Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-15
A Home Building Plan.

President Hoovers plan for the crea-
ton of home loan discount banks will
be presented to Congress as recon-
mendation for legislation at the coming
session. It proposes supplement 10
the credit corporation instituted some
weeks ago for the purpose of liquidating
now frozen assets in the banks OF the
country. These home loan banks, II
authorized, will be capitalized at about
$50, 900, 900 with a capacity of advanc-
ting twelve times that amount, or roughly
81, 300, 900, 900, to institutions dealing In
small mortgage loans. The President
hopes that by means of such an organ
ization of capital home building will be
revived, with a resulting increase in en-
ployment; that the present financial
strain on sound banks and loan asso-
eiations dealing in home building
kecurities will be eased; that safe
.uard will be provided against future
building slumps and that a longtime
promotion of home ownership through
the financial strengthening OF credit
institutions will be effected.
This chain of home-loan banks would
be a supplement in effect to the federal
reserve system, one such bank belng
established in each of the twelve reserve
districts. The initial capital would be
subscribed by the participating institu-
lions, as was the case IN the organiza-
ton of the federal reserve banks, the
Government subscribing any amount
not thus provided. These newly created
banks would bear to building and loan
associations and other institutions that
loan money for building enterprises the
relationship of the reserve banks to
the commercial banks at present.
In normal times more than 100000
homes are erected annually in this
country, involving, with their furnish
ings, expenditures Of more than
$4,000 100000 a year. For some time
mast this volume of building and ex-
penditure has been reduced. The result
is q congestion of population due to
the lack of suitable living quarters and,
in part, the consequence OF unemploy-
nent within recent months. This pres
ent project is predicated upon the
assumption that unemployment will be
greatly lessened and that home building
win be resumed as rapidly as workers
obtain steady employment. The begin
ming of home building under the pro-
iected plan Of financing would in itself
give employment to great numbers OF
artisans who are now idle.
The Presidents suggestion is that
these home loan banks should confine
themselves to small individual opera
tions, no mortgage loan of over $4,000
being eligible for collateral. 1t is indi-
Gated that volume of credit between
twenty billion and thirty billion dollars
would be stimulated.
This is constructive plan which has
already been Endorsed by savings banks
and building and loan associations, and
it is to be hoped that it will be con-
sidered promptly by Congress and put
into shape for sound legislative action
that will permit the early organization
of this agency for the revival OF home
building enterprises. The Governments
obligation would be relatively small in
proportion to the great volume of credit
and security commanded by the insti-
buttons themselves, and the plan should
be considered by Congress without ref
erence to the state of Federal revenues