!
T MAIL TRIBUNE, McdforJ, Cr9on, Mouthy, October 13, 1958
(Private Mome Building Seen
(Declining Over Tight Money
By A- ROBERT SMITH
Mail Tribune Correspondent
Washington - Private home
construction, Oregon lumber's
biggest market, appears head-
ed for another
H d decline due to
i - . . . -
a tig memng
m o r tgage
I money supply,
according to
trends now
showing up
within the
g o vernment's
home t financ
ing agencies.
A fall off from the strong
recovery which housing made
this summer-and which gave
the lumber industry a hefty
shot in the arm-may" come
within the next few months.
It probably will not affect
the predictions of housing
officials that over a million
new homes would be built
this year.
tw 1
m -wis
A. Kobt Smith
Home construction was so
good this summer that Hous
ing Administrator Albert M.
Cole last week increased his
prediction for the 1958 total
by 20,000 units to 1,120,000.
This would be better than a
10 per cent increase, of 1957's
housing starts, 989,700, low
est in a decade.
Credit Easier
This spurt in home building
was made possible in great
part by a relaxation of credit
restrictions by the Federal
Reserve Board in an effort to
combat the recession which
was felt most severely in the
early months of this year.
From mid-November of last
year until May, 1958, the
board approved reductions in
discount rates for federal re
serve banks in all 12 districts
from 3Vt per cent to 1 per
cent in four states.
Credit became easier and
more money began to flow
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into the mortgage market for
new homes. Congress also
passed a special anti-recession
housing bill to stimulate build
ing and purchasing even more
by reducing down payment
requirements on FHA-insured
homes and allowing a slight
increase in interest rates on
mortgages.
But by August 15, the Fed
eral Reserve Board was mov
ing in the opposite direction
once more to curb borrowing
slightly. The discount rate
went back up to 2 per cent
in all 12 districts. A board
spokesman explained that this
was brought on by "a change
in business conditions from a
downturn to an upturn" and
there were "manifestations of
an inflationary trend" appear
ing once more. The board also
raised margin requirements
on purchase of securities from
50 to 70 per cent on Aug. 5,
which is the way things stood
last January before the mar
gin was dropped.
This shift in tightening
somewhat the money supply
has served to bring another
rise in interest rates, accord
ing to officials here. As a con
sequence, the supply of mort
gage money is beginning to
tighten up. This is seen in the
statistics of the last few
weeks compiled by the Fed
eral National Mortgage Asso
ciation, the government
agency which buys and sells
mortgages in its secondary
market operations.
Sales io FNMA Increase
When money is plentiful,
FNMA sells mortgages to in
vestors looking for a good
place to put some money.
When money is tight, investors-banks,
savings and loan
associations-sell mortgages to
FNMA to obtain more money.
For the past month, there
has been a sharp increase of
200 per cent in the number
of mortgages investors sold to
FNMA. This indicates ' that-
mortgage money is growing
tighter and can be expected
to retard home construction
accordingly unless there is a
shift in the other direction.
Last summer, during the
Lsecond quarter when housing
picked up sharply as credit
became easy, FNMA sold a !
record 30,500 mortgages
worth $355 million to invest
ors with money to invest. But
early in 1957, when credit
was tight, FNMA purchased
33,800 mortgages worth $388
million.
FHA officials reported that
applications for FHA insur
ance for mortgages on new
homes remained high through
August. No information is yet
available for September. The
number of applications from
January through August; rang
ed from 17,272 m January to
a high of 34,558 in May and
33,617 in August. For the
same period last year, the
highest number any month
was 22,265 in August.
Substantial Influence
. Another factor in the cur
rent trend is that the $1 bil
lion appropriated by C.ongress
for anti-recession mortgage
buying was consumed by Sept.
15. Purchases with this money
involved a "subsidy" of a sort
in that the mortgages were
bought by FNMA at par.
"This had 'a substantial in
fluence on the spurt in home
building this summer," a'
FNMA official said, "and it
helped the lumber industry
quite a bit."
He estimated that the $1
billion fund provided money
for 80,000 new homes.
This special purchase pro
gram might still be underway
had the House of Representa
tives not killed another hous
ing bill shortly before ad
journment. That bill con
tained $500 million for FNMA
mortgage buying, if the presi
dent thought it necessary to
extend this anti-recession in
centive to home builders be
yond Sept. 15.
FNMA still has about $1.5
billion available for its sec
ondary market operations, but
not for use in buying mort
gages under subsidy terms.
Officials will be watching
housing and mortgage loan
figures closely in coming
weeks to determine how
strong a trend may be de
veloping, for another decline
in housing' could act as a
brake against a general re
covery in the nation's econ
omy and could send the lum
ber industry into another per
iod of recession.
Subscriber's Address
Mystifies Newspaper
Manchester, England - (UPD -
The Manchester Guardian re
ported today that an Ameri
can reader regretfully de
clined to renew his subscrip
tion because "I passed on to a
better world Aug. 3, 1958."
Commented the Guardian:
"Our New York' manager is
still wondering what to say
in his reply and where to send
Eisenhower Leads
Stepped-Up GOP
Drive for Voles
Washington - (OPD - Repub
licans stepped up their con
gressional campaign today
under the new battle cry that
President Eisenhower's
policies in the Middle and Far
East have "maintained the
peace."
As the final three weeks of
the campaign opened, Demo
crats blasted back by accus
ing the GOP of raising
"phony" issues. They urged
Democratic candidates to fighjt
back by dwelling on unem
ployment, the "farm mess, the
high cost of living, the defense
lag, the drift and confusion in
foreign policy."
