Other assistance

The Office of Minerals Exploration in the U.S. Department of the Interior is the agency through which the Government furnishes financial assistance in exploration for 36 mineral commodities. It contracts with eligible applicants to pay up to one-half of the cost of Work authorized for the exploration. The Government's contribution may not exceed $250,000 in any single contract. The contract provides for repayment of the Government's contribution with interest by a royalty on production from the land described therein. If there is no production, there is no obligation to repay. This is an extension of the program formerly administered by the Defense Minerals Exploration Administration, as authorized by act of August 21, 1958 (72 Stat. 700).

Other types of assistance to minerals producers which the Federal Government currently prorides include making loans and advance payments, guaranteeing loans, building access roads to mineral properties, and to some extent depletion allowances for tax purposes, protective tariffs and import quotas.

SURPLUS PROPERTY DISPOSAL

Although no subsidy has usually been intended, the disposal of surplus products by the Government has at times resulted in benefits to particular segments of the population, with the cost borne by the taxpayers of the Nation.

The disposal of various kinds of property considered surplus by Government agencies, primarily military property, has reached sizable proportions and continues to be a major administrative task. The total volume of war surplus property accumulated from World War II has been estimated at close to $50 billion. Of this amount $27,200 million was disposed of through the War Assets Administration (and predecessor and successor agencies); $10,400 million overseas through the State Department, the Army, and the Navy; and $12,300 million worth of shipping, through the Varitime Commission and other agencies.

Of the $27,200 million of net acquisitions administered by the War Assets Administration, $10,300 million were not sold but given to various governmental, educational, and other agencies, nd in some cases to friendly foreign nations; $15,100 million worth (reported cost) of surplus property were sold with a sales realization of $4,100 million. The difference between the reported cost and sales realization cannot, of course, all be considered as a subsidy, since the reported cost does not take into account such factors as depreciation, deterioration, obsolescence. Some purchasers, however, were able by surplus sales programs to obtain goods at lower prices than prevailed on the open market for comparable items.

The experience in the disposal of surplus property following the Korean war was similar to post-World War II disposal. According to the Commission on Organization of the Executive Branch of the Government (Hoover Commission) Task Force on Surplus Property:

In the 3 years and 9 months preceding March 31, 1954, $2,167 million (at acquisition cost) was disposed of with return to the Government of but $168 millionabout 7.7 percent of cost. Some of the reported acquisition cost-especially in the sale of airplane scrap-are estimates only, and consequently the average return

may be even lower. The tendency is toward smaller percentag growing glut of surpluses in increasingly saturated markets.?

Surplus disposal continues to be a major element il itary procurement program. Obsolescence and quali with age make it necessary for the military to di quantities of salable materials each year. Much of the at scrap prices regardless of true value or use. Vos property generated within the Government is dispo Government agencies, schools, hospitals, civil defen: State governments for educational and health purpose

RECONSTRUCTION FINANCE CORPORATION WARTI

The subsidy programs of the Reconstruction Fina are, of course, now only a matter of historical reco cussion of their magnitude and character is included World War II, these subsidies were among the largest ment and because the payments made as subsidies w the most unequivocal sense.

The subsidy programs of the Reconstruction Fina were adopted as a war measure for the purpose of : duction of materials and supplins essential to the i and the war effort. Authorization for its subsidy ope in section 5d of the Reconstruction Finance Act (1 which permits the Corporation to produce, acquire otherwise deal in strategic and critical materials, as President” and in section 2(e) of the Emergency Pr of 1942, as amended by the Stabilization Extensio The latter limited the subsidy functions of the RF 1945. Certain consumer subsidies were transferred to the Commodity Credit Corporation by the act o Public Law 88, 79th Congress, June 23, 1945, prov. maximum amounts authorized for subsidy payment

From the inception of the program in 1942 to Ju RFC expended in subsidy payments an aggregate am mately $3,123 million. By that date, the Corporatio connection with these programs were virtually com exception of the clearance and settlement of a few which were still pending. Some of the principal item meat, petroleum, flour, butter, zinc, copper, excess costs, coffee, lead, woodpulp, and nitrate of soda.

