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Mr. MULTER. Do I understand there has been an annual increase, in each of the last 3 years, to the extent of a billion dollars in savings?

Mr. BODFISH. That is right; that is why you hear some moans from some of our commercial banking friends these days. It is the competitive background. We are happy.

Mr. BUCHANAN. What is the average net cost of your loans in comparison with the Federal Housing Administration loans?

Mr. BODFISH. About the same. Our money is loaned at 5 percent or four and a half percent, unusually conservative percentage of loans at 4 percent, and we have done 30 percent of all the GI loans made, and that is all 4 percent net.

Mr. MULTER. Your mortgage loan is usually at a lower rate than those of other institutions.

Mr. BODFISH. No; they are about the same. See, for a while, we had a little higher rate, and we now meet Federal Housing Administration competition without any difficulty.

The CHAIRMAN. The deposits in your organization are insured up to $5,000.

Mr. Bodfish. The accounts, Mr. Spence. If my banking friends heard me say deposits, they would be up here before the committee. To the customer, they are whatever the customer thinks they are.

Mr. BUCHANAN. You say you did not testify before the Senate Banking Committee on this bill.

Mr. BODFISH. Not this year.
Mr. BUCHANAN. Did your organization?
Mr. BODFISH. Yes.

Mr. BUCHANAN. On page 568, Mr. Horace Russell, your general counsel, testified.

Mr. BODFISH. That is correct.

Mr. BUCHANAN. Just two questions: Would you care to define what you mean by subsidy?

Mr. Bopfish. I will be glad to try. I think a subsidy is when you take out of public funds money that is paid in by taxpayers, and given to a family, an individual, or a business.

Mr. BUCHANAN. Given.
Mr. BODFISH. That is right. I think that is the distinction. .

Mr. BUCHANAN. Would you say that certain existing Federal programs for the aid of the private housing industry, are subsidies? Naturally in terms of your definition of giving, they would not be.

Mr. BÖDFISH. Yes; I think the Federal Housing Administration has been subsidized to the extent of about $15,000,000, that is what Reconstruction Finance Corporation gave them. There has been some subsidy in the set-up of the insuring corporations. I do not happen to believe in that. I happen to believe that the bankers and ourselves ought to furnish the money for our insuring corporations, and we ought to pay a rate of premium that will pay the expenses and the losses.

Nr. BUCHANAN. You said you were going to put into the record some figures on existing GI loans and home loan bank loans. Are you including Federal Housing Administration and Reconstruction Finance Corporation?.

Mr. BODFISH. What we have made in the savings and loan business.

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Mr. BUCHANAN. Is this statement true?

The Federal Home Loan Bank System, through 11 regional Federal home-load banks, provides a source of secondary credit for member institutions, principally savings and loan associations, which account for approximately one-third of all home-mortgage financing in the United States, and which have combined assets of approximately $12,000,000,000. Since 1932 advances by the Federal home-loan banks to their member institutions have totaled $2,699,624,000 and outstanding advances on February 28, 1948, were $392,468,000. Would you construe that $2,699,000,000 figure an aid by the Federal Government to the private housing industry?

Mr. BODFISH. I consider it an aid but not a subsidy. We pay the going rate of interest on all of it and they made a profit on it.

Mr. BUCHANAN. In other words, then, the cleavage here, between all the people who testify before this committee, seems to be that there is a shadow line where subsidy stops and aid begins. You do not see any interlocking and intertwining, or interdependent phase between those two.

Mr. Bodfish. I think you can discern pretty clearly the difference between assistance, and the use of the chartering powers of Government in creation of Government agencies, and subsidy. As a matter of fact, in this business the Federal Government in our bank system has about $125,000,000 in there. We have about $80,000,000. We have been trying to pay the bank, but the Department down here will not let us. We want to get even the aid out of our system, which I think is the position for financial groups to take.

This question of subsidy, Mr. Buchanan, in my judgment, boils down to this: Of course there are activities on the American scene

The CHAIRMAN. Perhaps we will give you the opportunity to pay it back,

Mr. Bodfish. We want to pay back the Federal Savings and Loan Insurance Corporation at the same time, Mr. Spence. We had funds made available to us in time of need, and we think if we are the right kind of people we ought to furnish the capital for those instrumentalities, and we have been ready for some years.

