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Home Finance Plan Holds New Hope 10 Per Cent Down to Spur Building and Free Other Funds. By DAVID LAWRENCE. OF ALL the various plans and proposals of the Roosevelt administration to help re covery, none offers as much promise or is based on a better prin ciple of private capitalism than the suggestion for the financing of new ■mall houses with ft 10 per cent Mjt down payment. This feature— |R: the 10 per cent Ml down payment— 3ft Is criticized, in some quarters as risky, but ex- pH penence of the Government |||9 shows that the |||| chances of loss to f||| the insuring au- mm thority—the Fed- ||§§ erai Mousing aq- _ .. , ministration—are relatively small. One of the reasons why the public looks askance perhaps at the idea of a prospective home owner borrowing 90 per cent and putting up only 10 per cent of the. cost of house and lot combined is that for generations the customary lending has been on about 50 per cent of the valuation, and then a second trust usually had to be pro vided for about 25 per cent and a property owner had to supply the remaining 25 per cent as cash. But it is overlooked by many now adays that the old 50 per cent value mortgage was renewed for three-year intervals as a rule and some of them were never paid off or curtailed in any way. Tlxlay the Government pro poses to stand back of the banks by insuring loans made on properties that are to be paid off in monthly installments spread over 20 years. What does this mean as compared to the old system? $6,000 Property Illustration. First of all. in the case of a $6,000 property, the monthly installments on the $5,400 loan are such that at the end of five years the margin of equity owned is 28 per cent, so the loan is 72 per cent of the value of the property. Also the property owner at the end of the first five years is in the same position as he was in the old days when he had a first mortgage of $3,000 and a second mortgage balance of $1,680. But the payments cm that second mortgage were usually heavy and a default in them might cost the owner his property and a complete loss of his $1,680 equity. The second mortgage situation in America for many years has been notoriously bad. Heavy commissions and extortionate charges often have deterred those who have wanted to build their own homes. It is true that the second mortgage lenders felt they were undergoing a great risk because the first mortgage holder could foreclose the property and wipe out the second mortgage lender un less the latter wanted to buy in the house at a foreclosure sale and hold It for some future disposition. If the property was properly valued tn the first place and if there hap pened to be a market in which the house could be readily sold, the sec ond mortgage lender could come out all right, but too often as neighbor hoods changed their character or as cities lost large pa$ rolls due to vari ous causes, the value of real estate would go down. Wars on System. The Federal Government under President Roosevelt’s leadership stepped into the breach and deter mined to wipe out the second mort gage idea altogether by making a sim ple first mortgage and requiring monthly installments from the very _ beginning. In addition to the interest, a slight insurance fee is charged 1 which is really a reserve to take care 1 of the instances in which property 1 owners have defaulted on their pay- * ments and forced the lenders to sell r the property. 1 Thus every man who borrows money * to build a home and meets his pay- * ments punctually pays a slight fee to 0 take care of those cases where the * payments are unfortunately not met. The low rate of insurance for hoiu- n Ing loans now in vogue—and it is to b be slightly reduced by the Federal n Housing Administration’s new plan— j, is based on the experience of the . American people with installment financing which, on durable articles that can be repossessed and readily sold, reveaU a relatively small loss to the lenders. It should be clearly understood that the 90 pe- cent loan or 10 per cent down payment applies to houses of $6,000 or under which are to be occu pied by teh owners themselves—that Is, by the persons who borrow the money. Free* Funds for Baying. What the small down-payment plan really does Is to make it possible for a family to use part of its savings to furnish and equip the house and this In turn means business for the furni ture dealers and those who sell equip ment of various kinds for the small homes, A couple with $1,000 saved ;p can put $600 In the down payment ceded tor the $6,000 home and have 400 to put into new furniture and quipment. Incidentally, the interest ate is 6 per cent whether above or elow the $6,000 class, but the insur nce rate is one-fourth of 1 per cent l the case of the $6,000 houses and ne-half of 1 per cent In those above 6,000. The Federal Government Itself does ot, of course, lend the money. The anks do it. But the Federal Govern ment stands ready to guarantee the *ns if made according to the rules laid down by the Federal Housing Administration. This means that the banks run practically no risk. This affords an opportunity for the great sums of idle money in the banks to be put to work. Incidentally, about $750,000,000 worth of construction