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lion dollars. You look upon that, of course, as a financial aid to private housing institutions such as yours?

Mr. KREUTZ, Yes, sir. And most of those advances, I believe, came from funds which were raised by the sale of consolidated home loan bank debentures to private investors throughout the country-particularly financial institutions.

Mr. BUCHANAN. And within a year, of course, there have been outstanding advances amounting to almost 400 million dollars at the present time, that is, within the recent 12-month period. Of course, you do not look upon that as a form of a subsidy, but more a form of financial assistance from the Federal Government.

Mr. KREUTZ. Well, we look upon the operation of the Federal Home Loan Bank System as a reserve system which obtains its funds through the sale of its securities to public and private financial institutions, except to the extent that the Federal home-loan banks have capital which is supplied in part—now, in lesser part—by the Government, which capital is being retired steadily, and would, under some legislation which has been under consideration, be retired completely by the increase in subscriptions to the stock of the banks by the member institutions. That would then place the Federal Home Loan Bank System entirely on a self-sustaining and privately supported basis.

Mr. BUCHANAN. Then you disagree in principle with the purport of the program as advanced here in H. R. 4009, and similar legislation, wherein these same financial aids are made possible for groups that your organizations and institutions do not consider good credit risks?

Mr. KREUTZ. No. I believe I suggested in my statement that we recognize that some Federal assistance is necessary. For example, to finance these slum-clearance projects. We recognize that the amounts which would be involved in the way of advances to buy the land and to clear it are greater than the local governments could raise, and so some loans from the Federal Government would be necessary in a program of slum clearance of that kind.

The CHAIRMAN. What are the outstanding loans of the Savings and Loan League?

Mr. KREUTZ. I can give you that figure exactly, as of the end of last year. The total outstanding loans of savings and loan associations as of the end of 1947-I thought I had 1948—were roughly $9,000,000,000.

The CHAIRMAN. And they are all invested in homes, are they not?

Mr. Kreutz. Practically all of those loans are made to finance homes; yes, sir.

The CHAIRMAX. And to encourage the building of homes?
Mr. KREUTZ. Yes, sir.
The CHAIRMAN. Are there further questions?
Mr. MITCHELL. Mr. Chairman.
The CHAIRMAX. Mr. Mitchell.

Mr. MITCHELL. Would not Mr. Hart's suggestion be in the nature of a stubsidy to the landlord ?

Mr. KREUTZ. Yes, I think it would, Congressman Mitchell. It gets into the question of rental subsidy, which is a big question in itself and that is why I said I was not prepared to go into the ramifications of that here. It is a big question in itself and I doubt whether he himself has gone into all the phases of that question. He sees only this present situation, with some rental vacancies in 608 projects and the possibility of converting them to low rentals on a subsidized basis.

Mr. O'HARA. Mr. Chairman.
The CHAIRMAN. Mr. O'Hara.

Mr. O'HARA. I notice that you say, on page 2 of your statement, that the major cost of the elimination of slums should be borne by local taxation. I might say to you, sir, that in the city of Chicago, or in the county of Cook, in which the city of Chicago is located, some 52 cents out of every tax dollar go toward supporting the public schools. That is making a contribution not only to Chicago but to the Nation because the young men and young women who are educated in the public schools of Chicago, which the taxpayers of Chicago are supporting, go from Chicago to all the other States of the nion, and contribute to the citizenry in those other localities.

Also, in the city of Chicago, the Federal taxpayers turn in to the Federal Treasury very much more money than comes back directly to Chicago, and there is never any objection in Chicago to the money that the Chicagoans pay into the Federal Treasury, going into the projects in the West, South, and so forth, to benefit the Nation. Now, in view of all that, the taxpayers of Chicago, carrying their burden—and it is a heavy burden, making a contribution to the entire Nation—how do you justify your position that the Federal Government should not take a very generous stand in the matter of slum clearance?

Mr. KREUTZ. I believe this bill provides that the Feileral Government would contribute up to two-thirds of the cost of clearing slums. Our suggestion is that that seems a little high, and that if the larger portion were borne by the local tax funds, there would be certainly a deeper and wider local interest in the program, and perhaps at times the exercise of the very best judgment as to just how to do the thing.

Mr. O'HARA. Well, you would be generous enough to say that twothirds, in view of the contribution that Chicago and other large cities are making to the Nation as a whole, is not too much? The two-thirds provided for in this bill?