Mr. Buchanan, what you have in these questions is this: What choices do we make, what ones are proper? And very sincere men differ. Certainly none of us hesitate at all in assisting the blind, and we do not hesitate at all in assisting the very poor, and so forth. But there are always questions of what other additional fields is it necessary or is wise to go.

Mr. BUCHANAN. You were formerly with the Home Owners' Loan Corporation, were you not?

Mr. BODFISH. No, I was Democratic member of the original Federal Home Loan Bank Board, and I retired from that Board, I think, with the unanimous consent of the incoming administration.

Mr. MULTER. You were not a bureaucrat when you were with the Government.

Mr. BODFISH. Maybe I did not stay long enough.

Mr. DEANE. Speaking about subsidies, how do you feel about subsidization of air lines, railroads, shipping, farming?

Mr. BODFISH. I would not subsidize any of them.

Mr. MULTER. Do you think we would have any steamship lines or air lines in this country if the Government had not helped them?

Mr. Bodfish. I think those of us who ride the air lines ought to pay for riding them.

Mr. BUCHANAN. What would have happened to the banks and insurance companies in depression years if we had not had the Reconstruction Finance Corporation. The Government took a long shot, did they not?

Mr. BODFISH. I do not think it was a very long shot, but I will agree with you that we have a lousy banking system in this country and always have had.

Mr. MULTER. What would have happened to your institutions without the Home Owners' Loan Corporation.

Mr. Bodfish. It helped us along, but we would have gotten along pretty good.

Mr. MULTER. Without it.
Mr. BODFISH. I think so.

Mr. MULTER. I think you all would have gone broke and out of business if it had not been for the Home Owners' Loan Corporation.

Mr. BODFISH. Well, we have $10,000,000,000 in assets and I think ess than $100,000,000 of our loans were taken over by Home Owners' Loan Corporation, and I will admit that this may be an academic question, but I think I can make a good case that we could have carried them. I think this, the Home Owners' Loan Corporation had to pick up the straight mortgages, and had to pick up the mortgages that were in closed banking institutions, and I believed in it. It helped to get going

Mr. Buchanan. We held the bag for a good many years did we not?

Mr. BODFISH. I do not think you held the bag, because you took all that stuff at the bottom of the depression at 80 percent, and I do not think there was much possibility of loss in it.

Mr. BUCHANAN. Of course, we did not think that way at that time. Mr. Bodfish. I did. I was right on record before this committee. Mr. BUCHANAN. You were an optimist, then.

Mr. BODFISH. No, I thought that was the thing I was in, and I knew something about it. Mr. Russell here helped on that. He can tell you all about it.

Mr. DEANE. I was interested in your statement about the British system. What was the source of your figures and facts ?

Mr. BODFISH. The various white papers of the British Government. I have been there, I know people in the government. I know Mr. Bevin, Herbert Morrison; I know people in the home-financing business there; I know people in the building business, and they have all the facts and figures available just the same as we have from our Government departments.

Mr. DEANE. Do you know anything about the serious rural-housing problem here in our own country?

Mr. BODFISH. No; I am not qualified to advise you on the rural problems, Mr. Congressman.

Mr. DEANE. I mention rural housing because one title of this bill refers to rural housing. Does your general opposition to the bill include that provision ?

Mr. Bodfish. I think in General Smith's statement and I share his view-he stated that those of us who are not specialized and equipped in that field should not express an opinion on it. I think you should get the farm people up here. They know most about that.

Mr. DEANE. The promotion of rural housing, I might point out, will include certain aid and assistance from the Government.

Your attention is directed to the record and the testimony of Congressman Jones, of Alabama, who pointed out that only 17.7 percent of the farm homes in America have running water. That seems to me to be a rather serious indictment of we urban people for not coming to grips with this serious economic problem which threatens our social structure.

Mr. BODFISH. Congressman, I do not want to argue on this, but in many a good farm home you have to go out to the well to get a bucket of water.

Mr. DEANE. Would you be satisfied to accept that system yourself!

