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Form'&o. 131

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1

Uiiice Correspondence
To

Governor Eecles

From

J. M. PfiTggflfy^R7

FEDERAL RESERVE

BA D
0R

Date March 50,1955

Subject: Developments re relief b i l l
and housing subsidy

An article in this morning's Washington POST says that Congressman Buchanan of Texas, head of the House conferees on the relief bill,
"vainly sought to add an amendment making loans or grants possible under
each class of work,11 This would indicate that a definite effort was made
to have the conferees adopt the suggestion that you sent through on
Wednesday,
The POST says of Congressman Buchanan's effort to insert a loansand-grants clause:
"He was voted down. Other conferees took the stand that the
purpose was work relief, and not to set up a revolving fund. One
Senator pointed out that the RFC and other agencies have the power
to make loans."
The following paragraph from the POST article ?/ould indicate that
Mr. McCarl would not countenance a housing subsidy if one were adopted on
the strength of the two new liberalizing provisions that the house conferees got into the bill and that I referred to in my memorandum of yesterday morning:
"Administration stalwarts received another bad jolt in failure
of conferees to provide specifically for certain favored undertakings•
In an advisory ruling, the Comptroller General has held that 'rural
industrial communities' and 'subsistence homesteads' of the type now
in operation at Reedsville, W. Va., do not appear to come within the
appropriation."
Congressman Buchanan apparently wants the bill sent back to
conference, but is apparently blocked ty House rules from accomplishing this.
There is a suggestion, however, that some administration spokesman in the
Senate may make the point of order that the Senate conferees exceeded their
authority. If this point of order were sustained by Vice President Garner,
the bill would be sent back to conference* Such a development in the Senate
appears improbable in view of the fact that the Senate conferees appear to
stand pretty solidly with Senator Glass*
Senator Glass appears to be insistent that, if Congress and the
Administration are foolhardy enough to put through such a measure as the
relief bill, then the expenditures under it should be closely restricted
to relief and work relief. He was defeated in his effort in the conference
to amend the bill in such a manner as to require that 50% of the cost of




- 2 any project undertaken through funds provided in the relief bill be
spent for direct labor. Nevertheless he has succeeded in greatly
limiting the fields of operation that will be available to the
President,
For example, there is a provision that would prevent the
President from making loans or grants to State and local governments
out of any of the funds variously allocated to other purposes. That
is, the clause authorizing the President to shift appropriations up
to 20 per cent of the four billion dollar total would not apply to
loans and grants to State and local governments*
This would operate as a very serious limitation Gn your plan
for municipal construction•