I have given at least the major reason-our desire to secure cooperation. Of course one reason is that under the monthly payment amortization plan, which applies under the National Housing Act and also under this act to urban dwellings, the cost of operation is higher than it is with respect to farm mortgages bearing annual repayment provisions. But really the committee was faced with this choice; we could see it quite plainly. Mortgage companies showed us that their amounts in default or behind in payments in urban properties represented a much less proportion of the whole than in the case of agricultural mortgages, which have been hit by ten years of adverse conditions. They said quite frankly, "You are asking us to go to all our borrowers in the cities who are in good standing, who have kept their contracts, and say to them, 'In future you will not pay us 6 per cent, or 61 per cent, or 7 per cent; just as a free gift we are cutting your interest down.' " They argued also that we must consider the situation as a whole from the standpoint of companies becoming members of this bank. For instance, company A has, say sixty per cent of its investments in urban properties and forty per cent in farm properties; company B's investments might be seventy per cent urban and thirty per cent rural, and so on down the scale. Obviously each company is going to look at the obligation it assumes with respect to the whole of its properties. It was the design of the legislation to make that possible, otherwise the legislation would have been impracticable; and we gathered the impression in the committee from the representatives of the companies that, at 51 per cent for urban loans, we should have a very good chance of getting the great bulk of the companies to join, and thus extend to all urban and rural dwellers
who are borrowers from member companies the benefits of that very considerable cut in interest.
Topic: CENTRAL MORTGAGE BANK
Subtopic: PROVISION FOR INCORPORATION, PURCHASE OF SHARES, GUARANTEE OF DEBENTURES, ETC.