECCLES. Yes, sir.

Mr. WILLIAMS. Is that on existing properties or is it on existing loans?

Mr. ECCLES. Is is on existing properties. It may be mortgaged or property may not be mortgaged. A person may have a mortgage on property and desire to get that mortgage refunded as an insured mortgage. It may become due and a bank or any other lending institution may desire or be willing, with an insured mortgage, to refund that mortgage rather than force it into the home-owner's loan or some other place, because of default, and be willing to refund that mortgage over a period of time as provided in this plan.

Mr. GOLDSBOROUGH. Does the Government insure the mortgages which already exist?

Mr. ECCLES. No, sir.

Mr. WILLIAMS. That is what I want to know. Does this bill contemplate that?

Mr. ECCLES. No, sir; this bill contemplates, as I understand it, insuring mortgages on existing properties. In other words, a mortgage that now exists would not conform as it exists, either as to terms, as to the time, or as to the interest rates levied, that would be provided for in this bill.

Mr. WILLIAMS. Is it your understanding that this bill limits this insurance to obligations which are to be made after the law goes into effect?

Mr. ECCLES. Yes, sir.

Mr. WILLIAMS. And does not apply to an existing obligation? Mr. ECCLES. I do not thing there are any existing obligations which would conform to the requirements of an insured mortgage. Mr. WILLIAMS. In that case, it would be rewritten?

Mr. ECCLES. They may rewrite the obligation and refund the obligation. That is possible.

Mr. WILLIAMS. Then it is the intention, you might say, to "bale out a great many of the existing mortgages?

وو

Mr. ECCLES. I would not say that it "bales out" the existing mortgages. I do not see how this sort of bill, providing for an insured mortgage, in any way "bales" them out. As a matter of fact, the mortgage cannot exceed 60 percent of the appraised value of the property, the appraisal to be made not by the lending institution but by an independent agency.

Mr. WILLIAMS. That refers to money which has already been loaned?

Mr. ECCLES. Yes, sir.

Mr. WILLIAMS. If you refinance it, where are the additional funds coming from?