has been made possible under the F. H. A. since the first legislation was passed. The question of whether the plan will work out with small loas or no loss is related to the appraisals of the property. If the appraisals made by the banks and the Government are too high, then obviously in ease of default on payments the true worth of the property at a foreclosure sale will cause a loas to the lenders and ultimately to the Government. But the whole hous ing plan depends on efficient adminis tration anyway and appraisals must be conservative to make the plan effective. It isn’t the down payment, but the correctness of the appraisal that counts most. The project for mobilising private credit to stimulate housing Is one of the best things if not the best President Roosevelt has spon sored in his entire administration. (Copyright, 1937.) The Capital Parade Chase Bank Head Warns Stock Market May Take An other Shellacking—From Foreigners This Time. By JOSEPH ALSOP AND ROBERT KINTNER. WINTHROP W. ALDRICH, chairman of the board of the Chase National Bank, is warning friends in Wall Street that the stock market may take another shellacking, this time from foreign selling. Foreign Investors have hung on to their American securi ties thus far, but Mr. Aldrich fears that they may grow nervous and dump them. Mr. Aldrich’s fears are based on soundings of foreign opinion taken during a recent trip abroad. As one of the moat powerful figures in the American financial community, he was able to ask straight questions of such bigwigs as the managers of the big British investment trusts. According to those who have talked to him, he now reports that thee* men are showing the first signs of Jitters in regard to their American hold mgs. nimerto, urmsn ana other foreign business men have always considered American business men hysterically alarmist in their esti mates of the future. But now, ap parently, the British are beginning to change their minds, and are playing with the thought of pulling out of the American market. If they do, it will be pretty serious, since the holdings of the British trusts alone, as of today, amount to nearly $500,000,000. It must be added that the Securities and Exchange Commission, the Treasury and the Department of Commerce here all flatly disagree with Mr. Aldrich. They maintain very forcibly that for the present, at least, the threat of foreign selling is a meaningless bogeyman. * * * * At the S. E. C. and the Treasury, where the doings of foreign investors are minutely watched, the experts report that, since Sep tember, foreign buying has slightly exceeded foreign selling. And they see no reasons for a change in the trend. * * * a Representatives of the British investment trusts were here recently to find out how new American taxes would affect them. The Treasury worked hard to get their plans in regard to their American holdings, and came out pretty well convinced there would be no dumping. ' * * * * An interesting sign of the times is the denunciation of securities dealers to which the President has recently treated more than one business visitor. One of the great business minds who came to Washington to talk depression at the White House was surprised when the President launched into a full 20 minutes of angry eloquence against the system by which new securities are sold in this country. * * * * It was the President’s thesis that, if the securities dealers had an atom of sense, new securities could easily be floated, even in the present bad times. The incident gave an interesting measure of the degree to which the administration tends to regard the stock market not as a business barometer, but as a business depressant. * * a * A Belgian adventure in American utilities finance which has rather the flavor of an E. Phillips Oppenheim novel is being watched with some puzzlement by the S. E. C. officials responsible. The Belgian company concerned is the Societe Financiers de Trans ports et d’Entreprises Industrielles, "Sofina” for short. Soflna is the largest utilities holding company in Europe, with utilities properties in Belgium, France, Portugal, Germany, Turkey, the Argentine, Spain and Mexico. It also owns industrial companies, glass companies, coal mines and fertilizer manufactories. * * * * Its managing director, D. Heineman, is a suave, quiet Belgian whose extreme shrewdness has given him the reputation of being the cleverest bargain hunter among European financiers. Something of his method of doing business may be gathered from the fact that his properties in Barcelona are incorporated in Canada as the Barcelona Traction, Light A Power Co., while another inconspicuous Canadian concern, the Mexican Light and Power Co., is the repository of his Mexican holdings. * * * A While American utilities executives are twittering with fear for the future, the shrewd Mr. Heineman seems to have concluded that the business has hit bottom in this country. About a year ago, Soflna quietly acquired a 3.4 per cent interest in the Middle West Corp., a Chicago utilities holding company which ranks with the largest. Oddly enough, the stock was picked up at a bargain rate from the Reconstruction Finance Corp. That was Soflna s and M. /J]} Heineman'a first investment in the .. _. , -^sllm United States. As a