Vice President Richard M.
Nixon, number two gun in
the GOP campaign arsenal,
hits the trail today for his
third stumping tour. He will
speak in California, .Utah and
Wyoming where Republicans
are fighting hard to save Sen
ate seats in the Nov. 4 elec
tion. President Eisenhower, the
top Republican of them all,
will start his own speaking
schedule on . behalf of GOP
candidates later in the week.
Eisenhower described as
"good ., news" the Chinese
Communists' decision to ex
tend their cease fire in the
Formosa Strait for; two more
weeks.
Speaking in New York City
Sunday, the President said the
extension offered renewed op
portunity to settle the 'Far
East crisis through diplomatic
negotiations.
Firmness Cited
GOP National Chairman
Meade Alcorn immediately
hailed the extension as an in
dication that "the administra
tion's firmness in this situa
tio is maintaining the peace."
"It is results that the Amer
ican people are interested in,"
he said. "It is not how you
get them, it is the result."
Alcorn also said "we main
tained the peace" in the Mid
dle East because of Eisen
hower's "firm position" after
the revolt in Iraq.
The Democratic Advisory
Council described the Eisen
hower foreign policy earlier
as "six yeais of leaderless
vacillation."- ,
"They have led us to the
brink of isolation from our I
allies and to the brink of1
Portland Man
Drowns in River
Hammond, Ore.-CPD-A Port
land man drowned and an
other man1 managed to save
himself early Sunday after
their 32-foot fishing trawler
smashed up on rocks on the
north jetty at the mouth of
the Columbia river.
The body of Toivo W. Matt
son, 59, was found by a search
party a short distance from
where the wreckage of the
boast washed up on the beach
near here.
Rudolph R. Rautio, 55, the
dead man's half brother,
walked into the Coast Guard
station at. Cape Disappoint
ment shortly after sunrise
Sunday. He told Coast Guard
officers that he and Mattson
set out in the trawler from
Depoe Bay bound for Astoria
when they encountered heavy
fog and- rough water as they
neared the mouth of the Co
lumbia. Mattson, who had operated
the craft, radioed the Coast
Guard that the trawler was
in trouble and had hit rocks
"on the south jetty." Coast
Guard boats and a plane
searched the area until 4 a.m.,
then halted until sunrise.
Rautio said he and'Mattson
decided to abandon the trawl
er and agreed they would at
tempt to swim to rocks of the
jetty. Rautio said he made it
to the rocks but that Mattson
vanished in the water.
BEARING HIS OWN CROSS
Manchester, Conn.- (UPD -
The Rev. Clarence E. Win
slow hired -a crane to hoist
him 90 feet so he could secure
a four-foot cross to his new
church steeple. He figured he
saved his Church-of-the Naz
arene congregation $50 by do
ing the job himself.
having to fight a nuclear war
inadequately prepared and
alone," the committee said in
a week end pronouncement.
The GOP chairman Sunday
charged that "left-wingers"
controlled the Democratic
Party. He named Party Chair
man Paul M. Butler, Michigan
Gov. G. Mennen Williams,
Sen. Wayne Morse (D-Ore.-,
and Walter P. Reuther, presi
dent of the AFL-CIO United
Auto Workers.
In a letter to the Democrats
Butler said "just a little com
placency and relaxation" by
party workers "can mean the
loss of a good number of close
races."
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Rocket Virtually Floated in Space At 79,212 fiies
Washington (UPD A top
scientist said today that for
more than two hours Ameri
ca's lunar probe rocket vir
tually floated in space when
it reached an historic altitude
of more than 79,000 miles and
slowed to a stop.
Air Force figures bore out
the scientist's statement by
showing the rocket was at
about the ' same altitude be
tween 12:47 and 2:47 a.m.
(p.s.t) Sunday. Starting at 79,
120 miles, it rdse o 79,212
and then fell back to the 79,-120-mile
level. '
Gravity- Pull Less
Dr. William W. Kellogg,
acting chairman of the Inter
national Geophysical Year
earth satellite panel, explain
ed in an interview this was
because the rocket was so far
away the pull of the earth's
gravity was' only one four
hundredths as much as at the
surface of the earth.
If a 200-pound man could
be placed on a scale at that
distance he would "weigh"
only half a pound. The 82
pound rocket's "weight" , by
Thornton Predicts
Coast Development
Newport, Ore. - (UPD - Attor
ney General Robert Y. Thorn
ton, Democratic nominee for
Congress, predicted substan
tial development of Oregon's
port cities along with expan
sion of trade with the Orient
in a speech here Sunday.
"I do not seek to take any
thing away irom the Port of
Portland but I want to see
Astoria, Newport, St. Helens
and other cities in Oregon be
come major seaports," he said.
the same nt isurement was
only slightly more than two
tenths of a pound.
Kellogg said a better way
to picture the situation is to
consider that the acceleration
of gravity, 32 feet per secondj
at tne surtace ot the earth,
was only 1 400th as mucW
or less than an inch per sec-ond-at
that altitude.
The rocket, with very little
speed left, consequently fell
over in a great arch before
it began to pick up real speed
in its descent toward the
earth.
Kellogg noted the pull of
gravity continues indefinitely
into space but just keeps
growing less and less.' He said
at the great altitude reached,
the rocket could have been
placed in an orbit around the
earth if it could have been
given a push in almost any
direction.
. The Air Force has let a
contract for development of
an engine of one million
pounds thrust in what is re
garded as a first step toward
putting a man intp space.
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