Mr. Bodfish. I do not know. I might. I would rather do that than have the Government build me a house. I would work hard, and I would get to the place where I would have the water in the house after a while.

Mr. COLE. You would rather do that than lose your liberty, would

you not?

Mr. BODFISH. Certainly.
Mr. MULTER. May we go back to England for a moment?
Mr. Bopfish. Glad to.

Mr. MULTER. Do you know the total number of employable people in England?

Mr. BODFISH. I am not certain of it. I think it is something around 12 or 13 million. There is a population of 40 million.

Mr. MULTER. About how many are employed ?
Mr. BODFISH. I think it is around 13 million.

Mr. MULTER. How many of them are unemployed or were umemployed when you were there?

Mr. Bodfish. I do not recall the total unemployment figures.
Mr. MULTER. Was unemployment high or low?

Mr. BODFISH. Unemployment is spotty. It is fairly high in some activities. It is spotty. They do not have full employment in the building trades. You have whole areas in England where you have very substantial unemployment problems, the whole Wales area, and so forth. The Englishman is not mobile. Mr. MULTER. When

were you

there? Mr. BODFISH. About a year ago. Mr. MULTER. For how long?

Mr. BODFISH. I was there 4 weeks. I had been there at least 9 times before.

Mr. MULTER. When were you in Sweden ?
Mr. BODFISH. In 1938.
Mr. MULTER. How long were you there?
Mr. BODFISH. About 2 weeks.

Mr. MULTER. A friend of mine who came back from England only last week tells me that Rolls-Royce Automobile Co. is running full blast, selling automobiles as fast as they can produce them, some as high as $37,000 a piece. That would seem to contradict your statement that the rich have been taxed practically out of all their income and cannot pay for the Government activity.

Mr. BODFISH. They are not building any large number of RollsRoyce automobiles. They are building for the export market in part and anybody who runs that type of an automobile today in England is the vice president of an insurance company, and the company buys it and runs it for him.

Mr. MULTER. Not the bureaucrat.

Mr. BODFISH. Well, the bureaucrats have a pretty good slice of them too. Mr. Bevan rides around in a Ministry of Health RollsRoyce.

År. MULTER. I notice you say on page 17 :

The working people in final analysis are paying all the taxes to provide the subsidies for Government construction of houses. If they are paying all the taxes for their own houses, I do not think anybody ought to complain about it.

Mr. Bodfish. Well, wait a minute. It is one thing if a person spends his own income on his own house and it is another thing when you take it all away from him and spread it back over a whole community, where the money falls on each alike.

Mr. MULTER." You do not think that if we adopt your suggestion of this select committee going to England—you did not intend to exclude Sweden?

Mr. BODFISH. No; I think it would be excellent.

Mr. MULTER. England and Sweden. You do not think the same people who are calling us bureaucrats would then be accusing us of taking a junket at public expense?

Mr. BÓDFISH. Probably, but I think it is a wholesome thing for Members of Congress to study these problems first-hand. I think it has had much to do with our intelligent development of foreign policy in recent years.

Mr. MULTER. We do, too. We are very much interested in the subject.

Mrs. WOODHOUSE. Mr. Bodfish, I do not think your analogy between England and the United States is a valid one. I just make that statement for the record.

On page 4 you make the statement:

Before World War II, Great Britain established a housing record for a nation of its size, creating 2,500,000 new permanent units in 8 years— and so forth. Then later on you state, on page 17:

When the Labor government came to power, they did not have to enact a single new piece of basic legislation to move into their present government housebuilding program.

How do you account for the fact that, since the same type of legislation in effect since about 1920, that Great Britain was able to establish this prewar housing record? There has been no change in the legislation; but there has, of course, been a terriffic change in economic conditions in England, to which you do not seem to have given any consideration at all.

Mr. BODFISH. I do not see what is inconsistent about them.

Mrs. WOODHOUSE. How could they make a housing record, which you say is the best of any country in the world, under the same legislation which existed after World War II and now you blame this legislation for the current situation ?

Mr. Bodfish. I did not say there was no additional change. I said they did not need any additional legislation. They moved right ahead under the existing legislation.

Mrs. WOODHOUSE. But there was the same legislation ?
Mr. BODFISH. That is right.

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