consequence of it, Charles K. Wilmers, a previously unknown ■ngiishman, went on Middle West's Board of Directors as Sofina's representative. It had been expected that the matter would end there, but M. Heine man suddenly appeared in this country late last summer, and began nego tiations with New York and Chicago banks for more Middle West stock. Just before the stock market crash, arrangements for the transfer of work ing control of Middle West to Soflna had been completed. The crash, which knocked the bottom out of the Middle West stock price, upset the arrange ments. * * * * Now it it understood that Heineman and Soflna will return to the charge, this time with the intention of investing in a number of American utilities companies. * * * * Probably they will avoid acquiring more than 10 per cent of any one enterprise, for fear of coming within the purview of the Holding Company Act, but they are expected to buy enough of each to have what is called "an important voice” in policy. (Copyrlsbt. 1037, by the North American Newspaper Alliance. Inc.) T***on tfli* P°9e are their own, not The 1^tnt>»aJhnriTtle^uta^fi -i$uch opinions are presented in w0 0*?e sides of questions of interest to its themseives^nnAHt^Ii opinions may be contradictory among themselves and directly opposed to The Star’s. Will of the Majority? Potato Referendum Shows Relatively Small Number Imposed Control. dj rasniv BULUVAN. UNDER the farm control bill before ihe Senate, quotas will be imposed on farmers dictat ing the quantity of wheat they can raise, or corn, or cotton, or rice, or tobacco. (Under another law al ready existing, the so-called “soil conservation’* act, quotas can be im posed on other crops.) Once a quota is imposed on a farmer, he can raise inH fin mors than the quota Hi fixes. If he raises H and attempts to H sell more, he Is I subject to a pen- B alty enforceable fl In the Federal B courts. I In order to hold j ■ him to the quota, he is required to | ’ keep minute f records. He Is £. required to keep 'jm ords that may „ . . be—I quote from *“rk 8,m™' the bill—"prescribed by regulations of the Secretary.” He is required to keep and furnish to the Department of Agriculture—I quote: "Records, mark eting cards, reports, storage under seal.” He is required to furnish— again I quote from the bill—“proof of acreage, yield, storage and market ing.” If he fails to supply such records—once more I quote from the bill—“any farmer failing to furnish such proofs in the manner and within the time provided, shall be guilty of a misdemeanor and upon conviction be subject to a fine of not more than $100.” This is onerous. It does not seem that farmers would willingly submit themselves to it. But it is argued, in behalf of the bill, that farmers as a group have an opportunity to reject the quota system. It is argued that the system of crop control, of which the quota device is a detail, will not be imposed on raisers of any given crop until after a referendum of them is taken, and if one-third of the farmers vote to reject the system in any one year, the quota device will not take effect. Potato Quota Wins. Now let us look into this matter erf referendum. Under an already exist ing law, referendums were held early in October on the question of imposing quotas on potato raisers. After the referendums were held the Agricultural Adjustment Administra tion announced that 82 per cent of the farmers voting had voted in favor of the quota system. Thereupon the system was put In effect on potatoes. With the coming planting season, quotas will be imposed on potato raisers. • How was this referendum carried? How did it happen that 82 per cent of the farmers voting voted in favor of it? First &t all, there was an induce ment. Potato raisers were promised that if two-thirds of them would vote yes” in the referendum, all farmers required to submit to the quota would be given a bonus, the bonus to con sist of 4 cents a bushel on early po tatoes and 6 cents a bushel on late potatoes. But was this promise of a bonus lufflelent to persuade the potato rais srs to vote in favor of the quota system? It does not seem so. A. A. A. •oys—I quote an announcement given out October 11: "Eighty-two per cent of the 30.618 votes were in favor of ihe potato program." Thousands Didn’t Vote. ■ That sounds Impressive. But the innouncement omits something. It omits to state how many farmers did not vote at all. On this point Inquiry reveals that the total number of potato raisers in the country is upward of 800,000, sad that the total number of so-called "commercial growers”—that Is, growers who grow potatoes In large quantities for the market—is upward of 250,000. So what have we here? By the vote of less than 30,000 farmers, a quota system was Imposed which affects the entire potato growing Industry com prising more than 800,000 farmers. The “potato referendum” calls for Inquiry. Information sent me from Dauphin County, Pa., says that the number of farmers who grow potatoes In that county is many hundreds— but that In the referendum "just three farmers participated.” The three voted unanimously for adoption of the quota system. A recent issue of the Pennsylvania Farm News says that the total number of fa marts raising potatoes In Pennsylvania Is 144,104. But the total number