Evening star., 1934-05-16
Reviving the Building Industry.

According to Frank c. Walker, ex-
ecutive director of the National
Emergency Council, IAN attack on the
housing problem can at the present
time be made a major factor in eco
nomic readjustment." and the legisla-
tion proposed by the President con-
templates vigorous attack on several
fronts. The chief element in this at
tack is to unloose credit, facilitating
financing for repairs to homes, con-
struction and purchase of homes.
The theory behind the attack is that
the lack of credit facilities, plus the
terrific strains of the depression on a
financing system developed during
the booming years of prosperity. is
mainly to blame for having reduced
annual construction expenditures
from eleven to three billion dollars,
and of having thrown millions of per-
SONS, formerly employed in the con-
struction industry, out of work
I'VE have here" Mr.. Walker ex-
plains, "a sort of vicious circle. Un-
employment is maintained at high
figure because of the absence Of
facilities for financing new construc-
ton, while at the same time the
financial burden Of the existing mort
gage debt becomes increasingly diff
cult to carry because of the con-
tinuing large volume Of unemploy-
ment."
The administration program, now
embodied in legislation introduced in
both houses of Congress proposes to
apply the remedies which lie. first. in
making credit available for home i'm
provement and modernization, en-
bracing commercial and industrial
property as we'll as residential prop
erty; second, encouraging investment
Of capital in mortgages by plan of
government insurance, or guarantee
of mortgages up to eighty per cent of
the appraised value of newly construct
ed homes and sixty per cent of the ap-
praised value of existing homes; third,
authorization Of privately owned and
operated mortgage associations, incor-
porated under Federal charter and
under Federal supervision, to deal in
Governments Ensured mortgages, and,
fourth, Government insurance of the
shares and certificates of sound build
ing and loan associations to correct
what is described as the inequitable
disadvantage to these institutions re-
sulting from Government insurance Of
bank deposits. Under this last-named
plan, the expectation is that building
and loan associations will be in a more
advantageous position to attract small
savings for mortgage investment.
The extent to which this program
will put the Government IN the real
estate business may be judged by the
fact that Government insurance Of
mortgages carries with 1t the natural
right and obligation to judge as to
the necessity for construction. 1t is
not planned, for instance. to insure
mortgages on speculative" building,
and new construction would be lin
tied, according to Mr.. Walker, ito
that which is economically justified
in each community" With Govern
ment- insured mortgages competing on
the market with non-Government-in
sured mortgages, it may we'll be that
in time no construction, to be financed
through mortgages, will be possible
that is not approved by a Govern
ment agency.
Thus this entrance of Government
into another form Of private business,
while the purpose may be praise
worthy enough, carries with it the
traditional disadvantages. At the
same time it is a question whether
the Governments program sufficiently
takes into account the fact that high
cost of labor and building materials,
aside from the matter of financing, Is
an element that retards building and
discourages home purchase.