In addition to the direct subsidy programs of the Finance Corporation, two other programs have been category of "subsidies to producers and others" as lis report for the fiscal year 1951. Reimbursements t aluminum for extra power costs during the war tota and losses of the U.S. Commercial Company totaled

Like the consumer subsidy program of the Commod poration, discussed above, this program was essentia price control program. It permitted prices to consu at levels which were unremunerative to producers wh essential during the war. These subsidies were induc

? U.S. Commission on Organization of the Executive Branch of the Government Disposal of Federal Surplus Property. Report on use and disposal of Federal sur 1955. p. xviii.

cost producers to add to total production despite the imremunerative ceiling prices established and enforced.

HOUSING AND URBAN DEVELOPMENT

As public attention focuses on the inner cities, HUD's Federal Housing Administration is insuring mortgages financing purchases of housing in areas nerer before considered eligible, streamlining its processing of applications for insurance of mortgages financing multifamily housing, encouraging rehabilitation of existing structures, providing low-rent housing through below-market interest rate, interest subsidies, and rent supplement programs, and insuring mortgages financing land development and new communities. Vortgage insurance on

One- to four-family homes.- Provides insured mortgage financing for the construction, purchase, or repair and rehabilitation of one-to four-family homes. It is designed to help families undertake home ownership on a sound basis.

Armed services housing.- Provides insured mortgage financing for builders to construct (1) multifamily rental housing of at least eight dwelling units, and (2) detached, semidetached, and row housing for rental and eventual individual sales to military or essential civilian personnel of the Armed Services, NASA, AÈC', or employees of contractors thereof. Also provides insured mortgage financing for qualified military or civilian personnel to purchase the detached, semidetached or row houses released from the project mortgages.

Condominium housing. - Provides long-term mortgage financing for purchase of an individual family unit in a condominium project. Also provides financing for construction or rehabilitation of a housing project by a sponsor who intends subsequently to sell individual units on a condominium basis. Enables persons to reside in multifamily projects on an ownership, rather than a rental basis.

Cooperative housing. -Provides long-term mortgage insurance for financing projects that will be owned by, and provide housing for, members of nonprofit cooperative corporations.

Experimental housing.--Provides mortgage insurance on individual homes and multifamily properties that incorporate new or untried construction concepts intended to reduce housing costs, raise living standards, and improve neighborhood design.

Multifamily rental housing.--Provides mortgage insurance and long-term mortgage financing for the construction or rehabilitation of rental housing. It is designed to serve a broad cross section of the rental housing market by providing adequate space for family living at reasonable rents, and appropriate facilities for different types of families—those with or without children or those located in urban or suburban areas.

Low- and moderate-income rental housing (market interest rate). Provides mortgage insurance to aid in financing the construction of detached, semidetached, row, walkup, or elevator-type rental housing with five or more units for low- or moderate-income families, persons 62 or older, or handicapped persons.

Homes for low- and moderate-income families.- Provides insured mortgage financing, at the market interest rate, for construction, purchase, or rehabilitation of one- to four-family homes for low- and

moderate-income families. Advantageous financing purchase are available to families displaced by urban governmental action.

Rental and cooperative housing for low- and n families (below-market rate).- Provides insurance with special terms to finance the construction or i rental and cooperative housing projects of five or mo and moderate-income families. The mortgage may market rate of interest or an interest rate of 3 percent. has a below-market rate, the income of the occupants prescribed limits.

Housing for the elderly or handicapped.-Pro insurance to sponsors of new or rehabilitated rental of cight or more units specifically designed for oc elderly (62 or over) or the handicapped.

Urban renewal housing.-Provides mortgage ins and rehabilitated homes or multifamily structures ! nated urban renewal areas and areas with concen of code enforcement and neighborhood improvemen to assist in the elimination of slums and blight an properties from deteriorating.

Housing in declining neighborhoods.-FHA has insure financing of housing in older, declining neighb waiving normal economic soundness requirements and on individual merit and the need for low- and i honsing in such areas.

Nursing homes.—Provides mortgage insurance for homes, which must have at least a 20-bed capaci adequate to house the occupants properly and safely

Group practice facilities. —Provides mortgage insi the construction or rehabilitation (including pw movable equipment practitioners will use) of facilit practice of medicine, dentistry, or optometry.

Land development and new communities.-Pr insurance to finance land acquisition and developme subdivisions and complete new communities, and for tion of sound planning concepts in their developme Loan insurance on

Major home improvements.--Home mortgages family dwellings may be refinanced in amounts su outstanding mortgages and finance improvements. up to 20 years may be insured to finance improve tion of one-to four-family homes located inside renewal areas and of one- to 11-family units in urbai

Supplemental loans on multifamily projects.-F of supplemental loans to finance alterations, rep: improvements to any multifamily project finance insured mortgage. Loan proceeds may be used to fir of equipment for the operation of a nursing home facility. Interest supplements on

Rental and cooperative housing mortgages.Pro lower-income families by reducing costs on certain r

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new community development with federally assisted w and open space facilities.

