Special Message to the Congress Upon Signing Act To Stimulate Residential Construction.

To the Congress of the United States:

I have today approved S. 3418, an Act "To stimulate residential construction ."

Several of its provisions will promote a higher level of economic activity through acceleration of housing construction. The temporary extension of the World War II veterans' loan guaranty program, the more liberal terms of FHA insured mortgages, the repeal of the unworkable discount controls on guaranteed and insured mortgages, the limited authority to adjust interest rates on military housing mortgages to market conditions, and the additional authority for mortgage purchases under the Special Assistance Program of the federal National Mortgage Association pursuant to my specific designation, are timely additions to our present authorities and are consistent with Administration proposals. They can be used at once to supplement forward steps already taken to stimulate construction.

However, the legislation ignores the responsibility and ability of private enterprise to function without imposing a direct burden on the federal purse. It has been the fixed policy of this Administration, and should be the consistent purpose of the federal Government, to seek in every way to encourage private capital and private investors to finance in competitive markets the myriad activities in our economy, including housing construction. This legislation contains provisions that are wholly inconsistent with that policy and with the philosophy of the free enterprise system that has made this Nation strong. By not permitting the interest rate on VA guaranteed home mortgages to be fully adjusted to actual market conditions, and by requiring purchases of these mortgages at par by the federal National Mortgage Association, the legislation provides in effect for substituting $1 billion of federal financing for financing by private investors. This means that a wholly unnecessary burden of up to $1 billion will be added at this time to the already heavy load upon the taxpayers of the country. Moreover, this same action on the interest rate and certain additional provisions of the Act will, in the case of direct loans to veterans in rural areas, make it extremely difficult for the Voluntary Home Mortgage Credit Program-again private financing--to become effective, thereby causing an additional, and completely unnecessary, drain on the Treasury of the United States.

The American people expect their Government to act in every proper way to foster the resurgence of the economy. But they also expect their Government to preserve the integrity of principles and programs that have served us well. In acting for today we should not forget tomorrow. This is the plain duty of us all.

I again call upon the Congress promptly to enact legislation providing interest rates for VA guaranteed and direct loans sufficiently flexible to assure private participation, and eliminating the par purchase requirements on Government mortgage purchases, so that the taxpayers will not be called upon to do what private investors should, can, and will do--so that in this field our free enterprise system may have the fullest opportunity to work.

DWIGHT D. EISENHOWER