who voted In the referendum was 1,810, of whom 1,272 voted “yes” and 534 voted “no.” These so-called "majorities” voting In favor of a quota System are gro tesquely small. And charges are made that even this small number of votes in favor of the quota system is pro cured by persuasion and pressure. In the Senate debate last Tuesday, Sen ator Vandenberg of Michigan said that the so-called referendums are really “called by the Secretary of Agriculture, whipped up, unquestion ably, by the paid committee members of the structure which the Secretary has created all over the country In respect to his operations, and mani festly made to order for secretarial control of the result. • • • When an election respecting compulsion is called, there Is in existence a great existing machinery which is sympa thetic to the general Idea of compul sion, and there Is not in existence any comparable machinery on the other side.” Manipulation Hinted. Senator Vandenberg’s charge amounts to asserting that these ref erendums, and the results of them, are manipulated by the paid agents of the Department of Agriculture, of whom there are tens of thousands throughout the country. In support of Senator Vandenberg's charge, there Is some evidence in an A. A. A. an nouncement put out on August 17, about a then forthcoming referendum. I quote from the announcement: “Referenda will be conducted among the growers * * • hearings will be open to any one wishing to attend. Exten sion service specialists [these are a part of Mr. Wallace's army] will conduct educational meetings for growers. • • •” Did these “extension service spe cialists ’ act as impartial lmparters of information? Or did they act as Senator Vandenberg charges, as propagandists for Secretary Wallace's dream of control of all crops from Washington? I do not know. But it would seem as If Senator Vanden berg's charge, if sustained, would ex plain a mystery. It would explain why, out of the hundreds of farmers in Dauphin County, Pennsylvania, only three went to an A. A. A. ref erendum—and all three voted In favor of the quota system. (Coprrlsht. 1837.) Ireland to Become “Eire.” GENEVA, Dec. 2 OPh—The Irish Free State last night Informed the League of Nations that, beginning December 29, its name will be “Eire,” (pronounced “Airy”) m the Irish tongue and “Ireland” In the English by virtue of the new Irish constitu tion. We, the People Philosophy of Scarcity Still Controlling Motive of Groups Represented in Congress. _ By JAY FRANKLIN. A FEW days ago, one of the leading Government economist* expressed the opinion that by next July Industrial production and employ ment will be below the worst levels of 1832-33. This was a snap Judgment and the man who made it was not speaking for publica tion, but It is important as reflecting the deep gloom which prevails in the Inside New Deal circles about the business situation. As they see it, Mr. Roosevelt made the mistake of saving not only the essential American business system but also the power and control of the very men who steered it into the Hoover nanio at 1920 -Tier. v... been no "purge” of the general W, tvumi • •*** °* Wg business—a few men £ • i . I I __ like Wiggln, Inaull and Mitchell r, . . 7 ['■’• ,| w*r* thrown to the wolves and a I ''S'-7fin Ml few others> lik* the late Andrew iVIdM Mellon and John D. Rockefeller, sr., ’"v kave been gathered to their fathers, A V ' ~ but on the whole the country is still being run by the Fords, Hearsts, V~JjT— Mellons, Morgans, Rockefellers and ****** Du Ponta. The men of the pre-war .... . . .. , generation are still in command in politics, law, banking, utilities and industry. Since old dogs do not take kindly to New Deals, this meant that there has been irrational resistance to the very simple chances proposed by Mr. Roosevelt, that old guard ideas still prevail in tha decisions of price and business policy, and that the philosophy of scarcity is still the controlling motive of all the important groups which are represented in Congress. This i*-true of agriculture and labor, as well as of big business. The sacrifice of abundance to profits and of production to prices has become an economic epidemic. It is as if we sought to strangle ourselves by holding our breath. When labor seeks to create a closed-shop monopoly for union mem bers, and to give as few man-hours as possible for the highest possible wages, we are quick to brand the idea as insane. Carried to its logical conclusion, we say that it would strangle industry. Because labor has been so general^ abused and exploited, too little attention has been paid to the potential labor-monopolies which are building up in America, monopolies whose motives are little different from those of the management of the Chase National Bank or of Republic Steel. It is worth recalling that the American labor movement is still largely under the control of the labor leaders of a generation ago. ihC m°Tent' lher* U anxiety about the new farm bill. The com mercial farms of America—that is to say the land owners, including banks and prance companies—are moving strongly in the direction of a legally farm«ed *°°u SCarClty' whlch ahaU aacriflce agricultural abundance to the Ia ™ * cash mcome- Unsympathetic to organized labor and to Wall Street alike, the organized