through jurisdictional disputes, labour should make every effort to progress so far in self-government as to prevent such strikes themselves.
Under the apprentice-training pro- gramme of the Labour Department, the unions and the contractors are working together successfully, and every effort should be made to increase the facilities for Apprenticeship Train- ing.
Financing
The situation with respect to the supply of money or credit presents a series of paradoxes.
There is more credit available in the country in the form of individual savings than at any other time in his- tory; yet there are now reports of increasing difficulty by builders in ob- taining construction financing and a publicly expressed fear that financing may be the next road block to expan- sion of housing.
The demand and the need for rental construction are greater and the terms for financing such construction are more favourable now than at any time in the past; yet the industry is not constructing such dwellings at a rate even approaching the record of the 1920's when mortgages lacked their present stability and when the credit reservoir was much smaller than at present.
The yield on Government insured. amortizable housing mortgages is high- er than the yield from high-grade industrial bonds, yet the institutions with the largest reserves of capital now seeking invesment have been not- ably reluctant to invest heavily in the field.
The paradoxes lead to the following conclusions:
(a) The Government insurance of mortgage loans alone does not provide sufficient incentive to lenders or build- ers to engage in rental housing on the scale required by present needs.
(b) That while the interest rates on
mortgages on housing are not the main deterrents to institutional invest- ment, the rates stipulated in FHA in sured mortgages must have a degree of flexibility to meet basic changes in the money market. The trend is now upward.
(c) That the point of diminishing returns has been reached in the Gov- ernment's extension of liberal terms for insuring or guaranteeing mortgage loans for housing; that. however, some adjustments in present terms of FHA loans must be made to give greater emphasis to loans for multifamily dwellings during the emergency period and to pave the way to eventual transi- tion to the more sound forms of mort- gage insurance.
(d) That means must be sought through incentives that private enter- prise has always understood and accepted-hope of a satisfactory return. in good times and in bad on money and effort.
There is a need for rental housing aids for families of moderate and low income and veterans; provision of such housing is inadequate. In order to encourage construction of such units. there is a need for equity as well as mortgage financing. A special supple- mental programme is needed permit ting a 90-percent loan, 40-year maturity and 4-percent interest. Attention is
directed in the analysis to the fact that over-emphasis on units for speculative sale, has forced veterans to buy, when they were really financially unable to buy, and to force them to pay exces- sively high prices. This condition must be immediately corrected. Taxation
The Federal Government has gone about as far as it is justified in going in the assumption of risk through the insurance of mortgages, yet the build ers have not considered this sufficient incentive to build rental housing on a large scale. Other incentives there- fore must be offered.
The large scale builder and operator of rental housing is accustomed to long-term commitments. Rentals that correspond to the present high con- struction costs cannot be maintained through the life of a project. The insurance of the mortgage does not give the operator protection against operating loss; it merely makes it easier for him to finance the project at reasonable interest rates and low equity investment.
Modification of the Federal income- tax laws would provide the greatest incentive to the large-scale building of rental housing. The exact method or combination of methods to attain this
end is a matter for detailed considera- tion by tax experts.
司公蟻白滅專雲高
THOMAS COWAN & CO.
Tel. 30722
Room 320 Queen's Bldg., Hong Kong
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