Low-income housing demonstration. Provides gran and development projects concerned with new or impr providing housing, including self-help housing, for low-i and families, and for low-income elderly and handicapp families. Appropriate projects may include such areas reduction, land acquisition, land use, financing, and soci well as construction.

Property improvements.- Provides for insurance of $5,000 to alter, repair, and improve residential and properties and loans of up to $15,000 (not to exceed $ dwelling unit) to alter, repair, improye, or convert exis used or to be used as dwellings for two or more families.

Expenditures in 1970 for housing and urban developm estimated as follows:

Urban renewal...
Vodel cities program.
Low-rent public housing program.-
Rent supplement program.-
Home ownership and rental housing assistance.

LENDING PROGRAMS

tive housing. Assistance is provided in the form of monthly payments to the mortgagee on behalf of the mortgagor of a part of the interest on a market-rate project mortgage insured by FHA.

Home mortgages.- Provides assistance to low-income families in buving a home or a membership in a cooperative housing project. Assistance is provided in the form of monthly payments to the mortgagee to reduce interest costs on a home mortgage insured by FHA to as low as 1 percent. The homeowner must pay.at least 20 percent of his adjusted monthly income on the mortgage. Direct loans on

Senior citizens housing.- Provides low-interest, long-term loans for new and rehabilitated rental housing, dining facilities, community rooms, and workshops for the elderly (62 and older) and the handicapped. Other housing assistance programs

Rent supplements. —Provides Federal rent supplement payments to owners of certain private housing projects. The program is designed to make decent housing available to low-income families and individuals. These supplements amount to the difference between at least 25 percent of the tenant's monthly income and the fair market rental for the unit he occupies.

Low-rent public housing:—Provides loans and annual contributions which permit public agencies to provide decent, safe, and sanitary housing for low-income families at rents they can afford. Local housing authorities rent to low-income families dwelling units provided by construction, rehabilitation of existing structures, purchase from private developers or builders (the Turnkey method), and by lease from private owners.

Low-rent public housing (leasing and contracting).-Provides annual contributions to authorized public agencies to work with real estate agencies, owners, and developers to provide housing for lowincome families. Local authorities lease dwellings from private owners and make them available to low-income families at rents they can afford. Local authorities are also authorized to purchase a structure containing leased units and resell it to the tenants on terms which they can manage without undue financial hardship.

Modernization of low-rent public housing projects.-Provides loans and annual contributions to bring existing public housing projects up to present-day physical standards, and to involve tenants in all aspects of management including planning and implementing modernization programs, advising on management policies and practices, expanding services and facilities, and providing employment opportunities.

Model cities.—Provides supplemental financial and technical assistance to enable cities to improve the quality of their physical and social environment. Cities are required to utilize and coordinate existing Federal grant-in-aid programs, State, local, and private resources, and to involve neighborhood residents in planning and executing comprehensive five-year plans.

Guarantees for new communities. Provides support for new community development by authorizing Federal guarantees of the bonds, cash flow debentures, notes, and other obligations issued by private developers to finance new community development projects. It also provides for supplemental grants to State and local bodies providing a

Some industrial concerns have been able to obtain favorable terms than would be izvailable from private the Reronstruction Finance Corporation before 1952, cently from the Small Business Administration. Loi can exporters and to foreign firms and governments purchase of American goods are made through the ] Bank. Guarantees of, and participation in, private undertaken by the Export-Import Bank.

BENEFITS TO BANKS

Banks themselves have been the recipients of ben Federal Government which may be interpreted to be i! subsidies. Some of the more important are the following

Although stock held by member banks in the Federal is not essential to the functioning of the Reserve Sys money-creating power comes from the Congress, the i nonetheless receive an assured income of 6 percent oi Reserve stock.

The Treasury koeps its funds in commercial banks rules which give the banks an opportunity for profit is not paid on the tax and loan accounts representing and the proceeds of sales of Treasury securities. The T fers parts of the accounts to the Federal Reserve banks, intervals, and attempts to synchronize the withdrawals expenditures. In this interval, the commercial banks ca employment of these Treasury deposits in the making earnings would thus be diminished if the Treasury mat