Mr. Kreutz. We probably are not qualified to be specific on exactly what the local government can pay and what the Federal Government should pay, but it does seem desirable to have as large a contribution as possible made by the local government, or from local taxes, so as to keep the thing as nearly as possible on the local level.

Mr. O'HARA. Putting it in another way: slum clearance in the cities is a definite contribution to the welfare of the entire Nation, is it not?

Mr. KREUTZ. I think that can be said, yes, sir, just as your school system, which you mentioned, and other things, contribute to the welfare of the country.

Mr. O'Hara. So that it is pretty difficult to differentiate between that which is strictly local and that which has a reflection upon the entire Nation?

Mr. KREUTZ. Very difficult, ves, sir. Just like it is difficult, if I may say so, to differentiate between the families that are entitled to public housing and the families that are not entitled to it.

Mr. O'Hara. I appreciated your testimony here today very much. and I thought that you had presented your viewpoint most intelligently, and illuminatingly.

Mr. KREUTZ. Thank you.
Mr. McMillen. May I ask a question, Mr. Chairman?
The CILAIRMAN. Mr. McMillen.

Mr. McMillen. You made a brief statement here with regard to what is happening to public housing in England. Are you prepared to elaborate on that situation, and, further, as to what has happened to public housing in other countries in Europe, with regard to its merits? Do

you know what the facts are? You have made a brief statement about England here, and I wish you would elaborate if you are prepared to, on what, in your opinion, has happened to public housing not only in England but in other countries in Europe over the past 25 years.

Mr. KREUTZ. Perhaps I can make a brief statement, particularly in regard to the development of public housing in Great Britain, where, as you may know, for a period, all new construction, subsequent to the war, was in the form of public housing, and where now 1 out of each 5 new dwelling units constructed is private housing while 4 out of 5 are public housing:

They have carried on a very extensive program in Great Britain in public housing. I am not prepared to say how justifiable that program is. I am not sufficiently familiar with conditions in Great Britain. Perhaps they had conditions there which are somewhat different from the conditions we have in this country. I do know that public housing has infiltrated into good residential areas throughout Great Britain, to the damage of private housing, in my opinion. I think that is a situation which is a reflection of the policy of the present labor government, which believes that there should be no distinction drawn in types of residences, between classes of people, and which government simply disregards the sound economics of the thing, and, in my opinion, what is only fair to the owners of existing property.

The program has gone a long way, and is continuing. Besides the construction of public housing, as you know, they have their Town and Country Planning Act, which has gone a long way toward the seizure, actually, of land privately owned, which makes it almost impossible for any private land owner to know just where he stands.

I do not mean to say that that act is a part necessarily of their public housing program, but I say the two have gone hand in hand.

In some other parts of Europe-in Vienna, for example—there was a considerable amount of public housing built prior to the war. There is much evidence that in Vienna, the tenants of public housing, when they were hard up for fuel, proceeded to dismantle the housing, and burn the woodwork of housing. While at the same time, they held meetings in some of the community halls provided as a part of these public housing projects, and advocated the overthrow of the government. Those things did happen there.

I do not mean to imply by that that they would be likely to happen in this country, but I am merely trying to answer specifically and very briefly your question.

Mr. ČOLE. Mr. Chairman, I have a question.
The CHAIRMAN. Mr. Cole.

Mr. COLE. Mr. Kreutz, the chairman asked you whether or not, with respect to socialism, there was any difference between the Federal Government and the State governments or municipalities, in carrying out a program such as this. Personally I have talked very little about socialism-as a matter of fact, practically not at all, in my opposition to this bill—but in that regard, I want to quote, if I may, for the record, a short paragraph from the speech of General Dwight Eisenhower, president of Columbia University, before the first Columbia College Forum on Democracy in Earl Hall, Columbia University, February 12, 1949. [Reading]

Because the kind of dictatorship under which we may fall today is not that brought off by means of a coup d'etat and a suddenly seized power by using the Army and Navy and guns to put us all in a strait-jacket. There is a kind of dictatorship that can come about through a creeping paralysis of thought, readiness to accept paternalistic measures from the Government, and those paternalistic measures are accompanied by a surrender of our own responsibility and, therefore, a surrender of our own thought over our own lives, and over our own right to exercise our vote in dictating the policies of this Government. If we allow this constant drift toward centralized power on democratic government to continue, finally, it will be expressed not only in the practice of laying down the rules and laws for governing each of us in his daily actions to insure that we do not take unfair advantage of our comrades and other citizens, but finally it will be in the actual field of operation. There will be a swarming of bureaucrats over the land. Ownership of property will gradually drift into that central government, and finally you have a dictatorship as the only means of operating such a huge and great organization.

