MEDFORD MAIL TRIBUNE. MEDFORD. OREGON
TUESDAY. JUNE 19. 1962
A 3
I if
Your Money's
Worth
By SYLVIA PORTER
Copyright, Hill Syndicalt, Inc.
Two Medford Physicians Give Views on King-Anderson Plan
REAL ESTATE BOOM DYING TOO
Another boom which has been going on since World War
H is dying under our eyes. It is the boom in real estate and
it flashes the warning of a steep rise in foreclosures, de
linquencies, losses on sales of homes unless leaders in
government, finance and the housing field recognize the
dangers in time, consider what safeguarding actions might
be taken in advance.
This is the unmistakable implication of an investigation
of the quality of home mortgages included among the scholar
ly papers submitted by the National Bureau of Economic
Research in its just-published 42nd annual report. The study
was made by Professor James S. Earley of the University of
Wisconsin.
Throughout the entire postwar period when terms of
home mortgages have been progressively liberaliied to an
extent where there is no doubt that the quality of home
mortgage debt has deteriorated Earley points out that
foreclosure and loss rates have "stood up very well." The
reasons have been a combination of favorable circum
stances high employment, relative economic stability,
rising house and residential land values, a rapid growth
' in population a high rate of formation of new families
needing homes, general inflation.
As a result, "Most straitened borrowers have been able
to sell their houses for more than enough to cover their in
debtedness, and the holders of most defaulted mortgages
have been able to sell the foreclosed properties without loss."
Now, though, Earley stresses, "There is increasing evi
dence that this favorable combination of circumstances is
passing."
The rate of family formation has been declining recently
because of the simple fact that in the depression 1930s and
early 1940s, the birth rate in our country went way down,
and so today, in the early 1960s, there are fewer young
folks to get married. This situation won't be reversed until
the war baby crop reaches the marriage age and that won't
be for another few years.
In addition, "Prices of existing houses in many areas
have ceased to rise or have begun to fall." This means over
- mortgaged families can't expect to be bailed out by price
rises as in the past.
Simultaneously, vacancy rates, both on rental properties
and on homeowner units have been climbing from about 2.5
per cent in 1950 to 5-6 per cent in the mid-1950s to about
8 per cent last year. Again, this suggests hard-pressed fam
ilies won't find it so easy to get out from under.
Earley admits conditions vary among sections of the
country, but his conclusion Is flat: "The general sellers'
market in residential houses is disappearing."
This wouldn't be a cause for alarm were our residential
mortgage debt of high quality, but much of it isn't. The
average maturity of VA and FHA loans on new houses has
risen from about 20 years in the early post-World War
era to 29 years nows, and a similar trend has occurred
in the typical maturity of conventional residential mort
gages. There has been a sharp increase in the ratio of
loans to value strengthening the "possibility of deteriora
tion." In 1960 the average loan-to-value ratio topped 91 per
cent for FHA loans and was at 97 per cent on VA loans.
Already, disturbing trends are emerging. The foreclosure
rate which has been extremely low by all historical standards
for many years has increased from 1.96 per 1,000 houses in
1957 to 2.35 per 1,000 houses in 1958, to 2.65 in 1960.
The delinquency rate reflecting the failure of borrowers
to make scheduled mortgage payments promptly began
climbing rapidly in late 1957, and the economic advance
which started in the spring of 1961 "has not prevented a
further rise." This rate, Earley underlines, provides "sensi
tive and discriminating evidence.'1 '
Earley is saying trouble about home mortgage debt is
on the way. Surely, the time for all authorities to think hard
about what steps should be taken to avert such trouble as
this is before it hits.
Two Medford physicians,
whose personal political per
suasions differ widely, ap
peared together at the Mon
day noon meeting of the Med
ford Chamber of Commerce
Roundtable to register joint
opposition to the proposed
King-Anderson bill.
Dr. M. Donald McGeary,
who spoke first, Indicated his
companion speaker, Dr.
Thomas Rutter and said,
"This is a little like having
Barry Goldwater and Adlai
Stevenson join in support of
the same measure. Perhaps
this will give you some indi
cation that there are things
wrong with this bill."
The two doctors did dis
agree with each other on sev
eral points during their talks
and the discussion period
afterward, but they were
united albeit for different
Exams Announced For Federal Posts
Former Railroad
Company Turns
To Nuts and Bolts
New York - fUPD - About the
only relationship between
MSL Industries, Inc.. today
and the company which it
once was, explained the presi
dent, is a concern over con
nections. It once was a railroad opera
tion, the Minneapolis and St.
Louis Railway company.