farmers propose to imitate them and to establish an Sf b^bi«ine«°n°my rigid “ any monopoly of union membership or of big business profit seeking. It is well to remember that farmers are tra ditionally the most conservative-minded group in society * * * * it'c ure turning our oacKs on our own capacity to produce. Big-scale industry, through the technological advances of the last Jew years and its own installed plant capacity, is eouipped to produce goods tn abundance for the entire Western Hemisphere if not the whole world. Despite erosion by wind and rain, despite the wastage of cash-crop farming, our lands possess sufficient fertility and our farm-machinery enough power to clothe and feed our people lavishly. And southward lies the treasure-house of the tropics, over-flowing with Nature’s careless abundance, from sugar to cattle, fruits and vegetables. Then there is the greatest waste of our civilization—the unused man ^ °.Ur ^,UgC 1?bor reserve- recruited from the unemployed, the aging and those luckless children wh° come of working age year after remorselesf Vwtheirlai** had hcen ful*y employed since 1929, we could have rebuilt the entire United States, we could have rehoused every American co.uld haye created public lnstitutions-libraries, schools, hos pitals, swimming pools, auditoriums and athletic stadiums sufficient to breed a new and nobler race on the face of this continent. We shrink from the more abundant life, as from death itself. Big business cuts down production and lays off workers rather than produce needed goods at lower prices. Agriculture seeks to put a ball and chain on every independ ent farmer rather than deal with plentiful crops. Labor has no plan and will welcome no plan for putting monei? wMi(h to rf 0rk' we caught in a whirlpool of dead ideas about money^wealth and prosperity which is spinning us dizzily toward the depths. President and a few far-sighted business men are tiding to reverse this downward spiral, the great mass of our aging economic leaders hSt?™ *£.“ grWdyJand “ ever and, under the spur of fear, seem nowSveTh^fh?0*. rUCtl°n- ThU “ why New Dwd econom wh t thi* t me An“rlc* P>>ng to shoot the works, not be cause we do not know any better, but because we do not know how to stop (Copyright, 1937.) UK. htW TO TALK Dr. William Preston Pew, now serv ing his twenty-eighth year as presi dent of Duke University, will be prin cipal speaker at the annual Duke University Day dinner dance to be held by the Washington alumni to night at the Lafayette Hotel at 7:30 o’clock. Annual election of officers will be held as a feature of the dinner dance celebration. An American You Should Undersecretary of Agri culture Has Wide Vision of Future. By DELIA FTNCHOW. FOR 30 years Undersecretary of Agriculture Mllbum Lincoln Wilson has run a straight fur row in the service of agricul ture from coast to coast. His friends affectionately call him "M. L.” l/>ng ago he made his mark Indelibly upon the good earth of America. He captures the Imagination with his r—"«*»'» -***s sincerity, bound i less enthusiasm ■no wiae vision of future needs in terms of pres ent accomplish ment. His life co relate* the his tory of United State* industrial and agricultural dev elopment. Even his hobby is tvnli>a.iiv WEmmk mKm A m e r i can. Ha Mr. Witoen. 1143 a J*rge col lection of books and lithograph* on Lincoln. Farm-born In Iowa in 1885, "M. L." early in life was encouraged to make farming both his vocation and hi* avocation. His father believed with William Penn that “farming is the noblest profession of them all.” A graduate of the Iowa State College at Ames, Mr. Wilson went to farming in Nebraska, homesteading in Mon tana. He raised wheat, flax, cattle. He has always believed that people are happier living in the country sur rounded by growing things. The old subsistence homesteads that he di rected for a time had the answer, he thinks, if time and tide had not swept them beyond their depth De centralisation of industry and the ultimate establishment of rural com munities must come in the next 50 yearfc if we are to take up the slack of farm unemployment, Wilson be lieves. “M. L." traces agricultural history with deft verbal strokes. He was a part of the last wave of Western migration and homesteading. In the quietude of his Montana homestead that country that “Teddy" Roosevelt ranched, Mr. Wilson became a liberal in politics, a “Bull Mooser.” His convictions led him to become a leading spirit in all forward moving farm legislation. He became Montana's first county ' agent, cam paigned for the oft-defeated McNary Haugen farm relief bill, had charge of wheat production in 1933 under the triple A's. The ever normal granary is now on- the congressional doormat. “M. L.” does not use the terms “crop control" in speaking of farm legisla tion. He calls it a “balance between the things that the farmers have to trade for the things that the city makes.” It is apparent that Wilson hopes that the new farm relief bill will possess the latest gadgets that years of experience indicates. It is always a balance between producers and consumers. Nature, it appears, will umpire the granary score, calling her lean and fat years with sublime disregard to planned econqjny. 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