The CHAIRMAN. Will the gentleman yield?
Mr. COLE. Not just yet.

If you will, just a moment, Mr. Chairman, please. I will not take long.

There it is, in my judgment, therefore, and apparently in other Kansans' judgment, a differentiation between the method of approach to the people of this great country of ours who are in need; is that not right? Mr. KREUTZ. Yes, of course.

Mr. Cole. And it is a possibility that the approach to a Federal level might cause a greater centralization of the government, which could, eventually, be determined as the general has explained it; is that not possible!

Mr. KREUTZ. I should think that is the basis of the concern.
The CHAIRMAN. I do not think that is right at all.
Mr. COLE. Mr. Chairman-

The CHAIRMAN. The question that I propounded was that it was exactly the same governmental action, and the recipient received the same governmental bounty, whether it was contributed by the National Government or a State government, the question was whether it was justifiable under any conditions to make a man a recipient of a bounty which gave him some special advantage-whatever the purpose was. That it was exactly the same whether it was given to him by the National Government or by the State government. The advantage was given to him by a government. It does not make any difference whether it is National or State.

We can talk about socialism. A great many people say this thing ought to be done by the States. I say it is fundamentally the same thing, if it is done by the State as if it is done by the National Government. If it is socialistic to have this advantage given to the individual by the Federal Government it is socialistic to have it given by the State government or the city government, because it is all obtained in the same way. The people are taxed, and the funds come from the same source. I do not think anybody can consistently contend that the act is socialistic if the assistance is given by the National

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Government, and that it is not socialistic if the aid is given by the State or county or city government.

That was my contention. I do not think that answered it at all.

Thank you very much, Mr. Kreutz, for your testimony. You speak for a great organization and your testimony has been very helpful.

Mr. KREUTZ. Thank you, sir.

Mr. MULTER. Mr. Chairman, before we go to the next witness, may I put this observation on the record? It is particularly pertinent with reference to the invitation that one of the opponents of this measure extended to the committee to go to England and Sweden and view he public-housing situation there.

Here is the situation as recently developed in Italy: On April 9, the Italian Chamber of Deputies approved a 7-year governmenthousing program, intended to build about 1,700,000 rooms for workers. The vote was 244 to 85. Only the Communists and pro-Communist Socialists voted against the measure, similar to what we have here and which has been repeatedly labeled by its opponents as socialistic and communistic.

Incidentally, the cost of that program there will be about $870,000,000, will employ a hundred thousand workers for 7 years, and the employed workers will contribute about 70 percent of the total cost through pay-roll deductions. The Government will contribute the balance.

The CHAIRMAN. Thank you, Mr. Multer.
Mr. Brown will preside.
Our next witness is Mr. Hatcher from Georgia.

Mr. Brown. I desire to say that I have known Mr. Hatcher for a great many years. He is sincere, honest, honorable, and capable, and a good banker. He has been connected with the Trust Co. of Georgia for 14 or 15 years. The Trust Co. of Georgia has rendered outstanding service to the people of the State, including the farmers.

You may proceed.
Mr. HATCHER. Thank you, Mr. Chairman.



Mr. HATCHER. I am Lloyd B. Hatcher, vice president of the Trust Co. of Georgia, a relatively small bank in Atlanta, Ga. I am in charge of the investment, or bond, department of the bank, which underwrites and distributes State and municipal securities throughout the Southeast and deals in United States Government securities, as well as securities of Federal agencies such as Federal land banks, Federal home loan banks, and Federal intermediate credit banks.

We have engaged in this business of handling high-grade investment securities for over 30 years. In fact, the department was established at the time of the first Liberty Loan drive in 1918, so that the bank could do its share toward distributing Government securities. During the heyday of the late twenties several investment banking houses of national scope established branch offices in Atlanta, but soon after the crash in 1929–30 they all closed their offices, leaving our territory without any adequate local market for Government bonds. We in the Trust Co. of Georgia expanded our operations, and since

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