But late in 1960 all of Us
railroad properties went to the
Chicago and North Western,
and it acquired Heads and
Threads, an importer and dis
tributor of nuts, bolts, screws
and washers; the Universal
Screw company: the Stevens
Socket Screw company, and
the Joliet Wrought Washer
company. Wisconsin Bolt &
Nut company, an affiliate of
Universal, also was bought by
MSL.
It has added others since,
one only last week.
Tax Loss Carried Over
From its railroad operation.
MSL carried over two things,
said President Arnold R
Meyer. One was an estimated
tax loss carry forward credit
of $25 million, from the sale
of the railroad properties, and
the other was an idea, which
persisted for several months,
that it still had railroad inter
ests. This is not the case, ex
plained Meyer, "but we still
run into people who think so."
Headquarters of the opera
tion are in Chicago, and Meyer
was here to appear before the
New York Security Analysts,
to whom he described the com
pany's favorable sales and
earnings picture.
"None of the railroad traces
are left," said Meyer.
"There isn't an operating
railroad man left."
reasons in recommending to
the Roundtable that the King
Anderson bill is not the an
swer to the question of how
medical care for the aged
should be provided for.
Proud of Service
"I for one am proud of the
record of service physicians
have given to the people of
this country," Dr. McGeary
said. "Our medical statistics
are superior to those of any
other nation in the world."
The doctor then recalled a
number of the diseases and
ailments which have been
controlled or eliminated in
America through the efforts
of medical research.
"After these many remark
able achievements, now all of
a sudden other people come
along and try to tell us how
this problem of medical care
for the aged should be solved.
It makes me a little angry,"
Dr. McGeary said emphat
ically. Doctors As A Group
Doctors as a group, Dr. Mc
Geary insisted, are educated
and knowledgeable politically
and economically. Further, he
said they know more about
medical care programs than
lay people do.
He said that proposals simi
lar to King-Anderson in other
countries in the world have
been unanimously unsuccess
ful, and noted that 900 physi
cians in the Canadian prov
ince of Saskatchewan have
sworn to strike on July 1 if
certain medical care propos
als are put into practice there.
Dr. McGeary warned that
such legislation as the King
Anderson bill could only
have a debilitating effect of
the high standard of service
currently maintained by the
medical profession in the
United States.
Fall By Wayside
"When government steps
into medicine," he said, "car
tain things fall by the way
side." The speaker conceded, how
ever, that the medical profes
sion warrants criticism for
not having come forward with
a reasonable alternative to
present to the American
people.
Dr. Rutter, who prefaced
his remarks by saying that he
spoke only for himself, said
it is difficult now to view
these medical care proposals
objectively.
"The weeds of partisan in-
high,
the is-
terest have grown
they have obscured
sues," he said.
Unlike his colleague, Dr.
Rutter strongly criticized the
American Medical association.
"The AMA has done a
wretched job of leading us,"
he said. "The association's
record in matters of this sort
have been very poor. They've
been against everything since
the year 1."
Broadcasting Statements
"In this particular issue,"
he continued, "the AMA has
been guilty of throwing up
red herrings, and broadcast
ing misleading statements."
"Is there a need for some
plan to help the aged meet
whatever medical expenses
they may incur?" the doctor
asked.
As far as he was concerned,
Dr. Rutter said, the answer
was a flat affirmative. He
said he had seen too many
cases of people who lead in
dependent, self-sufficient lives
during their productive years,
only to be "wiped out" by an
illness requiring hospitaliza
tion during the late years of
their lives.
But, the speaker protested.
grafting such a proposal as
the King-Anderson bill on to
the Social Security program
is the wrong way to do it.
Social Security, which he
described as a "welfare in
strument designed to protect
the people from want and
destitution," is already in fi
nancial trouble, Dr. Rutter
said.
Unearned Increment
"There is an annual un
earned increment of debt
building up," the doctor
warned, "so that now an in
dividual pays 20 per cent
more into the program than
what his benefits will become."
The problem will be griev
ously worsened, he said, by
tacking medical care onto a
program that is already in
debt.
Another feature of the
Anderson bill which Dr. Rut
ter said particularly dis
turbed him was that "every
one was included in the mea
sure, willy-nilly." Many peo
ple don't need it, he argued,
therefore the inclusion of all
is unnecessary. Participation
in the program should be vol
untary, he stated.
Roundtable Chairman Bill
Longmore said after the pro
gram that he will make an ef
fort to schedule a speaker at
some future meeting to pre
sent arguments in favor of the
King-Anderson measure or
some similar medical cars
proposal.
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